CS Disco (LAW) AI Stock Analysis

• Market Cap: $317.35M
• Dividend Yield: N/A
• Average Volume (3M): 142.00K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.88
• Revenue Growth: 4.05%
• EPS Growth: -100.64%
• Country: US
• Employees: 561
• Sector: Technology
• Sector Strength: 85
• Industry: Software - Application
• EPS (TTM): -0.04
• Shares Outstanding: 61,741,844
• 10 Day Avg. Volume: 140,232
• 30 Day Avg. Volume: 141,999
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.51
• Enterprise Value/Revenue: 1.09
• Enterprise Value/Gross Profit: 1.47
• Enterprise Value/Ebitda: -2.90
• 1Y Price Target: $7.17
• Price Target Upside: 39.49% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 49 Neutral
• Price Target: $5.00 ▼(-2.72% Downside)

CS Disco's overall stock score is primarily impacted by its financial performance challenges, including negative profitability and cash flow issues. While there is positive momentum in technical analysis and some growth in software revenue, the valuation concerns and uncertainties from the CFO transition weigh heavily on the stock's attractiveness.

Positive Factors

Enterprise Strategy

The strategy of orienting its GTM organization towards more litigious enterprise customers with complex, larger matters appears to be bearing fruit, as customers spending >$100K annually on the platform grew to 323 (+6%).

Market Opportunity

Management believes Disco should be a 20% growth company as it sits at an intersection of a massive market opportunity that remains a more manual process than it needs to be.

Revenue Growth

CS Disco reported improving revenue growth and adj. EBITDA outperformance, with software revenue up 11.7%.

Negative Factors

Financial Performance

For now, the financial picture isn’t all that compelling – low single digit revenue growth and mid-teens EBITDA losses.

Growth Deceleration

With growth that has precipitously decelerated from IPO highs and a business model still 6+ quarters from EBITDA profitability, investors have put LAW in the penalty box.

Leadership Change

CFO Michael Lafair will be stepping down from his role at the end of this year, unless a successor is named in the interim.

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 makes money primarily through a subscription-based revenue model, where clients pay for access to its software solutions on a recurring basis. The company offers various pricing tiers based on the size and needs of the client, which can include additional fees for extra storage, advanced features, or increased user access. Key revenue streams include licensing fees for its software products and services related to data processing, hosting, and project management. Strategic partnerships with legal firms and corporate legal departments also contribute to its earnings by expanding its customer base and enhancing its market reach.

CS Disco Financial Statement Overview

Summary

CS Disco shows strong gross margins and low leverage, indicating operational resilience. However, persistent losses and negative cash flows pose risks to long-term sustainability. Improvements in operational efficiency and revenue growth are necessary for future profitability.

Income Statement

The gross profit margin remains strong at around 74% in TTM, showcasing effective cost management despite negative net income margins. Revenue growth is slow, with a TTM increase of just 0.75% over the previous year. However, persistent negative EBIT and EBITDA margins highlight ongoing operational inefficiencies.

Balance Sheet

The company maintains a healthy equity ratio of 84.6% in TTM, indicating strong asset financing through equity. However, the negative ROE due to net losses signals a lack of profitability. A low debt-to-equity ratio of 0.06 suggests minimal leverage, yet high reliance on equity might limit financial flexibility.

Cash Flow

Free cash flow remains negative, although it has improved slightly over the year with a growth rate of -26.12% in TTM. The negative operating cash flow to net income ratio indicates cash flow challenges, while the improving free cash flow to net income ratio suggests better cash management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	148.02M	144.84M	138.09M	135.19M	114.34M	68.44M
Gross Profit	109.56M	107.43M	103.14M	101.03M	83.24M	47.99M
EBITDA	-55.61M	-51.52M	-37.55M	-65.68M	-20.99M	-20.72M
Net Income	-56.56M	-55.77M	-42.15M	-70.77M	-24.34M	-22.87M
Balance Sheet
Total Assets	164.87M	180.32M	231.55M	256.32M	287.40M	79.11M
Cash, Cash Equivalents and Short-Term Investments	114.49M	129.13M	159.55M	203.24M	255.48M	58.57M
Total Debt	8.22M	9.30M	9.16M	10.91M	989.00K	2.12M
Total Liabilities	26.98M	32.81M	31.21M	32.69M	18.72M	174.03M
Stockholders Equity	137.90M	147.51M	200.34M	223.64M	268.68M	-94.92M
Cash Flow
Free Cash Flow	-18.41M	-11.53M	-44.39M	-50.39M	-24.75M	-24.62M
Operating Cash Flow	-15.49M	-8.75M	-25.53M	-46.01M	-21.64M	-22.71M
Investing Cash Flow	-92.98M	-78.03M	-20.04M	-9.69M	-3.11M	-1.90M
Financing Cash Flow	134.00K	-20.00M	1.87M	3.47M	221.66M	59.96M

CS Disco Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 5.14
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LAW, the sentiment is Positive. The current price of 5.14 is above the 20-day moving average (MA) of 4.61, above the 50-day MA of 4.38, and above the 200-day MA of 4.64, indicating a bullish trend. The MACD of 0.24 indicates Negative momentum. The RSI at 75.50 is Negative, neither overbought nor oversold. The STOCH value of 79.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LAW.

CS Disco Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SSTI	65 Neutral	$164.62M	―	-13.49%	―	1.47%	-430.99%
EB	65 Neutral	$254.11M	―	-11.81%	―	-11.54%	-54.32%
Sector *	61 Neutral	$35.62B	8.22	-10.94%	1.88%	8.86%	-10.36%
MKTW	61 Neutral	$301.73M	1.67	-10.56%	9.22%	-17.17%	497.89%
ONTF	54 Neutral	$233.11M	―	-22.60%	―	-6.88%	15.83%
LAW	49 Neutral	$317.35M	―	-36.64%	―	4.05%	-100.64%
NRDY	48 Neutral	$250.83M	―	-105.81%	―	-10.85%	-15.09%

CS Disco Corporate Events

CS Disco CFO Michael Lafair to Step Down

On August 6, 2025, CS Disco announced that Michael Lafair will step down as Executive Vice President, Chief Financial Officer, Principal Financial Officer, and Principal Accounting Officer by December 31, 2025, or upon the appointment of his successor. This decision was not due to disagreements with the company, and Lafair will continue to serve in his current roles until the transition date, after which he will provide advisory services until February 17, 2026. The company has initiated an external search for his successor. Additionally, DISCO reported its financial results for the second quarter of 2025, with total revenue of $38.1 million, marking a 6% increase year-over-year. The company also launched new tools, including Auto Review and Searchable AV Transcriptions, and saw a significant increase in the adoption of its Cecilia AI Platform. DISCO’s outlook for the third quarter and fiscal year 2025 anticipates continued growth in software and total revenue.

CS Disco Holds Annual Meeting, Elects New Directors

On June 10, 2025, CS Disco, Inc. held its Annual Meeting of Stockholders where key decisions were made, including the election of three Class I directors to serve until 2028. Additionally, stockholders ratified the selection of Ernst & Young LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025, reflecting confidence in the company’s governance and financial oversight.