CS Disco(US:LAW)2025-11-05 22:08Revenue Performance - Revenue for the three months ended September 30, 2025, was $40.9 million, representing a 13% increase from $36.3 million in the same period of 2024[140]. - For the nine months ended September 30, 2025, revenue was $115.7 million, a 7% increase from $107.8 million in the same period of 2024[140]. - Total revenue increased by $4.7 million, or 13%, for the three months ended September 30, 2025, compared to the same period in 2024[170]. - Total revenue increased by $7.8 million, or 7%, for the nine months ended September 30, 2025, compared to the same period in 2024[176]. - Revenue from new customers added since September 30, 2024 contributed $4.7 million, while revenue from existing customers decreased by $1.4 million[170]. - Revenue generated from software product offerings increased by $5.1 million, or 17%, for the three months ended September 30, 2025[171]. - Revenue from software product offerings increased by $9.5 million, or 11%, for the nine months ended September 30, 2025[177]. - Subscription revenue represented 9% of total revenue for the three months ended September 30, 2025, compared to 11% in the same period of 2024[157]. - Usage-based revenue accounted for 91% of total revenue for the three months ended September 30, 2025, up from 89% in the same period of 2024[157]. Expenses and Losses - The net loss for the three months ended September 30, 2025, was $13.7 million, compared to a net loss of $9.2 million in the same period of 2024[140]. - Adjusted EBITDA for the three months ended September 30, 2025, was $(0.3) million, an improvement from $(4.5) million in the same period of 2024[141]. - Total cost of revenue increased by $0.3 million, or 3%, for the three months ended September 30, 2025, primarily due to a $0.6 million increase in cloud hosting costs[172]. - Research and development expenses increased by $0.7 million, or 5%, for the three months ended September 30, 2025, driven by a $1.1 million increase in personnel costs[173]. - General and administrative expenses increased by $7.3 million, or 75%, for the three months ended September 30, 2025, primarily due to a $6.9 million increase in professional services costs[175]. - Total cost of revenue increased by $1.3 million, or 5%, for the nine months ended September 30, 2025, primarily due to a $1.6 million increase in cloud hosting costs[178]. - Research and development expenses increased by $3.9 million, or 10%, for the nine months ended September 30, 2025, driven by a $4.5 million increase in personnel costs[179]. - Sales and marketing expenses decreased by $1.5 million, or 3%, for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to a decrease in personnel costs and marketing expenses[180]. - General and administrative expenses increased by $7.4 million, or 23%, for the nine months ended September 30, 2025, mainly due to a rise in professional services costs related to legal fees[181]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $(8.1) million, an improvement from $(14.4) million in the same period of 2024[186]. Cash and Financing - The company had $28.8 million in cash and cash equivalents and $84.7 million in short-term investments as of September 30, 2025[140]. - Cash used in operating activities for the nine months ended September 30, 2025, was $15.7 million, an increase of 45% from $10.8 million in the same period of 2024[193]. - Net cash used in investing activities decreased by $43.8 million to $8.3 million for the nine months ended September 30, 2025, compared to $52.2 million in 2024[197]. - Cash provided by financing activities was $0.1 million for the nine months ended September 30, 2025, a decrease of $20.1 million from cash used in financing activities of $20.0 million in 2024[198]. - As of September 30, 2025, the company had cash and cash equivalents of $28.8 million and short-term investments totaling $84.7 million[187]. - Total future cash requirements as of September 30, 2025, are estimated at $93.1 million, including operating lease commitments and cloud platform purchase commitments[189]. - The company expects to meet its longer-term cash requirements primarily from cash flow from operating activities and available cash and cash equivalents[188]. - The company may seek additional equity or debt financing in the future to support operations and innovation[192]. 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[154]. - The company intends to continue pursuing strategic acquisitions to enhance its product offerings and market presence[155]. - The launch of the ediscovery chatbot, Cecilia, is expected to enhance lawyer productivity and was released in Q4 2023 in the U.S. and Q3 2024 in Europe[146]. Accounting and Compliance - The company allocates purchase consideration for acquisitions to tangible assets, liabilities, and intangible assets based on estimated fair values, with excess recorded as goodwill[203]. - Significant estimates in valuing intangible assets include future expected cash flows from acquired users and technology, useful lives, and discount rates[203]. - The company is classified as an emerging growth company under the JOBS Act, allowing it to take advantage of certain reporting exemptions[205]. - The company has opted not to use the extended transition period for complying with new or revised financial accounting standards, adopting them simultaneously with other public companies[205]. - As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk[206].