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Doximity (DOCS) investors are selling first and asking questions later after the company’s Q4 report and cautious FY27 outlook. The stock is plunging because the quarter showed solid engagement and cash generation, but revenue growth is slowing, margins are under pressure from AI compute, and management guided below consensus for both Q1 and the full year.

• Revenue growth remained positive but clearly decelerated. Q4 revenue rose 5.1% yr/yr to $145.4 mln, which was roughly in line with FactSet consensus, but that followed much faster full-year growth of 13% and came with management flagging a softer HCP digital pharma ad market and limited visibility.
• Adjusted EPS beat expectations, with Q4 adjusted EPS of $0.38 versus the $0.28 consensus, or a $0.10 beat. That is a good headline number, but it is getting overshadowed by the weaker forward setup.
• Adjusted EBITDA and margin direction were mixed. Q4 adjusted EBITDA was $65.8 mln, down from $69.7 million a year ago, and the adjusted EBITDA margin fell to 45.3% from 50.4%, pressured mainly by rising AI compute costs. Non-GAAP gross margin also slipped to 89% from 91%, reinforcing that AI monetization is still early while infrastructure costs are already showing up.
• Free cash flow was a bright spot. Doximity generated a record $107 million in Q4 free cash flow and $317 million for the full fiscal year, with full-year free cash flow equal to 49% of revenue.
• User engagement stayed strong and continues to be the main bull case. The platform reached a record 800,000 unique quarterly active prescribers, up roughly 30% year over year, and nearly half used the company’s AI tools in the quarter.
• Customer metrics were also healthy, though not strong enough to offset the guidance concerns. TTM net revenue retention was 109%, while the top 20 customers posted 114% NRR, and customers contributing at least $500,000 in annual subscription revenue rose to 125 from 118 a year ago.
• Guidance is the main problem. For Q1 FY27, DOCS guided revenue to $151-$152 mln versus the $153.79 mln consensus, and for FY27 it guided revenue to $664-$676 mln versus the $697.44 mln consensus, implying only about 4% growth at the midpoint. Adjusted EBITDA guidance of $68.5-$69.5 mln for Q1 and $323-$335 mln for FY27 suggests margins around the high-40% range, but not enough to offset the slower growth profile.

Briefing.com Analyst Insight

This was a fundamentally good quarter on engagement and cash flow, but a weak one for the stock because the market is looking ahead to growth durability. The company’s AI strategy is clearly driving usage, but it is also raising costs now, while monetization appears delayed by regulatory review cycles and cautious pharma budgets. Investors were likely expecting more from a company with record prescriber engagement and strong free cash flow, but instead got a lower-growth guide that suggests FY27 is more of an investment year than a reacceleration year. The key tension is that DOCS is doing the right things strategically, yet the near-term financial model is bending in the wrong direction. Revenue is still growing, retention remains solid, and the platform is more embedded in physician workflows than ever, but the combination of decelerating top-line growth, margin pressure from AI compute, and sub-consensus guidance explains why the stock is getting hit hard.