Q3 2023 CS Disco Inc Earnings Call
Okay.
Ladies and gentlemen, thank you for standing by and welcome to the C. S discuss third quarter of fiscal year 2023 clubs at school.
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After the Speakers' remarks, there will be a question and answer session.
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I would now like to hand, the call over to your first speaker today head of Investor Relations Alexis luxury calls. Please go ahead Sir.
Good afternoon, and thank you for joining us on today's conference call to discuss the financial results for <unk> third quarter of 2023 with me on today's call are Scott Hill, Chief Executive Officer, and Michael a fair This was chief financial Officer.
Today's call will include forward looking statements within the meaning of the safe Harbor provisions of the pie.
Divot Securities Litigation Reform Act of 1995, including but not limited to statements regarding our financial outlook and future performance or future capital expenditures market opportunity market position product strategy and growth opportunities and developments in the legal technology industry.
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.
C S Tesco dot 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 32023 filed with the SEC.
August 19, 2023, and the Companys upcoming Form 10-Q for the quarter ended September 32023.
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 equivalents is available in our earnings release and with that I'd like to turn the call.
All over to Scott.
Thanks, Alexie good afternoon, everyone and thank you for joining us for.
For those of you who have not yet met I'm Scott Hill.
I assume the role of Chief Executive Officer about two months ago.
Before we dive into the results I would like to briefly introduce myself.
I was the CFO of a company called Intercontinental exchange better known as Ais from 2007 until 2021.
I joined is not long after its IPO and help lead a company that used innovative technology to fundamentally transform commodity and financial markets and generate strong growth and investor returns.
I'll, let this go just after I retired from ice and saw accompanying similarly poised to use technology to transform the legal industry and generate strong growth and returns.
Jumping at the chance to join <unk> Board of directors in June of 2021, shortly before we went public.
More recently the board asked me to step into the CEO role on an interim basis, while we conduct a search for a permanent CEO.
We are focused on finding a leader with demonstrated experience scaling businesses, leading high functioning organization and building enhancing and maintaining our strong cultural foundation.
Once we find a new CEO I look forward to remaining undisclosed board of directors.
Until then I will strive every day to make a meaningful and positive contribution to the company its employees its customers and its shareholders.
There is a lot of work to be done.
We've gone through a difficult couple of months, but we remain steadfast and focused on building the leading legal technology company <unk>.
Here to enable that strategic vision by removing obstacles and making decisions that propel the business forward I'm excited to be a bridge to discuss his next chapter.
Although I've been here only a short while as CEO and I'm still very much diving into the core of our operations I've already spent considerable time speaking to our leadership team across all functions meeting with our customers around the country and listening to our employees. The magic that makes difficult unique continues to permit.
Our company.
Before diving into the quarter I wanted to share some of my initial observations.
First I'm very impressed with the employees and talent, we have at disco across all functional areas.
Our team continues to work incredibly hard to build the best company possible there.
Their commitment and dedication in the face of numerous challenges is inspiring.
This goes ability to succeed is not dependent upon a single person, but the collective team focused on innovation and customer service.
That is the DNA of the company and that is what will help us regain our footing and enable our future success.
Second this go has extraordinary products our customers loved them.
Having gone on several trips to visit our largest and most sophisticated users. The anecdotes I've been hearing are eye opening and I see the beauty of our platform and a lot more detail.
I have heard firsthand from general counsels and law firm partners and associates about the time savings and simplicity. This go his brought to their legal operations and when we showcase and demo our upcoming AI focused products like Cecilia Q&A or Cecilia timelines their eyes light up they see the power of our solutions.
And how it will positively impact the future of legal work.
Third I'm confident in our product roadmap and strategy.
Have world class talent on the product and engineering side of the house and the capabilities to build innovative solutions that can transform the legal industry.
And the pace and quality of that product development has never been better.
Fourth we've made progress within our go to market organization.
We had our best revenue quarter as a company in Q3 and that momentum carried into October.
However, there is more work to be done we are operating in a market with embedded legacy software providers and displacing those entrenched competitors takes time and requires great focus and execution and.
In particular, we are investing to enhance our approach to enterprise clients, both corporate legal function and large law firms.
Fifth we need to engage with and invest in our most important asset our people.
There are cultural elements at this go that need to be improved and that is one of my top priorities.
Building a great company culture takes time, and we are committed to promoting a constructive and supportive work environment that will enable our team to realize their full potential to the benefit of our customers and shareholders. We are already taking the important first steps of this journey.
