CS Disco, Inc.

Previous wording

We generate substantially all of our revenue from our customers’ actual usage of ourproduct offerings. Customers generally do not commit to purchase a specific amount of usage on ourproduct offerings and their usage can fluctuate based on the number and nature of legal matters they have at any particular time. As a result, our revenue and other financial results can fluctuate from period to period given the inherent unpredictability of the timing, duration and scope of legal casework. We also offer our customers the option to enter into subscriptions based on committed minimum usage on an annual or multi-year basis, which represented 11% of our revenue in each of the years ended December 31, 2024 and 2023. Inaddition, we generate revenue from a range of professional services aimed at accelerating the time-to-value for our customers.

Current wording

We generate substantially all of our revenue from our customers’ actual usage of ourproduct offerings. Customers generally do not commit to purchase a specific amount of usage on ourproduct offerings and their usage can fluctuate based on the number and nature of legal matters they have at any particular time. As a result, our revenue and other financial results can fluctuate from period to period given the inherent unpredictability of the timing, duration and scope of legal casework. We also offer our customers the option to enter into subscriptions based on committed minimum usage on an annual or multi-year basis, which represented 9% and 11% of our revenue in the years ended December 31, 2025 and 2024, respectively. Inaddition, we generate revenue from a range of professional services aimed at accelerating the time-to-value for our customers.

Previous wording

Our customers include a diverse set of enterprises across a broad set of industries, as well as law firms, legal services providers of all sizes and government organizations. While we serve customers across many different industries, the way in which lawyers and legal professionals use ourproduct offerings is similar regardless of the specific industry in which each customer operates. This commonality has created efficiencies in our sales and marketing and research and development activities because we do not need to tailor our sales and marketing activities to a wide range of different customer use cases. We define a customer as an entity that we have a contract with and from whom we have recognized revenue during the preceding month. Legal departments that use our product offerings and use many law firms across their legal matters, as well as law firms and service providers that use our product offerings for multiple clients, are generally treated as one customer. However, in some cases where they have separate billing terms, we may count these as multiple customers. As of December 31, 2024, we had 1,478 customers, increasing from 1,463 customers as of December 31, 2023. As of December 31, 2024 we had 315 large customers, defined as customers with revenue in excess of $100,000 over the previous 12-month period, increasing from 289 large customers as of December 31, 2023. Large customers accounted for approximately 76%, and 75% of our revenue for the years ended December 31, 2024 and 2023, respectively.

Current wording

Our customers include a diverse set of enterprises across a broad set of industries, as well as law firms, legal services providers of all sizes and government organizations. While we serve customers across many different industries, the way in which lawyers and legal professionals use ourproduct offerings is similar regardless of the specific industry in which each customer operates. This commonality has created efficiencies in our sales and marketing and research and development activities because we do not need to tailor our sales and marketing activities to a wide range of different customer use cases. We define a customer as an entity that we have a contract with and from whom we have recognized revenue during the preceding month. Legal departments that use our product offerings and use many law firms across their legal matters, as well as law firms and service providers that use our product offerings for multiple clients, are generally treated as one customer. However, in cases where they have separate billing terms, we count these as multiple customers. As of December 31, 2025, we had 1,549 customers, increasing from 1,478 customers as of December 31, 2024. As of December 31, 2025 we had 330 large customers, defined as customers with revenue in excess of $100,000 over the previous 12-month period, increasing from 315 large customers as of December 31, 2024. Large customers accounted for approximately 76% of our revenue for each of the years ended December 31, 2025 and 2024.

Previous wording

As of December 31, 2024, we had $52.8 million of cash and cash equivalents and $76.4 million of short-term investments. We generated revenue of $144.8 million and $138.1 million in the years ended December 31, 2024 and 2023, respectively, representing a period-over-period growth of 5%. Our net loss was $55.8 million and $42.2 million for the years ended December 31, 2024 and 2023, respectively. We generated Adjusted EBITDA of $(18.7) million and $(25.9) million for the years ended December 31, 2024 and 2023, respectively. See the section titled “—Non-GAAP Financial Measure” for the definition of Adjusted EBITDA, as well as a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with GAAP.

