CS Disco Inc (LAW) 2024 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to CS Disco second quarter of fiscal year 2024 conference call. (Operator Instructions)

女士們、先生們，感謝大家的支持，歡迎參加 CS Disco 2024 財年第二季電話會議。（操作員說明）

I would now like to hand the conference over to your first speaker today, Head of Investor Relations, Aleksey Lakchakov. Please go ahead.

現在我想將會議交給今天的第一位發言者，投資者關係主管 Aleksey Lakchakov。請繼續。

Good afternoon, and thank you for joining us on today's conference call to discuss the financial results for Disco's second quarter of fiscal year 2024.

下午好，感謝您參加今天的電話會議，討論 Disco 2024 財年第二季的財務表現。

With me on today's call are Eric Friedrichsen, Disco's Chief Executive Officer, and Michael Lafair, Disco's Chief Financial Officer.

與我一起參加今天電話會議的有 Disco 執行長 Eric Friedrichsen 和迪斯科財務長 Michael Lafair。

Today's call will include forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our financial outlook and future performance, the impact of changes to our executive leadership, our future capital expenditures, market opportunity, market position, product strategy, and growth opportunities, the benefits of our product offerings and developments in the legal technology industry, including those related to the role of artificial intelligence.

今天的電話會議將包括 1995 年《私人證券訴訟改革法案》安全港條款含義內的前瞻性陳述，包括但不限於有關我們的財務前景和未來業績、我們的行政領導層變動的影響的陳述，我們未來的資本支出、市場機會、市場地位、產品策略和成長機會、我們產品的優勢以及法律科技產業的發展，包括與人工智慧的角色相關的內容。

In addition to our prepared remarks, our earnings press release, SEC filings, and a replay of today's call can be found on our Investor Relations website at ir.csdisco.com.

除了我們準備好的發言之外，您還可以在我們的投資者關係網站 ir.csdisco.com 上找到我們的收益新聞稿、SEC 文件以及今天電話會議的重播。

Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Forward-looking statements represent our management's beliefs and assumptions only as of the date made. Information on factors that could affect the company's financial results is included in its filings with the SEC from time to time including the section titled Risk Factors in the company's annual report on Form 10-Q for the quarter ended March 31, 2024, filed with the SEC on May 09, 2024, and the company's upcoming quarterly report on Form 10-Q for the quarter ended June 30, 2024.

前瞻性陳述涉及已知和未知的風險和不確定性，可能導致我們的實際結果、績效或成就與前瞻性陳述明示或暗示的結果、績效或成就有重大差異。前瞻性陳述僅代表我們管理階層截至做出之日的信念和假設。有關可能影響公司財務表現的因素的資訊包含在其不時向SEC 提交的文件中，包括公司向SEC 提交的截至2024 年3 月31 日的季度10-Q 表格年度報告中標題為「風險因素」的部分。

In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalent is available in our earnings release.

此外，在今天的電話會議中，我們將討論非公認會計準則財務指標。這些非公認會計原則財務指標是根據公認會計原則編制的財務績效指標的補充，而不是替代或優於這些指標。我們的收益報告中提供了 GAAP 和非 GAAP 財務指標之間的對賬，以及使用非 GAAP 指標與最接近的 GAAP 指標相比的局限性的討論。

And with that, I'd like to turn the call over to Eric.

說到這裡，我想把電話轉給艾瑞克。

Hello, everyone, and welcome to Disco's second quarter of 2024 earnings call. I'm happy to be here with all of you and to share the results and discuss our go-forward strategy and plans for Disco.

大家好，歡迎參加 Disco 2024 年第二季財報電話會議。我很高興能與大家一起分享成果並討論我們的迪斯可前進策略和計劃。

Since I joined Disco on April 29, just over 100 days ago, I have had the opportunity to learn about the business, to meet with many of our top customers, and to get to know the people throughout Disco. I am excited to share my thoughts and my reflections.

自從我於 4 月 29 日加入 Disco 以來，也就是 100 多天前，我有機會了解業務、會見我們的許多頂級客戶，並結識整個 Disco 的人員。我很高興能分享我的想法和反思。

However, first, I'd like to go through incredible results. Total revenue for the second quarter of 2024 was $36 million, up 5% versus the same quarter last year. Software revenue in Q2 was $29.3 million, up 8% over the prior year. This was the fifth quarter in a row of year-over-year growth for our business and a new high watermark for our total revenue.

然而，首先，我想取得令人難以置信的結果。2024 年第二季總營收為 3,600 萬美元，比去年同期成長 5%。第二季軟體營收為 2,930 萬美元，較上年成長 8%。這是我們的業務連續第五個季度實現年增，也是我們總收入的新高水位。

Services revenue was $6.7 million in the second quarter. Adjusted EBITDA was negative $4.7 million or negative 13% adjusted EBITDA margin. We ended the quarter with 1,449 total customers, $130 million of cash and no debt. There are many exciting things that I want to discuss this quarter. While our team made considerable progress in sales and product development, our ultimate goal is to accelerate revenue growth and to further strengthen our position in the market.

第二季服務收入為 670 萬美元。調整後 EBITDA 為負 470 萬美元，即調整後 EBITDA 利潤率為負 13%。截至本季末，我們的客戶總數為 1,449 名，現金為 1.3 億美元，無債務。本季我想討論許多令人興奮的事情。雖然我們的團隊在銷售和產品開發方面取得了長足進步，但我們的最終目標是加速收入成長並進一步鞏固我們在市場中的地位。

On today's call, first, I will share my observations from my first three months at Disco. Second, I will highlight our primary areas of focus and our approach to accelerating revenue growth. Third, I will share some exciting updates on the product front.

在今天的電話會議上，首先，我將分享我在迪斯可的頭三個月的觀察。其次，我將強調我們的主要關注領域以及我們加速收入成長的方法。第三，我將分享一些關於產品方面的令人興奮的更新。

From my initial observations, I am more convinced than ever that Disco is a fantastic company with a bright future. I have visited all of our offices across the globe and met with many employees in various departments. It is clear that we have high caliber, eager, and talented employees who are dedicated to Disco. We have some of the brightest minds in the legal technology industry, who have a strong ambition to deliver the absolute best products and services to our customers.

