CS Disco (LAW) AI Stock Analysis

• Market Cap: $259.65M
• Dividend Yield: N/A
• Average Volume (3M): 139.09K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.90
• Revenue Growth: 6.33%
• EPS Growth: -66.34%
• Country: US
• Employees: 561
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): -0.04
• Shares Outstanding: 63,329,014
• 10 Day Avg. Volume: 186,114
• 30 Day Avg. Volume: 139,092
• PEG Ratio: 0.48
• Price to Book (P/B): 3.74
• Price to Sales (P/S): 3.05
• P/FCF Ratio: -26.62
• Enterprise Value/Market Cap: 0.92
• Enterprise Value/Revenue: 1.53
• Enterprise Value/Gross Profit: 2.04
• Enterprise Value/Ebitda: -6.05
• 1Y Price Target: $8.00
• Price Target Upside: 98.02% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): -0.14
• Revenue Forecast (FY): $172.73M

• Rating: 46 Neutral
• Price Target: $4.00 ▼(-0.99% Downside)
• Action: Reiterated Date: 03/06/26
• Date: Action: Reiterated 03/06/26

The score is held down primarily by persistent GAAP losses and ongoing negative operating/free cash flow despite strong gross margins and low leverage. Guidance and call sentiment are moderately supportive due to accelerating software growth and a clearer path toward adjusted-EBITDA breakeven, but mixed technical signals and limited valuation support keep the overall score below average.

Positive Factors

High gross margins

Sustained ~76–77% gross margins reflect strong product economics and cloud delivery scale. High gross margins provide durable operating leverage: as software revenue grows, incremental sales can flow quickly to margin expansion and help bridge the path to adjusted‑EBITDA breakeven.

Accelerating software revenue

Multi-year acceleration in software revenue indicates improving product-market fit and scalable recurring revenue. Durable software growth strengthens predictability, supports higher dollar-based retention within the software cohort, and underpins margin expansion as services decline and productized offerings scale.

Strong cash runway and low leverage

A sizable cash balance and zero reported debt provide near-term flexibility to invest in product, AI capabilities, and go‑to‑market while pursuing adjusted‑EBITDA breakeven. Low leverage reduces refinancing risk and gives management time to execute strategic efficiency measures.

Negative Factors

Persistent negative cash flow

Ongoing negative operating and free cash flow is a durable pressure point: it erodes equity, forces reliance on cash reserves or financing, and constrains the company’s ability to fund product investment or absorb execution missteps until sustained positive cash generation is achieved.

Ongoing GAAP unprofitability

Repeated GAAP losses indicate execution and scaling risk; even with improving adjusted metrics, persistent negative EBIT/net income raises questions about long‑term operating leverage and whether efficiency gains will fully offset continued R&D and commercial investment needs.

Retention & customer concentration risk

High revenue concentration among larger accounts and total DBNR below 100% pose a structural commercial risk: losing a handful of large customers or failing to upsell could materially slow growth, and concentration limits diversification benefits as services decline.

CS Disco Business Overview & Revenue Model

Company Description

CS Disco, Inc., a legal technology company, provides cloud-native and artificial intelligence-powered legal solutions for ediscovery, legal document review, and case management for enterprises, law firms, legal services providers, and governments. The company offers DISCO Ediscovery, a solution that automates ediscovery process and saves legal departments from manual tasks associated with collecting, processing, enriching, searching, reviewing, analyzing, producing, and using enterprise data that is at issue in legal matters. It also provides DISCO Review, an AI-powered document review solution, which consistently delivers legal document reviews; and DISCO Case Builder, a solution that allows legal professionals to collaborate with teams to build a compelling case by offering a single place to search, organize, and review witness testimony and other legal data. The company's tools are used in various legal matters comprising litigation, investigation, compliance, and diligence. CS Disco, Inc. was founded in 2012 and is headquartered in Austin, Texas.

How the Company Makes Money

DISCO generates revenue primarily by selling access to its cloud software platform to law firms and corporate legal departments. Its revenue model includes: (1) Software subscriptions/usage: customers pay for the right to use DISCO’s e-discovery and review platform, typically under contractual arrangements that may involve recurring subscription components and/or usage-based fees tied to matters, users, data volumes, or similar consumption drivers (specific pricing metrics vary by contract). (2) Professional services: DISCO also earns revenue from services that support customers’ use of the platform on active matters (e.g., implementation, onboarding, project support, and other litigation-support services), which can be billed separately from software access. Key factors influencing earnings include the volume and complexity of customer litigation/investigation matters (which can drive platform usage and service demand), customer retention/expansion within large firms and enterprises, and the company’s ability to land new customers and grow spend per customer over time. Specific significant partnerships: null.

