eDiscovery Business Kinetics: A Look at Operational Metrics in the Fall of 2019

In the fall of 2019, 141 eDiscovery Business Confidence Survey participants chose to answer at least one of the optional business operational metric survey questions in the quarterly survey. Almost 25% (24.8%) of survey respondents reported Monthly Recurring Revenue (MRR) as increasing in the fall of 2019. This is a solid decrease from approximately 33% (32.7%) reporting MRR as increasing in the summer of 2019.

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Article by Rob Robinson

The Kinetics of Three eDiscovery Business Metrics in the Fall of 2019

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 three optional questions regarding business operational metrics were introduced into the quarterly eDiscovery Business Confidence Survey during the winter 2019 survey and to date,  approximately 524 individual responses to these optional questions have been received over the course of four surveys.

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 Fall of 2019

General

  • In the fall of 2019, 141 eDiscovery Business Confidence Survey participants chose to answer at least one of the optional business operational metric survey questions in the quarterly survey. This is less than the number of participants that answered the optional business metrics questions in the summer 2019 survey when 156 survey participants responded to at least one optional business operational metric survey question.
  • In the fall of 2019, 94.0% 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 the 90.2.% of participants answering the optional business operational metric questions in the summer of 2019 survey.
  • In the fall 2019 survey, between 42.6% and 51.8%  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 17% of survey respondents reported DSO as increasing in the fall of 2019. This is a slight decrease from approximately 19% (18.6%) reporting DSO as increasing in the summer of 2019.
  • There was an increase (1.8%) in the fall 2019 percentage (25.5%) of respondents reporting DSO as unfluctuating when compared to summer 2019 reporting (23.7%).
  • Only 5.7% of survey respondents reported DSO as decreasing in the fall of 2019. This is a slight drop from reporting in the summer of 2019 when 5.8% of respondents noted decreasing DSO.

Monthly Recurring Revenue (Chart 2)

  • There was a solid decrease (7.9%) in the fall 2019 percentage (24.8%) of respondents reporting increasing MRR when compared to summer 2019 reporting (32.7%).
  • There was a dramatic increase (11.7%) in the fall 2019 percentage (27.7%) of respondents reporting MRR as unfluctuating when compared to summer 2019 reporting (16.0%)
  • Only 5% of survey respondents in the fall of 2019 reported decreasing MRR. This is the lowest reported percentage of respondents reporting decreasing MRR to date (four surveys).

Distribution of Revenue Across Customer Base (Chart 3)

  • The percentage of survey respondents reporting an increasing distribution of revenue across their customer base decreased solidly (5.8%) between the summer of 2019 (30.8%) and the fall of 2019 (25.0%).
  • There was an increase (3.3%) in the fall 2019 percentage (25.7%) of respondents reporting the distribution of revenue across their customer base as unfluctuating when compared to summer 2019 reporting (22.4%).
  • The was also a slight decrease (0.9%) in the percentage of survey respondents reporting a decrease in revenue distribution across their customer base, with only 3.6% reporting a decreasing distribution of revenue in the fall of 2019.

Survey Charts

(Charts Can Be Expanded for Detailed Viewing)


Chart 1: An Aggregate Overview of Days Sales Outstanding (DSO) Trajectory

1 – eDiscovery Business Metrics – DSO Trajectories

 


Chart 2: An Aggregate Overview of Monthly Recurring Revenue (MRR) Trajectory

2 – eDiscovery Business Metrics – MRR Trajectories

 


Chart 3: An Aggregate Overview of Distribution of Revenue Across Customer Base

3 – eDiscovery Business Metrics – CRD Trajectories

Running Listing of eDiscovery Business Confidence Survey Results

Additional Reading

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