Doximity, Inc.

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, along with a copy of our prepared remarks, all 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 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 any other reports and filings with the SEC that may be filed from time to time. including our upcoming filing on Form 10Q. Our forward-looking statements are based on assumptions that we believe to be reasonable as of today's date, February 6, 2025. 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 8K. Today, we will discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A historical reconciliation to comparable gap 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 these metrics in the future. I would now like to turn the call over to our CEO and co-founder, Jeff Tangy.

Jeff? Thanks, Perry, and thank you, everyone, for joining our third quarter earnings call. We have three updates today, our financials, network growth, and commercial highlights. First, our top line. We delivered $169 million in revenue for the third quarter of our fiscal 2025, which represents 25% year-on-year growth and a 10% beat from the high end of our guidance range. Of note, our top 20 clients once again grew the fastest for us, up 122% on a trailing 12-month basis. These clients are the largest, most sophisticated pharma companies who employ entire teams of analysts to measure their marketing effectiveness. We believe our continued growth with them is proof of our value to the broader marketplace. Our bottom line was also strong in Q3, with a record-adjusted EBITDA margin of 61%, or $102 million, which was up 39% year-on-year and 21% above the high end of our guidance. So just two years after our first quarter with nine figures in revenue, we've now achieved nine figures in adjusted EBITDA. So that's our Q3 financial highlights, a 10% beat, a 5% raise, and 61% margins. Okay, turning now to our network growth and engagement. Our unique active users on a quarterly, monthly, and weekly basis all hit fresh highs in Q3 with double-digit percent growth year on year. Our news feed usage continued to lead the way for us. For the first time ever, in Q3, more than 1 million unique active prescribers scrolled our feed to stay current on the latest news in their fields. Our workflow tools also hit new highs in Q3, with over 610,000 unique active prescribers. As a reminder, our workflow tools include our telehealth, fax, scheduling, and AI tools. Our AI tools grew the fastest in Q3 with over 1.8 million prompts, up 60% over the prior quarter. Finally, for the fourth year in a row, Doximity has earned the vaunted number one best-in-class telehealth video platform by health system CIOs and their staff, outperforming Microsoft Teams, Zoom, and many others. We're now proud to serve over 250 health systems and hospital clients, in delivering telehealth care to their patients. In short, our network engagement has never been stronger. As healthcare shifts to be more digital, more mobile, and more AI-powered, we're proud to be leading the way. Okay, turning now to our Q3 commercial highlights. We're pleased to report strong calendar year-end sales led by three initiatives, our new products, integrated programs, and client portal. First, Our new point of care and formulary products grew over 100% in Q3, generating over 20% of our pharmaceutical sales. As a reminder, these modules appear outside of our newsfeed and represent entirely new inventory for us. Second, with our newer integrated programs, clients can leverage our data science to create a custom-tailored dynamic approach for each doctor. For example, some doctors prefer scientific deep dives on Monday evenings. Others prefer bullet point guidelines in between patient visits. Letting our clients personalize and optimize their campaigns across our many modules helped us grow our program sizes in Q3. Finally, our client portal is weaving all of this together by providing our clients a single trusted place to test strategies and see their results. Our seamless third-party prescription data gives our clients real insights and proof of impact solidifying our role as a strategic partner. Now, as we've said before, our client portal is a multi-year initiative. Today, over half of our brand clients have access. Our plan is to add all of our clients in 2025. We also added agencies to the mix last quarter, signing 10 as portal partners. We'll do our inaugural training summit with them in New York later this month. Together, we're excited to bring consumer-grade marketing tools to healthcare. Okay, I'd like to end by thanking my Doximity teammates who continue to work incredibly hard to realize their mission to better healthcare. I personally have never been more excited or more proud about what we're building together. And with that, I'll hand it over to our CFO, Anna Bryson, to discuss our financials and guidance. Anna?

