Earnings Call Transcript
Doximity, Inc. (DOCS)
Earnings Call Transcript - DOCS Q4 2023
Operator, Operator
Hello, and welcome to Doximity's Fiscal Q4 2023 Earnings Call. I will now pass the call over to Doximity's Vice President of Investor Relations, Perry Gold, to kick off the call. Please go ahead.
Perry Gold, Vice President of Investor Relations
Thank you, operator. Hello, and welcome to Doximity's fiscal 2023 fourth 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 be making 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 or outlook. Please refer to the risk factors in our annual report on Form 10-K, any subsequent Form 10-Qs and any other reports and filings with the SEC that may be filed from time to time, including our upcoming filing on Form 10-K for the year. Our forward-looking statements are based on assumptions that we believe to be reasonable as of today's date, May 16th, 2023. Of note, it is Doximity's policy to neither reiterate nor adjust the financial guidance 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 incremental metrics to provide greater insights into the dynamics of our business. I would now like to turn the call over to our CEO and Co-Founder, Jeff Tangney.
Jeff Tangney, CEO
Thanks, Perry, and thank you everyone for joining our fourth quarter earnings call. We have three updates today: our financials, network growth, and two senior hires. First, our top line. I'm pleased to report that we delivered $111 million in revenue for the fourth quarter of our fiscal 2023, beating the high end of our guidance range. For our full fiscal year ended March 31st, we had $419 million in revenue and grew 22% year-on-year. As a reminder, our clients are the best brands in medicine, including 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 and patient referrals, each of which can be worth thousands of dollars per patient. We then measure our clients' return on investment, or ROI, using third-party claims and prescription data. Our median client ROI is a 10:1 return or better, which guides our pricing and fuels our profitability. Speaking of which, our bottom line was also strong in Q4 with an adjusted EBITDA margin of 44% or $49 million, which was 6% above the high end of our guidance. Our free cash flow was similarly strong at $46 million. For the full fiscal year, our EBITDA margin was 44% or $184 million. During the year, our cash balance grew to a record $841 million, while we made two new major cash investments. First, we invested $54 million in cash, plus up to $24 million in future earnouts to buy Amion.com, a SaaS physician scheduling company. And second, we bought $86 million of our own stock at an average price of $32.16 per share. Long-term, we feel good about both of these investments. Our buybacks reduced our shares outstanding by about 1% this year, and as we've integrated Amion's 200,000 physician schedules into our productivity suite, it has become a cornerstone of our daily engagement alongside our dialer telephony service. In short, we're increasingly the way doctors call patients from their EHRs and call colleagues from their own call schedules. Looking ahead, our revenue guidance for next year is $500 million to $506 million, which is 20% growth at our midpoint of $503 million. In terms of visibility, over 65% of our subscription revenue guidance is already under contract, which is more than we typically have at this time of year. We're prepared for another tough upsell year as we expect macro belt tightening to continue. Our adjusted EBITDA guidance for the year is $219 million at the midpoint, which continues the 44% margins we had last year. In all, despite macro headwinds, we expect to grow both our top and bottom lines by roughly 20% this year. Okay, turning now to our network growth. Our usage hit fresh highs in Q4. Across our entire platform, we achieved a record number of quarterly active users. As pandemic emergency provisions officially ended, we're proud to emerge with a record number of providers using our physician cloud in Q4 to power their scheduling, fax, e-signature, and telehealth needs. Our telehealth tools alone were used by a record 380,000 unique providers. Our enterprise products help hospital providers streamline workflows and spend more time caring for their patients. To that end, today, we announced a new integration with MEDITECH, the third most widely used electronic health record, or EHR, in the United States. Our workforce tools now integrate with all of the top three EHRs, namely Epic, Cerner, and MEDITECH, which collectively comprise 85% of the hospital market by beds per class research. Alongside our EHR partners, we're excited to continue digitizing the many paper-based and legacy workloads that physicians face today. As a product-led software company, we will continue to invest and grow our business while always keeping physicians first. By connecting doctors in their daily work from finding