CS Disco (LAW) Q1 2026 earnings summary

Executive summary

• Total revenue for Q1 2026 grew 14% year-over-year to $41.9 million, with software revenue up 12% to $34.7 million, driven by new customer additions, increased usage, and strong AI-driven product momentum.

• Net loss improved to $4.2 million (-10% of revenue) from $4.9 million (-14%) year-over-year on a non-GAAP basis, while GAAP net loss narrowed to $9.6 million from $11.4 million.

• Adjusted EBITDA improved to -$3.5 million, with margin improving to -8% from -14% year-over-year.

• Customer base with over $100,000 in trailing 12-month revenue grew to 347, contributing a significant portion of total revenue.

• Launched the DISCO Platform with advanced AI capabilities, exceeding adoption expectations and driving new revenue streams.

Financial highlights

• Gross margin remained steady at 75% year-over-year, with gross profit at $31.1 million.

• Adjusted EBITDA for Q1 2026 was -$3.5 million, with margin at -8%; non-GAAP operating expenses were $32.8 million (87% of revenue).

• Net loss per share improved to $0.07 from $0.08 year-over-year on a non-GAAP basis.

• Cash and short-term investments totaled $103 million at quarter-end, with no debt.

• Weighted-average shares outstanding were 63.7 million.

Outlook and guidance

• Q2 2026 revenue guidance: $41.5–$43.5 million; software revenue: $36.1–$37.1 million; adjusted EBITDA: -$4.5 million to -$2.5 million.

• FY 2026 revenue guidance raised to $169.25–$178.75 million; software revenue: $146–$152.5 million; adjusted EBITDA: -$8 million to -$4 million.

• Management targets adjusted EBITDA profitability by Q4 2026.

• Cash and investments expected to fund operations for at least the next 12 months.