CS Disco, Inc.

Previous wording

We generate substantially all of our revenue from our customers’ actual usage of ourproduct offerings. Customers generally do not commit to purchase a specific amount of usage on ourproduct offerings and their usage can fluctuate based on the number and nature of legal matters they have at any particular time. As a result, our revenue and other financial results can fluctuate from period to period given the inherent unpredictability of the timing, duration and scope of legal casework. We also offer our customers the option to enter into subscriptions based on committed minimum usage on an annual or multi-year basis, which represented 10% and 11% of our revenue for the three and six months ended June 30, 2025, and 2024, respectively. In addition, we generate revenue from a range of professional services aimed at accelerating the time-to-value for our customers.

Current wording

We generate substantially all of our revenue from our customers’ actual usage of ourproduct offerings. Customers generally do not commit to purchase a specific amount of usage on ourproduct offerings and their usage can fluctuate based on the number and nature of legal matters they have at any particular time. As a result, our revenue and other financial results can fluctuate from period to period given the inherent unpredictability of the timing, duration and scope of legal casework. We also offer our customers the option to enter into subscriptions based on committed minimum usage on an annual or multi-year basis, which represented 9% and 10% of our revenue for the three and nine months ended September 30, 2025, respectively, and 11% of our revenue in each of thethree and nine months ended September 30, 2024. In addition, we generate revenue from a range of professional services aimed at accelerating the time-to-value for our customers.

Previous wording

As of June 30, 2025, we had $21.7 million of cash and cash equivalents and $92.8 million of short-term investments. We generated revenue of $38.1 million and $36.0 million in the three months ended June 30, 2025 and 2024, respectively, representing a period-over-period growth of 6%, and $74.8 million and $71.6 million in the six months ended June 30, 2025 and 2024, respectively, representing a period-over-period growth of 4%. Our net loss was $10.8 million for each of the three months ended June 30, 2025 and 2024, and $22.2 million and $21.4 million for the six months ended June 30, 2025 and 2024, respectively.

Current wording

As of September 30, 2025, we had $28.8 million of cash and cash equivalents and $84.7 million of short-term investments. We generated revenue of $40.9 million and $36.3 million in the three months ended September 30, 2025 and 2024, respectively, representing a period-over-period growth of 13%, and $115.7 million and $107.8 million in the nine months ended September 30, 2025 and 2024, respectively, representing a period-over-period growth of 7%. Our net loss was $13.7 million and $9.2 million for the three months ended September 30, 2025 and 2024, respectively, and $35.9 million and $30.6 million for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

We generated Adjusted EBITDA of $(2.7) million and $(4.7) million in the three months ended June 30, 2025 and 2024, respectively, and $(7.8) million and $(9.9) million in the six months ended June 30, 2025 and 2024, respectively. See the section titled “—Non-GAAP Financial Measure” for the definition of Adjusted EBITDA, as well as a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with GAAP.

Current wording

We generated Adjusted EBITDA of $(0.3) million and $(4.5) million in the three months ended September 30, 2025 and 2024, respectively, and $(8.1) million and $(14.4) million in the nine months ended September 30, 2025 and 2024, respectively. See the section titled “—Non-GAAP Financial Measure” for the definition of Adjusted EBITDA, as well as a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with GAAP.

Previous wording

Further, unfavorable conditions in the legal industry may negatively affect the growth of our business and our results of operations. For example, in March 2025, President Trump issued executive orders against certain law firms with whom we partner, which could have the effect of restricting the ability of such firms to practice law in matters involving the federal government or under the jurisdiction of the federal court system. While we have not to date observed any adverse impact to our revenue from these law firm partners as a result of the executive orders, the validity of certain of these executive orders continues to be litigated in the federal court system and we cannot be certain that there will be no future adverse impact on our law firm partners’ usage of our product offerings or that our law firm partners’ clients will continue to engage such firms for their legal services. Additionally, under President Trump, certain federal agencies have decreased their levels of enforcement under President Trump, which could have the effect of reducing the volume of major legal matters experienced and, therefore, the usage of our product offerings.

