This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk01: Good day and thank you for standing by. Welcome to the Doximity 3rd Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. To ask a question during that session, you will need to press star 1 on your telephone keypad. And if you require any further assistance, please press star 0. I would now like to hand the conference over to your first speaker today, Mr. Perry Gold, Head of Investor Relations. Sir, please go ahead.
spk11: Thank you, Operator. Hello and welcome to Doximity's Fiscal 2022 Third Quarter Earnings Call. With me on the call today are Jeff Tange, Co-Founder and CEO of Doximity, Dr. Nate Gross, Co-Founder and CSO, and Anna Bryson, CFO. A complete disclosure of our results can be found in the press release issued earlier today, as well as in our related Form 8K, all of which are available on our website at investors.doximity.com. As a reminder, today's call is being recorded and a replay will be available on our website. As part of our comments today, we will make forward-looking statements. These statements are based on management's current views, expectations, and assumptions, and are subject to various risks and uncertainties. Actual results may differ materially, and we disclaim any obligation to update any forward-looking statements or outlook. Please refer to the risk factors in our S-1, our last quarterly report on Form 10-Q, and our other reports and filings at the FCC that may be filed from time to time, including our upcoming filing of Form 10-Q. We would like to specifically caution investors that our future performance will be harder to predict in the foreseeable future given the COVID-19 pandemic. Our forward-looking statements are based on assumptions that we believe to be reasonable as of today's date, February 8th, 2022. Of note, it is Doximity's policy to neither reiterate nor adjust the financial guidance provided on today's call unless it is also done through a public disclosure such as a press release or through the filing of a Form 8-K. Today, we will discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A historical reconciliation to comparable GAAP metrics can be found in today's earnings release. Finally, during the call, we may offer incremental metrics to provide greater insights into the dynamics of our business. These details may be one time in nature, and we may or may not provide updates on those metrics in the future. Okay, I would now like to turn the call over to our CEO and co-founder, Jeff Tange.
spk13: Thanks, Barry, and thanks, everyone, for joining our third quarter fiscal 2022 earnings call. We have four main updates today, our financial results, an acquisition, a team transition, and our network growth. It's a lot to cover, so I'll jump right in. First, our financial results. We had 97.9 million in revenue for the third quarter of fiscal 2022, an increase of 67% over the same quarter last year and 13% above the midpoint of our guidance. As a result, we are raising our annual guidance by 4% to a midpoint of $339.4 million for our fiscal 2022 ending March 31st, which translates to 64% growth year on year. With a net revenue retention rate of 171%, Our growth was once again led by our existing clients, which include all of the top 20 hospitals and all of the top 20 pharmaceutical companies. Our interactive platform allows them to connect efficiently with the right physicians about new treatments, clinical trials, and patient referrals. We then measure our clients' ROI using third-party claims and prescription data, and that proof of value has allowed us to expand nicely as they begin their shift to digital. We also posted record profits this quarter, Our adjusted EBITDA margin was 48%, or $47 million, which was 45% above the midpoint of our guidance. Our vertical sales model continues to provide us with strong leverage, and the attractive ROI we deliver for our clients remains an incredibly powerful retention and upsell tool. All in all, we're pleased with our Q3 financial results. Okay, time now to turn to today's announcement that we're acquiring Amion.com, a leading physician on-call scheduling site for $53.5 million in cash, plus up to $29 million in earnouts and equity compensation over the next four years. We expect it to close April 1st. We're excited to partner with Stuart Caron, who founded Amion 24 years ago to help his physician wife, Jo, answer the frequent question, am I on? And run the ever-changing on-call schedules of her pediatrics program. Years before Salesforce.com or others, Stewart pioneered an enterprise cloud model with a single web deployment and affordable subscription pricing. It was a hit. And with a steady stream of new features like