DOCS earnings call transcript, November 5, 2026

Thanks, Brian.

This is Jeff. I'll say qualitatively searches is exciting to our clients and to us. We've had more what they call top to top meetings with pharma companies, chief marketing officers, CEOs in the top 20. And they're going really well. It's an exciting time. They're getting real insight into the real problems that real patients and real doctors have without having to fly around and do lots of focus groups and rep rides and things that, frankly, aren't as efficient. So we're excited about that. We think we're entering a whole new market here, which has historically been paid search. And I'll give a hat tip to Bank of America. They did a survey of 35 pharma marketers, completely independent. They we had nothing to do with it. And they asked if you had more incremental budget, more to spend on marketing, who would you spend more with? And we hit an all time high with 81 percent of the respondents saying. Spend more with us. And I think that's because of the traction we're seeing with our 190 health system partners and AI search growth. But interestingly, the group that fell the most there was paid search or Google, which fell to only 6 percent of the response. On saying that they would spend incrementally there. So I think that's proof that with AI search, we are entering search budgets, which is about $14 billion a year in the United States, according to eMarketer, just for pharma. So $14 billion.

Thanks, Michael.

Yes, we're excited, super excited to work with UpToDate and, you know, they're picky. They're the number one player. The most used, most trusted. I think Evercore ran a survey on this a little earlier this year. I mean, they're far and away head and shoulders above anyone else. They're, I like to joke, I cue you like market share when it comes to. Being the clinical decision support point of care tool for doctors, most used, most trusted by far. And like I said, they're choosy. So they've chosen to work with Epic, Microsoft, and us. Not many others. And I think what we're bringing Greg and his team is a lot of AI savvy when it comes to being able to pull in broader, faster. Including evidence segments. But what they bring us and uniquely in the market is keep in mind, you know, everyone has access to all of the journals that are paid for largely by government grants and, you know, are all in the National Library of Medicine. Everyone has access to all that, all the Frontier models, but very, very few, I mean, none of the Frontier models have access to up-to-date. So we're excited about that. We're just getting out in market with it now. It's been just a couple of weeks since our announcement. But the client reaction to it has been very positive. And I would just say the partnership and the people also have been very synergistic. It's, you know, up-to-date is a mission-driven. A company, similar values to us and our team. And again, it seems to be just a strong synergy of, you know, our AI evidence tools.

And their unique expert opinion and physician expertise in that medical layer of knowledge that frankly isn't in a randomly controlled trial or published. A final point note, we have significant customer overlap. They have 2,500 health systems as clients. We have, you know, 190. So we see a lot of overlap between our client base and that. Also creates additional synergies for us. So anyway, very excited about UpToDate and you'll see more from us with them over the coming quarters. We're just getting started.

Thanks, Craig.

A more efficient go-to-market motion for those smaller accounts. We started with our more strategic, bigger accounts, which is what we typically do. Again, our best new products go to our best or biggest clients. Matt? I actually don't know if I have that much more to add. I think probably one of the things that signals well is one of the data points from the prepared remarks, which is that based on customer demand, we've made available more than double what we started with. in terms of available conditions. And that really just speaks to, I think, in a broad set of places that pharma customers are interested in conditions, drug areas, different types of treatments. You'll see there's just a lot of interest here. And Jeff's point, AI search is going to become a lot more accessible as we move into FY28. So we're excited. We're encouraged. I think the demand is there as we just continue to ramp it up. Yep, that makes a ton of sense.

Thanks for all the additional color.

Strange behaviors. So we're good at that. Again, we've been working with them for years, usually, as a partner on telehealth and scheduling. And it's actually been fun for our team to have, you know, our monthly Zoom call be about a whole new series of features and products. And I think we've got many. months of good Zoom calls there with our clients to help them see all the things they can do with it. But short answer is patient context does lead to an immediate lift. But just being inside an EHR less than. That's helpful. I appreciate that. Maybe just as a follow up, as you think about sort of expanding that top down penetration within the health systems, how valuable do you think the up to date partnership can be and is there any. sort of go to market sort of relationship there where they can help bring you into, obviously, that very large customer base that they have? Thanks.

Thanks, Ron.

You're absolutely right. Up to date is, you know, virtually everywhere in the US health system. And as I said, our teams have been getting along great. We think that, again, they're just a very high integrity, you know, real boom for the overall health system. So we're proud to work with them and we hope and expected to keep expanding our relationships. I don't have anything to announce today on go to market with them, but that's some of the things that have been discussed. But let's just say that I think it's a beginning of what we think will be a very strategic, very, it's a long term partnership. multi-year. We're excited to keep going with them.

That too, right? It will be a ramp up throughout the next calendar year. So that's a dynamic that we're seeing as well. I don't think any of that is surprising based on what Jeff described about some of our past product cycles, but that's kind of what the assumptions are that we're making for our business. Perfect.

Thanks, guys.

Hey, Richard, this is Jeff.

Hey, Jess, this is Matt.

Thanks again.

