Doximity, Inc. (DOCS) Q3 2022 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the Doximity Third Quarter 2022 Earnings Call. [Operator Instructions] I would now like to hand the conference over to your first speaker today Mr. Perry Gold, Head of Investor Relations. Sir, please go ahead.

Thank you, operator. Hello and welcome to Doximity's fiscal 2022 third quarter earnings call, With me on the call today are Jeff Tangney, Co-Founder and CEO of Doximity; Dr. Nate Gross, Co-Founder and CSO; and Anna Bryson, CFO. A complete disclosure of our results can be found in the press release issued earlier today as well as in our related Form 8-K, all of which are available on our website at investors.doximity.com. As a reminder, today's call is being recorded and a replay will be available on our website. As part of our comments today, we will make forward-looking statements. These statements are based on management's current views, expectations and assumptions and are subject to various risks and uncertainties. Actual results may differ materially and we disclaim any obligation to update any forward-looking statements for outlook. Please refer to the risk factors in our S-1, our last quarterly report on Form 10-Q and our other reports and filings with the SEC that maybe filed from time-to-time, including our upcoming filing a Form 10-Q. We would like to specifically caution investors that our future performance will be harder to predict for the foreseeable future given the COVID-19 pandemic. Our forward-looking statements are based on assumptions that we believe to be reasonable today's date, February 8, 2022. Of note, it is Doximity's policy to neither reiterate nor adjust the financial guidance provided on today's call unless it is also done through a public disclosure such as a press release or through the filing of a Form 8-K. Today, we will discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. A historical reconciliation to comparable GAAP metrics can be found in today's earnings release. Finally, during the call, we may offer other incremental metrics to provide greater insight into the dynamics of our business. These details may be onetime in nature, and we may or may not provide updates on those metrics in the future. Okay, I would now like to turn the call over to our CEO and Co-Founder, Jeff Tangney. Jeff?

