CS Disco(US:LAW)2025-05-07 21:03Financial Performance - Revenue for the three months ended March 31, 2025, was $36.7 million, representing a 3% increase from $35.6 million in the same period of 2024[123] - Net loss for the three months ended March 31, 2025, was $11.4 million, compared to a net loss of $10.6 million for the same period in 2024[124] - Adjusted EBITDA for the three months ended March 31, 2025, was $(5.1) million, slightly improved from $(5.2) million in the same period of 2024[125] - Total revenue for the three months ended March 31, 2025, was $36,653,000, representing a 3% increase from $35,571,000 in the same period of 2024[153] - Net loss attributable to common stockholders was $11,393,000 for the three months ended March 31, 2025, compared to a loss of $10,582,000 in 2024[150] - Adjusted EBITDA for the three months ended March 31, 2025, was $(5,089,000), slightly improved from $(5,192,000) in the same period of 2024[163] Revenue Composition - Usage-based revenue accounted for 90% of total revenue for the three months ended March 31, 2025, while subscription revenue represented 10%[142] - Revenue from new customers added since March 31, 2024, contributed $4,500,000, offset by a $3,400,000 decrease in revenue from existing customers[153] Cash and Investments - As of March 31, 2025, the company had $34.5 million in cash and cash equivalents and $84.3 million in short-term investments[123] - As of March 31, 2025, the company had cash and cash equivalents of $34,500,000 and short-term investments of $84,300,000, sufficient to fund anticipated cash requirements for the next 12 months[164] - Significant purchases of short-term investments amounted to $45.4 million in Q1 2025, partially offset by $38.3 million in maturities of investments[172] Operating Expenses - Cost of revenue increased by $651,000, or 7%, to $9,503,000, with cloud hosting costs rising by $400,000 due to increased usage[156] - Research and development expenses rose by $2,178,000, or 18%, totaling $14,257,000, primarily due to increased personnel costs[157] - Sales and marketing expenses decreased by $1,281,000, or 8%, to $14,527,000, attributed to reduced headcount and marketing expenses[158] - General and administrative expenses decreased by $188,000, or 2%, to $10,976,000, mainly due to lower professional services and insurance costs[159] Cash Flow - Net cash used in operating activities for Q1 2025 was $10.5 million, an increase of $3.2 million from $7.3 million in Q1 2024, representing a 43% increase[170] - Cash used in investing activities for Q1 2025 was $7.7 million, an increase of $7.0 million from $0.7 million in Q1 2024, indicating a significant rise in investment expenditures[171] - Cash used in financing activities decreased to $0.1 million in Q1 2025, down by $2.8 million from $2.9 million in Q1 2024, a reduction of 97%[173] - The net decrease in cash and cash equivalents for Q1 2025 was $18.2 million, a 68% increase compared to $10.9 million in Q1 2024[168] - The increase in cash flow used in operations was partially due to a net loss increase of $0.8 million and a decrease of $1.7 million in accounts receivable[170] Strategic Initiatives - The company plans to expand its international customer base, particularly in the United Kingdom and India, where less than 10% of revenue was generated from customers outside the United States[138] - The company intends to continue pursuing strategic acquisitions and investments to enhance its product offerings and bring in talent[139] - The launch of the ediscovery chatbot, Cecilia, occurred in Q4 2023 in the United States and Q3 2024 in Europe, showcasing the company's commitment to innovation[130] - The company aims to increase sales coverage by enhancing its sales force headcount in strategic locations across the United States and globally[135] Economic Factors - Macroeconomic conditions, including inflation and geopolitical events, may negatively impact the company's growth and results of operations[126] Financing and Accounting - The company may seek additional equity or debt financing in the future to support growth and innovation[167] - The company has historically generated negative cash flows and supplemented working capital primarily through equity securities sales[169] - The company capitalizes certain software development costs, which are amortized over an estimated useful life of four years[176] - Acquisitions involve significant estimates and assumptions regarding the fair value of intangible assets, which may lead to adjustments in future periods[177] - The company has opted not to use the extended transition period for complying with new accounting standards as an emerging growth company[179]