DISCO Q3 Revenue Rises 11%, Adjusted EBITDA Margin at 0%

DISCO (LAW) reported total revenue of $45.3 million for the third quarter of fiscal 2026, up 11% year over year, while its adjusted EBITDA margin stood at 0%. The results pair double-digit revenue growth with break-even profitability on the company’s adjusted EBITDA measure, as DISCO focuses on expanding customer usage and improving sales and marketing efficiency.

Software revenue rose 10% to $38.6 million and accounted for most of the legal technology provider’s quarterly revenue. DISCO reported a non-GAAP gross margin of 77% and said it had 374 customers generating more than $100,000 in trailing-12-month revenue.

Adjusted EBITDA excludes items including depreciation and amortization, stock-based compensation, payroll taxes on employee stock transactions, certain litigation costs and applicable one-time charges. DISCO cautioned that its non-GAAP measures should be considered alongside, rather than as substitutes for, GAAP results.

Platform and growth priorities

DISCO provides litigation technology and related services spanning legal holds, data collection, electronic discovery, document review, case timelines and deposition management. Its platform also includes Cecilia AI tools for functions such as question-and-answer searches, document summaries, automated timelines and deposition summaries. Professional services include managed review, AI consulting, forensics, data operations and project management.

The company’s growth strategy centers on increasing spending among existing law firms and corporate customers, winning more large multi-terabyte matters and securing greater volume commitments. DISCO also plans to continue investing in reliable, secure and high-performing technology while seeking to reaccelerate growth with greater sales and marketing efficiency.

The presentation did not provide a formal forward revenue or profitability forecast.

Key uncertainties

DISCO said revenue depends partly on customer usage, which can fluctuate with the timing and activity of legal matters. A shortage of large cases on its platform could therefore affect results. Other disclosed risks include the company’s history of operating losses, its ability to attract new customers and deepen usage among existing clients, international expansion, competition, regulatory compliance, cybersecurity and data privacy threats, and its reliance on strategic relationships.

Macroeconomic conditions, tariffs, reduced regulatory enforcement, potential U.S. government shutdowns and unfavorable conditions in the legal industry could also affect customer activity and demand for DISCO’s offerings, the company said.