which cardiologist is on call to viewing their profile to calling or messaging them, we believe we become the physician cloud, a workflow and communications hub whose usage is more analogous to a Bloomberg than a LinkedIn. Speaking of communications, our new DocsGPT.com AI medical writing site has proven a hit in helping doctors draft and seamlessly fax, yes, fax, the many varied approval letters needed to get care for their patients. There's an old phrase in medical training: if it's not documented, it's not done. Well, we're glad to help doctors reduce the nearly half of their day, per an AMA time-tracking study, that they spend on paperwork. As a department chief from a top five hospital put it to us in an email, DocsGPT is 'pretty bad ass.' DocsGPT has grown steadily via word of mouth to now serve thousands and thousands of clinician prompts each week. Doctors are sharing their most useful prompts with one another and grading responses on utility and clinical accuracy. This continuous feedback is helping us prioritize our roadmap and identify where AI can help doctors most. Okay, turning now to our new hire updates. Today, we are thrilled to announce two new additions to our senior leadership team, Craig Overpeck and Ben Greenberg. Craig joins us as the Senior Vice President of Commercial Operations and brings a wealth of industry knowledge and experience. Craig served as the US COO at M3, the Japanese physician network for over a decade. During that time, M3 grew its revenue from around $50 million to $700 million. Ben also brings decades of industry experience and joins us as Senior Vice President of Commercial Products. Ben spent more than 11 years at WebMD/Medscape, where he served as the VP of Product and headed their mobile products. You'll have an opportunity to hear directly from both Craig and Ben at our upcoming Investor Day on June 6th, which will broadcast live from the New York Stock Exchange. Speaking of which, we are excited to host our inaugural Investor Day next month. It's been nearly two years since our IPO and we're excited to demo our latest products, hear from a panel of physician technology experts, and discuss our longer-term model. We'll have lunch and live demos after our presentation for those who can attend live at the New York Stock Exchange. We look forward to seeing many of you in person in just a few short weeks. Okay, I'd like to end by thanking our nearly 1,000 Doximity team members who continue to work incredibly hard to realize our mission to make doctors more productive. With consecutive quarters of record provider engagement across our entire platform, I personally have never been more excited about what we're building, and I'm proud to be on this journey with you all. And with that, I'll hand it over to our CFO, Anna Bryson, to discuss our financials and guidance.
Anna Bryson, CFO
Thanks, Jeff, and thanks to everyone on the call today. We are proud to have achieved another year as a Rule of 60-plus company in fiscal 2023. Fourth quarter revenue grew to $111 million, up 18% year-over-year and exceeding the high end of our guidance range. Of note, our subscription revenue, which comprises 93% of our total revenue, saw growth reaccelerate to 20% in Q4, up from 18% in Q3. While the macro environment remains uncertain, we are encouraged to see this positive momentum in our core marketing business. Full year revenue grew to $419.1 million, a 22% increase year-over-year. Similar to prior years, our existing customers continued to lead our growth. We finished the year with a net revenue retention rate of 117%. For our top 20 customers, net revenue retention was higher at 124%. We ended the year with 294 customers contributing at least $100,000 each in subscription-based revenue. This is a 16% increase from the 254 customers we had in this cohort a year ago, and these customers accounted for 87% of our total revenue for the year. Additionally, our customers with the largest budgets continued to scale up quickly on our platform. We ended the year with 11 customers contributing more than $10 million each in revenue. This is up significantly from the two eight-figure customers we had just two years ago. These 11 customers are all top 20 pharmaceutical manufacturers and purchase across an average of over 15 brands each. As a reminder, no customer represents 10% or more of our revenue, and no individual brand represents 2% or more of our revenue. Turning to our profitability. Non-GAAP gross margin in the fourth quarter was 90%, flat versus the prior year period. For the full fiscal year, non-GAAP gross margin was also 90%, remaining flat with fiscal 2022. Adjusted EBITDA for the fourth quarter was $48.9 million, and adjusted EBITDA margin was 44%, compared to $39.4 million and a 42% margin in the prior year period. For the full fiscal year, adjusted EBITDA was $184 million, growing 22% year-over-year. Full year adjusted EBITDA margin was 44%, flat with