Thanks, Perry, and thanks everyone for joining our third quarter fiscal 2022 earnings call. The four main updates today, our financial results and acquisition, a team transition and our network growth, a lot to cover, so I'll jump right in. First our financial results. We had $97.9 million in revenue for the third quarter of fiscal 2022, an increase of 67% over the same quarter last year and 13% above the midpoint of our guidance. As a result, we are raising our annual guidance by 4% to a midpoint of $339.4 million for fiscal 2022 ending March 31, which translates to 64% growth year-on-year with a net revenue retention rate of 171%. Our growth was once again led by our existing clients, which include all of the top 20 hospitals and all of the top 20 pharmaceutical companies. Our interactive platform allows them to connect efficiently with the right physicians about new treatments, clinical trials and patient referrals. We then measure our client's ROI using third-party claims and prescription data and that proof of value has allowed us to expand nicely if they begin their shift to digital. We also posted record profits this quarter. Our adjusted EBITDA margin was 48% or $47 million, which was 45% above the midpoint of our guidance. Our vertical sales model continues to provide us with strong leverage and the attractive ROI we deliver for our clients remains an incredibly powerful retention in upsell tool, all in all we're pleased with our Q3 financial results. Okay, time now to turn to today's announcement that we're acquiring amion.com, a leading physician on-call scheduling site for $53.5 million dollars in cash, plus up to $29 million in earn-outs and equity compensation over the next four years. We expect it to close April 1. We're excited to partner with Stuart Karon, who founded Amion 24 years ago to help his physician wife Jodi to answer the frequent question Amion and run the ever-changing on call schedules of the pediatrics program years before salesforce.com or others Stuart pioneered in enterprise cloud model with a single web deployment and affordable subscription pricing. It was a hit and with a steady stream of new features like the ACG and the regulated work hour reports or easy shift swaps, Amion grew to manage schedules for nearly 200,000 U.S. physicians at thousands of hospitals, including 18 of the top 20. While primarily a product acquisition for us, Amion is also a high margin subscription business. In the calendar year 2021, we estimate Amion did roughly $5 million in revenue and over $3.5 million in adjusted EBITDA. We work closely with Stuart and Amion for over a decade now as an API and development partner. Among the 50 plus partner companies who actively use our login with Doximity APIs, Amion is among the most popular. Many day-to-day physician workflows center around who is on-call. Strategically Amion adds a key piece to our physician cloud by integrating scheduling alongside our secure messaging, CVs, referrals and tele-health tools. Doximity's mission is to build software to make physicians more productive, so that they can provide the best care for their patients. We're thrilled to add another critical day-to-day physician workflow tool and we're excited to explore the optionality it will unlock across all of our major businesses. Okay, next up, a team transition. After a distinguished 33-year career, our Chief Commercial Officer, Joe Kleine is retiring. I am internally grateful for Joe's friendship and leadership as our CCO here in the last four years. Starting tomorrow, Joe will move into a full-time advisory role until his retirement this fall. Joe has built a deep bench and is going out strong, that is leaving us after delivering a record-breaking quarter and year. To back up that last point, we're providing early revenue guidance for our fiscal year 2023, which starts in April. In short, we expect our fiscal 2023 revenue to grow 33% year-on-year to approximately $450 million, that is 6% above the current factset consensus of $425 million. Our guidance does not yet include Amion and will provide more detailed guidance on our next quarterly call. With Joe's retirement, Paul Jorgensen has been appointed our Chief Revenue Officer. Formerly a Senior Vice President, Paul has led our fastest growing businesses over past five years, including the recent launch of our tele-health business. Paul is an industry veteran, whose career includes four years running Enterprise Sales at One Medical and nine years growing our largest pharmaceutical clients at my previous company Epocrates. The team and I look forward to working with Paul in his new role and wish Joe the very best in his retirement. Okay, to close here is an update on our network growth. Q3 was a record quarter for our network across a number of dimensions, here are a few. First, our e-signature and fax products are record usage in Q3 as more doctors brought their at-home digital workflows back to the office by preferring to sign paperwork on their phones. Second, our continuing medical education or CME credits claimed also hit record highs, up 25% quarter-on-quarter to hundreds of thousands of credit hours as in person lectures increasingly get replaced by our anytime anywhere newsfeed articles, which are algorithmically personalized to each doctors clinical practice. Third, our job postings grew 4 times year-on-year as the great resignation hits medicine and as physicians weigh their post-pandemic job options, And last, we expanded our paid tele-health platform by an additional 23,000 physicians last quarter. Continued growth of our active tele-health user footprint brings us to a new all-time high with over 350,000 unique providers completing tele-health visits with us in the last quarter. Of note, nearly all 99% of our hospital clients renewed their tele-health agreements with us this year. So we're pleased that hundreds of hospitals are making us part of their long-term tele-health plans. We're also proud to be named a Best in KLAS by the much watched KLAS Healthcare IT Rankings, which are based on KLAS' phone interviews with thousands of hospital clients. In the tele-health video conferencing category for 2022, we earned the Best in KLAS top overall score of 92 out of 100, beating out Microsoft Teams, Zoom and a bunch of others for our ease of use, account teams and EHR integrations. In sum, our network flywheel grew last quarter as our physician cloud features like e-signature, CME and tele-health became the preferred go forward set for more physicians. Alongside our EHR partners, we're excited to streamline and digitize the many paper-based workflows that physicians face today. Okay. I'd like to end by thanking the entire Doximity team, who worked incredibly hard to deliver a spectacular quarter. And with that, I'll hand it over to our CFO, Anna Bryson to discuss our financials and revised guidance. Anna?

