Strategic Performance Drivers

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• Performance was driven by a strategic focus on large, complex matters which generate higher lifetime value, longer platform retention, and increased AI usage.

• The company is shifting from a point-solution provider to a comprehensive litigation partner through the launch of the Unified Litigation Solution, integrating evidence with case law.

• Management attributes growth in large customer segments to an integrated go-to-market approach that enables law firms to market DISCO's AI capabilities to their corporate clients.

• The 'DISCO platform' commercial model reached its 2026 year-end run rate goals by June 2026, driven by simplified pricing and the inclusion of Cecilia AI on every matter.

• Revenue from generative and agentic AI capabilities more than tripled year-over-year, signaling a shift from experimental usage to integral operational adoption by litigators.

• Operational efficiency improved as the engineering organization transitioned to an AI-first development cycle, accelerating the release of Auto Review and Advanced Research.

Outlook and Strategic Assumptions

• Management expects to achieve positive adjusted EBITDA in Q4 2026, supported by continued execution in large-matter acquisition and AI upsells.

• The Unified Litigation Solution is currently in a 'learn first, scale fast' pilot phase with no revenue contribution expected until after fiscal year 2026.

• Guidance assumes that the transition to the new DISCO platform pricing may cause short-term revenue headwinds from lower ingest fees, though this is expected to be offset by higher ongoing fees.

• The rollout of Advanced Research to all customers is scheduled for the coming weeks, following positive feedback from initial testing phases.

• Future product development will focus on 'persistent context,' allowing the AI to maintain a compounding understanding of a matter throughout its multi-year lifecycle.

Strategic Risks and Structural Changes

• Management highlighted a competitive advantage in data access, noting that unlike some competitors limited by API partnerships, DISCO owns or has full licenses to the necessary legal corpus.

• The company filed three provisional patents related to the Unified Litigation Solution, emphasizing the proprietary nature of their litigation-specific AI workflows.

• A potential risk exists in the varying degrees of 'AI readiness' among customers, which management is addressing by simplifying the inputs required for AI-driven reviews.