fiscal 2022. Now, turning to our balance sheet, cash flow, and an update on our share repurchase program. We ended the fiscal year with $841 million of cash, cash equivalents, and marketable securities. In Q4, we repurchased $16 million worth of shares at an average price of $30.59. For the full fiscal year, we repurchased $86 million worth of shares at an average price of $32.16. We generated free cash flow in the fourth quarter of $45.6 million compared to $44.9 million in the prior year period. For the full fiscal year, we generated free cash flow of $173.4 million compared to $120.9 million in fiscal 2022, an increase of 43% year-over-year. Now, moving on to our outlook. For the first fiscal quarter of 2024, we expect revenue in the range of $106.5 million to $107.5 million, representing 18% growth at the midpoint, and we expect adjusted EBITDA in the range of $39 million to $40 million, representing a 37% adjusted EBITDA margin. For the full fiscal year, we expect revenue in the range of $500 million to $506 million, representing 20% growth at the midpoint. And we expect adjusted EBITDA in the range of $216 million to $222 million, representing a 44% adjusted EBITDA margin. As of today, we have over 65% of our annual subscription-based revenue guidance under contract. We expect another 30% to come from renewals and upsells and the remaining 5% to come from new customers. To break down the renewal and upsell component further, given the continued macro uncertainty, we are modeling a similar percentage of mid-year upsell to last year, which is about half of our historical rate. Over the last few years, there have been many shifts in our customers' buying and launching behavior. A rapid move to digital, the macro downturn, and the launch of new products has led to some changing dynamics in our quarterly revenue curve. As we move into fiscal 2024, we are currently assuming our customers' buying and launching behavior will roughly mirror fiscal 2023, leading to a similar quarterly revenue cadence to what we saw last year. We'd also like to give an update on the delays we faced with getting regulatory approvals for our new vertical video products. We are happy to report that we have now received approvals from all but one client. A few of these programs have gone live, and the remainder will launch over the next quarter or two based on our client strategies. While these programs have not run for very long, the preliminary engagement and ROI data is incredibly encouraging, and we believe our new point-of-care and peer-to-peer offerings will be large contributors to our growth over the next several years. Finally, we are excited to host our inaugural Investor Day on June 6th, where we will do a deeper dive on our product and discuss our longer-term financial targets. With that, I will turn it over to the operator for questions.
Operator, Operator
We will now open the lines for questions. We have 30 minutes for Q&A. Our first question comes from the line of Brian Peterson with Raymond James. Please go ahead.
Brian Peterson, Analyst
Hi guys. Thanks for taking the questions. So, first one for Jeff. You mentioned that you expect a tougher year on upsell, and I kind of followed up on that as well. Is there anything that you're hearing from customers on that dynamic? And I'd just be curious if that perspective on the annual upsells changed versus what you guys were thinking 90 days ago?
Jeff Tangney, CEO
Yes, thanks Brian. This is Jeff. So, I said we're prepared for a tough upsell season. Of course, we hope that it isn't, and we think some of the products that we have in the queue here are exciting and should lead to upsells, but we're prepared for low upsells. If you look at the overall industry, I'll know a lot more in a couple of weeks because next week we're getting together with a few dozen of our top clients to spend a couple of days together talking about the landscape and where we're going together. I will say, if you look at the Standard Media Index data, it showed that the pharma overall ad spend was up 12% in January and 14% in February. And that's in line with the eMarketer stat we put out a few quarters ago that we thought this year would be a low teens growth, and that's driven by the shift to digital and just the overall growth within pharma. The overall pharma ETF in the US is only down 5% in the year. With some big new drug launches this year, we actually have some cause for optimism as we grow throughout the year. But I think the short answer is we're being conservative because it's an uncertain macro, and after last year, we certainly don't want to be uncertain again.
Brian Peterson, Analyst
Thanks Jeff. And maybe to follow up on point of care. It's encouraging to see the ROI and engagement stats; is it right to think about the revenue contribution will be more back-end loaded from that product this year? Or any help on how much that's contributing to June? Thanks guys.
