CS Disco (LAW) AI Stock Analysis

• Market Cap: $369.83M
• Dividend Yield: N/A
• Average Volume (3M): 139.09K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.01
• Revenue Growth: 6.33%
• EPS Growth: -66.34%
• Country: US
• Employees: 561
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): -0.01
• Shares Outstanding: 61,741,844
• 10 Day Avg. Volume: 186,114
• 30 Day Avg. Volume: 139,092
• PEG Ratio: -0.16
• Price to Book (P/B): 2.04
• Price to Sales (P/S): 2.07
• P/FCF Ratio: -26.06
• Enterprise Value/Market Cap: 0.00
• Enterprise Value/Revenue: 0.00
• Enterprise Value/Gross Profit: 0.00
• Enterprise Value/Ebitda: 0.00
• 1Y Price Target: $7.25
• Price Target Upside: 19.83% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 53 Neutral
• Price Target: $7.00 ▲(15.70% Upside)

CS Disco's stock score is primarily influenced by its financial performance challenges, despite positive technical indicators and earnings call highlights. The company's valuation remains a concern due to negative earnings, and while revenue growth is promising, profitability and cash flow issues persist.

Positive Factors

Revenue Growth

The consistent increase in software revenue indicates strong demand for CS Disco's products, supporting long-term growth prospects and market expansion.

AI Integration

Successful AI adoption enhances product capabilities and customer satisfaction, positioning CS Disco as a leader in legal tech innovation.

Strong Equity Position

A strong equity base provides financial stability and flexibility, enabling CS Disco to invest in growth opportunities and withstand market fluctuations.

Negative Factors

Profitability Challenges

Persistent profitability issues highlight the need for improved cost management and operational efficiency to ensure long-term financial health.

Negative Cash Flow

Negative cash flow poses liquidity challenges, potentially limiting CS Disco's ability to fund operations and strategic initiatives without external financing.

Contingent Revenue Dependency

Reliance on contingent revenue raises concerns about the sustainability of revenue growth, necessitating more stable and predictable income streams.

CS Disco Business Overview & Revenue Model

Company Description

CS Disco, Inc. is a leading provider of cloud-based legal technology solutions, primarily focusing on eDiscovery and litigation support for law firms and corporate legal departments. The company offers a comprehensive platform that facilitates the management of legal data, allowing users to streamline their discovery processes, enhance collaboration, and improve efficiency in handling legal matters. By leveraging advanced artificial intelligence and analytics, CS Disco empowers legal professionals to make informed decisions and optimize their workflows in the increasingly complex landscape of legal compliance and litigation.

How the Company Makes Money

CS Disco generates revenue primarily through subscription-based pricing for its eDiscovery platform, which provides users with access to its tools and services on a recurring basis. The company offers various tiers of subscriptions depending on the size of the client and the level of service required. Additional revenue streams may include professional services such as training, consulting, and custom integrations. Strategic partnerships with legal firms and technology providers further enhance CS Disco's market reach and can lead to increased customer acquisition. Furthermore, the growing demand for efficient legal technology solutions in an increasingly digital world positions CS Disco to capitalize on market trends towards automation and data-driven decision-making in the legal sector.

CS Disco Financial Statement Overview

Summary

CS Disco shows consistent revenue growth and a strong gross profit margin, but faces significant profitability and cash flow challenges. The low debt levels provide some financial stability, yet the negative return on equity and cash flow issues highlight the need for improved operational efficiency and profitability.

Income Statement

CS Disco shows a consistent revenue growth trend, with a TTM growth rate of 1.44%. However, the company is struggling with profitability, as indicated by negative net profit margins and EBIT margins over the years. The gross profit margin remains strong at around 74%, but the persistent negative net income and EBIT margins highlight ongoing operational challenges.

