CS Disco (LAW)
NYSE:LAW
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CS Disco
(NYSE:LAW)
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Rating:51Neutral
Price Target:
$3.50
▼(-13.37% Downside)
Action:Reiterated
Date:05/09/26
The score is held back primarily by persistent unprofitability and ongoing cash burn despite improving trends. The strongest offsets are a debt-free balance sheet and an earnings update that raised guidance and showed improving adjusted EBITDA margins. Technicals are broadly neutral with the stock still below longer-term moving averages, and valuation is constrained by negative earnings and no stated dividend yield.
Positive Factors
High gross margins (SaaS economics)
Sustained ~74–75% gross margins indicate a scalable, software-centric cost structure. High gross margins provide durable operating leverage as revenue grows, enabling the company to fund R&D and go-to-market investments while moving toward profitability if growth persists.
Negative Factors
Persistent negative operating cash flow
Operating and free cash flow remain negative TTM, indicating ongoing cash burn. Reliance on existing cash balances limits self-funding capacity and could force slower investment or external financing if the company fails to sustain margin improvement and convert EBITDA gains into positive cash flow.
Read all positive and negative factors
Positive Factors
Negative Factors
High gross margins (SaaS economics)
Sustained ~74–75% gross margins indicate a scalable, software-centric cost structure. High gross margins provide durable operating leverage as revenue grows, enabling the company to fund R&D and go-to-market investments while moving toward profitability if growth persists.
Read all positive factors
CS Disco (LAW) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$246.28M
Dividend YieldN/A
Average Volume (3M)139.09K
Price to Earnings (P/E)―
Beta (1Y)1.04
Revenue Growth11.07%
EPS Growth27.51%
CountryUS
Employees561
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)-0.69
Shares Outstanding64,134,410
10 Day Avg. Volume186,114
30 Day Avg. Volume139,092
Financial Highlights & Ratios
PEG Ratio0.48
Price to Book (P/B)3.74
Price to Sales (P/S)3.05
P/FCF Ratio-26.62
Enterprise Value/Market Cap0.93
Enterprise Value/Revenue1.41
Enterprise Value/Gross Profit1.88
Enterprise Value/Ebitda-6.16
Forecast
1Y Price Target
$8.00Price Target Upside98.02% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)-0.17
Revenue Forecast (FY)$175.24M
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....
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 a...
CS Disco Earnings Call Summary
Earnings Call Date:May 06, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 06, 2026
Earnings Call Sentiment Positive
The call conveyed strong commercial and product momentum: double-digit revenue growth (14% total, 12% software), notable improvement in adjusted EBITDA margin (600 bps), successful early adoption of the DISCO platform and promising AI product rollouts (Cecilia Advanced Research, Auto Review). These positives were balanced by continuing GAAP losses, negative operating cash flow, and short-term variability risks as customers transition to bundled pricing and Auto Review remains partially service-based. Management raised full-year revenue guidance and reiterated a path to adjusted EBITDA profitability later in the year, indicating confidence in the business trajectory despite ongoing cash burn and near-term profitability gaps.Positive Updates
Revenue Growth and Guidance Beat
Total revenue of $41.9M, up 14% year-over-year; software revenue $34.7M, up 12% YoY; services revenue $7.2M, up 25% YoY. Company beat the high end of total revenue guidance for the quarter.
Negative Updates
Adjusted EBITDA and Profitability Still Negative
Adjusted EBITDA remains negative at -$3.5M for Q1 and company expects full-year adjusted EBITDA to be negative in the range of -$8M to -$4M; path to adjusted EBITDA profitability targeted in Q4 but not yet achieved.
Read all updates
Q1-2026 Updates
Positive
Negative
Revenue Growth and Guidance Beat
Total revenue of $41.9M, up 14% year-over-year; software revenue $34.7M, up 12% YoY; services revenue $7.2M, up 25% YoY. Company beat the high end of total revenue guidance for the quarter.