Jeff Tangney, CEO
Yes, I'll take a first step at this, but I think Anna will provide some more color on the numbers. I'll just say, the product launch for the clients that we've launched for, all but one, has done really well. As Anna said in her prepared remarks, the engagement is much better than what we've seen. The ROI, based on the first 10 weeks of data from IQVIA, is also much higher than what we've seen. So, we're really excited about where this can go. And if you boil it all down in a couple of minutes before a doctor sees a patient on a telehealth visit, we have 1 million minutes a month now that doctors are sitting there just staring in an empty room into their own camera, at a beautiful time to remind them of the medications that are covered by their patients' insurance plans, making those kinds of quick reminders much easier and very close to the actual decisions being made. So, we think it's a pretty unique space that we've opened up here. But we do have to get through med legal review. I will say, the one client that hasn't approved it, we do have a meeting with them tomorrow where we're hoping to finalize it and get approval. They pride themselves on being the most conservative legal department in the industry. But I think you're right that we will see this roll in throughout the year, and I'll turn it to Anna maybe with a few numbers on that.
Anna Bryson, CFO
Yes, sure. And Brian, just to clarify here, we have received approval for all but one client, but only a few of those have gone live. So, we do have quite a few programs still left to launch. I think since these are newer formats without proven ROI and our clients have also developed more robust digital strategies internally, we're definitely having more collaboration on content strategy than typical for other products. But we do expect to get these programs live in the coming weeks and months, and that will result in a little bit more of a back half-weighted revenue contribution from these new products.
Operator, Operator
The next question comes from the line of Scott Berg with Needham. Please go ahead.
Scott Berg, Analyst
Hi everyone. Thanks for taking my questions. I have a follow-up to Brian's last question for you, Anna. Is the revenue contribution from these new products directly driving the modest acceleration in revenue growth from quarters two through four this year? Are there other factors we should consider?
Anna Bryson, CFO
Sure, I think that's the primary piece is once we get these new products live, we will be able to see a little bit of reacceleration there. The other piece, as I mentioned in my prepared remarks is that we are proud to have seen our subscription revenue growth actually reaccelerate in Q4. So, if we look back at Q4, our subscription revenue growth is 20%. That's up from the 18% that we saw in Q3. So, I think that's a good indication of the momentum we have in our business as we're launching our customers' calendar year 2023 programs. So, we feel like once we get those new products live as well in the coming months and weeks, then we will see kind of even a further uptick there.
Scott Berg, Analyst
Great. And then from a follow-up, Jeff, you mentioned the two new hires that were press released this afternoon. Obviously, big titles, interesting backgrounds relative to your business because one kind of comes from the industry, obviously. What do you expect them to bring to the company that might operate differently than what you all have all done before? On the commercial side, are you looking for any sort of wholesale big changes? Or are these going to be small, maybe more incremental go-to-market customer, I guess, goals and opportunities for you?
Jeff Tangney, CEO
Thanks, Scott. Yes. Well, I'd say they're not replacing anyone. So, no wholesale changes to the team or strategy. But we're excited to have both Craig and Ben join us. I mean, they've been key players in scaling two physician platform businesses much like our own to well over $0.5 billion each in revenue. So, we're looking for them to help build out our product strategy and team and help us continue to work with more clients more productively across more channels. So, excited to have them both with us. Again, they bring a ton of experience in scaling businesses over $0.5 million in revenue, like you said, directly in our industry. I'll say that I believe this is the time when great companies are built and great teams are built when the markets are a little bit tougher. These two folks, we would have hired five years ago if we could have. The reality is that it's just been the tougher market that's allowed us to go and bring them on board. So, we're excited to keep growing our team and to keep investing in folks with great experience like what Craig and Ben bring.
Operator, Operator
The next question comes from the line of Richard Close with Canaccord Genuity. Please go ahead.
Richard Close, Analyst
Yes, thanks for the questions. Congratulations on the year. Anna, maybe just to hit the first quarter revenue again, was there anything else that maybe isn't coming in that maybe you expected? I think if I go back to the fourth quarter call, you talked about a slight revenue step-up from Q4 to first quarter, and I just want to better understand that?