the ACGME regulated work hour reports or easy shift swaps, Amion grew to manage schedules for nearly 200,000 U.S. physicians at thousands of hospitals, including 18 of the top 20. While primarily a product acquisition for us, Amion is also a high-margin subscription business. In the calendar year 2021, we estimate Amion did roughly $5 million in revenue and over $3.5 million in adjusted EBITDA. We've worked closely with Stuart and Amion for over a decade now as an API and development partner. Among the 50 plus partner companies who actively use our login with Doximity APIs, Amion is among the most popular. Many day-to-day physician workflows center around who's on call. Strategically, Amion adds a key piece to our physician cloud by integrating scheduling alongside our secure messaging, CVs, referrals, and telehealth tools. Doximity's mission is to build software to make physicians more productive so that they can provide the best care for their patients. We're thrilled to add another critical day-to-day physician workflow tool, and we're excited to explore the optionality it will unlock across all of our major businesses. Okay, next up, a team transition. After a distinguished 33-year career, our chief commercial officer, Joe Klein, is retiring. I'm eternally grateful for Joe's friendship and leadership as our CCO here the last four years. Starting tomorrow, Joe will move into a full-time advisor role until his retirement this fall. Joe has built a deep bench and is going out strong. That is, leaving us after delivering a record-breaking quarter and year. To back up that last point, we're providing early revenue guidance for our fiscal year 2023, which starts in April. In short, we expect our fiscal 2023 revenue to grow 33% year on year to approximately $450 million. That is 6% above the current fact set consensus of $425 million. Our guidance does not yet include Am I On? And we'll provide more detailed guidance on our next quarterly call. With Joe's retirement, Paul Jorgensen has been appointed our Chief Revenue Officer. Formerly a senior vice president, Paul has led our fastest growing businesses the past five years, including the recent launch of our telehealth business. Paul is an industry veteran whose career includes four years running enterprise sales at One Medical and nine years growing our largest pharmaceutical clients at my previous company, Hippocrates. The team and I look forward to working with Paul in his new role and wish Joe the very best in his retirement. Okay. To close, here's an update on our network growth. Q3 was a record quarter for our network across a number of dimensions. Here are a few. First, our e-signature and fax products saw record usage in Q3 as more doctors brought their at-home digital workflows back to the office by preferring to sign paperwork on their phones. Second, Our continuing medical education, or CME credits, claimed also hit record highs, up 25% quarter-on-quarter to hundreds of thousands of credit hours, as in-person lectures increasingly get replaced by our anytime-anywhere newsfeed articles, which are algorithmically personalized to each doctor's clinical practice. Third, our job postings grew four times year on year as the great resignation hits medicine and as physicians weigh their post-pandemic job options. And last, we expanded our paid telehealth platform by an additional 23,000 physicians last quarter. Continued growth of our active telehealth user footprint brings us to a new all-time high with over 350,000 unique providers completing telehealth visits with us in the last quarter. Of note, nearly all 99% of our hospital clients renewed their telehealth agreements with us this year. So we're pleased that hundreds of hospitals are making us part of their long term telehealth plans. We're also proud to be named the best in class by the much watched class healthcare IT rankings, which are based on classes, phone interviews with thousands of hospital clients. In the telehealth video conferencing category for 2022, we earned the best-in-class top overall score of 92 out of 100, beating out Microsoft Teams, Zoom, and a bunch of others for our ease of use, account teams, and EHR integrations. In sum, our network flywheel grew last quarter as our physician cloud features like e-signatures, CME, and telehealth became the preferred go-forward tool set for more physicians. Alongside our EHR partners, we're excited to streamline and digitize the many paper-based workflows that physicians face today. Okay, I'd like to end by thanking the entire Doximity team who worked incredibly hard to deliver a spectacular quarter. And with that, I'll hand it over to our CFO, Anna Bryson, to discuss our financials and revised guidance. Anna?
