Doximity (NYSE:DOCS) reported fiscal 2027 first-quarter revenue of $157 million, up 7% from a year earlier, as the company cited improving demand from pharmaceutical and hospital customers and increased engagement with its clinical artificial intelligence tools.
Adjusted EBITDA totaled $75 million, representing a 48% margin. CEO and Co-Founder Jeff Tangney said revenue and adjusted EBITDA exceeded the high end of the company’s guidance by 3% and 8%, respectively. Doximity also raised its full-year revenue outlook by $6 million while continuing to increase spending on AI infrastructure, safety and product development.
AI usage and clinical-study results
The CEO also highlighted the NOHARM study, an independent evaluation of 24 clinical AI models across 1,100 real-world patient cases conducted by researchers from Stanford and Harvard. Tangney said Doximity Ask had the lowest clinical error rate and highest safety rating among U.S. models in the study. He said Doximity’s model recorded a 4.8% error rate, compared with 13.6% for Anthropic’s Fable 5 model.
Doximity attributed its results to a built-in drug reference that it said is expert-verified for drug dosing and interactions, as well as more than 12,000 physician PeerCheck editors who review and refine AI outputs. Tangney said hospitals are increasingly focused on privacy, data protection and the potential liability associated with clinical AI outputs.
The company has signed 165 health-system AI clients, including eight hospitals on the nation’s honor roll, Tangney said. Recent health-system wins included Northwestern, Penn Medicine and the University of Michigan. Doximity said all 165 clients are live in the sense that they have privacy agreements in place and their physicians can use its AI tools, though systems are at varying stages of electronic-health-record integration.
AI Search supports commercial activity
Doximity launched AI Search in late April and said the product is generating higher engagement with pharmaceutical customers. CFO Matt Sonefeldt said the company did not recognize AI Search revenue during the first quarter, but it has onboarded an initial cohort of customers across more than two dozen programs. The majority of contracted AI Search revenue to date is expected to be recognized in the fiscal third quarter.
Sonefeldt said AI Search has helped Doximity access innovation, insights-and-analytics, and search-related budgets at pharmaceutical companies, although the broader pharmaceutical spending environment remains tight. He described the environment as more stable than in prior periods.
During the call, executives said early AI Search contracts were intentionally structured with conservative inventory caps and shorter commitments of three to four months as the company protected the physician user experience and gathered customer feedback. As Doximity enters its annual upfront selling season, it expects to pursue larger and longer contracts, expand inventory across therapeutic categories, and offer more purchasing options, including category, keyword and target-list approaches.
Tangney said Doximity is currently generating more than 10 times as much revenue per AI Search query as it costs to run the service. He added that the company expects the cost of AI models to decline over time as models become more efficient. Sonefeldt said Doximity sees opportunities to improve efficiency through model optimization, capacity management, forecasting and internally developed AI tools.
The company said its AI products can also support its established pharmaceutical marketing offerings. Tangney said insights from AI Search, such as physicians’ questions about drug side effects or dosing conversions, can inform follow-up engagement through Doximity’s telehealth and other platform products.
Financial performance and customer metrics
Doximity said revenue growth was supported by pharmaceutical and hospital customers, particularly larger accounts. The company had 127 pharmaceutical and hospital customers generating more than $500,000 in trailing-12-month subscription revenue, up 7% from a year earlier. Those customers represented 83% of total revenue.
- Top 20 customer net revenue retention was 112%.
- Overall trailing-12-month net revenue retention was 107%.
- Non-GAAP gross margin was 88%, compared with 91% a year earlier.
- GAAP earnings per share were $0.13, while non-GAAP earnings per share were $0.29.
- Free cash flow was $40 million, which Doximity attributed in part to normal collection-timing variability.
The company ended the quarter with $688 million in cash equivalents and marketable securities and no debt. It repurchased $92 million of shares during the quarter and had roughly $400 million remaining under its repurchase authorization as of June 30.
Outlook reflects additional AI investment
For the fiscal second quarter, Doximity forecast revenue of $170 million to $171 million, representing 1% year-over-year growth at the midpoint. The company said the growth rate reflects a difficult comparison with the prior year’s 23% growth and only modest expected AI Search revenue in the second quarter.
For fiscal 2027, Doximity raised its revenue outlook to $671 million to $681 million, representing 5% growth at the midpoint. The higher outlook reflects first-quarter outperformance, a modest incremental increase, a more stable pharmaceutical budget environment, increased customer interaction and an expanding AI commercial pipeline, Sonefeldt said.
Doximity expects second-quarter adjusted EBITDA of $80.5 million to $81.5 million, or a 48% margin at the midpoint. Full-year adjusted EBITDA is projected at $309 million to $329 million, or a 47% margin at the midpoint.
The company said approximately 90% of its AI-related spending will support rising demand for its clinical AI suite and will be recognized in cost of revenue. As a result, Doximity expects gross margins to remain in the mid-to-high-80% range during fiscal 2027.
About Doximity (NYSE:DOCS)
Doximity, trading as DOCS, operates a digital professional network and communications platform designed primarily for clinicians. Headquartered in San Francisco, the company connects physicians, nurse practitioners, physician assistants and other healthcare professionals, providing tools that streamline clinical communication, telehealth delivery and access to specialty-specific medical information. Its platform is positioned as a professional hub where clinicians manage their workflows, stay current with medical news and collaborate securely with peers.
The company’s offerings include secure messaging and video telehealth capabilities that enable clinicians to consult with patients and colleagues while protecting patient information.
