CS Disco Q4 Earnings Call Highlights

Core Insights - DISCO's performance in 2025 was driven by increased platform usage, growth in large matters and customers, and rapid adoption of generative AI capabilities [1] - The company reported record highs in total terabytes on its platform and achieved double-digit growth in multi-terabyte matters [1] Financial Performance - For the full year 2025, DISCO's total revenue was $156.8 million, reflecting an 8% year-over-year increase, with software revenue at $134 million, up 12% [2] - In Q4 2025, total revenue reached $41.2 million, an 11% increase year-over-year, while software revenue was $35.1 million, up 14% [3][6] - Full-year adjusted EBITDA was -$10.2 million, improving from a -13% margin in 2024 to a -7% margin in 2025 [2][15] Customer and Market Dynamics - DISCO ended 2025 with 330 customers generating over $100,000 in total revenue, contributing 76% of total revenue, with 20 customers exceeding $1 million in revenue [6] - The adoption of Cecilia AI and Auto Review saw over 600% year-over-year growth in Q4, significantly impacting multi-terabyte usage and revenue growth from large matters [5][7] Product and Strategy Developments - DISCO introduced a new go-to-market strategy that bundles Cecilia AI with every matter and shifts pricing towards customer data size growth to enhance sales efficiency [5][12] - The company emphasized the importance of its AI capabilities in high-stakes litigation workflows, focusing on defensibility and audit trails [8][10] Future Guidance - For FY2026, DISCO guided total revenue between $167 million and $177 million, with expectations of adjusted EBITDA breakeven by Q4 2026 [5][18] - The company anticipates Q1 2026 total revenue of $39.0 million to $41.5 million, with adjusted EBITDA projected between -$6 million and -$4 million [17] Management Insights - CEO Eric Friedrichsen expressed optimism about DISCO's long-term growth potential, targeting a growth rate of over 20% driven by expansion within large customers and increased adoption of generative AI [19]