從我最初的觀察來看，我比以往任何時候都更確信 Disco 是一家出色的公司，有著光明的未來。我參觀了我們在全球各地的所有辦事處，並會見了各部門的許多員工。很明顯，我們擁有高素質、熱情和才華橫溢的員工，他們致力於迪斯科。我們擁有法律科技行業的一些最聰明的人才，他們有強烈的雄心壯志為我們的客戶提供絕對最好的產品和服務。

I've also met face to face with over 20 customers, mostly from our largest Am Law 100 and corporate customer base. Hearing directly from our customers has been enlightening. Their appreciation for our solution is evident. They have used competitors products in the past, which provides them with very valuable reference points.

我還與 20 多名客戶進行了面對面的會面，其中大多數來自我們最大的 Am Law 100 和企業客戶群。直接聽取客戶的意見非常有啟發性。他們對我們的解決方案的讚賞是顯而易見的。他們過去使用過競爭對手的產品，這為他們提供了非常有價值的參考點。

Consistently customers expressed their love for our products, ease-of-use, workflow, efficiency, speed, and reliability. They love the Disco is a significant improvement over the legacy solutions that they've used in the past.

客戶始終對我們的產品、易用性、工作流程、效率、速度和可靠性表示喜愛。他們喜歡 Disco，它比他們過去使用的傳統解決方案有了重大改進。

I heard stories directly from these customers about saving hundreds of hours of work by switching to Disco ediscovery, finding pivotal evidence quickly with Cecilia Q&A, and gaining significant value by leveraging our services team as a true strategic partner. Virtually, every customer that I met with made it clear that they want to do more with Disco.

我直接從這些客戶那裡聽到了關於透過切換到 Disco ediscovery 節省了數百個小時的工作、透過 Cecilia 問答快速找到關鍵證據以及利用我們的服務團隊作為真正的策略合作夥伴獲得重大價值的故事。事實上，我遇到的每一位客戶都明確表示他們希望透過 Disco 做更多事情。

It's clear to me that Disco is in a solid position to make the most of the market opportunity. So in terms of where we'll focus, it's all about customer focus, operational effectiveness, and cultural improvement. Those are the three areas that will drive our revenue acceleration. Becoming a customer-focused organization is absolutely paramount.

我很清楚，迪斯可處於充分利用市場機會的有利位置。因此，就我們的重點而言，一切都與以客戶為中心、營運效率和文化改進有關。這些是將推動我們收入加速成長的三個領域。成為一個以客戶為中心的組織絕對是最重要的。

Over the last few months, we segmented our customer base and began shifting resources to focus the attention on our most important top customers and prospects. We have a platform that's highly valued by legal teams and a services organization that provides world-class experiences and outcomes. However, I heard firsthand from several Disco champions at our largest customers that they need Disco's help in promoting our platform within their organizations. We're executing on a plan right now to enable our customer champions to do exactly that.

在過去的幾個月裡，我們對客戶群進行了細分，並開始轉移資源，將注意力集中在我們最重要的頂級客戶和潛在客戶上。我們擁有一個受到法律團隊高度重視的平台和一個提供世界級經驗和成果的服務組織。然而，我從我們最大客戶的幾位 Disco 冠軍那裡直接聽到，他們需要 Disco 的幫助來在他們的組織內推廣我們的平台。我們現在正在執行一項計劃，以使我們的客戶冠軍能夠做到這一點。

Our industry and the problems we solve are complicated. The US and international legal systems and regulations have unique rules and requirements and complex workflows that our solutions are designed to address elegantly. Because of the complexity that's inherent in our space, our sales and marketing team needs to be exceptionally well-enabled to understand the customer's needs, their roles, and the related value propositions. We're rebuilding our sales enablement function to help do just that.

我們的行業和我們解決的問題很複雜。美國和國際法律體系和法規具有獨特的規則和要求以及複雜的工作流程，我們的解決方案旨在完美解決這些問題。由於我們領域固有的複雜性，我們的銷售和行銷團隊需要非常出色地了解客戶的需求、他們的角色以及相關的價值主張。我們正在重建我們的銷售支援職能來幫助實現這一目標。

We will improve how we communicate Disco's value, navigate potential objections in the sales process, and sell the entire platform offering, not just a point solution. We're focused on adding high-caliber sales leaders who are experienced and sophisticated account-based enterprise sales motions. We believe that augmenting our existing reps with talent that is experienced in enterprise level sales will elevate our performance across the board.

我們將改進傳達 Disco 價值的方式，解決銷售過程中潛在的異議，並銷售整個平台產品，而不僅僅是單點解決方案。我們專注於增加高素質的銷售領導者，他們具有豐富的經驗和成熟的以客戶為基礎的企業銷售行動。我們相信，透過在企業級銷售方面擁有豐富經驗的人才來增強我們現有的銷售代表將全面提升我們的績效。

We've already added several talented quota carrying sales reps and managers just this past quarter and will be focused on adding additional talent in the coming quarters in line with our plan. We have started to resource and align our marketing, sales development, and customer success teams to our top customers, which are predominantly big law, corporate, and larger litigation boutiques.

就在上個季度，我們已經增加了幾名有才華的銷售代表和經理，並將根據我們的計劃在未來幾季重點增加更多人才。我們已經開始為我們的頂級客戶提供資源並調整我們的行銷、銷售開發和客戶成功團隊，這些客戶主要是大型律師事務所、企業和大型訴訟精品店。

Finally, when it comes to customer focus, we are rolling out an account based targeting strategy to ensure that demand generation is focused on our top account priorities, and we're shifting a significant amount of field marketing resources to better support and more focused customer set of events.

最後，當談到以客戶為中心時，我們正在推出基於客戶的定位策略，以確保需求生成集中在我們的首要客戶優先事項上，並且我們正在將大量的現場行銷資源轉移到更好的支援和更專注的客戶上事件集。

We've added key senior roles within marketing this quarter, including a vice president of demand generation to support this initiative. We believe that these changes as well as other initiatives that we're currently working on will drive better experiences and outcomes for our customers and result in more demand for our software.

