Shares of Doximity exploded higher after the physician-networking platform beat revenue expectations and revealed jaw-dropping AI adoption metrics, raising a pointed question: how much should investors pay today for profits that may not arrive until next year?
Revenue Beat and Guidance Raise Signal Reacceleration
Q1 fiscal 2027 revenue rose 7% year-over-year to $156.6 million, driven by workflow active prescriber growth of more than 30% and AI search query growth of over 25% quarter-over-quarter.
That figure cleared the high end of management's own guidance by 3%. Crucially, Doximity raised full-year revenue guidance to $671–$681 million, up from the prior range of $664–$676 million.
Analysts believe AI search revenue isn't baked into these forecasts , meaning the raise is backed by the core advertising business alone — a signal that underlying demand is firming, not just hype.
The AI Product Prints Huge Margins but Zero Revenue — Yet
CEO Jeff Tangney said the company's new AI-powered search tool for pharmaceutical advertisers earns "more than 10 times per search in revenue than it costs." That's a striking claim, but meaningful revenue recognition doesn't begin until Q3 FY2027 at the earliest, following a pharma regulatory review cycle, and in the just-reported quarter, AI search contributed minimal recognized revenue. Investors are pricing in a future product that has yet to scale commercially.
A Short Squeeze Turbocharged the Move
The results arrived against a stock that had lost 69% of its value over the prior year.
The surge was boosted by short sellers having to unwind a sizable bet against the company. That technical pressure amplified what was already a strong fundamental catalyst, but it also means some of the 84% gain reflects forced buying, not pure conviction.
Margins Are Compressing by Design
Gross margin slipped to 88% from 91% as Doximity raised AI compute spending.
This year's stock-based compensation increase is primarily tied to a grant made to the AI-focused R&D team. Management is explicitly trading near-term profitability — adjusted EBITDA held a 48% margin versus 55% a year ago — for the chance to own an AI advertising channel inside America's largest physician network. The payoff hinges entirely on Q3 and beyond.