Current wording

As of December 31, 2025, we had $19.7 million of cash and cash equivalents and $94.9 million of short-term investments. We generated revenue of $156.8 million and $144.8 million in the years ended December 31, 2025 and 2024, respectively, representing a period-over-period growth of 8%. Our net loss was $44.4 million and $55.8 million for the years ended December 31, 2025 and 2024, respectively. We generated Adjusted EBITDA of $(10.2) million and $(18.7) million for the years ended December 31, 2025 and 2024, respectively. See the section titled “Non-GAAP Financial Measure” for the definition of Adjusted EBITDA, as well as a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with GAAP.

Previous wording

Unfavorable conditions in the economy, both in the United States and abroad, may negatively affect the growth of our business and our results of operations. For example, negative conditions in the general economy both in the United States and abroad, including conditions resulting from fluctuations in inflation and interest rates, the potential imposition of tariffs in the United States and abroad, and the Russia-Ukraine war and conflict in the Middle East, have led to economic uncertainty globally. Historically, during periods of economic uncertainty and downturns, businesses may slow spending on information technology, which may impact our business and our customers’ businesses.

Current wording

Unfavorable conditions in the economy, both in the United States and abroad, may negatively affect the growth of our business and our results of operations. For example, negative conditions in the general economy both in the United States and abroad, including conditions resulting from fluctuations in inflation and interest rates, the imposition of tariffs in the United States and abroad, and the Russia-Ukraine war and conflict in the Middle East, have led to economic uncertainty globally. Historically, during periods of economic uncertainty and downturns, businesses may slow spending on information technology, which may impact our business and our customers’ businesses.

Previous wording

The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods. If, however, economic uncertainty increases or the global economy worsens, our business, financial condition and results of operations may be harmed. For further discussion of the potential impacts of macroeconomic events on our business, financial condition, and operating results, see the section titled “Risk Factors”.

Current wording

The effect of macroeconomic and legal industry conditions may not be fully reflected in our results of operations until future periods. If, however, economic uncertainty increases, the global economy worsens or unfavorable conditions in the legal industry persist or worsen, our business, financial condition and results of operations may be harmed. For further discussion of the potential impacts of macroeconomic events and legal industry conditions on our business, financial condition, and operating results, see the section titled “Risk Factors”.

Previous wording

Our success depends in part on our ability to maintain and advance our innovation and brand. We have a strong history of innovation, demonstrated by our DISCO Hold, DISCO Request, DISCO Ediscovery, DISCO Review and DISCO Case Builder offerings, and have built a research and development process that reliably produces features for these product offerings. We intend to continue combining our deep legal domain expertise and commitment to world-class software engineering to continue delivering features and introducing new product offerings to address more areas of legal work, such as our ediscovery chatbot, Cecilia, which was released in the fourth quarter of 2023 in the United States and in the third quarter of 2024 in Europe. Our future success is dependent on our ability to successfully develop, market and sell our product offerings to both new and existing customers.

Current wording

Our success depends in part on our ability to maintain and advance our innovation and brand. We have a strong history of innovation, demonstrated by our DISCO Hold, DISCO Request, DISCO Ediscovery, DISCO Review and DISCO Case Builder offerings, and have built a research and development process that reliably produces features for these product offerings. We intend to continue combining our deep legal domain expertise and commitment to world-class software engineering to continue delivering features and introducing new product offerings to address more areas of legal work, such as our ediscovery chatbot, Cecilia. Our future success is dependent on our ability to successfully develop, market and sell our product offerings to both new and existing customers.

Previous wording

An indication of the propensity of our customers to continue to work with and expand their relationship with us over time is our dollar-based net retention rate, which compares our revenue from the same set of customers in one period to the prior year period. As of December 31, 2024 and 2023, our dollar-based net retention rate was 96% and 92%, respectively. We calculate our dollar-based net retention rate as of the end of a period by using (a) the revenue from all customers during the twelve months ending one year prior to such period as the denominator and (b) the revenue from all customers during the twelve months ending as of the end of such period minus the revenue from all customers who are new customers during those twelve months as the numerator. Our dollar-based net retention rate could decrease over time as our customer base matures and the amount of revenue used in the denominator to calculate net retention grows.

