Ladies and gentlemen, thank you for standing by, and welcome to CS DISCO's third quarter of fiscal year 2022 conference call. At this time, all participants are in listen-only mode. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, please press star one again. I would like now to hand the conference over to your first speaker today, Lee Robinson, CS DISCO Investor Relations. Please go ahead. Good afternoon, and thank you for joining us on today's conference call to discuss the financial results for DISCO 's third quarter of 2022. With me on today's call are Kiwi Camara, DISCO 's Co-founder and Chief Executive Officer, and Michael Lafair, DISCO 's Chief Financial Officer. During today's call, we will review our financial results for the third quarter of fiscal year 2022 and discuss an update on full fiscal year 2022. 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, including our guidance for the fiscal year 2022, our market opportunity, market position, product strategy, and growth opportunities. 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. 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 quarterly report on Form 10-Q for the quarter ended June 30, 2022, filed with the SEC on August 12, 2022, and the company's upcoming Form 10-Q for the quarter ended September 30th, 2022. 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. A reconciliation 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. With that, I'd like to turn the call over to Kiwi. Welcome, and thank you for joining our Q3 2022 earnings call. Revenue for Q3 was $34.5 million above our guidance range. In Q3, adjusted EBITDA was negative $13.1 million, a substantial beat of our guidance. As we continue to invest in our business, we are finding ways to operate more efficiently. In 2022, we made many key investments across our company, including a large scale-out of our go-to-market team. We believe that these investments enable us to remain focused on accelerating revenue growth, leverage our cost structure to drive increased operating discipline across the company, and improve EBITDA margin going forward. As a result, we expect EBITDA margins to improve in 2023, and we believe we are well-positioned in our march toward profitability. We continue to add customers, growing customer count to 1,318 as of September 30, 2022. We continue to see improving productivity on our sales development representative and customer success teams as measured by leads and opportunities they identify. We were thrilled to introduce new customers to every single DISCO product this quarter. Recall that new customers are just one part of our growth strategy. Increasing multi-product usage, the number of matters with each customer, and the volume of data on the platform are other key factors that impact our growth. In Q3, Case Builder had the greatest quarter-to-quarter sequential increase in customers since its launch. We continue to be excited about Case Builder adoption. When customers use both Ediscovery and Case Builder, the DISCO platform becomes a common repository for all types of evidence, including both documents and testimony. DISCO Hold, which allows companies to efficiently implement, track, and manage legal holds, as well as retain and preserve enterprise data in the cloud, won long-term renewal contracts with three major technology companies and signed on new enterprise-scale customers in both the technology and health spaces. Our usage-based business model means that revenue in any given period is impacted by the volume and nature of customers' usage of each of our products. Last quarter, we explained that revenue was impacted by a shortfall in usage of our review product on large matters compared to high activity in the prior year, specifically on matters billing more than $1 million in review in the quarter. This shortfall continued in Q3. While this volatility in the timing and prevalence of large matters impacts usage, and given our usage-based business model revenue in any particular period. We are heartened by our continued ability to retain and add new customers to our platform. We continue to believe that long-term drivers, like the increase in the volume and variety of enterprise data and the velocity with which it is created, as well as companies' growing exposure to legal risk and legal disputes, is likely to result in increased usage of our platform by new and existing customers over the long term across the full range of case sizes. We remain excited about the opportunity in front of us and our ability to delight customers with the DISCO product experience, new features, and exceptional service. As we do in each earnings call, I'd like to highlight a few customer success stories from the quarter and then share some feature rollouts we are excited about. We were delighted to have a long-standing DISCO Ediscovery client, one of the largest law firms in the world, use DISCO Review on five matters since discussions began in July about expanding their DISCO product use beyond Ediscovery. Their feedback so far has been very positive. Driving multi-product adoption across both new customers and our existing customer base is a core part of our long-term growth strategy. Internationally, we began work with a new customer in the medical services industry. It was an inbound to DISCO after the company's leadership had heard of DISCO through their outside counsel, demonstrating the importance of good relationships with the lawyers of law firms who can introduce us to their clients. This customer had a large litigation matter and chose DISCO for collection, Ediscovery, and review. DISCO AI significantly reduced the number of documents they needed to review to prepare for their trial that is set to begin next year. Not only is our customer happy, but their outside counsel have also expressed high customer satisfaction as they have been supported night and day by our EMEA team under tight deadlines. Another client of DISCO's since 2019 with multiple matters on the DISCO platform wanted to expand their usage of DISCO. They have