DISCO's AI Bet Pays Off, Shakes Up Legal Tech with New Pricing

AUSTIN, Texas – February 25, 2026 – Legal technology innovator DISCO (NYSE: LAW) today announced strong financial results for the fourth quarter and full fiscal year 2025, showcasing significant revenue growth and narrowing losses driven by the explosive adoption of its artificial intelligence solutions. The company coupled its positive earnings report with major product and pricing announcements, signaling an aggressive strategy to deepen its market leadership in 2026.

For the fourth quarter ended December 31, 2025, DISCO reported total revenue of $41.2 million, an 11% increase over the same period in 2024. For the full fiscal year, total revenue climbed 8% to $156.8 million. The company also demonstrated a clear path toward profitability, substantially reducing its GAAP net loss to $8.5 million for the quarter, a stark improvement from the $25.2 million loss reported in Q4 2024.

This financial momentum is largely attributed to the company's AI offerings. Revenue from its Cecilia AI platform and Auto Review features skyrocketed, increasing over 600% in the fourth quarter compared to the prior-year period.

"DISCO continues to show what's possible as an innovator in legal technology as our AI solutions were significant growth drivers in the fourth quarter and a key part of strong full-year results for 2025," said Eric Friedrichsen, CEO of DISCO. "We are continuing that disruptive trend in 2026 with the launch of the industry's first scaled agentic AI solution for eDiscovery and a new AI-inclusive platform that combines all of our Cecilia AI platform capabilities into a single, powerful offering for the largest and most complex matters in modern litigation."

The Dawn of Agentic AI in Law

At the heart of DISCO's 2026 strategy is a significant technological leap forward with the introduction of a scaled "agentic AI" tool. This represents a major evolution from the generative AI that has recently captivated the tech world. While generative AI excels at single, isolated tasks like summarizing a document, agentic AI operates with a higher level of autonomy. It can deconstruct complex user requests, devise a multi-step plan, and execute that plan to find answers without constant human guidance.

This new capability, which will be integrated into the existing Cecilia Q&A tool, is designed to transform fact investigation in large-scale litigation. Instead of lawyers manually piecing together information across thousands or millions of documents, the agentic AI can autonomously reason through vast datasets to identify nuanced connections and surface critical evidence. According to the company, this will elevate document review from a routine task to a core component of case strategy, helping legal teams find dispositive evidence faster than ever. The feature is slated for wide availability later in 2026.

Furthering this AI-centric approach, DISCO is consolidating its key products—DISCO Ediscovery, DISCO Case Builder, and the Cecilia AI platform—into a single, unified offering. This AI-inclusive platform aims to make its most advanced tools, including deposition summaries and timeline creation, seamlessly accessible throughout the litigation lifecycle. A key differentiator is the promise of unlimited AI use on all databases, a move away from the token limits or document count restrictions that characterize some competitor offerings.

A Disruptive New Commercial Model

To complement its unified platform, DISCO is overhauling its commercial structure with a new, simplified pricing model. The company will now offer its entire integrated suite for a single per-gigabyte rate, a transparent approach based on the volume of processed customer data. This model eliminates separate user license fees and, notably, all data ingestion fees.

This strategic shift directly addresses a common pain point for law firms and corporate legal departments: unpredictable eDiscovery costs. By bundling its most powerful features, including unlimited use of Cecilia AI, into a predictable, volume-based rate, DISCO aims to simplify budgeting and provide a clearer return on investment. The move is a direct challenge to competitors who may charge for individual features, meter AI usage through complex token systems, or levy surprise fees for data handling.

This new commercial model aligns DISCO's pricing with a familiar industry standard while enhancing the value proposition. By billing only on processed data and not charging for duplicates when deduplication is selected, the company is positioning its model as both transparent and cost-effective, allowing for clearer like-for-like comparisons with other providers in the crowded eDiscovery market.

Improving Financials and a Confident Outlook

The strategic focus on high-margin software and AI is clearly reflected in DISCO's financial performance. Software revenue, the company's core growth driver, accelerated throughout the year, posting 14% year-over-year growth in the fourth quarter to reach $35.1 million. For the full fiscal year 2025, software revenue was $134.0 million, a 12% increase from 2024.

Profitability metrics also showed marked improvement. Adjusted EBITDA, a non-GAAP measure of operational performance, was a loss of $(2.2) million in Q4 2025, less than half the $(4.3) million loss from Q4 2024. For the full year, the Adjusted EBITDA loss narrowed to $(10.2) million from $(18.7) million in 2024. This progress was supported by a strong non-GAAP gross margin, which stood at an impressive 77% for the quarter.

Looking ahead, DISCO projects continued growth. For fiscal year 2026, the company anticipates total revenue between $167.0 million and $177.0 million, with a further improved Adjusted EBITDA loss in the range of $(8.5) million to $(4.5) million. This guidance suggests confidence that its new platform and pricing strategy will fuel further adoption and drive the company closer to sustained profitability.

Reshaping a Competitive Market

DISCO's announcements come as the legal technology sector, valued at over $18 billion, is undergoing a rapid transformation driven by AI. Competitors such as Everlaw and Relativity are also investing heavily in AI, with the concept of agentic systems becoming a new battleground for innovation. In this dynamic environment, DISCO's strategy appears two-pronged: to lead on technology with its scaled agentic AI and to lead on business model simplicity with its all-in-one pricing.

By bundling its entire suite of advanced tools into one predictable cost, DISCO is betting that customers will prioritize integrated platforms that remove friction and hidden costs. This could pressure competitors to re-evaluate their own pricing structures and product silos. As law firms and corporate legal teams become more sophisticated in their technology procurement, the ability to offer a powerful, comprehensive, and easy-to-budget solution may prove to be a decisive competitive advantage in the evolving legal tech landscape.