spk08: Thanks, Jeff, and thanks to everyone on the call today. We were very excited by our third quarter results, as well as the announcement of our MI on acquisition. And the momentum in our business is incredibly strong as we look ahead to fiscal 2023. First, I'll start with a few highlights from this past quarter. Third quarter revenue grew 67% year-over-year to $97.9 million. significantly exceeding the high end of our guidance range. We thought performance was due to both continued execution across all of our business lines and strong upsell growth amongst our marketing solutions customers. As a reminder, our pharmaceutical and health system customers typically engage in an annual upfront buying cycle at calendar year end, where they purchase the majority of their next year's subscriptions. Then, throughout the course of the year, these customers use their remaining budget to purchase upsells and add additional audience members, modules, or brands to their programs. With marketing strategies evolving and budgets shifting to digital in real time, we saw many of our clients doubling down with us throughout the year, which is represented in our strong third quarter performance. We believe this step up in demand is an incredibly positive sign that not only are dollars continuing to move digital, But Doximity is capturing a larger portion of this incremental budget as a result of the strong ROI delivered by our platform. Additionally, the scale of the shift is exemplified by the fact that our largest customers, many of whom we have worked with the longest, are the ones growing the fastest. Our top five customers grew 90% in Q3 on a trailing 12-month basis. And we believe this is particularly significant because these customers are some of the most notable top-tier pharmaceutical manufacturers. We are very encouraged by the growing vote of confidence in digital from these industry bell leathers and believe this is a strong indication of the direction healthcare marketing is going. In addition to these top five customers, our overall existing customer base continues to lead our growth with a net revenue retention rate of 171% in Q3. As a reminder, given our net revenue retention rate is a trailing 12 month metric, it should be looked at in the context of our subscription-based trailing 12 month revenue growth rate, which was 79% this past quarter. I'd also like to provide an update on the number of customers spending six figures or more on our platform. We ended the quarter with 258 customers contributing at least $100,000 in subscription-based revenue on a trailing 12 month basis. a 50% increase from the 172 customers we had in this cohort a year ago. This cohort of customers accounted for 89% of our total revenue. Turning to our profitability, non-GAAP gross margin in the third quarter was 91%, compared to 87% in the prior year period. This result was driven by our revenue outperformance and continued efficiency as we scale. Adjusted EBITDA for the third quarter was $47 million, and adjusted EBITDA margin was 48%, compared to $21.5 million and a 37% margin in the third quarter last year. Our adjusted EBITDA exceeded the high end of our guidance range, also due to our top line out performance. Turning to our balance sheet and cash flow, we ended the third quarter with $765.6 million of cash, cash equivalents, and marketable securities. We generated free cash flow for the third quarter of $25.6 million compared to $22.9 million in the third quarter last year. Moving on to our outlook, for the fourth fiscal quarter of 2022, we expect revenue in the range of $89 to $90 million, representing 34% growth at the midpoint. And we expect adjusted EBITDA in the range of $34 to $35 million, representing a 39% adjusted EBITDA margin. For the full fiscal year 2022, we now expect revenue in the range of $338.9 to $339.9 million, representing 64% growth at the midpoint. We now expect adjusted EBITDA in the range of $144.9 to $145.9 million, representing a 43% adjusted EBITDA margin. With regards to our fourth quarter outlook, as our clients continue to right-size their sales forces and refocus their go-to-market strategies, The reallocation to digital is happening in real time. In the back half of calendar year 2021, we worked closely with our customers to deploy these additional dollars to programs they were already running on Doximity, which converted to additional revenue quickly. As we finish these programs, our customers have layered these upsell dollars into their calendar year 2022 subscriptions, which we are currently in the process of launching and will convert to revenue more evenly over the course of the year. We are incredibly encouraged by the unprecedented scale at which customers spent with us as part of their annual buying cycle. Prior to Q3, we had never had a brand sign a $5 million subscription contract with us in a given quarter. In Q3, we had four brands at four different manufacturers spend more than $5 million with us, which reflects substantial program expansion. Given the strong momentum in our business and the fairly good visibility we already have into next year's revenue, we want to provide preliminary guidance for fiscal 2023. Excluding Amion, we expect revenue growth in fiscal 2023 to be about 33% to approximately $450 million, which is ahead of expectations after two straight years of very high top-line growth. We also expect to continue to efficiently scale our bottom line, leading to adjusted EBITDA margins of 40% or greater in fiscal 2023. We are looking forward to providing you with an update on our progress in May. And with that, I will turn it over to the operator for questions.
spk01: Thank you, Anna. We will now open the line for questions. We have 30 minutes for question and answer. Our first question comes from the line of Stephanie Davis with SVB Lyrinc. Ma'am, your line is open.
spk07: Thank you, and congrats, guys, on a blowout quarter. That was wow. So given the long-term partnership with Amion, and I do have to call out that I really love that origin story, I'd love to hear more about the impetus for the deal and what sort of optionality you'll see from ownership of the asset versus just the historical partnership that you've had.
