Earnings call transcript Q1 2023

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to CS Disco's First Quarter and Fiscal Year 2023 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. Instructions] [Operator

like Aleksey conference go Lakchakov, now first to ahead. hand today, speaker Investor to would over the your I Relations. Please

Aleksey Lakchakov

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

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

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

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

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

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

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

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

Kiwi Camara

Thanks, fiscal the afternoon and everyone, welcome to Adjusted our Revenue XXXX and end quarter call grew total of XXXX. high our range million year adjusted for negative guidance EBITDA million. count and Aleksey. above exceeded significantly customer QX earnings X,XXX. first to $XX was $XX.X guidance was Good of Revenue EBITDA range. for our the was

We have made the operational that including new lead profitability, launch office steady changes in of progress our expect on we the Delhi. to will

As improve and QX QX adjusted positive Michael EBITDA more our this achieving to XXXX. to EBITDA in for year our timeline will outlook XXXX from this pull share has detail, for us allowed forward adjusted anticipated

very sales exciting both QX was product the the a quarter perspective. marketing from for us and and

let's talk product. about First,

but at real since adoption have will in ready large We the into deliver vector important heralded value technologies are as years read language like of users. mass Disco. well the in believers equally to These world news as been huge for throughout development models technology to advances technologies which are less about important my in the that products Labs XXs. AI AI on advances in represent search that finally most incorporated have be in the the in working Recent everyday you opinion, the can internet

of will documents in use evidence them, citations in allowing her provide to a starting Disco the allow documents answers based investigation. support introduce private answers, for scale narrative the information database. receive AI a we language in an the large to To answers, support Ediscovery. ask point Ediscovery customer's will QX, Cecilia, integrated natural In and chatbot database, her and verify lawyers Cecilia Cecilia to questions as on for lawyers in cite documents further

evidence Ediscovery scale and documents to answer or books public or articles. than so that rather the of involve databases corporate public data based differentiated is in questions her at private may millions of Cecilia by internet tens cite do or ability secure To millions and platform into on while all of do other analyzing this reviews that preparing to large a and lets data, like scale and documents, integrated her of legal orchestrating disclosures. support productions to exploring work answers ingesting in lawyers do

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was in help XXXX I a I would've practicing initial after have had will me anticipate Cecilia be cases We Cecilia staged an on attorney. when that loved to available generally rollout.

as further the provide almost to our our we well. time step direction Disco's are AI and AI is Disco pricing Cecilia technologies in in a on continuation back will first that the information I of of that about productization and going. at often dates investment asked AI modern am both We founding.

and documents legal What does do? is in differentiated? technologies Disco legal collection powers AI to is embedded platform exactly? predicted fully AI Disco it helps productized is in the course of lawyers is which allow related What AI use How that seamlessly is our AI to of a it tags, lawyers issues. particular work. that identify Disco to

technology a other tags in how lawyers have document predicts documents lawyer tagged how past. the tag predicted based would a Our on

to predicted can tags Disco these to for. scores find searches as by a predicted part more be complicated can certain likely for and Users search believes that scores is in For filters document way. documents AI document visualization. each they’re tag to of are that incorporate scores tag looking search then every be They how the tagged likely generate what indicates

they Identifying Predicted tags reviewers documents disagree used should can review the quickly. review, quickly by telling be for of for a them be be documents areas what predicted documents that reviews. lawyers help them can find used lawyers AI’s And more looking important per control sort tags quality to ensuring unit human Disco at time real-time invested the can documents Predicted are to important where document. that of do with looking in and on human more recommendation. more tags more

clustering helps lawyers topic AI witness a visualization, understand Disco topics used topics a or to can phrases them covered of topics It example, particular and which by in jargon review. documents in a what database. party. of or used search take in millions filtering see and in for in terms This particular conjunction lets are and subsets particular documents organize learn the before with lawyers actual the language labeled from allows database, And it covered the in a by with indexing, beginning lawyers using are relevant what database powers documents. automatic a documents

ultimately or clients And Disco matter work on to facts new matters the on lawyers allows similar review leverage invested on trained AI allows prior AI, get their earlier on powers involve matters This cross issues. in matters accelerate that which models to similar matters. they lawyers and to legal new use

lawyer just a Just more across certain kind the within matter. past who case it has more a the kind lawyer efficient is as first can times effective become more a handling and as a who that learns many not AI than Disco handled be matters, single of case can in of time, for

areas, is think we roadmap, four Cecilia product about an of which in example. answering modern unlocking question Disco’s about think is we first AI features technologies When

language and can documents, natural used a labeling, is to be tag by data and Second extracting document parse modern think summarizing instructed AI basis. analysis. document in on as We document

making Third want, is the a for our do language interface they platform and to what products user generation. can natural fourth ask document easier providing where use. drafting And computer user even to is a Disco’s simply

future and work today. product and to believe a platform relative legal we modern through our integrate material models ability the this that to we are Our practicing you accelerating in represents product our law where automating customers. we improving have for which into product development, we insight will broad give be technologies platform private ideas pure-play how work take have and framework into AI can not understand a technologies do you about of impactful data productizing and advantage think AI are help modern into features their access our work already these thinking why clear, lawyers AI for experience To these it AI be and to companies. Disco to we power and for But

we is only of to intelligence the not element platform excited discuss. are our Artificial