Thanks Jeff, and thanks to everyone on the call today. We are very excited by our third quarter results as well as the announcement of our Amion acquisition and the momentum in our business is incredibly strong as we look ahead to fiscal 2023. First, I'll start with a few highlights from this past quarter. Third quarter revenue grew 67% year-over-year to $97.9 million, significantly exceeding the high end of our guidance range. This outperformance was due to both continued execution across all of our business lines and strong upsell growth amongst our marketing solutions customers. As a reminder, our pharmaceutical and health system customers typically engage in an annual upfront buying cycle, a calendar year-end where they purchase a majority of their next year subscription. Then throughout the course of the year, these customers use their remaining budget to purchase upsell and add additional audience members, module or brands to their program. With marketing strategies evolving and budget shifting to digital and real-time, we saw many of our client doubling down with us throughout the year, which is represented in our strong third quarter performance. We believe this step-up in demand is an incredibly positive sign that not only are dollars continuing to move digital, but Doximity is capturing a larger portion of this incremental budget as a result of the strong ROI delivered by our platform. Additionally, the scale of the shift is exemplified by the fact that our largest customers, many of whom reported the longest are the ones growing the fastest. Our top 5 customers grew 90% in Q3 on a trailing 12-month basis and we believe this is particularly significant because these customers are some of the most notable top-tier pharmaceutical manufacturers. We are very encouraged by the growing sort of confidence in digital from these industry bellwethers and believe this is a strong indication of the direction healthcare marketing is going. In addition to these top 5 customers, our overall existing customer base continue to meet our growth with a net revenue retention rate of 171% in Q3. As a reminder, given our net revenue retention rate is a trailing 12-month metric, which we much add in the context of our subscription-based trailing 12-month revenue growth rate, which was 79% this past quarter. I'd also like to provide an update on the number of customers spending six figures or more on our platform. We ended the quarter with 258 customers contributing at least $100,000 in subscription based revenue on a trailing 12-month basis, a 50% increase from the 172 customers we had in this cohort a year ago. These cohort of customers accounted for 89% of our total revenue. Turning to our profitability, non-GAAP gross margin in the third quarter was 91% compared to 87% in the prior year period. This result was driven by our revenue outperformance and continued efficiency as we scale. Adjusted EBITDA for the third quarter was $47 million and adjusted EBITDA margin was 48% compared to $21.5 million and a 37% margin in the third quarter last year. Our adjusted EBITDA exceeded the high end of our guidance range, also due to our topline outperformed. Turning to our balance sheet and cash flow, we ended the third quarter was $765.6 million of cash, cash equivalents and marketable securities. We generated free cash flow for the third quarter of $25.6 million compared to $22.9 million in the third quarter last year. Moving on to our outlook, for the fourth fiscal quarter of 2022, we expect revenue in the range of $89 million to $90 million, representing 34% growth at the midpoint. So, we expect adjusted EBITDA in the range of $34 million to $35 million, representing a 39% adjusted EBITDA margin. For the full fiscal year 2022, we now expect revenue in the range of $338.9 million to $339.9 million, representing 64% growth at the midpoint. We now expect adjusted EBITDA in the range of $144.9 million to $145.9 million, representing a 43% adjusted EBITDA margin. With regards to our fourth quarter outlook, as our clients continue to right size their sales forces and refocus their go-to-market strategies, the reallocation to digital is happening in real time. In the back half of calendar year 2021, we watched closely with our customers to deploy these additional dollars to programs they were already running on Doximity, which converted to additional revenue quickly. As we finish these programs, our customers have layered this upsell dollars into their calendar year 2022 subscriptions, which we are currently in process of launching and will convert to revenue more evenly over the course of the year. We are incredibly encouraged by the unprecedented scale at which customer spent as part of their annual buying cycle. Prior to Q3, we have never had a brand sign a $5 million subscription contract in a given quarter. In Q3, we have four brands at four different manufacturers spend more than $5 million with us, which reflects substantial program expansion. Given the strong momentum in our business and the fairly good visibility, we already have into next year's revenue, we want to provide preliminary guidance for fiscal 2023. Excluding Amion, we expect revenue growth in fiscal 2023 to be about 33% to approximately $450 million, which is ahead of expectations after two straight years of very high top line growth. We also expect to continue to officially scale our bottom line, leading to adjusted EBITDA margins of 40% or greater in fiscal 2023. We're looking forward to providing you with an update on our progress in May. And with that I will turn it over to the operator for questions.

Thank you, Anna. We will now open the line for questions. We have 30 minutes for question-and-answer. Our first question comes from the line of Stephanie Davis with SVB Leerink. Ma'am, your line is open.

Thank you and congrats guys on a blowout quarter, that was a - that was wow. So given the long-term partnership with Amion, I'd like to hear more about the imputes with the deal and what sort of optionality you see from ownership of the asset versus just the historical partnership that you've had?

