We have the kickoff show of the conference. Delighted to have the CS Disco team here. We have CEO Eric Friedrichsen, CFO Aaron Barfoot. We are going to do this as a fireside chat. Happy to take questions from the group. I have plenty that will get us through a half hour. Maybe just to kick things off, Eric, if you give us a quick intro to Disco, the problems you solve, and then maybe as part of that, you have been here a little over two years now. Talk about some of the changes you have affected in the organization and what you are seeing as an output of that. Yeah, you bet, D.J. Hello, everyone. Eric Friedrichsen, CEO of Disco. Disco is in the legal software industry. We have been in business since 2013, went public in 2021, really serving a specific sub-segment of lawyers called litigators and helping them historically with their problems related to eDiscovery. When you think of I do not know if any of you have seen the Julia Roberts movie, "Erin Brockovich," where she is digging through boxes and boxes of paper looking for evidence. We do that, but we do it electronically, and that business has historically, over many, many decades, been a human-based business, and over our history, we converted that into more of an electronic-based business. The software was built to be extremely friendly for lawyers and administrators that leverage the system, which was a game changer for the industry. Previous competitors were powerful but extremely difficult to use. That was how the business got started. The business grew very, very quickly on the back of selling to both law firms and corporations, and went public in 2021, and then the business started to slow down pretty significantly. I think we were founder led by a brilliant founder who was a litigator and understood the business extremely well or understood law extremely well and what litigators needed. But we were trying to do too many things all at the same time. I came in in April of 2024 as the new CEO. Had an extensive background in growing and turning around companies. My last company was Emburse, which we doubled in size to almost $300 million in revenue and very profitable when I left that business. I was excited to come into Disco. The first step we did was we brought in some great new talent, AKA Aaron is a great example of it, but we brought in a new chief product officer, new chief financial officer, a variety of talent across the executive team and the VP team. We set our strategy and focus to understand our ideal customer profile, which is really large law firms and highly litigious corporations. We changed our go-to market to be an integrated go-to market that would allow us to really work on expanding our wallet share within these existing customers. We had many of these customers that might have spent $100,000 or $1 million per year with us, but we only had 10% or 15% of their wallet at the time. We put a lot of effort in growing those customers and in getting larger and more strategic matters onto our platform. It's been great. We've had now six quarters in a row of accelerating growth. We illustrated 13% growth last quarter after when I joined. We were at 3% growth, so we're on the right trajectory. We're hitting on all cylinders, and a lot of it is based on pulling the levers in our go-to-market strategy. We see an optimistic future. I've told the street many times, I believe this business could be a 20%+ grower based on just the core strategy that we're executed upon right now. Beyond that, we just also introduced our unified litigation solution, which is the entire next phase of Disco, which we think has a ton of upside, a lot of value for our customers and for Disco as well. Yeah, that's a perfect primer on the business and all the changes. Lots to talk about in that. Maybe just dialing in on recent execution. You reported Q2 results, last week, I guess it was. Yeah. The weeks are blending together. Yeah, I know. They all fold together. Yeah. Maybe just talk about what stood out to you specifically in Q2, and what is top of mind as we head in the back half here. Yeah. I think that the real story of Q2, honestly, was strong execution on the back of focus. The fact that we put in a new comp plan, we allocated accounts the right way. There is a number of different levers that we pulled over the last several quarters that are all starting to come together, and that was in aggregate. It was not so much that we beat our guidance. It was how we beat our guidance that allows me to have confidence that this can be repeatable. That was the main thing. There were also some real sweet spots on a couple of new levers that we pulled. So at the beginning of the year, we introduced DISCO Platform Pricing, which was an entirely new approach to pricing, which has come out of the gates extremely strong. We hit our goals, for DISCO Platform Pricing rollout within six months for the full year. Yeah. Obviously we are looking now to go way past that, but really good strength there. And then in our Auto Review product, which is a generative AI product that allows all of that work looking through papers to be done with Gen AI. And that really had a great quarter. So those were some of the big highlights. Yeah. Let's dig deeper on a couple of those. Let's talk a little bit about Disco platform and some of the pricing changes that you've affected. Maybe what was the friction point under the old pricing model, and what did you change that now makes it a little bit easier? Sure. So it's interesting. When Disco was created, it