Anna Bryson, CFO
Sure. Yes, it's a good question, Richard. So, back in February, we had assumed that Q1 would be flattish based on the trajectory of launches. As I mentioned in my prepared remarks, only a few of those programs have gone live from our new products. And so that's really the big piece that we're seeing that's resulted in Q1 to actually look pretty similar to last year. So, because we didn't see that step-up from new products that we hope to see, the curve is actually looking pretty similar to fiscal 2023. And if we look back historically at our Q1 over the last two years, Q1 represented about 21% of our total annual revenue, which is exactly in line with what we're seeing today. So, it's actually pretty similar to historicals.
Richard Close, Analyst
Okay, that's helpful. Jeff, I was wondering maybe if you could talk about the competitive landscape. You just mentioned it's tougher times, whatnot. I'm just curious whether it's changing any, and I think IQVIA is acquiring DeepIntent, but the FTC's got some things to say on that, but just curious about the competitive environment for you guys?
Nate Gross, CSO
Hey Richard, this is Nate. I'll start taking that one. So, no major changes on the competitive front. I think as everyone on this call knows, cookies are crumbling and within digital, there are high barriers to entry. Our physician network has never been stronger. But some of the competition that we have faced has suffered from digital privacy regulation, which on the whole, is a net positive for us. Our physicians-first approach means we draw a hard line on protecting our physicians' privacy. 0% of our revenue is or ever was based on cookie technologies. We don't do banners, and so we're advantaged over those who lean more heavily on those technologies. Within analog competition, whether it's through the lens of the tools doctors use or the dependency of the healthcare system on snail mail, fax, paperwork, it's a continued shift that we're seeing. Where not only is there a shift to these new mobile digital technologies, but there are permanent habits being built, both among our doctors and among our partners that we think will position us for the next few years.
Richard Close, Analyst
Okay. Thank you.
Operator, Operator
The next question comes from the line of Sandy Draper with Guggenheim Securities. Please go ahead.
Sandy Draper, Analyst
Thanks very much. I guess my first question is on the medical recruiting side. If I sort of back in, I obviously note the pickup in subscription revenue. But if I back out, it looks like the slowdown in medical recruiting could just be a quarterly trend. But just wanted to get a sense for what's going on there and then also what your sort of outlook for the medical recruiting revenue growth would be for 2024?
Anna Bryson, CFO
Yes, sure. Happy to take that one, Sandy. So, Curative, which is the only non-subscription part of our business and it is temporary and permanent physician staffing, growth there was actually flat year-over-year. That's due to the fact that we're lapping a year where we saw a really large increase in temporary logos placements during the Omicron wave. If you actually go back to Q4 of last year, you can see Curative's revenue grew over 100% in that quarter. So, we're really just facing some pretty tough compares here. As we get past these tough compares and we look ahead, we do believe Curative's growth will reaccelerate and we're seeing some positive momentum in that business. However, we definitely believe that our core marketing business will continue to lead our top line growth, which is why we're so pleased to see that growth reaccelerate there in Q4, which really points to the positive momentum in the largest part of our business.
Sandy Draper, Analyst
Thank you. I have a question about the numbers. I believe you mentioned there are 294 customers generating at least $100,000 in revenue, which compares to 254 last year. My model reflects 265, and I would like to confirm if I need to adjust that. The numbers seem a bit different, and I want to verify that 294 is accurate.
Anna Bryson, CFO
Absolutely. Yes, you'll see that in the 10-K that comes out. But the short answer is there's a lot of M&A in the pharma industry. You've got Pfizer buying Biohaven, Amgen buying Horizon. And what we do is we net out the number for acquisitions so that we're truly looking at apples-to-apples numbers. So, you'll see a footnote in the 10-K that refers to consolidation as it pertains to M&A in the pharma industry.
Sandy Draper, Analyst
Okay, great. That’s really helpful. Thanks.
Operator, Operator
The next question comes from the line of Ryan Daniels with William Blair. Please go ahead.