historically used both Ediscovery and Review, so we worked with them to package a three-year comprehensive multi-product bundle to best address their needs. This new package has a built-in commitment with room for growth and the addition of more products. Longer-term enterprise deals like this can increase our revenue visibility over time. We also host a big client summit with one of our largest corporate clients and their outside counsel teams focused on maximizing the value of AI in their DISCO experience, diving more deeply into the DISCO products, and planning how DISCO can best serve their needs. Our client and their outside counsel got to meet the broader DISCO team who act as champions for them every day to provide optimal outcomes and are key partners in their use of DISCO. These summits and quarterly business reviews are a great way for us to educate a customer on the latest features and best practices, as well as hear client feedback on what we can build to best serve client needs. This is all part of our comprehensive customer relationship and assurance strategy to uphold the customer satisfaction and longevity over time. I would like to touch on new product releases during the quarter. We rolled out initial phases of our organization metrics feature set, which provides managers up-to-date metrics on their usage and data volumes on DISCO and allows self-service reporting for customers. This is particularly attractive to our corporate customers and general counsels who want to see how many gigabytes of data are uploaded for particular matters, if a database is active, and who has access to the databases. Organization metrics includes visibility into overall data usage across all matters and review databases and insight into activities impacting billable data usage. We are also excited to have recently announced Collect for Slack within our Hold product. With the continued rise of enterprise messaging and collaboration applications, app data like Slack can be difficult, expensive, and risky for organizations to preserve, collect, and review for compliance, investigations, or litigation. That's why we've built Collect for Slack to enable legal teams to seamlessly preserve in place, collect, and promote Slack legal hold data for review all in the same interface. Collect for Slack's integration with the Slack Discovery API enables collection of only the data needed for a legal matter and collection of that data only when it is actually needed, minimizing storage costs and security risks related to having company data live on in third-party applications. More broadly, DISCO Hold centralizes the hold, collect, review workflow in a single interface, making custodian notifications and tracking, in-place preservation, and now collection faster for legal and IT teams. With the release of Collect for Slack, we are delighted to grant legal teams additional visibility into and control of their legal hold and Ediscovery collections processes to get to evidence more efficiently. Building on these critical capabilities, we plan to expand our Hold connectors to additional enterprise collaboration solutions that legal and enterprise professionals rely on in their day-to-day work. Within our go-to-market organization, we previously announced the transition of Andrew Shimek, our former Chief Revenue Officer. Andrew has been with DISCO for nearly five years. He helped us scale our go-to-market organization, grow from a startup company to a public company, and cross the $100 million revenue milestone. We appreciate Andrew's commitment to DISCO and wish him well on his next career endeavor. The team leaders for sales, marketing, and services who had reported to Andrew will now report directly to me, which is the original organizational structure at DISCO. The current leaders of these teams came to DISCO with incredible experience. DISCO 's Senior Vice President of Global Sales, Luke McNeal, joined us in 2021 with impressive enterprise software sales leadership experience. Prior to DISCO, Luke helped scale the enterprise businesses at Amazon Web Services and Facebook. Melanie Antoon, Senior Vice President of Professional Services, started with DISCO in 2019 and helped launch our review and services offerings. Melanie has deep legal domain and process implementation expertise, having led teams at Inventus, Huron Consulting, and Catalyst. Tom Furr, our Senior Vice President and Chief Marketing Officer, has extensive B2B enterprise marketing experience and expertise in building enterprise brands, having previously led marketing teams at MongoDB and Vonage. Additionally, we recently promoted one of our own, Lauren Caruso, to be Vice President of Field Sales in North America, given her tremendous success as a regional sales leader and before that, as a first-line sales manager at DISCO. Our immediate focus areas as a go-to-market leadership team include deal level coaching and pipeline rigor, ensuring we cross-sell in every deal, and a focus on customer success in growing accounts to multi-product, full enterprise adoption. In 2022, we invested heavily to scale out every part of our business, especially our go-to-market organization that is focused on driving continued revenue growth. Now that we have made those investments, our focus in 2023 and beyond will be on driving organizational effectiveness and efficiency. I look forward to working with the rest of the management team to leverage what we have built to both accelerate revenue growth and make steady progress toward profitability in the coming years. I'll now turn it over to Michael to discuss our financial results and guidance. Thank you, Kiwi. I will now discuss the details of our recent quarter results and an update on our outlook for fiscal year 2022. As a reminder, for those who may be new to the DISCO story, our business is primarily a usage-based model that is driven by the number of matters, nature of usage on the platform, volume of data, length of time on the platform, and other factors that may impact revenue in any given quarter. As Kiwi mentioned, Q3 