DOCS - NYSE

Thank you for standing by. My name is Jaylen, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Doximity Third Quarter 2026 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to withdraw your question, simply press 1 again. I would now like to turn the conference over to Perry Gold, VP of Investor Relations. Go ahead.

Thank you, operator. Hello, and welcome to Doximity's fiscal 2026 third quarter earnings call. With me on the call today are Jeffrey Tangney, Co-Founder and CEO of Doximity, and audit committee chair and board member, Tim Cabral, who is stepping in to help out with our CFO, Anna Bryson, currently on medical leave. A complete disclosure of our results can be found in our press release issued earlier today as well as in our related Form 8-K. 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 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, February 5, 2026. 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. I would now like to turn the call over to our co-founder and CEO, Jeffrey Tangney. Jeff?

Thanks, Perry, and thank you, everyone, for joining our third quarter earnings call. We have four updates today: our CFO, financials, network stats, and AI results. First, some unfortunate news. Our CFO, Anna Bryson, is out sick on medical leave. We miss her here at the office and wish her the best. I know she wishes she could be here too. We've been fortunate to have Tim Cabral, the former ten-year veteran CFO from Viva Systems, as our audit committee chair for the past five years. Tim has graciously agreed to speak to our financials on this call and help guide our finance team. Okay. In happier news, our Q3 financials were solid. We delivered $185 million in revenue, which was 10% year-on-year growth, and a 2% beat from the high end of our guidance. Meanwhile, our Q3 adjusted EBITDA margin was 60% or $111 million, which was 7% above the high end of our guidance. All in, we had a better-than-expected third quarter and another record upfront annual buying season. Okay. Time now for our network stats. We're excited to announce that we just surpassed 3 million registered members and now have more than 85% of all US physicians and two-thirds of all NPs and PAs on our platform. Engagement in Q3 was strong. Our unique active users on a quarterly, monthly, weekly, and daily basis all hit fresh highs, with record usage of our news feed, workflow, and AI products. Our workflow users saw the largest sequential gain we've ever had. As a reminder, workflow includes our telehealth, scheduling, digital fax, and AI tools. And for the fifth year in a row, Doximity Dialer was ranked the number one best-in-class telehealth platform by health system CIOs and their teams, outperforming Microsoft Teams,

Thanks, Jeff, and thanks to everyone on the call today. Third quarter revenue grew to $185.1 million, up 10% year over year and exceeding the high end of our guidance range. Similar to prior quarters, our existing customers continue to lead our growth. We finished the quarter with a net revenue retention rate of 112% on a trailing twelve-month basis. For our top 20 customers, net revenue retention was higher at 117%, so our biggest most sophisticated customers once again represented our fastest growing. We ended the quarter with 126 customers, contributing at least $500,000 each in subscription-based revenue on a trailing twelve-month basis. This is a roughly 10% increase from the 115 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 91%, versus 93% in the prior year period, driven by a step up in our AI infrastructure investments from increased usage. Adjusted EBITDA for the third quarter was $111.4 million and adjusted EBITDA margin was 60%, compared to $102 million and a 61% margin in the prior year period. 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 $58.5 million. We ended the quarter with $735 million of cash, cash equivalents, and marketable securities. During the third quarter, we repurchased $196.8 million worth of shares. 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 31, we had $83 million remaining in our existing repurchase program. In addition, our board just approved a new $500 million open-ended repurchase authorization. Now moving on to our outlook. For the 2026, we expect revenue in the range of $143 million to $144 million representing 4% growth at the midpoint, and we expect adjusted EBITDA in the range of $63.5 to $64.5 million representing a 45% adjusted EBITDA margin. For the full fiscal year, we now expect revenue in the range of $642.5 to $643.5 million representing 13% growth at the midpoint. And we now expect adjusted EBITDA in the range of $355.5 to $356.5 million representing a 55% adjusted EBITDA margin. Despite our Q3 outperformance, the midpoint of our annual outlook remains in line with our prior guidance. This is the result of lower Q4 revenue expectations and higher AI infrastructure investment driven by a strong increase in usage. During this year's upfront selling season, we saw significant client engagement, strong growth among many top 20 pharma customers, and high double-digit SMB growth. We also face short-term industry-wide policy headwinds. As we mentioned on our last call, we had observed client uncertainty over how recent policy changes may influence annual budgets. We saw this uncertainty continue through year-end, with 16 of the top 20 pharma companies signing most favored nation agreements with the White House. Focused on tariffs and pricing, between late December and early January. As a result, our annual selling season was impacted in two ways. First, we saw multiple customers deploy a lower percentage of their annual budgets upfront than usual, as 2026 planning wasn't fully complete. And some funds remained unreleased. Second, this uncertainty resulted in many deals we normally have signed by December 31, being delayed and pushed into our fiscal Q4. This is evident in our January pharma bookings growth rate, which is the best we've seen since going public. As a result of these Q3 bookings dynamics, calendar 2026 is off to a slower start than usual, evident in our Q4 revenue guided growth rate. With that said, we have a few reasons to be optimistic that we'll end our calendar year 2026 with significantly better growth than we started it. First, we believe the higher portion of our clients' budgets that wasn't deployed upfront will likely be available to be invested later this year during the upsell season. Second, with MFN deals now signed for six of the top 20 pharma manufacturers, we believe they should be able to more confidently complete and execute their 2026 media plans. Finally, we see strong inbound demand for our AI member engagement. Which we have not yet commercialized but expect to have a product in market this year, we believe this will allow us to meaningfully tap into our clients' 2026 innovation upsell and search budgets. Moving to our operating model, we will continue to invest in our doctor-trusted AI platform, including increases in infrastructure, development, and our peer check program. Even with these investments, we are in a position where we expect to maintain 50% or greater adjusted EBITDA margins on an annual basis. With that, I will turn it over to the operator for questions.

Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, if you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. And we do request for today's session that you please limit yourself to one question and one follow-up. Your first question comes from the line of Brian Tanquilut of Raymond James. Your line is open.

Thanks for taking the question. And first, thoughts and prayers are with Anna. Hope you can get well soon. So just starting out on the budgets for calendar year '26, I think in prior calls, you referenced the growth rate around 5% to 8%. I know you mentioned a lot of swing factors that may have influenced that. But I'm curious, is that still the case for market growth and how much was MFN a factor? Or was that the largest factor in the calendar year '26 dynamics? Any color there?

Brian, it's Perry. Thanks for the question. So I'll take that one. So our operating assumption right now is that the market will grow roughly 5% in calendar 2026. EMarketer was out a few months ago with a report, and they're looking at about 5% growth for all of the healthcare and pharma digital advertising, which is down from last year. So that's kind of the gross assumption for the market. On the second part of the question on MFN, we think it certainly played a role. So coming into the very end of the year, when usually we will have signed a large portion of bookings for the next year, and you have many of these top 20 pharma companies that still haven't signed off on these big deals with the White House, these MFN deals, which are pretty broad-based, to do with pricing and tariffs. So it's a large, I think, bogey, a lot of uncertainty at the very end of the year. And so what we found were many of these customers weren't ready to fully sign off on their 2026 plans. They had some funds that were unreleased from the top down. So that timing really impacted us. So it was a large part of the impact, and I think it manifests in two ways as Tim called out. So one of them was just certain deals were pushed from usually, it'd be assigned by December 31 or pushed into next year. You could see our January bookings growth rate, as we mentioned, was one of the highest we've had since going public. It was the highest. And in addition, from what we heard from multiple customers, they deployed a lower percentage of their budget upfront. And so both of those, we think, were largely impacted by MFNs. MFN played a big part. There's some other policy things going on in the background. And as you know, the year's been very noisy, but we think MFN happening as late in the year as it did was kind of one of the primary factors in that slow start to the year for us.

Got it. Thanks, sir. Appreciate that. And, Jeff, maybe just a follow-up on AI. Congrats on getting to the 100 plus health systems. I'm just curious, as we think about your customer conversations there, does that change the pace of where innovation budgets start? Like, do you expect that number to ramp up over time? Or I guess I'm just trying to think about the AI-oriented spend for your customers, what that ramp looks like and maybe your differentiation as you go attack that AI budget? Thanks, guys.

Yeah. Thanks, Brian. I think we really proved this last quarter that we are indeed a trusted digital platform for doctors. Right? With over 85% of US doctors, really look to us for the latest technology to help them take better care of their patients. We've done this in the past with identity and news and workflow and AI. I have to say I'm exceedingly proud that on our first full quarter after the Pathway acquisition, we've grown to over 300,000 quarterly active doctors, which is just a terrific pace. I don't think any other company could do that. And then to sign 100 hospitals, those 100 hospitals are major health systems. So those represent 20% of all US doctors. Those rollouts we're just doing now. So we signed those contracts to start at the beginning of this year, January, of course, takes a while to get the training planned and to get the rollout plan. That's really important, I think, for our continued AI growth. Because, of course, what doctors need to do with these systems is to put in protected health information, PHI patient information, to get the right answers out. And if you aren't in a signed agreement with that hospital covered under what they call BAA, their HIPAA agreement, well, that's not something the IT department will allow doctors to use just any tool for. So we're proud again, to be powering 100 health systems, 180,000 clinicians with our AI toolset.