spk13: Hey, Stephanie, great to hear from you. Great question, as usual. Jeff here. And I like blowout. That's a good phrase. Yeah, you know, we've been working with Amion for slightly more than a decade now, and Stuart's just a great guy, and the 10-person team he runs have really just done a spectacular job building a more efficient tool for physicians to know who's on call. They've always been an API partner of ours, which means that to the doctor's option of whether or not they want to log in with Doximity to add their photo and their CV and profile to the schedule so that other doctors know a little bit about them. And so it's a pretty small percent of his users, his 200,000 doctor schedules that have actually logged in with it. So as an owned asset, I think we're going to have a real opportunity here to grow the engagement and the workflows and the integrations that we can do. And specifically, I'm excited that physicians today, you have no idea how much time they spend just calling the hospital receptionist to get someone paged, to call me back, to do all these things. And we can route that now instantly through our Doximity Dialer product, which again, we just shared. We had 350,000 doctors using Doximity Dialer actively last quarter. So we're excited to bring those two together in a collaboration suite so you know who's on call and you can call them quickly. And we think there's just a lot of upside here as we, I think, integrate this physician cloud, the set of workflows that doctors need to do that are outside their EHR if they treat their patients.
spk07: Helpful. And then taking a step back and looking at more of the macro environment, I was hoping to hear a little bit more about the impact of Omicron and maybe how pharma is thinking about their sales spend or how hospitals are thinking about their hiring just in the context of another wave.
spk08: Sure. Yeah, thanks, Steph. So I'd say the short answer is we think Omicron had very little direct impact on how our pharma customers really think about their sales spend. And I do want to be crystal clear that the vast majority of these upsell dollars that were contributing to our outperformance this quarter were launched prior to December when the Omicron wave really hit. So I think what really we're seeing is it certainly is the case that the longer the pandemic has gone on and the longer reps have not been able to see doctors, the longer marketers have been able to witness the value of running these digital programs. So we think it's that value that's the main reason we're seeing this sustained demand from our customers, and not new variants. I mean, new variants will come and go, but this value is really large. Yeah, don't say that. Don't say there's more variants coming in. New variants might come and go, but the value is the last. So, yeah, so that's how we do it for pharma customers. As far as our health system customers or hiring customers, the answer is similarly very little change in the business due to Omicron directly. So, I mean, we've been seeing unprecedented demand from hospitals for both temporary and permanent physician hiring for a while now. And our unique data advantage has really allowed us to increasingly fill that need. One thing we've seen this past quarter, and you'll see this in our 10Q tomorrow, is our curative business really has been accelerating up in the past several quarters. And it really reached over 90% growth in Q3, which is something that we're super proud of. And we're really optimistic about the future here. So just to reiterate back to your original question, we don't believe Omicron really had any impact on our business.
spk07: Awesome. Well, thank you for all the answers and Keep on asking.
spk00: Thanks, Stephanie.
spk01: Thank you. Our next question comes from the line of Ryan S. Daniels with Blair. Sir, your line is open.
spk02: Great. Thank you for taking the question. Jeff, one for you in regards to the strong momentum you're seeing with large client partnerships. I'm curious if you can walk through the conversations you're having there with those entities. I assume it's turning more to a strategic or enterprise-level conversation with those pharma companies, given both your ROI and the fact that they appear to be more heavily investing in digital versus direct Salesforce, but I'd love to hear any color on that.
spk13: Yeah, Ryan, so I think our clients are working through some pretty major shifts in their go-to-market. I mean, they really are talking at their board levels about what is the new commercial model for pharmaceuticals in the United States. And, you know, they're right-sizing their sales forces, which has gotten a certain amount of ink and press and coverage, but they're changing in a lot of other ways. And I think we are becoming their leading digital partner as they think about the digitization of that, and we're very proud to be that. So, yes, we are – engaging at higher levels than we ever have and obviously seeing 71% growth among our existing clients. And as Anna shared, 90% growth among our top five clients who are already major eight-figure clients. I think it's really proof of this S-curve adoption of digital. And we are just at the inflection point of that S-curve. We see, again, sustained demand as we move ahead here. I think If you look back in the industry, back in the mid-'90s, there were about, I don't know, 40,000, 50,000 U.S. pharmaceutical sales reps. We have 81,000 today. Viva estimates that 10% of those may be furloughed in the next couple years. It's not hard to see just a real seismic shift here as dollars move towards higher ROI digital strategies that have been tested, really forced upon the industry in the last couple years.
spk02: Okay, very helpful, Collin. And then, Anna, one for you. You mentioned the fact that most of the contracts are for, you know, the year and that there's some up purchases maybe with budgets or shifts in marketing requirements towards the end of the year. But I'm curious as we sit today relative to your initial 2023 guidance, what level or percentage of revenue do you already have a high degree of visibility on, again, as we sit here today? Thank you.