This to in that case. timelines evidence and lawyers quarter allows and to them team we’ve create also collaboratively legal understand, the develop Timelines platform Builder. other announced of their chronologies and and them Timelines assemble the in Case uses events into link documents and and facts, present release the to depositions, elsewhere, Disco

in matter issue. whereas well to moment Builder a our is the Timelines legal a legal positioned generally to technology end be with Case Ediscovery to provider, an end now part client a is capture occurs lawyer well to the into of matter, comes strategy the

customers are very Timelines been bring we capability the provides pleased some asking and market. to have it Our for to that time for

underlying search There versions. are that improving automates improved quarter as Periodically under well of develop enable moving core changes older or or example products, released capabilities. are performance hood latest other we our to to we make versions to as data live databases the the on re-indexing platform Disco of re-indexing. process the features this that the are new architecture that we Live of capabilities. is this One our

user We on human by engineers our for years experience was basis. clients, to re-indexing those whose this case the managed Previously, platform. task believe clients by a matters our time-consuming multiple improve for live last on tend will a especially case

strong basis. sales of such seeing Across we year. The QX quarter. near-term the opportunities the been wins, quarter and was meetings, per have on activity since our On and start productive a the accelerations side, aggregate highlight an was measures rep and the as marketing of funnel

neither the call that our results. that a every we be, ability discussed do our In been starting This large operational last on control matter know telling are will internally we and nor we our the but deal. we earnings after go is initiatives industry how ultimately have to customers to us implementing drive

in Our improving demonstrate effort. success metrics pipeline that

a continue in total our very large with platform across resulting growth our and of pleased in on to less see all products. we pipeline improvement metrics continued matters usage the are we While customers,

of our more Additionally, see the aggressively lower customers pressure from platform to Disco we and our by on Disco spent. renegotiating cost reduce reducing largest total in like utilizing continue data to spend offerings our amount ECA, platform their

mean the business in net matters drive usage growth. based more can we necessarily would model, new that We new pressure pipeline in without improvement we and add grow does of on the seeing can lots are seeing levels metrics line of usage with usage this the revenue directly our control. lots that increase revenue Given not sell that customers in

drive and We is platform more drive customer, customers across of to our customers believe to matters Disco adopt new continue to adding to our continue that products. adoption right strategy at more platform, the increased each

time, to world announced In well blitz Law Disco commercials increased social for believe usage this Law media. streaming in will we full launched increased to and Over Better the a make as with launched We is marketing the here consequently our result digital services we Better targeted revenue. law everyone. length on on as the work better QX, digital campaign.

even on You TV. might your Justice own have J seen Lady or Lady our

If not, spot. you have you our up should look

prospects this very new have campaign. and customers Our about positive been

are content our media pages with time spending campaign across averages. On We high are seeing visitors more engagement website, our versus on sitewide XX our channels. times all

some of conversations. our exploring website, the coming our buyers seeing legal products, to engagement largest world with in and out are reaching We for the

he New attention. full on entire the attendance, York the saw receive family Law One when he were saw Better and our not lead display It’s that us Law in team often Better this generation. past and brought with and campaign we strong show March at Legalweek lawyer told Cecilia engagement his marketing TV, where watch. into on Both lawyers

We campaign excitement among are generated prospects. pleased customers has and with the our our

will of globalize opening customer and Finally, operationally, on team business India our new will out Through Delhi. This North in service existing our office our a and our team in and scale other augment push of to able continue including functions provide presence, engineering. to continuing be and America profitability. Discovians we to to path our are we to our be with tailwind customers Europe XX/X will support the worldwide

With that, Michael. I turn will it over to

Michael Lafair

XXXX, unless smaller In we business. to is all QX a million, please share In basis. review X% of the The expenses, the our the operating specified, quarter in Thank $XX.X non-GAAP year-over-year remainder of decline results count references income the the Kiwi. decline was and are that year-over-year. in statement, note matters on discussing attributable a you, saw to revenue otherwise

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

based period-to-period on margins As we nature our fluctuate the mentioned of usage. gross customers before, from our

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

revenue and was million the margin or expense bands continue to expect revenue QX QX of XX% seen. compared Sales of within be for marketing of we’ve historically year. prior to in to We gross $XX.X XX% the

This well as quarter year-on-year. of $X.X increase in million in as was in campaign represents driven The XXXX an launched our headcount QX. by approximately our the increase investments marketing

and in $X.X our represents for QX QX million year. XXXX. revenue, Research the revenue in an compared increase million in XX% was of development of prior or primarily year-on-year. growth This XX% This to expense driven investments $XX.X approximately of the quarter by was engineering headcount of

expense of increase prior was of XX% $X.X over and million QX General XX% year-on-year. This revenue in an of revenue in the represents QX or administrative of to million $X.X quarter compared in the year.