Stephanie, great to hear from you. Great question as usual. Jeff here, and I like to blowout, that's a good phrase. Yes, we've been working with Amion for slightly more than a decade now and Stuart is just a great guy and 10% TV runs have really just you've done a spectacular job building a more efficient tool for physicians to know who is on call. They've always been an API partner of ours, which means to the doctors option whether or not they want to login with Doximity to add their photo and their CV and profile to this schedule, so that other doctors know a little bit about them. And so it's a pretty small percent of his users, 200,000 doctor schedules that have actually logged in with it. So as an owned asset I think we're going to have a real opportunity here to grow the engagement, workflows and the integrations that we can do. And specifically I'm excited that physicians today have no idea how much time they spend just calling the hospital receptionist to get someone page, to call me back to do all these things and we can route that now instantly through our Doximity Dialer product, which again we just shared. We had 350,000 doctors using Doximity Dialer actively last quarter. So we're excited to bring those two together in a collaboration suite. So you know who is on call and you can call them quickly and we think there is just a lot of upside here as we - I think integrate this physician cloud, the set of workloads that doctors need to do their outside the EHR if they treat their patients.

Helpful. And then taking a step back and looking at more of the macro environment, I was hoping to hear a little bit more about the impact of Omicron and maybe how pharma is thinking about their sales spend or how hospitals think about their hiring, just in the context of another wave?

Sure. Yes. Thanks Steph. So I think the short answer is we think Omicron had very little direct impact on how our pharma customers who will think about their sales spend. And I do want to be crystal clear that the vast majority of these upsell dollars that were contributing to our outperformance this quarter were launched prior to December when the Omicron wave really hit. So I think we're - really what we're seeing is certainly is the case that the longer the pandemic has gone on and the longer reps have not been able to see doctors, to longer marketers have been able to witness the value of running these digital programs. So we think it's that value that's the main reason we're seeing this sustained demand from our customers and not in variants. I mean new variants will come and go, but this value is really long...

Anna, don't say that.

New variants might come and go, but this value will last. So, yes, let's go for pharma customers, as far as our health system customers are hiring customers, the answer is similarly very little change in the business due Omicron directly. So I - we've seeing unprecedented demand from hospitals for both temporary and permanent position hiring for a while now and our unique data advantage has really allowed us to increasingly fill that need. One thing we've seen in this past quarter, and you'll see this in our 10-Q tomorrow is our care heroes business really has been accelerating enough in the past several quarters and it will be reached over 90% growth in Q3, which is something that we're super proud of, I mean we're really optimistic about the future here. So just to reiterate, back to your original question, we don't believe Omicron really had any impact on our business.

Thank you. Our next question comes from the line of Ryan Daniels with Blair. Sir, your line is open.

Great, thank you for taking the question. Jeff, one for you in regards to the strong momentum you're seeing with large client partnerships. I'm curious if you can walk through the conversations you're having there with those entities? I assume it's turning more to a strategic or enterprise level conversation with those pharma companies given both your ROI and the fact that they appear to be more heavily investing in digital versus direct sales force, but I'd love to hear any color on that?

Yes, Ryan. So I think - our clients are working through some pretty major shifts in their go-to-market. I mean they really are talking at their Board levels about what is the new commercial model for pharmaceuticals in the United States. And they're rightsizing their salesforces, which has gotten the certain amount of in compressing coverage, but they're changing a lot of other ways. And I think we are becoming their leading digital partner as they think about the digitization of that and we're very proud to be that. So yes, we are engaging at higher levels than we ever have and obviously seeing 71% growth among our existing clients. And as Anna shared 90% growth among our top 5 clients, who are already a major 8 figure clients. I think it's really proof of this S-curve adoption of digital and we are just at the inflection point of that S-curve. We see again sustained demand as we move ahead here. I think here, if you look back in the industry, back in the mid '90s, there were about - I don't know 40,000, 50,000 U.S. pharmaceutical sales reps, we have 81,000 today. We would estimate the 10% of those may be furloughed in the next couple of years. It's not hard to see just a real seismic shift here as dollars move towards higher ROI, digital strategies that have been tested, really forced upon the industry in the last couple of years.