With that let's dive into our performance during the third quarter.
Revenue for Q3, 2023 was a record $34 $9 million.
Adjusted EBITDA was negative $4 5 million.
A sequential improvement from the second quarter.
We ended the quarter with $158 million of cash no debt and 1400, 49 customers, 10% more than a year ago Michael.
Michael will provide more details about the quarter shortly.
Within our core Ediscovery business, we've continued to make progress.
We have seen a reacceleration and usage over the last several months, which continued into October.
We saw quarter over quarter growth in both active and early case assessment usage, which is very encouraging.
Although ECA is still the fastest growing data segment. We're also seeing growth in active this is attributed to the hard work. Our sales team is doing to attract new matters and gigabytes to our platform. In addition to usage expansion among our existing customer base.
Our product and engineering teams released some important new E discovery features during the third quarter we.
We introduced self service capabilities for slack, which is by far the fastest growing dataset among our customers.
This new capability will allow customers to upload documents and the ediscovery without needing disco support considerably reducing total ingest time for slack data.
<unk> also released Ediscovery annotations, which allows much more intuitive and flexible collaboration between team members within <unk> E discovery.
Customers can now annotate specific documents alert their team and start comment threads, creating a richer workflow for the legal team.
We also added a witness management module to our case builder product a task that had been historically performed and excel and word can now efficiently be conducted in a central contextually rich interface.
Finally, we continue to enhance our Cecilia Q&A capabilities to match, how our users work with the addition of scoping.
Scoping allows users additional control over the content being reviewed such as documents related to a specific custodian.
This allows our customers to find answers faster within specific document sets.
This was the single most requested product enhancement to Cecilia based upon early customer trials.
In addition to delivering a solid third quarter and a fast start in October our sales team has been busy introducing our customers to our new disco AI platform Cecilia.
We have embarked upon a nationwide customer roadshow, where we had been showcasing Cecilia Q&A and integrated AI chatbot for large scale E discovery as well as phacelia timeline, which automatically generates timelines from preexisting legal documents.
We are also previewing several other cecilia skills on our product roadmap.
Importantly, phacelia is running in beta in support of over 20 active customer matters.
Those customers are using cecilia to rapidly understand critical facts and opposing productions prepare for depositions and gain insights into critical case strategy questions.
I've had the opportunity to join dozens of our AI roadshow events in my first few weeks and the power of this technology to help our customers deliver better legal outcomes for their clients is clear.
We've heard customers talk about how <unk> can help minimize the time required for tedious tasks such as building the timeline a must have for any case, but also time consuming and expensive from a billing perspective.
Customers also appreciate the efficiencies of document interrogation using Cecilia Q&A.
In fact, one customer highlighted some critical documents Theyre review had missed but which is celia pulp surface.
We believe that the risks and cost associated with not using technology like Cecilia to augment lawyer capabilities is high.
We are focused on continuing to build customer interest and generating financial returns on this important investment.
We also continue to invest in our long term strategy to become an end to end legal technology provider you saw us announced yesterday that we've licensed fast cases comprehensive U S primary law data.
This will give us and our customers access to all federal and state laws regulations and rules.
Integrating facts and evidence with primary law into a single platform will further our ability to enable legal professionals to deliver optimal outcomes for their clients by leveraging our leading innovation around AI and intelligent workflow solutions.
We look forward to sharing additional aspects of our strategy over the coming quarters.
With regard to the path to profitability, we have made impressive progress and we have much lower operating expenses now than in Q3 of last year.
The early observation, though is that the way in which we have allocated resources may have swung too far and too fast from a growth only focus to cost cutting we have to make sure. We have a balance between cost efficiency and growth investments I believe a balanced approach to profitability that combines prudent expense and resource management.
Along with investments in our people products and sales will result in a more sustainable profitable and growing company.
Two months into this role I strongly believe we have the people.
The products and the customer relationships to Reenergize, our topline we.
We will have more concrete full year 2020 for guidance on our fourth quarter earnings call in February.
With that I'll hand, it over to Michael.
Thank you Scott in Q3 of 2023 revenue was $34 9 million, although year over year revenue was up only 1% we are starting to see a pickup in E discovery usage.
As Scott mentioned, we are seeing growth in both ECA and active data on our platform within our review revenue came in below where it was in Q2 due to a $1 billion review that ended offset somewhat by the growth of our E discovery business in.
In discussing the remainder of the income statement. Please note that unless 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 our gross margin in Q3 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.
