New York Stock Exchange-listed eDiscovery vendor CS Disco has informed the Securities and Exchange Commission that it plans to reduce its workforce by approximately 62 employees, representing 9% of the company’s current global workforce. The plan, which was finalised on 19 January, is said to be based on cost reduction initiatives intended to reduce its cost structure and accelerate its path to profitability.
The moves follows a drop in Disco’s share price at the start of the year and the decision by investment analysts at Bank of America to downgrade their recommendation for CS Disco (which trades on the New York Stock Exchange as NYSE: LAW) from ‘neutral’ to ‘underperform.’ Bank of America’s most recent projection for the price of stock is $5.00.
While revenue is projected to be up to between $132m and $136m for the 2022 fiscal year at Disco (up from $114m in 2021), the company is currently unprofitable, and sell-side analysts have predicted that it will report a loss of 1.26 cents a share for the current fiscal year, according to financial media outlets. According to Simply Wall St, Disco’s share price dropped 78% over the last year – although it notes that Disco’s stock may have fared better in a stronger market.
Disco’s shares plummeted in August last year after it said its revenue would be in the $132-136m range – down from its previous guidance that the figure would be between $149-153m.
The news follows the resignation this month of Disco’s executive vice president and chief technology officer Keith Zoellner.
This is not the first time that Disco has made headlines for making redundancies. In March 2020 – prior to its IPO – Disco cut its workforce by an undisclosed number in preparation for an economic downturn.
Disco is not the only eDiscovery player to announce redundancies: Relativity on Wednesday 9 December said that it is cutting roles in order to prepare for what it describes as “an increasingly uncertain macroeconomic environment.”
The company, which received an undisclosed strategic growth investment from Silver Lake in March 2021, valuing it at $3.6bn, told Legal IT Insider in a statement: “On Wednesday, we announced the difficult decision to decrease our global team. This means that approximately 150 talented Relativians will be leaving the company. We’re committed to ensuring everyone is treated fairly and with respect during this transition, and will be offering financial, healthcare, and job search support to impacted Relativians. We want to express our deepest gratitude to our colleagues who will be moving on, and we wish them happiness and success wherever their paths take them next.”
caroline@legaltechnology.com