Okay, very helpful color. And then Anna one for you, you mentioned the fact that most of the contracts are for the year and that there some up purchases maybe with budgets or shifts in marketing requirements towards the end of the year. But I'm curious, as we sit today relative to your initial 2023 guidance, what level or percentage of revenue do you already have a high degree of visibility on again as we sit here today? Thank you.

Yes, sure. So as we sit here today on February 8, we have about just under 50% of our fiscal 2023 revenue already booked. Those are subscription-based revenue that's already under contract and we estimate that by the end of the fiscal year, so by March 31st, we'll have over 60% of fiscal 2023 revenue already under contract.

And I assume that's in line with most or yours, how you look at your revenue visibility?

That's correct.

Thank you. The next question comes from the line of Scott Berg with Needham and Company. Your line is open.

Hi, everyone. Congrats on the great quarter. I wanted to follow up on the acquisition kind of streaming thoughts here a little bit with Amion here is, how should we think about the - I guess the R&D of product efforts with that? Do you ultimately kind of develop and blend that into the existing Doximity platform or does it end up being continuing to be a standalone solution going forward?

Hi, Scott, this is Nate. Great question. So, Amion was at its core, primarily a product acquisition. They're a day-to-day workflow technology. They're used by a substantial physician population with strong engagement. It's high margin subscription business and has a broad footprint across hospitals and so all of those characteristics mesh really well with the suite and the platform that we have today and will make integration easy. Now they have been an API partner as Jeff mentioned for a decade and our API program connect companies like Amion into the Doximity ecosystem. And thus far, that has been centered primarily around individual physician as Jeff mentioned. And so with a greater integration, it's deeper across the product, we see multiple different touch points with physician for improving their experience and one of the things that gives us the most amount of confidence about this is that Amion is a trusted multi-decade brand. It's a mission-oriented company and focuses on making physicians lives easier, you combine that with Doximity scale across users, enterprises, modern technology functionalities, we see this acquisition something that will create unique value for doctors and healthcare system - ecosystem alike and will really mesh well with our own R&D growth.

Got it. Helpful. And then from a follow-up question. Change in Chief Commercial Officer can always be both an opportunity and the challenge. How should we think about Paul stepping into this role? Is this just kind of extending maybe the structure that was already there or are there any maybe significant changes that we could see come out of this change going forward?

Yes, this is Jeff. I'll answer that. No, it's just an extension. I think Paul again has been here for five years. He has been a key partner of Joe as we've grown all this. And again Joe isn't going anywhere, he's going to be around help us through this transition as he looks to retire. I will say that the joke I share is that Joe is retiring at age 59, so that means, everyone is working here that sets the new bar. We often work until we're 59, okay everybody. But the good news is Paul has led some of our fastest growing businesses and teams and again have strong support within the organization, which has a deep bench.

Got it. Thanks for taking my questions. 59 is a great target.

Thank you. And the next question comes from the line of Brian Peterson with Raymond James. Your line is open.

I'll offer my congrats on the strong results. Jeff I had one for you and a follow-up for Anna. When you're talking about your top 5 customers growing 9% on some 8 figure spend levels. So those are a pretty big number. So Jeff I'm curious, why now? Is it time for those significant expansions? If you're talking about the penetration in terms of those top 5, in rough sense on where you are today with those customers?

Yes. No a great question. Short answer is, we still - we're less than 5% of their health care professional budgets in the U.S. And you're right, the system big numbers and I can tell you these top 5 clients of ours, they are among the top 5 in the world. They're industry bellwethers, leaders. They're the folks that others in the industry look to when it comes to these kinds of seismic shifts. And yes, we're really pleased. To me, actually empirically, this is the best proof that we are in the early innings of our TAM, that again we can grew 90% among these clients who have already spending the most with us and again they see the ROI and they keep leaning in and again we've got the results to keep going along with that.

Understood. And Anna I just wanted to clarify on the NRR, I know that came in at 71%, we had the revenue growth at 67%. I know it's kind of a TTM versus current quarter dynamic, but any help on maybe explaining the difference between the two numbers in the quarter? Thanks guys.