本季我們在行銷領域增加了關鍵的高階職位，包括負責支援此舉的需求產生副總裁。我們相信，這些變化以及我們目前正在進行的其他舉措將為我們的客戶帶來更好的體驗和成果，並導致對我們軟體的更多需求。

Next, we need to enhance elements of our internal operations to drive organizational effectiveness and customer outcomes. I'm pleased to announce that Richard Crum has joined Disco as our Chief Product Officer. I worked extensively with Richard at t Emburse, and he will bring a wealth of experience to Disco from his time leading B2B organizations. Richard is customer-focused and commercially minded, and he brings an intense focus and discipline to our product team. Richard has a long legacy of growing people and aligning cross-functional teams around clear sets of priorities.

接下來，我們需要增強內部營運要素，以提高組織效率和客戶成果。我很高興地宣布 Richard Crum 已加入 Disco 擔任我們的首席產品長。我與 Richard 在 t Emburse 進行了廣泛的合作，他將為 Disco 帶來他在領導 B2B 組織期間積累的豐富經驗。理查德以客戶為中心，具有商業頭腦，他為我們的產品團隊帶來了高度的關注和紀律。理查德擁有不斷壯大人員和圍繞明確的優先事項調整跨職能團隊的悠久傳統。

We're also working to improve the effectiveness of our internal end-to-end business processes and systems, especially as they relate to the quote to cash life cycle. These improvements will enable a faster and more scalable approach to sales, improves customer experience, and enhance visibility into the effectiveness of our business decisions. This effort is well underway and is key to scaling our revenue.

我們也致力於提高內部端到端業務流程和系統的有效性，特別是與報價到現金生命週期相關的流程和系統。這些改進將實現更快、更具可擴展性的銷售方法，改善客戶體驗，並提高我們業務決策有效性的可見度。這項工作正在順利進行，並且是擴大我們收入的關鍵。

Customers love our products, and we want to ensure that our operational approach is a tailwind to further winning and growing our customers. Lastly, cultural improvement is about ensuring that Disco is an enjoyable and rewarding place to work. It's a win-win.

客戶喜歡我們的產品，我們希望確保我們的營運方法能夠成為進一步贏得和發展客戶的順風車。最後，文化改進是為了確保迪斯可成為一個令人愉快且有益的工作場所。這是雙贏的。

Engaged and satisfied employees will better serve our customers, who will reward us with more business as a result. We have done significant internal work around culture including improving our practices to promote a transparent, healthy, and collaborative work environment. The data shows significant improvement in our culture already, and energy in the Disco hallways is palpable.

敬業且滿意的員工將更能為我們的客戶服務，客戶也會因此為我們帶來更多業務。我們圍繞文化做了重要的內部工作，包括改進我們的做法，以促進透明、健康和協作的工作環境。數據顯示我們的文化已經有了顯著改善，迪斯可走廊裡的活力是顯而易見的。

When push comes to shove, culture starts at the top, and I'm committed to ensuring that Disco builds a remarkable reputation based on integrity, ethics, and respect. As Peter Drucker said, "Culture Eats Strategy For Lunch".

當緊要關頭，文化從高層開始，我致力於確保迪斯可在誠信、道德和尊重的基礎上建立卓越的聲譽。正如彼得·德魯克所說，「文化把策略當午餐」。

Continuing down our path of building a strong company culture will be a key ingredient in our future success. We have a journey ahead of us to enable this business, and it will not happen overnight. We are taking very clear steps in the right direction. Michael will speak more to this. But from a cost perspective, we don't expect a material change to our adjusted EBITDA in 2024.

繼續建立強大的企業文化將是我們未來成功的關鍵因素。要實現這項業務，我們還有一段路要走，這不會一蹴可幾。我們正在朝著正確的方向採取非常明確的步驟。邁克爾將就此發表更多演講。但從成本角度來看，我們預期 2024 年調整後的 EBITDA 不會有重大變動。

Now, I would like to focus on some customer highlights and the great work our product team has done over the past quarter. I was thoroughly impressed during the recent visit to one of our large Am Law customers. This firm, which has a long standing relationship with Disco and manages a significant number of matters on our platform, is currently piloting Cecilia Q&A on a complex matter. As a reminder, Disco Cecilia Q&A is a tool that allows users to use natural language questions about the documents in their databases and receive detailed, narrative responses along with specific source citations.

現在，我想重點介紹一些客戶亮點以及我們的產品團隊在過去一個季度所做的出色工作。最近拜訪我們的一位 Am Law 大客戶時，我留下了深刻的印象。該公司與 Disco 有著長期的合作關係，並在我們的平台上管理大量事務，目前正在針對一個複雜的事務試行 Cecilia 問答。提醒一下，Disco Cecilia 問答是一種工具，允許使用者使用自然語言對其資料庫中的文件提出問題，並收到詳細的敘述性答覆以及特定的來源引用。

So the customer chose this particular case for the pilot due to its size with over 3 million documents and its subject matter which was complex and rendered traditional search techniques less precise and less effective. The ability to ask questions and receive responses with documented support was highly appealing to the customer. The case team was impressed with the Cecilia Q&A's ability to submit questions and receive responses with references to supporting documents.

因此，客戶選擇了這個特殊案例進行試點，因為其規模超過 300 萬份文檔，而且其主題很複雜，導致傳統搜尋技術不太精確且效率較低。透過有記錄的支援提出問題和接收答案的能力對客戶來說非常有吸引力。案例團隊對 Cecilia 問答提交問題和接收參考支援文件的答案的能力印象深刻。

Effective querying of a large population of documents that led to finding key documents also helped the legal team quickly provide their client with initial takeaways and actionable recommendations. This pilots early findings demonstrate Cecilia Q&A can be a powerful investigative tool early in a case. In this example, Cecilia Q&A can be leveraged much more effectively than traditional search to prove or refute allegations of generic misconduct.

