CS Disco (LAW) Q4 2024 earnings summary

Executive summary

• Fiscal year 2024 total revenue reached $144.8 million, up 5% year-over-year, with software revenue at $120.1 million (+7%) and services revenue at $24.7 million (-4%).

• Adjusted EBITDA improved to -$18.7 million for the year, a $7.2 million improvement from the prior year.

• Ended 2024 with 315 customers contributing over $100,000 each, up 9% year-over-year, and 19 customers contributing over $1 million.

• Strategic focus on large customers and multi-product adoption, with a 17% attach rate including Cecilia AI.

• Significant operational and cultural improvements, including leadership changes and enhanced internal processes.

Financial highlights

• Q4 2024 total revenue was $37.0 million (+4% YoY); software revenue $30.8 million (+5% YoY); services revenue $6.2 million (-4% YoY).

• Gross margin remained steady at 75% for both Q4 and full year 2024.

• Sales and marketing expense for 2024 was $56.7 million (39% of revenue), down from 45% in 2023.

• Research and development expense for 2024 was $43.8 million (30% of revenue), up $1.5 million YoY.

• Net loss for 2024 was $55.8 million, compared to $42.2 million in 2023; net loss per share was $0.29.

• Ended Q4 with $52.8 million in cash and $129.1 million in cash and short-term investments; operating cash flow for 2024 was -$8.7 million, a significant improvement from -$25.5 million in 2023.

Outlook and guidance

• Q1 2025 revenue guidance: $35–$37 million; software revenue: $30.1–$31.1 million; Adjusted EBITDA: -$8.0 to -$6.0 million.

• Fiscal year 2025 revenue guidance: $145.5–$157.5 million; software revenue: $124–$131 million; Adjusted EBITDA: -$19 to -$15 million.

• Targeting breakeven Adjusted EBITDA by Q4 2026, with a focus on sustainable profitability.