Yes, sure. So when we think about our net revenue retention rate at 171%, we need to think about it in the context of our trailing 12-month revenue growth rate, which was 79% because our net revenue retention rate is a trailing 12-month metric, so that's how you should be thinking about it. So don't look at it on a quarterly basis, but look at it on a trailing 12-month basis in context of that 79%.

Got it. Thanks Anna.

Thank you. The next question comes from the line of Vikram Kesavabhotla with Robert W. Baird & Co., Inc. Your line is open.

Yes, thank you for taking the questions. I wanted to ask a couple about the EBITDA margin guidance. You've built it at the third quarter, it looks like you posted adjusted EBITDA margin about 48% and then the fourth-quarter guidance at the midpoint implies about 38.5%. I'm curious if you can just walk us through some of the drivers there behind the sequential margin contraction and maybe why some of the outperformance in the third quarter maybe is not translating into the fourth quarter. And then in the follow ups, that looks like your initial fiscal '23 EBITDA margin guidance is above 40%. I think in the past you've talked about, over 40% being the right kind of long-term margin framework for the business. And so I'm curious, just given some of the recent outperformance, what are your current expectations in terms of the right long-term margin profile of the company and maybe what some of the remaining room for operating leverage might be in the model? Thanks.

Sure, I'll take that one. So it's probably helpful for me to just start by kind of further framing what we're seeing between Q3 and Q4. So that EBITDA deceleration is simply due to what's happening on the topline. We're continuing to invest at the same pace that we've been investing. So it isn't due to any changes in our OpEx. I mean, it's probably helpful for me to kind of frame what we're seeing from a revenue perspective. So what we started back up in last year's dollars continue to ship digital quickly. Our clients are really turning to ops to add those dollars onto their already running programs at a much greater scale than we've seen before. And we really believe that, that's definitely a strong indication of the value they're receiving from our platform. So as an example, a mini added audience members to their programs to increase their reach in Q3 and as a result we saw quick revenue conversion from these upsell dollars, which led to a lot of our revenue upside and that EBITDA upside that you just mentioned. But what this has really allowed us to provide even further value to our customers and it helped translate into strong annual buying cycle, where we are working with our clients to really smoothly fold those growing budget dollars into their new programs that we're currently in the process of launching and will run over calendar year 2022, and that's going to convert to revenue at a more even pace. So that's really going to be the key factor behind what we're seeing from the top line guide and that's really moving down to the bottom line. As far as our next year's guide on the EBITDA margins of 40% plus, I mean, as we've said before, we aim to be a Rule of 60 company through a combination of growth and profitability. And we're really proud of the fact that we're already at that level and we're well above that level today and we really want to focus on continuing to make prudent investments, focus on continuing to grow our R&D team to support our products to make our products even better for our physicians, continuing to grow our customer success team to support the future growth of our customers and you're going to see us doing that in the next couple of years.

Thank you. The next question comes from the line of Glen Santangelo with Jefferies. Your line is open.

Yes, good evening and thanks for taking my questions. I just wanted - Jeff, I just wanted to follow up on some of the comments you made with respect to the tools on the physician cloud and the record utilization that you saw this quarter. We get a bunch of questions about engagement trends and I'm kind of curious as to maybe what you're seeing engagement wise on the platform as the pandemic seems to be hopefully coming to a close here and how that is? And secondly, I did want to ask about the competitive landscape, I mean obviously in digital marketing, but there is a lot of companies obviously chasing those dollars and as you know last week the Apple iOS Privacy change clearly impacted some of the social media platforms. I don't think this impacts your company, but maybe that could ultimately be a benefit to you for example as maybe some customers come back to a vertical sales model like yours and so I just wanted to get your quick updated thoughts on the competitive landscape? Thanks.

