CS Disco (LAW) AI Stock Analysis

• Market Cap: $440.84M
• Dividend Yield: N/A
• Average Volume (3M): 164.48K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.00
• Revenue Growth: 4.05%
• EPS Growth: -100.64%
• Country: US
• Employees: 561
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): -0.04
• Shares Outstanding: 61,741,844
• 10 Day Avg. Volume: 182,948
• 30 Day Avg. Volume: 164,484
• 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: 0.37
• Enterprise Value/Revenue: 1.09
• Enterprise Value/Gross Profit: 1.47
• Enterprise Value/Ebitda: -2.90
• 1Y Price Target: $7.17
• Price Target Upside: 18.51% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 55 Neutral
• Price Target: $7.00 ▲(15.70% Upside)

CS Disco's stock score is primarily influenced by its financial performance challenges, including negative profitability and cash flow issues, which weigh heavily on the score. Technical analysis shows positive momentum, providing some support. Valuation remains a concern with a negative P/E ratio. The earnings call provided mixed signals, with growth in certain areas but ongoing financial challenges and leadership changes.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective sales strategies, supporting long-term business expansion.

AI Product Adoption

Increased adoption of AI products like Cecilia enhances competitive positioning and drives efficiency in legal processes.

Low Debt Levels

Low debt levels provide financial stability and flexibility, allowing the company to invest in growth opportunities without significant financial risk.

Negative Factors

Negative Profitability

Ongoing operating losses highlight challenges in achieving profitability, which could hinder long-term financial health and investment capacity.

Negative Cash Flow

Negative cash flow indicates potential liquidity issues, impacting the company's ability to fund operations and growth initiatives sustainably.

CFO Transition

Leadership changes, especially in finance, can create uncertainty and disrupt strategic continuity, affecting investor confidence and operational stability.

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 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: 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 6.34, above the 50-day MA of 5.96, and above the 200-day MA of 4.75, indicating a bullish trend. The MACD of 0.23 indicates Negative momentum. The RSI at 61.87 is Neutral, neither overbought nor oversold. The STOCH value of 77.21 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
PUBM	―	$400.11M	―	-0.65%	―	3.53%	-109.03%
Sector *	―	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
DSP	―	$576.00M	272.32	5.20%	―	30.92%	―
SMRT	―	$280.23M	―	-25.48%	―	-28.45%	-224.48%
LAW	―	$440.84M	―	-36.64%	―	4.05%	-100.64%
ONTF	―	$239.45M	―	-22.60%	―	-6.88%	15.83%
FRGE	―	$226.19M	―	-28.14%	―	14.78%	21.87%

CS Disco Corporate Events

CS Disco’s Earnings Call: Growth Amid Challenges

The recent earnings call for CS Disco, Inc. painted a generally optimistic picture of the company’s trajectory, underscored by notable growth in software revenue, customer expansion, and the introduction of innovative products like Auto Review and Cecilia. Despite challenges such as negative operating cash flow and ongoing losses, the strategic emphasis on larger customers and technological advancements suggests a promising outlook for future performance.

CS Disco, Inc. Reports Growth in Q2 2025

CS Disco, Inc., a leader in litigation technology, offers innovative cloud-native solutions to streamline legal processes for law firms and corporations. In its second quarter of 2025, DISCO reported a total revenue of $38.1 million, marking a 6% increase from the previous year, alongside a 12% rise in software revenue. Despite a consistent GAAP net loss of $10.8 million, the company improved its adjusted EBITDA to $(2.7) million from $(4.7) million in the same quarter last year.

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.

The most recent analyst rating on (LAW) stock is a Buy with a $8.00 price target. To see the full list of analyst forecasts on CS Disco stock, see the LAW Stock Forecast page.