CS Disco, Inc. Q1 FY2025 earnings call

• Q1 2025 results: Software revenue $30.9M, total revenue $36.7M (high end of guidance range), adjusted EBITDA negative $5.1M (-14%), $1M above high end of guidance range. Ended Q1 with $118.8M cash and short-term investments, no debt. - New customer value proposition: Launched 'with you in every case' to better communicate full value proposition. - Go-to-market progress: Made progress on talent enhancement, target account targeting, and incentive alignment; saw growth in revenue from larger customers and matters. - Cecilia Generative AI suite: Cecilia Q&A customers grew five times y/y; Cecilia auto review showing strong momentum with fast throughput and high quality results, used by clients to drive superior outcomes. - Recent product launches: Cecilia definitions, enhanced document scoping, improved navigation, expanded support for Slack and various documents/images. - Macroeconomic considerations: Acknowledged external volatility but believe Disco is well-positioned to weather economic downturn, with litigation potential providing tailwinds.

In Q1 2025, software revenue was $30.9 million, total revenue was $36.7 million. Services revenue, including Disco managed review and professional services, was $5.8 million. There were 318 customers who each contributed more than $100,000 in total revenue over the last twelve months, up 8% year over year, and these customers represent 76% of revenue. Software revenue grew 3% year over year, and services revenue grew 2% year over year.

• Q2 2025 total revenue guidance: $36.5 million to $38.5 million; software revenue guidance: $31.25 million to $32.25 million; adjusted EBITDA guidance: negative $5.5 million to negative $3.5 million. - Fiscal year 2025 total revenue guidance: $146 million to $158 million; software revenue guidance: $125.5 million to $131.5 million; adjusted EBITDA guidance: negative $18 million to negative $15 million, which is an increase from prior guidance.

• External volatility: US government administration's global tariff announcements and legal industry conflicts pose potential risks to financial performance.

Q: David Hynes asked about the plan for the next twelve to eighteen months to drive fast growth and the new tagline.

A: Eric Friedrichsen said they're just getting started with their strategy, focused on execution, and the new tagline 'with you in every case' aims to communicate that Disco provides an integrated solution with services and product for any case.

Q: Mark Schappel asked about expense levers to reduce operating losses in an economic slowdown and how new customers come to Disco.

A: Eric Friedrichsen said they're focused on working on strategic matters, have investments in place, and new customers come through a combination of account-based marketing, events, digital aspects, and a sales development team, with focus on expanding existing customer relationships.