Thanks Glen. Great question. Yes, well first with regard to Apple's privacy changes iOS 14 and other things, I'll just reiterate what we said. I think a quarter or two ago, which is precisely 0% of our revenue is or ever was based on cookie technologies. We've always run a very hard line when it comes to protecting our physicians privacy and so we've always been more I think in sort of the Apple camp on this than perhaps others. But it is nice that we can keep that all within our ecosystem and - so that - it's been powerful for us. With regard to your engagement more broadly, I can just say that we continue to do really well and again - I think we're seeing these long-term trends start to play out as physicians are able to digitize their lives a bit more. We had a 25% quarter-on-quarter increase in our continuing medical education credit, CME credits, the doctors need to earn each year and you know the need to go to the hospital auditorium to do that and they will listen to a lecture that maybe wasn't about their particular procedural practice. And now, instead we got - we give a hundreds of thousands of credit hours last quarter to doctors that they can get anytime, anywhere on their phones in a way that's algorithmically personalized to each doctors clinical practice. So I think that's really exciting and I think that's the beginning of really a light shift sort of trend towards a more hybrid life for a lot of physicians in this country. Obviously, our tele-health is another sign of that, again 350,000 providers just in the quarter using us to do a tele-health visit, I mean that is - that's a big number and again this is before Omnicom or other things hit. So we're continuing to see, maybe it's not eight times a day, maybe it's only once a day or on Wednesday afternoons, but it doesn't matter. From our business model point of view, we will become the go-to-way to digitize some of this hybrid work life.

Thank you. The next question comes from the line of Richard Close with Canaccord Genuity. Your line is open.

Yes, thanks. Congratulations first of all on a great quarter. Jeff, I was wondering if you could talk about how you balance the shift to digital marketing and physicians get overwhelmed by the amount of information that's coming at them. Maybe how you're differentiated versus other digital marketing that's coming to them? And I've seen a couple of articles, I think over the last month or so, just talking about how saturated maybe they are, if you could talk a little bit about that, that would be helpful?

Yes thanks, Richard. Great question. You know there has been a number of research surveys that have been done in the past quarter or two, because pharma is trying to figure out the right move towards digitization. And frankly all the surveys that have come out that have been independent research have hold it favorable for us, because typically they're talking about our doctors are getting a little tired of getting too many emails in their inbox, which is not something that we're known for. We're known as the place where I can login, see the things that are in my news feed that my colleagues are filtering for me, commenting on, important in my specialty. There's a lot of things that, again, physicians rely on their peers to help sort of triage for them and it is information overload. We've all lived through it and I think again - we're in a unique position to be more like the way medicine used to be, which is we doctors getting together in the real-life lounge, which doesn't happen anymore, but still tuning the news of the day for each other in that way. So I do think the collegial aspect in what we do is probably are defining characteristic. And I think we've applied some terrific leading-edge technology to make that professional and relevant and something that isn't just another email hitting a doctor.

Okay. And as a follow-up on the hiring staffing, obviously you turned on the news and you hear about healthcare workforce, people walking away, but it seems to be more primarily highlighting the nurse front, can you talk a little bit about, obviously, you cited metrics here in terms of the growth on that side of the business, but can you talk a little bit more about the physician marketplace and how that's changed maybe over the last six months?

So, you're right. I mean there's a lot of talk about the burn out and the effect this pandemic has had on nurses and also on physicians. We actually put out a piece in conjunction with some academic research is showing that there was a permanent 1% bump, basically 1% of U.S. doctors retired during this pandemic and really haven't come back. So it's about a 1% deadweight loss to a situation where we already had a physician shortage. And again we think that that makes our products more attractive to hospital systems because you ask any hospital CEO these days at somewhere in there top 3 priorities is going to be keeping - retaining staff, worrying about burn out. And again I think we can help out with that by helping them reduce the scutwork, the paperwork and we're pleased that we showed 93% \growth in our recruiting business, our talent business year-on-year and that will be out in our 10-Q in a few days here, I guess. But you'll see that, that business lost still a small percentage of our overall business, a single-digit percentage is growing nicely and we're proud to help doctors do it with less paperwork and find the right kind of flex positions that I think may work for them, better longer term.

The next question comes from the line of Ricky Goldwasser with Morgan Stanley. Your line is open.

So, yes thank you. This is Craig. I just wanted to come back to the guidance of fiscal '23. Looking at a 33% growth on top of 64% expected this year, can you just touch on perhaps just some of the acceleration you're seeing in the move to digital and then any context when you think about differences between up-sell and cross-sell into fiscal 2023?