對大量文件進行有效查詢，找到關鍵文件，也有助於法律團隊快速向客戶提供初步結論和可行的建議。這項試點的早期發現表明，塞西莉亞問答可以成為案件早期的強大調查工具。在這個例子中，與傳統搜尋相比，可以更有效地利用塞西莉亞問答來證明或反駁一般不當行為的指控。

Relying on Cecilia Q&A's ability to understand subtle language, the legal team was able to identify highly relevant documents, very early on, with a limited number of tailored natural language questions. The legal team is now using these documents to assess potential risks, to formulate a broader strategy for the case, and to assist the client in making informed decisions.

依靠 Cecilia Q&A 理解微妙語言的能力，法律團隊能夠很早就透過有限數量的客製化自然語言問題識別出高度相關的文件。法律團隊現在正在使用這些文件來評估潛在風險，為案件製定更廣泛的策略，並協助客戶做出明智的決策。

Next, we are pleased to announce the launch of Cecilia Auto Review now generally available and set to be showcased at the ILTA conference next week. In our testing with top Am Law firms, the results were outstanding. Disco's testing of Cecilia Auto Review on customer data demonstrated review speeds of 3,800 documents per hour over a 24 hour period. Equivalent to a 140-person review team working an eight hour a day. And precision and recall metric is 10% to 20% higher than typical from human reviewers.

接下來，我們很高興地宣布 Cecilia Auto Review 現已全面推出，並將在下週的 ILTA 會議上展示。在我們與頂級 Am 律師事務所的測試中，結果非常出色。Disco 對 Cecilia Auto Review 的客戶資料測試表明，24 小時內審核速度可達每小時 3,800 個文件。相當於一個140人的審核團隊每天工作8小時。準確率和召回率指標比人工審閱者的典型指標高 10% 到 20%。

Our customers can now leverage this technology on live cases to accelerate their reviews. Firms adopting this technology will revolutionize their workflows, reducing first pass review times from weeks to hours while maintaining or even improving quality. Using natural language to describe tags and documents to be tagged, Cecilia Auto Review offers an efficient and effective solution. We're very excited to bring this powerful technology to our customers.

我們的客戶現在可以在實際案例中利用這項技術來加快審核速度。採用這項技術的公司將徹底改變他們的工作流程，將首次通過審核時間從幾週縮短到幾個小時，同時保持甚至提高品質。Cecilia Auto Review 使用自然語言來描述標籤和要標記的文檔，提供了高效且有效的解決方案。我們非常高興能夠將這項強大的技術帶給我們的客戶。

Cecilia Q&A has shown promising growth in its first six months since it's been released. We're seeing positive feedback from our customers and early indications showing meaningful uplift in software revenue for matters where Cecilia Q&A has been implemented. We already have a number of customers eager to begin using Cecilia Auto Review. However, we're cautious that material adoption of these technologies will take time, and we don't anticipate significant revenue impact in the current year.

自發布以來，《塞西莉亞問答》在前六個月內就展現了可喜的成長。我們看到客戶的正面回饋，以及早期跡象表明，實施 Cecilia 問答後，軟體收入顯著增加。我們已經有許多客戶渴望開始使用 Cecilia Auto Review。然而，我們謹慎地認為，這些技術的實質採用需要時間，而且我們預計不會對今年的收入產生重大影響。

The heartbeat of our platform remains ediscovery. It is our core offering and ultimately what the vast majority of our customers care about most today. We are committed to providing the leading solution in the market and reflecting our customers feedback in the upcoming product releases.

我們平台的核心仍然是電子發現。這是我們的核心產品，也是現今絕大多數顧客最關心的。我們致力於提供市場領先的解決方案，並在即將發布的產品中反映客戶的回饋。

In Q2, we had a significant capability release called in-app mass redactions. This is a key ediscovery functionality because it is specifically targeted for large matters and enables users to redact thousands of gigabytes worth of data at once. Lawyers will no longer need to draw redaction boxes over sensitive data, scour documents one by one for sensitive information, and spend expansive hours on this task.

在第二季度，我們發布了一項重要的功能，稱為應用程式內大規模編輯。這是一項關鍵的電子發現功能，因為它專門針對大型事務，使用戶能夠一次編輯數千 GB 的資料。律師將不再需要在敏感資料上畫出密文框，逐一搜尋文件以查找敏感信息，並在這項任務上花費大量時間。

Now information like credit card numbers, social security numbers, addresses, or other specific terms and patterns can be redacted with a simple user interface. This release has been frequently requested, and we're excited for our customers to start relying on it.

現在，信用卡號、社會安全號碼、地址或其他特定術語和模式等資訊可以透過簡單的使用者介面進行編輯。人們經常要求發布此版本，我們很高興我們的客戶開始依賴它。

In summary, it's been a wonderful first 100 days at Disco. We had strong revenues this quarter. Our business is growing. We have over 1,400 satisfied customers and amazing product outcomes. I'm impressed with our team, and I'm energized by our customers. We know what we need to do, and we are getting everyone aligned around the same priorities. I am proud of what our team has accomplished over the last few months, and I'm incredibly optimistic about our future.

總而言之，在 Disco 的前 100 天非常美好。本季我們的營收強勁。我們的業務正在成長。我們擁有超過 1,400 位滿意的客戶和令人驚嘆的產品成果。我們的團隊給我留下了深刻的印象，我們的客戶也為我帶來了活力。我們知道我們需要做什麼，我們正在讓每個人圍繞相同的優先事項保持一致。我為我們的團隊在過去幾個月所取得的成就感到自豪，我對我們的未來非常樂觀。

With that, I'll turn it over to Michael.

有了這個，我會把它交給麥可。

Thank you, Eric. In Q2 2024 total revenues were $36 million, up 5% year over year. Software revenues were $29.3 million, up 8% year over year. We had some softness in software in April that impacted the full quarter, but we saw improvement in May and June.

謝謝你，埃里克。2024 年第二季總營收為 3,600 萬美元，年增 5%。軟體收入為 2,930 萬美元，年增 8%。4 月軟體出現一些疲軟，影響了整個季度，但我們在 5 月和 6 月看到了改善。

Services revenue were $6.7 million, down 7% year over year. The year over year decline in services is due to a decline from strong reviewed usage we saw in Q2 of 2023.