Read all positive updates
Company Guidance
DISCO guided Q2 2026 to total revenue of $41.5–$43.5M, software revenue of $36.1–$37.1M and adjusted EBITDA of -$4.5–-$2.5M, and raised FY2026 guidance to total revenue of $169.25–$178.75M, software $146.0–$152.5M and adjusted EBITDA of -$8.0–-$4.0M. Management noted these targets follow a Q1 beat (Q1 total revenue $41.9M, +14% YoY; software $34.7M, +12% YoY), improved adjusted EBITDA of -$3.5M (a 32% improvement; -8% margin vs -14% prior), 75% gross margin, services $7.2M (+25% YoY), net loss $4.2M (‑10% of revenue, EPS -$0.07), and a cash balance of $103M with no debt, which they said supports the FY raise and their path to adjusted EBITDA profitability in Q4.CS Disco Financial Statement Overview
Summary
Income Statement
34
Negative
Balance Sheet
72
Positive
Cash Flow
28
Negative
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 162.08M | 156.85M | 144.84M | 138.09M | 135.19M | 114.34M |
| Gross Profit | 121.36M | 117.42M | 107.43M | 103.14M | 101.03M | 83.24M |
| EBITDA | -37.10M | -43.41M | -50.96M | -37.55M | -67.13M | -20.99M |
| Net Income | -42.60M | -44.37M | -55.77M | -42.15M | -70.77M | -24.34M |
Balance Sheet | ||||||
| Total Assets | 162.37M | 173.64M | 180.32M | 231.55M | 256.32M | 287.40M |
| Cash, Cash Equivalents and Short-Term Investments | 103.04M | 114.60M | 129.13M | 159.55M | 203.24M | 255.48M |
| Total Debt | 0.00 | 0.00 | 9.30M | 9.16M | 10.91M | 989.00K |
| Total Liabilities | 38.42M | 45.53M | 32.81M | 31.21M | 32.69M | 18.72M |
| Stockholders Equity | 123.95M | 128.11M | 147.51M | 200.34M | 223.64M | 268.68M |
Cash Flow | ||||||
| Free Cash Flow | -19.35M | -17.99M | -11.53M | -44.39M | -50.39M | -24.75M |
| Operating Cash Flow | -16.12M | -14.94M | -8.75M | -25.53M | -46.01M | -21.64M |
| Investing Cash Flow | -949.00K | -18.20M | -78.03M | -20.04M | -9.69M | -3.11M |
| Financing Cash Flow | 185.00K | 16.00K | -20.00M | 1.87M | 3.47M | 221.66M |
CS Disco Technical Analysis
Negative
4.04
Price Trends
4.01
Negative
4.61
Negative
5.55
Negative
Market Momentum
-0.11
Positive
46.83
Neutral
63.14
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 4.01, above the 50-day MA of 4.01, and below the 200-day MA of 5.55, indicating a bearish trend. The MACD of -0.11 indicates Positive momentum. The RSI at 46.83 is Neutral, neither overbought nor oversold. The STOCH value of 63.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LAW.
CS Disco Risk Analysis
CS Disco disclosed 64 risk factors in its most recent earnings report. CS Disco reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
CS Disco Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $733.86M | -385.45 | 16.65% | ― | 18.15% | 331.16% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $481.15M | -7.70 | -6.98% | ― | -2.33% | -425.96% | |
51 Neutral | $246.28M | -6.32 | -32.73% | ― | 11.07% | 27.51% | |
48 Neutral | $246.83M | -16.16 | -10.61% | ― | -9.70% | 61.30% |
* Technology Sector Average
LAW
CS Disco
3.79
-0.08
-2.07%
PUBM
PubMatic
10.54
-1.59
-13.11%
SMRT
SmartRent
1.27
0.43
51.19%
DSP
Viant Technology
11.07
-2.89
-20.70%
CS Disco Corporate Events
Executive/Board Changes
CS Disco Adds Toby Williams to Board of Directors
Neutral
Apr 23, 2026
On April 22, 2026, CS Disco, Inc. expanded its board of directors from nine to ten members and appointed Toby Williams, president and chief executive of Paylocity Holding Corporation, as an independent Class II director with a term running until t...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.