Sure. Thanks, Craig. So yes, I'll say, as we've said before, we look to shift to digital will likely play out over the next decade and we won't necessarily see that same acceleration in growth next year that we've seen in the past two years. And I think we've been pretty clear about that. Now pharma is in the process of adopting really hybrid marketing model, where they're going to focus a lot more of a mix of digital and face-to-face and this is certainly going to take time and it's not going to happen overnight. And I'd say we're more focused on today is we're building a business that can provide years of sustainable growth with high margins and we certainly believe that next year's preliminary guidance is representative of this continued strength in our business. As far as the dynamics around through the cross-sell and up-sell and we're very focused on continuing to expand by our core motions. So we're focused on continuing to add more brands and more service lines. We're focused on continuing to upsell additional modules and I think you'll see a lot more of that as well from us next year.

Great. And then...

Sorry, Jeff here. Just very, very big picture, I think we put out the IDC report saying that overall healthcare was only 23% digital spend and overall Fortune 500, it's more like 70% spend. We we're guessing what 2021 will come in at, I think the data will come out on that in a month or two and so we'll be interested to see it. But out conscious maybe went from 23% to 30% or so. And again, we still think that this whole industry has a long way to go to catch up on digital marketing, just even catch up to the - the Fortune 100.

Got it. Appreciate the extra context there. And then just a follow-up on the heels of the Amion acquisition, just how you're thinking about - just the runway you have, which is the long one to the core business, but just other things that you can add, whether it's from a tuck-in perspective and the enhanced platform on a longer-term basis?

Sure. So, this is Nate. Healthcare continues to digitize. We believe that the healthy level of cash that we still have on the balance sheet puts us in a real position of strength. I - despite the acquisition, I need to reiterate, we are a software company in our DNA. We have been a company that excels at building, is not dependent on buying and will continue to act accordingly there building new tools that book physicians first. And so healthy level of cash allows us to build the confidence, move rapidly when we're launching new products just like we did the tele-health and we believe that we have a lot of headroom to grow organically. It does also help us be opportunistic around synergistic acquisitions or partnerships, things that would put us in a position to accelerate our product road map with other software technologies that have a mission of putting physicians first and Amion is a great example of that.

Thank you. The next question comes from the line of Jessica Tassan with Piper Sandler. Your line is open.

Hi, thank you for taking my question and congrats on a good - on a great quarter. I think you are interested to just know - I think the U.S. News and World Report voting opened about a week ago and we know it's consolidating on the Doximity platform for the first time this year. So just interested to know if that consolidated voting activity is having any impact on new feed or just generally on app engagement? Thanks.

Thanks, Jessica, Jeff here. I like the good to great, we'll take good to great. The short answer is, I don't know. I could wander down the hall here and ask some of our news feed team. So I probably should do that. But yes, we are the only place that you can vote on the best hospitals in the country and that is a much watched rankings. And typically, we do see added behavior, doctors come in and tell us who the best cardiology hospitals and systems are in the country. But I don't have any data unfortunately on that yet.

Got it. And then just a quick follow-up, so with winning Amion is there currently a patient self-scheduling capability and is there any opportunity to maybe leverage their enterprise scheduling in order to enable patients of scheduling either during or subsequent to a Doximity tele-health to-date? Thank you.

Yes, great question. No, there is no patient scheduling on it. It's really designed for a physician on-call scheduling. So every hospital needs to have a cardiologist on-call at all times and this date is for really almost 20 different specialties. And so it's really for the physician to physician, quick consults and hand-offs that happen in healthcare. So the nice thing for us is that, really is again, it's a daily use case for physicians to have to get a quick console or call someone on call. But no, we don't do any patient registration or scheduling there. We do, however, through our U.S. news partnership have the ability for patients to scheduled visits through the U.S. news site when they're looking up the best hospital for their disorder and they can go look at the doctors in that hospital, they actually can book appointments directly. I don't know the latest numbers on that, but we have a growth opportunity I would say in that patient scheduling business, but it's independent of Amion.

Thank you and this does concludes our question-and-answer session. I will now turn the call back to Mr. Jeff Tangney for any closing comments. Sir, please go ahead.

I just want to thank everyone again for joining this quarter's call and thank the entire Doximity team for just an incredible quarter and great results. Thanks everyone.

This concludes today's conference call. Thank you for participating. You may now disconnect.