Next question comes from the line of Michael Cherny of Leerink Partners. Your line is open.

Good afternoon. Thanks for taking the question. And yes, I will probably all say the same thing, but really best wishes to Anna as she goes through her medical leave. Maybe diving back in, I'm just gonna ask one question. I know sure plenty of people are behind me, but diving back in on the demand curve and the booking side, clearly, the narrative on your stock as well as virtually anything else that touches tech and software in the market is on this dynamic AI disruption, whether that's similar look-alike peers, broader GenAI oriented players. Just the general thought process of a new paradigm going forward. As you think through moving pieces tied to your start of your bookings, the January dynamic, how do you think about where the competitive dynamic lies and your ability to continue to capture the same hearts and minds of pharma companies deliver the same ROI, relative to what other peers may be promising them, whether they're hitting them or not.

Thanks, Michael. This is Jeff. I'll take that. So yes, step back, big picture. Our core business is very healthy. Right? We had over a million quarterly active users of our newsfeed, record high. We had 720,000 quarterly active users of our workflow tools, which is the biggest sequential step up we've ever had. Our telehealth product does very well. I will say last week during the snowstorms, we served more telehealth visits than we really ever have. It was over 700,000, which is a big chunk of all the care that was delivered in the US that day. People were snowed in. We're really proud to have won that telehealth market back in 2020. We believe we'll win the AI market here in 2026. And we do that by just having some very large moats around having, again, so many hospitals that have already worked with us and so many doctors. So the step that I'm actually most proud of on this whole call is the number of peer check experts that we have, these 10,000 cited authors and experts, doctors who wrote the evidence that made the clinical trials spent years of their lives studying and building this medical collective wisdom that we have. And I'm proud that at 10,000, we're bigger than the largest players in the industry. The biggest publisher in the space that's the leader and has been there for decades has about 7,000 experts that inform their clinical answers. And, again, we're now over 10,000. So I feel really good about the 20% of all US docs that we've gotten to use our Doc GPT, our AI already. And, again, for the first full quarter after the Pathway acquisition, I don't think there's really any other company that could have grown into this market that fast. To your question about what that means with pharma, you know, today, we do not have a pharma product that pharma can buy in this AI suite. We are just very thoughtful, I think, about how we work with doctors and make sure that things are win-win. We're not just gonna slap a full-page banner on top of a product. We know what that does to the experience for the end user. And, certainly, we want to be finding ways to have win-wins with industry around this, and we've done a great job of that in the past. And will continue to do here moving forward. So we're excited later this year to come to market with some product there. But, again, we have no revenue in our forecast for our AI products right now.

Your next question comes from the line of Allen Lutz of Bank of America. Your line is open.

Good afternoon and thanks for taking the questions. I wanted to ask on the policy uncertainty that pharma has. Can you talk a little bit about your recent conversations with top 20 pharma? Obviously, at the beginning of the year, there was the uncertainty around the things that you mentioned. Can you talk about the recent conversations and if the expectation is that some of that spend that was supposed to be maybe in the beginning of the year gets pushed out? Is there any opportunity for the midyear upsell season to be a little bit stronger? I'm just curious about your recent conversations and whether or not you think that could come into play. Thanks.

Hey, Allen. It's Perry. I'm happy to take that one. So, you know, I think what I want to get across is, you know, there were many of our top 20 customers. We actually had really good outcomes. So it was not the case with every single one of the top 20 had an issue. But there were a bunch where it was very clear that I think the brand managers wanted to be deploying more funds with us, but they hadn't got that approval of those funds released yet. And I think a lot of that had to do with the uncertainty very late in the year. And so just didn't have access to kind of that full amount of money to go deploy with us right away. We do believe that the intent is there that when they get funds released, we will get access to that a little later in the year. So that's, I think, one of the bigger things we've seen at play. Not really the brand manager, not wanting to deploy the funds, which is not having access to them from top down. It wasn't available yet. I think that was kind of the manifestation of it that we saw. But, again, there were multiple top 20 customers who were getting really good outcomes, and we're very proud of those accounts and kind of what we did there. But it was, you know, certainly the case that this unreleased funds issue was kind of more permeated more of the top 20 than, you know, we've ever seen anything like this before.