in of the XX% a XX% representing million, QX $XX to compared was of QX in loss year. negative margin prior Operating negative

million negative QX, XX% of the a was in QX a margin XX% margin of negative negative prior year. EBITDA $XX of to in Adjusted compared

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

for cash $XX.X adjusted Turning departments. we million the to flow QX million in and May cash cash EBITDA cash took number We across actions cost are new Operating sheet provide. million X, end are QX in in compared of These the balance flow with guidance a employees negative changes about $XXX.X reflected $XX.X that prior year. we to equivalents. negative was ended the to On all cutting impacted statement.

Now the turning outlook. to

guidance to million. to providing adjusted in EBITDA QX XXXX, and $XX $XX For range million million $XX negative guidance million $XX we are revenue range in of the the of negative

to prior million our $XX range For million negative negative are guidance our $XX raising $XXX million to revenue reiterating million a negative million adjusted $XX $XXX to fiscal EBITDA range to year of a from of XXXX, guidance in we $XX million. of

teens We XXXX negative EBITDA adjusted are continuing [ph]. target to the QX in margin

Additionally, to the we by anticipated are forward of pulling path one our quarter. profitability timeline

EBITDA exiting shared be EBITDA be previously that adjusted to expect we adjusted positive expect We to XXXX. QX have now XXXX. We in positive of

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

Operator

Thank you.

question Koji go ahead. We with comes will now the begin line Your America. of the Bank from Instructions] question-and-answer of session. first Please Ikeda [Operator

Koji Ikeda

and of that the is that data potential future market around could to expander. less These ingested lead is result tools. onto Maybe Kiwi going, were really tools. on for focus Yes. AI be and Hey think guys. the end to about about AI in or where should question you AI that opportunity TAM to platform. a talking this my thinking Mike. really AI tools for Thanks here maybe for be might these And drive efficiency the it needs It Wanted to taking thank Cecilia could the on question question here questions. and about you you is but color it all other guys how the

trying how think the AI tools TAM? really these of you understand just to implications the about in So,

Kiwi Camara

It’s a great question.

about using the example to in what is is the already we’ve armies to we’re doubt talked basis natural force think another different over review business. to is categories products what where and are guaranteed us four and associates such answering use DISCO for using AI who material review go a will of that doing deflationary, in document been that AI-powered a allows thinking which If areas forward AI a the analysis, Review. to from last days that eight generation, switch I technology business, on an think Cecilia do we has early deliver the spend. document about, of one of example, review question review I our is Indeed, use is core and about language of, third baked the customers in years products. the drafting of savings interface is into our fourth to brute be the There AI of categories to deflationary no going is

the will also both using a expansion by these Bloomberg in is expansion happening you a existing see bank, very efficient. AI there an market the of simple with defense lot is right? email, services company, possible faced mix large spend a you every knowing But issue legal them any every there example, making think in more of them is will reducing about because of problematic legal an that I for compliance, think categories M&A communication on right? will work documents, does and large in whether Every of give of see company taking technologies. Slack, To chat, or in not pharmaceutical be large what contractor, of you

creating the able first seen that provide can deflationary create communication and with an those I documents many of rise of who eventually department system review actual That’s think And traditional clients. what the one I many AI the AI, approach to lawyers legal creating the the at value not possibly to and use to place. with the feedback are areas, to that in rise ideally while compliance could just for having example those samples give. to we’ll but actionable technologies in at it’s other of more with the of be the review replaced some audits of powered of But we’ve that department, by but opportunities same see time documents, humans technology minimum supervision doing is the that only lawyers

Koji Ikeda

May, EBITDA that there’s outlook. operation to And leading thank little mentioned a bit higher for here, for some dig remarks, you your may adjusted into a please? In adjustments I more Could that. the early Kiwi you Michael. No, that’s the follow-up it. in if Got in just you prepared

Michael Lafair

adjusted the global it of outlook and X, committed also forward XXXX EBITDA to workforce. of we our to not related related higher XX On exclusively to. – pulling to roughly and reduce to EBITDA X% our employees from current adjusted about and is May exiting representing XXXX Well, our workforce plan so QX but a

You’ll our details see pulling the more about but related in Q, to guidance. this really that’s

Koji Ikeda

Got Thank you much. you. so it. Thank

Operator

with of go from ahead. line Your Citigroup. Radke comes question Tyler next the Please

Unidentified Analyst

categories about I functionalities for respect Hi, of as you this for specifically that of on of Tobin And at remarks, look wanted that you on which Kiwi, Kylie you spoke And opportunity guys those asked monetization do uplift? kind piggyback the which Radke. with question. categories are last prepared Tyler the hearing to AI think revenue is most? [ph] these biggest just in the customers for these Thanks. your to strategy, provides you

