CS Disco (LAW)
NYSE:LAW
Top Page
CS Disco
(NYSE:LAW)
Select Model
Select Model
Rating:46Neutral
Price Target:
$4.00
▼(-0.99% Downside)
Action:ReiteratedDate: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 indicate strong product economics and high incremental profitability as software usage grows. Durable SaaS gross margins provide operating leverage potential, supporting margin expansion and helping the company move toward adjusted-EBITDA breakeven as fixed costs scale.
Negative Factors
Persistent negative operating cash flow
Consistent OCF and free-cash-flow deficits erode equity and force reliance on cash reserves or financing. Even with improving margins, ongoing cash burn constrains strategic flexibility, heightens dilution or financing risk, and means execution must deliver sustained profitability before cash-generation is self-sustaining.
Read all positive and negative factors
Positive Factors
Negative Factors
High gross margins
Sustained ~76–77% gross margins indicate strong product economics and high incremental profitability as software usage grows. Durable SaaS gross margins provide operating leverage potential, supporting margin expansion and helping the company move toward adjusted-EBITDA breakeven as fixed costs scale.
Read all positive factors
CS Disco (LAW) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$255.85M
Dividend YieldN/A
Average Volume (3M)139.09K
Price to Earnings (P/E)―
Beta (1Y)0.88
Revenue Growth6.33%
EPS Growth-66.34%
CountryUS
Employees561
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)-0.04
Shares Outstanding63,329,014
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 Cap0.92
Enterprise Value/Revenue1.51
Enterprise Value/Gross Profit2.01
Enterprise Value/Ebitda-5.95
Forecast
1Y Price Target
$8.00Price Target Upside98.02% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)-0.14
Revenue Forecast (FY)$172.73M
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:Feb 25, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 07, 2026
Earnings Call Sentiment Positive
The call presented a constructive narrative: accelerating software growth, improving adjusted EBITDA margins, strong generative AI and Auto Review adoption, expanded large-account penetration, and a healthy cash position. Key challenges include declining services revenue, worsening operating cash flow, ongoing R&D investment and near-term negative adjusted EBITDA in guidance. Management outlined commercial and product changes intended to drive higher win rates and margin expansion, and set a goal of reaching adjusted EBITDA breakeven in 2026. Overall, positive operational momentum and strategic initiatives outweigh near-term profitability and cash-flow headwinds.Positive Updates
Q4 Revenue and Software Growth
Q4 total revenue of $41.2M, up 11% year over year; Q4 software revenue of $35.1M, up 14% year over year — the third consecutive quarter of accelerating revenue growth (excluding a one-time contingent deal).
Negative Updates
Services Revenue Decline
Services revenue declined 3% in Q4 to $6.0M and declined 8% for fiscal 2025 to $22.8M, driven by a reduction in traditional review business; traditional review remains service-heavy and a source of revenue shrinkage.
Read all updates
Q4-2025 Updates
Positive
Negative
Q4 Revenue and Software Growth
Q4 total revenue of $41.2M, up 11% year over year; Q4 software revenue of $35.1M, up 14% year over year — the third consecutive quarter of accelerating revenue growth (excluding a one-time contingent deal).
Read all positive updates
Company Guidance
CS Disco’s guidance for Q1 2026 calls for total revenue of $39.0M–$41.5M, software revenue of $33.75M–$35.25M, and adjusted EBITDA of negative $6.0M to negative $4.0M (with the quarter’s EBITDA decline attributed to higher employee costs and one‑time sales kickoff, marketing and professional services expenses); for fiscal‑year 2026 management guided total revenue of $167M–$177M, software revenue of $145.5M–$152.5M, and adjusted EBITDA of negative $8.5M to negative $4.5M, and reiterated a path to adjusted‑EBITDA breakeven in 2026 assuming the first‑half one‑time costs do not reoccur.CS Disco Financial Statement Overview
Summary
Income Statement
38
Negative
Balance Sheet
55
Neutral
Cash Flow
30
Negative
| 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
Negative
4.04
Price Trends
4.68
Negative
6.04
Negative
5.60
Negative
Market Momentum
-0.11
Negative
41.53
Neutral
14.09
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 below the 20-day moving average (MA) of 4.15, below the 50-day MA of 4.68, and below the 200-day MA of 5.60, indicating a bearish trend. The MACD of -0.11 indicates Negative momentum. The RSI at 41.53 is Neutral, neither overbought nor oversold. The STOCH value of 14.09 is Positive, 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 |
|---|---|---|---|---|---|---|---|
75 Outperform | $690.55M | 8.21 | 19.72% | ― | 22.97% | 49.49% | |
66 Neutral | $347.22M | -11.71 | -19.64% | ― | -6.23% | 28.57% | |
64 Neutral | $393.94M | -28.83 | -5.64% | ― | -0.68% | -146.14% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
54 Neutral | $294.10M | -6.33 | -25.34% | ― | -24.30% | -181.62% | |
46 Neutral | $255.85M | -10.79 | -32.94% | ― | 6.33% | -66.34% |
* Technology Sector Average
LAW
CS Disco
4.04
-0.28
-6.48%
PUBM
PubMatic
8.31
-1.64
-16.48%
ONTF
ON24
8.10
2.51
44.90%
SMRT
SmartRent
1.53
0.37
31.90%
DSP
Viant Technology
10.90
-1.61
-12.87%
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.