Current wording

Further, unfavorable conditions in the legal industry may negatively affect the growth of our business and our results of operations. For example, in March 2025, President Trump issued executive orders against certain law firms with whom we partner, which could have the effect of restricting the ability of such firms to practice law in matters involving the federal government or under the jurisdiction of the federal court system. While we have not to date observed any adverse impact to our revenue from these law firm partners as a result of the executive orders, the validity of certain of these executive orders continues to be litigated in the federal court system and we cannot be certain that there will be no future adverse impact on our law firm partners’ usage of our product offerings or that our law firm partners’ clients will continue to engage such firms for their legal services. Additionally, under President Trump, certain federal agencies have decreased their levels of enforcement under President Trump. Finally, as of October 20, 2025, U.S. Federal courts are operating in a limited capacity until the lapse in government funding resulting from the U.S. government shutdown is resolved and operations are being determined on a court-by-court basis. To the extent the current government shutdown continues, or future shutdowns of the U.S. government occur, there may be delays in the advancement of litigation in the Federal courts government investigations or enforcement actions. Any of these factors could have the effect of reducing the volume of major legal matters experienced and, therefore, the usage of our product offerings.

Previous wording

Our market is global and we believe there is a significant opportunity to expand our international customer base, particularly in the United Kingdom, and further expand our operations internationally, particularly in India. In the three and six months ended June 30, 2025, less than 10% of our revenue was generated by customers outside of the United States. Operationally, weexpect to continue to expand our global employee headcount in India.

Current wording

Our market is global and we believe there is a significant opportunity to expand our international customer base, particularly in the United Kingdom, and further expand our operations internationally, particularly in India. In the three and nine months ended September 30, 2025, less than 10% of our revenue was generated by customers outside of the United States. Operationally, we expect to continue to expand our global employee headcount in India.

Previous wording

In the three and six months ended June 30, 2025 and 2024, usage-based revenue represented 90% and 89% of total revenue, respectively, and subscription revenue fees represented 10% and 11% and of total revenue, respectively.

Current wording

In the three and nine months ended September 30, 2025, usage-based revenue represented 91% and 90% of total revenue, respectively, and subscription revenue fees represented 9% and 10% of total revenue, respectively. In the three and nine months ended September 30, 2024, usage-based revenue represented 89% of total revenue and subscription revenue fees represented 11% of total revenue.

Previous wording

Research and development expenses consist primarily of personnel-related costs for our development team, including salaries, benefits, bonuses, stock-based compensation expenses and allocated overhead costs. Research and development expenses also include contractor or professional services fees and third-party cloud infrastructure expenses incurred in developing our product offerings. In the near term, we expect that our research and development expenses will remain relatively consistent in absolute dollars but may fluctuate as a percentage of our revenue over time. In addition, research and development expenses that qualify as capitalized software development costs are capitalized, the amount of which may fluctuate significantly from period to period.

Current wording

Research and development expenses consist primarily of personnel-related costs for our development team, including salaries, benefits, bonuses, stock-based compensation expenses and allocated overhead costs. Research and development expenses also include contractor or professional services fees and third-party cloud infrastructure expenses incurred in developing our product offerings. We expect that our research and development expenses will increase in absolute dollars but may fluctuate as a percentage of our revenue over time. In addition, research and development expenses that qualify as capitalized software development costs are capitalized, the amount of which may fluctuate significantly from period to period.

Previous wording

General and administrative expenses consist of personnel-related costs associated with our finance, legal, human resources and administrative personnel, including salaries, benefits, bonuses, stock-based compensation and allocated overhead costs. General and administrative expenses also include external legal, accounting and other professional services fees, software services dedicated for use by our general and administrative functions, insurance and other corporate expenses. In the near term, we expect that our general and administrative expenses will remain relatively consistent in absolute dollars but may fluctuate as a percentage of total revenue from period to period.

Current wording

General and administrative expenses consist of personnel-related costs associated with our finance, legal, human resources and administrative personnel, including salaries, benefits, bonuses, stock-based compensation and allocated overhead costs. General and administrative expenses also include external legal, accounting and other professional services fees, software services dedicated for use by our general and administrative functions, insurance and other corporate expenses. Excluding the impact of the stockholder litigation, we expect that our general and administrative expenses will increase in absolute dollars but may fluctuate as a percentage of total revenue from period to period.

Previous wording

Total revenue increased by $3.2 million, or 4%, for the six months ended June 30, 2025 compared to the same period in 2024. Revenue related to new customers added since June 30, 2024 contributed $7.7 million, which was offset by a $4.5 million decrease in revenue from customers that existed as of June 30, 2024. The change in revenue from existing customers was driven by decreases in usage of our product offerings by several of our existing customers.

Current wording

Total revenue increased by $4.7 million, or 13%, for the three months ended September 30, 2025 compared to the same period in 2024. Revenue related to new customers added since September 30, 2024 contributed $4.7 million. Revenue from existing customers decreased by a $1.4 million due to decreased usage of our product offerings offset by a $1.3 million increase of contingent revenue as a result of a favorable resolution to a legal matter for one of our customers.

