CS Disco(LAW) - 2024 Q4 - Annual Report

Customer Growth and Retention - As of December 31, 2024, the company had 1,478 customers, up from 1,463 in the previous year, and 315 large customers, an increase from 289[28] - The dollar-based net retention rate was 96% as of December 31, 2024, indicating strong customer loyalty and revenue growth from existing customers[21] Product Offerings and Innovation - The company’s product offerings are designed to automate legal processes, significantly reducing manual tasks and improving lawyer productivity[25] - The Cecilia AI platform, launched in Q4 2023 in the U.S. and Q3 2024 in Europe, enhances legal workflows with features like Q&A and smart timelines[25] - The company aims to pursue strategic acquisitions and investments to enhance its platform and product offerings, indicating a focus on growth through innovation[36] - The company plans to expand its product offerings to address additional areas of the legal function, anticipating increased competition in these areas[47] Financial Performance - Revenue for the year ended December 31, 2024, was $144.841 million, an increase from$138.090 million in 2023, representing a growth of approximately 5.0%[365] - The company's gross profit for 2024 was $107.427 million, compared to$103.142 million in 2023, indicating a gross margin improvement[365] - Total operating expenses increased to $169.150 million in 2024 from$152.987 million in 2023, reflecting a rise of approximately 10.6%[365] - The net loss attributable to common stockholders for 2024 was $55.774 million, compared to a loss of$42.150 million in 2023, representing an increase in losses of approximately 32.4%[365] Cash and Investments - Cash and cash equivalents were reported at $52.771 million as of December 31, 2024, down from$159.551 million in 2023[363] - The company experienced a net decrease in cash and cash equivalents of $106,780 thousand in 2024, compared to a decrease of$43,693 thousand in 2023[369] - The Company purchased $87,937 thousand in short-term investments in 2024, while there were no purchases in 2023[369] - As of December 31, 2024, the Company had$76.4 million in short-term investments, primarily in U.S. government securities[436] Research and Development - The research and development organization comprised 163 employees as of December 31, 2024[43] - The Company capitalized $2.4 million in software development costs in 2024, down from$4.3 million in 2023[439] - The Company recognized impairment charges of $1.2 million related to capitalized software development costs during the fourth quarter of 2024[440] Stock-Based Compensation and Share Repurchase - Total stock-based compensation expense for the years ended December 31, 2024 and 2023 was$22.3 million and $16.2 million, respectively[461] - The Company authorized a share repurchase program of up to$20.0 million, completing the repurchase of approximately 2.6 million shares at a weighted average price of $7.66 as of June 30, 2024[477] - The Company reversed$7.7 million in previously recognized stock-based compensation expense in September 2023 due to the termination of the CEO and cancellation of the CEO Performance Award[475] Tax and Deferred Tax Assets - The provision for income taxes for the year ended December 31, 2024, was $332,000, compared to$443,000 for 2023, reflecting a decrease in tax expenses[480] - The net deferred tax asset (liability) as of December 31, 2024, was $(127,000), compared to$(145,000) as of December 31, 2023, indicating a slight improvement[480] - The Company had a total deferred tax asset of $76.3 million and total deferred tax liabilities of$3.7 million as of December 31, 2024[480] Impairment Charges - The Company recorded a $15.2 million impairment charge in the year ended December 31, 2024, related to the primary law finite-lived intangible asset and capitalized software development costs[401] - A full non-cash impairment charge of$14.0 million was recorded for the primary law intangible asset due to zero future cash flows identified[452] - The Company recorded a $1.2 million non-cash impairment charge related to capitalized software development costs associated with the integration of the primary law intangible asset[454] Workforce and Organizational Changes - As of December 31, 2024, the Company had 151 professionals in its sales and marketing organization[41] - The Company recorded restructuring charges of$2.6 million during the year ended December 31, 2023, related to a global workforce reduction of approximately 9%[458]