Ryan Daniels, Analyst
Yes, thanks for taking the questions. And Anna, maybe one for you to start. I know we've talked about deferred revenue in the past and maybe not being the ultimate indicator of future sales performance, but it was up about 50% sequentially and broke the $100 million mark for the first time. So, I was curious if you could just offer a little bit of color on what's driving the level of strength there?
Anna Bryson, CFO
Sure. We're seeing more of our customers request to receive their first invoice in the calendar year that the program is running. So, Q4 ended up becoming a really strong billings quarter for us. You can see that in our deferred and you can see that in our ARs, they're both up quite significantly. But I would kind of continue to caution we've never really thought of deferred revenue as a meaningful metric for our business because we have milestone-based billing, which really means a significant amount of backlog doesn't show up in our deferred revenue balance. So, just because it shows strength this quarter, I still wouldn't put too much weight on that data point.
Ryan Daniels, Analyst
Okay, fair enough. And then maybe one for Jeff, just to get your update on the hospital market. We talk a lot about the pharmaceutical market. I know there's been some puts and takes there with med legal review. But you also have a very high ROI product for hospitals. So, I'd love to get an update on how that market is progressing. Thanks.
Jeff Tangney, CEO
Yes, thanks, Ryan. The short answer is that things are going really well. I'm pleased to see that in the IT sector for hospitals, we're emerging strongly as the end of the pandemic approaches. We are becoming leaders in providing telephony and telehealth services for our doctors, with over 38,000 unique active providers this last quarter. We've received best-in-class recognition, with 80% of our clients indicating that we are part of their long-term plans. Additionally, with the end of the public health emergency, the previously lenient HIPAA rules are now being enforced again, which benefits us since we've always been HIPAA-compliant and have undergone privacy committee reviews with all 200-plus clients we serve. This situation may work to our advantage because some hospitals using non-HIPAA-compliant solutions may now turn to us. Overall, we're doing quite well in the hospital market.
Operator, Operator
The next question comes from the line of Stan Berenshteyn with Wells Fargo Securities, LLC. Please go ahead.
Stan Berenshteyn, Analyst
Hi, thanks for taking my questions. I wanted to ask about your competitor's recent discussion regarding the transition to performance-based revenue models. Since your platform delivers a high return on investment, I'm curious if performance-based contracts are something you could explore to enhance your contracted business.
Jeff Tangney, CEO
Yes, that's a great question. We do provide return on investments for most of our programs, which helps us in setting our pricing and program descriptions for the following year. We've implemented some ROI guarantees in certain contracts, but major pharmaceutical companies tend not to favor a gain share approach. This works better with smaller mid-tier organizations, yet the economics may not justify the additional overhead. It's positive that others are pursuing this model. Nonetheless, ROI will continue to be central to our sales strategy and operations. Charging based on a percentage or ROI often leads to budgeting issues that clients usually do not approve. We will keep enhancing our ROI and increasing charges, but at this juncture, I wouldn't anticipate significant benefits from gain share light agreements.
Stan Berenshteyn, Analyst
Got it, helpful. And then maybe a question for Anna as a follow-up. Just on capital deployment, are you comfortable with the current reinvestment rates across R&D, S&M? Do you think there's some incremental benefit you can get from increasing spend there?
Anna Bryson, CFO
Sure, that's a great question, Stan. We are continuing to invest in research and development as well as sales and marketing, particularly as we focus on new products for physicians, like DocsGPT, and for our customers, such as peer-to-peer and point-of-care solutions. This is why our EBITDA margins remain stable year-over-year; we are committed to investing. However, we run a very profitable business, and while we are increasing our investments, we are also mindful of maintaining our margins. We feel confident in our level of investment and in our ability to generate sufficient free cash flow, which allows us to provide value to our shareholders through share repurchases.
Operator, Operator
The next question comes from the line of Stephanie Davis with SVB Securities. Please go ahead.
Stephanie Davis, Analyst
Hey folks, thanks for taking my question. So, first one, Jeff, I know you talked about why you want to go and make these new hires because talent is available in the market. But I was hoping you did tell us more on what your follow-on impacts we'll be seeing. Are there any goals you'll have for these folks in the first year? Or any sort of greater predictability you hope to get with such senior folks in the commercial side?
