Yahoo Finanza CS Disco Inc (LAW) Q1 2024 Earnings: Revenue Growth Amidst Widening Net Loss
Revenue: Reported at $35.6 million, marking a 7% increase year-over-year and meeting the estimated $35.60 million.
Net Loss: GAAP net loss significantly improved to $10.6 million from $20.4 million in the same quarter last year, but was above the estimated net loss of $6.85 million.
EPS: Reported a net loss per share of $0.17, compared to a loss of $0.34 in the prior year's quarter, but was above the estimated EPS of -$0.11.
Software Revenue: Increased by 9% to $29.9 million, indicating continued growth in core business operations.
Adjusted EBITDA: Improved to -$5.2 million from -$13.0 million year-over-year, reflecting better operational efficiency.
Customer Growth: Customer count rose to 1,442, up 4% compared to the previous year, showcasing expanding market reach.
New Leadership: Appointment of Eric Friedrichsen as CEO, expected to drive future growth with his extensive background in scaling software businesses.
On May 9, 2024, CS Disco Inc (NYSE:LAW) disclosed its financial outcomes for the first quarter of the fiscal year 2024 through its 8-K filing. The company, a provider of cloud-native, AI-powered legal solutions, reported a revenue of $35.6 million, marking a 7% increase year-over-year and aligning with analyst estimates. However, the reported GAAP net loss of $10.6 million significantly diverged from the anticipated $6.85 million, reflecting deeper financial challenges.
Company Overview
CS Disco Inc offers a range of legal technology solutions aimed at enhancing the efficiency of legal processes for enterprises, law firms, and government entities. Its products, primarily delivered through usage-based and subscription models, facilitate legal discovery, document review, and case management.
Financial Performance Insights
The first quarter saw CS Disco Inc achieve a notable top-line growth with software revenue climbing to $29.9 million, up 9% from the previous year. This growth is attributed to the expansion of its customer base, which grew by 4% to 1,442 customers, and the introduction of new features such as Cecilia Deposition Summaries. Despite these gains, the company's bottom line tells a different story. The GAAP net loss improved year-over-year from $20.4 million to $10.6 million, yet it fell short of analyst expectations, underscoring ongoing profitability challenges.
Key Financial Metrics and Commentary
The reduction in net loss was partly due to a decrease in total operating expenses, which dropped from $47.1 million in Q1 2023 to $39.1 million in Q1 2024, reflecting stringent cost management. Adjusted EBITDA also improved, registering at negative $5.2 million compared to negative $13.0 million in the prior year. This metric is crucial as it provides insights into the operational efficiency of the company excluding non-recurring items and stock-based compensation.
"We are happy to announce that this quarter we saw our fourth consecutive quarter of year-over-year revenue growth as well as the launch of new core platform and Cecilia AI features," stated Scott Hill, Incoming Chair of the Board of Directors and former Chief Executive Officer.
Looking Ahead
For the second quarter of 2024, CS Disco Inc anticipates software revenue between $29.0 million and $30.0 million and total revenue in the range of $34.5 million to $36.5 million. The full-year guidance projects software revenue between $120.0 million and $124.0 million, with total revenue potentially hitting between $143.0 million and $151.0 million. These forecasts highlight management's confidence in maintaining revenue growth momentum but also suggest ongoing challenges in achieving profitability, as reflected in the projected negative Adjusted EBITDA.
Investor and Analyst Perspectives
While the revenue figures align with market expectations, the deeper net loss than anticipated could concern investors about the pace of profitability. The introduction of new leadership under CEO Eric Friedrichsen and continued product innovation are positive signs. However, the ability to translate these into net income improvements will be crucial for investor confidence.
As CS Disco Inc navigates through 2024, stakeholders will be closely monitoring its ability to manage expenses and innovate in its product offerings to capture further market share in the competitive legal tech landscape.
Explore the complete 8-K earnings release (here) from CS Disco Inc for further details.
This article first appeared on GuruFocus.