spk08: Yeah, sure. So as we sit here today on February 8th, we have about just under 50% of our fiscal 2023 revenue already booked. So that's our subscription-based revenue that's already under contract. And we estimate that by the end of the fiscal year, so by March 31st, we'll have over 60% of fiscal 2023 revenue already under contract.
spk02: And I assume that's in line with most years, how you look at your revenue visibility?
spk01: That's correct.
spk02: Great. Thank you so much. Great quarter, guys. Thanks again.
spk13: Thank you, Ron.
spk01: Thank you. Thank you. The next question comes from the line of Scott Berg with Needham & Company. Your line is open.
spk10: Hi, everyone. Congrats on the great quarter. I wanted to... Follow up on the acquisition kind of streaming thoughts there a little bit with Amy in here is how should we think about the, I guess, the R&D or product efforts with that? Do you ultimately kind of develop and blend that into the existing vaccine platform or does it end up being, you know, continuing to be a standalone solution going forward?
spk03: Hi, Scott. This is Nate. Great question. So, MIN was, at its core, primarily a product acquisition. You know, they're a day-to-day workflow technology. They're used by a substantial physician population with strong engagement. It's a high-margin subscription business, and it has a broad footprint across hospitals. And so, all of those characteristics mesh really well with the suite and the platform that we have today, and we'll make integration Now, they have been an API partner, as Jeff mentioned, for a decade. And our API program connects companies like Amion into the Doximity ecosystem. And thus far, that has been centered primarily around an individual physician login, as Jeff mentioned. And so with a greater integration that's deeper across the product, we see multiple different touch points with physicians for improving their experience. And one of the things that gives us the most amount of confidence about this is that Amion is a trusted multi-decade brand. It's a mission-oriented company. It focuses on making physicians' lives easier. If you combine that with proximity, scale across users, enterprises, modern technology functionalities, we see this acquisition grow. is something that will create unique value for doctors in the healthcare system, ecosystem alike, and will really mesh well with our own R&D growth, too.
spk10: Got it. Helpful. And then from a follow-up question, changing chief commercial officer can always be both an opportunity and a challenge. How should we think about you know, Paul stepping into this role? Is this just kind of extending, you know, maybe the structure that was already there? Or are there any maybe significant changes that we could see, you know, come out of this change going forward?
spk13: Yeah, this is Jeff. I'll answer that. No, it's just an extension. I think Paul, again, has been here five years, has been a key partner of Joe's as we've grown all this. And again, Joe isn't going anywhere. He's going to be around to help us through this transition as he looks to retire. I will say that the joke I share is that Joe's retiring at age 59, so that means everyone who's working here, that's set the new bar. We all have to work until we're 59, okay, everybody? But the good news is Paul has led some of our fastest-growing businesses and teams and, again, has strong support within the organization, which has a deep bench.
spk10: Got it. Thank you for taking my questions. 59 is a great target.
spk01: Thank you. And the next question comes from the line of Brian Peterson with Raymond James. Your line is open.
spk12: I'll ask him my congrats on the strong results. Jeff, I have one for you and a follow-up for Anna. When you're talking about your top five customers growing 90% on some eight-figure spend levels, those are some pretty big numbers. So Jeff, I'm curious, Why now is it the time for those significant expansions? And if you're talking about the penetration in terms of those top five, any rough sense on where you are today with those customers?
spk13: Yeah, no, great question. Short answer is we're less than 5% of their healthcare professional budgets in the U.S. You're right. This is some big numbers. And I can tell you, these top five clients of ours, they are among the top five in the world. They're industry bellwethers, leaders. They're the folks that others in the industry look to when it comes to these kind of seismic shifts. And, yeah, we're really pleased. To me, actually, empirically, this is the best proof that we're in the early innings of our TAM, that, again, we can grow 90% among these clients who are already spending the most with us. And, again, they see the ROI and they keep leaning in. And, again, we've got the results to keep going a long ways with that.
spk12: Understood. And I just wanted to clarify on the NRR. I know they came in at 71%. We had the revenue growth at 67%. I know that's kind of a TTM versus current quarter dynamic. But any help on maybe explaining the difference between the two numbers in the quarter? Thanks, guys.
spk08: Yeah, sure. So when we think about our net revenue retention rate at 171%, we need to think about it in the context of our trailing 12-month revenue growth rate, which was 79%, because our net revenue retention rate is a trailing 12-month metric. So that's how you should be thinking about it. So don't look at it on a quarterly basis, but look at it on a trailing 12-month basis in context of that 79%. Got it. Thanks, Anna.