revenue was $34.5 million, up 15% year-over-year and above our guidance range. In discussing the remainder of the income statement, please note that unless otherwise specified, all references to our expenses, operating results, and share count are on a non-GAAP basis. Our gross margin in Q3 was 76%, up from 74% in Q3 of the prior year. As a reminder, our gross margins fluctuate from period to period based on, for example, the amount and types of data ingested and managed on our platform. We expect gross margin to continue to be within the bands we've historically seen. Sales and marketing expense in Q3 was $18.6 million, or 54% of revenue, compared to 43% of revenue in Q3 of the prior year. This represents an increase of over $5.6 million in the quarter year-over-year. As we have mentioned over the last few quarters, we've been focused on investing in scaling our go-to-market organization. At this point, we believe that our sales and marketing teams are reaching the point of scale appropriate for near-term objectives. Research and development expense in Q3 was $13.8 million, or 40% of revenue, compared to 31% of revenue in Q3 of the prior year. This represents an increase of over $4.4 million in the quarter year-on-year as we continue to invest in teams to support product and feature development. General and administrative expense in Q3 was $7.9 million, or 23% of revenue, compared to 26% of revenue in Q3 of the prior year. This represents an increase of approximately $0.1 million in the quarter year-on-year. Operating loss in Q3 was $14.1 million, representing a margin of -41%, compared to -27% in Q3 of the prior year. Adjusted EBITDA was -$13.1 million in Q3, a margin of -38%, compared to a margin of -25% in Q3 of the prior year. Overall, our EBITDA was better than guidance due to strong gross margins and tighter OpEx spend in the quarter. Net loss in Q3 was $14.1 million or -41% of revenue compared to a net loss of $8.2 million or -27% of revenue in Q3 of the prior year. Net loss per share in Q3 was -$0.24 compared to a net loss per share of -$0.17 in Q3 of the prior year. Turning to the balance sheet and cash flow statement, we ended Q3 with $213.1 million in cash and cash equivalents. Year-to-date operating cash flow in Q3 was -$36.7 million compared to -$18.8 million in Q3 of the prior year. Now turning to the outlook. For fiscal year 2022, we are reiterating our revenue guidance in the range of $132 million-$136 million, representing 17% year-over-year growth at the midpoint. We continue to anticipate that our original product, Ediscovery, will be over $100 million in revenue in 2022 with an annual growth rate of more than 30%. For fiscal year 2022, we are updating our adjusted EBITDA guidance in the range of -$54 million-$50 million, representing adjusted EBITDA margin of -39% at the midpoint. As Kiwi mentioned, since our IPO, we have significantly invested in the business across every major function to attain the scale we believe is needed to drive our increasing penetration of the market. Going forward, we believe these investments give us the resources we need to achieve our growth goals. As part of our march towards profitability, we are planning for EBITDA margin improvements in 2023 and beyond. We will provide more details on this and our outlook for 2023 on our Q4 earnings call next year. I'd like to now turn the call over to the operator to open up the line for Q&A. Operator? Thank you. As a reminder, if you'd like to ask a question, please press star then one on your telephone keypad. Our first question is from Jackson Ader with MoffettNathanson. Your line is open. Great. Thanks for taking our questions, guys. The first one is on the sales organization and, you know, the change with Chief Revenue Officer departure there late in the quarter. Just curious, what are some of the changes that you think are to come? What needs to happen in terms of either, you know, hiring plans, ramp plans, productivity? Any detail you can provide would be great. Sure. The basic message is steady at the tiller. We think that Andrew did a wonderful job over the last almost five years, taking us from, frankly, an early-stage startup to a public company, growing revenue more than 10x, and taking us over the $100 million revenue milestone. The folks who reported to Andrew, our heads of sales, marketing, and services, who we talked a bit about in our prepared remarks, are continuing on and will report directly to me. That's the original organization structure at DISCO. It means that I'll get more involved in go-to-market, but it does not represent any fundamental change in our go-to-market strategy. I've long been a believer that in scaling out a go-to-market organization, there are no silver bullets, and results depend much more on day-to-day execution, focusing on every stage of the funnel, ensuring that we are treating every opportunity as sacred, winning as many opportunities as we can, ensuring that we're cross-selling into those deals, and focusing through our customer success team on ensuring customers have a great experience during initial adoption and as they ramp their spend with the eventual goal of full enterprise adoption. One of the things we're very focused on that I highlighted in my prepared remarks is the multi-product strategy that I talked about at our annual earnings call. Last quarter, we saw some great data points across all of our products, with an increase quarter-over-quarter in the number of matters active in review, some great hold renewals, as well as new hold sales to enterprises in the tech and healthcare spaces, and the largest sequential quarter-over-quarter increase in Case Builder adoption. Thanks for that, Kiwi. Just to follow up on the product, kinda the mix here. If we're still looking for the flagship Ediscovery product to continue to outgrow the rest of the portfolio, what exactly, you know, is it sales? Is it brand-new sales that maybe aren't bundling all of the packages together? Is it cross-sales of current Ediscovery customers that maybe aren't picking up Case Builder Review