Previous wording

Revenue generated from our software product offerings increased by $3.5 million, or 12%, for the three months ended June 30, 2025 compared to the same period in 2024 due to increases in usage of our software product offerings. Revenue generated from our services product offerings decreased by $1.4 million, or 20%, for the three months ended June 30, 2025 compared to the same period in 2024. This change was driven by decreases in usage of our services product offerings within managed review.

Current wording

Revenue generated from our software product offerings increased by $5.1 million, or 17%, for the three months ended September 30, 2025 compared to the same period in 2024. Of this change, $3.9 million is attributable to increased usage of our software product offerings and $1.2 million is attributable to the favorable resolution of a contingent matter. Revenue generated from our services product offerings decreased by $0.4 million, or 7%, for the three months ended September 30, 2025 compared to the same period in 2024. This change was driven by decreases in usage of our services product offerings within managed review.

Previous wording

Total cost of revenue increased by $0.4 million, or 4%, for the three months ended June 30, 2025 compared to the same period in 2024. This change was primarily driven by a $0.6 million increase in costs for cloud hosting as a result of increased usage of our software product offerings and a $0.4 million increase in salary and benefits costs. These changes were partially offset by a $0.7 million decrease in outsourced staffing vendor fees due to a decrease in managed review activity.

Current wording

Total cost of revenue increased by $0.3 million, or 3%, for the three months ended September 30, 2025 compared to the same period in 2024. This change was primarily driven by a $0.6 million increase in costs for cloud hosting as a result of increased usage of our software product offerings and a $0.4 million increase in salary and benefits costs. These changes were partially offset by a $0.7 million decrease in outsourced staffing vendor fees.

Previous wording

Research and development expenses increased by $3.3 million, or 13%, for the six months ended June 30, 2025 compared to the same period in 2024. The change was primarily driven by an increase of $3.4 million in personnel costs, including stock-based compensation, as a result of increased headcount, partially offset by a $0.2 million increase in capitalized software development.

Current wording

Research and development expenses increased by $0.7 million, or 5%, for the three months ended September 30, 2025 compared to the same period in 2024. The change was primarily driven by an increase of $1.1 million in personnel costs, including stock-based compensation, partially offset by a $0.3 million increase in capitalized software development.

Previous wording

General and administrative expenses increased by $0.1 million, or 1%, for the six months ended June 30, 2025 compared to the same period in 2024. This change was primarily attributable to an increase of $0.6 million in personnel costs, including stock-based compensation, as a result of increased headcount, partially offset by a $0.5 million decrease in insurance expense.

Current wording

General and administrative expenses increased by $7.3 million, or 75%, for the three months ended September 30, 2025 compared to the same period in 2024. This change was primarily attributable to an increase of $6.9 million in professional services costs related to legal fees and a legal loss contingency accrual for the securities litigation. In addition, personnel costs increased $0.9 million, including stock-based compensation, as a result of increased headcount. These increases were partially offset by a $0.2 million decrease in insurance expense.

Previous wording

Total revenue increased by $2.1 million, or 6%, for the three months ended June 30, 2025 compared to the same period in 2024. Revenue related to new customers added since June 30, 2024 contributed $4.4 million, which was offset by a $2.3 million decrease in revenue from customers that existed as of June 30, 2024. The change in revenue from existing customers was driven by decreases in usage of our product offerings by several of our existing customers.

Current wording

Total revenue increased by $7.8 million, or 7%, for the nine months ended September 30, 2025 compared to the same period in 2024. Revenue related to new customers added since September 30, 2024 contributed $10.6 million, which was offset by a $2.8 million decrease in revenue from customers that existed as of September 30, 2024. The change in revenue from existing customers was driven by a $4.1 million decrease in usage of our product offerings, partially offset by contingent revenue recognized of $1.3 million.

Previous wording

Revenue generated from our software product offerings increased by $4.4 million, or 8%, for the six months ended June 30, 2025 compared to the same period in 2024 due to increases in usage of our software product offerings. Revenue generated from our services product offerings decreased by $1.3 million, or 10%, for the six months ended June 30, 2025 compared to the same period in 2024. This change was driven by decreases in usage of our services product offerings within managed review.

