While gross margins remain structurally efficient at 74.2% in 2026Q1, the company continues to struggle with profitability, reporting a deeply negative operating margin of -24.1%.
| Sales/Revenue | 162.08M | 156.85M | 144.84M | 138.09M | 135.19M | 114.34M | 68.44M | 48.56M |
| Revenue Growth % | 11.07% | 8.29% | 4.89% | 2.15% | 18.23% | 67.06% | 40.96% | - |
| Cost of Goods Sold | 40.72M | 39.42M | 37.41M | 34.95M | 34.16M | 31.1M | 20.45M | 14.46M |
| COGS % of Revenue | - | 25.14% | 25.83% | 25.31% | 25.27% | 27.2% | 29.88% | 29.77% |
| Gross Profit | 121.36M | 117.42M | 107.43M | 103.14M | 101.03M | 83.24M | 47.99M | 34.1M |
| Gross Margin % | 74.88% | 74.86% | 74.17% | 74.69% | 74.73% | 72.8% | 70.12% | 70.23% |
| Gross Profit Growth % | - | 9.31% | 4.15% | 2.09% | 21.36% | 73.44% | 40.75% | - |
| Operating Expenses | 166.96M | 165.55M | 169.15M | 152.99M | 172.84M | 107.07M | 70.5M | 64.45M |
| OpEx % of Revenue | - | 105.55% | 116.78% | 110.79% | 127.85% | 93.64% | 103% | 132.73% |
| Selling, General & Admin | 109.92M | 108.95M | 102.43M | 101.36M | 113.58M | 72.66M | 44.95M | 39.1M |
| SG&A % of Revenue | - | 69.46% | 70.72% | 73.4% | 84.01% | 63.55% | 65.68% | 80.52% |
| Research & Development | 57.04M | 56.6M | 51.51M | 51.62M | 59.26M | 34.41M | 26.6M | 25.35M |
| R&D % of Revenue | - | 36.08% | 35.56% | 37.38% | 43.83% | 30.1% | 38.86% | 52.21% |
| Other Operating Expenses | 0 | 0 | 15.21M | 0 | 0 | 0 | -1.06M | 0 |
| Operating Income | -45.61M | -48.12M | -61.72M | -49.84M | -71.81M | -23.83M | -22.5M | -30.35M |
| Operating Margin % | -28.14% | -30.68% | -42.61% | -36.1% | -53.12% | -20.84% | -32.88% | -62.51% |
| Operating Income Growth % | - | 22.03% | -23.83% | 30.59% | -201.35% | -5.9% | 25.86% | - |
| EBITDA | -41.22M | -47.91M | -57.8M | -45.69M | -68.83M | -21.09M | -20.88M | -29.55M |
| EBITDA Margin % | -25.43% | -30.55% | -39.9% | -33.08% | -50.92% | -18.45% | -30.5% | -60.85% |
| EBITDA Growth % | 29.21% | 17.11% | -26.51% | 33.63% | -226.35% | -1.03% | 29.34% | - |
| D&A (Non-Cash Add-back) | 4.39M | 214K | 3.93M | 4.16M | 2.97M | 2.74M | 1.62M | 803K |
| EBIT | -42.47M | -43.63M | -54.89M | -41.54M | -70.11M | -23.72M | -22.35M | -29.7M |
| Net Interest Income | 1.21M | 0 | 6.28M | 8.14M | 1.23M | -434K | -301K | 528K |
| Interest Income | 1.21M | 0 | 6.84M | 8.31M | 1.7M | 106K | 155K | 652K |
| Interest Expense | 0 | 0 | 556K | 168K | 473K | 540K | 456K | 124K |
| Other Income/Expense | 3.76M | 4.5M | 6.28M | 8.14M | 1.23M | -434K | -301K | 528K |
| Pretax Income | -41.85M | -43.63M | -55.44M | -41.71M | -70.58M | -24.26M | -22.8M | -29.82M |
| Pretax Margin % | -25.82% | -27.82% | -38.28% | -30.2% | -52.21% | -21.22% | -33.31% | -61.42% |
| Income Tax | 465K | 743K | 332K | 443K | 186K | 81K | 71K | 10K |
| Effective Tax Rate % | -1.11% | -1.7% | -0.6% | -1.06% | -0.26% | -0.33% | -0.31% | -0.03% |
| Net Income | -42.6M | -44.37M | -55.77M | -42.15M | -70.77M | -24.34M | -22.87M | -29.83M |
| Net Margin % | -26.28% | -28.29% | -38.51% | -30.52% | -52.34% | -21.29% | -33.42% | -61.44% |
| Net Income Growth % | 24.72% | 20.44% | -32.32% | 40.44% | -190.69% | -6.43% | 23.33% | - |
| Net Income (Continuing) | -42.6M | -44.37M | -55.77M | -42.15M | -70.77M | -24.34M | -22.87M | -29.83M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | -0.67 | -0.72 | -0.93 | -0.70 | -1.20 | -0.42 | -0.40 | -0.52 |
| EPS Growth % | 26.6% | 22.58% | -32.86% | 41.67% | -185.71% | -5% | 23.08% | - |
| EPS (Basic) | - | -0.72 | -0.93 | -0.70 | -1.20 | -0.42 | -0.40 | -0.52 |
| Diluted Shares Outstanding | 63.67M | 61.72M | 60.21M | 60.14M | 58.75M | 58.01M | 56.88M | 56.88M |
| Basic Shares Outstanding | 63.67M | 61.72M | 60.21M | 60.14M | 58.75M | 58.01M | 56.88M | 56.88M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - |
Liquidity and cash burn
