Doximity Q1FY27 Results: Revenue rises 7% to $157 million on AI traction
- Revenue reached $157 million, up 7% YoY, beating guidance by 3%
- Adjusted EBITDA hit $75 million with a 48% margin, exceeding expectations by 8%
- Full-year revenue guidance raised to $671-$681 million, implying 5% growth
- Active workflow prescribers grew 30% YoY, with nearly half using AI tools
*this image is generated using AI for illustrative purposes only.
Doximity reported first-quarter fiscal year 2027 revenue of $157 million, representing a 7% year-over-year increase. Adjusted EBITDA reached $75 million, translating to a 48% margin, both figures surpassing the high end of prior guidance.
The growth was driven by robust adoption of clinical AI tools and increased engagement from pharmaceutical and hospital clients. The company signed 165 health system AI clients, including eight top honor roll hospitals, signaling a shift toward enterprise-level AI decisions in healthcare.
Financial Performance Overview
Revenue growth reaccelerated to 7% YoY, rebounding from previous quarters. The outperformance was attributed to higher-than-expected clinician usage of AI products and the initial monetization of the new AI Search feature. Although no AI Search revenue was recognized in Q1, the product drove higher client engagement and supported overall demand.
| Metric | Q1FY27 | Guidance High | Change vs Guidance |
|---|---|---|---|
| Revenue | $157 million | ~$152 million | +3% |
| Adjusted EBITDA | $75 million | ~$69 million | +8% |
| Adjusted EBITDA Margin | 48% | N/A | N/A |
Profitability remained strong despite increased investment in AI infrastructure. Non-GAAP gross margin stood at 88%, down from 91% in the prior year, primarily due to higher AI compute spend to support surging usage. Stock-based compensation was $37 million, or 23% of revenue, consistent with guidance.
AI Adoption and Commercial Traction
The company highlighted significant momentum in its AI suite. Quarterly active workflow prescribers grew more than 30% YoY, with nearly half using AI tools. AI prompt volume increased by over 25% quarter-over-quarter, while Doximity Scribe users grew 10x in July compared to the prior period.
Management emphasized that AI Search is gaining traction, contributing to an upward revision in full-year revenue guidance to $671–$681 million, implying 5% growth at the midpoint. The company expects the majority of contracted AI Search revenue to be recognized in Q3FY27.
What the Numbers Show
A key divergence appears between revenue growth and margin compression. While revenue rose 7%, gross margins contracted by 300 bps YoY due to deliberate AI investment. However, unit economics for AI Search appear favorable; management stated they are earning more than 10 times per search in revenue compared to the cost to run it. This suggests that current margin pressure is a strategic choice to capture market share rather than a structural degradation of profitability.
Furthermore, customer concentration remains high but stable. The top 20 customers generated a net revenue retention (NRR) of 112%, while overall NRR was 107%. Customers generating more than $500,000 annually now represent 83% of total revenue, highlighting the critical dependency on large enterprise accounts for sustained growth.
How will the delayed recognition of AI Search revenue in Q3FY27 impact Doximity's quarterly earnings volatility and investor sentiment in the interim?
Can Doximity sustain its 48% EBITDA margin if AI compute costs continue to rise faster than revenue as adoption scales across enterprise health systems?
What is the potential risk to revenue stability given that 83% of total revenue is concentrated among customers spending over $500,000 annually?
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