服務收入為 670 萬美元，年減 7%。服務年減是由於我們在 2023 年第二季度看到的強勁審查使用量有所下降。

In discussing the remainder of the income statement, please note that otherwise specified, all references to our gross margin, operating expenses, and net loss are on a non-GAAP basis. Adjusted EBITDA is also a non-GAAP financial measure.

在討論損益表的其餘部分時，請注意，除非另有說明，所有提及我們的毛利率、營運費用和淨虧損的內容均基於非公認會計原則。調整後 EBITDA 也是非 GAAP 財務指標。

Our gross margin in Q2 was 75%. As we mentioned before, our gross margins fluctuate from period to period based on the nature of our customers' usage. For example, the amount and types of data ingested and managed on our platform.

我們第二季的毛利率為 75%。正如我們之前提到的，我們的毛利率會根據客戶使用的性質而隨時間波動。例如，我們平台上攝取和管理的資料量和類型。

Sales and marketing expense for Q2 was $14.3 million or 40% of revenue, compared to 47% of revenue in Q2 of the prior year. The year-over-year decline is predominantly driven by a combination of lower total headcount and redistribution of our investment within sales and marketing.

第二季的銷售和行銷費用為 1,430 萬美元，佔營收的 40%，而上一年第二季為營收的 47%。年比下降的主要原因是總人數減少以及我們在銷售和行銷方面的投資重新分配。

Research and development expense for Q2 was $10.8 million for 30% of revenue compared to 31% of revenue in Q2 of the prior year. We were relatively flat year over year with our R&D spend, general and administrative expense in Q2 was $8 million or 22% of revenue compared to 21% of revenue in Q2 of the prior year. General and administrative expenses were relatively flat year over year.

第二季的研發費用為 1,080 萬美元，佔營收的 30%，而上年第二季則佔營收的 31%。我們與去年同期相比相對持平，第二季的研發支出、一般和管理費用為 800 萬美元，佔營收的 22%，而去年第二季佔營收的 21%。一般和行政費用較去年同期相對持平。

Operating loss in Q2 was $5.9 million, representing an operating margin of negative 17% compared to negative 25% in Q2 of the prior year. Adjusted EBITDA was negative $4.7 million in Q2, representing an adjusted EBITDA margin of negative 13% compared to an adjusted EBITDA margin of negative 22% in Q2 of the prior year. Net loss in Q2 was $4.4 million or negative 12% of revenue compared to a net loss of $6.5 million or negative 19% of revenue in Q2 of the prior year. Net loss per share for Q2 was $0.07 compared to $0.11 per share for Q2 of the prior year.

第二季營運虧損為 590 萬美元，營運利潤率為負 17%，而上年第二季為負 25%。第二季調整後 EBITDA 為負 470 萬美元，調整後 EBITDA 利潤率為負 13%，而上年第二季調整後 EBITDA 利潤率為負 22%。第二季的淨虧損為 440 萬美元，佔營收的 12%，而上一年第二季的淨虧損為 650 萬美元，佔營收的 19%。第二季每股淨虧損為 0.07 美元，而上年第二季每股淨虧損為 0.11 美元。

Turning to the balance sheet and cash flow statement, we ended Q2 with $130 million in cash and cash equivalents and no debt. This included the impact of the $20 million share repurchase program completed in the quarter. Operating cash flow for the first two quarters of 2024 was negative $8 million compared to negative $21.8 million in the same period of the prior year.

談到資產負債表和現金流量表，我們第二季末的現金和現金等價物為 1.3 億美元，沒有債務。這包括本季完成的 2,000 萬美元股票回購計畫的影響。2024 年前兩季的營運現金流為負 800 萬美元，去年同期為負 2,180 萬美元。

Turning to the outlook for Q3 2024, we are providing total revenue guidance in the range of $35.3 million to $37.3 million in software revenue guidance in the range of $29.5 million to $30.5 million. We expect adjusted EBITDA to be in the range of negative $7 million to negative $5 million.

談到 2024 年第三季的前景，我們提供的總收入指引範圍為 3,530 萬美元至 3,730 萬美元，軟體收入指引範圍為 2,950 萬美元至 3,050 萬美元。我們預計調整後的 EBITDA 將在負 700 萬美元至負 500 萬美元之間。

For fiscal year 2024, we anticipate total revenue guidance in the range of $143 million to $147 million in software revenue guidance in the range of $118.5 million $120.5 million. We expect adjusted EBITDA to be in the range of negative $23 million to negative $19 million.

對於 2024 財年，我們預計總收入指引範圍為 1.43 億美元至 1.47 億美元，軟體收入指引範圍為 1.185 億美元及 1.205 億美元。我們預計調整後 EBITDA 將在負 2,300 萬美元至負 1,900 萬美元之間。

Now I'd like to turn the call over to the operator to open up the line for Q&A. Operator?

現在我想將電話轉給接線員以開通問答線路。操作員？

(Operator Instructions) Brian Essex, JP Morgan.

（操作員說明）Brian Essex，摩根大通。

Maybe for Eric, if you could help us understand, like if within your customers base, these 1,400 plus customers, how many would fall into the large law corporate litigation boutique bucket? And what is the behavior of that customer cohort? Is it growing faster than the rest of the customers? And maybe just to get a sense of the underlying dynamics from as it relates to like total customer number that we see.

也許對艾瑞克來說，如果你能幫助我們理解，就像在你的客戶群中，這 1,400 多名客戶中，有多少人會落入大型法律公司訴訟精品桶中？該客戶群的行為是什麼？它的成長速度是否比其他客戶快？也許只是為了了解與我們看到的客戶總數相關的潛在動態。

So, Brian. Absolutely. Big law Am Law 100 customers are the biggest producer of revenue for us. And in fact, if you look at our top approximately 300 customers in general, they generate 75% of our revenue, which is comprised of quite a few Am Law 100 customers in that group.