was created on the back of absolute best software, best technology. But also there was a theory that if the company priced the product differently, it would be a differentiator. I think for a long time it was. I think that Disco won some business based on the back of this unique approach to pricing. But by the time I came into the business, I would go into customer meetings and I would hear about these large strategic matters that could generate a ton of revenue for Disco, that the customers would go with our competitor. Because they just couldn't explain our pricing. They couldn't explain the pricing to the various decision-makers. Essentially, our biggest competitor is a company called Relativity. Older technology, but they've been in the business for a long time. They've got good market share. They price theirs based on the amount of data that comes into the system, and as that data grows, they charge as that data grows per gigabyte. Well, the approach that we had at Disco was however much data comes in at the beginning, that's how much we charge you for. So it's a more predictable model, but as you can imagine, in order to have good margins, our price had to be significantly more. Some cases, twice as much. Yeah. And so, to somebody that really understood our pricing, they would say, "Okay, you guys are about the same price, that's fine." But oftentimes, our champions within these law firm customers are needing to sell our products with our pricing to somebody else. Think of them as a channel. It was just getting too complicated. We were swimming too upstream, so we rebuilt out our pricing model to be on a very similar method to our competitors. Now, obviously, in addition to that, we add more value. We include our generative AI capabilities as part of that core product. So now we look more similar. Maybe we're a little bit more expensive, but we add a lot more value. So that's opened up an incredible number of doors for us. The AI adoption is huge for us as well because as customers use our AI capabilities to do much more than just creating a production for the defense or for the other side of the case, now they can do many more strategic things. Yeah. You talk about embedding AI into the Disco platform. Maybe just give us some examples of what your AI products do for customers. Sure. Bring it to life. Yeah, for sure. I think the first thing to look at is when I talk about eDiscovery, one of the great things about eDiscovery for us is that it is mandated. You have to do it. So there is always budget. You are not trying to go convince a customer that they need to go spend money on this. Everybody has to do it. Everybody has to defend themselves. There is a requirement that you have to produce evidence to the other side. So there is literally physically a process that you have to go through, and some of these processes last years and cost millions and millions of dollars to go through. What our Gen AI capabilities do on top of that is they take that required process, and they can make it much more strategic. A lawyer can actually interrogate all of the data and the facts within their cases to better understand what is more important. In fact, even our corporate clients can look at a case before it goes to court and say, "Man, how risky is this? Should I maybe settle? Where are the hot documents? Where are my danger points?" Then when the law firm gets it allows them to much more quickly go through the process and start to build a strategy for how they might be able to win the case. Yep. It is really a big game changer. Then our Auto Review capabilities, that is a whole another thing. Auto Review is you literally have to go through every single document and tag which ones you will deliver to the other side and which ones you will not. That process could take, for a relatively large matter, six months for 20 attorneys. Yeah. We can do it in 48 hours. Yeah. The efficacy rates are higher than what it is for humans, proven time and time again. Yeah. Maybe we could talk a little bit about Auto Review. I mean, it was the other kind of bright spot we called out in Q2. What clicked in Q2, do you think, that kind of drove that upside? Aaron, I would be curious. Maybe I will let you answer that, and I can follow up. Yeah. I think the clicking part was, it is a combination. I think there is time, there is awareness, but also, I think our GTM teams, the go-to-market teams, have been working with customers to make sure they understand the value proposition. Why is this better? How is it faster? I think that is a process. Lawyers are risk averse by nature. In Q1, we had customers coming to us looking for Auto Review. They were attracted to the capabilities, but they were still early. They were still trying to understand where it was, and I think our sales teams have been working with them, helping them feel more and more comfortable. Then as we got to Q2, we started seeing some of that pay off. We started seeing, hey, instead of it actually coming in as an Auto Review and customers going the old way, which is a managed review, which we did for them as well, this time they started choosing the Auto Review. That is the great thing, is that I think the demand is continuing. We are seeing them start to take the leap, I think, with the work the teams are doing. On top of that, we even saw repeat buyers. The good news is we are actually seeing customers come back again for it, which I think is huge. It is actually part of the reason we also mentioned we are continuing to