From Nasdaq: 2025-02-21 00:15:15

CS Disco (NYSE: LAW) conducted its Q4 2024 Earnings Call on Feb 20, 2025, with CEO Eric Friedrichsen and CFO Michael Lafair. The company reported a total revenue of $144.8 million for fiscal year 2024, up 5% from the previous year. Adjusted EBITDA for 2024 improved to negative $18.7 million. The company ended the year with $129.1 million in cash and short-term investments. CS Disco had 315 customers contributing over $100,000 in revenue, up 9% year over year. The company is focused on enhancing its go-to-market approach and customer relationships for further success in 2025.

CS Disco reported a strong end to 2024, with software revenue at $120.1 million and services revenue at $24.7 million. Total revenue for the year was $144.8 million, up 5% from the previous year. Adjusted EBITDA improved to negative $18.7 million. The company ended the year with 315 customers contributing over $100,000 in revenue, up 9% from the previous year. CS Disco is focused on enhancing its go-to-market approach and customer relationships for continued success in 2025. DISCO is establishing itself as the go-to solution for large matters by adding innovative tech capabilities and educating the market on their expertise. They have seen success in helping customers with complex cases and are focused on a customer-centric approach. This includes aligning sales towards target accounts, enhancing incentives for growth, and improving customer support. By concentrating efforts on target accounts, they aim to deepen customer trust and deliver exceptional value. Success patterns with large customers show significant growth in software spend through tailored, hands-on partnerships. Notable law firms have deepened engagement with DISCO, showing promising opportunities for the future. DISCO is focusing on customer feedback to enhance their product offerings in 2025, with improvements in generative AI and workflow efficiency. Orrick, Herrington & Sutcliffe, LLP is leveraging DISCO’s AI capabilities to streamline document review and enhance legal workflows. DISCO’s internal operations have been optimized for faster decision-making and execution, resulting in positive cultural changes within the organization. The company is confident in their ability to achieve break-even adjusted EBITDA by Q4 2026 by executing their go-to-market strategy and driving growth. In Q4 2024, total revenue was 37.0 million, with software revenue up 5% year over year. In Q4, gross margin was 75%, consistent with fiscal year 2023. Sales and marketing expenses decreased for fiscal year 2024, while research and development expenses increased. General and administrative expenses remained consistent year over year. Adjusted EBITDA was negative, with net loss also increasing for Q4 and fiscal year 2024. The company ended Q4 with $129.1 million in cash and no debt. Operating cash flow improved in fiscal year 2024. A noncash impairment charge was recorded in Q4. Guidance for Q1 2025 and fiscal year 2025 was provided, expecting negative adjusted EBITDA.

During a Q&A session, the CEO discussed the selling environment for AI legal tools, noting increased interest in AI solutions within the legal industry. The company’s Cecilia AI products have seen significant adoption, offering specific solutions to help customers with early case assessments and trial preparation. The CEO highlighted the benefits of the Cecilia products, emphasizing their use of generative AI technology to provide tailored solutions for customers’ needs. DISCO, a legal technology company, is focused on achieving sustainable profitability by targeting larger customers and driving revenue growth efficiently. They aim to reach breakeven adjusted EBITDA by Q4 2026 and are confident in their strategy to do so. The company’s improvement in overall dollar net retention is driven by larger customers spending over $100,000 with DISCO. Their investment priorities for the coming year include enhancing sales strategies, focusing on enterprise sales, and implementing an account-based marketing strategy to accelerate revenue growth. Additionally, they are restructuring customer success functions to ensure customer satisfaction and product adoption. DISCO has redesigned its sales compensation strategy to boost growth, focusing on core e-discovery and AI products. They have hired new enterprise sellers to target larger customers, with revenue from customers spending over $100,000 growing at double the rate last year. There is a wider guidance range this year due to a shift in strategy towards larger customers, leading to revenue reacceleration. The multi-product attach rate has increased to 17%, including the Cecilia product, but the difference in attach rates between enterprise and nonenterprise customers is not disclosed. DISCO’s Cecilia Q&A platform is driving significant interest and growth among customers, particularly in Q4. Customers see value in using Cecilia Q&A for their largest matters, leading to adoption across multiple matters over time. CEO Eric Friedrichsen is optimistic about DISCO’s progress, product advancements, and long-term success. The company’s focus remains on driving innovation and seizing opportunities. The conference call highlighted positive developments and future prospects for DISCO. The Motley Fool provided a transcript of the call, emphasizing the importance of conducting personal research and due diligence. 1. The unemployment rate in the United States has dropped to 4.2% in September, marking a significant decrease from the previous month. This is the lowest rate since the start of the pandemic, indicating a strong recovery in the labor market.

2. The FDA has approved the Pfizer-BioNTech COVID-19 vaccine for children aged 5 to 11, making it the first vaccine authorized for this age group. The decision comes after clinical trials showed the vaccine to be safe and effective in preventing COVID-19 in children.

3. The COP26 climate summit in Glasgow has concluded with countries agreeing to accelerate efforts to reduce greenhouse gas emissions and limit global warming to 1.5 degrees Celsius. However, critics argue that the commitments made by countries are not sufficient to address the urgent climate crisis.



Read more at Nasdaq: Cs Disco (LAW) Q4 2024 Earnings Call Transcript