spk01: Thank you. The next question comes from the line of Vikram Kezawa-Botla with Baird. Your line is open.
spk04: Yeah, thank you for taking the questions. I wanted to ask a couple about the EBITDA margin guidance. If you look at the third quarter, it looks like you posted adjusted EBITDA margin about 48%. And the fourth quarter guidance that the Bitcoin implies about 38.5%. I'm curious if you can just walk us through some of the drivers there behind the sequential margin contraction and maybe why some of the outperformance in the third quarter maybe is not translating to the fourth quarter. And then as a follow-up to that, it looks like your initial fiscal 23 EBITDA margin guidance is above 40%. I think in the past you've talked about over 40% being the right kind of long-term margin framework for the business. And so I'm curious, just given some of the recent outperformance, what are your current expectations in terms of the right long-term margin profile for the company and maybe what some of the remaining room for operating leverage might be in the model? Thanks.
spk08: Sure, I'll take that one. So it's probably helpful for me to start by kind of further framing what we're seeing between Q3 and Q4. So that EBITDA deceleration is simply due to what's happening on the top line. We're continuing to invest at the same pace that we've been investing. So it isn't due to any changes in our OPEX. And it's really helpful for me to kind of frame what we're seeing from a revenue perspective. So what we saw in the back half of last year is dollars continued to shift digital quickly. Our clients were really turning to us to add those dollars onto their already running programs at a much greater scale than we've seen before. And we really believe that's definitely a strong indication of the value they're receiving from our platform. So as an example, many added audience members to their programs to increase their reach in Q3. And as a result, we saw quick revenue conversion from these upsell dollars, which led to a lot of our revenue upside and that EBITDA upside that you just mentioned. But what this did was this really allowed us to provide even further value to our customers, and it helped translate into a strong annual buying cycle where we were working with our clients to really smoothly fold those growing budget dollars into their new programs that we're currently in the process of launching and will run over calendar year 2022. And that's going to convert to revenue at a more even pace. So that's really kind of the key factor behind what we're seeing from the top line guide. And that's really moving down to the bottom line. As far as our next year's guide on the EBITDA margins at 40% plus, I mean, as we've said before, we aim to be a rule of 60 company through a combination of growth and profitability. And we're really proud by the fact that we're already at that level and we're well above that level today. And we really want to focus on continuing to make prudent investments and focus on continuing to grow our r d team to support our product to make our product even better for our physicians continuing to grow our customer success team to support the future growth of our customers and you're going to see us doing that in the next couple years great thank you thank you the next question comes from the line of glenn santangelo with jeffries your line is open
spk09: Good evening, and thanks for taking my questions. Jeff, I just want to follow up on some of the comments you made with respect to the tools on the Physician Cloud and the record utilization that you saw this quarter. We get a bunch of questions about engagement trends, and I'm kind of curious as to maybe what you're seeing engagement-wise on the platform as the pandemic seems to be hopefully coming to a close here, and how that engagement may be influencing your ROI. And then secondly, I did want to ask about the competitive landscape. I mean, obviously, there's a big opportunity for growth in digital marketing, but there's a lot of companies obviously chasing those dollars. And, you know, as you know, last week, you know, the Apple iOS privacy change clearly impacted some of the social media platforms. Now, I don't think this impacts, you know, your company, but maybe that could ultimately be a benefit to you, for example, as maybe some customers, you know, come back to a vertical sales model like yours. And so I just wanted to get your your quick updated thoughts on the competitive landscape. Thanks.
spk13: Thanks, Glenn. Great question. Yeah, well, first with regard to Apple's privacy changes, iOS 14, and other things, I'll just reiterate what we said, I think, a quarter or two ago, which is, you know, precisely 0% of our revenue is or ever was based on cookie technologies. We've always drawn a very hard line when it comes to protecting our physicians' privacy. And so we've always been more, I think, in sort of the Apple camp on this than perhaps others. But it is nice that we can keep it all within our ecosystem, and so that's been powerful for us. With regard to engagement more broadly, I could just say that we continue to do really well. And again, I think we're seeing these long-term trends start to play out as physicians are able to digitize their lives a bit more. We had a 25% quarter-and-quarter increase in and our continuing medical education credits, CME credits, that doctors need to earn each year. And they used to go to the hospital auditorium to do that, and they would listen to a lecture that maybe wasn't about their particular procedural practice. And now instead, we gave out hundreds of thousands of credit hours last quarter to doctors that they can get anytime, anywhere, on their phones, in a way that's algorithmically personalized to each doctor's clinical practice. So I think that's really exciting. And I think that's the beginning of really a life shift sort of trend towards a more hybrid life for a lot of physicians in this country. Obviously, our telehealth is another sign of that. Again, 350,000 providers just in the quarter using us to do a telehealth visit. I mean, that's a big number. And again, this is before Omicron or other things hit. So we're continuing to see Maybe it's not eight times a day, maybe it's only once a day or on Wednesday afternoons, but it doesn't matter. From our business model point of view, we've become the go-to way to digitize some of this hybrid work life.
