CS Disco (LAW) Makes Its Case in Q1
CS Disco (LAW) reported Q1 numbers that surpassed expectations. Revenue rose 63.5% to $34.5 million (beating by $3.8 million), while adjusted EPS of -$0.15 beat by $0.06. Billings grew almost 60% to $35.3 million versus consensus closer to $31 million. International was up 200%, with U.K. being a standout performer. Management raised the midpoint of full-year guidance by $2.2 million to $151 million (+32%). The company also acquired legal hold workflow solutions from Congruity360 and those will become part of the e-discovery platform. This is good and helps Disco built out a more complete suite of offerings, key to attracting and retaining larger clients. Overall, a very solid quarter, and while management seems a little conservative on guidance (full-year guidance goes up less than the Q1 beat), that could (hopefully) be attributed to some conservatism (seems to be the norm here) and the usage-based pricing model Disco has. The stock is sort of in no man’s land but seems quite oversold and a positive reaction today (+15%) in a market that feels overdue for a rally (even if it’s a short-lived one) is a positive sign. Keeping at buy. BUY