Financial Data and Key Metrics Changes - In Q4 2025, total revenue grew 11% year-over-year to $41.2 million, while software revenue increased 14% year-over-year to $35.1 million, marking the third consecutive quarter of accelerating growth for both metrics [9][30] - For the full year 2025, total revenue was $156.8 million, up 8% year-over-year, and software revenue was $134 million, up 12% year-over-year [10][30] - Adjusted EBITDA for Q4 was negative $2.2 million, representing an Adjusted EBITDA margin of negative 5%, an improvement from negative 12% in Q4 of the prior year [9][37] - The full year 2025 Adjusted EBITDA was negative $10.2 million, with a margin of negative 7%, compared to negative 13% in 2024 [10][37] Business Line Data and Key Metrics Changes - Services revenue in Q4 was $6 million, down 3% year-over-year, primarily due to a reduction in traditional review services [30] - The decline in services revenue for the full year was $22.8 million, down 8% year-over-year, attributed to the decline in traditional review business [30] Market Data and Key Metrics Changes - The company finished the year with 330 customers generating over $100,000 in total revenue, contributing $119 million, or 76% of total revenue [11] - There was a record high in total terabytes on the platform, with over 30% revenue growth from multi-terabyte matters year-over-year in Q4 [11] Company Strategy and Development Direction - The company aims to disrupt the e-discovery industry by leveraging AI-native technology and enhancing its product offerings, including Cecilia AI and Auto Review [7][12] - A new pricing model was introduced to simplify access to DISCO's tools, combining all capabilities into a single offering to reduce friction for customers [22][23] - The strategy focuses on expanding wallet share with existing customers and increasing adoption of generative AI capabilities [10][75] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving Adjusted EBITDA breakeven by Q4 of 2026, driven by revenue growth and reduced one-time costs [39] - The company anticipates total revenue guidance for Q1 2026 in the range of $39.0 million to $41.5 million, with software revenue guidance of $33.75 million to $35.25 million [38] Other Important Information - The company ended Q4 with $114.6 million in cash equivalents and short-term investments, with no debt [38] - The gross margin for Q4 was 77%, and for the fiscal year 2025, it was 76%, an increase from 75% in fiscal year 2024 [33] Q&A Session Summary Question: Why now for the pricing and packaging changes? - Management indicated that the changes were driven by customer demand and feedback, aiming to reduce friction in selling DISCO's services [41][44] Question: What is the intermediate growth rate outlook? - Management believes the company can achieve 20%+ growth, supported by larger customer engagements and increased adoption of generative AI capabilities [46][48] Question: Are general AI tools impacting the e-discovery process? - Management noted that customers have not reported using general AI for e-discovery, emphasizing the unique requirements of litigation that differ from other legal areas [54][58] Question: What are the potential downsides of the new commercial model? - Management acknowledged that simplifying the pricing model could lead to some initial challenges but emphasized the long-term benefits of improved customer understanding and sales efficiency [67][68] Question: Any changes to the sales organization? - Management confirmed that the sales strategy has been effective, with a focus on outside sales and incentivizing new matters, and they are considering adding talent to capitalize on growth opportunities [70][71]

Financial Data and Key Metrics Changes - In Q4 2025, total revenue grew 11% year-over-year to $41.2 million, while software revenue increased 14% year-over-year to $35.1 million, marking the third consecutive quarter of accelerating growth for both metrics [9][30] - For the full year 2025, total revenue was $156.8 million, up 8% year-over-year, and software revenue was $134 million, up 12% year-over-year [10][30] - Adjusted EBITDA for Q4 was negative $2.2 million, representing an adjusted EBITDA margin of negative 5%, an improvement from negative 12% in Q4 of the prior year [9][36] - The full year adjusted EBITDA was negative $10.2 million, with a margin of -7%, compared to -13% in 2024 [10][37] Business Line Data and Key Metrics Changes - Services revenue in Q4 was $6 million, down 3% year-over-year, primarily due to a reduction in traditional review services [30] - The decline in services revenue for the full year was $22.8 million, down 8% year-over-year, attributed to the decline in traditional review business [30] Market Data and Key Metrics Changes - The company finished the year with 330 customers generating over $100,000 in total revenue, contributing $119 million, or 76% of total revenue [11] - There was a record high in total terabytes on the platform, with over 30% revenue growth from multi-terabyte matters year-over-year in Q4 [11] Company Strategy and Development Direction - The company aims to disrupt the e-discovery industry by leveraging AI-native technology and enhancing its product offerings, including Cecilia AI and Auto Review [7][12] - The new pricing model combines all DISCO capabilities into a single offering, aiming to simplify customer access and increase adoption of AI features [22][23] - The strategy focuses on expanding wallet share with existing customers and targeting larger matters, with a goal of achieving 20%+ growth in the future [46][47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's role as a disruptor in the legal tech industry, emphasizing the importance of AI in enhancing litigation outcomes [6][18] - The outlook for Q1 2026 includes total revenue guidance of $39.0 million to $41.5 million and software revenue guidance of $33.75 million to $35.25 million, with expectations of adjusted EBITDA improving towards breakeven by Q4 2026 [38][39] Other Important Information - The company ended Q4 with $114.6 million in cash equivalents and short-term investments, with no debt [38] - The gross margin for Q4 was 77%, and for the fiscal year 2025, it was 76%, an increase from 75% in 2024 [33] Q&A Session Summary Question: Why implement pricing and packaging changes now? - Management noted that the changes were driven by customer demand and feedback, aiming to reduce friction in the sales process and improve win rates for larger matters [41][43] Question: What is the expected intermediate growth rate for the company? - Management expressed optimism about achieving 20%+ growth, driven by larger customer engagements and increased adoption of generative AI capabilities [46][47] Question: Are general AI tools impacting the e-discovery process? - Management indicated that customers have not reported using general AI for e-discovery, emphasizing the unique requirements of litigation that differ from other legal areas [56][58] Question: How does the usage-based model inform guidance philosophy? - The CFO highlighted that as the business scales, predictability in the usage model improves, allowing for more precise guidance [61][63] Question: What potential downsides or trade-offs are anticipated with the new commercial model? - Management acknowledged that simplifying the pricing model could reduce the need for discounts and improve customer understanding, which is expected to enhance sales efficiency [65][66]

