CS Disco, Inc. (LAW): DISCO Announces Third Quarter 2026 Financial Results
CS Disco, Inc. (LAW) filed an SEC Form 8-K — Results of Operations and Financial Condition. DISCO Announces Third Quarter 2026 Financial Results Total Revenue of $45.3 Million, A Year over Year Increase of 11%, or 15% when Excluding the Contingent Matter in Q3 2025 AUSTIN, Texas - November 4, 2026 - CS Disco, Inc. (“DISCO”) (NYSE: LAW) today announced financial results
How this was made
The 30-second read
Why it matters
The earnings beat and new revenue guidance provide fresh data for traders to reassess valuation and short‑term price direction.
Market read
Earnings beat and forward guidance could drive short‑term price movement in LAW.
What to watch
Potential volatility from stock‑based compensation and ongoing litigation expenses could affect future profitability.
DISCO Announces Third Quarter 2026 Financial Results Total Revenue of $45.3 Million, A Year over Year Increase of 11%, or 15% when Excluding the Contingent Matter in Q3 2025
Total revenue grew 11% year over year to $45.3 million, software revenue grew 10%, and Adjusted EBITDA turned positive at $0.1 million, one quarter ahead of the company's stated expectations. GAAP net loss, operating loss, and nine-month operating cash outflow remained negative.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 total revenue (in thousands)GAAP | $45.34M | – | 11% |
| Q3 2026 software revenueGAAP | $38.6M | – | 10% |
| Q3 2026 software revenue excluding the contingent matter in Q3 2025GAAP | $38.6M | – | 13% |
| Q3 2026 total revenue excluding the contingent matter in Q3 2025GAAP | $45.3M | – | 15% |
| Nine months 2026 revenue (in thousands)GAAP | $130.4M | – | – |
| Q3 2026 cost of revenue (in thousands)GAAP | $11.11M | – | – |
| Q3 2026 gross profit (in thousands)GAAP | $34.23M | – | – |
| Nine months 2026 gross profit (in thousands)GAAP | $97.43M | – | – |
| Q3 2026 research and development expense (in thousands)GAAP | $13.81M | – | – |
| Q3 2026 sales and marketing expense (in thousands)GAAP | $16.32M | – | – |
| Q3 2026 general and administrative expense (in thousands)GAAP | $9.71M | – | – |
| Q3 2026 total operating expenses (in thousands)GAAP | $39.84M | – | – |
| Q3 2026 loss from operations (in thousands)GAAP | −$5.60M | – | – |
| Q3 2026 operating marginGAAP | (12) % | – | – |
| Q3 2026 interest and other income, net (in thousands)GAAP | $714K | – | – |
| Q3 2026 loss from operations before income taxes (in thousands)GAAP | −$4.89M | – | – |
| Q3 2026 income tax provision (in thousands)GAAP | −$139K | – | – |
| Q3 2026 net loss attributable to common stockholders (in thousands)GAAP | −$5.03M | – | – |
| Q3 2026 net loss per share attributable to common stockholders, basic and dilutedGAAP | $ (0.08) | – | – |
| Q3 2026 weighted-average shares used in computing net loss per share attributable to common stockholders, basic and dilutedGAAP | 65,259 | – | – |
| Nine months 2026 loss from operations (in thousands)GAAP | −$24.91M | – | – |
| Nine months 2026 net loss attributable to common stockholders (in thousands)GAAP | −$23.30M | – | – |
| Nine months 2026 net loss per share attributable to common stockholders, basic and dilutedGAAP | $ (0.36) | – | – |
| Q3 2026 Adjusted EBITDA (in thousands)non-GAAP | $79K | – | – |
| Q3 2026 Adjusted EBITDA marginnon-GAAP | — % | – | – |
| Nine months 2026 Adjusted EBITDA (in thousands)non-GAAP | −$6.80M | – | – |
| Nine months 2026 Adjusted EBITDA marginnon-GAAP | (5) % | – | – |
| Q3 2026 non-GAAP cost of revenue (in thousands)non-GAAP | $10.64M | – | – |
| Q3 2026 non-GAAP gross profit (in thousands)non-GAAP | $34.7M | – | – |
| Q3 2026 non-GAAP gross marginnon-GAAP | 77 % | – | – |
| Nine months 2026 non-GAAP gross marginnon-GAAP | 76 % | – | – |
| Q3 2026 non-GAAP research and development expense (in thousands)non-GAAP | $12.45M | – | – |
| Q3 2026 non-GAAP sales and marketing expense (in thousands)non-GAAP | $15.23M | – | – |
| Q3 2026 non-GAAP general and administrative expense (in thousands)non-GAAP | $7.88M | – | – |
| Q3 2026 non-GAAP loss from operations (in thousands)non-GAAP | −$864K | – | – |
| Q3 2026 non-GAAP operating marginnon-GAAP | (2) % | – | – |
| Q3 2026 non-GAAP net loss attributable to common stockholders (in thousands)non-GAAP | −$289K | – | – |
| Q3 2026 non-GAAP net loss attributable to common stockholders per share, basic and dilutednon-GAAP | $ — | – | – |
| Nine months 2026 non-GAAP net loss attributable to common stockholders (in thousands)non-GAAP | −$8.07M | – | – |
| Nine months 2026 non-GAAP net loss attributable to common stockholders per share, basic and dilutednon-GAAP | $ (0.13) | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Software revenueThe contingent matter in Q3 2025 led to $1.2 million of software revenue recognized during that period; excluding its impact, software revenue was up 13%. | $38.6M | – | 10% |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Fourth quarter of 2026 and fiscal year 2026 outlook
- RevenueFourth quarter of 2026: Software revenue in the range of $39.4 million - $40.4 million; Total revenue in the range of $45.8 million - $47.8 million. Fiscal year 2026: Software revenue in the range of $149.5 million - $150.5 million; Total revenue in the range of $176.1 million - $178.1 million.
