Cs Disco, Inc. ((LAW)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for CS Disco, Inc. painted a generally optimistic picture of the company’s trajectory, underscored by notable growth in software revenue, customer expansion, and the introduction of innovative products like Auto Review and Cecilia. Despite challenges such as negative operating cash flow and ongoing losses, the strategic emphasis on larger customers and technological advancements suggests a promising outlook for future performance.
Software Revenue Growth
In the second quarter, CS Disco reported software revenue of $32.7 million, marking a 12% increase year-over-year. This growth underscores the company’s successful efforts in expanding its software offerings and capturing a larger market share.
Total Revenue Increase
The company achieved a total revenue of $38.1 million in Q2, reflecting a 6% rise compared to the previous year. This increase highlights the overall positive momentum in the company’s financial performance.
Customer Expansion
CS Disco ended the second quarter with 323 customers contributing more than $100,000 in total revenue over the last 12 months, representing a 6% year-over-year growth. This expansion in customer base indicates the company’s ability to attract and retain high-value clients.
Innovative Product Offerings
The introduction of DISCO Auto Review capabilities to the EU and U.K. markets has been a significant development. Clients can now review up to 32,000 documents per hour with precision and recall metrics exceeding 90%, showcasing the company’s commitment to innovation and efficiency.
Cecilia Adoption
The first half of the year saw a 150% growth in multi-terabyte matters leveraging Cecilia, reflecting the increasing adoption and success of this innovative product.
Adjusted EBITDA Improvement
CS Disco reported an adjusted EBITDA of negative $2.7 million for Q2, which, despite being negative, represents a $2 million improvement over the same period in 2024. This improvement suggests progress in the company’s financial management.
Negative Operating Cash Flow
Operating cash flow for the first two quarters of 2025 was negative $14.7 million, compared to negative $8.0 million in the same period of the previous year. This indicates a challenge that the company needs to address to improve its cash flow situation.
Continued Losses
The net loss in Q2 was $2.8 million, or negative 7% of revenue, compared to a net loss of $4.4 million or negative 12% of revenue in the previous year. Although still in the red, this reduction in losses points to some financial recovery.
Services Revenue Decline
Services revenues, including DISCO managed review and professional services, were $5.4 million, with continued softness in the Review business. This decline suggests an area where the company might need to focus on revitalization efforts.
Forward-Looking Guidance
During the earnings call, CS Disco provided strategic guidance for the fiscal year 2025, projecting total revenue between $148 million to $158 million and software revenue between $128 million to $134 million. The company aims to enhance its Ediscovery platform, leverage AI capabilities, and improve operational efficiency, which are expected to drive sustainable growth.
In conclusion, CS Disco’s earnings call revealed a generally positive sentiment with significant achievements in software revenue growth and customer expansion. While challenges such as negative cash flow and continued losses remain, the company’s strategic focus on innovation and larger customer engagements offers a hopeful outlook for the future.