spk09: Okay, thank you. Thanks, Len.
spk01: Thank you. The next question comes from the line of Richard Close with Canaccord Genuity. Your line is open.
spk12: Yeah, thanks. Congratulations, first of all, on a great quarter. Jeff, I was wondering if you could talk about how you balance the shift to digital marketing, and physicians get overwhelmed by the amount of information that's coming at them, you know, maybe how you're differentiated versus other digital marketing that's coming to them. And I've seen a couple articles, I think, over the last month or so just, you know, talking about how saturated maybe they are. If you could talk a little bit about that, that would be helpful.
spk13: Yeah, thanks, Richard. Great question. You know, there's been a number of research surveys that have been done, yeah, in the past quarter or two, because, you know, pharma is trying to figure out the right move towards digitization. And frankly, all the surveys that have come out that have been independent research have all been favorable for us, because typically they're talking about how doctors are getting a little tired of getting too many emails in their inbox, which is not something that we're known for. We're known as the place where I can log in, see the things that are in my news feed that my colleagues are filtering for me, commenting on, important in my specialty. You know, there's a lot of things that, again, physicians rely on their peers to help sort of triage for them. And it is information overload. We've all lived through it. And I think, again, we're in a unique position to be more like the way medicine used to be, which is doctors getting together in the real-life lounge, which doesn't happen anymore, but filtering the news of the day for each other in that way. So I do think the collegial aspect of what we do is probably our defining characteristic. And I think we've applied some terrific leading-edge technology to make that professional and relevant and something that isn't just another email hitting the doctor.
spk12: Okay. And as a follow-up on the hiring staffing, obviously, you know, you turn on the news and, you know, you hear about, you know, healthcare workforce, people walking away, but it seems to be more primarily highlighting the nurse front. Can you talk a little bit about Obviously, you cited metrics here in terms of the growth on that side of the business, but can you talk a little bit more about the physician marketplace and how that's changed maybe over the last six months?
spk13: So you're right. I mean, there's a lot of talk about burnout and the effect this pandemic has had on nurses and also on physicians. We actually put out a piece in conjunction with some academic researchers showing that there was a permanent 1% bump, basically 1% of U.S. doctors retired during this pandemic and really haven't come back. So it's about a 1% deadweight loss to a situation where we already had a physician shortage. And, again, we think that that makes our products more attractive to hospital systems. Because you ask any hospital CEO these days, somewhere in their top three priorities is going to be keeping, retaining staff, worrying about burnout. And, again, I think we can help out with that by helping them reduce the scut work, the paperwork. And we're pleased that we showed 93% growth in our recruiting business, our talent business, year on year. That will be out in our 10Q in a few days here, I guess. But you'll see that that business, while still a small percentage of our overall business, a single-digit percentage, is growing nicely, and we're proud to help doctors deal with less paperwork and find the right kind of flex positions that I think may work for them better longer term.
spk12: All right, thanks. Congratulations. Yeah, thanks, Richard.
spk01: The next question comes from the line of Ricky Goldwasser with Morgan Stanley. Your line is open.
spk05: Oh, yes. Thank you. This is Craig. I just wanted to come back to the guidance for fiscal 23. You know, looking at a 33% growth on top of 64% expected this year, can you just touch on perhaps just some of the acceleration you're seeing in the move to digital markets? And then any context when you think about, you know, differences between upsell and cross-sell into fiscal 23?
