Earnings call transcript Q4 2022

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Operator

Ladies and gentlemen, thank you for standing by and welcome to CS Disco's Fourth Quarter and Fiscal Year 2022 Conference Call. At this time, all participants are in a listen-only mode. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions].

to CS conference Disco, like first to now [indiscernible], speaker, Investor would hand over the your I Relations. Please go ahead.

Unidentified Company Speaker

Good us and Disco's on Camara, Disco's the you Michael me on for Lafair, call XXXX. and are fiscal thank Disco's discuss Kiwi call and for financial afternoon to Officer. results Chief With Chief quarter year Founder Financial today's today's and conference fourth joining Executive Officer

Private Safe include to will the statements Litigation Harbor XXXX, provisions of forward-looking product the financial statements outlook, limited the call Today's and our meaning including, of market our strategy, future market within expenditures, opportunity Securities our not position, Act growth Reform and performance, of but capital and future regarding opportunities.

our a filings, release, be remarks, earnings at call Relations can In press replay on today's addition and our Investor ir.cscisco.com. found website our SEC of to prepared

involve Forward-looking implied performance, unknown may results, uncertainties and actual from statements expressed our different to known cause statements. and materially the forward-looking those achievements that or risks be by or

Forward-looking beliefs made. and date as the of management's represent our assumptions only statements

could for XX-Q year SEC company's factors XX, Form and results the the titled XX-K XXXX. for Report ended Information the including XXXX XXXX, quarter December in in ended the November the from on that Annual Form September on its on filings on company's XX, with the included SEC filed with Factors Risk section quarterly time-to-time, affect report the the in upcoming XX, financial company's

using a performance discussion limitations earnings release. or GAAP to addition, their measures. reconciliation financial and and A are non-GAAP addition These for equivalents measures financial during non-GAAP superior will is not of and measures today's financial GAAP. our of in prepared a discuss measures of non-GAAP in In financial GAAP closest to measures with in versus available we between call, the substitute non-GAAP accordance

I'd to to the over turn Kiwi. And with call like that,

Kiwi Camara

and our call. fiscal year afternoon, fourth XXXX welcome Good quarter and Alexi. Thanks, to earnings

partners get would the into here. helped was who Disco to I dive customers thank I XXXX. our all results, us Before in like and Disco employees, founded

is side tech XXXX In XX lawyer's a come of next So of that company project leading a celebration that a our accomplished. in I everything Discovians years everything into to business. built am from our is deeply And legal time, excited first have years. XX company. his we I'm in proud for hundreds of

million adjusted negative was XXXX Adjusted Turning year now to QX EBITDA and and results, XX.X full million. our XXXX million. XX.X XX.X the for million XXX.X full for revenue was QX for XXXX the negative for year was revenue EBITDA was

In XX% than overall revenue in accomplished addition these to Ediscovery grew from things We original many XXX product to our more XXXX. great by than we results, million. more

customers. and to existing relationship onboard continue new with our We expand customers

the over of in product whom over our acquisition, ended We experience City. our $XXX,XXX the Disco We our topic by and global for including spent over office XXXX and opened year the $X with whom XXX XXXX us XX office in welcome of spent customers back with and to Discovians London Austin base. million. product to our amazing Disco automatic team, We New with York first customer which We portfolio. Hold in Request completed Disco the indexing, saw enhanced adding innovations and clustering

Marketscape, prospects, junior incredible Ediscovery the able that Case of received vendor these they the by I deliver, a access of stream we by these that the encouraged program are corporate and worldwide scalability, tech of our legal talent. We achievements, generation assessments we by and and they And our feedback to cannot launched and use help from praise love Software toolkit, in industry, specifically feedback including develop the in next steady ease results rotational work and customers and leader experience an and Ediscovery in Review Early emerging legal Assessment, a leadership calling the to of recognition XXXX IDC us doing be for leaders strengths by but the to as give products products. powered continued customers. the received products, from out our

latter Going year. forward, usage growth created by was in usage decline products, product, pulls this path discovery, This we impacted of that by including part and last and profitability. forward on especially are that our growth of volatility will focused the the compounded by plan continue our exceptional reviews, in by e reaccelerates difficult a especially review all QX large a comps to in was growth on Revenue in revenue Difficult year. year comps our in of XXXX. of

lies the execution. that revenue growth go-to-market believe focus in path to on reaccelerating continued We

last senior IPO, new of to Over addition marketing since our the first-line heavily managers. and and up out and go-to-market success a scale growth organization. our field our of involved the we leaders quarters This lead inside as sales teams, as six invested well scale of and generation rapid customer

focus to market's support we is commercial the Our and strategy, and and view. service needs, is product that this continue meet and that on a larger from now organization efficiently, customer effectively go-to-market point ensuring and of operating pricing

timeline exiting materially have We believe achieve We can XXXX. we decided to EBITDA profitability for positive our and that also important to set path that clear accelerate a milestone.

