CS Disco, Inc.

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, again press star one. I would now like to hand the conference over to your first speaker today, Head of Investor Relations, Alexey Lokhchikov. Please go ahead.

Good afternoon and thank you for joining us on today's conference call to discuss the financial results for DISCO's first quarter of fiscal year 2025. With me on today's call are Eric Fredrickson, DISCO's Chief Executive Officer, and Michael Affair, DISCO's Chief Financial Officer. Today's call will include forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding our financial outlook and future performance, our future capital expenditures, market opportunity, market position, product and go-to-market strategies, and growth opportunities, and the benefits of our product offerings and developments in the legal technology industry. 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 statements. 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 and the company's annual report on Form 10-K for the year ended December 31st, 2024, filed with the SEC on February 20th, 2025, and the company's upcoming quarterly report on Form 10-Q for the quarter ended March 31st, 2025. 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. Reconciliations 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 Eric.

Good afternoon, everyone. I am pleased to report our first quarter of fiscal 2025 results, and I'm encouraged by the progress and the traction that we're seeing across the business. Software revenue in Q1 was $30.9 million, and total revenue in Q1 was $36.7 million, towards the high end of the guidance range. Adjusted EBITDA for Q1 was negative $5.1 million, or negative 14%, approximately $1 million above the high end of our guidance range. We finished the quarter with $118.8 million of cash and short-term investments and no debt. We ended Q1 with 318 customers who each contributed more than $100,000 in total revenue over the last 12 months, up 8% year over year. We continue to see year over year growth in the number of customers spending more than $100,000 with us, as well as the total revenue generated from these customers. In all, these customers represent 76% of our revenue. We saw yet another quarter of growth in the revenue from large multi-terabyte matters. We believe this is a meaningful signal for us for a few reasons. First, it's an indicator for future revenue. as large matters typically remain on the platform for longer. Second, matters tend to expand over subsequent months, which supports further revenue expansion. And third, it reflects the go-to-market changes that we have made that are driving the right interactions with the right customers, resulting in more strategic matters, higher average data per matter, and increased overall usage of our platform. While it's too soon to call this a trend, we are encouraged by these signals and optimistic that momentum will build in the quarters ahead. We continue to focus on the things we can control, including how we engage customers, and we are seeing early signs that our more focused, strategic approach is starting to pay off. First, I'm going to highlight our focus on client services changes in our go-to-market function in additions to our product suite. This quarter, we launched our new customer value proposition, With You in Every Case. With You in Every Case captures the essence of how Disco is shaping the future of litigation. Our industry-leading platform equips legal teams with tools not previously available to the legal world. And when paired with our expert services team, We're enabling customers to tackle the most complex, high-stake matters with confidence. To be clear, we've always had a strong combination of software and services, but we haven't always been great at communicating our full value proposition to our customers. We are changing that. The essences behind With You In Every Case are embedded in our marketing, sales, products, and operations ensuring that our customers understand the full value of what DISCO can offer them. We want customers to view DISCO not just as a vendor, but as a true partner who is scalable, reliable, and deeply attuned to the demands of every case. One great example of this partnership is the law firm Munch Heart. In Q1, Munch renewed a three-year subscription doubling their commitment compared to their prior contract. They've been with us for years and have consistently expanded both the number of matters and the volume of data they manage on the Disco platform. This is exactly the kind of outcome that we're striving for through with you in every case. We earned their trust through the strength of our technology, and we've kept it through close collaboration, deep listening, and a relentless focus on delivering value at every stage in their journey. This renewal is the result of strong collaboration between our customer success and sales teams, working alongside product and engineering to align on their evolving needs. It is a powerful example of how we combine our platform and our people to serve as a true partner in every case, and why we're confident in our ability to drive long-term durable customer relationships. Moving to the overall progress we are making within our go-to-market, last quarter we discussed our initiatives to enhance talent, to target accounts, and to align