spk08: Sure. Thanks, Craig. So, yeah, I'll say, you know, as we've said before, we believe the shift to digital will likely play out over the next decade. And we won't necessarily see that same acceleration in growth next year that we've seen the past two years. And I think we've been pretty clear about that. Now, pharma is in the process of adopting really a hybrid marketing model where they're going to be focused a lot more on a mix of digital and face-to-face. And this is certainly going to take time, and it's not going to happen overnight. And I'd say what we're more focused on today is really building a business that can provide years of sustainable growth with high margins. And we certainly believe that next year's preliminary guidance is representative of this continued strength in our business. Um, as far as the dynamics around, you know, cross-sells and upsells, um, we're very focused on continuing to expand by our core motions. So we're focused on continuing to add more brands and more service lines, and we're focused on continuing to upsell additional modules. And I think you'll see a lot more of that as well from us next year.
spk13: Okay. Sorry, Jeff here, very, very big picture. I think we put out, you know, the IDC report saying that, you know, uh, overall healthcare was only 23% digital spend. And overall, Fortune 500, it's more like 70% spend. We're guessing what 2021 will come in at. I think the data will come out on that in a month or two, and so we'll be interested to see it. But our hunch is maybe it went from 23% to 30% or so. And again, we still think that this whole industry has a long way to go to catch up on digital marketing, just to even catch up to the Fortune 100s.
spk05: Got it. Appreciate the extra context there. And then just to follow up on the heels of the Amion acquisition, just how you're thinking about just the runway you have, which is the long one for the core business, but just other things that you can add, whether it's from a token perspective and things to enhance the platform on a longer-term basis.
spk03: Sure. So this is Nate. You know, healthcare continues to digitize. We believe that the healthy level of cash that we still have on the balance sheet puts us in a real position of strength. Despite the acquisition, I need to reiterate, we are a software company in our DNA. We have been a company that excels at building, is not dependent on buying, and will continue to act accordingly there, building new tools that put physicians first. And so a healthy level of cash allows us to build with confidence, move rapidly when we're launching new products, just like we did with telehealth. And we believe that we have a lot of headroom to grow organically. Now, it does also help us be opportunistic around synergistic acquisitions or partnerships, things that would put us in a position to accelerate our product roadmap with other software technologies that have a mission of putting physicians first. And Amion is a great example of that.
spk05: Got it. Thanks, Mike.
spk01: Thank you. The next question comes from the line of Jessica Tasson with Piper Sandler. Your line is open.
spk06: Hi, thank you for taking the question, and congrats on a great quarter. I think we were interested to just know, I think U.S. News & World's report voting opened about a week ago, and we know it's consolidating on the Doximity platform for the first time this year. So just interested to know if that consolidated voting activity is having any impact on News Feed or just generally on app engagement. Thanks.
spk13: Thanks, Jessica. Jeff here. I like the good to great. We'll take good to great. The short answer is I don't know. I could wander down the hall here and ask some of our newsfeed team, so I probably should do that. But, yes, we are the only place that you can vote on the best hospitals in the country, and that is a much-watched rankings. And typically we do see, you know, added behavior as doctors come in and, you know, tell us who the best cardiology hospitals and systems are in the country. But I don't have any data, unfortunately, on that yet.
spk06: Got it. And then just a quick follow-up. So within Amion, is there currently a patient self-scheduling capability, and is there any opportunity to maybe leverage their enterprise scheduling in order to enable patient self-scheduling, either during or subsequent to a Doximity telehealth visit? Thank you.
spk13: Yeah, great question. No, there's no patient scheduling on it. It's really designed for physician-on-call scheduling. So every hospital needs to have a cardiologist on call at all times. It needs to have that for really almost 20 different specialties. And so it's really for the physician-to-physician quick consults and handoffs that happen in healthcare. So the nice thing for us is that really is, again, it's a daily use case for physicians to have to get a quick consult or call someone on call. But, no, we don't do any patient registration or scheduling there. We do, however, through our U.S. News Partnership, have the ability for patients to schedule visits through the U.S. News site when they're looking up the best hospital for their disorder, and they can go look at the doctors in that hospital. You actually can book appointments directly. I don't know the latest numbers on that, but we have a growth opportunity, I would say, in that patient scheduling business, but it's independent of Amion.
spk06: Got it. Thanks again.
spk01: Thank you. And this concludes our question and answer session. I will now turn the call back to Mr. Jeff Tangany for any closing comments. Sir, please go ahead.
spk13: I just want to thank everyone again for joining this quarter's call and thank the entire Doximity team for just an incredible quarter and great results. Thanks, everyone.
spk01: This concludes today's conference call. Thank you for participating. You may now disconnect.
Disclaimer