Kiwi Camara

I in things every think to Midjourney. who’ve interesting many an customer exposed we’re like been exposed virtually been Chat-GPT moment customers like has to and where things

you’ll so or get ask And AI? generative in go my you my does your either terms customers, And category where category mind three. to of one

to I talked time, really of all categories document and is focusing answering But course about. four businesses put that’s amazing either So that Cecilia. customers, because where of the in amazing I you’ll get we’ve product first that products one really think experiences spend on front I’ll question there think And and generation. I in that the or build have we of consequently are opportunities

of answers data. what you it get ask in think questions and customers in them natural do, Cecilia about private collections back language narrative If huge lets lets

And you get the follow for in in you happens like, questions a documents support Or emails can the to use demonstration questions legal Our Enron’s ultimate accounting fraud? that case, Enron what this business think database with importantly on in questions language. citations You can And was natural did the populated commit and in database narrative documents. California? I ask answer. can technology up back even like, of Enron’s those

again, So is in go to of basis can rest get be investigation comfort hallucination and the the that directly further that allows then our to not answer importantly for documents in documents the Cecilia a can lawyers platform. they because or those the

lawyer documents the baking visualization, So but one not is evidence is Q&A platform it that not AI already the of learn so into AI transition then lawyers lawyer from can into make capabilities the the incorporating from it Cecilia, engaging having capabilities the AI production these the to power standalone It’s court, are the other to advantage pull after seamlessly just of with a a of regulator the important, their deposition in where that on. just of doing can a platform up feature, testimony those category them work. and that client, search using our collect but

term, I across customers closest do the with and in to a sequence think we product will that fast be the We it up to is about. near is material look following of areas think forward that to the other I GA. Cecilia releases it a talked

Unidentified Analyst

XQ year maybe the guidance, continued Thanks And That’s very business reacceleration the last full assumes Michael. the declines. it much. really helpful. in few for one year-over-year implies But The quarters. over revenue

about thinking of half or Cecilia potentially FY AI you will in any are up the the how to of FY in of uplift back up going Are Thank you. show Or So year they from anticipating kind they you XXXX? capabilities? XXXX? are what these show and new

Michael Lafair

the for we the I platform about been our and we’ve and what Cecilia doing to new is years. been have Cecilia be technology just AI kind doing clients. in do dot know the our were we And and of we that where fact I were technologies And helpful baked old other startups. years can companies into amazing. our very is things believe for pack the or one room all com going the I others and I’m recall is the position believe other So think basically that do and think I our these that is successful I have many in Cecilia that for industries us enough leverage to of mention in are incredibly we for We’ve companies XXXX. incredibly and on exciting data, technology build the of guidance of I’ll not that newer that that this on most and data be

obviously the reacceleration guidance does year, back of require revenue. the it for terms half our the of of In

funnel signs and is to the are and We the the positive into of there seeing optimism revenue. reacceleration turn that’s in and going expectation pipeline some our

And are where end on optimistic we’re to the year. so we going

Operator

the Jackson SVB. with ahead. Your next of go from line Ader question comes Please

Jackson Ader

Great. Good our for evening, Thanks guys. taking questions.

your matters and The usage commentary reducing the and larger on customers Kiwi, their their large with first one is spend you. on,

curious, maybe Just they going providers a that services ago? are reducing are of the flavor to the usage activity other or them? that more or level not there have and two just of to matters maybe legal existed year Or the level of a

Kiwi Camara

there give their I’m sense but usage of No, margin about I’m sure defecting platform. be customers of the to would usage not I reducing just is a on large the there It’s our that may you what exceptions, handful of platform. what our And customers talking any competition. a to can or increase case do are things mean, your you decrease of on large

toss into leave line, of just lots from broadly conducted managing the the platform, you data closely if collect it you might you not review, you review, bottom the of example, When get up the there. review. to data the witnesses, the you’ve to all For once lots are get you

course litigation that depositions, appeal. of period leave a of multi-year up you’re As but anything of the parts over sometimes even downstream litigation the the with aren’t summary during not motions unfolds. It’s the trial, you for doing coming dependency the judgment it, in there as you through like might you occasionally go data

for our broader many we’ve customers come years, call part as was it of seeing years. to focus many What legal for provide on pressure some lately of for that savings true under cost profitability. as is departments company large of these XX been So

large to our line Disco’s can material customers, For be item them.

occurs what they cost see their do total of them to can so And to the to reduce it usage. Disco

closer a can so instead of and witnesses we they from various load I do workflow in deadline. that only up it wait of relevant the Disco. two there witness can that leave parts the can where collecting about it of way that or data most it consuming parts can we discovery it to restored, we can leaving collect rest active there talked usage every immediately instead fewer of And be Instead imaginable, it maybe so up archive maybe data down what loading from trim call we month in and the is but maybe isn’t a

because related and the there case for on to. is is litigation, follow a when than take keep around we’ll maybe maybe down it if we reload rather prospect resolved, we simply data it And need the later