CS Disco Financial Statement Overview

Summary

Gross profit is strong and losses improved in 2025, but the company remains meaningfully unprofitable with negative EBIT/net income and consistently negative operating and free cash flow that has reduced equity over time (despite low/zero debt).

Income Statement

Revenue growth remains positive but has cooled materially in recent years (2024: ~4.9%, 2023: ~2.1%; 2025: ~2.7%). Gross profit is consistently strong (gross profit dollars rising from ~$83M in 2021 to ~$117M in 2025), indicating solid product economics. However, profitability is the key weakness: EBIT and net income are negative every year shown, and while losses improved in 2025 versus 2024 (net loss narrowed to ~$44M from ~$56M), the business is still meaningfully unprofitable.

Balance Sheet

Leverage looks conservative overall: debt was modest in 2021–2024 (debt-to-equity around ~0.04–0.06 in 2022–2024), and 2025 shows zero debt reported. That said, the balance sheet has weakened in scale: stockholders’ equity declined from ~$269M (2021) to ~$128M (2025), consistent with ongoing losses and cash burn. Total assets also stepped down versus 2022–2023 levels, reducing financial flexibility even with low leverage.

Cash Flow

Cash generation is a clear pressure point: operating cash flow is negative every year (ranging from about -$8.7M in 2024 to -$46.0M in 2022), and free cash flow is also consistently negative (including roughly -$18.0M in 2025 and -$44.4M in 2023). While free cash flow improved substantially from the 2022 trough, the company still depends on cash reserves/financing to fund operations until it reaches sustainable profitability.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	156.85M	144.84M	138.09M	135.19M	114.34M
Gross Profit	117.42M	107.43M	103.14M	101.03M	83.24M
EBITDA	-43.41M	-50.96M	-37.55M	-67.13M	-20.99M
Net Income	-44.37M	-55.77M	-42.15M	-70.77M	-24.34M
Balance Sheet
Total Assets	173.64M	180.32M	231.55M	256.32M	287.40M
Cash, Cash Equivalents and Short-Term Investments	114.60M	129.13M	159.55M	203.24M	255.48M
Total Debt	0.00	9.30M	9.16M	10.91M	989.00K
Total Liabilities	45.53M	32.81M	31.21M	32.69M	18.72M
Stockholders Equity	128.11M	147.51M	200.34M	223.64M	268.68M
Cash Flow
Free Cash Flow	-17.99M	-11.53M	-44.39M	-50.39M	-24.75M
Operating Cash Flow	-14.94M	-8.75M	-25.53M	-46.01M	-21.64M
Investing Cash Flow	-18.20M	-78.03M	-20.04M	-9.69M	-3.11M
Financing Cash Flow	16.00K	-20.00M	1.87M	3.47M	221.66M

CS Disco Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 4.04
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LAW, the sentiment is Negative. The current price of 4.04 is above the 20-day moving average (MA) of 4.01, below the 50-day MA of 4.89, and below the 200-day MA of 5.61, indicating a neutral trend. The MACD of -0.07 indicates Negative momentum. The RSI at 45.05 is Neutral, neither overbought nor oversold. The STOCH value of 13.09 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LAW.

CS Disco Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DSP	75 Outperform	$720.96M	8.21	19.72%	―	22.97%	49.49%
ONTF	66 Neutral	$345.51M	-11.71	-19.64%	―	-6.23%	28.57%
PUBM	64 Neutral	$378.53M	-28.83	-5.64%	―	-0.68%	-146.14%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
SMRT	54 Neutral	$303.71M	-6.33	-25.34%	―	-24.30%	-181.62%
LAW	46 Neutral	$259.65M	-10.79	-32.94%	―	6.33%	-66.34%

CS Disco Corporate Events

CS Disco Names Aaron Barfoot as New Chief Financial Officer

On December 18, 2025, CS Disco’s board appointed Aaron Barfoot as Executive Vice President, Chief Financial Officer, principal financial officer and principal accounting officer, effective January 12, 2026, replacing current CFO Michael Lafair, whose tenure will now extend through January 11, 2026. Barfoot, previously CFO at digital identity and fraud-prevention firms Socure and Forter, will receive a $456,000 base salary, a target annual bonus equal to 60% of salary, a $2 million restricted stock unit grant vesting over four years, and a $100,000 signing bonus subject to partial repayment under certain early departure scenarios; his employment agreement also provides for differentiated severance and equity-acceleration protections in change-in-control and other termination situations, underscoring CS Disco’s effort to attract experienced financial leadership and ensure continuity through potential strategic transactions.

The most recent analyst rating on (LAW) stock is a Hold with a $8.50 price target. To see the full list of analyst forecasts on CS Disco stock, see the LAW Stock Forecast page.