- NoteFourth quarter of 2026 Adjusted EBITDA in the range of $0.0 million - $1.5 million.
- NoteFiscal year 2026 Adjusted EBITDA in the range of $(6.8) million - $(5.3) million.
Capital returns
- Repurchase of common stock related to net share settlement: $ (499) (in thousands) for the nine months ended September 30, 2026, compared to $ (70) (in thousands) for the nine months ended September 30, 2025.
- Proceeds from exercise of stock options: $ 11 (in thousands) for the nine months ended September 30, 2026.
- Net proceeds from issuance of common stock under Employee Stock Purchase Plan: $ 408 (in thousands) for the nine months ended September 30, 2026.
What drove it
- The company cited its sixth consecutive quarter of double-digit software growth.
- DISCO Platform has grown 10x since Q1 2026.
- DISCO had 374 customers with revenue in excess of $100,000 over the previous 12-month period as of September 30, 2026, a 15% increase compared to September 30, 2025.
- DISCO announced general availability of Advanced Research, an agentic AI application.
- The Q3 2025 contingent matter contributed $1.3 million of total revenue and $1.2 million of software revenue in that prior-year period.
Concerns
- GAAP net loss was $5.0 million in Q3 2026 and net cash used in operating activities was $ (15,801) (in thousands) for the nine months ended September 30, 2026.
- Revenue depends on customer usage, which the company states fluctuates based on the timing of and activity driven by legal matters and any shortfall of large matters on its platform.
- The company states that stock-based compensation expense and expenses associated with stockholder litigation can significantly and potentially unpredictably affect future GAAP financial results.
- Cash and cash equivalents declined to $ 12,533 (in thousands) at September 30, 2026 from $ 19,655 (in thousands) at December 31, 2025.
What to watch
- Whether fourth-quarter software revenue reaches the guided range of $39.4 million - $40.4 million.
- Whether fourth-quarter total revenue reaches the guided range of $45.8 million - $47.8 million.
- Whether Q4 Adjusted EBITDA remains positive within the guided range of $0.0 million - $1.5 million.
- Customer expansion following the reported increase to 374 customers with revenue in excess of $100,000 over the previous 12-month period.
- The contribution from Advanced Research, DISCO Platform growth, and the unified litigation solution pilot program.
Balance sheet and cash flow
- Cash and cash equivalents were $ 12,533 (in thousands) as of September 30, 2026, compared with $ 19,655 (in thousands) as of December 31, 2025.
- Short-term investments were $ 84,248 (in thousands) as of September 30, 2026, compared with $ 94,942 (in thousands) as of December 31, 2025.
- Total assets were $ 163,401 (in thousands) as of September 30, 2026; total liabilities were $ 43,439 (in thousands); total stockholders’ equity was $ 119,962 (in thousands).
- Accrued legal loss was $ 11,500 (in thousands) as of September 30, 2026, unchanged from December 31, 2025.
- Net cash used in operating activities was $ (15,801) (in thousands) for the nine months ended September 30, 2026, compared with $ (15,698) (in thousands) for the nine months ended September 30, 2025.
- Purchases of property, equipment and capitalized software development costs were $ (4,204) (in thousands) for the nine months ended September 30, 2026, compared with $ (2,546) (in thousands) for the nine months ended September 30, 2025.