Another my I to prepared a remarks is about talked Disco assessment, of piece use allows large of capabilities that course of case of set the load that early volumes ECA, which customers ECA in data at prioritize and price Disco active out data a review lower point, using a into then AI price Disco like that tools data of and promote explore and at visualization, search higher point. is

of about a their usage customers, more we that's think customers being little especially careful in of on usage Again, our of seen volume large uptick ECA. an a phenomenon We've Disco platform. bit

Jackson Ader

people like you that? provide R&D sales something thorough. Thank functional was it or whether Okay. details in reduction, can All XX on was kind you. That or Michael, right. of that any workforce the the

Michael Lafair

was It all departments. across

Jackson Ader

Okay. you. Thank Got it.

Operator

question the with Derrick ahead. from next Wood Cowen. TD line comes Your of Please go

Derrick Wood

startups given with you forward, behavior about longer being their deal sounds any guess, job kind you questions. trending what Do Great. as then And Nice potential gen customers of new talking blip? taking healthy generative right like pipelines customers. or on think to average on have caused Thanks it for the AI sizes my maybe last for what ChatGPT are a going a guess, looking good that for AI And what's what do year? look looking of where give versus I see new rebound you us new built. now? generation that just customer investigating for sense looked I at and capabilities QX, new you people back sales are are cycle

Kiwi Camara

Sure.

really on count think a the of don't there's magical quarter. delighted So to to additions rate sort customer it. rebound what customer the historical new anything by in more I we're has been of

strengthened what churn, If you is right. break into components, it its apart

until So deactivations higher can to of net number, positive. matter, customers improved both touch to add gets is little for back. to be which coming first your in because when say numbers the before matters to of a active Related a complicated bit we it's matters, these and zero contributing at course of some hit matters, customer point think quarter-over-quarter some year, about the then possible questions, or three a active add their customer two six

has when the numbers. sign up unit data what or much bouncing determined have some case you platform. the also that contract customer, will that thinking in Disco is they they the is about then It a first the of So by on complicates how of cases sign that and of the deal you involved simply pricing size, size in deal couple because around that the put be average

is material spend. zooming terms out journey biggest companies that seen I journey middle of the think spend in the and sometimes little year someone Disco went a first at of a don't middle years. at adoption up when to low in bit, switches of adopts to logo, over prior think took Disco new five five In any through figures growing has trend repeat time the who But for the winding that of in figures upper three especially logos, a then we've the recent the seven there kind in customers meaning six journey historically And times buyer low six a been and of aggregate, figures. out more then then our kind company. company, about customers at figures, starting size again, and and sort accelerated

Derrick Wood

you I some up is is, of ChatGPT every deal conversations? is how mentioned up company I the is follow of showing the that into any just in that there And in mean, the sales conversation coming customer on second every question now, cycle around are vendors aware and it different think Okay. often part cycles? creating a

Kiwi Camara

up we in course, an big question customers at and where reaction show. months people announce of of We unveiling, months our the tremendous to did had customers days it's far from answering following March. one-on-one We had hundreds of service at of have meetings come of end were the at lots and course So ago that delighted followed. interest lots We the had the be been a Cecilia, of of with then, in event one Legalweek in a live Ediscovery of able a to for accelerator. couple

new tremendous the opportunity it's who go there, a opener, a form for to portfolio both rest just interested of of think So it's been generation. so customers about Disco the an product lead are I door demand in Cecilia, also and but talk existing,

so if I other seen we've far, We in in haven't other Ediscovery the I GPT set competitive think, even change were much in I AI Ediscovery predicting our person, in applications other both and areas. say on that review, based would and and product see likely But impact will in competition see startups from from both areas. and less presumably seen, a incumbents we first, we'll

think now. years doing facing in In good of we've very I been a eight terms that AI position for competition, of Disco's because course,

have lawyers work to the a is also private we are collection out, only as that but to large Michael advantage their in people data very for pointed hard platform. not of of doing other our having attain, And access

and And what to so our used of to observations which train get label of interact platform, in these data the be we with it's lawyers training can we models. all of how data, used lots annotate call

that compounding. is releases AI you're some seeing they're I of thing another these how with think

interacting, we do the not they So they people are ups being the can early they great asking? get chatbot not but of data another the only questions an follow the from that also gets early what grabbing AI but that grabbing share or of share do signal company with It's they releases like training dislike? Cecilia. only market all market Which like releases. first also questions benefit unfair share, products that's that comes be power ask? on, What to And to think so used subsequent

Derrick Wood

Thank to the later you. Well, excited see Great. product to year. come Thanks. market new this

Operator

Please Sandler. comes of the Piper Ramnani next ahead. with go question from Your line Arvind

Arvind Ramnani

taking Like, of on I back review outlook thanks know any for wanted if I my just of the question. you business, have on has kind the what's and Hi, was a fairly review your stabilized of to there update right. that. that kind volatile, to kind kind mean, business? of I go