Financial Data and Key Metrics Changes - In Q4 2025, total revenue grew 11% year-over-year to $41.2 million, while software revenue increased 14% year-over-year to $35.1 million, marking the third consecutive quarter of accelerating growth in both categories [8][31] - For the full year 2025, total revenue reached $156.8 million, up 8% year-over-year, and software revenue was $134 million, up 12% year-over-year [9][31] - Adjusted EBITDA for Q4 was negative $2.2 million, improving from negative $4.3 million in Q4 of the prior year, while full year Adjusted EBITDA was negative $10.2 million, compared to negative $17.2 million in 2024 [9][38] Business Line Data and Key Metrics Changes - Services revenue in Q4 was $6 million, down 3% year-over-year, primarily due to a reduction in traditional review services [31] - The decline in services revenue for the full year was $22.8 million, down 8% year-over-year, attributed to the decline in traditional review business [31] - Auto Review showed strong growth, partially offsetting the decline in traditional review services [31] Market Data and Key Metrics Changes - The company finished the year with 330 customers generating over $100,000 in total revenue, contributing $119 million, or 76% of total revenue [10] - There was a record high in total terabytes on the platform, with over 30% revenue growth from multi-terabyte matters year-over-year in Q4 [10] Company Strategy and Development Direction - The company aims to disrupt the e-discovery industry by leveraging AI-native technology and enhancing its product offerings, including Cecilia AI and Auto Review [6][11] - The new pricing model combines all DISCO capabilities into a single offering, aiming to reduce friction for customers and improve sales efficiency [24][27] - The strategy focuses on expanding wallet share with existing customers and targeting larger matters, with a goal of achieving over 20% growth [48][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's role as a disruptor in the legal technology space, emphasizing the importance of AI in enhancing litigation outcomes [5][6] - The outlook for Q1 2026 includes total revenue guidance of $39.0 million to $41.5 million, with expectations for Adjusted EBITDA to improve towards breakeven by Q4 2026 [39][40] Other Important Information - The company ended Q4 with $114.6 million in cash equivalents and short-term investments, with no debt [39] - The gross margin for Q4 was 77%, and for the full year, it was 76%, an increase from 75% in 2024 [34] Q&A Session Summary Question: Why implement pricing and packaging changes now? - Management noted that the changes were driven by customer demand and feedback, aiming to simplify the pricing model to reduce friction in sales [42][44] Question: What is the expected intermediate growth rate for the company? - Management is optimistic about achieving over 20% growth, driven by larger customer engagements and increased adoption of generative AI capabilities [46][48] Question: How is DISCO addressing competition from foundational model companies? - Management indicated that customers have not reported using general AI for e-discovery, emphasizing DISCO's unique position in handling sensitive data and complex litigation workflows [55][60] Question: What are the implications of the usage-based model for guidance? - The CFO highlighted that as the business scales, predictability in the usage model improves, allowing for more precise guidance [63][65] Question: What potential downsides or trade-offs are anticipated with the new commercial model? - Management acknowledged that simplifying the pricing model could lead to reduced discounts and improved understanding among customers, enhancing sales opportunities [67][68]

INVESTOR PRESENTATION Q3 FY25 Disclaimer Forward-Looking Statements The forward-looking statements contained in this presentation are also subject to additional risks, uncertainties, and factors, including those more fully described in our filings with the Securities and Exchange Commission ("SEC"), including our Quarterly Report on Form 10-Q for the quarter ended September 30, 2025. Further information on potential risks that could affect actual results will be included in the subsequent periodic and curre ...

Financial Performance (Q2 FY25) - Total revenue reached $38.1 million, reflecting a 6% year-over-year growth[12] - Software revenue grew by 12% year-over-year[12] - Non-GAAP gross margin was 76%[13] - Adjusted EBITDA margin was -7%[13,44] Market Trends and Challenges - Litigation time-to-close has increased by 60% due to growing discovery demands[17] - Litigation spend is increasing by 64% per year, exceeding $360 billion[17] - The volume of productivity data is projected to grow from 22 ZB in 2024 to over 146 ZB in 2029, representing a 46% compounded annual growth rate[17] - Discovery accounts for over 50% of litigation costs[21] DISCO's Solutions and Strategy - DISCO provides litigation solutions for complex legal matters, streamlining processes from fact investigation to document review using an AI-powered platform[27] - DISCO's AI can review millions of documents at speeds up to 32,000 documents per hour[36] - DISCO's growth strategy includes expanding wallet share with existing clients, increasing the number of large matters, and focusing on sales and marketing efficiency[37]