includes well mix path addition well growth, talent as as as functions increased In talent. to to of global profitability time Disco, advantage to over greater all across take at our efficiency our homegrown changing as revenue talent

And our driven internal used can production further we infrastructure to environments infrastructure, historically side, our in used and non-staff by sharp spend that our both non-staff the in at customers, headcount. engineering On expenses, serve look and our on expenses, cloud environment we teams. optimize taking a believe software have including expenses we development are been other by

any is milestone through are of senior and important I Disco transition an to team the in profitability my transition. to leadership The maturation lead excited this business.

driving targets leadership revenue to senior goals focus of every EBITDA twin achieving for plans, reaccelerating revenue at including profitability. our our level both on of tied XXXX team and have growth and We goal the incentive compensation with

building the platform look ecosystem. and software out be five, Disco? call legal outcomes be three, on clear portfolio being I technology; two, to the the that earnings counsel's; what software strategy be the choice five one, using are of I profitability long-term use; general year. one tech the QX continuing from center The leader at of the pillars for toward course year, this over year best deliver by four, the progress platform; an strategy. next is love be outlined our that remains for tech to coming strategy our that ago extensible XXXX five legal to Zooming lawyers the forward of report on with our The owner of software pillars

on strength combining deep and our with respect built number Pillar feel love one magical world-class the law for to that a experiences core engineering product lawyers. to is build

of love requires powerful and that every step to legal our on process legal is human expertise that that use, of kind design judgment. work product that to the on deep focus and focus customers infused simple. domain And that both Our us allows the enables software with lawyers build to

core releases review metrics Ediscovery topic included Our and clustering time our automatic indexing, XXXX in and product. tracking redactions, native with Excel product

for hold. they features for We litigation slack happened to also lawyers evidence many in figure and released the and facts. in investigations prove others management in that what builder collect in to These evidence it find those and released XXXX also case out need easier make

by available to we advances capabilities them introducing QX, XXXX, Disco's a in use This new power continue to that In customers. on customers bringing to our made to review. architecture document tag and next continued products, legal greatly current limited intend of the prospects possible made our recall AI innovating and like and tag scoring both new and features models market accelerate that or In AI analytics. lawyers of architecture improves demand to precision and we set generation predictions language wholly-automate features

architecture ability find One language. legal English, to train a by related model the documents in to documents to in is capability a the based on for example, different one model issue use the this language same and enabled

will documents in accelerate evidence Disco example, of We Review. process are that the only humans we believe English. even year, Ediscovery, these For of expect enter finding efficiency if improvements, AI in this Disco further Japanese, improve reviewed and which availability will general the have

in areas of more operating years. of product time and are the We to continued full work coming suite our in analytics. and look advances advances across AI accelerating We legal applying these to the in forward

the brings us pillar legal for large This be to controlled to of departments being continue General platform world The of the choice by legal Counsels. in the budgets enterprises. number largest two

strategy of become pillar our for second choice legal The of these the platform to departments. is

and we reminder, corporate through providers. to departments as As firms well sell directly, a as legal services law legal

Hold directly Disco attractive that solution increased is single sell These more to XXXX, well an our and legal We than used representing departments. investment number like of like customers our more to a the in-house platform that only products counsel, by corporate made also that integrated downstream disputes. support year-over-year ability which XX% and XXX, not Review we work around legal are to and growth. Builder end-to-end Disco In Case Disco than full primarily Ediscovery, provide stack but Disco to investigations as believe and as to into products departments solution Request has our corporate more demand

that solution. We positioned provide to are now well

to loyal economy, company One since customer Disco that XXXX. was QX, a of the a been subscription at and XXXX, sharing signed my they bringing favorite from friendly. customer a of has $X very examples rave times Council two a is spend that were was excellent leading tech to us In beginning million. refreshingly they platform the paying a Their that Disco amount north of annual monthly their user

technology technology themselves Our in as with of which forward leader. an vision platform Disco's customer innovator their aligns and loves

fast-food to million major over reasons. Disco with $X.X usage Disco XXXX. Another customer, for a love global They increased in chain, several their

efficiency find their which the them of tighter matters. legal they and work global outside their gives for control into greater allows transparency First, across Disco counsel,

pricing, of force compared traditional save and understand through legal Second, dollars through finally, they brute provides Disco to certainty. hundreds to AI thousands the simple them of review. us love And allows approaches document application with them which review our cost analytics to of

we They and expanded major XXXX, team XXXX. a customer in U.S. and members. conglomerate with updates matters to a that intuitive product them in keep service, love team in our users to This their The Disco small up today. responsive XX is over over Additionally, Disco usage and feedback us with and forward-thinking started of needs. $XXX,XXX with powerful, to addition since platform, they on receive have that of finding their manages increased customer consistently dozens our frequent with from engaged spending

key choice our XX next GCs platform the pillar strategic for a Becoming of remains for years.