Kiwi Camara

business. I do the to a have review share about cautious update

it although finally, is is good, up So first, quarter-over-quarter, which modestly.

ticket Second, but are then metrics gone. of the It's this gone, the And pipeline we is where we out tail not ticket those number. all is reviews of only talked at. look the the a big reviews all so big know, that quarter you completely additionally improvement about in

so there? wins the many tell today, on. we seeing we where I how win finally business. rates? can in are And many you, are And are So optic are review What are an there, given the opportunities how

that pair to with caution. want I optimism

report will good And think out. business. results big tails their back in But when on of the report seems and fully results. items of we in we're state ticket a QX like facts on QX We all growth are, that I are it two

Arvind Ramnani

lot think at one Q&A product looking then color chasing, should want part, that But right. the And we this and and on from how fad Cecilia And the didn't a like, an way one mean, it's about this it, prepared and saying you're AI Terrific. about Like, company kind in like have hey, remarks a be you AI. driven I I of is past right. of your think I not provided to of there's beginning. think you

are a AI you take advantage development unique of broader like feels it So this to in in position technology.

either these like, you of be kind really have AI. other But business also companies of is startups incumbents as or with that going kind part hand, to on the in other the what been there's the mentioned sharpening of product Q&A like

is like at large AI thing? you did We it data as y'all it still see, do you clarify, that lot threat have Of have or to is you helps set a But unique potential course, mixed look a set there your like well? this train data really mixed opportunity, is have for a being for you'll and is you better. or things mixed, an – as

Kiwi Camara

with internal can things, just product you of but the have I not this we've these internal we're if how was some of also fundamental time, knowledge about drafting trained to AI, everything in business throughout to, I of the that AI science. computer and and remarks, we it's mid the school communications customers I study clearly chatbots base what across an is me, talked have what in advances campaign part any XXs ticket I And prepared we're be excited we internal that's and AI is, at technologies technology my the systems web tell been give people answer how should think take which put I opportunity, launched not sure the me to a from as and but products. about it's about for not bit going bake questions share entire can and into I'm every convinced to products you responses use internally, to our able to documents work. drafts and so Disco, they first an that aggressive our saying I since

And the I beginning. think that's just

is To of of of a as opportunity going I AI be there example, So even that using to that do I including an you think work are be don't largely reading lawyers huge part going AI that productized documents we some a that is AI. there believe accelerate better obsoleted in or are years and huge being becomes opportunity. effective. legal is that a automated such to more large of lot will you do XX categories though give are work, be that is AI that the either I think right

course, of that Disco the in would position to believe that obsoleting. best I do is

opportunity. made did if the from take then like the to so well DVDs take a our we advantage I we're way this little shift prospects But I great. we I phrase bit not in opportunity, And be of streaming, think go wouldn't might this, positioned to Netflix, when mail Netflix are advantage the think this of

Arvind Ramnani

clarifying appreciate it. Terrific. Really that. Thanks for

Operator

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

Luv Sodha

or grow Hi, for prepared line Kiwi trend a this seen. of near-term longer you, questions. taking bit And expect it you've be remarks, improvement Kiwi, more the longer going term you Thill. is, Brent trend? is Maybe this Thank a about near-term we that for in know this a pipeline I gives first is that with if Luv fact Sodha rebound term? it confidence will that in of little more should my guess, not than what talked more and revenue forward in on I you might to trend the for isn't your the Michael a

Kiwi Camara

is can do what there's And remarks largest what as nothing seeing see it. our to on report from it. the in I hearing we my try we and the is So we're prepared convey are in to about market I thing customers, what fancy only

suddenly when we received item them response profitability right. a rather? the our lot hey, says, to us this a way other is department, just can percent. How the is We legal to and help That you largest our always calls finance And at it line misses Disco matters and a buy where we've And is first clients, more. companies reduce us, that mandate X is we as by And we've big Disco. is are to then help? like how mandate at sometimes line to more every mandate that Disco client like from can item, when received you finance, cut small spend saying, would EBITDA budgets from a

And sometimes that works. It really does.

swath further in can client cutting the goals times XX we boom out conversation cost in total years they agreement In clients simply broader our be of those growth. present And try to usage commitments Maybe kinds near-term during sides. in profitability start ways spend to other in to economic and longer it's But large exchange discussion either help our in from something Disco roll for we plus achieve not conversations and along we thinking conversations history of do or the a that there's about with an we negotiating having we're both largest the headwind products. our that term were of for times get or reduced. clients, we or that ensure a that

point some other at such terms times. in won't and the of I will we be than they anything economy to grimly faith perceived and world have economy, don't the have In whether economic U.S. I continue, special in add

the and And world issues legal trends when and any there fundamental will Salesforce, of for audio only rise don’t companies of application around not show Jira, that data email video, and the chat because data, also data on. application that increased Slack, to happens, increased exposure like expect documents, I but operating of volumes that be things in like change so the streams,

driven that trends opposed are profitability. as guess to be we to what a is getting a I’m those long-term from same some in saying customers I to by desire I’m questions improve So believer short-term seem

