Doximity outlines 13% full-year revenue growth target as AI suite accelerates client adoption

Earnings Call Insights: Doximity, Inc. (DOCS) Q2 2026

MANAGEMENT VIEW

* CEO Jeffrey Tangney highlighted, "we delivered $169 million of revenue for the second quarter of our fiscal 2026, which represents 23% year-on-year growth and a 7% beat from the high end of our guidance range. Our bottom line was also strong in Q2, with an adjusted EBITDA margin of 60% or $101 million, which was 15% above the high end of our guidance." He noted that the company saw a "better-than-expected first half led by our AI optimized integrated programs and our portal."
* Tangney detailed new engagement highs, reporting that the news feed reached an all-time record number of quarterly active prescribers with double-digit growth in articles read or tapped. More than 650,000 unique prescribers used workflow tools, and "our AI tools once again grew the fastest with quarterly active prescribers up more than 50% from the prior quarter."
* The integration of Pathway's medical data set and AI models into DoxGPT was completed just seven weeks post-acquisition, and the CEO emphasized, "we're the first medical AI to provide direct full text PDF access to over 2,000 medical journals."
* Tangney reported rapid adoption of the Doximity Scribe, stating, "our number of quarterly active users nearly tripled versus Q1."
* CFO Anna Bryson stated, "Second quarter revenue grew to $168.5 million, up 23% year-over-year and exceeding the high end of our guidance range. We finished the quarter with a net revenue retention rate of 118% on a trailing 12-month basis." She also cited, "free cash flow in the second quarter of $91.6 million compared to $66.8 million in the prior year period, an increase of 37% year-over-year."

OUTLOOK

* For Q3 fiscal 2026, the company expects revenue in the range of $180 million to $181 million and adjusted EBITDA in the range of $103 million to $104 million.
* For the full fiscal year, management forecasts revenue in the range of $640 million to $646 million, representing 13% growth at the midpoint, and adjusted EBITDA in the range of $351 million to $357 million, with a 55% adjusted EBITDA margin.
* Bryson attributed the increased outlook to "outperformance of our pharma business during the upsell season" and noted, "bookings growth in this cohort of roughly 100% year-over-year in Q2."
* Management said, "we do not expect as large of a step-up between Q2 and Q3 as we've seen in prior years, when upsells were more condensed and year-end weighted."

FINANCIAL RESULTS

* Q2 revenue was $168.5 million, representing 23% year-over-year growth and exceeding prior guidance. Adjusted EBITDA was $100.8 million, with a 60% margin. Free cash flow rose to $91.6 million. The company ended the quarter with $878 million in cash, cash equivalents, and marketable securities. Share repurchases totaled $21.9 million during the quarter.
* Non-GAAP gross margin in the second quarter was 92%, flat versus the prior year period. The company ended the quarter with 121 customers contributing at least $500,000 each in subscription-based revenue on a trailing 12-month basis.

Q&A

* Brian Peterson, Raymond James: Asked about budget uncertainty and its timing. Bryson responded the uncertainty is "primarily talking about calendar 2026 budgets," and said, "client engagement with our platform remains very high and especially interest in our integrated programs continues to build really well."
* Peterson followed up on AI strategy. Tangney stated, "The short answer is we're going to take it all the way. ...we've grown our AI QAUs 50% this last quarter on quarter and... tripled our number of scribe users."
* Michael Cherny, Leerink Partners: Asked about strategic discussions on budgeting shifts. Perry Gold explained, "it's a little bit early in the process...but I definitely think D2C is one of the many kind of policy uncertainty points that is leading to...a delay in locking in final...budgets for next year."
* Allen Lutz, BofA Securities: Queried about the upsell cycle shift. Bryson clarified, "with our earlier integrated program starts and our client portal insights, we've...seen their upsell dollars more evenly deployed over the last 4 to 6 months of the year."

SENTIMENT ANALYSIS

* Analysts expressed concerns about budget timing, market share capture, and AI monetization, with a slightly cautious but inquisitive tone. Questions about policy uncertainty and spend allocation were frequent.
* Management maintained a confident and optimistic tone during prepared remarks, emphasizing growth and product adoption. During Q&A, they acknowledged uncertainties but repeatedly highlighted strong engagement and program traction. Tangney used phrases such as "we're really excited" and "we believe we're the fastest, best real-world AI medical reference in the market today."
* Compared to the previous quarter, analyst tone shifted slightly more cautious due to emerging policy uncertainties, while management showed increased confidence driven by recent outperformance and rapid AI adoption.

QUARTER-OVER-QUARTER COMPARISON

* Revenue growth accelerated from 15% year-on-year in Q1 to 23% in Q2. Adjusted EBITDA margin improved from 55% to 60% quarter-over-quarter.
* The company increased its full-year revenue outlook from a midpoint of $632 million to $643 million. Integrated program adoption rose sharply, representing over 40% of bookings in Q2 compared to less than 5% a year ago.
* Management's tone has become more confident, with greater emphasis on AI-driven products and their adoption, while analysts are focusing more on budgetary risks and upsell timing shifts than in Q1.

RISKS AND CONCERNS

* Management cited "uncertainty over how recent policy changes may influence annual budgets" as a risk.
* Bryson stated, "we will continue to take a measured approach to the revenue we have yet to book, which is reflected in our implied Q4 guidance."
* Analyst questions highlighted concern over budget flush timing, direct-to-consumer policy impacts, and the competitive landscape in AI and clinical reference.

FINAL TAKEAWAY

Doximity management highlighted record financial and operational results for Q2 2026, underpinned by rapid adoption of AI-powered integrated programs and the successful integration of the Pathway acquisition into DoxGPT. The company raised its full-year outlook, citing outsized performance in its pharma segment and broad-based customer engagement, while acknowledging policy-related uncertainties in upcoming client budgets. Management remains focused on expanding its AI suite and integrated offerings, aiming for higher client returns and improved business predictability as these programs gain traction.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/docs/earnings/transcripts]

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