Thanks, Jeff, and thanks to everyone on the call today. Third quarter revenue grew to $168.6 million, up 25% year over year, and exceeding the high end of our guidance range. Similar to prior quarters, our existing customers continued to lead our growth. We finished the quarter with a net revenue retention rate of 117% on a trailing 12-month basis. Our top 20 customers remained our fastest growing, with a net revenue retention rate of 122%. We ended the quarter with 114 customers contributing at least $500,000 each in subscription-based revenue on a trailing 12-month basis. This is a 21% increase from the 94 customers we had in this cohort a year ago, and these customers accounted for 84% of our total revenue. Turning to our profitability, non-GAAP gross margin in the third quarter was 93%, flat versus the prior year period. Adjusted EBITDA for the third quarter was $102 million, and adjusted EBITDA margin was 61%, compared to $73.3 million and a 54% margin in the prior year period. This represents adjusted EBITDA growth of 39% year-over-year, as we continue to run a very profitable business with high incremental margins. Now turning to our balance sheet, cash flow, and an update on our share repurchase program. We generated free cash flow in the third quarter of 63.4 million, compared to 48.7 million in the prior year period, an increase of 30% year over year. We ended the quarter with 845 million of cash, cash equivalents, and marketable securities. During the third quarter, we repurchased $19.2 million worth of shares at an average price of $48.62. We believe repurchasing our shares is a valuable use of the incremental cash we generate above what's needed to reinvest in the business. As of December 31st, we had 451 million remaining in our existing repurchase program. Now we'll turn to a recap of our annual buying season. As a reminder, our December quarter represents our largest sales quarter by a significant amount. This is when our pharma customers sign on for next year's programs, committing the majority of their annual marketing budgets in what are called upfront contracts. While we sign these contracts in Q3, we'll primarily recognize revenue over the next 12 months, depending on the timing of program launches. This upfront season, our clients continue to expand their reach across our entire platform. Our modules that sit outside of the newsfeed point of care and formulary grew by more than 100% year over year combined. We also sold a large number of programs on a multi-module integrated basis. which contributed to much larger deal sizes. Brands buying these integrated offerings grew more than twice as fast as brands buying our modules on a standalone basis. Finally, our upfront season demonstrated that there is still plenty of room for growth among our hundreds of pharma brand partners. We increased the number of $10 million plus brands to four and had our first ever $15 million plus brand. With record prescriber engagement and continued commercial product innovation, we see ample runway to further scale our partnerships over time. Now moving on to our outlook. For the fourth fiscal quarter of 2025, we expect revenue in the range of 132.5 to 133.5 million, representing 13% growth at the midpoint. And we expect adjusted EBITDA in the range of 62.5 to 63.5 million, representing a 47% adjusted EBITDA margin. For the full fiscal year, we now expect revenue in the range of $564.6 to $565.6 million, representing 19% growth at the midpoint. This is an increase of roughly 5% or $28 million at the midpoint after outperforming our Q3 guidance by roughly $16 million. We now expect adjusted EBITDA in the range of $306.6 to 307.6 million, representing a 54% adjusted EBITDA margin. This is an increase of roughly 11% or 31 million at the midpoint after outperforming our Q3 guidance by roughly 19 million. Our increased annual outlook is due to a variety of factors. First, our former year-end upsells materially outperformed, driving stronger than anticipated Q3 revenue. Second, our annual buying cycle exceeded expectations due primarily to new product traction and larger multi-module integrated programs. Finally, the structure of these integrated programs led to a higher percentage of January launches than prior years. These programs are contracted to start at the beginning of the year with the client's first content approved module. While we're excited to help our customers go live faster, this launch efficiency also means annual upfront sales are converting to Q4 revenue at a faster pace. As a result, more of our upfront sales will be recognized as revenue in the current fiscal year than in years past. Looking ahead, we expect the pharma HCP digital market to continue to grow roughly 5% to 7%. While we will provide our fiscal 2026 guidance in May, our goal remains to grow ahead of the overall market. Given our strong competitive positioning and record engagement, we believe we are well positioned for another year of share gains. With that, I will turn it over to the operator for questions.