Financials: Q4 total revenue was $41.2M (+11% YoY) with software revenue of $35.1M (+14%), full-year revenue was $156.8M and adjusted EBITDA improved to −$10.2M (−7% margin); the company finished Q4 with $114.6M in cash and no debt.

GenAI momentum: Adoption of Cecilia AI and Auto Review accelerated sharply (over 600% YoY growth in Q4), helping drive record multi‑terabyte usage and >30% YoY revenue growth from large matters.

Go‑to‑market shift and guidance: DISCO will bundle Cecilia AI on every matter and move pricing toward customer data‑size growth to reduce sales friction and improve win rates; management guided FY2026 revenue of $167M–$177M and expects adjusted EBITDA breakeven by Q4 2026.

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CS Disco (NYSE:LAW) reported fourth-quarter and full-year 2025 results highlighting accelerating software revenue growth, improving profitability metrics, and increasing adoption of its generative AI offerings, including Cecilia AI and Auto Review. Management also detailed a shift to a new packaging, pricing, and contracting model intended to reduce friction in sales cycles and expand usage across larger litigation matters.

For Q4 2025, DISCO reported total revenue of $41.2 million, up 11% year-over-year, with software revenue of $35.1 million, up 14%. CEO Eric Friedrichsen said this marked the third consecutive quarter of accelerating growth in both total and software revenue, excluding a one-time contingent software revenue item recognized in Q3.

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Adjusted EBITDA in Q4 was -$2.2 million, representing a -5% margin, compared with a -12% adjusted EBITDA margin in the prior-year period.

For the full year 2025, total revenue was $156.8 million (the CFO later cited $157 million), up 8% year-over-year. Software revenue was $134 million, up 12%. Full-year adjusted EBITDA was -$10.2 million for a -7% margin, improving from a -13% margin in 2024.

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Services revenue declined, which management attributed to lower traditional review activity:

Q4 services revenue: $6.0 million, down 3% year-over-year

Full-year services revenue: $22.8 million, down 8% year-over-year

Management attributed 2025 performance to higher platform usage, growth in large matters and large customers, and faster adoption of generative AI capabilities. In Q4, DISCO said it set record highs in total terabytes on its platform and finished the year with double-digit growth in multi-terabyte matters. Friedrichsen said revenue from multi-terabyte matters grew more than 30% year-over-year in Q4.

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DISCO ended the year with 330 customers generating more than $100,000 in total revenue over the last 12 months. Revenue from those customers totaled $119 million in 2025, representing 76% of total revenue. The company also finished the year with 20 customers contributing more than $1 million in revenue.

Friedrichsen highlighted “significant acceleration” in adoption of Cecilia AI and Auto Review, saying DISCO saw over 600% year-over-year growth in Q4 attributable to these features.

Chief Product, Technology and Strategy Officer Richard Crum emphasized that DISCO’s AI is designed for high-stakes litigation workflows, focusing on privilege controls, audit trails, and defensibility. He said every insight generated by Cecilia AI is anchored by a source and that Auto Review results exceed precision and recall benchmarks used to support defensibility in court.

Crum also discussed newly announced “agentic reasoning” capabilities for Cecilia, including a “deep research mode” designed to plan and execute multi-stage research flows, verify sources, and deliver cited answers across millions of documents. DISCO said these capabilities will roll out over the coming quarters.

Friedrichsen provided customer examples to illustrate the company’s AI impact, including a matter where a multi-terabyte dataset was narrowed to roughly 550,000 documents using Cecilia AI, after which Auto Review completed review in two days. He cited results of 98% precision and 97% recall, contrasting it with an estimate of 70 human reviewers over four weeks to meet the same deadline. He also cited Osborne Clarke as a customer that more than doubled matters with DISCO during 2025, began using Cecilia AI, used Auto Review for the first time, and expanded total spend by more than four times versus 2024.

DISCO announced a new go-to-market approach combining its e-discovery and Cecilia AI capabilities into a single offering, alongside updated pricing and contracting options. Crum said the new model includes all of Cecilia AI on every matter, including tools such as Cecilia Q&A, Auto Timelines, Document Summaries, and Definitions, along with Case Builder products like witness prep, deposition management, and case story building.

DISCO also said it is evolving its pricing toward an industry-standard approach based on customer data size as it grows over time, rather than the initial data load size. Crum said the historical approach provided cost certainty but sometimes made DISCO appear more expensive and led to discounting pressure. Management said the new approach should improve win rates with less discounting and provide a long-term revenue and gross margin lift at full implementation.

In the Q&A, management said the changes were driven by customer feedback and tested with select customers over the last six months. Friedrichsen and Crum described the goal as making DISCO easier to buy, improving sales efficiency, and helping win larger matters that tend to remain on the platform longer.

On profitability and expenses (on a non-GAAP basis unless noted), DISCO reported Q4 gross margin of 77% and full-year gross margin of 76%, up from 75% in 2024. Q4 sales and marketing expense was $13.9 million (34% of revenue), while full-year sales and marketing expense was $54.4 million (35% of revenue), down as a percentage of revenue versus 2024. Research and development expense increased year-over-year, which DISCO attributed to continued investment in product capabilities.

GAAP net loss for Q4 was $2.5 million (6% of revenue), compared with a net loss of $4.3 million in the prior-year quarter. Full-year net loss was $10.7 million (7% of revenue), compared with $17.2 million in 2024, with net loss per share of $0.17 versus $0.29 the prior year.

DISCO ended Q4 with $114.6 million in cash, cash equivalents, and short-term investments and no debt. Operating cash flow for 2025 was -$14.9 million, compared with -$8.7 million in 2024.

For Q1 2026, DISCO guided total revenue of $39.0 million to $41.5 million and software revenue of $33.75 million to $35.25 million, with adjusted EBITDA of -$6 million to -$4 million. CFO Aaron Barfoot said the sequential decline in adjusted EBITDA versus Q4 is expected to be driven by increased employee costs and one-time items related to sales kickoff, marketing campaigns, and professional services. DISCO said it expects to be on track for adjusted EBITDA breakeven by Q4 2026.

For full-year 2026, DISCO guided total revenue of $167 million to $177 million and software revenue of $145.5 million to $152.5 million, with adjusted EBITDA of -$8.5 million to -$4.5 million.

During the Q&A, Friedrichsen reiterated optimism about the company’s longer-term growth potential, stating he believes DISCO can be a “20%+ grower,” citing expansion within large customers, larger matters, and increased adoption of generative AI and Auto Review. He also said he had not heard of customers using general-purpose AI or frontier models for e-discovery workflows, emphasizing litigation-specific requirements such as defensibility, sensitive data handling, and integrated workflows.

CS Disco, Inc is a provider of cloud-native, artificial intelligence-driven legal applications designed to streamline e-discovery, document review and compliance processes for law firms and corporate legal departments. The Austin, Texas–based company offers a unified platform that automates labor-intensive tasks using machine learning and predictive analytics, enabling legal professionals to process, search and review large volumes of data with greater speed and accuracy.

At the core of CS Disco's product suite is its flagship e-discovery application, which supports early case assessment, data processing, review analytics and production workflows.

The article "CS Disco Q4 Earnings Call Highlights" was originally published by MarketBeat.