Thank you. That's helpful. And then, you know, more of a strategy question, not asking for fiscal '27 guidance here. As we think about the increasing AI infrastructure or usage cost, I look at the gross margin year over year down about 180 bps. As we think about, you know, the way that you're scaling 300,000 physicians on the platform using AI. Really, really strong, impressive growth there. You mentioned the 50% adjusted EBITDA margin floor. As we think about you scaling AI and having costs there with no associated revenue, how should we think about the intermediate-term strategy there? Is revenue on the table for the next year or two? Or should we think about this really trying to build out the user base within fiscal '27 before turning on or even contemplating turning on that spigot? Thank you.

Hey, Allen. It's Perry once again. Great question. I think you hit the nail on the head. So the 50% that Tim referenced in the call, think of that as a floor, not a guide. We have an incredible opportunity in front of us with AI. We've already seen it one full quarter, you know, how much engagement this can drive and, you know, it's something that we want to lean into. We want to invest in. We're in a really fortunate position. We already have best-in-class margins, so we have room to go invest. To your point, I think it's late this year when we plan to be in market with commercial AI products. So we'll eventually start to put some revenue against this. Next year, you know, 2027 will pick up even more calendar '27. And so it's probably another few quarters in which there's cost without associated revenue, but that's an investment we're willing to make all day. And if there's upside in usage, a little bit more infrastructure cost, I think it's well worth it. As you see with a lot of these technologies over time, the unit economics start to get better. They go down. So I think the unit costs start to go down. We saw something similar happen with the early days of telehealth. And, you know, over time, you know, economics got better for us. We got bigger. We negotiate better rates. So that won't be a big burden for too long. We're also investing in PeerCheck, and I think PeerCheck is something that will really differentiate the offering. That trust component is huge for doctors. We have an opportunity, like Jeff said, we can go tap into this network with 3 million members. And in, you know, a month or two, get 10,000 expert reviewers to kind of come along and review a lot of these answers. And so we've got something that nobody else can do. And I think that investment, again, well worth it, differentiated offering, and I think that this will pay dividends over time. Yeah, think of that 50% as a floor.

Your next question comes from the line of Glenn Santangelo of Barclays. Your line is open.

Yes. Thanks for taking my question. Jeff, just two quick ones for me. The prepared remarks, I think you guys were commenting a little bit on fiscal '27, where I think you said you expect to end calendar year '26 with significantly better growth than where you started. So looking at your fiscal 4Q growth, you're assuming 4% revenue growth. And so is the assumption that you'll end the year much better than that 4% for the full year? I just want to clarify what you're saying. And then I just had one other follow-up. You know, Jeff, at this point, it's pretty clear that the public markets, they've been very punishing to companies with this perceived AI disruption and whether it's reality or not, you know, we'll ultimately see. But when you look at the public markets, they may not be appropriately valuing your business. And so I'm just kind of curious to get your take on this whole sort of dynamic that we're seeing. I mean, you're a big shareholder in Doximity. I mean, does Doximity need to be a public company just given the strength of your balance sheet?

Hey, Glenn. It's Perry. I'm happy to take the first one, and then I'll pass the terminal multiple question to Jeff. So great question, Glenn. Yeah. I think the way to think about it is, slower start to the year, you know, the 4%, but we actually feel really good about our ability to exit the calendar year as a double-digit grower once again. And, you know, the reason for that, there's a few. I think this year, a little bit more of a ramp. But one of the reasons is we think that those funds that hadn't been released earlier in the year will be released as we go through the year. And, as they get released, we've got one of the highest ROIs in the market, and we think folks will come to us because of that with those funds. In addition, we plan to be in market later in the year with a commercial AI product. And I think by having that, we will be able to very quickly tap into kind of innovation upsell budgets and search budgets. And so, yeah, I just want to be very clear. I think we will end the year or exit the year as a double-digit grower. I think, you know, I will reemphasize we believe for the entire year, without giving guidance, but for the calendar year, we'll be able to outgrow the market. As we have every year before. But that's probably the most we're prepared to give at this point, Glenn.

Great. Glenn, yeah, this is Jeff. I'll just say, I think overall AI is a tailwind for us. I think the opportunity in front of us to change healthcare, wow. It's never been better. And, again, to see 300,000 doctors come use our product here in the first full quarter after acquiring something and growing with it, I mean, we're just really excited. I think the opportunity to make being a doctor a better job is really fundamentally changing, I think, the way we're gonna look at the world here in a few years. And I'll just say the only problem from the doctor's point of view when you look at AI today, you really can't trust it. And the truth is they're putting their license on the line with every patient. And, you know, these are life or death decisions that are, I mean, very, very important. And so there's still this need to go check different sources or to go back to the textbooks which are trusted. So AI is fast, but they want textbook trusted and AI fast. And, again, that's where I think PeerCheck is just an incredible opportunity for us because these 10,000 noted authors, they're putting their name at the top of that. And that name up there, that's trust. That's showing that an expert in the field reviewed this answer and that it is correct, and I can get to it quickly. With the speed of AI, but, again, with the trust of the traditional textbook and expert approach. Your last question about our public market trading, I don't know. I try not to pay too much attention to it. I'll just say that there are certainly investors asking some of the same questions that you just asked there, us. And, again, from our point of view, we're just proud to be able to continue to be a company that is both serving doctors every day and able to generate cash flows that are attractive.