Sales and marketing expense for Q3 was $15 4 million or 44% of revenue compared to 54% of revenue in Q3 of the prior year. This represents a decrease of over $3 1 million in the quarter year on year. The decrease was primarily driven by a decrease in sales and marketing personnel cost.
Yes.
Research and development expense for Q3 was $10 1 million or 29% of revenue compared to 40% of revenue in Q3 of the prior year. This represents a decrease of approximately $3 7 million in the quarter year on year. This decrease was primarily driven by a reduction in research and development personnel costs.
General and administrative expense in Q3 was $6 6 million or 19% of revenue compared to 23% of revenue in Q3 of the prior year. This represents a decrease of approximately $1 3 million in the quarter year on year. The majority of the decrease was driven by a reduction in general and administrative personnel.
Cost operating loss in Q3 was negative $5 8 million, representing an operating margin of negative 17% compared to negative 41% in Q3 of the prior year in total our Q3 operating expenses wherever $8 1 million lower than Q3 of the prior year representing an.
<unk>, 20% reduction in operating expenses.
Adjusted EBITDA was negative $4 $5 million in Q3, representing an adjusted EBITDA margin of negative 13% compared to adjusted EBITDA margin of negative 38% in Q3 of the prior year. These results represented an adjusted EBITDA improvement of $8 5 million from Q3 of last year, bringing us closer to <unk>.
<unk> ability.
Net loss in Q3 was $3 9 million or negative <unk>, 11% of revenue compared to a net loss of $14 1 million or negative 41% of revenue in Q3 of the prior year net loss per share for Q3 was negative <unk> <unk> per share compared to negative 24 per share in Q3 of the prior year.
Turning to the balance sheet and cash flow statement, we ended Q3 with $157 $7 million in cash and cash equivalents and no debt operating cash flow in the first three quarters of 2023 was negative $28 7 million compared to negative $36 7 million in the same peer.
<unk> of the year prior.
Now turning to the outlook for Q4 of 2023, we are providing revenue guidance in the range of 34 million to $36 million and adjusted EBITDA guidance in the range of negative $7 million to negative $5 million for fiscal year 2023, we are providing revenue guidance in the range of $136 3 million.
$238 3 million and adjusted EBITDA guidance in the range of negative $31 9 million to negative $29 9 million.
As Scott mentioned, we will provide our 2020 for revenue and adjusted EBITDA targets on our next earnings call. At this point, we are not planning to significantly increase spending from current levels. However, we do expect to make some additional investments to set the company up for success in 2024 and beyond now.
I would like to turn the call over to the operator to open up the line for Q&A operator.
Thank you Sir at this time I would like to remind our teleconference participants in order to ask a teleconference questions. Please press the star followed by the number one on your telephone keypad, we will pause for just a moment to compile the Q&A roster.
Our first question comes from the line of Eric <unk> from TD Cowen. Please go ahead with your question.
Hey, guys. This is call on for Derek.
Just wanted to get a better picture of just kind of how sales rep productivity has been trending in the quarter I know that last quarter you Carla.
Enablement initiatives.
Have you guys can you just give us an update on that.
Okay.
Hey, Thanks for the question. So we're really pleased about the performance in Q3, it was a record quarter the best quarter in the history of the company.
And so in terms of rep productivity.
With the direction of the business and as we mentioned in our prepared remarks.
Very very pleased with that.
Pace of where the business is going and how their usage on that platform in particular with respect to E. Discovery has picked up into October. So we're pleased with how things are going.
Great. Thanks, and then just one more on the net new customer number that was lower than its been the past couple of quarters.
So we are kind of in tandem with the sales rep productivity has that productivity has shifted to more focus on existing customers.
And that's kind of selling into them more or what did you say on the new customer front.
Yeah, Hey, it's Scott I'll take this and it's interesting the way you phrased the question.
It's not a focus on existing or our focus on new.
Our focus on boats and that's one of the things in a couple of months that I've been here.
I think we need to do a better job of.
From a sales standpoint is.
It's not corporate or transactional, it's not corporate or am law.
All of that and so I was pleased to see the customer count up again, 10% year over year.
Pleased to see that it's trended up as we move through the year and I think thats a great opportunity for us it gives us a larger customer customer base to sell into but it's also the case that we've got this great existing set of customers that I think we can do a better job of selling into as well and so I would like to see the customer count grow we're clear.
<unk> focused on continuing that trend, but we again, we want to do both and I think in the quarter. We did a pretty good job of that we saw some growth in existing customers, we saw growth in new customers.
