CS Disco, Inc.

Ladies and gentlemen, thank you for standing by and welcome to CS Disco's first quarter 2026 conference call. At this time, all participants are in listen 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. and if you would like to withdraw your question, press star 1 again. I would now like to hand the conference over to your first speaker today, Head of Investor Relations, Alexey Lakshakov. Please go ahead.

Good morning, and thank you for joining us on today's conference call to discuss the financial results for DISCO's first quarter of fiscal year 2026. With me on today's call are Eric Friedrichson, DISCO's Chief Executive Officer, Aaron Barfoot, Disco Chief Financial Officer, and Richard Crump, Disco Chief Product Technology and Strategy 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 the 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 the 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. Overlooking 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 Annual Report on Form 10-K for the year ended December 31st, 2025, filed with the SEC on February 25th, 2026, and the company's quarterly report on Form 10-Q for the year ended March 31st, 2026. 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. Reconciliation between GAAP and non-GAAP financial measures and the discussion of the limitations of using non-GAAP measures versus the closest GAAP equivalent is available in our earnings release. And with that, I'd like to turn the call over to Eric.

Thank you, Alexi. Good morning, everyone, and thank you for joining us. In the first quarter, Disco delivered strong results across the board with significant product momentum, continued traction with our largest customers in both software and services, and strong underlying financial performance. We continue to drive accelerating and sustainable revenue growth. As AI permeates through the legal industry, Law firms are looking for ways to boost their productivity, increase efficiency, and deliver better outcomes in order to win more business as their corporate clients look to control litigation spend. The key to success in this environment is trust. The trust is earned through security, enterprise scale, and litigation-specific capabilities necessary to help lawyers win on the largest and most complex matters. This is where Disco shines. We are in an excellent place with unique capabilities to continue to be a disruptor and leader in AI for litigation. And our progress in Q1 has helped further differentiate Disco from both general purpose legal AI tools and those in the traditional eDiscovery space. In Q1, total revenue grew 14% year over year to $41.9 million and software revenue grew 12% year over year to $34.7 million. This was the fourth consecutive quarter of accelerating growth in total revenue, if you exclude the one-time contingent deal we recognized in Q3 of last year. We are very pleased to deliver strong software growth and to beat the high end of our total revenue guidance range. Adjusted EBITDA improved 32% to negative $3.5 million in Q1, also beating the high end of our guidance range. We saw strong Q1 performance in four key areas. First, increased wallet share among our biggest customers. Second, growth of large multi-terabyte matters. Third, continued adoption of our generative AI capabilities. And fourth, overall acceleration in the growth of data on our platform. Regarding improvement with our biggest customers, in Q1 we increased the number of customers that generated more than $100,000 in total revenue during the last 12 months to 347. The revenue attributable to these customers during the last 12 months totaled $124 million, representing 77% of total revenue over this period and 13% year-over-year growth. We are continuing to add multi-terabyte matters as more complex litigation comes onto our platform. In Q1, we saw an acceleration in net new large matters added, which is a very promising sign given that these matters generate more revenue, expand over time, and last longer on our platform. Continued adoption of our generative AI capabilities was driven by both Cecilia AI and AutoReview. Disco is transforming high-stakes litigation through an AI native stack built on a decade of proprietary data innovation and purpose-built legal workflows. At its core, Cecilia's agentic intelligence allows legal teams to speak directly to their data, uncovering complex evidence in seconds rather than weeks. Cecilia Advanced Research is our new platform-native agentic AI capability which is a breakthrough for e-discovery and investigations. It is capable of much more sophisticated, autonomous reasoning that extracts deeper context, makes next-level connections, and delivers significantly more detailed and thorough results across even the largest data sets. We're currently in testing with select customers on live case data in preparation for a broader rollout to wait-listed customers next month. The feedback is fantastic. Customers instantly grasp how much more they can accomplish and see it as a real example of what other AI providers have only been promising. Increased adoption has also extended through to our AI powered managed services, which deliver expert level results at software scale economics. The result is a secure enterprise grade ecosystem that fundamentally redefines the speed and efficiency of modern discovery. Disco Auto Review is a more accurate and leaner alternative to traditional review and an excellent example of our AI capabilities in action. As more law firms look for new revenue streams, Auto Review allows them to bring more of that work in-house rather than sending it to alternative legal service providers, moving review from a cost center to a profit center. This is a win-win-win for the client, for the law firm, and