Doximity, Inc. (DOCS) Earnings & Analysis

Latest quarter

Doximity reported Q2 FY2027 revenue of $174.5 million, up from $168.5 million a year earlier and above its $170.0 million–$171.0 million guidance. Adjusted earnings per share were $0.36, above the $0.35 consensus for the quarter.

The company’s filing attributed the revenue increase primarily to new subscription customers, with temporary staffing and permanent placement also contributing. Subscriptions accounted for approximately 93% of quarterly revenue.

Doximity reported diluted earnings per share of $0.18, down from $0.31 a year earlier. Gross margin fell to 85.5% from 90.3%, and the filing attributed the decline primarily to costs supporting AI initiatives. Operating margin declined to 25.2% from 37.8%. Adjusted EBITDA was $88.9 million, compared with $100.8 million a year earlier.

Doximity generated $93.3 million in operating cash flow during the quarter and repurchased $54 million of shares.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

Revenue came in within or above the company’s guide in 2 of the last 2 quarters it guided.

What management said on the call

CFO Matt Sonefeldt said revenue exceeded Doximity’s guidance with contributions across its products and growing interest in AI Search. He said pharma customers were purchasing more than two AI Search programs on average, and customer interest had led Doximity to more than double the available conditions covered by the product.

On the call, Sonefeldt said AI Search had become an eight-figure bookings product and began generating revenue when its first program launched in July. Asked about monetization, he said the company primarily sells AI Search advertising to pharma customers, while health systems pay a nominal amount for AI products as part of the broader workflow suite.

CEO Jeff Tangney said quarterly active workflow prescribers, including AI users, grew 34% year over year. He said more than 190 health systems were using the AI suite, up from 165 the prior quarter. Tangney also described DoseCheck, a tool intended to verify medication safety, and said Doximity had added UpToDate to its AI answers.

Sonefeldt said adjusted EBITDA exceeded expectations because of both higher revenue and better AI efficiency. He attributed efficiency gains to advance capacity purchases, use of multiple models and improvements in Doximity’s proprietary software. He said increased cost of revenue largely reflected AI investment to support growing engagement.

Asked about demand in the upfront contracting cycle, Sonefeldt said early activity was still centered on core products, including newsfeed and telehealth placements. He said most pharma clients commit the majority of their marketing budgets during this period, with most contracts signed by the end of December. For new AI Search customers, he said medical-legal review contributes to a gradual revenue ramp through calendar 2027.

Guidance

Doximity raised its FY2027 revenue guidance to $678.0 million–$683.0 million from $671.0 million–$681.0 million. It revised its adjusted EBITDA range to $317.0 million–$325.0 million from $309.0 million–$329.0 million.

For Q3 FY2027, Doximity expects revenue of $195.0 million–$196.0 million and adjusted EBITDA of $102.5 million–$103.5 million. Sonefeldt said the company expects Q4 year-over-year revenue growth to be similar to its guided Q3 growth rate.