And Thats a trend that I am really working hard with Luke and the sales team to focus on it as we move forward and to take the steps that we can do to enable that team to be able to not do either or but to do both.
Okay.
Great. Thanks.
Thanks.
Thank you. Our next question comes from the line of Scott Berg from Needham and company. Please go ahead with your question.
Hi, This is Ron <unk> on for Scott Berg, Thanks for taking the question.
Your <unk> revenue guidance is a touch light from the implied guide last quarter there was a difference.
Just on less new customers signing of <unk> or existing customers I guess using.
Is used to.
Yes.
As previously expected.
So we feel good about the usage and in particular on a discovery into October into the beginning of Q4.
We in terms of the guidance.
We have provided guidance based on what we believe the number will land based on all the information we have as of today and we feel good about that number.
We would like to beat the guidance.
But the number that we provided is the number based on all the facts. We have today that we believe we're going to land based on where we are now.
Got it and then with the additional primary law, what does that do for the <unk> platform competitively.
So what how do the economics work for <unk>.
Yes, so I'll start and then I'll, let Mike will walk you through the financial aspects of it but.
The way.
I would think about it is.
We've built.
An amazing platform that today helps lawyers understand all of the facts and the evidence in their case.
And so whether it's in our Ediscovery platform today or using case builder or we've been demoing Cecilia and basically interrogating Cecilia on all your facts and evidence makes.
It makes the workload of understanding your facts.
Far more efficient than it has historically been.
What the primary law does is allow us to go from what are my facts.
<unk>.
What law is relevant to those facts, how did the facts and law intersect and again I think that's a really big step forward on our overall goal strategically to be an end to end platform a place where lawyers can come in and work with their facts and evidence come in and understand the relevant laws and.
And use all of that information to determine what the best path forward is with their clients.
And so I think thats, the great opportunity I imagine so in a world where Cecilia becomes an expert on a 100% of your documents and your facts imagine if that witness also new 100% of the relevant law, how powerful that can be and so I think.
For what is a relatively small investment we have the opportunity to create an incredibly powerful offering for our customers.
Michael you want to talk a little bit about the finance in terms of the financial impact of this.
We spend.
Its a $14 million investment that gives us.
Access to all of primary law as we've described in the release that went out yesterday for five years as well as regular updates of that also when I go back from almost six years ago. When I joined the business. This has been a vision of the business from from I believe the inception, and especially firm since when I joined.
And as Scott mentioned the concept that we have the evidence and we have our technology to help review that evidence and then we also have the wall at the same time that we're going to build into the product. It's very very powerful and we also have an option to renew for another five years.
And then we have additional options to renew beyond that so it's a really exciting opportunity for.
We're not a large investment from a cash perspective to build it into our product and give our customers really the full spectrum from the discovery piece to what is the law.
Got it that's helpful. I guess with that option does it another $14 million investment after five years or is there just curious we haven't disclosed what the option prices.
But.
We just haven't disclosed that.
Got it.
Color.
Thank you. Our next question comes from the line of Marc Shapiro from Loop capital markets. Please go ahead with your question.
Hi, Thank you for taking my question, Mike I was wondering if you could just provide some additional details on your activity around your Rajiv who for your product.
For instance are you expecting any additional legal matters to kind of wind down on our platform in the next quarter or two.
Yes, I mean, so all of our.
Business as you know is usage based or most of our business is usage based so some matters.
And when a case ends or when a case may settle or judge may make a decision in one way or another that could cause.
The customer to actually have to load up a whole bunch of new data on the system or in the alternative if a case settles remove data from the system. So the review piece and we mentioned this in the script. There is a large review that ended in the prior quarter and Q2, there was a significant amount of.
It was a $1 billion plus review that review ended and had an impact on our Q3 numbers and in terms of the guidance we've provided.
You provided some color on October we feel really good about E discovery and the usage or any discovery. That's that's kind of happened over the last couple of months and into October.
Okay. Thanks, and then.
Michael with respect to your prepared remarks around needing to make some additional investments next year I Wonder if you could just elaborate a little more on that.
Yes.
Its Scott let me take that one so I think from my standpoint, two months into the role there are a couple of areas that I think are important for us as I said in my prepared remarks to strike a balance between prudent investment and not losing sight of the opportunity to grow.
Look at an amazing group of people inside the company and an amazing set of products that have been developed and are being developed and again. That's just not my opinion. That's for me spending probably three or four dozen meetings with with customers, but I think it's important that we really enhance the ability.