outcomes for prove and with counsel's enterprises the Disco deliver continue will and efficiently, current implementing companies, general to major climate. legal do their We can why forward winning them macroeconomic in push GCs, to especially and better enable more so to

is three number to that just of not just Pillar legacy an review better our doing efficiency give Disco use higher outcomes. AI for to our technology. especially tools. ultimate review than approaches technology, review. deliver process people we clients legal that Instead, deliver document tools We is outcomes, don't delivering outcome and quality and documents rather with Disco greater on of and the rely example

and about, they sell that want the might are allows By And technology care they compared that reduce people so otherwise to that approaches them friction ultimately at AI process. what to superior legacy around delivering technology. our us these feel deliver buy principally customers margins, powered fundamentally outcome adopting to new to the rely and able we gross do on outcomes reliance to on

While primarily headwinds convinced usage in firmly on very XXXX, that a and are review, supplant encountered XXXX our many approaches relative and to document that to We review Disco the large process. rely to stack to approaches other powered in kinds in legal shortfall amazing people an driven like legacy matters. remain work offerings technology product ultimately due year legal review of full AI from future. revenue review, primarily will on

spend to our Disco to introduce broaden built Case a preparation, leverage time, of on technology to full document Over summarization, deposition offering quality, Disco deliver beyond simultaneously and making areas to increasing ultimate more legal begun top costs products that we reducing of have review while stack deposition predictable. these review Builder. like and total We more outcomes, expect pure legal

and so broaden number tech part acquisition work. power of owner. Request legal is and more on in pillar We kinds customers the our to be to integration of our progress more made great to Hold. With this and release Hold, and Disco that product of For This continuing Pillar Disco of use four XXXX. can Slack Collect Disco portfolio as legal Disco means our portfolio

in invest Builder. Case Review to development have Disco Disco We continued the also and of Ediscovery, Disco

tech strategic build several We to legal both look and products forward to portfolio and revenue our Adding continuing accelerate organically more ways. growth our partnerships. can in acquisitions through portfolio, to out

deliver customers more customer. generate to First, revenue with to can more able the our value are products, we and we per increase

Second, with our more adoption then portfolio give expand more disco customers time. and over ways journey, across products, to we begin our their product

their to with needs introduce variety that commit be will one that customers fourth, they legal displace to Disco, even it is or customers for products spend point Third, of across from to only models legal commercial wider of our solutions that relationships with our who the prefer a products, who more the period-to-period. with more encourage with our we can changes competitors us. a of portfolio able work, to compete to nature that confidence as use products, from spend difficult existing two of buy And products with more offer

existing our who for attach as use more of among based percentage the the year-end, of us inception The time substantially for revenue was products one driver other our and XX%. using the customers of the and Increasing generated rate a at multiproduct than product one be material of customer completion of number at multiproduct adoption on XXXX, during legal matters. other year their multiple investigations in revenue future. litigation, can calculated in growth customers In varies base any things, XXXX, Disco across

legal five operating center Finally, the tech pillar is of number at ecosystem. the

deliver our legal services providers build in firms by and with services invest law powered businesses who to technology. continued and Disco have We partnerships

customer these more new at sales company work grow invited kickoff to addition us departments. have direct our partnerships to We sales to to January reach legal ways incentivized XXXX. corporate our force direct our in efforts, with us In in services provider and give relationships of legal our to these and collaboratively several existing annual join partners partners

more of own metrics allow give that processes these their all that some partners features like in to partners them these released releases, deeply have Disco. we organization recently, More we business work And offerings and dashboards their visibility platform. product build enable our to our on endpoints API provided integrate into into have that

have available careers training Disco which that and in at rigorous we invested next the to and ecosystem technology, like training law Disco allows the ecosystem prepare provides schools to programs for schools, for Disco Beyond makes platform which lawyers engaged the Disco. and and reduced Disco by And Disco generation in programs University, bono, or for free certifications users on-demand technology Disco in of bono pro other through nonprofits paralegal customers rates. powered pro work greatly to gain for access participants.

a to revenue million plus companies. relationships. are relationships who to the the adoption careers of add other the to driver continue embrace value have who participants develop these and Lawyers We of long-term more originated elsewhere many in dollar on their with as legal moved industry in leading also growing be multiple our growth more to many be Already or active legal legal the through we continue at to conferences have from of tech. with seeking in people our and alumni the industry. the and maintain and these tech professionals move positions industry cloud to several Disco. of legal individuals We customers across gone proud customers And seek

next make synonymous healthy five tech. believe pillars We tech. that Disco important If can growth XX at an next generation with and legal with executing pillar the as the drive accelerator over legal and into number truly XX years, sustainable in we career make for Disco we on affiliation strategy five are successful credential will the we next over leaders an our years of

over I'll results discuss hand Now financial to it and Michael our to guidance.