as quickly as you thought that's causing them to undergrow the Ediscovery product SKU? The principal issue is what we highlighted on the last earnings call and what's continued on this earnings call in last quarter, which is a shortfall in the number of very large review users. That's review usage that bills more than $1 million in a particular quarter. Last year and extending into Q1, we saw elevated usage of review on very large matters like those. That fell away in Q2, and that shortfall has continued in Q3, resulting in challenging growth numbers for our review business. Across the rest of the product line, as I highlighted in my earlier answer and in our prepared remarks, we're pleased at the growing adoption of those products, although, of course, they remain relatively small in scale as compared to our original Ediscovery product. Understood. Okay. Thank you. The next question is from Tyler Radke with Citi. Your line is open. Yeah, thanks for taking the question. So last quarter you talked about kinda de-risking the guidance and from some of these larger XL deals that you had on the review business. You know, assume that none of those really came through here with results, you know, kinda in towards the high end of your guidance here. How are you thinking about the review business heading into Q4? Has there been any change in the pipeline? Maybe help us understand if you're not expecting any of these larger deals in Q4, why is that and when would you expect them to return? Is it, you know, a function of the macro, or is there? Just help us understand, you know, that this is something that, you know, you're seeing in the industry more broadly versus, you know, just the nature of your pipeline. Thank you. We delivered a beat in the last quarter on revenue relative to the guidance that we provided and have reiterated revenue guidance for the full year. In terms of review, as we've talked about with respect to all of our business, our usage-based business model means that revenue in any particular period may be impacted by the nature and volume of usage on our platform. Customers may not know exactly how big their matters are until well after they sign a contract or start the matter with DISCO. The size of a matter and the timing of activity on that matter in our platform depend on the nature of the case and the timing or nature of rulings from courts or regulators. For example, a customer may have a new patent infringement lawsuit, and that lawsuit might start out as relatively small in data because it involves, say, just one product or just a small part of the business. As the case proceeds, that data might blow up because it turns out that some parts that are part of the allegedly infringing product are also allegedly infringing, and some third parties are brought in, and the data blows up. The opposite thing can happen, too. An investigation from a regulator can start out being extremely widespread. Think of a Foreign Corrupt Practices Act investigation. Early on, it may be possible for lawyers to limit down the size of that investigation to a particular country or a particular business unit. Again, these are things that happen in the middle of a particular legal matter, and so they're unknown and largely exogenous from the point of view of both our sales team and the customer. That's why we've reiterated that revenue can fluctuate from period to period, again, just depending on the kind of nature of the matters on our platform and the timing of usage of different aspects of our platform on those matters. Sorry, I didn't mean to shortchange you and say you didn't beat the guidance. You came in $0.5 million above the high end. I just wanted to clarify none of those large deals happened in the quarter. In other words, the beat that we saw was more from the Ediscovery side. That's correct. The shortfall in large reviews, meaning reviews that bill more than $1 million in a particular quarter, that started in Q2 and has continued in Q3. Great. Just on the go-to-market side, Kiwi, now that the sales team is kinda rolling up to you directly, how are you just thinking about the incentive structure next year now that you have, you know, invested a lot, you have hopefully a lot more ramp sales capacity? Is it gonna be much more of a focus on, you know, expansion ARR? Are you know, continuing to incentivize new logos? Just help us understand how you're thinking about that as you're going through the planning process. Thanks. Sure. Yeah. If you think about the big drivers of our growth, right, it's adding new customers, expanding existing customers, and driving multi-product adoption. We're right in the middle now of incentive plan design for the coming year, and those are the things that are top of mind for us as we think about how to structure the plans. Now, the basic structure of the plans hasn't changed, which is that they incentivize revenue, and because almost all of our customer base is usage-based, they incentivize driving usage. A salesperson is as incentivized to go take an existing customer and expand our relationship with them, for example, adding more lawyers to the platform or more areas of law or more, you know, product lines with whatever, however the customer is structured, as well as incentivizing salespeople to go drive multi-product adoption in those customers. One area where we are paying a little bit more attention in our incentive plan design is actually how we incentivize our customer success professionals. Historically, we've thought of a variety of different things that they do and link their plans to sort of aggregate results. Going forward, we're going to be linking incentive comp for customer success much more directly to growth. Now, if you look at our customer base and think about sort of the stages of the customer success process, there's a new customer or even a new group within a customer, and getting them from zero to ones, we think of that as onboarding. Then there's a long phase, and again, in our business, this can be three to five years. It can be faster for people