Current wording

An indication of the propensity of our customers to continue to work with and expand their relationship with us over time is our dollar-based net retention rate, which compares our revenue from the same set of customers in one period to the prior year period. As of December 31, 2025 and 2024, our dollar-based net retention rate was 98% and 96%, respectively. We calculate our dollar-based net retention rate as of the end of a period by using (a) the revenue from all customers during the twelve months ending one year prior to such period as the denominator and (b) the revenue from all customers during the twelve months ending as of the end of such period minus the revenue from all customers who are new customers during those twelve months as the numerator. Our dollar-based net retention rate could decrease over time as our customer base matures and the amount of revenue used in the denominator to calculate net retention grows.

Previous wording

We believe we have a significant opportunity to continue to grow our customer base, particularly those customers with significant annual ediscovery spend, large practice teams, and practices in legal areas with significant ediscovery needs. As enterprises continue their digital transformation journeys and the demand for differentiation in the competitive market for legal services continues to grow, we expect more and more companies will struggle with existing legal solutions and ultimately will adopt an integrated, easy-to-use platform like DISCO to improve productivity and legal outcomes. We believe our market leadership and differentiated product offerings will enable us to efficiently acquire new customers across all channels. As of December 31, 2024, we had 1,478 customers, increasing from 1,463 customers as of December 31, 2023. Our ability to attract new customers will depend on a number of factors, including the effectiveness and pricing of our products, the offerings of our competitors and the effectiveness of our sales and marketing efforts. We will need to dedicate significant resources to further develop the market for our product offerings and expand, retain and motivate our sales and marketing personnel.

Current wording

We believe we have a significant opportunity to continue to grow our customer base, particularly those customers with significant annual ediscovery spend, large practice teams, and practices in legal areas with significant ediscovery needs. As enterprises continue their digital transformation journeys and the demand for differentiation in the competitive market for legal services continues to grow, we expect more and more companies will struggle with existing legal solutions and ultimately will adopt an integrated, easy-to-use platform like DISCO to improve productivity and legal outcomes. We believe our market leadership and differentiated product offerings will enable us to efficiently acquire new customers across all channels. As of December 31, 2025, we had 1,549 customers, increasing from 1,478 customers as of December 31, 2024. Our ability to attract new customers will depend on a number of factors, including the effectiveness and pricing of our products, the offerings of our competitors and the effectiveness of our sales and marketing efforts. We will need to dedicate significant resources to further develop the market for our product offerings and expand, retain and motivate our sales and marketing personnel.

Previous wording

We believe that our technology, and especially our approach to automation and AI, is applicable to a wider range of legal processes outside of our current core offerings. We intend to leverage our technology to introduce further offerings that increase lawyer productivity across more and more areas of legal work over time. We may expend significant resources in the development of additional offerings. For example, our ediscovery chatbot, Cecilia, which was released in the fourth quarter of 2023 in the United States and in the third quarter of 2024 in Europe. Our ability to successfully develop, market and sell new offerings will depend on a number of factors, including the availability of capital to invest in innovation, our customers’ satisfaction with such offerings, competition, pricing and overall changes in our customers’ spending levels.

Current wording

We believe that our technology, and especially our approach to automation and AI, is applicable to a wider range of legal processes outside of our current core offerings. We intend to leverage our technology to introduce further offerings that increase lawyer productivity across more and more areas of legal work over time. We may expend significant resources in the development of additional offerings, such as our ediscovery chatbot, Cecilia. Our ability to successfully develop, market and sell new offerings will depend on a number of factors, including the availability of capital to invest in innovation, our customers’ satisfaction with such offerings, competition, pricing and overall changes in our customers’ spending levels.

Previous wording

In each of the years ended December 31, 2024 and 2023, usage-based revenue represented 89% of total revenue and subscription revenue fees represented 11% of total revenue.

