CS Disco Q2 Earnings Call Highlights

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Sat, August 8, 2026 at 7:04 PM GMT+3 6 min read

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Q2 fiscal 2026 revenue rose 13% to $43.1 million, driven by larger matters, stronger major-customer relationships and increased AI adoption. AI-related revenue more than tripled year over year, while trailing-12-month revenue from customers generating over $100,000 grew 15%.
CS Disco launched its DISCO Unified Litigation Solution into a limited customer pilot, connecting case evidence with relevant legal authorities and litigation workflows. The company said the product will not contribute revenue in fiscal 2026 as it continues refining pricing and packaging.
The company raised its full-year revenue outlook to $172 million–$179 million and maintained its expectation of adjusted EBITDA profitability in Q4 fiscal 2026. Q2 ended with $101.4 million in cash and short-term investments and no debt, despite a $3.4 million adjusted EBITDA loss.

CS Disco (NYSE:LAW) reported second-quarter fiscal 2026 revenue growth of 13% as the legal technology company cited expanding large matters, deeper relationships with major customers and increased use of its artificial intelligence products.

Total revenue for the quarter was $43.1 million, while software revenue reached $36.8 million, both up 13% from a year earlier. Services revenue increased 18% to $6.3 million, which Chief Financial Officer Aaron Barfoot said was primarily driven by professional services and managed-review work related to Cecilia AutoReview on the company's largest matters.

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The company recorded adjusted EBITDA of negative $3.4 million and a net loss of $3.6 million, or $0.06 per share. CS Disco ended the quarter with $101.4 million in cash and short-term investments and no debt. Operating cash flow was negative $1.1 million, improving from negative $4.2 million in the prior-year period.

Unified Litigation Solution Enters Pilot Phase

Chief Executive Officer Eric Friedrichsen announced the launch of the DISCO Unified Litigation Solution, which the company described as a broader, long-term expansion beyond e-discovery. The platform is designed to connect a litigation team's evidence with applicable case law, court rules, statutes and regulations through a unified interface.

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Friedrichsen said the company ultimately intends to provide an integrated set of litigation tools spanning a matter from filing through trial preparation. In the near term, the offering is intended to help teams connect facts and controlling law, while incorporating litigation-specific workflows.

"We are ultimately building a full suite of integrated litigation solutions that span the life of a matter from filing to verdict," Friedrichsen said.

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Chief Product, Technology and Strategy Officer Richard Crum said the solution has native access to an e-discovery database, including document text, metadata and customer work product, along with DISCO's licensed corpus of U.S. case law, court rules, statutes and regulations. He said the system is designed to map claims to the legal elements needed to prove them and evaluate whether a matter's evidence supports those elements.

The offering remains in a pilot stage with a small group of selected customers using it on live matters. Crum said the company is focused on learning from engagement patterns and customer needs before setting pricing, packaging or timing plans. He added that CS Disco has filed three provisional patents related to its approach.

During the question-and-answer session, Crum said investors should not include revenue from the Unified Litigation Solution in their models yet, while Friedrichsen clarified that the company does not expect revenue from the new offering in 2026.

AI Product Adoption and Large-Customer Growth

CS Disco said revenue attributable to its generative AI and agentic AI capabilities more than tripled year over year in the second quarter. Cecilia and AutoReview were key contributors, with AutoReview posting a material sequential increase driven by pipeline growth, larger matters, a higher number of matters and repeat usage.

Barfoot said AutoReview set a revenue record during the quarter, supported by a record number of reviews executed and growth in the average size of AutoReview engagements. He said some customers that had favored traditional review processes in the first quarter shifted toward AutoReview in the second quarter as their readiness and comfort with AI improved.

The company also began rolling out an enhancement to AutoReview intended to simplify the creation of inputs required for AI review. CS Disco said the change is designed to reduce the learning curve for customers with differing levels of AI readiness.

Advanced Research, an agentic AI feature built into the company's e-discovery products, is expected to roll out to all customers in the coming weeks. Crum said the product performs multistep reasoning across a matter's evidentiary record and had received positive feedback during testing with law firms.

CS Disco also cited strong demand for DISCO Platform, its newer commercial model. Friedrichsen said the company achieved its December 2026 year-end run-rate goal for the platform by June, aided by faster-than-anticipated adoption and demand. The model includes Cecilia AI on every matter and uses simplified pricing, which the company said has helped bring more and larger matters to the platform.

The company said it had 354 customers generating more than $100,000 in revenue over the trailing 12 months. Those customers represented $128 million, or 77%, of trailing-12-month revenue, and revenue from the group grew 15% year over year.

Profitability Investments and Outlook

Non-GAAP gross margin was 76%, unchanged from the prior-year quarter. Sales and marketing expense totaled $15.7 million, or 36% of revenue, while research and development expense was $13.4 million, or 31% of revenue. Barfoot said the company's R&D spending reflected continued investment in the Unified Litigation Solution, Advanced Research and AutoReview.

CS Disco maintained its expectation of reaching adjusted EBITDA profitability in the fourth quarter of fiscal 2026. For the third quarter, the company forecast total revenue of $43.75 million to $45.75 million, software revenue of $38.1 million to $39.1 million, and adjusted EBITDA between negative $1.75 million and negative $0.25 million.

For the full year, CS Disco raised its total revenue outlook to $172 million to $179 million and its software revenue outlook to $147.5 million to $152.5 million. It updated its adjusted EBITDA guidance to a loss of $8 million to $5 million.

Barfoot said the higher full-year outlook reflected confidence in continued execution with large matters and large customers, adoption of DISCO Platform and momentum in AutoReview. He noted that the platform's lower ingest fees could create short-term revenue pressure if adoption continues to exceed expectations, though the company expects that effect to be offset over time by ongoing platform fees and larger, longer-lasting matters.

About CS Disco (NYSE:LAW)

CS Disco, Inc is a provider of cloud-native, artificial intelligence-driven legal applications designed to streamline e-discovery, document review and compliance processes for law firms and corporate legal departments. The Austin, Texas–based company offers a unified platform that automates labor-intensive tasks using machine learning and predictive analytics, enabling legal professionals to process, search and review large volumes of data with greater speed and accuracy.

At the core of CS Disco's product suite is its flagship e-discovery application, which supports early case assessment, data processing, review analytics and production workflows.

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