CS Disco (LAW) Q1 2026 earnings summary

Executive summary

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

• Net loss narrowed to $9.6 million from $11.4 million in Q1 2025; adjusted EBITDA improved to -$3.5 million from -$5.1 million year-over-year.

• Customer base with over $100,000 in revenue grew to 347, up 13% year-over-year.

• DISCO Platform launch exceeded expectations, driving larger matters, multi-year deals, and increased AI adoption.

• Appointment of Toby Williams, an AI SaaS veteran, to the Board of Directors.

Financial highlights

• Gross profit for Q1 2026 was $31.1 million, with gross margin steady at 74–75% year-over-year.

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

• Non-GAAP net loss attributable to common stockholders was $4.2 million, or $(0.07) per share, compared to $4.9 million, or $(0.08) per share, in Q1 2025.

• Cash and short-term investments totaled $103 million at quarter-end; cash and cash equivalents were $17.6 million.

• Ended Q1 with no debt.

Outlook and guidance

• Q2 2026 revenue guidance: $41.5M–$43.5M; software revenue: $36.1M–$37.1M.

• FY2026 revenue guidance raised to $169.25M–$178.75M; software revenue: $146M–$152.5M.

• Q2 adjusted EBITDA guidance: -$4.5M to -$2.5M; FY2026 adjusted EBITDA expected between -$8M and -$4M.

• Targeting adjusted EBITDA profitability by Q4 2026.

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