invest in that product. One of the reasons we are investing in Auto Review and around the tag tuning elements that Eric alluded to there is our goal really is to make that self-service. If you think about that is a massive industry today, right? Where there is third parties all over the world, they just throw thousands and thousands, millions and millions of documents at, and they go through it. Obviously, we view one day that Auto Review is a much better use, and so we think over time it is going to take all of it, and if we can make it self-service, it will make it a lot easier for people to buy. Yeah. Makes sense. Yeah. Just one other note on that. Lawyers are conservative. Litigators are another level of conservatism because they can't take risks, right? You can't take a chance of losing a case for your client. In a way, that's a disadvantage to us, but in a way, it's a great advantage to us because the software that we build is very difficult to replicate by others. The more momentum we get, the momentum picks up a momentum. There was a judge ruling at the end of June, Schulte v. LinkedIn that essentially said Gen AI review is the next version of technology-assisted review, or TAR. TAR has been mandated for over 10 years as the acceptable way to go through the review process with eDiscovery. Another boon to our opportunity there. It's just the more and more momentum the industry gets and the acceptance that they get when it comes to leveraging technology like ours is helpful. Yeah. As we think about the forward trajectory of Auto Review, is looking at managed services a good leading indicator, or do you think more customers now come in landing with Auto Review first? Help me link what we should expect when we see a good managed review quarter. Is that an indicator that like, "Hey, maybe we'll have a strong Auto Review in a couple of quarters," or what's the right way to think about it? It's not today, too, right? For everybody, to give context, when you see our revenue, you'll see services, which services revenue contains professional services and managed reviews. Those are the two components. Part of that variability comes from professional services, which is, as Eric alluded to, part of our strategy has been to attract bigger and bigger matters from our largest customers, and part of that involves professional services. They need help as they bring these really complex matters to us. That variability will always link to large matters coming in and in the initial phases of setting it up. I think the second part of that revenue stream is the managed services business. It's definitely not necessarily a precursor because I think, usually you're choosing Auto Review, or you're choosing managed services. In the long run, we obviously hope and believe that Auto Review is going to cannibalize not just this, but all managed review. I think that's a ways out probably for the all. Yeah. Obviously today, to us, it's additive. Yeah. It's straight coming in for both. Yeah. Makes sense. Yeah, I think another thing, it's a billions of billions of dollar space, the whole review process. Almost all human-based historically, and Disco's been in that business for a long time. We've never really hit more than, let's say, about $10 million in revenue from the managed review space. $10 million in revenue is a drop in the bucket. Yeah. It's like nothing, right? Part of the issue that we had is it was difficult to differentiate ourselves. Of course, if we have a relationship with a client using us for our software, then they would be more likely to use us for managed review. Auto Review gives us a much bigger differentiator now. We can deliver with better efficacy at a lot higher pace, a lot higher speed, keep the context in-house rather than the law firms having to send it to legal service providers, which creates new revenue streams for them. We think that we're seeing it in the data, that our pipeline of review is going up significantly, and the conversion rates are better because we're so much more differentiated. We think this is really the unlock for us to take a much, much larger share of that wallet. Yeah. Makes sense. I want to talk about the unified litigation solution. It was a new product introduction, vision for where the company's headed. Before we go there, I want to ask about competition. Sure. It's a question I get a ton, and I think one feeds into the next conversation, which is why I set it up that way. But we're getting asked a lot these days around Anthropic and what they're doing in law, and obviously there's the legal specific AI companies, Harvey and Legora, private, but big companies. Where are those folks focused versus where Disco's focused, and what creates your moat that leaves you comfortable those Venn diagrams aren't going to overlap more over time? Sure. Clearly, our competition is Relativity, it's Relativity resellers, and it's Everlaw. Those are by far our biggest competitors, and it's heavily weighted towards Relativity resellers, really. Yeah. You certainly hear a lot about companies like Harvey and Legora because they're getting a lot of investment right now. And frankly, for good reason, because they're delivering a lot of value. But most of the value they're delivering is really on the transactional side of law, on the M&A side of law. We are very much focused on litigation. And as I mentioned earlier, the bar is much higher for litigators. What they need from us is they need security, they need scalability, they need privilege. Their