Michael Lafair

Kiwi. you, Thank

year in revenue of and up million, of is contraction by XXXX, X% year-over-year. XX% expansion the the QX In saw was revenue review review, The offset XX.X in by was year-over-year. total attributable of Full revenue. we revenue year-over-year a existing was lower million, resulting quarter decline decline customers customers a driven new the smaller to XXX.X revenue. XXXX in Full year matters addition primarily in growth significant

Our Ediscovery growth Ediscovery XXXX million, rate north growth saw over a as finished business year-over-year. of the in compared half. front in back the to XX% revenues of revenue XXX of half and We with lower

Our XXX%. of net XX, dollar was base This XXXX the as December discussed. of large retention from is rate primarily previously of our reviews DNR drop we've due last year to XXX% ending

the our in on revenue for contribution customers. new year, based for XXXX. Ediscovery XXX%, will XXX% was and was in and existing demonstrating retention from variability be DNR of overall And before, of rate dollar-based the we've While Ediscovery, as timing said net resilience the there DNR

discussing non-GAAP specified, count to all please income note a the references expenses, are statement, our operating remainder In on that of share basis. the unless and results otherwise

was Our prior margin in for fiscal for from up gross XXXX. the XX% up margin XX% fiscal QX from was XX%, in QX of year year, year XX%, XXXX gross

our As from our on fluctuate the based period-to-period nature customers of margins reminder, usage. gross a

amount ingested managed For and example, the of and our platform. types data on

margin We we've bands the continue historically expect to seen. to within be gross

go-to-market marketing This quarter, we expense QX QX year-on-year of of in the the for was organization. an in XX.X approximately out X.X year. to sixth as completed increase quarter XX% million and XX% revenue revenue million scale Sales the or compared represents of prior of of our

of For XXXX, XX% of XX% XXXX. increase approximately XX.X to million marketing XX.X year fiscal compared year and expense sales revenue, revenue fiscal for of year-on-year. or was million, An

and over Research we quarter we business we XX% scale and in in more as XX% represents headcount. forward, last focused be year. of revenue our X and during of we execution on of the million the appropriate mentioned of quarter, compared we year-on-year And development sales, terms efficiency. as Kiwi will an moving have This QX continue in of As feel of mentioned million prior to reached expense invest or innovation. in QX to revenue, increase XX.X was the

expenses compared XX.X the XX% fiscal administrative XX% revenue, year we to to prior to development growth year. or year compared This million expense of a revenue XXXX, XXXX, an an QX represents was decrease XX% and revenue, General or as million million year-on-year in of in year-on-year. pace During were back-office increase revenue in research XX.X compared expense of in year-on-year. fiscal million million of and of X.X revenue, XX% to approximately over administrative million of revenue increase scaled X.X or in in General of XX% was the of company. fiscal our XX% QX and X.X of over of year fiscal year XXXX XXXX, with keep quarter XX.X of the functions the

in to approximately Operating line representing negative were by in the of in performance. fiscal loss compared XX.X million our negative XXXX We XXXX. XX.X XX% XXXX. year. want year. in operating prior QX the in negative We million primarily to negative million margin expect driven compared negative year incentive not QX negative compensation was benefit negative EBITDA do compared of out lower was loss XX% to of Operating to savings QX in X.X than XX% from QX a a of was these point QX million margin that prior of expenses lower XX% margin in This to QX. with in Adjusted XX% for QX, was in of a representing XX% XX margin

XX% Net negative of X per fiscal in in margin fiscal XX.X fiscal fiscal of XX% loss was compared million, for negative million, XX% XXXX. year revenue million, Net to negative revenue, revenue net was the year to million, year Net XX% of share compared of share, loss was XX $X.XX in XXXX. of of compared loss per $X.XX for of XXXX prior XXXX XX.X or to loss negative million XX% a loss XXXX. margin negative QX or XX% revenue, compared in share of year. in or or in year was per EBITDA QX to a net Adjusted XX.X a negative XXXX of negative

XX equivalents. balance sheet cash cash in million in we year year. flow the compared to to million Turning the ended and XX.X for million statement, cash XXXX prior Operating negative and the XXX.X was cash negative flow with

Now outlook. turning to the

last keep guidance facing For QX million mind to XXXX, in that strong a to we're revenue XX.X million. providing range the of QX a review. difficult year, especially due we're comp in in Please XX.X

of the adjusted million margin we're negative EBITDA XXXX, to million providing midpoint. XX.X XX% QX representing negative in For adjusted at of guidance XX.X negative the EBITDA range

and For XX XXX of fiscal negative guidance margin year XXXX, million XX% range of we're EBITDA at million representing the midpoint. revenue million in the range providing adjusted negative million of XX EBITDA XXX to to adjusted negative

are in business targeting our margin QX adjusted a last relative we of the the negative implies Additionally, This quarters. few guidance EBITDA XXXX teens. to reacceleration

profitability remarks, positive forward as said task in his on Kiwi exiting EBITDA Additionally, pulls plan with we're a XXXX. focused adjusted that to our

very about our the XXXX towards. working progress We're excited is team and

into have at XX the strategy right our years. next people, vision Disco lead to We and forward us

I Operator? Now, the the Q&A. would over for to like to the line call up open to operator turn

Operator

Thank you. [Operator Instructions].