Current wording

Revenue generated from our software product offerings increased by $9.5 million, or 11%, for the nine months ended September 30, 2025 compared to the same period in 2024. Of this change, $8.3 million is attributable to increased usage of our software product offerings and $1.2 million is attributable to the favorable resolution of a contingent matter. Revenue generated from our services product offerings decreased by $1.7 million, or 9%, for the nine months ended September 30, 2025 compared to the same period in 2024. This change was driven by decreases in usage of our services product offerings within managed review.

Previous wording

Total cost of revenue increased by $1.0 million, or 6%, for the six months ended June 30, 2025 compared to the same period in 2024. This change was primarily driven by a $1.0 million increase in costs for cloud hosting as a result of increased usage of our software product offerings and a $0.6 million increase in salary and benefits costs. These changes were partially offset by a $0.8 million decrease in outsourced staffing vendor fees due to a decrease in managed review activity.

Current wording

Total cost of revenue increased by $1.3 million, or 5%, for the nine months ended September 30, 2025 compared to the same period in 2024. This change was primarily driven by a $1.6 million increase in costs for cloud hosting as a result of increased usage of our software product offerings and a $1.0 million increase in salary and benefits costs. These changes were partially offset by a $1.5 million decrease in outsourced staffing vendor fees.

Previous wording

Research and development expenses increased by $1.1 million, or 8%, for the three months ended June 30, 2025 compared to the same period in 2024. The change was primarily driven by an increase of $1.5 million in personnel costs, including stock-based compensation, as a result of increased headcount, partially offset by a $0.4 million increase in capitalized software development.

Current wording

Research and development expenses increased by $3.9 million, or 10%, for the nine months ended September 30, 2025 compared to the same period in 2024. The change was primarily driven by an increase of $4.5 million in personnel costs, including stock-based compensation, as a result of increased headcount, partially offset by a $0.4 million increase in capitalized software development.

Previous wording

Sales and marketing expenses decreased by $1.5 million, or 5%, for the six months ended June 30, 2025 compared to the same period in 2024. The change was primarily related to a decrease of $0.8 million in personnel costs, including stock-based compensation and variable compensation, for our sales personnel as a result of decreased headcount. In addition, marketing expenses decreased $0.7 million.

Current wording

Sales and marketing expenses decreased by $1.5 million, or 3%, for the nine months ended September 30, 2025 compared to the same period in 2024. The change was primarily related to a decrease of $0.5 million in personnel costs, including stock-based compensation and variable compensation, for our sales personnel as a result of decreased headcount. In addition, marketing expenses decreased $0.8 million.

Previous wording

General and administrative expenses increased by $0.3 million, or 3%, for the three months ended June 30, 2025 compared to the same period in 2024. This change was primarily attributable to an increase of $0.7 million in professional services costs primarily related to legal fees for the securities litigation. This increase was partially offset by a $0.3 million decrease in insurance expense.

Current wording

General and administrative expenses increased by $7.4 million, or 23%, for the nine months ended September 30, 2025 compared to the same period in 2024. This change was primarily attributable to an increase of $7.1 million in professional services costs primarily related to legal fees and a legal loss contingency accrual for the securities litigation. In addition, personnel costs increased $1.5 million, including stock-based compensation. These increases were partially offset by a $0.7 million decrease in insurance expense.

Previous wording

We have financed operations primarily through customer payments and net proceeds from sales of equity securities, including our IPO in July 2021. As of June 30, 2025, our principal sources of liquidity were cash and cash equivalents and short-term investments, totaling $21.7 million and $92.8 million, respectively. Cash equivalents include highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. Short-term investments consist of highly-rated U.S. Treasury securities and corporate debt securities with maturities of more than three months but less than one year at the date of purchase. We believe our existing cash and cash equivalents and short-term investments will be sufficient to fund anticipated cash requirements for the next 12 months. We believe we will meet our longer-term expected future cash requirements primarily from a combination of cash flow from operating activities and available cash and cash equivalents and short-term investments. We may also engage in equity or debt financings to secure additional funds.

Current wording

We have financed operations primarily through customer payments and net proceeds from sales of equity securities, including our IPO in July 2021. As of September 30, 2025, our principal sources of liquidity were cash and cash equivalents and short-term investments, totaling $28.8 million and $84.7 million, respectively. Cash equivalents include highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. Short-term investments consist of highly-rated U.S. Treasury securities and corporate debt securities with maturities of more than three months but less than one year at the date of purchase. We believe our existing cash and cash equivalents and short-term investments will be sufficient to fund anticipated cash requirements for the next 12 months. We believe we will meet our longer-term expected future cash requirements primarily from a combination of cash flow from operating activities and available cash and cash equivalents and short-term investments. We may also engage in equity or debt financings to secure additional funds.