Current wording

In the years ended December 31, 2025 and 2024, usage-based revenue represented 91% and 89% of total revenue, respectively, and subscription revenue fees represented 9% and 11% of total revenue, respectively.

Previous wording

Research and development expenses consist primarily of personnel-related costs for our development team, including salaries, benefits, bonuses, stock-based compensation expenses and allocated overhead costs. Research and development expenses also include contractor or professional services fees and third-party cloud infrastructure expenses incurred in developing our product offerings. In the near term, we expect that our research and development expenses will increase in absolute dollars but may fluctuate as a percentage of our revenue over time. In addition, research and development expenses that qualify as capitalized software development costs are capitalized, the amount of which may fluctuate significantly from period to period.

Current wording

Research and development expenses consist primarily of personnel-related costs for our development team, including salaries, benefits, bonuses, stock-based compensation expenses and allocated overhead costs. Research and development expenses also include contractor or professional services fees and third-party cloud infrastructure expenses incurred in developing our product offerings. We expect that our research and development expenses will increase in absolute dollars but may fluctuate as a percentage of our revenue over time. In addition, research and development expenses that qualify as capitalized software development costs are capitalized, the amount of which may fluctuate significantly from period to period.

Previous wording

Sales and marketing expenses consist primarily of personnel-related costs directly associated with our sales and marketing staff, including salaries, benefits, bonuses, commissions, stock-based compensation and allocated overhead costs. Sales and marketing expenses also include advertising costs and other expenses associated with our marketing and business development programs. In addition, sales and marketing expenses consist of travel-related expenses, software services dedicated for use by our sales and marketing organizations and outside services contracted for sales and marketing purposes. We expect that our sales and marketing expenses will increase in absolute dollars and continue to be our largest operating expense for the foreseeable future as we grow our business. Our sales and marketing expenses may fluctuate as a percentage of our revenue over time.

Current wording

Sales and marketing expenses consist primarily of personnel-related costs directly associated with our sales and marketing staff, including salaries, benefits, bonuses, commissions, stock-based compensation and allocated overhead costs. Sales and marketing expenses also include advertising costs and other expenses associated with our marketing and business development programs. In addition, sales and marketing expenses consist of travel-related expenses, software services dedicated for use by our sales and marketing organizations and outside services contracted for sales and marketing purposes. We expect that our sales and marketing expenses will increase in absolute dollars and will continue to be our largest operating expense for the foreseeable future as we grow our business. Our sales and marketing expenses may fluctuate as a percentage of our revenue over time.

Previous wording

General and administrative expenses consist of personnel-related costs associated with our finance, legal, human resources and administrative personnel, including salaries, benefits, bonuses, stock-based compensation and allocated overhead costs. General and administrative expenses also include external legal, accounting and other professional services fees, software services dedicated for use by our general and administrative functions, insurance and other corporate expenses. In the near term, we expect that our general and administrative expenses will remain relatively consistent in absolute dollars but may fluctuate as a percentage of total revenue from period to period.

Current wording

General and administrative expenses consist of personnel-related costs associated with our finance, legal, human resources and administrative personnel, including salaries, benefits, bonuses, stock-based compensation and allocated overhead costs. General and administrative expenses also include external legal, accounting and other professional services fees, software services dedicated for use by our general and administrative functions, insurance and other corporate expenses. Excluding the impact of the stockholder litigation, we expect that our general and administrative expenses will increase in absolute dollars but may fluctuate as a percentage of total revenue from period to period.

Previous wording

Impairment of intangible asset and capitalized development consists of a one-time non-cash full impairment charge of our primary law intangible asset and the related capitalized software development costs as it is no longer probable of being completed.

Current wording

Impairment of intangible asset and capitalized development consists of a one-time non-cash full impairment charge of our primary law intangible asset and the related capitalized software development costs in 2024 as it was no longer probable of being completed.

Previous wording

Other income (expense), net consists primarily of interest income, income related to non-operating activities, interest expense, gains and losses from foreign currency transactions and remeasurements of foreign currency-denominated monetary assets and liabilities to the U.S. dollar.

