Scott Hill: Yes, I think that’s a really good question, and it’s an important one, because I think historically we’ve talked about customers as if they’re all equal, an equal opportunity, equal future ability to grow, equal interest in partnering. And that’s not what I’ve seen in the six months that I’ve been here. I think there are certainly customers where we have deep, long-standing relationships, but there are also customers who do a small case, buy a small deal, and then aren’t with us two months later. I’ve really asked the team to focus a lot inside those 1441 customers, on who are the ones that we can grow with, who are the ones that will partner with us, who are the ones that look to us for the second case, and the fourth case and the 6th case, because historically, what we know is if we can get a customer to a fifth or a 6th case, that’s a sticky customer.
And so I’ve asked the team to look at the customers from a lens of who are the customers we can grow to six cases. It doesn’t immediately go one to six, but who’s the one we can sell a second to? And if that second one comes, can it lead to a third, and can that put us on a path to a six? So what that’s going to mean is from quarter to quarter, I don’t know that you look at the customer count as particularly meaningful, but it does matter year over year because we do need to grow customers. And so I take solace in the fact that we’re entering 2024 with 9% more customers than we had in the prior year. We’re entering the year with 9% more customers, spending more than $100,000. We’re entering the year with 26 customers, which is up 10% or 12% from last year.
Three. It’s up three customers, but they’re spending a million dollars or more a year. That’s the growth driver force. And the thing it does is it makes us a little bit less transactional, because to the extent that we can embed ourselves in a customer and grow with that customer, it becomes far more annuity, like it’s still transaction in nature, but the relationship becomes more annuity because there’s a point in time at which we get the call on the next case. It’s not a hard sell to win that case. And so over the course of the year, growing our customer base, absolutely important ins and outs in any particular quarter, particularly, and this is really important as we’re for the first time ever as a Company, segmenting our customers and looking at big law, distinct from mid-market law, distinct from corporate law, and developing sales motions around that, deploying our sales team across that, aligning our marketing spend with that.
If there’s going to be some dynamics underneath the covers within that customer count. What I would encourage you to do is watch the year-over-year growth for the full year, and ask about the trends as we move through the year. But know that what I think is really important is the fact that we’ve segmented the customers, we’re developing the sales motion, we’re aligning soup, the nuts, every bit of spend around the customer to serve that. I think those are the more meaningful metrics. And then at the end of the day, the metric to watch is how is revenue trending?
David Hynes: Yes. Okay, fair enough. Michael, one for you. Do you have software revenue for 21 and 22? I mean, it’d be helpful to see how that’s been trending as a percent of revenue, given it looks like it’s going to be a new guidance metric.
Michael Lafair: Okay. The K includes software revenue for ’22, for ’23. And I’ll just tell you what it is on the call now. It’s about $112 million. And that is in the K. And you also have in the K the quarterly numbers for ’23.
David Hynes: But nothing historically past beyond that.
Michael Lafair: Nothing prior to ’23.
David Hynes: Okay, got it. Thank you, guys.
Operator: [Operator Instructions] Your next question comes from Koji Ikeda with Bank of America. Please go ahead.
Koji Ikeda: Hi, Scott. Hi, Michael. Thanks for taking the questions. So just a couple from me here. I think I heard that. I guess it’s safe to assume that the third quarter, 2024 EBITDA profitability inflection target is now off the table. But I think you did mention something about 2025. So would that be EBITDA profitable for the full year 2025? Or is that a quarter in 2025 that would show that positive inflection?
Scott Hill: Yes. Koji, Scott here. It’s a good question and not an unexpected one. What I said precisely in my remarks is that it will put us on a sustainable, and that’s an important word to me, a sustainable path of profitability as we move through 2025. So I didn’t pick a quarter. I didn’t pick the year. What I’m telling you is that I believe a combination of the investments we’re making this year, the acceleration in revenue we’re seeing this year, and then an additional acceleration as we move out into ’25 and beyond, are the things that put us on track for a sustainable path to profitability during 2025. Again, I’m not going to pick the mark. But again, just in case I need to say it on the record. We have to get to profitability.
We’re committed to get there. I just, as I said, did not want to cut off our ability to grow revenues and to balance the path to profitability. And that’s what doing. So as we move into 2025, I think the investments we’re making this year combined with accelerating revenue growth will put us on a sustainable path as we move through the year next year.
Koji Ikeda: Got it. That is super helpful. And looking at the guidance it assumes services revenue, which is Disco review, is roughly flat for 2024. So I guess maybe walk us through why it would be flat. And is services revenue going to be a drag on the business going forward? And then the second part of that question is, how is review priced? Because I was looking through prior transcripts and it sounded like it’s priced on how many documents are ingested in the platform. So just wondering why it was being put into a different category going forward.