那麼，布萊恩。絕對地。大律師事務所 Am Law 100 的客戶是我們最大的收入來源。事實上，如果你看看我們大約 300 名前 300 名客戶，你會發現他們創造了我們收入的 75%，其中包括該組中相當多的 Am Law 100 客戶。

So if we look at like the net adds for the quarter, is this a function of the larger customers growing and the smaller customers churning off? Or maybe to put it a different way, like what's going on within the rest of the customer base? And how are you managing the ability to like retain and stabilize that customer base within your customer across the platform?

因此，如果我們看一下本季的淨增加量，這是否是大客戶成長和小客戶流失的結果？或者也許換一種方式來說，就像其他客戶群中發生了什麼？您如何管理在整個平台上保留和穩定客戶群的能力？

Yeah. Historically, Disco was all about net new customer acquisition regardless of whether those customers were big customers or small customers or customers with big potential or small potential. It was -- really Disco was acquiring customers at any rate. We've really shifted our focus. As we've put more focus on managing our largest customers, we've also put focus on acquiring larger customers.

是的。從歷史上看，Disco 的重點是淨新客戶獲取，無論這些客戶是大客戶還是小客戶，還是潛力大還是潛力小的客戶。無論如何，迪斯科確實在贏得客戶。我們確實轉移了注意力。當我們更專注於管理最大的客戶時，我們也將重點放在獲取更大的客戶上。

And so just like we're managing big law, big litigation boutiques, and corporations that tend to have a lot of litigation, we're doing the same thing from an acquisition standpoint. So -- as we're acquiring customers, very much focused on acquiring the right customers where we think we can add the most value and where we have the opportunity to grow.

因此，就像我們管理大型法律、大型訴訟精品店和往往有大量訴訟的公司一樣，我們從收購的角度也在做同樣的事情。因此，當我們獲取客戶時，我們非常注重獲取合適的客戶，在這些客戶中我們認為我們可以增加最大的價值並且我們有機會成長。

Maybe last one for me. In terms of those large customers, how do you look at that opportunity in terms of a catch rate or penetration of those customers? Is your large customer focused primarily on increasing penetration within the install base or going out for new logo lands?

也許對我來說是最後一張。就那些大客戶而言，您如何看待這些客戶的捕獲率或滲透率？您的大客戶主要關注的是提高安裝基礎的滲透率還是尋求新的標誌土地？

Yeah. Brian, I'm glad you asked that. We -- I've been in front of over 20 customers over the last 100 days in New York, in Philly, in D.C., in New Jersey, in London, in Dallas, and a little bit of everywhere. And consistently what I've heard from our champions of those customers are that, number one, they love our product.

是的。布萊恩，我很高興你這麼問。在過去的 100 天裡，我在紐約、費城、華盛頓特區、新澤西州、倫敦、達拉斯以及其他一些地方的 20 多名客戶面前。我從這些客戶的支持者那裡聽到的始終是，第一，他們喜歡我們的產品。

Number two, they want to expand the use of our product within their organizations. Number three, we don't have as big of wallet share as we might think we have. And number four, they want us to help them expand the platform usage within their firms. And so that's exactly what we're doing. We've built out a champion enablement approach, and we're focused on expanding our wallet share within our customer base.

第二，他們希望擴大我們產品在其組織內的使用。第三，我們的錢包份額並不像我們想像的那麼大。第四，他們希望我們幫助他們擴大公司內部的平台使用率。這正是我們正在做的事情。我們已經制定了冠軍支援方法，並專注於擴大客戶群中的錢包份額。

I should point out, I spent a lot of time in the expense management industry with Concurrent, Emburse, and in the ERP industry with SAP. And in those industries when you're trying to win wallet share, a lot of times you're actually trying to displace your competitor and, it could be pretty challenging. Those are long sales cycles that are -- those are very complex.

我應該指出，我在 Concurrent、Emburse 的費用管理行業以及 SAP 的 ERP 行業花費了大量時間。在這些行業中，當你試圖贏得錢包份額時，很多時候你實際上是在試圖取代你的競爭對手，這可能非常具有挑戰性。這些是漫長的銷售週期，非常複雜。

One of the interesting things about our market is that matters begin and matters end, and there might be some disadvantages to that. But there's also some big advantages to that in the sense that we don't have to necessarily win every single matter right away. We have to win the next matter. And once we win the second and the third matter, we get to the fifth or the sixth matter, we start to get some traction. That's where we've got the opportunity to standardize a little bit more and win very large wallet shares within our customer base.

我們市場的一個有趣的事情是事情有開始和結束，這可能會有一些缺點。但從某種意義上說，這樣做也有一些很大的優勢，因為我們不必立即贏得每一件事。下一場比賽我們一定要贏。一旦我們贏得了第二和第三件事，我們就進入了第五或第六件事，我們開始獲得一些牽引力。這就是我們有機會進一步標準化並在我們的客戶群中贏得大量錢包份額的地方。

Mark Schappel, Loop City market.

馬克沙佩爾，盧普城市場。

Eric, question for you on your second priority of driving operational effectiveness throughout the organization. What was it during your company reviews that caused you to basically bring in a new leader on this front as well as make changes in this area?

艾瑞克（Eric），請問您的第二要務是提高整個組織的營運效率。在您的公司審查期間，是什麼導致您基本上在這方面引入了新的領導者並在該領域做出了改變？

Yes, I think I think you may be speaking about bringing in Richard Crum, our new Chief Product Officer. Is that correct?

是的，我想您可能正在談論引進我們新任首席產品長理查德·克拉姆（Richard Crum）。這是正確的嗎？

That's right. Yeah.

這是正確的。是的。

I got to tell you, again, I've been in front of 20 customers. They love our product. They need our help in expanding the use of their product throughout their organizations.

我必須再告訴你，我已經在 20 位顧客面前了。他們喜歡我們的產品。他們需要我們的幫助來擴大其產品在整個組織中的使用。

Then with respect to the go to market changes, we are focusing more on the Am Law 100 customers. That typically requires a little bit different type of sales rep, and maybe you just talk about the type of rep you're bringing on board to target those customers.