on their second journey, we call it growth. It's getting the customer first. From their first matter to six matters, and then from six matters to sort of full enterprise multi-product adoption. At the far end of that journey, there's customers who are at enterprise adoption, and our engagement with them is much more about maintaining the relationship. It looks a lot more like renewals in a subscription business and then, of course, introducing new products to those customers, like Hold and Request, as we continue to grow. I think with sales, the basic message on incentive comp is it's pretty similar with some changes around the edges. In customer success, we are really heavily aligning that group towards growth, representing the importance of existing account expansion and also the multi-product strategy to our future growth plans. Thank you. The next question is from Koji Ikeda with Bank of America Securities. Your line is open. Hey, guys. Thanks for taking the questions. Apologies, I'm jumping around from a couple calls here. You know, if you did mention this in the prepared remarks, apologies on my behalf. I just wanted to ask you know, how to think about balancing growth and profits in this type of environment. You know, if growth looks like it's gonna be, you know, call it maybe a durable 20% growth versus previously thought, you know, much higher trajectory, how do you think about balancing growth versus profits right now? As we tried to emphasize in our prepared remarks, we have changed our philosophy on operating margins a little bit in light of both recent growth results and the macro environment. What we've said is that we're very much focused now on getting leverage on the investments we made across our business over the past six quarters, and we believe we're in a position to make steady progress on our march toward profitability and our long-term operating model in 2023 and beyond. Now, that does not mean that we've given up on growth. I don't think I or Michael would be here if we did not believe there was a tremendous opportunity to continue adding new customers, as we've demonstrated we can do even in the challenging macro environment. We increased customer count to 1,318, and also a tremendous opportunity to expand our relationships with those customers, including by driving multi-product adoption of newer products like Review, Case Builder, Request, and Hold. It does mean that in this quarter and going into the new year, we are taking a sharp look at every part of our operating expenses, staff and non-staff. We're also investing and really accelerating an ongoing investment in globalization, giving us access to lower cost talent in other parts of the world. In general, we think we are going to strike a more balanced note between revenue growth and operating margins going forward. Got it. Thanks, Kiwi. Just one follow-up, if I might here for Michael. You know, net revenue retention, again, apologies if you guys talked about this already, but just directionally, you know, how to think about net revenue retention. Was it maybe up, down or flat in Q3 versus last quarter or the first half of this year? Thanks, guys. Yep. Koji, thanks for the question. Good question. We've reported on dollar-based net retention when we went public. I believe it was the Q1 number, and then again when we filed the Form 10-K. I expect that we'll also release that number again when we file the Form 10-K, in likely February of next year. You know, that number is obviously based on revenue and it's variable based on usage. It moves around a lot, and it has moved around in the past as we've reported publicly. You could expect to see that it is gonna be variable, and we expect it'll continue to move around. Got it. Thanks, guys. Thanks for taking the questions. The next question is from Derrick Wood with Cowen. Your line is open. Hey, guys. Thanks for taking my questions. Kiwi, we hear a lot of companies talking about seeing optimization of the usage of their public clouds on kinda core enterprise applications. What kind of behavior are you seeing out there when it comes to your workload, your customers that you know they may be focused more on cost containment? Is that a trend that's happening and looking at how to better you know use your cloud and optimize consumption? I think it's no secret that heads of finance at every company are doing what Michael is doing at DISCO and seeking to reduce spend across every part of the business. Legal is no exception. We have had customers come to us and ask us how we can help them achieve their spend reduction goals. I'd point to a few things. Over the past year or two, roughly, we've shipped a variety of features in the product that help people optimize their data footprint. I think just over a year ago, we shipped DISCO ECA, which is a lower cost environment where people can stage large collections of data, can use AI and other tools to identify what actually needs to go into active review at a higher price point, and then can seamlessly promote that data into active review. Shortly after that, a few quarters after that, we announced the addition of the Hold product, and one of the great selling points of the Hold product is that it allows preservation in place. Historically, in order to preserve data for legal matters, you had to collect it, make a copy of it, and store it in a platform like DISCO Ediscovery or DISCO ECA. With Hold in place, you don't have to do that, and so you aren't paying double, right? Once for the data in, say, Slack or Microsoft or Google, and once for the data in an Ediscovery platform. That's one way in which our products can help our customers optimize usage. I think the final point that we make is when customers come to us, and talk about reducing their legal budgets and making them more predictable, we like to lean in and emphasize that adopting DISCO as a legal platform can do exactly that. It's not that the customer should reduce their spend with us, it's that they should adopt DISCO in order to reduce and to make more predictable the total