Doximity, Inc.

Hello, and welcome to Doximity's Fiscal First Quarter 2024 Earnings Call. I will now pass the call over to Doximity's Vice President of Investor Relations, Perry Gold. Please go ahead.

Thank you, Operator. Hello and welcome to Doximity's Fiscal 2024 First Quarter Earnings Call. With me on the call today are Jeff Tangney, 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 our 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'll be making 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 annual report on Form 10-K, any subsequent Form 10-Qs, and our other reports and filings with the SEC that may be filed from time to time, including our upcoming filing on Form 10-Q. Our forward-looking statements are based on assumptions that we believe to be reasonable as of today's date, August 8th, 2023. Of note, it is Doximity's policy to neither reiterate nor adjust the financial guidance provided in 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. I would now like to turn the call over to our CEO and co-founder, Jeff Dagny. Jeff?

Thanks, Perry, and thank you, everyone, for joining our first quarter earnings call. We have four updates today. Our Q1 results, Doc's GPT for Enterprise, a guidance revision, and a new self-serve platform for clients and agencies. Okay, I'll start with the good news. Our Q1 results were strong. Our revenue grew 20% year-on-year to $108.5 million, beating the top end of our guidance. Our top 20 clients, who know and measure us best, continue to be our fastest growing with a net revenue retention rate of 124%. Our bottom line was also good with an adjusted EBITDA margin of 43% or $47 million, a full 16% above the high end of our guidance. Our free cashflow was better still at $56 million up 31% year on year. Meanwhile, our physician cloud has never been more used or more useful. In Q1, Our active workflow users grew to a record 525,000 plus unique prescribers. Telehealth alone topped 385,000 users. In terms of enterprise paid subscriptions, we reached a record 44% of all U.S. physicians. And our overall QAU, MAU, WAU, DAU, that is quarterly, monthly, weekly, and daily active users, all hit record highs last quarter. Q1 also marked a major product milestone for us as we signed our first DocsGPT enterprise deals with three top health systems. You may recall that DocsGPT is our AI medical writing tool that was launched in February to help doctors write and fax insurer appeal letters for their patients. With our enterprise version, we've now added HIPAA security and administrative guardrails that'll let doctors do even more. We believe the time savings could be significant. Our recent survey of 322 AI using doctors predicted that in a few years, AI will save them each 13 hours per week, six in their EHR and seven in their other office work. We're focused on serving the latter half, the non-EHR workflows. From service animal letters to teacher notes, we're proud to help busy physicians help their patients. We're also excited to deepen our health system partnerships as we expand our AI and enterprise-level offerings. Okay, turning now to our guidance revision. As a reminder, our clients include all of the top 20 pharmaceutical companies and all of the top 20 hospitals. Roughly two-thirds of our revenue is contracted during the winter annual budget season, or what marketers call the upfront. This is when pharma marketers look back on the year, measure their ROI by tactic, and renew annual programs like ours. During the summer, it's upsell season for us. That's when clients typically spend the remaining one-third of their budgets to expand program reach, modules, or content personalization. Until last year, our upfront and upsell seasonal growth rates were highly correlated. If our upfront grew well, then our upsell did too. Despite a record upfront this winter, our upsell close rate fell short in June and July. So after growing steadily for a decade, our upsells have now slowed for two years in a row. We've dug into this, spoke to our key customers and industry experts and found two core reasons. First in part, it's the market. Pharma's shift to digital has slowed. Post COVID travel and agency swaps are soaking up budget while budgetary caution rules the day.