CS Disco Q2 Earnings Call Highlights

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.

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.

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. 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.

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.

CS Disco said revenue attributable to its...