CS Disco (LAW) AI Stock Analysis

• Market Cap: $248.88M
• 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: 0.99
• Enterprise Value/Revenue: 1.57
• Enterprise Value/Gross Profit: 2.09
• Enterprise Value/Ebitda: -6.19
• 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: 03/04/26
• Date: Action: Reiterated 03/04/26

The score is held down primarily by weak financial performance (ongoing losses and negative cash flow) and poor technical trend/momentum (below key moving averages with negative MACD). Earnings-call commentary provides partial support via accelerating software growth and improving profitability trends with a breakeven target, but valuation is constrained by losses and there is limited incremental uplift from the CFO change.

Positive Factors

Recurring SaaS model & large accounts

A subscription-based, software-first revenue mix anchored by 330 sizable accounts and software dollar-based net retention above 103% supports predictable, recurring revenue. Large-account concentration boosts visibility into multi-year spend and underpins durable revenue as cross-sell expands.

High gross margins and efficiency gains

Sustained ~76-77% gross margins indicate strong product economics and scalability typical of cloud software. Combined with declining S&M as a percent of revenue, this creates operating leverage that can convert revenue growth into durable margin expansion as adoption and per-gig pricing scale.

Healthy cash balance and zero debt

A sizable cash reserve with no reported debt provides runway to fund product investments, generative-AI initiatives, and go-to-market changes without immediate financing. This reduces short-term liquidity risk and gives management time to execute toward adjusted-EBITDA breakeven.

Negative Factors

Persistent negative operating cash flow

Consistent negative operating and free cash flow erodes financial flexibility over time, forcing reliance on cash reserves or financing. Until accounting improvements convert to sustained positive operating cash generation, growth investments and margin goals may be constrained by actual liquidity limits.

Ongoing GAAP losses; near-term profitability headwinds

Recurring GAAP losses and guidance that still implies negative adjusted EBITDA mean execution risk remains elevated. Management must sustain revenue acceleration and cost discipline long enough to translate improved adjusted EBITDA into positive GAAP earnings and cash flow to secure durable financial stability.

Services decline & low cross-sell penetration

A shrinking services business reduces revenue diversity and near-term topline support, while a 19% multiproduct attach rate signals limited cross-sell. Improving attach and offsetting services declines are needed to lift average revenue per customer and sustainably improve margins.

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 ongoing cash burn: EBIT/net income are negative across the periods shown and operating/free cash flow are consistently negative. Positives include strong gross profit generation and low leverage (no debt reported in 2025), with some loss improvement in 2025, but equity and asset levels have trended down, keeping overall financial quality weak.

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: Neutral
• Last Price: 4.04
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LAW, the sentiment is Neutral. The current price of 4.04 is above the 20-day moving average (MA) of 3.67, below the 50-day MA of 5.79, and below the 200-day MA of 5.58, indicating a neutral trend. The MACD of -0.70 indicates Negative momentum. The RSI at 45.04 is Neutral, neither overbought nor oversold. The STOCH value of 82.98 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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	$342.51M	-11.81	-20.20%	―	-6.23%	28.57%
DSP	65 Neutral	$631.20M	382.95	4.45%	―	22.97%	49.49%
PUBM	64 Neutral	$384.78M	-26.61	-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	$291.37M	-4.31	-25.48%	―	-24.30%	-181.62%
LAW	46 Neutral	$248.88M	-5.46	-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.