- Net cash provided by investing activities was $ 8,792 (in thousands) for the nine months ended September 30, 2026, compared with net cash used in investing activities of $ (8,328) (in thousands) for the nine months ended September 30, 2025.
- Net cash used in financing activities was $ (113) (in thousands) for the nine months ended September 30, 2026, compared with net cash provided by financing activities of $ 59 (in thousands) for the nine months ended September 30, 2025.
Analysis
DISCO reported Q3 2026 total revenue of $45.3 million, up 11% compared with the third quarter of 2025. Software revenue was $38.6 million, up 10%. The prior-year comparison included a contingent matter that added $1.3 million of total revenue and $1.2 million of software revenue in Q3 2025. Excluding that item, the company reported 15% total-revenue growth and 13% software-revenue growth.
Profitability improved materially from the prior year. GAAP net loss was $5.0 million compared with $13.7 million, while GAAP loss from operations was $ (5,602) thousand compared with $ (14,462) thousand. General and administrative expense was $ 9,712 thousand versus $ 16,921 thousand, with the prior-year period including $ 7,023 thousand of expenses associated with stockholder litigation. Adjusted EBITDA was $0.1 million, compared with $(0.3) million, producing the company's first positive Adjusted EBITDA result and reaching break-even a quarter ahead of its stated schedule.
The non-GAAP cost structure was broadly stable at the gross-profit level. Q3 non-GAAP gross margin was 77 %, unchanged from 77 % in the prior-year quarter. Non-GAAP research and development expense was $ 12,451 thousand, non-GAAP sales and marketing expense was $ 15,234 thousand, and non-GAAP general and administrative expense was $ 7,879 thousand. The company also reported 374 customers with revenue in excess of $100,000 over the previous 12-month period, a 15% increase compared to September 30, 2025, alongside the general availability of Advanced Research.
Cash generation remains an area of attention. For the nine months ended September 30, 2026, net cash used in operating activities was $ (15,801) thousand, compared with $ (15,698) thousand in the prior-year period. Cash and cash equivalents were $ 12,533 thousand and short-term investments were $ 84,248 thousand at period end. The company spent $ (4,204) thousand on property, equipment and capitalized software development costs during the nine-month period.
For Q4 2026, DISCO guided software revenue to $39.4 million - $40.4 million, total revenue to $45.8 million - $47.8 million, and Adjusted EBITDA to $0.0 million - $1.5 million. For fiscal 2026, it guided software revenue to $149.5 million - $150.5 million, total revenue to $176.1 million - $178.1 million, and Adjusted EBITDA to $(6.8) million - $(5.3) million. The key reported progression is that revenue growth and customer expansion coincided with break-even quarterly Adjusted EBITDA, while GAAP losses and operating cash use persisted.
Management, verbatim
DISCO had another strong quarter building AI for Litigators, paced by our sixth consecutive quarter of double-digit software growth, rapid growth in our DISCO Platform, which has grown 10x since Q1 2026, and continued customer enthusiasm for our unified litigation solution which just added a second cohort to our pilot program.
Eric Friedrichsen, CEO
Importantly, we also reached break-even Adjusted EBITDA in Q3 - a full quarter ahead of schedule.
Eric Friedrichsen, CEO
Not in the filing
stated, not guessed- Previous-period outlook was not provided; therefore no comparison with prior guidance is available.
- GAAP gross margin was not reported.
- Quarterly operating cash flow was not reported.
- Free cash flow was not reported.
- Debt was not reported as a separate balance-sheet line item.
- Dividend information was not reported.
- Prior-quarter comparisons were not reported.
- Revenue by additional operating segment was not reported.
- GAAP diluted versus basic EPS were reported together rather than separately.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
The filing is a standard SEC Form 8‑K reporting Q3 results and forward outlook for CS Disco, Inc.
Ticker impact
DISCO released its Q3 2026 earnings with revenue up 11% YoY and issued guidance for Q4 and FY 2026.
likely upward pressure as investors price in the improved revenue growth and break‑even adjusted EBITDA.
The company posted a narrower loss, achieved positive adjusted EBITDA, and provided higher‑than‑expected revenue guidance, which are fresh, material facts for a mid‑cap stock.
Market effects
Highlights continued growth in legal‑tech SaaS, potentially benefiting peers in litigation software.
U.S. legal‑tech sector may see modest gains.
Limited to U.S. market; no broader macro effect.
Counterpoint
If the guidance misses analyst expectations, the stock could face disappointment despite the earnings beat.
Key entities
- CompanyCS Disco, Inc.
Legal‑tech SaaS provider listed on NYSE under ticker LAW.
