Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total revenue for Q3 2024 increased by 4% year-over-year, with software revenue up by 6%.
- CS Disco Inc (LAW, Financial) has made strategic hires, including the return of Lauren Caruso as Chief Sales Officer, to strengthen their sales team.
- The company has signed several notable customers, including Fortune 500 companies, indicating strong market traction.
- CS Disco Inc (LAW) is seeing increased usage of its platform and improved software dollar net retention.
- The company is focused on enhancing its product offerings, particularly in AI, with positive feedback from customers about its Cecilia AI platform.
Negative Points
- Adjusted EBITDA for Q3 2024 was negative $4.5 million, indicating ongoing financial challenges.
- Services revenue decreased by 7% year-over-year, driven by lower review usage.
- The company underwent a restructuring, resulting in the elimination of 31 roles, which may impact employee morale.
- Customer count remained relatively flat, with a slight decrease quarter-over-quarter, indicating challenges in expanding the customer base.
- Despite positive feedback, the adoption of the Cecilia AI platform is not expected to materially impact revenue in the near term.
Q & A Highlights
Q: What impact will the new Chief Sales Officer have on CS Disco's go-to-market strategy?
A: Eric Friedrichsen, CEO, expressed excitement about Lauren Caruso joining as Chief Sales Officer. He highlighted her enterprise-oriented mindset and deep knowledge of eDiscovery and Disco's products. Caruso's role will focus on strategic growth, leveraging her familiarity with the client base and products to enhance revenue. Friedrichsen emphasized that while sales are crucial, other areas like customer success and marketing also report directly to him to ensure comprehensive revenue growth.
Q: Can you provide details on the recent restructuring and its impact on headcount?
A: Friedrichsen explained that the restructuring affected 31 employees, but 22 new roles were opened simultaneously, indicating a strategic realignment rather than cost-cutting. The focus is on refocusing resources and investments to areas with the most growth potential. The sales organization was notably impacted, with a shift towards hiring experienced enterprise sales executives.
Q: What is the current customer count, and how does it reflect Disco's strategic focus?
A: The customer count at the end of Q3 was 1,439, relatively flat year-over-year. Friedrichsen noted that the focus is not on customer count but on acquiring and growing within customers with significant eDiscovery needs, such as large corporations and law firms. The company is seeing progress with more customers spending over $100,000 annually and increased platform usage.
Q: What are the plans for Cecilia AI, and how does it fit into Disco's growth strategy?
A: Friedrichsen highlighted Cecilia AI as a key component of Disco's strategy, noting its potential to enhance customer penetration and monetization. While adoption in the legal industry is gradual, feedback has been positive, with Cecilia AI being recognized as superior to competitors. However, its impact on revenue is expected to be limited in the near term.
Q: How does Disco plan to achieve profitability, and what is the outlook for cash flow?
A: Friedrichsen emphasized that the primary goal is to accelerate growth by capturing a larger share of the market. He indicated that while expenses may rise next year, they will not increase as much as revenue, suggesting a focus on shifting resources rather than adding costs. The company is working towards sustainable profitability by optimizing investments in go-to-market strategies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
