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: 58 Neutral
• Price Target: $7.50 ▲(23.97% Upside)

CS Disco's overall stock score reflects a mix of growth potential and significant challenges. The most significant factor is the company's financial performance, which shows growth but struggles with profitability and cash flow. Technical analysis indicates positive momentum, providing some optimism. However, valuation concerns due to negative earnings and lack of dividends weigh heavily. The earnings call provided some positive insights but also highlighted ongoing risks.

Positive Factors

Revenue Growth

The consistent revenue growth indicates strong market demand and effective sales strategies, positioning CS Disco for long-term expansion in the legal tech sector.

AI Adoption

Successful AI integration enhances product offerings and customer satisfaction, providing a competitive edge and supporting future growth in the AI-driven legal tech market.

Strong Equity Position

A low debt-to-equity ratio indicates financial stability and flexibility, allowing CS Disco to invest in growth opportunities without significant leverage risks.

Negative Factors

Profitability Challenges

Ongoing profitability challenges highlight the need for cost management improvements to achieve sustainable financial health and long-term viability.

Negative Cash Flow

Negative cash flow indicates liquidity challenges, which could constrain operational capabilities and investment in growth initiatives if not addressed.

Contingent Revenue Dependency

Reliance on contingent revenue introduces uncertainty in revenue stability, potentially impacting financial predictability and investor confidence.

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 revenue growth but struggles with profitability and cash flow. The company has a strong equity position and low leverage but needs to address operational inefficiencies to improve financial health.

Income Statement

CS Disco shows a consistent revenue growth trend, with a TTM growth rate of 3.14%. However, profitability remains a challenge as indicated by negative net profit margins (-38.21%) and EBIT margins (-40.04%). The gross profit margin is strong at 74.02%, but the company needs to improve its cost management to achieve profitability.

Balance Sheet

The company maintains a low debt-to-equity ratio of 0.06, indicating conservative leverage. However, the return on equity is negative (-38.04%), reflecting ongoing losses. The equity ratio stands at 74.73%, suggesting a solid equity base relative to total assets, but profitability issues persist.

Cash Flow

CS Disco's cash flow situation is concerning, with negative operating cash flow and free cash flow. The free cash flow to net income ratio is positive at 1.19, indicating some efficiency in cash usage, but overall cash flow growth is negative, highlighting liquidity challenges.

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: Negative

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 6.94, below the 50-day MA of 6.59, and above the 200-day MA of 4.98, indicating a bullish trend. The MACD of 0.23 indicates Negative momentum. The RSI at 65.35 is Neutral, neither overbought nor oversold. The STOCH value of 86.38 is Negative, 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	65 Neutral	$699.88M	424.62	4.45%	―	22.97%	49.49%
SMRT	62 Neutral	$372.73M	―	-25.48%	―	-24.30%	-181.62%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
ONTF	59 Neutral	$251.58M	―	-20.20%	―	-6.23%	28.57%
PUBM	59 Neutral	$426.09M	―	-2.85%	―	-0.68%	-146.14%
LAW	58 Neutral	$369.83M	―	-41.00%	―	6.33%	-66.34%
FRGE	48 Neutral	$609.56M	―	-28.65%	―	16.40%	22.80%

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.