Previous wording

Our future capital requirements will depend on many factors, including our revenue growth rate, usage of our product offerings, billing frequency, the timing and extent of spending to support further sales and marketing and research and development efforts, and the continuing market acceptance of our product offerings. Although fluctuations in general macroeconomic and industry conditions, including conditions resulting from fluctuations in inflation and interest rates, the imposition of tariffs in the United States and abroad, the Russia-Ukraine war and conflict in the Middle East, and the executive orders issued by President Trump, have not materially impacted our liquidity to date, we plan to continue to evaluate aspects of our spending, including capital expenditures, discretionary spending and strategic investments throughout 2025. We have considered the impacts of these factors on our liquidity and capital resources to date, and we do not currently expect them to impact our ability to meet future liquidity needs.

Current wording

Our future capital requirements will depend on many factors, including our revenue growth rate, usage of our product offerings, billing frequency, the timing and extent of spending to support further sales and marketing and research and development efforts, and the continuing market acceptance of our product offerings. Although fluctuations in general macroeconomic and industry conditions, including conditions resulting from fluctuations in inflation and interest rates, the imposition of tariffs in the United States and abroad, the Russia-Ukraine war and conflict in the Middle East, the executive orders issued by President Trump, and the ongoing U.S. government shutdown, have not materially impacted our liquidity to date, we plan to continue to evaluate aspects of our spending, including capital expenditures, discretionary spending and strategic investments throughout 2025. We have considered the impacts of these factors on our liquidity and capital resources to date, and we do not currently expect them to impact our ability to meet future liquidity needs.

Previous wording

Net cash used in operating activities for the six months ended June 30, 2025 was $14.7 million, an increase of $6.7 million from net cash used in operating activities of $8.0 million for the six months ended June 30, 2024. The change in cash flow used in operations was partially due to an increase in net loss of $0.8 million. Fluctuations in net loss are further explained in the Comparison of the Six Months Ended June 30, 2025 and 2024 section included elsewhere in Management’s Discussion and Analysis. The change in cash flow used in operations was also caused by a decrease of $2.4 million in the change in accounts receivable due to the timing of payments received from customers and a decrease of $1.7 million related to accretion income of short-term investments. In addition, there was a decrease of $1.3 million in the change in accounts payable and accrued expenses due to the timing of vendor payments and a $0.9 million decrease related to various prepaid expenses.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2025 was $15.7 million, an increase of $4.9 million from net cash used in operating activities of $10.8 million for the nine months ended September 30, 2024. The change in cash flow used in operations was partially due to an increase in net loss of $5.3 million. Fluctuations in net loss are further explained in the Comparison of the Nine Months Ended September 30, 2025 and 2024 section included elsewhere in Management’s Discussion and Analysis. The change in cash flow used in operations was also caused by an increase of $15.5 million attributable to an estimated accrued legal loss contingency related to the stockholder litigation, which was partially offset by a $9.2 million decrease attributable to the insurance recovery receivable related to the legal loss contingency associated with the stockholder litigation. In addition, the change in accounts receivable decreased $3.7 million due to increased revenues and collections from customers and a decrease of $2.3 million related to accretion income of short-term investments.

Previous wording

Net cash used in investing activities for the six months ended June 30, 2025 was $16.3 million, an increase of $14.9 million from net cash used in investing activities of $1.3 million for the six months ended June 30, 2024. The change in cash used in investing activities was primarily related to $91.9 million in purchases of short-term investments during the six months ended June 30, 2025. This was partially offset by an increase in maturities of short-term investments of $77.1 million during the six months ended June 30, 2025.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2025 was $8.3 million, a decrease of $43.8 million from net cash used in investing activities of $52.2 million for the nine months ended September 30, 2024. The change in cash used in investing activities was primarily related to an increase in maturities of short-term investments of $149.6 million during the nine months ended September 30, 2025. This was partially offset by an increase of $105.5 million in purchases of short-term investments during the nine months ended September 30, 2025.

Previous wording

Net cash used in financing activities for the six months ended June 30, 2025 was $0.1 million, a decrease of $20.1 million from net cash used in financing activities of $20.2 million for the six months ended June 30, 2024. This decrease was primarily related to cash paid for the 2024 share repurchase program of $20.1 million.

Current wording

Net cash provided by financing activities for the nine months ended September 30, 2025 was $0.1 million, a decrease of $20.1 million from net cash used in financing activities of $20.0 million for the nine months ended September 30, 2024. This change was primarily related to cash paid for the 2024 share repurchase program of $20.1 million.