Luv Sodha

Perfect. quick I if it. And Michael, follow-up for Got one may.

that the guess the through sequentially. beat a you’re the some flowing four the what’s I and year the you. baked easier full beat Thank guidance us quick given color the on comms guide, for and fact this into you getting being – not are into quarter, question Could just give year? into Just keep

Michael Lafair

Yes.

at mentioned do So our week, positive of at we signs. back obviously terms look and in every – the we re-acceleration does metrics, our every of day, require year, the are metrics and and seeing it We funnel of half pipeline as revenue. the Kiwi metrics, review our

and believe to full revenue that revenue for growth re-acceleration our we to year. hit numbers some need lead will the of the We the have positive we the seen signs that

Luv Sodha

say three Got you months did it. just But are be conservatism in to ago? more clear, than you baking now

Michael Lafair

No.

Luv Sodha

Okay. Thank you.

Operator

go Your the line ahead. Berg with from comes next Please Needham. Scott of question

Rob Morelli

into specifically. have a far for This law Thank question. fared firm. you Do any understanding the but selling a push last concrete it’s taking it towards mentioned an too to that be so a Scott. how early Rob versus might get is Understanding here, Hi. push Thanks have insight corporate Morelli to you you. at for on and answer quarter

Kiwi Camara

believe earnings year-on-year the growth direct terrific. of annual We shining some logo point Yes, about call, growth I shared shared for total I a earnings we that Disco. call overall of in our the a think That’s so number also last which on logos. numbers exceeded And basis, that’s corporate substantially.

of always So strategy the since long-term, corporate this dollars that revenue is, it into been ours the of flown legal the as Disco the course, budgets have departments. of and has beginning, come from a have over

many the reach ultimate But has as were and grown, maker haul. much law earlier to on channel who’s the in company following large been as firms directly IPO, partner dependent more they our journey more confidence a to our and a by we’ve customers as go legal those have for partner work especially the of And we department more long decision credible the I company, viewed enterprises. that around a in of think will a with perhaps be

substantial success in event, any directly. being the In we’ve whatever to those seen reason, able forge relationships

new on We part constituted focused group have forming the of much and maniacally future. think corporate direct that a enterprise relationships. growing is sales We very it’s

Rob Morelli

you. then the And Cecilia, not it Got it. Thank into guidance. looped understanding, has updated

your As updated revenue you what portfolio, in acceleration that’s Thanks. use anticipating product the across look or implied your growth will sales modules of guidance? drive are you

Kiwi Camara

majority revenue. – two so still Disco our product vast, of original vast the represents Well, Ediscovery our

And that in so is of overall product growth. growth lion share line the

having out. again, contributing dropped growth where are you comps its and although to review Review think is quarter quarter the and about ticket first fully all that, optimism roll of has let all I big to have off this the tail of growing the we QX

Ediscovery, line businesses can and scale big of those likely a products growth, movers because top think the of we be newer everything of contributor, I Review So and think do be they’re but not be Review of growth, can contributors the Dash, else. then percentage overall material so to

Rob Morelli

Thank it. Got you.

Operator

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

Matthew Kikkert

is new kind you that customer offering you? do return Secondly, foresee to for incremental Kikkert India. in opened What able how this give this support you’ll do will quickly on international a XX/X year? be you investment? other see you any And believe growth do on think for my touch the impact of Parker. on office this you love to taking questions. Thanks Matthew Hi, I’d

Kiwi Camara

term London low companies India have We’re very office as the to and of course our of we we many excited cost it avoid offshoring. their don’t treated about think many are the treating We and is in spaces presences try – Delhi expansion, space over office the the in launch talent and Delhi build every across caliber time of Delhi way. a department office as we Delhi business. of essentially the our to in New intend is We about that And office the in think available full-fledged into there York. there same is

the And the and that office to continue strides growing of over towards year. course we’ve made already intend great that accomplishing

think from in of of has I these we global COVID then a a have London, really Austin, of and York, excellence but hasn’t of New that multiple centers talent learnings we one Delhi. been the experience been nexus our kind work, that during can remote it like

think we about So it. that’s how

and We globalization the of improving us obviously profile. that gets to has access profitability better effect our talent also think

announce but in on have are front We of to idea globalization the the now, similar to nothing announcing right the expansion we I a future. open else think

rate overall expansion Some the course, of of in headcount depend of that on business. will the

don’t of XX/X stay support, but terms provided of Americans always a little XX/X up support, the they In lives bit since the probably have Delhi we’ve makes to night. better at

Matthew Kikkert

me. Got you. That’s it. Thanks color. for the Thank for all

Operator

Your question next Hynes David of Genuity. Please with from the line comes ahead. Canaccord go

David Hynes

Thanks guys.