然後，關於進入市場的變化，我們更加關注 Am Law 100 客戶。這通常需要稍微不同類型的銷售代表，也許您只需談論您為瞄準這些客戶而引入的銷售代表類型。

Yeah, you're absolutely, right. We've got some great talent here at Disco, and we've been adding to that talent. We hired several new sales reps and leaders within the last few months, and we're continuing to do so.

是的，你絕對是對的。我們在迪斯可擁有一些優秀的人才，並且我們一直在增加這些人才。在過去的幾個月裡，我們聘請了幾位新的銷售代表和領導者，我們將繼續這樣做。

It is a different approach. It's a more enterprise-oriented type of sale. It's important that we have people that understand multiple buyers, that understand the legal tech space. So obviously, we're looking for that type of a profile as we're bringing in new people. But we're also building out our sales enablement function and ensuring that we're enabling all of our sales teams to do a better job at expanding our wallet share within our customer base.

這是一種不同的方法。這是一種更面向企業的銷售類型。重要的是，我們擁有了解多個買家、了解法律科技領域的人員。顯然，我們在引進新人時正在尋找這種類型的人才。但我們也在建立我們的銷售支援功能，並確保我們讓所有銷售團隊能夠更好地擴大我們在客戶群中的錢包份額。

Ian Black, Needham.

伊恩·布萊克，李約瑟。

How does the new Cecilia Auto Review differ from your existing Disco review product?

新的 Cecilia Auto Review 與您現有的 Disco 評論產品有何不同？

Yeah, that's great, Ian. Auto review, I can't tell you how excited I am about auto review. I mean first of all, generative AI in general, is a technology that general counsels at corporations are very excited about. GCs are looking for ways to reduce their costs and to get more efficient, and they're putting some pressure on their outside counsel to find ways to focus on providing legal judgment but then to reduce costs for areas that require typically less legal judgment, and they believe that technology innovation is one way to get them there.

是的，那太好了，伊恩。自動審核，我無法告訴你我對自動審核有多興奮。我的意思是，首先，總的來說，生成式人工智慧是一項讓企業總法律顧問非常興奮的技術。GC 正在尋找降低成本並提高效率的方法，並且他們向外部法律顧問施加了一些壓力，要求其找到專注於提供法律判斷的方法，然後降低通常需要較少法律判斷的領域的成本，以及他們相信技術創新是實現這一目標的一種方式。

And then our law firm customers are excited about where AI can take them and their ability to differentiate themselves from their competitors. They look at it not only as an opportunity to potentially get more efficient, but also to be able to very quickly do an early case assessment. To be able to give their clients an early perspective on the risks associated with their case or even potentially help them more quickly come up with case strategies. So they look at it as an opportunity to be able to deliver faster outcomes and better outcomes for their clients. And many of our law firm customers want to differentiate themselves.

然後，我們的律師事務所客戶對人工智慧可以帶他們去往何處以及他們從競爭對手中脫穎而出的能力感到興奮。他們不僅將其視為提高效率的機會，而且還能夠非常快速地進行早期案例評估。能夠讓客戶儘早了解與其案件相關的風險，甚至可能幫助他們更快地制定案件策略。因此，他們將其視為一個能夠為客戶提供更快、更好結果的機會。我們的許多律師事務所客戶都希望自己脫穎而出。

I think that one of the things that's really important to point out is that lawyers are typically risk averse, and the way we have designed Cecilia Auto Review is set up to help even the most risk averse types of lawyers. Every document -- first of all, we can review every single document, whereas typically technical -- technology-assisted review, can't review every single document. But with Auto Review in the mix, we can review every single document.

我認為真正需要指出的一件事是，律師通常是厭惡風險的，而我們設計塞西莉亞汽車評論的方式旨在幫助最厭惡風險的律師。每份文件——首先，我們可以審查每一份文件，而通常的技術——技術輔助審查，不能審查每一份文件。但有了自動審閱的結合，我們就可以審閱每一個文件。

Secondly, we have AI services wrapped into -- consulting services wrapped into the product such that we are helping our clients make sure that they are writing the tag explanations in the right way. And then as the documents get tagged, there is a description for why every single document was tagged based on the tag instructions that were given at the very beginning.

其次，我們將人工智慧服務融入產品中——諮詢服務中，這樣我們就可以幫助我們的客戶確保他們以正確的方式編寫標籤解釋。然後，當文件被標記時，會根據一開始給出的標記說明來描述為什麼每個文件都會被標記。

And then we're providing precision and recall reporting and metrics, which are 10% to 20% better than human review as part of the process as well. So it's -- we're very excited about the prospects for Cecilia Auto Review. Obviously, it's very, very early days. But the early testing that our clients have done, the -- being able to process and review 3,800 documents in an hour, it's pretty optimistic about the future there.

然後，我們還提供精確度和召回率報告和指標，作為流程的一部分，這些報告和指標比人工審核好 10% 到 20%。所以，我們對《塞西莉亞汽車評論》的前景感到非常興奮。顯然，現在還為時過早。但我們的客戶所做的早期測試，能夠在一小時內處理和審查 3,800 份文檔，我們對那裡的未來非常樂觀。

(Operator Instructions) Brent Thill, Jefferies.

（操作員說明）Brent Thill，Jefferies。

Luv Sodha on for Brent Thill. Maybe first one for you, Eric, now that you've been at Disco for a few days, given your time there, what assessments have you made about the opportunity set? And just in terms of improving execution, what are the changes do you need to make besides hiring, obviously Richard Crum?

盧夫·索達 (Luv Sodha) 換下布倫特·希爾 (Brent Thill)。也許第一個對你來說，埃里克，既然你已經在迪斯科工作了幾天，考慮到你在那裡的時間，你對機會集做了什麼評估？就提高執行力而言，除了聘用理查德·克拉姆（Richard Crum）之外，您還需要做出哪些改變？

As far as the observations that I've had so far, I mean, I think the first one I would just say is that I've been to every one of our offices. I've been to India, where we have a very strong cross-functional team that covers many different areas of our business. Multiple trips to our New York office, to our London office, and then of course, many trips to our Austin headquarters.

