Core Insights - LegalZoom reported revenue of $183.11 million for the quarter ended March 2025, reflecting a 5.1% increase year-over-year and surpassing the Zacks Consensus Estimate of $176.51 million by 3.74% [1] - Earnings per share (EPS) for the quarter was $0.13, consistent with the consensus estimate, compared to $0.09 in the same quarter last year [1] Financial Performance Metrics - Average revenue per subscription unit (ARPU) was $0.25 million, slightly below the average estimate of $0.26 million [4] - Subscription units at period end totaled 1,924, exceeding the average estimate of 1,788 [4] - Average order value (AOV) was $196, lower than the average estimate of $205.58 [4] - Transaction units reached 341, surpassing the average estimate of 317 [4] - Business formations were reported at 131, matching the average estimate [4] - Subscription revenue amounted to $116.26 million, exceeding the average estimate of $112.16 million, representing a year-over-year increase of 7.8% [4] - Transaction revenue was $66.85 million, above the average estimate of $64.13 million, with a year-over-year change of 0.8% [4] Stock Performance - LegalZoom's shares have returned -0.6% over the past month, contrasting with the Zacks S&P 500 composite's increase of 10.6% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Company Performance - LegalZoom reported quarterly earnings of $0.13 per share, matching the Zacks Consensus Estimate, and an increase from $0.09 per share a year ago [1] - The company posted revenues of $183.11 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 3.74% and up from $174.21 million year-over-year [2] - LegalZoom has surpassed consensus EPS estimates three times over the last four quarters [1][2] Market Outlook - LegalZoom shares have declined approximately 3.2% since the beginning of the year, compared to a 4.7% decline in the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $0.15 on revenues of $180.1 million, and for the current fiscal year, it is $0.66 on revenues of $710.65 million [7] Industry Context - The Industrial Services industry, to which LegalZoom belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of LegalZoom's stock may be influenced by the overall outlook for the industry [8]

Financial Data and Key Metrics Changes - First quarter revenue was $183 million, reflecting a 5% year-over-year increase [6][26] - Adjusted EBITDA for the first quarter was $37 million, representing a 33% year-over-year increase, with an adjusted EBITDA margin of 20% [8][33] - Free cash flow increased to $41 million, up 67% compared to $25 million for the same period in 2024 [34][35] Business Line Data and Key Metrics Changes - Subscription revenue grew by 8% year-over-year to $116 million, driven by compliance pricing initiatives and increased virtual mail subscriptions [28] - Transaction revenue increased by 1% to $67 million, aided by the acquisition of Formation Nation [26] - The number of subscription units rose by 20% to approximately 1.9 million, primarily due to bundling of lower-priced products [29] Market Data and Key Metrics Changes - Business formations decreased by 6% year-over-year, attributed to a softer macroeconomic environment and a 5% decline in Census EIN applications [7][27] - Average order value was $196, down 1% compared to the previous year [27] - Deferred revenue increased by $36 million from Q4, reflecting the benefits of subscription pricing initiatives [30] Company Strategy and Development Direction - The company is focused on driving subscription adoption and optimizing its go-to-market strategy, including a new brand campaign to position itself as a premier provider of online legal services [18][19] - The strategy includes decoupling from business formations and emphasizing higher-value subscriptions, with over 60% of revenue now subscription-based [11][24] - The integration of Formation Nation is aimed at shifting lower-end customers to a separate brand while focusing on higher-value offerings [51][54] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unpredictable macroeconomic environment but expressed confidence in achieving a full-year revenue growth of 5% and an adjusted EBITDA margin of 23% [9][39] - The company is prepared for potential challenges and is focused on areas it can control, emphasizing long-term value for shareholders [13][41] - Management expects double-digit subscription revenue growth by the fourth quarter, supported by recent strategic initiatives [10][38] Other Important Information - The company has a strong cash position of $210 million and remains debt-free, allowing for flexibility in capital allocation [34][35] - The marketing budget has been reallocated to increase Formation Nation's marketing spend by over 30% [21] Q&A Session Summary Question: What contributed to the strong subscription unit growth? - Management highlighted a shift towards quality share, reorienting products and pricing to attract better customers, and bundling lower-priced subscriptions to drive engagement [43][44][47] Question: Can you discuss the integration of Formation Nation? - The integration aims to decouple free products from high-value offerings, allowing for better customer engagement and upselling opportunities [51][54] Question: Should we expect elevated overall marketing spend? - Management clarified that there will be a shift in marketing spend rather than an increase, focusing on efficiency and brand authority [60][64] Question: What is the expected contribution from Formation Nation going forward? - Management indicated that the contribution from Formation Nation will be integrated into overall business performance, with a focus on efficiency and profitability [67][70] Question: How is the company managing macroeconomic pressures? - Management is running various scenarios to adapt to changing conditions and has adjusted expectations for business formations accordingly [80][82] Question: What are the key inputs for achieving double-digit subscription growth? - Management emphasized the importance of attracting quality customers and improving the overall subscription experience to ensure sustainable growth [100][102]