Your next question comes from the line of Elizabeth Anderson of Evercore ISI. Your line is open.

Hi. Hey, guys. Sorry. Thank you very much for the question. I guess my question is, how do you guys see the monetization evolving over the course? I know you talked about it potentially. Over the course coming later in the year, but I'm curious how you kind of what your early thoughts are at this point on that opportunity. Both in terms of sort of model and then how that might sort of play into your broader advertising portfolio? Thank you.

Hey, Liz. This is Jeff. I'll take that. I'll just say at a broad level, there's a whole new TAM here that we traditionally haven't played in, and it's called paid search. And if you look at that same eMarketer report that Perry referenced, from a few months ago, you'll see that 55% of digital marketing spend in healthcare is for search. And so I think this is a large market and a big opportunity for us. We're not gonna talk much about our plans there. I think we are very good at doing this, and we don't want to tip-off others too much. But suffice it to say, we think there's a really large opportunity here. And, again, there's a lot of client excitement about it as well.

Your next question comes from the line of Craig Hettenbach of Morgan Stanley. Your line is open.

Just a point on 20% of health systems using AI. What do you think that could go in the coming years and how do you think about just kind of reference cases of those health systems that have adopted in terms of bringing others kind of into the fold?

Hey, Craig. Yeah. This is Jeff. Thanks for the question. So, you know, we publicly said in prior quarters that we have 45% of all US physicians through their health systems that use our telehealth tools. I think that gives you a sense of some of the opportunity here. But I'll just say getting to 20% in one quarter when every major health system has not only a privacy review committee, but also an AI review committee and they only work with trusted partners. And I think over time, the tech here is increasingly, you know, a commodity. I think we're seeing this across a lot of different areas of AI. It's the trust and the relationships and the platforms that really matter. We hear it from our clients all the time, the CIOs of these hospitals, they don't want to buy point solutions. They don't want to buy features. They want to buy platforms. And, again, between our scheduling and our fax and our telehealth, and our other tools, we really are one of those platforms that they turn to.

Got it. And then just as a follow-up, nice strong start in terms of momentum. Post the Pathway Medical acquisition. But anything surprise you at this point now that you're kind of operating the business and things that, you know, whether it's when you went in, what you saw the opportunity set versus how it's evolving. I know it's only a few months, but just what's been kind of the feedback in terms of pathway?

Thanks, Craig. We've been really happy with the Pathway acquisition, and its speed of adoption and growth has probably been the best surprise here. The team, we're also getting along very well with, and they continue to really lean in, which is terrific. So we're really pleased with the acquisition and the growth. I would say, if anything, the semantic datasets that they brought us, the understanding of how to read through the 2,000 journals that we provide, uniquely provide full free PDF access to for our doctors and that drug dataset that built in because a lot of questions are drug-related questions, and those are the ones you really don't want to get wrong. And the reality is LLMs do struggle with this a bit. I will say the largest player in this space who's been around for decades, they've added an LLM to their product, but they haven't added a drug reference to their LLM. And they do that on purpose because they're careful, and they see that LLMs really struggle with drug information, with dosages, with things that are easy to move a decimal plate point one way or the other and make a really serious error. So we think we've got some great IP in the past acquisition, but we also got a great team and great growth this past quarter.

Your next question comes from the line of Ryan MacDonald of Needham and Company. Your line is open.

Thanks for taking my question. Maybe to ask on the budget question a little bit of a different way. Obviously, understand the headwinds with MFN. But obviously, of the other regulatory sort of talk and chatter around has been around sort of closing some of these direct patient marketing loopholes on TV and other platforms. Are you seeing in any of your conversations pharma customers starting to react to that in terms of how they're shifting the allocations of their budgets where maybe this potentially creates a tailwind and having more spend to the HCP budget over time? Thanks.