requirements are extremely high, and that's where we're focused, and we have deep expertise there that is very difficult for those types of organizations to go get. Yeah. So now talking about the unified litigation solution, right? As you work on building that out, maybe, A, talk about what is involved in that and how you're able to do it right. And second, how does that further cement the moat that you're building? Yeah. The unified litigation solution, we just announced at our last earnings call last week, is we are really excited. Initially, we are going to pilot with some new capabilities. Ultimately, this will become Disco. We believe that we are in a great position to be able to solve many more phases of the litigation lifecycle, essentially from the very beginning of a case to the very end of a case. Today, we are in the chunk of it. We are in 50% of the spend there in eDiscovery, but we think we have got the opportunity to take over 100% of the lifecycle for litigation, and we are in a unique position to do so. First of all, we have got the facts with eDiscovery, which is absolutely critical to any case. We also have a very powerful license to the law, to case law. Whenever a lawyer wants to try to win a case, they need to know what are the claims that have been made by the other party. They need to know what are the facts of the case, and then what is the case law. They combine those two, and it allows them to go build their case strategy. Everything is driven off of that. About three years ago, a little less than three years ago, Disco signed an agreement with vLex and Fastcase to buy access to primary law. It is a very rare asset that only a few companies have quality access to primary law. I have got a great license that allows us to continue to get updates and also to take the data that we have and allow it to train our models so that it gets better and better and better over time. Which again, very, very few organizations have the ability to do. We think we are in a really unique spot to be able to help our customers drive case strategy, navigate their entire litigation lifecycle, and it would be very difficult for our competitors to touch that. Yeah. How are you thinking about timelines and when this could be commercially relevant to the business model? Yeah, the great news is we're moving fast. We're in pilot right now. We've got several customers with live matters that are using our initial capabilities with the unified litigation solution. Aaron Barfoot was clear on the earnings call not to model any revenue for 2026, but we're building up the proof points, and we're continuing to learn in the process, and we think this is an enormous revenue opportunity for us with you. Yeah. I want to zoom out and talk about wallet share a little bit, because I think it's an important part of the story. You have customers that are spending a lot of money with you. You have million-dollar plus customers, but even in those, you're getting what, I don't know, 15%, 25% of their wallet share, somewhere in that range. Yeah. What's the gating factor or the unlock to kind of get access to the rest of that potential spend? Yeah. It's true. We just announced we continue to grow. We've put a lot of focus on our largest customers and growing wallet share, and I think we hit 354 customers that each spend more than $100,000 with us last quarter, so significantly up over the last couple of years. It represents about 77% with 15% growth in that segment. We're putting a lot of focus on these big customers, knowing that they have a tremendous amount of upside. Historically, Disco was really good at. Disco had a strategy of landing expanding, and was really good at landing, but just didn't put enough focus on expanding. The last couple of years, we've put a lot of focus on expanding, and it's about building the right relationships with the customers. It's about thinking of the law firms as our channel partner, because that's really what they are. Ultimately, it's their end corporate clients that need our capabilities, and doing a better job to equip them with the content, with the right talk tracks, with the right price model, as we spoke about before, to be able to promote Disco. Then larger matters, we've had tremendous progress on getting larger and more strategic matters into Disco. That's important for a variety of reasons. First of all, it's better relationships with the customers when you're working with them on their most important stuff. They're also more revenue for us because we charge based on the amount of data that comes into the system. The approach there really was twofold. One was, let's go after the right matter types. We did an ideal matter profile analysis. Just like you have an ideal customer profile analysis, we also did an ideal matter profile analysis, and we recognized that there are certain matter types where we're really good. We deliver tremendous amount of value, but they're small. Things like employment litigation matters. Yeah. There's other ones where we're really good, but they're big. Construction litigation, SEC investigations, IP, patent litigation, things like that. We're very, very strong there. They tend to be much, much bigger, and we pivot our go-to market to make sure that we are going after the right types of practices and that we are telling them the right story, that salespeople are demoing the product in a way that really outlines our capabilities in that area. That was the first thing. The second thing we did is make sure that these