less? of Ediscovery going I it to it would or to quantification, around your helpful. how both core questions Like to a seeing? make Jackson’s in be But that anything talk XX%? comment about nervous, it’s more impacts numbers look think any right? it trim is is think investors and super put without So mean, a us Kiwi, X%, I you can spend. you trimming is any customer help Luv’s about magnitude there bands why way put Is the their the you’re to that and you some So out may there looking when be answer how

Kiwi Camara

that give conversations. have now. I can I’m can I most for you. anecdotally take in these as anything We’ll the you in but aggregate, don’t with good feedback. of not We share of involved sort you

but disambiguate usage can Disco matters bit usage reduce and of the have – be fixed, the and legal of – little kind a but it the you legal just those that hold downs the range don’t keep purely the exact usage a all us anecdote. to I customer, of amount numbers, I then That’s sort Again, put would keep the wrap that color-wise, be ups given. XX%, can ordinary in to big for of XX%-ish disclaimers Sometimes platform but sort it in matters. to the of want these of on

David Hynes

understood. Yes,

a you. Michael, for then And Okay. follow-up

timing the guidance you today, implies restructuring a growth you just are in the the at OpEx the bit to in of QX that embedding kind of you little what assumption stay XXXX? by of are can flat based get OpEx that I Like, down Or QX. like So more does goes about talked there, on you level? about QX. that down OpEx breakeven OpEx probably it? in kind QX goes thinking From how presume

Kiwi Camara

I in mean, the year. to where QX I to we we’re us expect about I we’ve very levers to remarks, so talked path you – will about be my this committed will profitability. – there’s mean, this tell And getting there’s before to there’s to path of talked four profitability. EBITDA prepared in we that

adjusted targeting also and hitting we’re numbers QX. We in positive provided EBITDA that full also on color adjusted the EBITDA year

same talked AWS There’s how four that their tell and have of I obviously obviously Delhi growth, like spend then spend. software get its cost, the ways and of revenue partners plan. and approaching vendors cost. customers our manage also our we to below part who COGS some the Kiwi two of the thing all obviously, work is of with there. line on that doing optimization and is globalization overall to can are our total our the other kind we to non-staff, One AWS just and optimize and vendors with us lot a platform. non-staff COGS New manage There’s that we the the And you hit overall effort about office is are

we’re there, there’s will get going to a mix big there. we’re but in committed So tell you I very how to getting

David Hynes

good. guys. Thank sounds Okay, you,

Operator

Loop Markets. Mark question comes Capital And ahead. your Please of from final line the with go Schappel

Mark Schappel

Hi. my for question. taking you Thank

a activities going wondering or to on a or perspective. just to go-to-market wondering from – product you’re it if new respect a your a about could approach was the I them you talked you planned have Cecilia, you Just some Cecilia product currently back to was and undergoing bring talk bit maybe to from little talk that lot about I if the up speed sales force capabilities. of with about

Kiwi Camara

Sure.

it about talk me a different couple levels. Let at

products, ago, talked announcing intent these intent technologies some in kicked about So modern hand way company-wide but bake our AI as into into we I work to first, off Disco, with I to our AI this the our company. every time at bake bit only technologies not an of part all our these modern a

what’s applied and SDR an can their models is their of they how there engineering or with you that ongoing someone work and so tell They more education business intelligence someone language make an to tell at and colleagues an so or in and you those large So embedding what’s can on. working going be campaign on technologies pick can Disco working you that can efficient. ask and in them

level So going at the on. that’s biggest picture

then, as a synchronize of technology series would to how form customers ago. did them At party rollout, and meetings of as to about meetings questions view the at big with did play product and as a we’ve new Cecilia the demo directly, their So practice. based to of ask gauge months the booth. as year answers, the of select we the Since hourly it well to well give a of the invitation the series we of opportunity terms In demonstrations announcement done about right? directly, be suite applicable prospects a learn where couple with with we Legalweek this Legalweek public where we

larger of we’ll in done be We’ve broader And at one week Conference, audiences. presentations the webinar to Legal space. the conferences also next CLOC style Operations

awareness building that demand there’s in So and building frankly field. going on of kind the

have We we’ve these with conversations Cecilia. to number able also sales our team enabled enabled the the be amplify to of the team and clients, and around messaging partners architect a to have solutions

rollout collecting early we we’re followed expose where there’s will clients a on it And going matters general to availability. well, our be road to going be and get Cecilia, the them to by existing important allowing closer, feedback. to that use As largest phased then

terms and availability, have We more closer are that that general we commercial time. get announce surround still we’ll working on the as to a to will

Mark Schappel

That’s all Thank Great. me. for you.

Operator

Camara, And to there turn Co-Founder will at CEO remarks. closing for time. this Kiwi no are further call I questions the and

Kiwi Camara

you and Disco. joining Thank today for in thank for your interest us you

Operator

conference This call. concludes today’s

may You now lines. your disconnect

CS Disco (LAW) 10 May 232023 Q1 Earnings call transcript