Your of first from Ikeda question America. line comes with Koji a Bank

Koji Ikeda

how about? looking at we specifically, should or this matters any already thinking be seasonality was should wondering, I this there fourth that third quarter or are of be platform to off the about Anything And come beyond anticipating year. was call I the first you're to growth aware the up And the second, the about guidance thinking quarter? large year? So that we for

Kiwi Camara

what no optimize large we come is some me responses macro matters are how environment, help obviously, you talked who big earnings say a And spend? there say, Koji, that think we can roll there. to in which we're hey, and it's few have will disco customers last my this about different do have ticket do on items we that of fair are to that that our aware I specific call, off.

big customers wind scheduled line to to multiple is which Disco some can spend less your products. cases that no we come help off. across the material by certainly platform The business those whom But more of a are large you for item, to first but is, instances, we of moving providing up Disco in discounts

Koji Ikeda

you, on Thank up for profitability I follow Got of comment that. Michael XXXX. And wanted Kiwi, exiting the with the adjusted to EBITDA it.

color Just maybe leverage, growth provide driving any out guys. driving be sort you call model scale can of specific to and that profitability. anything that to could other path other Thanks, that

Michael Lafair

good of thank Koji, you. In light -- question,

path the So profitability. in and to macro we've light to our of environment, decided forward pull

shown And to next EBITDA that do quarters. year, in the things levers this We we're the of respect can eight how the going with past. ability a on go based on And exiting I how to providing obviously positive. achieved us what have get over is mean, kind adjusted color the there. to number different XXXX there's of that will be be

And so we'll updates go as provide we each quarter. along

Operator

next line of question with Tyler Radke the Citi. Your from comes

Kylie Tobin

built Tyler Hi, feedback your and is Tobin initial Disco margin customers? into on business theme are question. How the does for on is your Starting been you from those And the the outlook Thanks. integration how guidance beta next impact thinking it taking the Thanks and the and What architecture. review monetization this into for generative this about year? opportunity Kylie off the Radke. has for long-term? AI

Kiwi Camara

in improvement topic improved to what and to investing the do Disco the the clustering when they And and We the documents higher models last the Customers precision technologies that offerings is AI was more ultimate with use that a over help is improvement able language in they're matters in into been Review the has about So scoring time, short, and Ediscovery, automatic ago a everything year release quality review an review. us doing great The AI architectural incorporated most both from both predictions legal years use differentiator delivered our recall done recent of AI before. In with you're indexing. get legal document tag tag reviewed talking quickly we in product multiple accelerate buy allow Disco as that automate beginning. benefit market to core and themselves. Disco eight of technology to for has began of matters. reviews broader to outcome of have this than from Lab when in even they've

in based review pricing way, of documents the increase And are Now an our of review redounds generally Disco's number is deals model to review the when submitted. priced efficiency that on benefit. the

On it firm provider Disco the review the spend reduces their Ediscovery because doing do customer into services. the using to those amount or review, to side, legal or the on the that AI services of translates outside law third-party the is an themselves, delivers increased legal when the customer, value

forward. Going

just I not only beginning in integration AI techniques forward, and like generative newer product the AI Disco's sharing Disco announcements going and Case very look Ediscovery, other we think we're to Disco of of at the Builder, in forward a and of products exciting more time into but some in our products Hold.

the in to. We incremental have into we've pricing baked that AI not margins or any AI numbers incremental guided

that to model. upside priced area, then we So if expect in be next we over are independently to the the course of this year would and year, release that capabilities this

Kylie Tobin

was much. this count fall Thanks. that customer year your customer that We And noticed did at helpful. and of the That's Thanks guidance? QX ending XXXX. churn Did it expectations? more just see in quarter? Or off you so, full on anticipated that so one dipped really count. bit short And a if

Michael Lafair

Hey, question. appreciate the I

So customer count actually QX. sequentially did from increase

customer in saw count increased the We segment. corporate also

So it we're not seeing definitely seeing what up. you're went

Operator

Your SVB next question comes from with line of Moffett. the Ader Jackson

Jackson Ader

and Just expectations your into kind of think we Ediscovery, of Builder. Review for factored guidance each three Case largest this about, What year? review case those of for kind curious products are if that growth

