Editor’s Note: This is the fifteenth quarterly eDiscovery Business Confidence Survey from ComplexDiscovery that has included three optional questions regarding business operational metrics. Since the introduction of specific operational questions around Days Sales Outstanding (DSO), Monthly Recurring Revenue (MRR), and customer revenue distribution, more than 1,400 legal, information technology, and business professionals have responded with their thoughts. 65 respondents shared their opinions on at least one of these three questions as part of the most recent survey and the aggregate results of the answers to all fifteen quarterly surveys are shared in the following observations and charts.
Industry Report
The Kinetics of Three eDiscovery Business Metrics in the Summer of 2022
ComplexDiscovery
The eDiscovery Business Confidence Survey is a non-scientific quarterly survey designed to provide insight into the business confidence level of individuals working in the eDiscovery ecosystem. The survey consists of nine core multiple-choice questions focused on factors related to the creation, delivery, and consumption of eDiscovery products and services. Additionally, the survey includes the following three optional questions focused on the business operational metrics of days sales outstanding (DSO), monthly recurring revenue (MRR), and revenue distribution across customer bases.
- How would you characterize the trajectory of your organization’s Days Sales Outstanding (DSO) during the last quarter? DSO represents the average number of days it takes credit sales to be converted into cash, or when a company’s account receivables can be collected.
- How would you characterize the trajectory of your organization’s Monthly Recurring Revenue (MRR) during the last quarter? MRR is income that a company can reliably anticipate every 30 days. Revenue from one-time purchases billed at the time of purchase is not included in MRR.
- Which of the following statements best describes the distribution of your organization’s revenue across your customer base during the last quarter? Distribution is the reduction of revenue concentration across the customer base. The customer base is the group of customers who repeatedly purchase the products or services of a business.
Survey participants were presented with four potential answers to the optional business operational metric questions and asked to select one. The choices were as follows:
- Increasing
- Unfluctuating
- Decreasing
- Do Not Know
The aggregate results of the answers to the business operational metric questions are shared in the following observations and charted overviews. They provide an interesting vector view of the trajectories of these important measurements and the results may also be helpful to business and legal professionals as they consider the current conditions and trends in the business of data and legal discovery.
Key Observations in the Summer of 2022
General
- In the summer of 2022, 65 eDiscovery Business Confidence Survey participants chose to answer at least one of the optional business operational metric survey questions in the quarterly survey. This represents a solid number of participants given the intentional limiting of survey email requests to balance against the ongoing proliferation of new industry surveys and higher volumes of industry-centric email communications.
- In the summer of 2022, 89.0% of eDiscovery Business Confidence Survey participants chose to answer at least one of the optional business operational metric questions in the quarterly survey. This is an increase in percentage from 88.5% of participants answering at least one of the optional business operational metric questions in the spring of 2022 survey.
- In the summer 2022 survey, between 32.8% and 26.6% of the respondents (depending on the question) did not know whether DSO, MRR, or distribution of customer revenue-based measures were increasing, unfluctuating, or decreasing.
Days Sales Outstanding (Chart 1)
- Exactly 26.6% of survey respondents reported DSO as increasing in the summer of 2022. This is an increase from 21.7% reporting DSO as increasing in the summer of 2022. This is the fourth-highest percentage of respondents reporting DSO as increasing since the introduction of operational metric questions into the business confidence survey.
- There was a decrease (5.7%) in the summer 2022 percentage (31.3%) of respondents reporting DSO as unfluctuating when compared to spring 2022 reporting (37.0%). This percentage is the fifth-highest percentage of respondents reporting DSO as unfluctuating since the introduction of operational metric questions into the business confidence survey.
- 9.4% of survey respondents reported DSO as decreasing in the summer of 2022. This is an increase from reporting in the spring of 2022 when 8.7% of respondents noted decreasing DSO. It is also the highest percentage of respondents reporting DSO as decreasing since the fall of 2021 when 18.2% of respondents reported DSO as decreasing.
Monthly Recurring Revenue (Chart 2)
- There was a slight decrease (0.7%) in the summer 2022 percentage (40.6%) of respondents reporting increasing MRR when compared to spring 2022 reporting (41.3%). It is also the fourth-highest percentage of respondents reporting MRR as increasing since the introduction of operational metric questions into the business confidence survey occurred.
- There was a decrease (0.5%) in the summer 2022 percentage (23.4%) of respondents reporting MRR as unfluctuating when compared to spring 2022 reporting (23.9%).
- Only 9.4% of survey respondents reported Monthly Recurring Revenue (MRR) as decreasing in the summer of 2022. This is an increase from the 8.7% reporting MRR as decreasing in the spring of 2022.
Distribution of Revenue Across Customer Base (Chart 3)
- The percentage of survey respondents reporting an increasing distribution of revenue across their customer base significantly decreased (12.9%) between the spring of 2022 (39.1%) and the summer of 2022 (26.2%). This is the lowest percentage of respondents reporting the increasing distribution of revenue across their customer base since the fall of 2020 when 23.0% reported the distribution of customer base revenue as increasing.
- There was a solid increase in the summer 2022 percentage (35.4%) of respondents reporting the distribution of revenue across their customer base as unfluctuating when compared to spring 2022 reporting (28.3%).
- There was a decrease (2.5%) in the percentage of survey respondents reporting a decrease in revenue distribution across their customer base, with 6.2% reporting a decreasing distribution of revenue in the summer of 2022.
Survey Charts
(Charts Can Be Expanded for Detailed Viewing)
Chart 1: An Aggregate Overview of Days Sales Outstanding (DSO) Trajectory
1 – eDiscovery Business Metric Trajectory – Days Sales Outstanding – Summer 2022
Chart 2: An Aggregate Overview of Monthly Recurring Revenue (MRR) Trajectory
2 – eDiscovery Business Metric Trajectory – Monthly Recurring Revenue – Summer 2022 – Update
Chart 3: An Aggregate Overview of Distribution of Revenue Across Customer Base
3 – eDiscovery Business Metric Trajectory – Distribution of Revenue Across Customer Base – Summer 2022 – Update
Past Survey Results
Additional Reading
Source: ComplexDiscovery
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