incentives. We made significant progress with each of these initiatives, and the increase in revenue from larger customers and larger matters is a positive indicator that those efforts are beginning to take effect. We are also seeing nice growth in our Cecilia generative AI suite, including Cecilia Q&A and Cecilia Auto Review. The number of our Cecilia Q&A customers grew five times from Q1 2024. We are happy with this trajectory and this capability as more customers are leveraging Cecilia Q&A to drive superior outcomes for their customers. With Auto Review, we continue to see strong momentum as well. In Q2 of 2024, we announced that Cecilia Auto Review was demonstrating speeds of 3,800 documents per hour over a 24-hour period, which is equivalent to a 140-person review team. Since then, we've continued to make big strides on even faster throughput and higher quality results that are potentially game changing for our industry. Excitement was especially clear at Legal Week in March, where I repeatedly heard how Cecilia and our broader e-discovery capabilities are ahead of the competition. One standout example is a leading MLAW 50 firm. In a government investigation involving close to 3 million documents, this client leveraged Cecilia's Q&A and auto-review capabilities to identify key facts and documents well ahead of critical deadlines, enabling them to craft the optimal strategy for their client. Working in close partnership with Disco, They used Cecilia to conduct a first-level responsiveness review and submit a production. The result was fantastic, a 97% recall and 71% precision across nearly 200,000 documents, well within the accepted industry standards, and they delivered at unprecedented speed. It's compelling proof of how our AI and services can elevate legal outcomes. Although Cecilia Auto Review revenue is still a small portion of our total revenue, we are optimistic about the future of this product. I continue to hear from our customers how they love our platform. Specifically, I've been hearing very positive feedback on the power of our AI and core search functionality, the speed of our systems, the intuitive user interface, the security, and the rate with which we are releasing high-performing new capabilities. Our customers' passion for Disco's platform and the continued execution from the Disco team gives me incredible optimism for the future. We are continuing to release capabilities that make life easier for our customers, enhancing both core eDiscovery and Cecilia-related workflows. Recent launches include Cecilia Definitions, which enables users to generate on-demand definitions for selected text, accelerating comprehension and analysis. enhanced Cecilia document scoping, improved document navigation, and expanded support for Slack and Apple documents and images, along with many others. These enhancements are not just about convenience. We believe they are important to driving more large and complex matters to our platform. We are building tools legal professionals can rely on to handle the most demanding cases with speed and precision. Importantly, many of these innovations were directly informed by customer feedback. They reflect our continued commitment to both industry-leading innovation and to solving real-world challenges for our users, ultimately helping to deepen customer trust and increase wallet share. From a macro perspective, we have seen some external volatility over the past few months. The US government administration's global tariff announcements sparked financial market instability, and its recent executive orders targeting specific law firms have raised concerns in the legal industry. I want to touch on these topics. First, regarding the recent legal industry conflict with the current administration, we stand firmly behind our customers and remain steady to support them however they need, when they need. Based on our review, we currently believe we have negligible exposure from these events. Second, In the context of broader macroeconomic concerns, we believe DISCO is well positioned to weather a potential economic downturn. Our industry is unique in that it can experience both headwinds and tailwinds during times of uncertainty. Historically, economic slowdowns have led to increases in litigation across several key areas where we have strengths, including bankruptcy, securities litigation, contract enforcement, insurance coverage, and regulatory investigations. While we believe we're in a strong position today, the strategic initiatives that we are driving with our existing customers to ensure that they are working with us on their large matters inherently helps us mitigate downturn risk even further. While the exact impact of the potential recession is uncertain, we remain optimistic that Disco's platform, which is designed to reduce costs, increase efficiency, and drive better outcomes, will continue to deliver strong value to our customers when it matters most. In summary, we're pleased with the progress we made in Q1. From continued revenue growth and improving customer engagement to continued innovation across our platform and AI capabilities, I'm excited for the rest of 2025 and beyond. I want to thank our customers, partners, and Disco employees for their continued trust and dedication. With that, I'll turn it over to Michael to walk through our financials in more detail.