Doximity DOCS reported Q1 FY27 results after the close on August 6, 2026, delivering revenue above the high end of guidance and prompting management to raise the full-year revenue outlook by $6 million. The quarter was highlighted by accelerating clinical AI adoption, including 165 health system clients and strong physician usage metrics, while the stock trades up roughly 74% year to date at $39.70 with a $5.24 billion market cap. Read more market recaps on the Market News hub.
What happened
Doximity posted Q1 FY27 revenue of $156.6 million, up 7% year over year from $145.9 million in the year-ago quarter, beating the Wall Street consensus estimate of $151.8 million. Non-GAAP earnings per share came in at $0.29 versus the $0.30 estimate, a slight miss on the bottom line. Adjusted EBITDA reached $75 million, translating to a 48% margin and exceeding the company's own guidance range for the period.
Management raised FY27 full-year revenue guidance by $6 million to a new range of $671 million to $681 million, representing approximately 5% growth at the midpoint. EBITDA margin guidance for the full year is approximately 47%.
The standout segment was clinical AI. Doximity disclosed 165 health system clients, AI prompts growing 25% quarter over quarter, and workflow prescribers expanding 30% year over year. CEO Jeff Tangney said during the call that Doximity's clinical AI beat Anthropic's latest model in physician testing, a point that drew analyst attention. Net revenue retention came in at 107% overall, with the top-20 cohort posting 112%. A total of 127 customers generated more than $500,000 in trailing twelve-month revenue.
On the margin side, non-GAAP gross margin contracted to 88% from 91% in the prior-year quarter, reflecting higher AI compute infrastructure costs. Free cash flow for the quarter was $40 million. The company ended the period with $688 million in cash and equivalents and repurchased $92 million in shares during the quarter.
Following the results, both Canaccord and BMO raised their price targets on Doximity.
Why it matters
Q1 FY27 marks a second consecutive quarter of reacceleration for Doximity after a mid-FY26 trough, and the $6 million guidance lift signals management's growing conviction in the clinical AI segment. The 165 health system clients and 25% sequential jump in AI prompts indicate that Doximity's physician network is becoming an AI workflow destination, not just a media platform.
The AI outperformance claim against Anthropic's latest model is a qualitative signal worth tracking. If reproducible in broader benchmarks, it could accelerate enterprise sales cycles and support pricing power in a market where large language model providers are competing aggressively for healthcare verticals.
The gross margin compression to 88% is a real cost headwind. Higher AI compute spending is largely structural as usage scales, meaning the margin trajectory will depend heavily on how quickly AI search monetization converts usage into contract value. A 107% NRR with top-20 cohorts at 112% suggests strong expansion revenue, but pharma ad budget sensitivity remains an external variable outside management's control.
What to watch next
First, monitor the Q2 FY27 print expected around November 5, 2026, for confirmation that revenue growth continues to accelerate and that AI prompts keep climbing quarter over quarter. Second, track gross margin recovery: if non-GAAP gross margin stabilizes above 89% as AI monetization scales, the margin story becomes constructive. Third, follow the pharma demand environment: tight budgets were flagged as a lingering risk on the call, and any improvement in pharma advertising spend would be a direct tailwind. Fourth, watch for updated price targets from additional analysts beyond Canaccord and BMO following the clinical AI outperformance narrative.