Kiwi Camara

view, our continue more as and the measured product. platform and multiple of And targets materially point is our that use year. I the course second, to about percentage of new getting the drive today, the of a part that more as to call on with of strategy is right metric That up multiproduct our the customers for the focus fifth remain at talked and multiple for on stands products executing we that and in you tell I think of of your Well, to as And that which main products, is same fourth they to multiproduct by this expect that XX%. expand full shared year. to Disco who we use course our work. growth year-over-year. rate we products an the customers disaggregate ordering both don't It's both over third, very getting increase can metric, stack that over that attach end operational the the that pillars. five is across We new metric existing customers land metric an more by customers categories goal legal from new

Jackson Ader

then, think, That's ago, right. just company you we couple that years think growth rewind to All expecting, like about can And we your at point this a if maybe that lifecycle fair. in Okay. were to the the to -- couple how of to up products, the much actually you're slowdown growth this that you maybe years that a relative Disco competitive capabilities again, catching maybe, I'm enjoyed attribute would curious ago. you experiencing?

Kiwi Camara

four time We were delivered. thing of interesting. the unexpectedly it's do we we models compare think then and number somewhat where to the the we year would the we thought be quarters interesting I revenue paying of An is actually that last quarters number provided around growth. at of IPO the look growth, to the good we to had four revenue at and unexpectedly penalty good that

and then And bit growth, of, the a some that. forward back pulled had some so on slower of there's we little end growth we

attach key that's to to customer of expand tightening right? I talked I reach have XX%, forward. is then driving sacred, in believe and year-over-year, on, our a ingredients extending and up Every opportunity we customers year-over-year. and XX% XXX that Things like multiproduct and that all five-pillar the the we course, need think every things into materially up going plan to growth execution, that our to up up can reaccelerate very rate Of And go-to-market corporate, number and so strategy. about is beyond

On don't landscape, the I over last much competitive the actually it, year, changed specifically. think call has

analytics, often I ultimate the back that were sales things products ago, sell moving experience legal and years the market, at the like we stack Disco whether you AI Things to number end model, cloud, of things go reliance departments, buyers, like of things like that like the in were where to on and direct if like focus new Review. to or user five were lawyers, the think our to on that Disco ideas championed, law full of with firms. a skeptical three directly there competitors, a

go of have if And skeptical and our now say competitors them are our we things These would you them. many embracing like were Disco. are competitors to of too, back, been trying

that has changed. certainly So

of on puck deepen is that the are like is discussed stack, to legal is full about that skeptical and in build talked I the offering now. And current the my Review, you This leverage the some think Disco investment in remarks, continuous to to you again, continuing Builder. And products going Disco technologies investment deliver in outcomes one now through our five Case those today doing ultimate built focused prepared work. work are things spectrum not beginning full market we're core areas. also introducing that where what ideas these our handle idea broaden I platform we've I multiproduct so, of to our offerings to our differentiation and And can but how skating can that of. like in the investigations. full spectrum we're only around in products, that to But competitors And handled disputes tools, we're like

we're landscape. sum up I'd the that's to market. how competitive continuing And So lead where the that's I think,

Jackson Ader

That Okay. thoughtful. great was and Thanks.

Operator

line next the comes Derrick Your Cowen. question Wood from of with

Unidentified Analyst

in generation, what Thanks. and on off driving effective quarter, those It's are investments most just last for are how to you marketing and in starting channels Kiwi, increasing new leads? kind lead pay Derrick. great. of Oh, Andrew about CSMs talked curious

Kiwi Camara

So start SDRs. we with if

and both and that outreach, unambiguously warm generate. basis, those cold and of That over do team sort scaled So steadily basis part they accepted increased And leads, SDR measured very go-to-market unit outbound targets. from is the up that the of they SDRs on going to we've out. we're leads our number inbound on seeing the quarters they process productivity terms team of of aggregate a scale that six well, do, last sales an in as

progress an for SDR corporate origination. We've teams, new focused building SDR also specialty in team on is made direct example, that

up been some cold year-on-year built SDR corporate through XX%, growth generation, that team actually, shared the people of those of initially to skepticism has because Operations. on number Deputy some a a that's of you contributed we've lead just And where call. direct out we to imagine, XXX. on That's in General sorts to metrics we get like But Counsel, it's an to productive. SDR corporate relationships, prospect selling that's like So phone General of tremendously of the the the the have might area now about Legal Counsel, the call, harder Head

the setting customer sell success an that they an of both seen opportunities On in records that basis results team, and identify. and aggregate side, terms the individual also strong with we've upsell cross

positioning we're be team think for can we huge of a the it how coming about the growth. think you driver If year, CS

taking of they example, plan number customers them at have in the the that matters $XXX,XXX, and in double would blow say under the that number the to Disco, our For large getting platform of are right? that out spend, of park,

shorten tremendous a that new done. journey to it now longer, do much And three something quickly do or to historical know to shorter. and adoption from that for five we've existing there's enough can for opportunity the the be So it years us customers customers we seen things

of think like But so and in whereby time. I promising those we we're marketing progress on the marketing, scaling to things On areas in side, expect the those course marketing based I marketing, over here, seeing XXXX. the over our making spend We're results digital journey we're on. And earlier early continue mean results. field

