Doximity, Inc. Q1 FY2027 earnings

Doximity opened fiscal 2027 with revenue of $156.6 million for the quarter ended June 30, 2026, up 7.3% from $145.9 million in the prior-year quarter. Approximately 93% of the quarter's revenue came from subscription customers. The network still reaches more than 85% of U.S. physicians, with over 3 million registered members as of March 31, 2026.

Profitability went the other way. Net income was $24.3 million, down 54.4% from $53.3 million a year earlier, and diluted EPS was $0.13, down from $0.27. Operating income fell 38.3% to $33.6 million, and operating margin dropped to 21.5% from 37.4%. Gross margin was 84.9%, down from 89.2%, a decline of 4.3 percentage points. Revenue grew while operating income fell, so the squeeze came from costs rather than from demand.

The gross margin hit traces back to AI-related spending. Cost of revenue climbed on higher hosting and software costs plus amortization tied to an acquired intangible and internally-developed software. Research and development, sales and marketing, and general and administrative costs each grew, with stock-based compensation a large contributor in every category. Legal costs also rose, which management tied to certain non-ordinary course matters including the shareholder class action litigation. Management said the higher spending was incurred to support the company's AI initiatives, and it expects to keep investing in cloud infrastructure, AI and its customer support organization. All of those items sit outside the non-GAAP results, which is why the GAAP and non-GAAP profit lines diverge so widely.

On a non-GAAP basis, adjusted EBITDA was $74.8 million, down 6% from $79.8 million, with margins of 47.7% versus 54.7%. Non-GAAP net income was $55.0 million against $71.9 million, and non-GAAP diluted EPS was $0.29 against $0.36. The gap between GAAP and non-GAAP net income is largely explained by stock-based compensation, which is added back in the non-GAAP figures. Operating cash flow was $42.0 million, down 32% from $62.1 million. Free cash flow was $39.6 million, down 34% from $60.1 million. A build in accounts receivable from the timing of billings and collections weighed on the cash comparison.

Engagement held up better than the income statement. Quarterly unique active providers using the workflow tools rose about 32% year over year. Workflow active prescribers grew more than 30% year over year, and AI Search queries grew over 25% quarter over quarter. Doximity also noted that its clinical AI assistant, Doximity Ask, was the top-performing U.S.-based model on the NOHARM benchmark. The net revenue retention rate was 107%, down from 118%. Customers with at least $500,000 of trailing 12-month subscription revenue totaled 127, up from 119, and that cohort accounted for approximately 83% of revenue for the trailing 12 months ended June 30, 2026. Management cautioned that provider activity can vary with the seasons, including weather-related swings in Dialer usage, and that the newer AI tools are more variable than the core workflow products.

Deferred revenue, current portion, was $109.1 million, down 7.1% from $117.4 million. For the fiscal second quarter ending September 30, 2026, guidance is adjusted EBITDA of $80.5 million to $81.5 million. For the full fiscal year ending March 31, 2027, guidance is adjusted EBITDA of $309 million to $329 million. Management pointed to a competitive and rapidly changing market, along with the seasonal and AI variability noted above, as factors that could move results. Stock-based compensation keeps climbing, which pressures GAAP earnings, and the repurchase authorization still had $400.9 million available as of June 30, 2026. Doximity said it believes existing cash, cash equivalents and marketable securities will be enough to fund working capital and capital expenditure needs for at least the next 12 months.