CS Disco, Inc. (LAW) · Nov 4, 2026 · Earnings

CS Disco earnings beat estimates as adjusted EBITDA breaks even early

Beat — Revenue $45.3M vs ~$44.8M consensus; adjusted EBITDA $0.08M vs Q3 guide of $(0.25)M–$(1.75)M

CS Disco’s Q3 earnings beat revenue expectations and reached adjusted EBITDA break-even ahead of schedule, while GAAP losses persist.

CS Disco is trying to turn its legacy e-discovery business into a broader AI-native litigation platform, with its unified litigation solution and agentic AI products now central to the growth story. That transition is showing operational traction: the company had guided for a Q3 adjusted EBITDA loss of $1.75 million to $0.25 million, while consensus expected roughly $44.8 million of revenue.

The quarter beat the operating bar, not just the revenue bar. Revenue reached $45.3 million, about 1% above consensus and 11% above the prior-year quarter; software revenue was $38.6 million, up 10% year over year. The larger surprise was adjusted EBITDA of $79,000 versus the prior guide for a loss, delivering the break-even milestone one quarter earlier than management had expected.

MetricQ3 2026Q3 2025Consensus / Guide
Revenue (Income Statement)$45.3M (+10.8%)$40.9M~$44.8M
Software revenue (Financial Highlights)$38.6M (+10%)—$38.1M–$39.1M guide
Adjusted EBITDA (Reconciliation)$0.08M$(0.30M)$(0.25M)–$(1.75M) guide
GAAP net loss (Income Statement)$(5.0M)$(13.7M)—
Operating cash flow, nine months (Cash Flow statement)$(15.8M)$(15.7M)—

The growth story is improving, but it is not yet a clean profitability story. GAAP operating loss narrowed to $5.6 million from $14.5 million, helped by lower general and administrative costs and the absence of the prior-year stockholder-litigation expense. But the quarter still produced a $5.0 million net loss, and adjusted EBITDA excludes $4.7 million of stock-based compensation. That makes the break-even milestone meaningful for operating discipline, but less conclusive as evidence of durable GAAP profitability.

AI progress is now moving from product launch toward commercial proof. Advanced Research became generally available during the quarter, while management said the DISCO Platform had grown tenfold since Q1 2026 and that a second cohort entered the unified-litigation pilot. Advanced Research itself was already announced in August, so the new information is less the launch than whether adoption can convert the AI investment into sustained software growth.

Liquidity is adequate but still deserves attention. Cash and short-term investments totaled about $96.8 million at September 30, down from roughly $114.6 million at year-end, while nine-month operating cash use remained $15.8 million. The improved adjusted EBITDA reduces the urgency of that burn, but it has not eliminated it.

Bottom line: This is a clear execution beat: revenue modestly exceeded expectations and adjusted EBITDA reached break-even ahead of schedule. It strengthens DISCO’s AI-and-efficiency transition, but the company still has to turn non-GAAP break-even and product enthusiasm into sustained GAAP profitability and lower cash burn.

What to watch next

Q4 earnings report and fiscal 2026 close

Original filing on SEC EDGAR

CS Disco earnings beat estimates as adjusted EBITDA breaks even early | LAW Stock News
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