Unidentified Analyst

as higher, us in to to And this terms a you've past help over flavor need and one you're are what where growth that but a and hired hired Great, then, us productive maybe a currently, a feel thanks. grow you carrying over lot -- Thanks. of those maybe cannot Kiwi, of for number year. the place quota don't sales give reps two much in percentage ramp capacity, at for the give years, reps you've accelerate

Kiwi Camara

Yes. bet. That's exactly our

classes newer that XXXX. materially their in reps through to as our of believe freshman go we in So ramp contribute XXXX that and growth will they

of newer they XX months, months the of when rep reps, the of think so similar historical terms reps to Disco productivity of about is XX we rent, productivity reps years to the at were the on. ramp new say way and In to six so compare the

are performing when historical reps our similar compared reps they bands. as newer were well at tenure to Our

Operator

Your next the comes Jefferies. from line question of Brent Thill with

Luv Sodha

of Thill. is mentioned then, on did Brent half in you Are into you're first Are the into year. a slowdown this growth the Hi, that conservatism. back what you Could that you higher to than level Sodha next is baking historical what And you. Ediscovery baking for Luv Michael, as year? give of the us the guide? in for for just baked some color you maybe question guiding

Michael Lafair

Yes. Luv, thanks question. the for

lot reacceleration. guidance. last prepared wouldn't quarters, I if a into read business. goes remarks, couple than and that. said other a at our Ediscovery the you there's in So as of combination obviously that my overall that, a of into it's guidance And the the review more And implies just I look

Luv Sodha

need you growth? you year? like that gives Got I the growth resources terms of drive And better you reaccelerate you it. to confidence guess, internal the in what more Or have Is Kiwi, anything over do feel point, can next you execution? that on there

Kiwi Camara

I do.

guns, function, last talking of company investing terms the was S&M. six less And both in pillars quarters, that Over or strategy we true the to that more in the pursue out of about. five our stuck to every go scaling the and in R&D, been I've

new as quota I how focused and productive very terms earlier response we're their XXXX. and in to In sales questions, in go color members some teams ramp helping one XXXX on growth are contribute rep CSM of SDR, they the become those the of team you Now, gave to carrying through and doing.

that understand We thinking of of can from in underlying pointed some our about and number help metrics I the investors our remarks. color, prepared business. a think analysts and to zooming that out things

continue experience more we up to XXXX than First, strong customer to today. growth, customers

our of that that multiproduct enterprises. to expansion Direct corporate working XX% attach of and counsel also to than control customers multiproduct of more a to is succeeding to multiproduct last grow penetrating and but that stack budgets. low attach customers there's up more than that rate also large spend growth. decision at XX% relationships, a expand who attach up year, million. a rate the the is room rate makers legal And $XXX,XXX multiproduct That the at continue spending number we're materially market XXX and us full driver year-over-year, strategy year-over-year. with general the tremendous is up Then spending We We're with with be enough higher XXX levels a material largest XX, for

our of last importantly XXX for of makes up XX% majority our And Disco based then and large with course, still Ediscovery year-over-year of up original product, dollar a million north net retention. revenue XXX% overall year,

also operating of So both on out in level. at execution metrics seeing what an level the micro and terms at the we're in teams, zoomed

I business. think the there about growth in prospect are many reasons our optimistic for to be reaccelerating

Operator

comes Robert from with Morelli Needham. Your the of next question line

Rob Morelli

the Rob for my bookings changed composition much beginning into at versus for year. last look you modules This When the here. in fiscal the 'XX, year Thanks Hi. Berg the the stepping as of Scott is taking two pipeline question. quarters, of of or

Kiwi Camara

No.

Rob Morelli

it. Got

accelerate litigation legal or replace existing view drivers economic how just slowdown the to then, in their customer industries should And the to tech why given Okay. movements, the are macro? Thank to legal the lightly sensitive would we softened platforms you. decision

Kiwi Camara

impact in the has the puts business our takes. I and macro think of

And customers large spent. climate, the go so on material and very about one when there's spend pressure to reduce item you earlier, I talked hand in is line that this have their with the Disco and Disco current

have with customers. those we so to And work

try do extend their discounts, we times headwind in Sometimes that's and maintaining we connection spend created deals providing with discounts. provide a that but of expanding succeed or by And at things to like other we macro. definitely course,

new less products pilot or at Additionally, to are programs. Disco, software in to likely engage we undertake new otherwise much

new the macroeconomic of to that logos. created to is in resistance new generalized times then also acquisition headwind so of a And is stress

enterprises. side, more think on of have Counsel for material and spent, by reducing in Put and the we which and is predictable services delivers are large investigations simply, impactful making tailwind handling product time cost the professional General large bill very ROI save that line more we disputes and by and help a money. often the that hour very what item is lawyer I

a have field. would think And than puts of to customers a from two that's shakeout? many in where some How is so and the it's we're in been that takes But customers hard little are much ago. I more time our a tailwind years color these suddenly they that bit say. hearing EBITDA focused of experiencing and do the