Current wording

Interest and other income, net consists primarily of interest income, income related to non-operating activities, interest expense, gains and losses from foreign currency transactions and remeasurements of foreign currency-denominated monetary assets and liabilities to the U.S. dollar.

Previous wording

Total revenue increased by $6.8 million, or 5%, for the year ended December 31, 2024 compared to the same period in 2023. Revenue related to new customers added since December 31, 2023 contributed $11.3 million, which was partially offset by a $4.6 million decrease in revenue from customers that existed as of December 31, 2023. The change in revenue from existing customers was driven by decreases in usage of our product offerings by several of our existing customers.

Current wording

Total revenue increased by $12.0 million, or 8%, for the year ended December 31, 2025 compared to the same period in 2024. Revenue related to new customers added since December 31, 2024 contributed $13.7 million, which was partially offset by a $1.7 million decrease in revenue from customers that existed as of December 31, 2024. The change in revenue from existing customers was driven by a $3.0 million decrease in usage of our product offerings, partially offset by contingent revenue recognized of $1.3 million as one of our customers under a contingent arrangement experienced a favorable resolution to their legal matter.

Previous wording

Revenue generated from our software product offerings increased by $7.9 million, or 7%, for the year ended December 31, 2024 compared to the same period in 2023 due to increases in usage of our software product offerings. Revenue generated from our services product offerings decreased $1.1 million, or 4%, for the year ended December 31, 2024 compared to the same period in 2023. This change was driven by decreases in usage of our services product offerings by several of our existing customers, particularly within managed review.

Current wording

Revenue generated from our software product offerings increased by $13.9 million, or 12%, for the year ended December 31, 2025 compared to the same period in 2024 due to increases in usage of our software product offerings. Revenue generated from our services product offerings decreased $1.9 million, or 8%, for the year ended December 31, 2025 compared to the same period in 2024. This change was driven by decreases in usage of our services product offerings within DISCO Review.

Previous wording

Total cost of revenue increased by $2.5 million, or 7%, for the year ended December 31, 2024 compared to the same period in 2023. This change was primarily driven by a $1.5 million increase in costs for cloud hosting as a result of increased usage of our software product offerings and a $1.7 million increase in salary and benefits costs. This increase was partially offset by a $0.9 million decrease in outsourced staffing vendor fees.

Current wording

Total cost of revenue increased by $2.0 million, or 5%, for the year ended December 31, 2025 compared to the same period in 2024. This change was primarily driven by a $2.2 million increase in costs for cloud hosting as a result of increased usage of our software product offerings and a $1.5 million increase in salary and benefits costs. These changes were partially offset by a $2.0 million decrease in outsourced staffing vendor fees.

Previous wording

Research and development expenses decreased by $0.1 million, or less than 1%, for the year ended December 31, 2024 compared to the same period in 2023. The change was primarily driven by a decrease of $0.4 million in personnel costs, including stock-based compensation, as a result of the expansion of our operations to lower-cost international locations, and a $1.5 million decrease in nonrecurring restructuring charges related to our reductions in force in January and May 2023. These decreases were partially offset by a reduction in capitalized software development of $1.5 million and an increase in software costs of $0.5 million.

Current wording

Research and development expenses increased by $5.1 million, or 10%, for the year ended December 31, 2025 compared to the same period in 2024. The change was primarily driven by an increase of $5.3 million in personnel costs, including stock-based compensation, partially offset by a $0.3 million increase in capitalized software development.

Previous wording

Sales and marketing expenses decreased by $6.8 million, or 10%, for the year ended December 31, 2024 compared to the same period in 2023. The change was primarily related to a decrease of $4.2 million in personnel costs, including stock-based compensation and variable compensation, for our sales personnel. In addition, marketing expenses decreased $1.0 million and software related costs decreased $0.5 million. Further, $0.6 million of the decrease was also due to nonrecurring restructuring charges related to our reductions in force in January and May 2023.