project cost of legal matters, often by reducing, legal lawyer billable hours on those matters, materially through the use of automation and artificial intelligence to deliver high-quality legal work product more efficiently. Yeah, that makes a lot of sense. My second question is on the sales capacity side. I mean, clearly a big build-out year for you. Just, did you dial back the kinda level of sales heads versus your original targets, just given the macro and the revenue outlook? How are you feeling about ramp to productivity and maybe, you know, do you have a sense as to what percentage of reps will be considered productive as you exit this year? We did tap on the brakes a little bit, and we actually talked about that on last quarter's earnings call. We had observed on last quarter's earnings call that some of our newer reps had a higher appetite for lead generation than some of our more established reps who benefit from the sort of DISCO referral cycle, right, where existing customers refer new customers and supply a material part of their sort of lead supply. We did that last quarter. On a relative basis, we reduced our investment in quota-carrying sales capacity and increased our investment in SDRs, CSMs, and marketing lead generation programs. I think it's also fair to say that in the aggregate, we have reduced across the board, the level of our investment in go-to-market relative to the ambitious plans that we announced at the time of the IPO. What we've done and what we'll exit the year with still represents a super, large step function increase in our go-to-market capacity, both in terms of quota-carrying heads and in terms of lead gen and all the other functions, that go into making those quota-carrying heads effective. In terms of ramp, we still have a lot of sellers who are very early in their ramp with DISCO, folks hired, this year and even in the past couple of quarters. One piece of data that we're pretty pleased with is if we look at the performance of those reps who are in their first 12 months of tenure and compare them to the performance of reps of similar tenure earlier in DISCO 's history, we're actually seeing the new class of reps outperform those historical class of reps, who we know developed into successful sellers at DISCO. One of our big focuses in the new year is really doing our best to treat every opportunity as sacred. What I mean by that is involving senior people at DISCO, proven sellers, subject matter experts on a deal-by-deal level, especially with our newer sellers, to ensure that we're putting our best foot forward in terms of presenting to customers the value that DISCO provides. I think that will help us close more deals. It'll help us close bigger deals. It'll ensure we're doing cross-sell and upsell correctly. Perhaps most importantly, I really think that's the best way to train and ramp new reps, right? Seeing senior people do it, being on a sales call with me or with Luke or with other senior leaders at DISCO, that's historically how we've trained the best reps at DISCO, and we're continuing to make that investment for the newer sellers as well. Got it. Thank you. The next question is from Arvind Ramnani with Piper Sandler. Your line is open. Hi, thanks for taking my question. Yeah, I just wanted to go back on the kind of the topic of margins. You know, certainly you all alluded to, you know, basically providing an update on the February earnings call as to sort of the kind of recasting of margins. You know, while I'm not looking for any kind of specifics, you know, directionally is this gonna be a hard shift towards prioritizing margins? The follow-up to that is, you know, would there be any sort of compromise or kind of streamlining of R&D type of expenses, or would it come more in the form of, like, sales and marketing type of efficiencies? Where are you looking to kind of drive increased profitability? Hey, Arvind, really good question. What we said in the prepared remarks and what we're also planning for next year as we're kind of in the middle of the budget process, is really driving towards, marching towards a path to profitability. What does that mean? If you look at the investments we've made over the last six quarters since the IPO, we've significantly beefed up the go-to-market team, and we've also significantly made a large number of investments in the product team. As we move into 2023 and we look towards a path to profitability and improve adjusted EBITDA margins in 2023 and beyond, the goal really is to just optimize and leverage what we've already invested in better and, in light of the macro environment, just more attention. I'm not saying we haven't had attention in the past to operating discipline, and Kiwi mentioned this earlier, really looking closely at all non-staff and also staff costs and also globalization. We are looking at globalization. We already have heads in a variety of countries throughout the world, and we're really looking at leveraging globalization to attract and retain the best and the top talent. We believe that we can balance both the growth that we expect as well as the longer term goal, which is a path to profitability. Terrific. Thank you very much. The next question is from Brent Thill with Jefferies. Your line is open. Yeah. Kiwi, one of the questions, you know, we get is, you know, legal volume should be more resilient in a tougher macro, so many continue to ask, you've had a pretty material decel in growth. Is this just lower volumes? Is this execution? How do you frame this up? Your visibility now going into, you know, the front part of next year, can you just describe, you know, what you're seeing from your overall pipeline as we head into the new year? Look, I think there are some challenging headwinds in our business, the principal one being the shortfall in large review matters that began in Q2 and continued in Q3, and it's especially challenging from a comp point of view, given that we had such elevated usage in the form of those large review matters for about a year going into Q1 of this year. That's kind