for Disco because it provides a clear ROI and better outcomes for the client while providing more differentiated revenue streams for the law firm and for Disco. Our auto review capabilities continue to lead the market in terms of speed and efficacy, and we believe that as more and more firms consider AI for the review needs, that we are very well positioned to capture that demand. Interest in auto review continues to grow. We are seeing more customers engage with us to evaluate how auto review can help with their larger matters. And it has proven to be a strong driver for our managed review offering, which also enjoyed a strong Q1. That's a great example of how our AI capabilities, combined with our customer value proposition of with you in every case, are bringing more customers, more matters, and more revenue to Disco. As far as overall acceleration of usage, we had a significantly better than expected launch of the Disco platform in Q1. For context, the Disco platform is our powerful, industry-leading set of AI capabilities, including Cecilia Q&A, auto timelines, document summaries, definitions, and case builder, bundled together in one solution with our eDiscovery capabilities on every matter. The Disco platform gives customers everything they need to manage and win their matters for one competitive price. In the first three months, we've seen strong demand from customers with early adoption that has been much better than anticipated. And we're equally pleased from a financial perspective. While it's still in the early days, we're seeing some very encouraging trends from Disco platform adoption, including larger matters, increased committed revenue, multi-year deals, and growing AI adoption. These results demonstrate how much easier we've made it to do business with Disco, something further proven by the strong customer demand. Continuing to grow Disco platform is a key driver behind expanding wallet share among our existing base of large customers with large matters. I always like to highlight a couple of real world examples to illustrate the value that Disco is delivering to customers. These are examples of customers who have moved from important transactional relationships to strategic relationships that benefit us both. The first is Mound Cotton, a leading litigation boutique focused on insurance matters with a nearly 90-year history. Following the launch of our Disco platform in the first quarter, Mound Cotton signed a three-year enterprise agreement, making Disco the provider of choice for e-discovery technology across their firm. The reasoning was simple. They wanted a strategic partner that combined secure, cutting edge AI technology with professional services and support that they need for the largest and most sensitive matters. Mountain Cotton conducted a broad review of potential partners in search of a comprehensive integrated solution before selecting Disco and noted that it quickly became clear that Disco was the better product for their clients and better experience for their attorneys. As a firm that closely works with large global financial institutions, Mountain Cotton was drawn to Disco's reputation for security, privacy, and reliability. They said, we have the luxury of being able to select the best-in-class solution, and the unanimous verdict was that Disco is a dramatically better product today and that the gap will only widen in the future. As a firm with sophisticated clients that demand the best tools, Disco is the right choice. We hear similar things from many of the top firms we work with. They need advanced, secure technology paired with the expertise to help them get the most out of it to deliver results for their clients. The Disco platform is making that easier than ever. A second example that demonstrates how we're building multi-year relationships because customers see our technology's potential is Reynolds Brazil LLP, a generalist commercial litigation firm in Houston with a prominent energy litigation practice. Reynolds Frisell is one of our longest relationships. They've been using Disco since 2015, and they also recently signed a multi-year enterprise agreement to expand their use of our technology across their firm. Reynolds Frisell has taken a considered approach to new technology in the legal tech space, thoughtfully vetting AI applications and focusing on technology specifically designed for legal use cases. As they looked into legal AI applications, Disco was a natural place to start based on a decade-long relationship built on trust and collaboration. A Reynolds Brazil partner said that they've used and evaluated a number of different AI legal tools and were especially impressed by Disco's Cecilia capabilities. We're excited to have it available for our cases, the partner said. This illustrates the power of our with you in every case value proposition. Our combination of advanced technology and expert professional services has made Disco into an essential resource for Reynolds Brazil, and we're continuing to serve and grow this longstanding relationship into the future. The stories about Mountain Cotton and Reynolds Brazil are just two examples of our strategy in action, and there are dozens more every quarter demonstrating our ability to develop these relationships and dramatically expand them over time. All told, Q1 was a strong quarter for Disco, with continued growth in our core business, a better than expected launch of the Disco platform, and great progress with AI adoption. We believe this creates significant momentum for us throughout 2026 and beyond. With that, I'll next turn it over to Richard to discuss how our recent product advancements and our product roadmap are shaping our longer-term view of the broader opportunity to provide powerful AI solutions for litigation. Richard?