This website uses cookies, pixel tags, and similar technologies (“Cookies”) for the purpose of enabling site operations and for performance, personalisation, and marketing purposes. We use our own Cookies and some from third parties. Only essential Cookies are used by default. By clicking “Accept All” you consent to the use of non-essential Cookies (i.e., functional, analytics, and marketing Cookies) and the related processing of personal data. You can manage your consent preferences by clicking Manage Preferences. You may withdraw a consent at any time by using the link “Cookie Preferences” in the footer of our website.
Our Privacy Notice is accessible here. To learn more about the use of Cookies on our website, please view our Cookie Notice.
Consilio posts soft Q3 earnings but lenders shrug off AI disruption noise
Yiwen Lu
+Sunny Oh
•2 min read
Legal services provider Consilio (rated B3/B-) reported softer than expected Q3 earnings in early November, according to 9fin sources.
For the quarter, revenue was around $290m, about 3.6% lower than Q3 2024’s $301.1m. Adjusted EBITDA was $87m, also a decrease from the same period last year.
Management cited the loss of government contracts as the main reason for the revenue decline, sources added. As with other service providers that work with the US government, Consilio’s federal contracts were terminated this year under the Trump administration.
But to existing lenders, the results weren’t particularly surprising as the company’s management has prepared lenders well in advance.
In October, Consilio hosted a two-hour call with lenders, where the company disclosed preliminary Q3 earnings. During the call, management also assured lenders about its internal AI progress and partnerships.
This follows from recent market chatter over potential AI disruption. Legal services providers like Consilio are seen as particularly vulnerable to AI competition, which has dragged down trading levels on their debt.
Stone Point-backed Consilio provides eDiscovery and document review, which involves managing and analyzing vast amounts of electronically stored information for legal cases, litigation, and regulatory investigations.
As generative AI models develop, such technology providers are considered to be under competitive pressures. As a result, Consilio and competitor Harvest Partners-backed Epiq (rated B3/B-) — the leading LevFin issuers in the eDiscovery space — saw their term loans trade down from near par to low 80s between mid-August to mid-September, despite both companies reporting solid Q2 earnings, sources said.
Other legal services providers also moved down in tandem, including Veritext, LegalShield, and Vaco, to name a few.
Yet more recently, buysiders speaking to 9fin generally felt positive about Consilio’s ample liquidity, long-term maturity, and long-term prospects, as the company has been actively rolling out its own AI capabilities. Three buyside sources said that the AI impact was overstated.
One portfolio manager pointed to Consilio’s partnership with AI-powered legal eDiscovery platform Reveal, saying that it should counter some AI worries.
The optimism is in part validated by how Consilio is trading in the secondary market: The company’s $1.983bn SOFR+375bps TLB due 2028 has been edging up since late October. As of 14 November, the loan was quoted at 88.78, about 6 points higher than its October 14 low of 82.