Current wording

Sales and marketing expenses decreased by $1.3 million, or 2%, for the year ended December 31, 2025 compared to the same period in 2024. The change was primarily related to a decrease of $0.9 million in marketing expenses and a $0.3 million decrease in professional services costs. In addition, personnel costs decreased $0.2 million, including stock-based compensation and variable compensation, for our sales personnel.

Previous wording

General and administrative expenses increased by $7.8 million, or 24%, for the year ended December 31, 2024 compared to the same period in 2023. This change was primarily attributable to a $7.9 million increase in personnel costs, including stock-based compensation, as a result of the $7.7 million reversal of stock-based compensation related to the 10-year performance award previously granted to our former CEO (the “CEO Performance Award”) that was cancelled in 2023. Additionally, professional services increased $1.3 million, of which $0.7 million was due to legal fees related to the stockholder litigation. These increases were partially offset by a $0.6 million decrease in insurance expense and a $0.4 million decrease in nonrecurring restructuring charges related to our reductions in force in January and May 2023.

Current wording

General and administrative expenses increased by $7.9 million, or 19%, for the year ended December 31, 2025 compared to the same period in 2024. This change was primarily attributable to an increase of $7.4 million in professional services costs primarily related to legal fees and a legal loss contingency accrual for the securities litigation. In addition, personnel costs increased $2.1 million, including stock-based compensation. These increases were partially offset by a $0.8 million decrease in insurance expense and a $0.3 million decrease in acquisition revaluation expense.

Previous wording

During the fourth quarter of the year ended December 31, 2024, we identified a triggering event related to our primary law intangible asset, and the capitalized software development costs associated with the integration of our primary law intangible asset into our product offerings as it was no longer probable of being completed. As the fair value of the primary law intangible asset and its related capitalized development was determined to bezero given no future cash flows were identified, we recorded a full non-cash impairment charge on our primary law intangible asset of$14.0 million andalso recorded a$1.2 million non-cash impairment charge related to all capitalized software development costs associated with the integration. We recorded no such impairment charges in the year ended December 31, 2023.

Current wording

During the fourth quarter of the year ended December 31, 2024, we identified a triggering event related to our primary law intangible assetand the capitalized software development costs associated with the integration of our primary law intangible asset into our product offerings, as it was no longer probable of being completed. As the fair value of the primary law intangible asset and its related capitalized development was determined to bezero given no future cash flows were identified, we recorded a full non-cash impairment charge on our primary law intangible asset of$14.0 million andalso recorded a$1.2 million non-cash impairment charge related to all capitalized software development costs associated with the integration.

Previous wording

We report our financial results in accordance with generally accepted accounting principles, or GAAP. However, management believes that Adjusted EBITDA, a non-GAAP financial measure, provides investors with additional useful information in evaluating our performance. We define Adjusted EBITDA as net loss, adjusted to exclude: depreciation and amortization expense; income tax provision; interest and other, net; stock-based compensation expense; payroll tax expense on employee stock transactions; restructuring charges; acquisition revaluation expense; expenses associated with stockholder litigation; impairment of intangible asset and capitalized development; and other one-time, non-recurring items, when applicable.

Current wording

We report our financial results in accordance with generally accepted accounting principles, or GAAP. However, management believes that Adjusted EBITDA, a non-GAAP financial measure, provides investors with additional useful information in evaluating our performance. We define Adjusted EBITDA as net loss, adjusted to exclude: depreciation and amortization expense; income tax provision; interest and other, net; stock-based compensation expense; payroll tax expense on employee stock transactions; acquisition revaluation expense; expenses associated with stockholder litigation; impairment of intangible asset and capitalized development; and other one-time, non-recurring items, when applicable.

Previous wording

Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of these limitations include that: (i) it does not properly reflect capital commitments to be paid in the future; (ii) although depreciation and amortization expense is a non-cash charge, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures; (iii) it does not consider the impact of stock-based compensation expense and payroll tax expense on employee stock transactions; (iv) it does not reflect other non-operating expenses, including interest expense; (v) it does not consider the impact of any contingent consideration liability valuation adjustments; and (vi) it does not reflect tax payments that may represent a reduction in cash available to us. In addition, our use of Adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate Adjusted EBITDA in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA alongside other financial measures, including our net loss and other results stated in accordance with GAAP. We expect Adjusted EBITDA to improve over the long term as we achieve greater scale in our business and efficiencies in our operating expenses.