of the principal thing that we're seeing that we did not expect. I think also we're being somewhat judicious in our outlook because of the macro environment and our uncertainty about what will come to pass. I think you have puts and takes there, right? On the one hand, you have the historical behavior of legal, which is that in the down part of economic cycles, disputes go up, right? Litigators become busier. That's certainly what happened after 2008. On the take side, you have, to go to someone else's earlier question, the fact that, Michael's equivalent at every business is going around department by department and asking people to limit usage and constrain costs. You know, DISCO is not immune from that kind of conversation, although, as I said in answer to that earlier question, I think we have some compelling reasons why increasing DISCO usage actually is the path to controlling legal costs more generally. I think that uncertainty is also causing us to moderate our outlook. Now, that said, there are a ton of things that we think are super promising about the business and what we're seeing, and maybe the most prominent of those is that we've continued to steadily grow customer count now to 1,318, despite this challenging macro environment. You know, I talk to a lot of my peers at other software companies, and I think a lot of categories of software sales were really challenged in Q3, where people were just putting off purchases and not switching, and we haven't seen that happen in our business. There's continued interest in making the jump from services-based solutions to software-based solutions in legal. I think the value proposition that we're delivering to our customers of reducing legal spend in the aggregate, making it more predictable, and perhaps more importantly, giving them a solution that actually can scale so that their legal budgets don't continue to blow up, not just in the current climate, but next year and the year after that, I think that continues to resonate in the market as demonstrated by growth in customer count. I think the performance of our lead gen and expansion organizations continues to be a positive point about the business. The fact that those teams continue to set records on unit and aggregate productivity means that when we call customers, they're receptive to our call, right? That's sort of exactly what that means, right? Those are folks willing to take meetings with us, about the benefit that their legal tech solution can have, to their business. Then the final positive point, I think is really multi-product adoption, which never mind 2023, I think if we think about the long-term growth strategy of our business, that multi-product strategy underpins a lot of it. Across all of the newer products, we have good things to say that we included in our prepared remarks. A continued increase in the number of review matters quarter-over-quarter, the largest sequential increase in CaseBuilder adoption quarter-over-quarter, and some great enterprise hold deals, right? Where we're getting into companies, some of these that aren't using DISCO Ediscovery yet, and getting in at the front end of the process, where they're preserving data for use in downstream litigation. I would say we've been chastened a bit by the results and by the macro environment, but I think there are puts and takes, and there are many good facts about what we're seeing in the business as well. Michael, can I just ask a quick one on pathway to profitability and the other steps other than just our branding go-to-market and sales reps? What else are you putting in to ensure that you get to that point? I mean, what we've said a little bit in the prepared remarks and what I believe I answered in my earlier question, we, you know, we've invested a significant amount since the IPO, and we feel that we've reached the scale necessary across most of our functions, that's gonna support where we go next year. Also in addition to that, globalization, and in addition to that, really a very close look at continuing operating leverage, operating discipline. It's clearly a much different macro environment, and I think we have the kind of focus that all my CFO peers have in terms of really looking at every cost and making sure that we manage efficiently. We still want to invest in growth, but we feel like we've made significant number of investments over the last six quarters that will support us as we continue to grow the business. Thank you. The next question is from Scott Berg with Needham & Company. Your line is open. Hi, Kiwi and Michael, thanks for taking my questions here. I guess I have two. The first one is a question I've had from several investors over the last quarter that I don't have a great answer for, but was hoping you all could clarify and add some color to, is on the large review cases that it seemed like you were expecting, at least in Q2, that moved out of the quarter, given the results here in Q3, likely obviously did not occur given your commentary. What would cause those large reviews to move, not necessarily one quarter, 'cause that could be a couple of weeks or a month or maybe a couple months, but, you know, six months, multiple quarters? You know, help us understand in the environment, I guess, you know, with your customers that could move the usage, you know, to that type of an extreme? Well, I don't think that what we're talking about is, you know, customer has a large matter, that matter has a large review, they're intending to use DISCO Review, but something has gone wrong with the timing, like there's a stay or. That's not what we're talking about. I think what we're talking about is just customers not having those large reviews on our platform. Not a question of timing, but maybe a question of occurrence. What can drive that, you know, some of it is just does a customer happen to be sued or investigated in a matter that involves a large amount of data? You know, one that we've talked about publicly is the opioids litigation, right? Which was all over the news, last year and which generated