Jeff Tangney, CEO
Thanks, Steph. Good question. Yes, they definitely have dollar signs in their bonus packages and programs, and we are looking for them to lead our overall top-line growth, and Ben and Craig both have a ton of experience there. They're actually going to tell you more about this live at our Investor Day, June 6th, coming up with the New York Stock Exchange. So, I'll let them speak to it a bit more. But suffice it to say that with the mega channel that we have, this record engagement from physicians not only engaging with us around professional network, news, and colleagues, but also around their day-to-day workflow of checking their calendar and calling a colleague and calling a patient, I think really opens up a lot of avenues for us for win-win growth.
Anna Bryson, CFO
Sure, just to clarify here, we have received approval for all but one client, but only a few of those have gone live. So, we do have quite a few programs still left to launch. I think since these are newer formats without proven ROI and our clients have also developed more robust digital strategies internally, we're definitely having more collaboration on content strategy than typical for other products. But we do expect to get these programs live in the coming weeks and months.
Operator, Operator
The next question comes from the line of Jessica Tassan with Piper Sandler. Please go ahead.
Jessica Tassan, Analyst
Hi, thanks so much for taking my questions, and congrats on the new hires. So, I was just hoping you could maybe explain how you're pricing the point-of-care and peer-to-peer modules, just given that they're so new and they don't have ROI studies attached yet? And can we kind of think of these solutions as maybe being discounted until those studies are generated, at which point you might see pricing inflect maybe towards the back half of 2024 or FY 2024?
Anna Bryson, CFO
Sure, Jess, I'm happy to take a stab at that one. So, you are absolutely right, these are very new products, very innovative products. We are pricing them at a premium. That said, we are constantly monitoring the potential ROI of what these could be. We've run our own tests. We've run the programs in non-sponsored ways first. So, we did have quite a few good data points around what they should be priced at. Now, that said, we are opportunistic with pricing as you know. And we think that once we start getting these first ROI studies back, which the prelims show significantly higher than our median, so once we start getting these first ROI studies back, we will likely be able to continue to be opportunistic on pricing there. So, we're trying to find that right fit. But we're also trying to be thoughtful about what the long term could be for these new products.
Jeff Tangney, CEO
Yes, this is Jeff. We had over 200 physicians come out to San Francisco from around the country, top physicians, chairs of their departments. We got a lot of great feedback over the two-day weekend with them all. Again, we'll talk about this more at our Investor Day, but I'll just say I've never been more excited about our product pipeline and the things we're working on to save them time and make their lives a little bit easier. Yes, I guess I'll leave it at that. I’ll say there is a lot of excitement around GPT and what GPT can do. Keep in mind, doctors spend half their day, on average, doing paperwork. 11.5 hours a day, one and a half of that at home, usually at night. And again, the ability to help doctors treat more patients as opposed to spend more time typing excites a lot of folks, including us. And with thousands of doctors using DocsGPT and having it steadily grow throughout this quarter without any marketing on our part, it's all been word of mouth, I think we've got a pretty unique window into what things doctors actually find most helpful when it comes to this new technology.
Operator, Operator
The next question comes from the line of Elizabeth Anderson with Evercore ISI. Please go ahead.
Elizabeth Anderson, Analyst
Thank you for the question. Regarding the overall OpEx levels, could you provide more details about the R&D areas of focus for 2024 and how they differ from previous years?
Nate Gross, CSO
Hey Elizabeth, this is Nate. I can take that one. At our upcoming Investor Day, we’ll highlight some of the recent product improvements that our team has been focused on. We have a sizable R&D team, allowing us to make an impact for physicians in multiple areas simultaneously, even with our emphasis on a physician-first approach that saves doctors' time. As we develop our physician cloud, we notice synergies among the different features we are building, and we invest additional time to integrate them, ensuring they work together cohesively rather than as separate functionalities. For instance, our Amion acquisition has received significant R&D investment, now offering seamless integration with key aspects of our workflow suite, enabling physicians to transition quickly between products for communication and care coordination. We are also investing in advanced technologies like GPT, which has been mentioned earlier. Physicians are particularly interested in using these technologies to reduce administrative burdens, and that’s just one area where we can make a significant impact. With over 80% of physicians at Doximity, we can leverage these technologies to create an impact that others in the market may not be able to achieve, thanks to our network effect and proprietary data.
