CS Disco (LAW) AI Stock Analysis

• Market Cap: $222.92M
• Dividend Yield: N/A
• Average Volume (3M): 139.09K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.09
• 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: 0.90
• Enterprise Value/Revenue: 1.28
• Enterprise Value/Gross Profit: 1.71
• Enterprise Value/Ebitda: -5.05
• 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: $3.00 ▼(-25.74% Downside)
• Action: Reiterated Date: 02/28/26
• Date: Action: Reiterated 02/28/26

The score is held back primarily by weak financial performance (ongoing losses and negative operating/free cash flow) and bearish technicals (price below key moving averages with negative MACD). The earnings call provides partial support via accelerating software growth and improving adjusted EBITDA trends with a strong cash/no-debt balance sheet, while valuation remains constrained by unprofitability and no dividend.

Positive Factors

Pricing & Packaging Shift

Moving to per-gigabyte pricing and bundling Cecilia AI per matter structurally aligns revenue with persistent data growth and AI usage. As a subscription SaaS provider, this change should raise monetization of terabyte-scale matters, reduce discounting, and sustain higher long-term revenue per customer as data volumes expand.

High Gross Margins

Sustained gross margins in the mid-70s percent indicate strong core product economics and scalability. High gross margins provide durable capacity to fund R&D and go-to-market while absorbing incremental cloud and AI costs, improving the probability of reaching sustainable operating margins as software revenue scales.

Healthy Cash / No Debt

A large cash balance with zero reported debt materially reduces refinancing and liquidity risk, giving management runway to invest in product, AI, and sales execution. This balance sheet strength supports the company’s path to adjusted-EBITDA breakeven without immediate capital raises, increasing strategic optionality.

Negative Factors

Persistent Cash Burn

Operating cash flow has been negative each year (OCF deteriorated to -$14.9M in FY2025) and free cash flow remains negative, forcing reliance on cash reserves or financing. Persistent cash burn constrains flexibility, limits reinvestment choices, and raises execution risk if revenue or margin improvements fail to materialize.

Ongoing Unprofitability

Despite improving adjusted-EBITDA margins, management still guides to negative adjusted EBITDA for FY2026. Continued GAAP and non-GAAP losses erode equity, raise the prospect of further financing or dilution, and mean the company must sustain operational improvements to convert strong unit economics into consistent profitability.

Customer Concentration & Retention

Revenue concentration (76% from customers >$100K) combined with total dollar-based net retention below 100% increases exposure to churn or contract compression among a limited set of large accounts. That structural concentration amplifies revenue volatility and raises dependency on successful cross-sell and upsell execution.

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

CS Disco generates revenue primarily through a subscription-based model, offering its eDiscovery platform and associated services on a recurring basis. Key revenue streams include monthly or annual subscriptions for access to its cloud software, which is priced based on the volume of data processed or the number of users. Additionally, the company may earn revenue through professional services, such as training, implementation support, and consulting for firms looking to optimize their use of the platform. Significant partnerships with legal technology vendors and integration with other legal software systems also contribute to its earnings by expanding its market reach and enhancing the value of its offerings.

CS Disco Financial Statement Overview

Summary

Financials are pressured by persistent losses and cash burn: EBIT/net income remain negative and operating/free cash flow are negative across the periods shown (cash flow score 30). Offsetting positives include strong gross profit economics and modest continued revenue growth, plus low leverage and zero debt in 2025, though equity has declined meaningfully over time.

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: Neutral

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 3.79, below the 50-day MA of 5.88, and below the 200-day MA of 5.58, indicating a bearish trend. The MACD of -0.80 indicates Negative momentum. The RSI at 38.20 is Neutral, neither overbought nor oversold. The STOCH value of 66.76 is Neutral, 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
ONTF	66 Neutral	$341.66M	-11.78	-20.20%	―	-6.23%	28.57%
DSP	65 Neutral	$632.45M	383.71	4.45%	―	22.97%	49.49%
PUBM	64 Neutral	$379.67M	-26.26	-5.36%	―	-0.68%	-146.14%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
FRGE	52 Neutral	$623.01M	-9.13	-28.65%	―	16.40%	22.80%
SMRT	51 Neutral	$297.05M	―	-25.48%	―	-24.30%	-181.62%
LAW	46 Neutral	$222.92M	-4.89	-41.00%	―	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.