quite a bit of usage for us. Many of those cases, you know, I don't think many new ones are being filed, and I think a variety of them have been or are being resolved. That's one example, right? I think more generally, until the review business gets to larger scale, it's going to be possible for these large review kind of use cases to impact revenue in any particular quarter. Last year, we saw that happen to the good, right? Q2 of last year was the tidal wave of goodness, and this year we're seeing what happens when that tidal wave goes out. We're not seeing any fundamental shift in how many large matters there are in the world or sort of anything like that. Our hope would be that as we get review usage to larger and larger scale, eventually we get it to such a scale that the impact of any particular large matter on revenue from the review product is small relative to the aggregate revenue from review. That, of course, is what we've seen in Ediscovery. As Ediscovery has gotten to greater and greater scale, there are still large Ediscovery matters, and they can come and go, and their timing is exogenous and sometimes hard to predict. But even very large Ediscovery matters as a percentage of overall revenue from Ediscovery usage are now relatively small, and that's just not true yet of our review product. Got it. Helpful. A follow-up from you from an answer you gave earlier around sales investments. Kiwi, you changed the composition, sounds like, from direct AEs or field reps to SDRs here over the last maybe quarter or two. You You kind of changed what that composition looks like. What does that tell us in, you know, in the DISCO model around what your go-to-market activities are gonna look like over the next three to maybe 12 months or so? Is this really more about trying to fill more at the top of the funnel that an SDR would often work with, and maybe there's not enough opportunities later in the funnel? Is it maybe a change in terms of the size of customers that you're starting to look at today and have an opportunity to sign? Any color around what that change means for you would be helpful. Sure. First of all, to give you context, I'm talking about a relatively small change on the margin and not some kind of fundamental shift. I mean, think on the order of, like, low double digits number of people switching from one to the other. This is not a huge change. What we observed, and I talked about this a bit on last quarter's earnings call, was that because so many of our quota-carrying sellers are new, so with DISCO less than a year, they don't have the benefit of a big existing customer base that they sold into. And the benefit of that base is that it tends to generate referrals. We, you know, the core of our model here is that we're really good at building these product experiences that lawyers love. When lawyers love using the DISCO platform, they introduce our sellers to their friends and colleagues, both within the same organization and at other organizations. That sort of leveraging of customer satisfaction coupled with the usage-based business model, the power of growth, that's been a key part of our historical success. For newer reps, that's a lot harder, right? Because they have to get the flywheel going by signing up their first sets of customers who then generate referrals to more customers and so on. What we were finding is that some of those newer sellers had excess sales capacity, or another way of saying that is not enough opportunities. The way we addressed that was increasing, relatively speaking, our investment in lead generation in the form of SDRs, customer success, and marketing programs in order to get more leads and opportunities to those sellers early in their ramp. Got it. Very helpful. Thanks for taking my questions. As a reminder, please press star one if you'd like to ask a question. The next question is from Parker Lane with Stifel. Your line is open. Yeah, hi. Thanks for taking the questions. Kiwi, curious if there's any change in the number of customers that are looking to lock in subscriptions, in the face of a more uncertain macro. I think you referenced one during the prepared remarks. Is that something that you'd expect to hear over the next 12 months, or is that sort of a one-off situation? I don't wanna overstate it. There are some customers who have come to us with exactly the motive that you described, right? The desire to increase the predictability of their spend, and also to reduce their spend if at all possible. There's some of that going on. As a percentage of our overall business, as a percentage of the deals that we're closing, those kinds of subscriptions, I mean, this is disclosed in our numbers. They still represent a much smaller part of our business than our traditional usage-based offering. I actually think this cuts both ways. Some of our newer products, like Hold, lend themselves to this kind of multi-year subscription kind of relationship with customers. Again, in the spirit of being somewhat uncertain about the macro environment and chastened by recent growth results, perhaps it's good for us to sign a few more of those long-term subscriptions and bundle some other products in with them. There's no fundamental shift in what we're seeing or what we're doing. When customers do want to engage with us on a subscription basis, we're certainly open to having that conversation. I think on the margin, some of our newer products actually lend themselves to that kind of deal structure more. Got it. Appreciate it. I'll leave it at one in the interest of time. Thank you. There are no further questions at this time. I'll turn it over to Kiwi Camara, Co-founder and Chief Executive Officer, for any closing remarks. Thank you for joining us today. I want to reiterate our strong belief in the opportunity ahead of us in the products we have built that are transforming the legal industry and in our ability to execute on that opportunity. We appreciate your interest in DISCO and for joining our Q3 2022 earnings call. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.