就我迄今為止的觀察而言，我的意思是，我想我想說的第一件事是我去過我們的每個辦公室。我去過印度，那裡我們擁有一支非常強大的跨職能團隊，涵蓋了我們業務的許多不同領域。多次前往我們的紐約辦事處、倫敦辦事處，當然還有多次前往我們的奧斯汀總部。

We've got really incredible talent that's very well-versed in the legal tech industry and in ediscovery specifically, people that care a lot about our customers. And I've been really impressed at how they're working together. Got low egos, a lot of collaboration. So that part's obviously very, very positive.

我們擁有非常出色的人才，他們非常精通法律科技產業，特別是電子發現領域，他們非常關心我們的客戶。他們的合作方式給我留下了深刻的印象。自我意識較低，合作較多。所以這部分顯然非常非常積極。

I think there's opportunities for us to add more talent, experienced people who have been there and done it before and helped scale companies from where Disco is today to multiple hundreds of millions of revenue. And we've begun to do that, and we've done it. I talked about hiring sales leaders and sales reps. We talked about hiring our chief product officer, Richard Crum. We are also in the process of interviewing for a general counsel and in the process of interviewing for a senior vice president of operations. And so there certainly are some opportunities to round out the talent, and we're going through that process as we speak.

我認為我們有機會增加更多的人才、經驗豐富的人，他們以前曾在那裡做過這件事，並幫助公司將迪斯科的規模擴大到數億美元的收入。我們已經開始這樣做，而且已經做到了。我談到了招募銷售領導和銷售代表。我們討論了聘請我們的首席產品長理查德·克拉姆（Richard Crum）。我們也正在面試總法律顧問和資深營運副總裁。因此，肯定有一些機會來完善人才，而我們正在經歷這個過程。

And then we also talked about some of the investments that we're making in processes and systems, things like our quote to cash project, building out our customer success team, and our sales enablement team. It's incredible how far Disco has come, 1,449 customers, $140 million in revenue, but there's just some things that we are building right now that are going to put us into a position to be able to scale to a much, much bigger company in the future.

然後我們還討論了我們在流程和系統中進行的一些投資，例如我們的報價現金項目、建立我們的客戶成功團隊和我們的銷售支援團隊。Disco 已經取得瞭如此大的進步，擁有 1,449 名客戶，收入 1.4 億美元，令人難以置信，但我們現在正在建立的一些東西將使我們能夠擴展到一個更大的公司。

And one quick follow up for Michael, if I may. Michael, obviously, you've had a few quarters where you've come in line with the guide. I guess, you're pulling some of the second half guide if you will. Could you just walk us through like what would give you more confidence in getting to a more beat and raise cadence in the future?

如果可以的話，還有邁克爾的快速跟進。邁克爾，顯然，你已經有幾個季度與指南保持一致了。我想，如果您願意的話，您正在提取後半部分指南的一些內容。您能否向我們介紹什麼能讓您更有信心在未來獲得更多節拍並提高節奏？

I mean, I feel really confident about the direction of the business is going and the changes that have already been put in place and the strategy that Eric outlined in his prepared remarks. In terms of the guide, as we finish each quarter, finish Q1, finish Q2, we have narrowed the range based on -- for the full year, based on how our performance was in the first half, and also based on our best estimate of where we think we're going to land.

我的意思是，我對業務的發展方向、已經實施的變革以及埃里克在準備好的演講中概述的策略非常有信心。就指南而言，當我們完成每個季度、完成第一季、完成第二季時，我們根據全年、上半年的表現以及我們的最佳估計縮小了範圍我們認為我們將要降落的地方。

Of course, we would like to do better. I'm also optimistic about the direction of the business, and I feel really good about the strategic direction of the company. And -- but right now we give the best estimate on where we think we're going to land, and we did it narrow the range a little bit based on the fact that we're closer to the end of the year.

當然，我們希望做得更好。我也看好業務的方向，對公司的策略方向感覺非常好。而且 - 但現在我們對我們認為的著陸點給出了最佳估計，並且基於我們接近年底的事實，我們稍微縮小了範圍。

Are you -- just a quick follow up, sorry. Are you making an additional conservatism in the second half or is it the same philosophy as before?

您是——只是快速跟進一下，抱歉。您在下半年是否會採取額外的保守主義，或與先前的理念相同？

It's the same philosophy as before.

這和以前的哲學是一樣的。

And there are no further questions at this time. I will turn the call back over to Eric Friedrichsen, CEO for closing remarks.

目前沒有其他問題。我會將電話轉回給執行長 Eric Friedrichsen，他將發表結束語。

Thank you, very much, and thanks to all of you for joining our earnings call today and for your continued support and your interest in Disco. Your confidence in us drives our commitment to deliver strong results and sustainable growth.

非常感謝你們，感謝你們所有人今天參加我們的財報電話會議，感謝你們對迪斯可的持續支持和興趣。您對我們的信任促使我們致力於實現強勁的業績和永續成長。

I want to extend my gratitude to our dedicated Disco employees, whose hard work and innovation are the foundation of our success as well as to our customers who have been amazing supporters and partners to Disco. Together, we've achieved significant milestones, and we're poised to capture even greater opportunities ahead.

我要向我們敬業的 Disco 員工表示感謝，他們的辛勤工作和創新是我們成功的基礎，並向我們的客戶表示感謝，他們是 Disco 的出色支持者和合作夥伴。我們共同實現了重要的里程碑，並準備好抓住未來更大的機會。

To our investors, your trust and your investment are invaluable. We remain focused on executing our strategic initiatives, driving long-term value, and maintaining transparent communication. We look forward to sharing our progress in the quarters to come.

對於我們的投資者來說，您的信任和投資是無價的。我們仍然專注於執行我們的策略計劃、推動長期價值並保持透明的溝通。我們期待在未來幾季分享我們的進展。

Once again, thank you for your time today. Thank you for your unwavering support, and have a great day.

再次感謝您今天抽出時間。感謝您的堅定支持，祝您有美好的一天。

Thank you. This concludes today's conference call. You may now disconnect.

謝謝。今天的電話會議到此結束。您現在可以斷開連線。