LAW — CS Disco, Inc.

Summary of CS Disco Q2 2026 Earnings Call

1. Key Financial Results and Metrics:

• Total Revenue: $43.1 million, up 13% year-over-year.
• Software Revenue: $36.8 million, also up 13% year-over-year.
• Services Revenue: $6.3 million, an 18% increase year-over-year.
• Adjusted EBITDA: Negative $3.4 million, with a margin of -8%, compared to -7% in Q2 of the prior year.
• Net Loss: $3.6 million, or 8% of revenue, compared to a net loss of $2.8 million, or 7% of revenue, in Q2 2025.
• Cash Position: Ended Q2 with $101.4 million in cash and short-term investments, no debt.

2. Strategic Updates and Business Highlights:

• Launched the Unified Litigation Solution, aimed at enhancing the capabilities for litigators by integrating facts and law into a single platform.
• Continued growth in large matters and wallet share with significant customers; 354 customers generated over $100,000 in revenue over the last 12 months, representing 77% of total revenue.
• Adoption of AI capabilities, particularly Auto Review, tripled year-over-year, indicating strong customer engagement with AI tools.
• The new DISCO platform has exceeded internal goals, driving higher matter counts and improved pricing transparency.

3. Forward Guidance and Outlook:

• Q3 2026 Revenue Guidance: Expected in the range of $43.75 million to $45.75 million; software revenue guidance of $38.1 million to $39.1 million.
• Full Year 2026 Revenue Guidance: Raised to a range of $172 million to $179 million, reflecting confidence in the second half of the year.
• Adjusted EBITDA for the full year is projected to be between negative $8 million and negative $5 million, with expectations to achieve positive adjusted EBITDA in Q4.

4. Bad News, Challenges, or Points of Concern:

• Adjusted EBITDA remains negative, indicating ongoing challenges in achieving profitability.
• The company noted potential short-term revenue impacts from lower ingest fees due to the performance of the DISCO platform, although expected to be offset by ongoing fees from larger matters.
• The competitive landscape remains intense, with other AI legal tools emerging, although DISCO emphasizes its unique capabilities tailored for litigators.

5. Notable Q&A Insights:

• The Unified Litigation Solution is currently in a pilot phase with select customers, and pricing strategies are still being developed based on customer feedback and engagement.
• Confidence in Q4 revenue acceleration is based on strong execution in securing larger matters and the successful adoption of the DISCO platform and Auto Review.
• The company is focused on deepening relationships with law firms to expand into corporate legal departments, seeing significant upside potential in this area.
• Management emphasized the importance of their comprehensive access to legal data and AI capabilities as key differentiators in the competitive landscape.

Overall, DISCO demonstrated solid growth in Q2 2026, with strategic initiatives aimed at enhancing its offerings and market position, despite ongoing challenges in achieving profitability.