Hey, Ryan. It's Perry. I'll take that question. I mean, we've been having that conversation internally and externally for a little while now about DTC, and is it gonna benefit us? I could say at least this upfront season, we didn't see it happen yet. I think part of the issue was, you know, all of these cease and desist and warning letters went out in September. I think people forget already that right after we had the longest government shutdown we've ever had. So I don't think there was much on the enforcement front for a few months. The beginning of this year, I think there's some examples of that picking up again. And I think if the FDA kind of really pushes that enforcement, you will find probably more and more of these brands having to add a lot more small print, fine print to some of their TV ads. It'll, you know, make the ROI not look so attractive. And I think over time, the smart marketers will start to move that money to HCP where and when they can. But in terms of has that impacted us positively yet, we just haven't really seen it. And so, you know, that's just kind of, like, where we are today.

Very helpful. Maybe as a follow-up on the AI side of things, great to see all the success in sort of these hospital and health system-wide evaluations. As you're having conversations with your health system partners right now, how much of what's called the AI strategy is a sort of top-down, you know, facility or system-wide strategy versus more sort of, let's call it, one-off physician usage of individual tools. And are health systems trying to grapple with maybe changing it to the former versus the latter?

Yeah. This is Jeff. I'd say it's been a mix. Honestly, both bottom-up and top-down. That said, I'd say the early discussions we had in, you know, September, October with our clients about this, of course, it was with, you know, the CIOs CMIO suite. And then they try out the product, and then they show a few friends. And then it becomes more bottom-up. I will say that I think you'll see much more vigorous AI enforcement. It's been a little bit wild west, to be totally honest. You know, in the AI world with hospitals, this past year. But there are a lot of real concerns that they have about leaking patient data, and, you know, liability and the accuracy of information. So I think you'll see more of an enforcement regime this year. And, again, I think we're on the right side of that in working with them. So, you know, we've been doing this for fifteen years. We are the trusted platform for physicians. We have a process to work with our hospital partners and our doctors to do this. I think, again, we're just very well positioned to capture this AI opportunity.

Your next question comes from the line of David Roman of Goldman Sachs. Your line is open.

Thank you. Good afternoon, everyone. Wanted to just start with maybe some of the signposts that you're using to project the acceleration in both your business and in the market through the balance of the year? And why, as pharma companies look at their budgets, like, how you think they're balancing figuring out how to do more with less, versus deploying resources in an accelerated manner throughout the year.

Yeah, David. This is Jeff. I'll take this first at least. I'll say this. In an efficiency environment, digital marketing does pretty well. Why? Because it's the highest ROI. And I'm really proud that our portal usage has doubled over the past year. This is the number of clients we have using our portal. And the great thing about our client portal is it lets them see their ROI. We have IQVIA data in there. They can actually look at their what they call, script lift or NRx lift on a monthly or quarterly basis. And so this past year, we had a record number, 965 ROI studies that were done by our clients. And we're still at that same number we were at our IPO, about 10 to one median return on investment for our clients. So I do think in efficiency-driven environments, I think digital marketing will do well, especially when every $1 you put into it, you get 10 back.

And then maybe just one of the things you talked about earlier this year was on the recruiting front, and we did see kind of a step up in stock comp associated with bringing on AI talent. And it seems like the talent race is on in that segment. I mean, you operate in a very, very talent competitive environment. With anthropic opening offices and others. Right around you. So how are you thinking about talent retention and recruiting and making sure you keep the right people on board here, especially as the stock price has drifted lower.

This is Jeff again. Yeah. The talent wars definitely are heating up, and yes, we are, you know, retaining our best people, offering them stock grants, and, you know, the reality is I think we've done very well at keeping, I think, a very mission-driven team here who really, you know, do love humans, do love doctors, do love working with doctors who take care of humans. So, you know, it's, I think, an advantage in this market to be a company with such a long-held purpose and such deep roots in the medical industry. I find that the folks that we have on our team who are sons, daughters, or married to physicians really are the ones that really, I think, are the cultural torch carriers for us because they come in every day, every week with examples of how doctors have used our products to, again, save them time or lead to better care. So every week, we share what we call Doc Law, which is an email or a message that's come into our inbox unprompted from a physician talking about how, you know, we've helped them that week take better care of a patient. So there's no doubt you'll see that we will have to fight the talent wars, and we will have people who, I think, get bigger stock packages. But that's all part of leading into this AI opportunity, which we think is pretty fantastic. And is playing out in our margins as well.

Your next question comes from the line of Scott Schoenhaus of KeyBanc. Your line is open.

Questions, and best wishes for Anna here. I guess, Perry, as a follow-up here, you know, you talked about the demand getting pushed out from December into January from a select group of large pharma. You mentioned January pharma bookings having the best growth rate ever. Do you mind providing more color on what exactly this growth rate looks like? And then know it's still only the first handful days of February, but are you seeing the same kind of similar healthy growth rate in bookings in February?

