CS Disco 2025 Q2 Earnings Revenue Growth Outpaces Loss Narrowing

CS Disco reported its fiscal 2025 Q2 earnings on August 6, 2025, with revenue rising year-over-year despite ongoing net losses. The company raised its full-year revenue guidance, signaling optimism about its growth trajectory.

Revenue
CS Disco’s total revenue grew 5.8% to $38.11 million in 2025 Q2, driven by a strong performance in its software segment. Software revenue reached $32.74 million, reflecting a 12% year-over-year increase, while services contributed $5.36 million to the total.

Earnings/Net Income
The company maintained an EPS of $-0.18 and slightly reduced its net loss to $10.81 million in 2025 Q2 from $10.83 million in the prior-year period. While the improvement is marginal, it underscores continued financial challenges, with the company posting losses for the sixth consecutive year in this quarter.

Price Action
The stock has gained 0.49% in the latest trading day and 1.47% over the past week, though it has fallen 6.56% month-to-date.

Post-Earnings Price Action Review
Buying shares of CS Disco on the day of its revenue raise announcement and holding for 30 days has historically yielded positive returns, averaging 12.5% per quarter over the last three years. The strategy capitalizes on the market’s optimistic reaction to the company’s growth prospects, particularly in response to revenue guidance upgrades. This approach has shown consistent performance, reinforcing the view that improved revenue figures, even in the context of ongoing losses, are seen as catalysts for near-term stock appreciation. The market’s positive sentiment appears to be driven by confidence in the company’s strategic direction and long-term growth potential.

CEO Commentary
Eric Friedrichsen, CEO, emphasized strong Q2 performance fueled by a 12% YoY increase in software revenue to $32.7 million and progress on multi-terabyte cases. He highlighted strategic shifts such as targeting larger clients, cross-functional collaboration, and the adoption of AI tools like Cecilia and Auto Review. Operational improvements in sales, marketing, and HR were also noted, alongside simplified legal contracts to boost efficiency. Friedrichsen expressed confidence in the company’s execution and long-term growth potential, stating, “We are confident in our ability to execute and that the foundation we're laying today will drive sustainable growth and increase efficiency going forward.”

Guidance
For Q3 2025, the company expects total revenue of $37.5 million to $39.5 million, with software revenue between $32.75 million and $33.75 million. Adjusted EBITDA is forecasted to range from -$5 million to -$3 million. For FY 2025, DISCO projects total revenue of $148 million to $158 million, software revenue of $128 million to $134 million, and adjusted EBITDA of -$17 million to -$13 million, with all metrics above prior estimates.

Additional News
On August 7, 2025, CS Disco raised its 2025 revenue guidance to a maximum of $158 million, signaling confidence in its long-term trajectory. While details of the update were inaccessible due to restricted page access, the move aligns with the company’s strategic focus on expanding within large clients and enhancing AI and operational efficiency. The guidance increase reflects management’s optimism and strategic execution in key areas. No M&A activity, C-level changes, or dividend announcements were reported in the specified timeframe.