Balance Sheet

The company maintains a low debt-to-equity ratio of 0.06, indicating minimal leverage, which is a positive sign of financial stability. However, the return on equity is negative, reflecting the company's inability to generate profits from shareholders' equity. The equity ratio is not explicitly calculated, but the low debt levels suggest a relatively stable financial position.

Cash Flow

CS Disco's cash flow situation is concerning, with negative operating and free cash flows. Although there is a positive free cash flow growth rate of 26.68% in the TTM, the company still struggles to cover its net income with operating cash flow, as indicated by a negative operating cash flow to net income ratio. The free cash flow to net income ratio is above 1, suggesting some efficiency in converting net income to free cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	152.68M	144.84M	138.09M	135.19M	114.34M	68.44M
Gross Profit	113.95M	107.43M	103.14M	101.03M	83.24M	47.99M
EBITDA	-57.84M	-50.96M	-37.55M	-67.13M	-20.99M	-20.72M
Net Income	-61.07M	-55.77M	-42.15M	-70.77M	-24.34M	-22.87M
Balance Sheet
Total Assets	174.76M	180.32M	231.55M	256.32M	287.40M	79.11M
Cash, Cash Equivalents and Short-Term Investments	113.49M	129.13M	159.55M	203.24M	255.48M	58.57M
Total Debt	7.60M	9.30M	9.16M	10.91M	989.00K	2.12M
Total Liabilities	44.13M	32.81M	31.21M	32.69M	18.72M	174.03M
Stockholders Equity	130.63M	147.51M	200.34M	223.64M	268.68M	-94.92M
Cash Flow
Free Cash Flow	-16.71M	-11.53M	-44.39M	-50.39M	-24.75M	-24.62M
Operating Cash Flow	-13.61M	-8.75M	-25.53M	-46.01M	-21.64M	-22.71M
Investing Cash Flow	-34.21M	-78.03M	-20.04M	-9.69M	-3.11M	-1.90M
Financing Cash Flow	71.00K	-20.00M	1.87M	3.47M	221.66M	59.96M

CS Disco Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 6.05
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• 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 Positive. The current price of 6.05 is below the 20-day moving average (MA) of 6.64, below the 50-day MA of 6.36, and above the 200-day MA of 4.86, indicating a bullish trend. The MACD of 0.19 indicates Negative momentum. The RSI at 55.98 is Neutral, neither overbought nor oversold. The STOCH value of 78.04 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
DSP	64 Neutral	$646.19M	392.05	4.45%	―	22.97%	49.49%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
PUBM	57 Neutral	$437.69M	―	-2.85%	―	-0.68%	-146.14%
FRGE	57 Neutral	$606.80M	―	-28.65%	―	16.40%	22.80%
ONTF	54 Neutral	$236.78M	―	-20.20%	―	-6.23%	28.57%
LAW	53 Neutral	$369.83M	―	-41.00%	―	6.33%	-66.34%
SMRT	53 Neutral	$274.34M	―	-25.48%	―	-24.30%	-181.62%

CS Disco Corporate Events

CS Disco’s Earnings Call: Growth Amid Challenges

CS Disco, Inc. recently held its earnings call, revealing a mixed sentiment among investors and analysts. The company showcased impressive revenue growth and operational improvements, driven by successful AI adoption. However, concerns linger due to its dependency on contingent revenue and ongoing negative cash flow. While the positive highlights are noteworthy, the uncertainties introduced by the lowlights warrant cautious optimism.

CS Disco Reports Revenue Growth Amidst Financial Losses

CS Disco, Inc., a leading provider of cloud-native litigation technology solutions, leverages AI to enhance legal outcomes for law firms and corporations. In its third quarter of 2025, DISCO reported a total revenue of $40.9 million, marking a 13% increase from the previous year, driven by a significant rise in software revenue. Despite this growth, the company recorded a GAAP net loss of $13.7 million, though it showed improvement in adjusted EBITDA, which stood at a loss of $0.3 million compared to a $4.5 million loss in the same quarter last year.