CS Disco, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the CS Disco third quarter of fiscal year 2021 conference call. At this time, all participants are in innocent only mode. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, just press the pound key. I would now like to hand the conference over to your first speaker today, Leigh Robinson, CS Disco Investor Relations. Please go ahead.

Leigh Robinson Good afternoon and thank you for joining us on today's conference call to discuss the financial results for Disco's third quarter and fiscal year 2021. With me on today's call are Kiwi Kamaroff, DISCO's co-founder and chief executive officer, and Michael LaFerre, DISCO's chief financial officer. During today's call, we will review our financial results for the third quarter of fiscal year 2021 and discuss our guidance for the fourth quarter and full fiscal year 2021. Today's call will include forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our financial outlook, including our guidance for the fourth quarter and full year of 2021, our market opportunity, market position, product strategy, and growth opportunities. In addition to our prepared remarks, our earnings press release SEC filings, and a replay of today's call can be found on our investor relations website at ir.csdisco.com. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from those expressed or implied by the forward-looking statement. Forward-looking statements represent our management's beliefs and assumptions only as of the date made. Information on factors that could affect the company's financial results is included in its filings with the SEC from time to time, including the section titled Risk Factors in the company's quarterly report on Form 10-Q for the quarter ended June 30, 2021, filed with the SEC on September 3, 2021. Additional information will be made available in the company's quarterly report on Form 10-Q for the quarter ended September 30, 2021. In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalent is available in our earnings release. And with that, I'd like to turn the call over to Kiwi.

Thanks, Lee. Good afternoon and welcome to our Q3 earnings call. Before I jump in, I want to thank the entire team of Discovians for all their incredible effort resulting in another stellar quarter. I also want to introduce our new Vice President of Investor Relations, Lee Robinson. Many of you will interact with her in the coming days and weeks, and we will make sure there is time for all of you to become friends. With that, let's jump in. On our last earnings call, we spent a good amount of time discussing DISCO, our history, and our strategy. For those joining our earnings for the first time, I would like to highlight a few key points. At DISCO, we are well positioned to take advantage of enduring trends in the $767 billion legal services market that is being transformed by software. These trends include the expanding variety of legal work, the ever-rising volume of enterprise data that can become evidence in legal matters, and the growth in regulation that companies are exposed to around the world. We leverage advances in artificial intelligence and cloud computing to build products that automate large categories of legal work, freeing lawyers to focus on those tasks that require human legal judgment. We do this by combining world-class software engineering and design with a deep understanding of the law and how lawyers work and think to create product experiences that feel magical to lawyers. Our first product, Disco eDiscovery, helps lawyers quickly find evidence in large collections of millions, tens of millions, or even hundreds of millions of enterprise documents and data. Disco Review leverages Disco AI to automate the process of legal document review using artificial intelligence models to automatically classify enterprise data into legal categories and identify potential evidence. Disco Case Builder extends this product suite to witness testimony, helping lawyers find evidence in deposition transcripts. Our products all leverage our extensible, scalable platform that uses elastic compute to deliver phenomenal performance even on the largest data sets. By using our products, legal departments save time and money, free lawyers to actually practice the law, and most importantly, achieve better legal outcomes. And with that, I'm very pleased to provide a few updates on another strong quarter. We continued our excellent growth trajectory in Q3 with 67% year-on-year growth attributable to broad-based momentum across a large number of customers. We have successfully executed on our plan to add new customers and grow our usage with existing customers. Following our IPO, we've continued to broaden awareness of DISCO by attending and speaking at thought leadership sessions at legal industry conferences, such as ILTACON, the main conference of the International Legal Technology Association, and General Counsel Conference East and Midwest. In total, our leadership and sales team attended 34 events globally in Q3. In Q3, we continued to see an increasing number of customers use more than one of our solutions. Our eDiscovery business has continued to grow and perform well, and we are pleased with the ongoing strength of our review business, including the expansion of customers who use review. Thanks to our sales and marketing organization's efforts, we saw a very impressive sales pipeline in Q3. This momentum contributed to net new client wins in the quarter. Sales performance is driven by a combination of tenured sales reps at Disco seeing strong traction, new reps who have recently joined Disco, as well as proactive inbounds from customers seeping our solutions in the market. We continue to see incredible outcomes for our clients, and I'm constantly in awe at the results our products can deliver. One of our new Disco clients is a leading medical device company. We were introduced to them by an AMLA 200 law firm who has referred more and more of its clients to Disco. This new corporate client adopted multiple products and generated more than $200,000 of revenue in its first quarter with us. This is a great example of how our multi-product strategy and partnerships with the law firms to drive introductions to new customers is working well. A leading global mobility technology company recently decided to renew and expand its relationship with Disco. This renewal and expansion was driven by the customer's satisfaction with our solutions and the efficiency of using Disco to accelerate legal document review. This is a great example of the impact automation can have on the productivity and efficiency of legal departments and the tremendous return on investment customers experience by switching to Disco. Disco continues to support some of the most high-profile and mission-critical legal matters. Law firms involved in a front-page drug litigation matter currently use all three of Disco's solutions. and recently renewed their Case Builder subscription. We continue to receive positive feedback from clients with special mention of our customer service. We are incredibly focused on customer-centric innovation and have a long history of using customer feedback received through the sales cycle, quarterly business reviews, and industry events to inform our development priorities. Based on feedback from our Product Advisory Council, we developed BISCO Early Case Assessment, or ECA. ECA is the process of quickly evaluating large collections of evidence before a full-scale legal document review. A robust ECA platform is especially beneficial for large matters where there are tens to hundreds of millions of documents. With the DISCO ECA, customers get access to the full suite of DISCO analytics and visual search, including the ability to apply DISCO AI models trained in full-scale legal reviews to data in ECA. And likewise, as lawyers identify important documents in ECA, this creates an additional signal that strengthens our DISCO AI models. With the Disco ECA, we have extended Disco AI to a larger and richer set of data from our customers, while at the same time making Disco eDiscovery and Disco Review even more effective for our customers' largest matters. We are excited to roll out Disco ECA to more customers over the next few quarters and continue to build a full stack of solutions that make our customers' day-to-day work more magical. While delivering continuous feature innovation, we also continue to invest in our platform. One of the hallmarks of our products going all the way back to 2013 has been performance. Over the past year, we have improved ingest speed by more than 30%. Search speed and viewer rendering by more than 20%. and production speed by 63%, with 89% of productions completing in less than 30 minutes. For those of us who struggled with poor performance using competing solutions, speeds like this are like going from dial-up to broadband. And as you can see, we continue to invest in getting even faster. We are also proud of the launch of Disco University, an integrative learning program available to Discovians, channel partners, and customers that gives these audiences the ability to deepen their relationship with Disco through continuous learning and certifications. In the roughly one week between the launch and the end of the quarter, we had over 150 individual clients and partners complete over 4,000 courses. we are confident that in the coming quarters and years, Distro University will grow to become a leading resource for legal professionals. Because of the traction we see from all our products with customers across industries, we will continue to ambitiously invest in our go-to-market teams and scale the rest of our operations to meet the needs of our clients. And with that, I'll turn it over to Michael, our CFO.