CS Disco, Inc. (NYSE:LAW) Q1 2024 Earnings Call Transcript

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We also believe that the innovation edge that we have in those products opens the door to new customers who want that efficiency and will then move their cases and their databases onto our platform to be able to leverage it. And so we’re still working our way through what the individual pricing versus the package pricing and the overall strategy will be. But it’s certainly a place where we feel like it’s a value pricing strategy and not one that simply chases the lowest dollar.

Eric Friedrichsen: Yes. And I’ll just jump in on that, too. This is Eric. But I think I’m very optimistic about Cecilia AI and all the capabilities. And it’s not just from seeing demos of the product or speaking with the DISCO team, but it’s from speaking with customers and understanding that they believe that AI is going to revolutionize the industry at this point. And DISCO’s got a significant leg up on the competition. And it’s all about the investment that we’ve made in AI for the past several years. We’re far ahead when it comes to things like security, speed, reliability, capabilities. The early feedback so far on Cecilia Q&A is very positive. We’re starting to get some feedback in on deposition summaries and automated review and that’s a pretty incredible opportunity.

And some of these capabilities, particularly automated reviews one that I think about where it’s a game-changer. The amount of time that we can save customers with AI is going to create opportunity for the customer to save money and it’s going to create the opportunity for DISCO to generate better margins. Yes. Go ahead.

Mark Loop: And then one follow-up here. Michael, I was wondering if you could just address churn in the quarter?

Michael Lafair: Thanks for the question. So in terms of churn, I mean, we’ve previously disclosed our dollar-based net retention at the end of the year in the K. And we obviously — Q1 was a good quarter. We were pleased with the results. We would have preferred at a bigger beat than we had. We were basically in line with the guidance. And we’ve discussed a little bit about some of the softness in Q2. But what I will tell you, and I agree with everything Scott said, we feel really confident about the second half of the year and a lot of the investments that we’ve made and are still making are going to pay off and get us back to where we can reaccelerate revenue, which also would lead to improved dollar-based net retention numbers back to where they used to be.

Scott Hill: And Mark, just a couple of data points to reinforce that point. Customer count was up year-over-year and up a little bit modestly from where it was the prior quarter. And DNR also ticked up slightly from where it was at the end of the year. So each of those metrics, as Michael alluded to, suggest that that along with the revenue performance in the quarter suggests that the churn was modest and not really a factor in the quarter.

Operator: That concludes our question-and-answer session. I will now turn the call back over to Incoming Chair of the Board of Directors, Scott Hill, for some final closing remarks.

Scott Hill: Thank you very much. Thank you all for joining our call today. When I stepped into the CEO role eight months ago, my goal was to stabilize the Company and work with my DISCO colleagues to acknowledge and more importantly, improve what was broken, reinvest in what was working and recreate forward momentum. I want to thank all of my colleagues here at DISCO who have leaned in and focused forward and helped us get the Company back on the right track. Your commitment to our customers and our company inspires me. A lot of hard work remains to be done, but the opportunity is there for us to take. Now we have to come together and execute. I also want to thank our customers and investors for their patience and their loyalty. We’re refocused on serving you and generating positive returns. Eric, welcome to the job, anything you’d like to add?

Eric Friedrichsen: Yes, Scott. Actually, first of all, I just want to thank you one more time for everything that you’ve done for DISCO over these past several months. I’m very fortunate that we get to work together with you as Chair of the Board. So I’m looking forward to that. And like you, I very much appreciate our customers, our partners and our investors. I’m looking forward, I’m optimistic about the future of DISCO, and I look forward to sharing more at our next quarter’s earnings call. So thank you, everybody, for joining the call, and have a great evening.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.

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