CS Disco Raises Full-Year Guidance as It Nears EBITDA Breakeven

CS Disco (LAW), ranking by market capitalization reported its fiscal 2026 Q2 earnings on Aug 05th, 2026.CS Disco reported a Non-GAAP EPS of -$0.06, in line with expectations, while total revenue of $43.15 million surpassed consensus estimates by $0.48 million. The company raised its full-year fiscal 2026 revenue guidance to a range of $172 million–$179 million, signaling increased confidence in the second half of the year driven by large matter growth and platform adoption.

Revenue

The total revenue of CS Disco increased by 13.2% to $43.15 million in 2026 Q2, up from $38.11 million in 2025 Q2. Software segment revenue accounted for $36.84 million, representing the primary growth driver, while the Services segment contributed $6.30 million to the top line.

Earnings/Net Income

CS Disco narrowed losses to $0.13 per share in 2026 Q2 from a loss of $0.18 per share in 2025 Q2 (27.8% improvement). Meanwhile, the company successfully narrowed its net loss to $-8.66 million in 2026 Q2, reducing losses by 19.9% compared to the $-10.81 million net loss reported in 2025 Q2. The Company has sustained losses for 7 years over the corresponding fiscal quarter, highlighting ongoing financial headwinds. The EPS performance indicates a modest improvement in profitability efficiency despite continued net losses.

Price Action

The stock price of CS Disco has climbed 4.92% during the latest trading day, has dropped 4.03% during the most recent full trading week, and has climbed 4.65% month-to-date.

Post-Earnings Price Action Review

Following the earnings release, CS Disco shares exhibited mixed short-term momentum, reflecting a divergence between immediate market reaction and broader technical trends. The stock gained 4.92% on the day of the report, suggesting positive sentiment toward the revenue beat and raised guidance. However, this optimism was tempered over the subsequent trading week, resulting in a 4.03% decline, indicating some profit-taking or caution among investors. Despite the weekly pullback, the stock remains positive on a month-to-date basis, having climbed 4.65%, which underscores a gradual recovery trend from lower levels. This volatility highlights the market's ongoing assessment of the company's path to adjusted EBITDA positivity.

CEO Commentary

Eric Friedrichsen, Chief Executive Officer, reported Q2 total revenue of $43.1 million, up 13% year-over-year, with software revenue at $36.8 million. He highlighted strong performance driven by larger, more complex matters, increased wallet share with sophisticated customers, and accelerating adoption of AI capabilities like Cecilia and AutoReview. A key strategic priority is the launch of the DISCO Unified Litigation Solution, which integrates facts and law to serve litigators beyond basic e-discovery. Friedrichsen expressed optimism, noting that customer validation confirms market readiness for this deep-context AI. He emphasized that DISCO’s focus on winning outcomes through litigation-specific intelligence, combined with the successful rollout of the DISCO Platform pricing model, positions the company for sustained growth. The company remains on track to achieve adjusted EBITDA positivity in Q4.

Guidance

For Q3 fiscal 2026, CS Disco expects total revenue between $43.75 million and $45.75 million, with software revenue between $38.1 million and $39.1 million. Adjusted EBITDA is projected to range from -$1.75 million to -$0.25 million. For the full fiscal year 2026, the company raised total revenue guidance to $172 million–$179 million and software revenue guidance to $147.5 million–$152.5 million. Full-year adjusted EBITDA is now expected to be between negative $8 million and negative $5 million. Management reaffirmed its expectation to be adjusted EBITDA positive in the fourth quarter of fiscal 2026, citing increased confidence in the second half of the year driven by large matter growth and DISCO Platform adoption.

Additional News

In insider trading activity, CEO Eric Friedrichsen acquired 9,000 shares of CS Disco on May 8, 2026, at an average cost of $3.97 per share. This transaction increased his position by 0.60%, bringing his total holdings to 1,517,172 shares, valued at approximately $6.02 million. Additionally, Arrowstreet Capital Limited Partnership purchased 326,115 shares of the company, signaling institutional interest. Weiss Ratings recently upgraded CS Disco’s rating from "sell (e+)" to "sell (d-)" on July 2, 2026, reflecting a slight improvement in their assessment. Currently, analysts maintain a consensus "Hold" rating with a target price of $8.00, while company insiders own 16.80% of the stock.