According to the latest quarterly filings, LAW's revenue growth has accelerated to 14.3% in 2026Q1, marking a notable improvement from the low-single-digit growth rates observed throughout 2024 and early 2025, suggesting a potential stabilization in demand for its cloud-native ediscovery platform among enterprise legal clients.
The recent uptick in top-line expansion may indicate that the company is successfully navigating a more disciplined corporate spending environment. However, investors should monitor whether this growth is driven by sustainable subscription adoption or volatile, project-based usage fees that remain sensitive to the timing of large-scale litigation matters.
As reported in financial statements, LAW has maintained a consistent gross margin profile hovering around 74-75% over the last ten quarters, demonstrating that the company's core software-heavy delivery model remains structurally efficient despite the ongoing challenges in achieving profitability at the operating level.
This high gross margin suggests that the company possesses a degree of pricing power, yet it remains insufficient to offset the heavy investment in sales and marketing. The persistence of these margins implies that cloud infrastructure costs are being managed effectively, even as the volume of data processed on the platform continues to scale.
Based on the provided income statement data, LAW continues to struggle with operating leverage, as operating margins remain deeply negative at -24.1% in 2026Q1, indicating that the company has yet to decouple its revenue growth from the high fixed costs associated with R&D and administrative overhead.
The inability to scale operating income faster than gross profit suggests that the company is still in a heavy investment phase, likely prioritizing market share acquisition over immediate bottom-line results. This trend warrants further investigation into whether the current cost structure is a permanent feature of the business model or a temporary consequence of aggressive expansion efforts.
Analysis of recent SEC filings reveals that LAW consistently utilizes stock-based compensation, with quarterly figures frequently exceeding $5 million, which effectively masks the true cash-based operating losses and complicates the assessment of the company's path toward GAAP profitability for potential investors.
The reliance on equity-based incentives to attract specialized AI talent may be necessary for product development, but it creates a persistent drag on EPS that is not fully captured by operating income alone. Investors should be cautious of the dilutionary impact this strategy has on existing shareholders, especially given the company's current negative net income trajectory.
With cash and equivalents reported at approximately $19.6 million against a trailing twelve-month net loss exceeding $44 million, the company's financial position appears increasingly vulnerable, suggesting that management may face significant pressure to secure additional funding or drastically reduce expenditures in the near term.
The current cash burn rate relative to the available liquidity may indicate that the company is approaching a critical juncture where external financing becomes unavoidable. This situation poses a substantial risk to shareholders, as any future capital raise in the current interest rate environment could be highly dilutive and signal a lack of internal self-sufficiency.
Quick answers to the most common questions about buying LAW stock.
For fiscal year 2025, CS Disco, Inc. (LAW) reported total revenue of $156.8M. This represents a 223.0% increase compared to $48.6M in 2019.
CS Disco, Inc. (LAW) reported a net loss of $44.4M for the fiscal year ending 2025.
CS Disco, Inc. (LAW) reported an operating income of $-48.1M, resulting in an operating profit margin of -30.7%. This margin reflects the operational efficiency of the business before interest and taxes.
CS Disco, Inc. (LAW) generated $117.4M in gross profit for the year, representing a gross profit margin of 74.9%. This demonstrates the company's core pricing power and production efficiency.