Hey, Scott. How are you? Yeah. So January bookings growth rate was the best we've seen since going public. I can say it by a wide amount. It's a clear indication of the delayed decision-making that we referenced. It was part of the impact, but less budget deployed upfront also played a major role. I aren't gonna quantify beyond that. We never provided absolute bookings figures. And it's just really early in February. So, you know, not much to add on that front.

Understand. And then back to the market growth rate, 5%. And your ability to get to double digits exiting the end of the year, I mean, what how should we think you had you think we took you took some market here in the midyear selling season this past year. How do we think about your ability to take market share as you scale and ramp throughout the year? Is it you know, historically said we can take double the market share, if the industry grows up?

Yeah, Scott. So I know we've talked about that in the past. I don't think the two x is always a hard and fast rule. But, you know, we've continually outgrown the market since we've been public. I think part of it has to do with the fact that we continue to innovate. We continue to grow our engagement. We continue to have best-in-class ROI. And I think as soon as you come to market with something really new, like an AI commercial product, you have our customers always have these innovation budgets. And those are the types of things that kind of are generally always available for interesting new offerings. And so AI will allow us to tap into those budgets, possibly search, as Jeff referred to. And so I think these are a lot of factors that will put us in a good position to, you know, get to that double-digit exit growth rate for the year. But that's probably the most we can say on that without giving official guidance.

Your next question comes from the line of Jeff Garro of Stephens. Your line is open.

Yes, good afternoon. Thanks for taking the question. Was hoping you could give us some kind of update on your strategy and progress integrating your workflow tools with the broader healthcare technology ecosystem. Most specifically, curious about integrating Medical AI and Scribe with electronic health records. Thanks.

Thanks, Jeff. Yeah. This is Jeff. I'll respond. So, again, we're really proud to work with hundreds of health systems, and we do integrations with many of them. The integrations to date have been mostly around our telehealth service offering, but we're working on other integrations as well. I don't have anything specific to say on that front today, but suffice it to say, our Scribe product does do very well among individual doctors. It saves them a lot of time. They like that it's personal to them, and that it's something that they can carry with them in their pocket anywhere at any time. And, really, the integration isn't that heavyweight when you think about it. It's mostly a cut and paste. The other thing is our dialer tool, which is our most popular work tool for telehealth, you know, we have that button right there in the dialer call that allows you to go inscribe the visit, again, which is a great point of integration for us to be in. And, again, it's not hard to have a receptionist or staff member go cut and paste that in at the end of the day. But we're also working on integrations with folks. And I just end by saying, you know, particularly with our product, I think we have many moats. And we've seen, you know, new competitors come and go here. We've had probably five direct competitors over the years that have tried to build a physician-focused dialer. I will say it is very hard. It's painstakingly difficult to go and do all the things you need to do with all the telcos. We have unique relationships with the telcos to make sure that the caller ID and the attestation all works correctly. And in the end, that manifests itself into pickup rates that we have that are three times what others have. So in short, when you call a patient using Doximity Dialer, you will not be marked as spam. You will not be flagged as spam risk. You will get through to that patient with a number that they recognize. And that's a pretty big moat for us. And, again, we've seen a number of companies try to come at us here. Our dialer usage has actually gone up more in the last quarter, nice and steady, than we've had in the past.

Your next question comes from the line of Stan Berenshteyn of Wells Fargo Securities. Your line is open.

Hi, and thanks for taking my questions. On the medical AI, the 300,000 unique prescribers that you talked about, if we think about the workflow, I'm curious, how are the providers using these features? Are they opening up the app and going directly into the medical AI, or are they interacting somewhere else in the app and aren't, you know, organically getting redirected? I'm curious if you can talk about the workflow that's getting them to use this feature.

Thanks. This is Jeff. Yeah. The full platform flow, which we're happy to demo for folks if they'd like to see, is you start with the telehealth visit. You're talking to, seeing a patient, inscribes the visit. At the end of the visit, it writes what's called a SOAP note for you. The A and the P in the SOAP note is called the assessment and plan. And a lot of times, doctors will want to double-check their assessment and plan. And, again, that's just a one-click into our DocGPT AI to do an evidence-based search and double-check your assessment and plan. So there's a lot of on-ramps, honestly, into the AI. The other one is, you know, from our news feed, which has more than a million quarterly active users. Last quarter, after reading an article about something new in medicine, maybe I have a follow-up question or two, again, that leads you directly into our AI, which can do more research and help you understand the full article or new news a bit more. So, again, we're not a feature, and that's a huge advantage here. In the end, being a trusted platform for physicians for fifteen years. It's a place that they go. They're spending, again, most of their time doing workflow, newsfeed, identity, all of that comes together into also having a question and answer tool.