Elizabeth Anderson, Analyst
Thanks for that information. Anna, I have a question for you. Will you provide any additional details regarding the gross margin trends throughout the fiscal year? Is there anything we should consider or highlight that would differ from our expectations last year? I'm interested in any factors that might influence this. Thank you.
Anna Bryson, CFO
Sure. The short answer is we expect our gross margin to look very similar to how it looked last year. Similarly, we expect our adjusted EBITDA margins to look very similar to how they looked last year. And you can see that already kind of mirrored in our Q1 guide where it starts out a little bit light in Q1 and then it continues to increase throughout the year. So we're expecting between revenue, gross margin, EBITDA to look very, very similar to fiscal 2023.
Operator, Operator
The next question comes from the line of David Larsen with BTIG. Please go ahead.
David Larsen, Analyst
Hi. Can you talk a little bit more about DocsGPT and what exactly it does? It looks a little bit like ChatGPT, and have you done any work around how much money that can save the doc practices themselves in terms of like administrative burdens, FTEs, and so forth? And will you actually generate revenue from it? Will you price it? Thanks.
Jeff Tangney, CEO
Yes, David, this is Jeff. I'll take that. So, you're right; I think it saves doctors a ton of time. I think it has already, like I said, we're doing thousands of queries a week. And the integration seamlessly into our fax, believe it or not, is super helpful because a lot of what doctors have to do is fax a prior authorization or a preauthorization letter or send a drug approval letter or drug appeal letter to insurance companies. That's not something that there are many other systems out there to help them with. The main help they get is from the pharma companies themselves who we obviously work with. But they have to call some 1-800 number, wait online, get on hold. Again, I think the ability to automate a lot of that can make it easier for doctors to handle the excessive documentation burdens that they have. Yes, you're right that the site is powered by ChatGPT. So, we partnered with OpenAI. We've been working with them for about a year now and continue to think that they've got a leading product, although we're not wed to it; we can certainly use other products as they come along. But we think there's a lot of opportunities here. I think there are a lot of questions. At the end of the day, being a physician is an information job and a communication job, and it can help out a lot with both. I will share one little vignette from our 200-doctor Advisory Board. One of the main places that they see DocsGPT helping them out, it's not just the insurance appeal letters, but also in writing the technical jargon that they understand medically in a seventh-grade reading level so that a patient can understand it. And that kind of ability to translate is not something that they're taught in medical school. So, we're excited to help them out with it. In terms of the business model around it, the good news is that we have a lot of ways to monetize physicians. It's just another channel of access for both our hospital and pharmaceutical clients. But I think the transaction here that gets really exciting is helping both of those parties with reimbursement, which, of course, has a direct benefit to both hospitals and pharma companies.
Anna Bryson, CFO
Yes, on the G&A side, it looks like your G&A costs improved as a percentage of revenue pretty significantly year-over-year in the quarter by over 100 basis points. What's driving that? And is that sustainable? Thank you. Sure, it's a great question. We certainly saw, if you kind of look back as we were going to IPO, naturally, there was an increase in G&A investment. And we front-loaded a lot of that investment. So now, we're able to focus on being as efficient as possible. We don't need to invest as strongly in G&A, and we're able to invest more in areas such as R&D and sales and marketing. So, as we look ahead, we do expect G&A to maintain at about the similar percentage of revenue that it is today.
Operator, Operator
The Q&A portion of the call has now concluded. I will now pass the call back to Doximity's CEO, Jeff Tangney for closing remarks.
Jeff Tangney, CEO
Thank you. I'd like to end by thanking our record number of physician members, our clients, and, of course, our entire team. We hope to see many of you live at the New York Stock Exchange in a few weeks. Thank you for joining. Bye now.
Operator, Operator
This concludes today's conference call. Thank you for joining. You may now disconnect your lines.