Hey, Jess, I think the answer is it's just too early. A lot of these programs just launched in the last few months. That being said, this is the most contextually relevant product we have. And so I think the working thesis is, give us a few more months, we'll have more kind of results in. But this should be just as, I would say, ROI strong as the other products, if not better. And the nice thing is this is also making all of our product portfolio better. There's AI signal now in other products. When you buy AI search, you're not just buying media. You're buying insights. You're buying retargeting to other parts of the platform. And so everything gets better. Everything gets better education at the right time to the right docs. So I think the long and short is it's a little too early right now, but the thought is it'll be just as good. Not better.

Hi, Destiny.

I would say those metrics tend to follow our revenue growth. I think we see that as being at a trough level. Like we said, we're expecting the beginnings of re-acceleration in the second half. Usually those metrics follow the rate of revenue growth.

I would say, you know, as we move forward and something I kind of am thinking about, you know, as a newer person in my seat, like I think these metrics may not be the right set of metrics to measure our growth going forward. I'll take the customer count. As an example, it's very focused on our largest customers that we've landed and had in place for a long time misses our small and medium growth segment, which has been one of the faster growing segments for several quarters now within our pharma business so. I think, you know, we'll see and evolve the right metrics for our next chapter of growth, but it's not something I'm particularly worried about, as we consider the opportunities that are sitting in front of us over the next several quarters. Just to add on the reacceleration point, I think there's three things you can look at. One of them is just AI search, new incremental. We're getting deeper, better breath at all of our customers, even the existing ones in particular. The core, the other products have higher value because of the search signal. There's more excitement around just the whole portfolio than we've seen in a while. And then, you know, what my earlier comment, cost-optimism in the market itself will be a little bit better, at least a little bit better next year than this year. So I think all three of those could contribute to, you know, improving NRR as we go forward. Thank you. And then as a follow-up, the customer count for

the customer is over 500,000. That came down for 2Q. Can we touch on what drove that deceleration? And Dusty, I'm going to have you repeat the question again. It just sounded a little... Barbled on our end. Sorry, it was on the customer count for 500K customers. It came down this quarter, so I just wanted to cover it. Oh, right. So, Q2 is actually usually one of the weaker quarters for... That metric, just from an expand standpoint, we just see less kind of incremental upsell activity. That's basically what I would point to if you look at past quarters and past Q2s and past years, you see a kind of similar pattern of relative seasonal weakness. That's the primary explanation for that. Thank you.

Thanks, Alan, and I appreciate you. Listening to the shout out, I'd say I've reluctantly come to like your survey because it is, you know, 35 pharmaceutical marketers, which is good coverage, given the top 20 is most of the market. And you do do a good job of adding in all. The various companies or partners that they work with. You know, your chart there pointed it out, I think, pretty clearly. We're at the highest level there of interest in incremental dollars we've ever had. Paid search or Google is at the lowest level it's ever been. And some of the new search players there have also dipped. As I think, you know, again, there are ups and downs in the market and some folks are. Are pleased with their partnerships and some are not. So I guess my short answer to your question is that I think you are pointing us to the fact that these really are two different markets. One is search and one is media. And the good news is we're really expanding. A year ago we were a pure media company. Now we are a media and a search company. And as Perry pointed out. About a few moments ago. There's a lot of synergy between the two because the reality is Google knowing that you search X here means that they're better able to target you on YouTube there. And those two things go together very well. And that's what we see with our business. Our telehealth which again is at all time highs. Our scheduling. Our other workflow tools in addition to AI search. Appreciate that color. And then one for Matt.

Margins in the quarter were really strong and you talked a little bit in the Q&A around some of the operating levers you could see in the business. We'd love to get a sense of are there opportunities to invest where it would be a high ROI. Investments. And how do you think about investing more in things like AI search versus maintaining these margins north of 50%? Thank you. Yeah, I think you see us making that concerted investment in our EBITDA margin for the full year. I think we have what we feel like is the right firepower to be able to make some of these incremental investments. We literally look at things that we can do differently on week in and week out basis, especially right now and given it such a dynamic time. And that's led us to kind of, I think, continue to iterate on the infrastructure that we're using, begin to make investments like in the auction biddable product that Jeff was describing earlier. kind of play offense through some of these partnerships. We'll continue to do that. I think what you also see is that we have a really great business model as a company. It generates really incredible incremental market. especially when we outperform from a revenue standpoint, and we have a really great team who excels at executing. I think you saw that this quarter again. I'll share the metric. shared earlier in the Q&A, which is this quarter, our cost of revenue, which is highly AI focused right now, grew at half of the rate of our prompt volume in our AI products, whereas last quarter

of those things were one to one. So we saw from that measure kind of a 50% efficiency on our incremental spend. And that is just a huge, huge kudos and credit to our team who continues to innovate on AI infrastructure. So we'll continue to play offense, very much so, but I'm also pretty confident in our ability to generate great incremental margins as we're doing it. Great. Thank you.

Yeah, this is Jeff.