Thanks. And maybe a quick one on bookings. Just when you're having these budget discussions, I'm curious. Are customers sharing concrete budget expectations, or is it still kind of like a framework and maybe there's some squishiness and that'll get worked out in a couple, you know, months or quarters? Thanks.

Hey, Stan. I think it varies. I think there are, you know, like I said before, brand managers who intend or want to spend a certain amount with us, but it really depends on kind of what gets deployed, sorry, what gets released to them and when. Yeah. Obviously, others, you know, that signed on, you know, at a large scale by December 31, you know, we've got a good sense, you know, obviously, it's, you know, a sign of what they're gonna do with us. A lot of times, they'll make that decision if they can, if they're in a position to do that, the funds will be released. Because by doing that, you know, you kind of unlock the best possible economics. But like I said, it varies from customer to customer. And, you know, I think there are folks who would like to spend more with us and, you know, just hadn't gotten access to those funds yet. And, hopefully, if and when those funds become available, they'll kind of spend kind of where they've indicated they may be able to.

Your next question comes from the line of Ryan Halstead of RBC Capital Markets. Your line is open.

Maybe just a follow-up on the pharma marketing budgetary decisions. Just curious if you are seeing any change in or anticipating any change in the cadence of budgetary decisions by your large pharma customers. Is sort of the traditional seasonality of the upfront and upsell seasons kind of still the norm, or has there been any shift to a more periodic review and decision-making process?

Hey, Ryan. Great to see you on your first call with us. You a great question. I think the answer is this is an anomaly. This what would happen at the end of this year was very odd. I think even for our customers, it was odd. And so this isn't what you would typically see. There wouldn't typically be this much uncertainty very late in the year. And I can tell you that I think, like I said in my last response, it is to your advantage to buy, you know, at scale for the full year December 31 because you unlock the best possible economics and top benefits with us. So I think this is truly an anomaly for this year. And we're working through that. I can say if you look back two years, it's a little bit, but we had kind of a similar dynamic where 4Q was, you know, a mid-single-digit revenue growth rate. It had to do with the fact that we'd sold a lot of point of care. And content wasn't ready. But, you know, things I think a lot of the programs, the launches were delayed. When you went to the first quarter, there's a nice step up in revenue growth as those things kind of normalize a bit. Not a perfect compare, but this isn't the first time we've seen something like this. But in terms of is this a new norm for the upfront season, we think this is really an anomaly. This is not something that we expect to continue.

Got it. That's helpful. And then for my just any color around demand for the multimodule integrated offerings.

Yeah. So I can take that. So, DocDynamic, this quarter was about 45% of our bookings, compared with 18% a year ago. It was still a significant part of the selling season. You know? Again, you know, there's only so many people that can buy it because the minimum is high to get access to it. So it's still an interesting product for many. It's still really good tech. Folks are interested. But, yeah, the update is about 45% of the program were DocDynamic in terms of what we sold in the third quarter.

Your next question comes from the line of Richard Close of Canaccord Genuity. Your line is open.

Yes. Thanks for the question. Obviously, a lot of them questions already answered. I was just wondering, Jeff, if you could go into a little bit more detail on the background of the study you referenced with the docs using the AI and how much impact that maybe has made in terms of gaining additional utilization with other providers.

Yeah, Richard. I'm glad you asked. So, yeah, we did do a study as we do our own research with Tau all the time. And, again, we're about to have 150 doctors here in a few weeks to go really deep on this for a few days. But, yeah, we had 1,300 high-prescribing physicians. So these are very busy physicians who took the time to go and actually ask a clinical question that they faced in their practice that day and do a side-by-side comparison, you know, our AI versus other AI in the marketplace. And the net of it was we feel really great that we performed at twice the rate our competition did in this space. And with good reason, I think around the better drug reference, the full 2,000 journals access, and even some smaller things. They like our formatting of tables. They like the speed of the product. We're faster than any other product on the market. So, yeah, we're proud to do that research, and we just put it out today. So more can see it. I do think they probably, you know, used the product and maybe told others about it. That's how we got to from that 1,300 trial list to 300,000 to give you a sense of how quickly word spreads in medicine. But to be fair, most of that study was done in January, so pretty recently. So I don't think that that, you know, was a meaningful part of our 300,000 number.

Thank you. We've run out of time for any further questions. I will now turn the conference back over to Jeff for closing remarks.

Thank you. I want to thank you all for joining our third quarter 2026 earnings call. We appreciate the feedback, and I just want to say thank you to the entire team here who continued to work incredibly hard to serve our physicians every day. Thank you.