customers know that we have services to augment their projects. That was something that held us back. When I started meeting with customers when I joined Disco two and a half years ago, almost now, I found when I would say, "Man, you're great. You're spending $1 million with us, and we really appreciate everything you're doing, but why aren't you putting your large matters on Disco?" Oftentimes, I would hear things like, "Well, we love Disco. The products are phenomenal, but sometimes I just need help. I have a small team, and I just need help. Yeah. They didn't know that we had that help available to them, that we had that professional services. We're not trying to go drive up our professional services revenue to sky-high numbers. Sure. But we win larger matters when customers get a little bit of help along the way. Yep. Makes sense. Aaron, maybe we could bridge some of this to the numbers. You alluded to growth's accelerated for several quarters in a row now. There's a lot going on from a product perspective where you're investing, but you also have this Q4 EBITDA breakeven milestone out there. So talk about kind of the levers to get you there and how you think about the sustainability of profitability from here. Yeah. So we've definitely put the goalpost out there of being adjusted EBITDA positive in Q4. It's something we reaffirmed in our latest guidance, and I think it's something we've been working for actually for years. I mean, long before I got here. But I think as Eric arrived, one of the things the company had to do, obviously, was re-accelerate the growth. And so we've been in this mode for time now, right, of how do you keep accelerating on a bigger base while becoming more profitable? And that's something, if you look Q2 of last year, we grew 6%, we grew 13% in this last quarter or so while accelerating. So I think in our mind, if you were to think about how do we prioritize, number one, for sure, let's keep growing. Can we keep accelerating the growth? When we look at something like the unified litigation solution, that's obviously something that gives us the ability to continue to look at how can we grow faster. We're going to make those types of investments. At the same time, I think it's great, like the AI tooling and the ability to actually use it in a productive way where our teams. We've really seen the teams come a long way in what we can do. I think we can do a lot more today with a lot less than we used to. We have the ability to make these investments while becoming more efficient, which is something we've been doing, like I said, for the last two years. I don't think it's a new thing to us, but I think we're actually able to get more leverage today than we used to get. Yeah. Eric, you talked about you see a path to 20% growth for the business. Is that executing on the strategy as is, and we can get to 20%, or do we need things like unified litigation to kick in and Auto Review to crank up? How do you think about the sequencing of what has to go right for you to become a 20% grower again? Yeah, look, I truly believe this business can be 20% plus grower on the back of the core strategy that we've been executing upon the last few quarters. The unified litigation solution is on top of that. I think there's an opportunity to accelerate far beyond 20% growth once we get the ball rolling there. But in terms of pulling the levers, growing wallet share within our existing customers, getting those larger matters onto the platform, and Auto Review does factor in. That's what's going to get us to 20% plus growth, and we're on that trajectory. Yeah. Good. I see we're at time. Maybe just a final closing. What do you want investors to leave here with? What's the message? Yeah, look, I think you hear stories about the Harveys and the Legoras of the world getting all this investment, and I think we've got much more opportunity than any of them do. We're in a little bit of a different situation because we're in the public markets already, but we have real revenue. We are accelerating growth. We've got a unique opportunity with unified litigation solution that will be very difficult for our competitors to be able to reach. You hear some of them, we don't ever compete with Harvey and Legora today, but you do hear them talking about, "Well, we want to try to get access to the facts," or, "We want to try to get access to the law." People don't want to give them that access, and they're signing partnerships. There was a partnership that Harvey. Sorry, let me get my data right. Yeah, Harvey signed with LexisNexis, and the LexisNexis CEO was interviewed a couple weeks ago and said, "We give them less than 1% of our primary law data." They don't want to give the data up. It's extremely rare to have that, so we're in a really fortunate position to be able to have unique assets. We've got excellent software, but we've got excellent people, too, in litigation workflows. Lawyers who have become product people and engineers who have become legal people to combine that into a really big opportunity for us. Look, we're excited. Yeah. I think I would just say keep your eyes on us, because we go out of our way to say what we're going to go do and then deliver on it, and that's what we've been doing for the last few quarters. Yeah. Keep your eyes. I will just layer in pretty attractive valuation in vertical SaaS for a business that is showing accelerating growth. This is great coverage of the business, and I appreciate you guys being here. Thank you. Thanks, T.J. Thank you.