CS Disco (LAW) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenue reached $43.1 million, up 13% year-over-year, with software revenue at $36.8 million, also up 13% year-over-year.

• Net loss narrowed to $8.7 million from $10.8 million in Q2 2025, and Adjusted EBITDA was $(3.4) million, compared to $(2.7) million in Q2 2025.

• The number of customers generating over $100,000 in the last 12 months grew to 354, representing a 10% increase year-over-year and 77% of total revenue.

• The company launched the DISCO Unified Litigation Solution, expanding beyond e-discovery to offer integrated, AI-driven litigation tools.

• Customer adoption of generative and agentic AI capabilities more than tripled year-over-year, with significant traction for AutoReview and Advanced Research.

Financial highlights

• Gross margin held steady at 76% year-over-year; gross profit for Q2 2026 was $32.1 million.

• Adjusted EBITDA margin was -8% for Q2 2026.

• Net loss was $3.6 million (8% of revenue), with net loss per share at $0.06; weighted average shares outstanding were 64.5 million.

• Cash and short-term investments totaled $101.4 million at quarter-end, with no debt.

• Operating cash flow improved to -$1.1 million from -$4.2 million year-over-year.

Outlook and guidance

• Q3 2026 revenue guidance: $43.75 million–$45.75 million; software revenue: $38.1 million–$39.1 million.

• Q3 Adjusted EBITDA guidance: -$1.75 million to -$0.25 million.

• FY2026 revenue guidance raised to $172 million–$179 million; software revenue: $147.5 million–$152.5 million.

• FY2026 Adjusted EBITDA guidance updated to -$8 million to -$5 million; company expects to be Adjusted EBITDA positive in Q4.

• Management expects continued revenue growth driven by new customer acquisition, increased usage, and expansion of AI-powered product offerings.