Current wording

Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of these limitations include that: (i) it does not properly reflect capital commitments to be paid in the future; (ii) although depreciation and amortization expense is a non-cash charge, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures; (iii) it does not consider the impact of stock-based compensation expense and payroll tax expense on employee stock transactions; (iv) it does not consider the impact of any contingent consideration liability valuation adjustment; (v) it does not reflect other non-operating expenses, including interest expense; (vi) it does not consider the impact of expenses associated with the stockholder litigation; (vii) it does not consider the impact of impairment charges; and (viii) it does not reflect tax payments that may represent a reduction in cash available to us. In addition, our use of Adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate Adjusted EBITDA in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA alongside other financial measures, including our net loss and other results stated in accordance with GAAP. We expect Adjusted EBITDA to improve over the long term as we achieve greater scale in our business and efficiencies in our operating expenses.

Previous wording

We have financed operations primarily through customer payments and net proceeds from sales of equity securities, including our IPO in July 2021. As of December 31, 2024, our principal sources of liquidity were cash and cash equivalents and short-term investments, totaling $52.8 million and $76.4 million, respectively. Cash equivalents include highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. Short-term investments consist of highly-rated U.S. Treasury securities with maturities of more than three months but less than one year at the date of purchase. We believe our existing cash and cash equivalents and short-term investments will be sufficient to fund anticipated cash requirements for the next 12 months. We believe we will meet our longer-term expected future cash requirements primarily from a combination of cash flow from operating activities and available cash and cash equivalents and short-term investments. We may also engage in equity or debt financings to secure additional funds.

Current wording

We have financed operations primarily through customer payments and net proceeds from sales of equity securities, including our IPO in July 2021. As of December 31, 2025, our principal sources of liquidity were cash and cash equivalents and short-term investments, totaling $19.7 million and $94.9 million, respectively. Cash equivalents include highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. Short-term investments consist of highly-rated U.S. Treasury securities and corporate debt securities with maturities of more than three months but less than one year at the date of purchase. We believe our existing cash and cash equivalents and short-term investments will be sufficient to fund anticipated cash requirements for the next 12 months. We believe we will meet our longer-term expected future cash requirements primarily from a combination of cash flow from operating activities and available cash and cash equivalents and short-term investments. We may also engage in equity or debt financings to secure additional funds.

Previous wording

We have contractual commitments consisting of operating and finance lease obligations of $10.2 million due over the next four years, as disclosed in Note 7, “Commitments and Contingencies,”in our consolidated financial statements of this Annual Report on Form 10-K. We also have $18.0 million of non-cancellable cloud platform purchase commitments due in less than one year to support our software. Other purchase commitments include non-cancellable software agreements to support our internal functions. Other purchase commitments are not material. Cloud platform and other purchase commitments are expensed as incurred as services are performed and are in the normal course of business.

Current wording

c. Cloud platform and service purchase commitments encompass non-cancellable agreements to support our software. These expenses are incurred as services are performed and are in the normal course of business.

Previous wording

Our future capital requirements will depend on many factors, including our revenue growth rate, usage of our product offerings, billing frequency, the timing and extent of spending to support further sales and marketing and research and development efforts, and the continuing market acceptance of our product offerings. Although fluctuations in general macroeconomic conditions, including conditions resulting from fluctuations in inflation and interest rates, the potential imposition of tariffs in the United States and abroad, and the Russia-Ukraine war and conflict in the Middle East, have not materially impacted our liquidity to date, we plan to continue to evaluate aspects of our spending, including capital expenditures, discretionary spending, and strategic investments throughout 2025. We have considered the impacts of these factors on our liquidity and capital resources to date, and we do not currently expect them to impact our ability to meet future liquidity needs.