<unk> of our sales team to get out and sell those great products to our customers as I said earlier, the growing number of customers gives us a growing amount of opportunity.
There are a couple of places where.
For example, we really have dialed back significantly and our investments in our sales operations function.
We largely.
This invested in our customer success function and all of those are necessary to support the sales team to be successful with customers and so we're going to make some investments to improve those areas and enhance those areas. So our sales team can focus on what they do best which is cell.
The other thing I think the company has done a really good job this year of focusing on performance management with regards to the field sales, but I think it has left us a little under capacity in the field right now and so we're going to make some investments to make sure. We've got the right capacity in the field. So those investments are about further enabling the sales.
Team about supplementing the sales team to give us the team on the field.
That has the opportunity to go out and consistently win because ultimately as we move along the path towards profitability.
<unk> a path that is a combination of prudent investment and top line growth is really the only sustainable way to get there.
Great. Thank you that's helpful.
Thank you. Our next question comes from the line of DJ Hynes from Canaccord. Please go ahead with your question.
Hey, good evening, guys, Scott, maybe I can stay on that thread.
I hear your comments in the prepared remarks that the pendulum has swung too far towards cost optimization.
Is that a hint in any way that you guys are backing away from the Q3 'twenty four EBITDA breakeven target.
Yeah.
The end of the job I'm not backing away from anything nor am I, leaving our head all I'm, saying is I think there are areas that as I move from kind of a 30000 seat at the board level down to 10 feet.
The CEO level I think some rebalancing needs to occur I'll give you. Another example, our our team has worked incredibly hard as we move through this year to deliver on the products I mentioned the pace of productivity out of our engineering team is better than it's ever been.
The products that we're developing the skills that we're developing versus Celia are remarkable and I'm not convinced that the rewards have kept up with that for the team and so I think there is an investment in our people I said it in our in my prepared remarks.
The most important asset we have is our people.
And so I think there is an investment that needs to be made there. So I'm in no way today, suggesting that it's a significant investment and in terms of dollars, but it is significant in terms of what I believe it will result in and that is an even more motivated employee population and even more motivated and enabled sales team.
And I think that will help us get back to the growth company that we were.
And help enable.
I said, a more sustainable profitability as we move forward as a company.
Understood. Thank you.
Michael a follow up for you so.
Increased revenue sequentially now for three quarters in a row. It sounds like you are pretty constructive on the trends that youre seeing through October.
There anything youre seeing the business today that would lead you to think.
That that trend of sequential growth doesn't persist into Q4.
Look Vijay it's a really good question I mean, we feel good about the recent trends in the business over the last few months.
And particular with respect to E discovery and additional.
Data on the platform and into October.
So we feel good about all those trends we are usage based.
So cases will end and cases will get added back to the platform. So I'm cautiously optimistic about the trends in the business and I'm really pleased in terms of where they've been growing the last few months.
Okay.
One last quick clarification for me.
I believe I heard you say that that large client review ended in Q2 is that correct. So there was no bleed of revenue from that into Q3.
I don't actually know exactly off hand, if it there may have been a little bit of a tail into Q3.
Im not sure offhand, but the $1 billion plus was all in Q2 and there could have been a little bit of a tail, but if it was it wasn't material.
Okay. Thank you guys I appreciate the color.
As a reminder, if you'd like to ask a question. Please press the star followed by the one on your telephone keypad.
Our next question comes from the line of Koji Ikeda from Bank of America Securities. Please go ahead with your question.
Hey, Scott Hey, Michael Thanks for taking the questions.
Michael I just wanted to circle back into some of your prepared remarks about 2024, realizing you're not guiding on the revenue side, but you did make a comment on operating expenses I think I heard you right, where you said you're trying to hold operating expenses flat for next year does that.
Mean like on a for Q guidance run rate basis, or and I'm, just trying to understand exactly what you meant by that holding expenses flat.
I think what I said was no significant increase.
From where we are now is what I said and we're going to have more to come back to you with more color and detail in Q1, when we report Q4.
Okay. Okay got it and then just thinking about that and some of Scott's comments on.
Potential revenue growth drivers from here.
I guess you guys are doing a good job of trying to control what you can which is investing in the growth levers that you are and when we're looking at the model is it safe to say or safe to assume that the primary function here to drive growth.
Given the given the the revenue recognition usage based model of your of your revenue its customers right is trying to land as many customers as you can and customer growth is going to be the best indication of the future growth of this business.
