CS Disco reported third‑quarter 2025 revenue of $40.9 million, a 13% year‑over‑year increase that surpassed the consensus estimate of $38.46 million. The company’s earnings per share of $‑0.01 beat the $‑0.06 estimate, a $0.05 or 83% improvement that reflects tighter cost control and a higher mix of high‑margin software contracts.
Revenue growth was driven by a surge in software sales, which rose 12% to $30.2 million, and by the rapid adoption of the company’s AI‑powered Cecilia suite. Usage of Cecilia grew sevenfold from Q3 2024 to Q3 2025, translating into a 12% lift in software revenue and reinforcing the company’s strategy to win larger enterprise contracts.
Gross margin expanded to 77% from 74% in the same quarter last year, driven by the higher proportion of software revenue and improved operational leverage. However, the GAAP net loss widened to $13.7 million from $9.2 million, largely due to increased investment in product development and sales expansion. Adjusted EBITDA improved markedly, moving from a $4.5 million loss in Q3 2024 to a $0.3 million loss in Q3 2025, indicating that the company is closing the profitability gap.
Management guided for Q4 2025 revenue of $38.75 million to $40.75 million, a significant upward revision from the $36.5 million to $38.5 million range previously cited. Full‑year 2025 revenue guidance was raised to $154.4 million to $156.4 million, and Q4 adjusted EBITDA guidance was tightened to a negative $3.5 million to negative $1.5 million. The company reiterated its target of reaching adjusted EBITDA breakeven by the fourth quarter of 2026.
CEO Eric Friedrichsen emphasized that the company’s focus on large, complex matters is accelerating: "Our strategy to bring large clients and large matters to DISCO continued to gain traction in the third quarter with meaningful acceleration in both software and total revenue." He added that the expanding AI capabilities, particularly the Cecilia suite, are driving higher usage and customer retention, and that the company remains committed to investing in the business while working toward profitability.
The results underscore CS Disco’s ability to scale its AI platform and win high‑value enterprise contracts, while also highlighting the ongoing challenge of managing operating expenses. The company’s margin improvement and narrowed loss suggest that the investment in AI and enterprise expansion is beginning to pay off, positioning it for a path to profitability in the near term.
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