Doximity(DOCS) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Doximity reported Q1 2025 revenue of $127 million, reflecting a 17% year-on-year growth and exceeding the high end of guidance by 5% [4][5] - Adjusted EBITDA margin was 52%, amounting to$ 66 million, which is 18% above the high end of guidance, with adjusted EBITDA growing 42% year-on-year [5][11] - Non-GAAP gross margin increased to 92% from 90% in the prior year [11] Business Line Data and Key Metrics Changes - The top 20 clients grew revenue by 21% on a trailing 12-month basis, indicating strong demand from major pharmaceutical manufacturers [5][11] - Doximity ended the quarter with 102 customers contributing at least $500,000 each in subscription-based revenue, a 16% increase from the previous year [11] Market Data and Key Metrics Changes - Unique active prescribers using Doximity's tools reached a record 590,000, with significant growth in daily active users [6][7] - The company reported that its new products, particularly in point of care and formulary, saw sales increase by over 70% year-on-year [14] Company Strategy and Development Direction - Doximity is focused on leveraging AI to enhance its offerings, including the launch of Doximity GPT, which has seen over 1.5 million prompts completed [7][8] - The new client portal is designed to provide real-time insights and actionable recommendations, enhancing client engagement and driving upsell opportunities [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's competitive position and ability to gain market share, despite acknowledging ongoing macroeconomic uncertainties [15] - For Q2 2025, Doximity expects revenue in the range of$ 126.5 million to $127.5 million, representing a 12% growth at the midpoint [13] Other Important Information - Free cash flow for Q1 was$ 39.5 million, a decrease of 29% year-on-year, primarily due to the timing of tax payments [12] - The company repurchased $48.2 million worth of shares, reducing fully diluted shares outstanding by 6% since Q1 of last year [12] Q&A Session Summary Question: Updated stance on pharma budget growth for the full year - Management believes overall budget growth for pharma customers remains at roughly 5% to 7%, but clients are more comfortable deploying dollars earlier in the upsell cycle due to the strong product portfolio [16] Question: Driving factors behind record engagement on the platform - Daily active users grew significantly as Doximity becomes a key tool for doctors' mobile medical workflows, with more physicians working remotely [18] Question: Trends in client portal usage - Clients are using the portal for real-time insights, which has led to faster growth among brands with access compared to the overall pharma business [21] Question: Variability in company growth rates - Management noted that quarterly variations in revenue are expected due to the timing of upsells and product launches, emphasizing the importance of annual performance [22] Question: Performance of the curative business segment - The curative business saw strong quarter-over-quarter growth, with a focus on leveraging AI for recruiting [55]