Yes look at Scott and Michael will know the numbers better than I do but clearly our ability to continue to grow customers is a net positive from a revenue standpoint, but as I said to the earlier question.
Don't think it can be only that right I think we have to continue to.
Drive new customers, but then we also need to continue to build the relationships with existing customers to sell them more.
If there are any discovery customer that's fantastic, but if they have a review coming up in front of them, we need to be selling them on a review team. We have an outstanding review team and we need to make sure our customers are existing customers know about that review team.
Again in Ediscovery flag planted in the ground is fantastic, but have we shown them case builder and all of the skills that we have in case builds the ability today on a subscription basis to have case builder and use the celia skills to develop a timeline to do witness management are they aware of that offering with our corporate <unk>.
Lyons, we made an acquisition a couple of years ago of a hold product and having lived in the corporate world within the last couple of years and they have been in a company where on occasion, you got those hold notices showing the gcs are those companies that opportunity or existing customers that operate.
<unk> I think is a great way for us to establish a foothold from which we can grow and so my mantra with the sales team has been it's not do.
Do we do transaction or subscription is not do we sell ediscovery or review it.
Could do it all and we should use the portfolio of products that we have and that we're developing to attract new customers without question, but we should certainly take advantage of the <unk> 549 customers that we have to sell them more as.
As I look at this company I don't in any way.
She is having an issue of a lack of opportunity to gain new customers to sell more into existing customers.
I think the field is open I think the products. We have are there I think we have a terrific sales team and we're going to make investments to enable them more and so it's both it's yes, you should expect us to continue to grow customers, but you should also expect expect us as we move forward to talk about what we're doing to sell our existing customers more.
Got it thanks, Scott Thanks, Michael for taking my questions really appreciate it.
Thank you. Our final question comes from the line of branded sales from Jefferies. Please go ahead with your question.
Hi, This is love soda on for Brent Thill. Thank you Scott and thank you Michael for taking my questions.
Over the past few quarters, you highlighted maybe continued optimization in.
Some of your larger customers.
As the renegotiating some of their spend is it fair to assume that the comments you made in terms of E discovery.
Usage, improving does that apply to those larger customers as well.
Yes, the improvement we're seeing again as this is my theme for the call I guess is across all of our customers. So we are seeing improvements with the existing customers and again some of what you are talking about with the existing customers, where we're negotiating that's the exact opportunity im talking about where we can go to those.
Customers that say, hey, it's more than a discovery.
Talk to you about the opportunity to buy case builder to buy reviews.
It is when it's available in the fourth quarter to bias the celiac and so it is absolutely. The case that we are seeing some growth in our existing customers, particularly as we work through the wave of some of the larger cases that come off earlier in the year.
But I definitely see an opportunity in those customer conversations to really sell the breadth of the company and the breadth of the products.
And allow us to see the usage go up related to that.
Got it and just a quick follow up on <unk>.
Thank you for the net new.
As commentary.
But wanted to dig in I guess on an absolute basis. It was only 18 customers added.
Let's say the six quarter average has been around 50%. So I guess it is somewhat of a step down.
There anything different in terms of churn or.
Any additional color you can add there. Thank you.
Yes, Im not consider I don't think I would say 18, theres a step down.
Smaller step up but it to step up.
And it's again I don't have the numbers right in front of me, but.
Really confident in saying that it has been a step up each quarter for the last eight to 12 quarters.
And Thats the trend you want would I have liked 18 to bend 81 short.
Are we focused on continuing to drive more customers, absolutely, but I don't want to apologize for another sequential improvement in our customer count because again, that's 18 more customers that can buy the breadth of the products we have to offer.
Got it thank you.
There are no further questions at this time, Scott Hill, CEO I'll turn the call back over to you.
Thank you <unk>.
This has been a challenging year for our company.
Want to thank our employees for their resilience and maintaining a remarkable focus on continuing to innovate and serve our customers I also want to reiterate my commitment to working with all of you to make <unk> a great place to work and importantly, I want to thank our customers for their continued confidence and business we're committed to continue.
To help you be more efficient by delivering innovative technology solutions.
Thank you for joining us today and thank you for your interest in disco.
Thank you. This concludes today's conference call. We thank you for participating and you may now disconnect.
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[music].
Yes.
Okay.
Thank you.
Okay.
Yes.
Yes.
Thank you.
Okay.
[music].
Okay.
Yeah.
Okay.
Yes.
Yes.
[music].
Yes.
Okay.
Yes.