Doximity, Inc. (DOCS)
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Earnings Call: Q2 2025

Nov 7, 2024

Operator

Good day, everyone, and welcome to the Doximity Fiscal 2Q25 Earnings Call. At this time, I would like to hand the call over to Mr. Perry Gold. Please go ahead, sir.

Perry Gold
Head of Investor Relations, Doximity

Thank you, Operator. Hello and welcome to Doximity's Fiscal 2025 Second 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 on the 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, November 7th, 2024. Of note, it is Doximity's policy to neither reiterate nor adjust the financial guidance provided on today's call unless it's 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 CEO and Co-founder, Jeff Tangney. Jeff?

Jeff Tangney
CEO, Doximity

Thanks, Perry, and thank you, everyone, for joining our second quarter earnings call. We have three updates today: our financials, network growth, and Client Portal. First, our top line. We delivered $137 million in revenue for the second quarter of our fiscal 2025, which represents 20% year-on-year growth and a 7% beat from the high end of our guidance range. Of note, our top 20 clients once again grew the fastest for us, up 24% 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 Q2, with a record adjusted EBITDA margin of 56%, or $76 million, which was 41% year-on-year growth and 20% above the high end of our guidance.

In short, we had a better-than-expected first half of our fiscal year, with 19% top-line growth and 54% margins. Our CFO, Anna, will provide details and guidance in a minute. Okay, turning now to our network growth and engagement. Q2 was another record engagement quarter for us. Our unique active users on a quarterly, monthly, weekly, and daily basis were all up double-digit percentages year-over-year. Drilling down to our biggest revenue driver, our Newsfeed, did particularly well in Q2, setting a new record for articles read. We're proud to put our 12 years of proprietary data to use to personalize each Newsfeed for each of our more than 2 million members. Our workflow tools also set new records in Q2, with over 600,000 unique active prescribers. As a reminder, our workflow tools include our telehealth, fax, scheduling, and AI assistance.

Our AI tools grew the fastest, with over one million Doximity GPT prompts in Q2, but our telehealth tools grew nicely as well. In this age of increasing burnout, we're proud to help doctors save time, be more mobile, and provide the best care for their patients. While we're still in the early innings of monetizing these workflow tools, our point-of-care and formulary products continue to gain traction. Indeed, 20% of our pharma sales in Q2 came from our workflow-related modules. 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 new Client Portal. In September, we hosted our annual Pharma Client Showcase in New York City, where we were joined by over 150 marketing leaders from our largest brand and agency partners.

The hit of the day was our panel of top digital doctors describing how our AI and point-of-care tools are already transforming their practices and lives for the better. Our clients were excited to hear how we allow doctors to focus more on patients and less on paperwork. Excitement was also high for our new Client Portal, which is now open to more than 40% of our pharma brand clients, among whom our sales growth has been the strongest. In part, that's because upsells are easier in our portal. Our best-selling add-on to date has been nurse practitioner, or NP, audience extensions. The portal identifies NPs who work for our clients' top positions and then can add them at a modest cost to existing programs. NPs conducted over 1 billion patient visits in the U.S. last year, and pharma knows they are an important high-growth audience to reach.

Thankfully, they're also heavy Doximity users. Over the last quarter, we've also seen that ad agencies can be key portal allies for us. They help existing clients use the portal and introduce us to new SMB clients as well. So we've created an Agency Partners Program to offer them more training. We've signed a handful of agencies so far, and they've already referred us to new six-figure clients. Based on this positive feedback and sales growth, we plan to roll out our Client Portal to all of our pharma clients starting early next year. Of note, we are now prioritizing agency partnerships over SMB self-service as we see better sales leverage there. That said, our Client Portal remains a multi-year initiative, and we'll continue to learn and adapt as we onboard more clients and partners.

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