Operator

comes line from question next Parker Your Stifel. Lane of the with

Matthew Kikkert

taking so hold questions. And for and is anything with bit this Kikkert those Hi, have solutions you about been surprised by progressed? Thanks you Could traction request, far? the integrations how those like? for What's acquisitions Parker. been a my on your Matthew talk

Kiwi Camara

wouldn't integration pleased played made both from the was line engineering we've internally of think an of less the acquisition it. with the or view. that point the success view. We're from has surprised, I of and say out justify product been in with to go-to-market And more point a I case

Review were and with great Case who customers conversation new entirely prospects hold of and We ecosystem. think, customers. who to that Builder a second, the first, of case? door we that and was a existing both the what customers Disco opened kind are request so number new And to added we preexisting enterprise And Ediscovery,

landing the So and our or there start conversations product don't that talked many the one they're on, request. start they Ediscovery even some other products, Or over hold those that's with corporate first of hold the a if with or now, buying Builder by new and of we're logos conversation. about, having driver review are request say time. Case Maybe of or they is I that where expand

step if a components and great I two our think request are So of pillars. you hold five of back, take

a for handling all second, of enable by These and of And are kinds technologies used aspects lawyers. full stack. solution, are the multiproduct pillar other deliver and legal products really in-house around Counsels. GC that of choice platform litigation, our and two the end-to-end becoming disputes. principally investigations us These to First General

Operator

question last Your DJ today Hynes line from Canaccord. the with of come

Luke Hannan

Luke taking Hey, for DJ. is on question. Thanks guys. for my This

adds additions quarter, XXXX three to customer I'm the if of new I'm XX customer XXXX. correct to that net that, me And net back wrong on going calculating average going or down but question, this So prior that's nine count quarters. in XXXX from from

Now, capacity just off, that's tripling a significant especially here. pretty finished sales having after drop

becoming Is of just just new more customers guess I in increased quarter? the is an sort component? some question add to difficult is, this Or it So environment? this churn outlier is there

Kiwi Camara

in adding not. I the the And but think specific quarter an that it's about creates or macro it's Disco early to terms some outlier, headwinds of talked whether I of new that say customers. really generic play not we'll environment to course, of changed. feel of that color But fundamentally I see continues say quarters few has can as doesn't in to something like terms over it out. the next

Luke Hannan

not EBITDA whether Okay. of a of your have And what then, guess pull just lot I to year. hit Can about on already to just [indiscernible] course this decline sort a work or And guidance, rep then, the you talk Thanks. maybe accomplished, over in QX? target. it implies that pretty has bit the with significant been you of a that levers in

Kiwi Camara

earlier. of I think question Michael answered a version this

Hopefully, you, my they're So I'll give additive. thoughts.

have exiting commitment made think And to mid-teens, to 'XX. manifested in around a positive and to I providing profitability. that we're in is in year XXXX. And that EBITDA big in full of is the we've the negative difference be pulled forward EBITDA commitment path guidance commitment the QX for 'XX then our EBITDA guidance in

as in revenue think prospect think are development levers. infrastructure course, growth. make accelerating we hits prepared the spend, bit there, optimize margins we COGS, of gross is, And four which given terms of on in to be we reaccelerating reasons there production in R&D we of hits talked so environment, that the our is both a how growth. a we I've two, remarks, optimizations. Number Number the environment Now, think opportunities there OpEX, those further upside going we revenue big and forward to we about which may why which reasonable one there's lots there are of get

think non-staff. Then the and staff on side, OpEx about

the we talent global unit time. believe to item Then, to talent we're and items pencil the homegrown with of will have In to non-staff every side, time cost general expenses, mix, with that focus staff, certain line increase historically non-staff particular earlier terms strategy over taking software a which a on course, is of the of sharp expenses, our over of of headcount. scaled relative on talent reduce our like mix of

achieving call. use components what Now of how of progresses on that going the targets to the see that's year. unfold net is profitability exact committed mix But attain that today over this saying discussed we're business we've profitability we of everything, the our that course those four commitment to as to we're we the the

back turn This would I session Camara, Kiwi Thank for and today. to you. concludes question-and-answer Co-founder now our CEO. call like to the

Kiwi Camara

to be We for you in the technology Disco, Disco, lives lawyers for the more efficient. today. and of Thank and interest quarter continue year we legal joining make thank leader earnings smarter XXXX easier, joining us At and march you for our call. fourth everyday and will your our fiscal

Operator

attending. This call. concludes you Thank for today's

You may now disconnect.

CS Disco (LAW) 23 Feb 232022 Q4 Earnings call transcript