Business Breakdowns
· Matt Reustle, Jim Jones
[00:00:00] S0: Always good to have design partners in the business. On the margin side of the equation, how does this stack up? It sounds very technology based, so I would assume that there's some impressive numbers here, but can you just give us a snapshot of the margin profile of the business and whether that's materially changed over the years? [00:00:00] S1: It is impressive. The gross margins are about 90%. EBITDA margins are 55%. They're just placing ads on their platform to the eyeballs, so as the eyeballs grow, the inventory grows. There's not a whole lot of expense required on their side to place that ad. Because they're generating 55% EBITDA margins and 54% operating margins, they're able to recycle back into R&D without really disrupting the margin profile of the business. Because margins are so high, they're able to reinvest, and that also means that as the top line grows and they continue to take market share and more dollars move into their world, the incremental margins are incredibly high, which also just fuels the growth. [00:00:00] S0: Do they have much excess cash? I would assume, as you mentioned, they've been building out this suite of different productivity tools for the doctors. That's gonna be a high ROI investment, I think, just to reduce churn. Do they have excess cash that would go back to shareholders, that they would use for M&A? How do they think about capital allocation more broadly once it goes beyond reinvesting in the business?
· Matt Reustle, Jim Jones
[00:00:00] S0: Do they have much excess cash? I would assume, as you mentioned, they've been building out this suite of different productivity tools for the doctors. That's gonna be a high ROI investment, I think, just to reduce churn. Do they have excess cash that would go back to shareholders, that they would use for M&A? How do they think about capital allocation more broadly once it goes beyond reinvesting in the business? [00:00:00] S1: I think they have about $900 million in net cash today, so that's about $5 a share. They use that cash. They've been buying back stock the last few years, but also making acquisitions. They're making acquisitions to increase the engagement of the doctors on the platform, continue to give them new tools. They recently bought an AI engine that is now gonna be used for clinical reference for the tools. You're getting your newsfeed and then you're making phone calls and signing documents, and now you're going to be increasingly using the platform for medical reference, clinical reference, and also for scribing your appointments with your patients.
· Jim Jones, Matt Reustle
[00:00:00] S1: I think they have about $900 million in net cash today, so that's about $5 a share. They use that cash. They've been buying back stock the last few years, but also making acquisitions. They're making acquisitions to increase the engagement of the doctors on the platform, continue to give them new tools. They recently bought an AI engine that is now gonna be used for clinical reference for the tools. You're getting your newsfeed and then you're making phone calls and signing documents, and now you're going to be increasingly using the platform for medical reference, clinical reference, and also for scribing your appointments with your patients. [00:00:00] S0: On the AI point, there's obvious ways that incumbents can adopt AI into their systems, and as it stands today in November of 2025, I would expect that most of agentic AI is just a benefit to existing corporations more than a threat, but medicine and the medical field is a very interesting study here because I think when people question where AI could have the biggest impact, it is in the medical profession. Maybe that's more on the research side of things. But how have they framed both the risk and the opportunity, and then how have you thought about this? Because you have to think about it both as a risk and as an opportunity as it relates to AI.
· Matt Reustle, Jim Jones
[00:00:00] S0: On the AI point, there's obvious ways that incumbents can adopt AI into their systems, and as it stands today in November of 2025, I would expect that most of agentic AI is just a benefit to existing corporations more than a threat, but medicine and the medical field is a very interesting study here because I think when people question where AI could have the biggest impact, it is in the medical profession. Maybe that's more on the research side of things. But how have they framed both the risk and the opportunity, and then how have you thought about this? Because you have to think about it both as a risk and as an opportunity as it relates to AI. [00:00:00] S1: Starting with the risks: if there are point solutions that have much better reference or are giving you more succinct answers or direct to the point or are wildly better, then that's certainly a risk. Doximity has made their platform on technology that's good enough, and that almost makes it sound like it's not great. It doesn't necessarily need to be the number one telehealth provider and the number one transcriber. As long as on the platform I can get it all in one place and it's effective, then that proves to win the day. The exciting thing about this clinical reference tool is just the amount of time now that doctors will be spending on the platform goes up quite a bit. The scribe tool makes doctors incredibly happy because they're not spending their evenings writing reports or putting together charts. The AI can do that for them.
· Jim Jones, Matt Reustle
[00:00:00] S1: Starting with the risks: if there are point solutions that have much better reference or are giving you more succinct answers or direct to the point or are wildly better, then that's certainly a risk. Doximity has made their platform on technology that's good enough, and that almost makes it sound like it's not great. It doesn't necessarily need to be the number one telehealth provider and the number one transcriber. As long as on the platform I can get it all in one place and it's effective, then that proves to win the day. The exciting thing about this clinical reference tool is just the amount of time now that doctors will be spending on the platform goes up quite a bit. The scribe tool makes doctors incredibly happy because they're not spending their evenings writing reports or putting together charts. The AI can do that for them. [00:00:00] S0: When you think about the secular growth or shift towards more digital, seems very obvious to me in terms of being part of the upside case here. Are there other things that you would add into that, getting more of that wallet share onto the platform? But is there other things that you would point to, or does it all revolve around that?
· Jim Jones
[00:00:00] S1: They're in the right place at the right time from a market growth perspective. As the industry moves digital, the wallet share is real. They have some charts in their investor presentation that will show you the number of big brands, call them over a hundred million dollars, over time, and the number of brands is increasing over time. Within that chart, you can see their wallet share of those big brands, and you can see how that over time—we have 10% of the wallet share and moving up to plus 50—and you can see how over time that's shifting because of the ROI. Other industries might move faster given the ROI that they're seeing, but it's just a lot more measured in pharma. They recently launched what they call the Portal, which is something that gives pharma real-time feedback on how their ads are doing. That's just another way for them to gain wallet share because as brands are seeing, "Oh, this ad is doing well, we're getting the scripts," then they can add on top of that. We talked about the CTV market moving their direction, and then also new customers: increasingly, new biotech, new pharma customers are launching digital first. They don't have an army of salespeople to begin with. They moved to Doximity earlier in their maturation process than they have historically. If you want to dream the dream, they're currently largely just in pharma, but could theoretically move into med tech and diagnostic companies as well. They've got a lot of ROE in front of them, a lot of row to hoe with the pharma companies, so I think that's a little bit of an afterthought at the moment, but certainly adds to the runway.