Current wording

Our future capital requirements will depend on many factors, including our revenue growth rate, usage of our product offerings, billing frequency, the timing and extent of spending to support further sales and marketing and research and development efforts, and the continuing market acceptance of our product offerings. Although fluctuations in general macroeconomic and industry conditions, including conditions resulting from fluctuations in inflation and interest rates, the imposition of tariffs in the United States and abroad, the recent U.S. government shutdown, the executive orders issued by President Trump, and the effects of global events, such as the Russia-Ukraine war and conflict in the Middle East, have not materially impacted our liquidity to date, we plan to continue to evaluate aspects of our spending, including capital expenditures, discretionary spending and strategic investments throughout 2026. We have considered the impacts of these factors on our liquidity and capital resources to date, and we do not currently expect them to impact our ability to meet future liquidity needs.

Previous wording

Net cash used in operating activities for the year ended December 31, 2024 was $8.7 million, a decrease of $16.8 million from net cash used in operating activities of $25.5 million for the year ended December 31, 2023. The change in cash flow used in operations was primarily due to an increase in net loss of $13.6 million offset by an impairment charge of $15.2 million related to our primary law intangible assetand the capitalized software development costs associated with the integration of such asset into our product offerings. Additional offsets include the change in stock-based compensation which increased $6.1 million primarily related to the cancellation of the CEO Performance Award in 2023 and the change in accounts receivable which increased $8.5 million related to increased collections from customers.

Current wording

Net cash used in operating activities for the year ended December 31, 2025 was $14.9 million, an increase of $6.2 million from net cash used in operating activities of $8.7 million for the year ended December 31, 2024. The change in cash flow used in operations was primarily due to a decrease in net loss, offset by an impairment charge in 2024 and working capital charges, primarily related to accounts receivable due to timing of collection from our customers, accrued legal loss, and the insurance recoverable receivable related to the accrued legal loss.

Previous wording

Net cash used in investing activities for the year ended December 31, 2024 was $78.0 million, an increase of $58.0 million from net cash used in investing activities of $20.0 million for the year ended December 31, 2023. The change in cash used in investing activities was primarily related to purchases of short-term investments of $87.9 million. This increase in cash used was partially offset by maturities of short-term investments of $12.7 million and a reduction of purchases in property, equipment, and capitalized development costs of $2.1 million. This was further offset by cash paid in 2023 for the primary law intangible asset of $14.0 million and $1.2 million for the acquisition of legal workflow products from Congruity360, LLC (“Congruity”).

Current wording

Net cash used in investing activities for the year ended December 31, 2025 was $18.2 million, a decrease of $59.8 million from net cash used in investing activities of $78.0 million for the year ended December 31, 2024. The change in cash used in investing activities was primarily related to an increase in maturities of short-term investments of $178.3 million during the year ended December 31, 2025. This was partially offset by an increase of $118.2 million in purchases of short-term investments during the year ended December 31, 2025.

Previous wording

Net cash used in financing activities for the year ended December 31, 2024 was $20.0 million, a change of $21.9 million from net cash provided by financing activities of $1.9 million for the year ended December 31, 2023. The change in cash flows was primarily related to cash paid for the 2024 share repurchase program of $20.1 million, as well as $0.5 million in cash paid in 2024 for the acquisition of legal workflow products from Congruity. Additionally, there was a decrease in proceeds from exercises of stock options of $0.5 million due to a decrease in option exercise activity, and a decrease in net proceeds received from the issuance of common stock under the ESPP of $0.9 million.

Current wording

Net cash provided by financing activities for the year ended December 31, 2025 was nominal, a change of $20.0 million from net cash used in financing activities of $20.0 million for the year ended December 31, 2024. This change was primarily related to cash paid for the 2024 share repurchase program of $20.1 million.

Previous wording

See Recently Adopted Accounting Pronouncements in Note 2, “Summary of Significant Accounting Policies,” in our consolidated financial statements of this Annual Report on Form 10-K for more information.

Current wording

See “Accounting Pronouncements Adopted During the Current Year” in Note 2, “Summary of Significant Accounting Policies,” in our consolidated financial statements of this Annual Report on Form 10-K for more information.