Financial Data and Key Metrics Changes - First quarter revenue was $183 million, reflecting a 5% year-over-year increase [6][26] - Adjusted EBITDA for the first quarter was $37 million, representing a 33% year-over-year increase, with an adjusted EBITDA margin of 20% [8][32] - Free cash flow increased by 67% to $41 million compared to $25 million for the same period in 2024 [33][34] Business Line Data and Key Metrics Changes - Subscription revenue grew by 8% year-over-year to $116 million, driven by compliance pricing initiatives and increased virtual mail subscriptions [28][29] - Transaction revenue increased by 1% to $67 million, attributed to the acquisition of Formation Nation and higher revenue from Beneficial Ownership Information Report filings [26][27] - The number of subscription units rose by 20% to approximately 1.9 million, primarily due to bundling of lower-priced products [29][30] Market Data and Key Metrics Changes - Business formations decreased by 6% year-over-year, with 131,000 formations recorded in the first quarter [27] - Census EIN applications fell by 5% year-over-year, impacting overall business formation trends [7][8] - The average order value was $196, down 1% compared to the previous year [27] Company Strategy and Development Direction - The company is focused on driving subscription adoption and optimizing its go-to-market strategy, including a new brand campaign to enhance its market position [15][18] - LegalZoom aims to decouple from the business formations macro by emphasizing legal and compliance services and increasing subscription offerings [12][24] - The integration of Formation Nation is expected to enhance customer acquisition and improve service offerings, particularly in the lower-end market [55][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a full-year revenue growth of approximately 5% and an adjusted EBITDA margin of 23% despite macroeconomic uncertainties [37][39] - The company anticipates double-digit subscription revenue growth by the fourth quarter, supported by strategic pricing and product bundling initiatives [9][38] - Management acknowledged the challenges posed by a rapidly evolving macroeconomic environment but emphasized the company's resilience and adaptability [14][41] Other Important Information - The company ended the quarter with $210 million in cash and cash equivalents, remaining debt-free [33][34] - A $100 million increase to the share repurchase program was approved by the Board of Directors, with $150 million remaining under authorization [35][36] Q&A Session Summary Question: What contributed to the strong subscription unit growth? - Management highlighted a shift towards quality share, reorienting products and pricing to attract better customers, and implementing a bundling strategy for lower-priced subscriptions [43][45][46] Question: Can you discuss the integration process of Formation Nation? - The integration aims to decouple from free offerings and push lower-end customers to Formation Nation, which focuses on value pricing and higher engagement [52][54][56] Question: Will overall marketing spend be elevated going forward? - Management clarified that there will be a shift in marketing spend rather than an increase, focusing on efficiency and leveraging brand authority [61][62][65] Question: What is the expected contribution from Formation Nation moving forward? - Management indicated that while the initial contribution was approximately $8.6 million, the focus will be on integrated growth rather than segmenting revenues [68][70][72] Question: How is the company addressing macroeconomic pressures on business formations? - Management is modeling various scenarios to navigate uncertainties and has adjusted expectations for business formations to decline mid to high single digits [80][81] Question: What are the key inputs for achieving double-digit subscription growth? - Management emphasized the importance of attracting quality customers and shifting focus from unprofitable formations to higher-value subscriptions [102][104][106]

Company Vision and Mission - LegalZoom's vision is to be the guardian of people's aspirations, lives, and legacies[10] - The company's mission is transforming how people navigate the legal system[10] Market Opportunity and Leadership - The online legal and compliance market represents a significant $51 billion to $61 billion Serviceable Addressable Market (SAM)[13] - LegalZoom has formed 47 million businesses since inception[13] - LegalZoom has delivered 43 million estate planning solutions since inception[13] - LegalZoom has 19 million active legal & compliance subscriptions[13] - LegalZoom has over 1,000 independent attorney network servicing all 50 states[13] Financial Performance (Q1 2025) - GAAP Revenue for Q1 2025 was $123 million, a 5% year-over-year increase[50] - Adjusted Gross Profit for Q1 2025 was $183 million, representing 67% of revenue, a 10% year-over-year increase[50] - Adjusted EBITDA for Q1 2025 was $37 million, representing 20% of revenue, a 33% year-over-year increase[50] - Subscription revenue for Q1 2025 was $116 million, an 8% year-over-year increase[52] Strategic Initiatives - LegalZoom acquired Formation Nation, Inc on February 10, 2025, which is expected to positively contribute to Adjusted EBITDA and be accretive to Non-GAAP earnings per share[7, 27]

[LegalZoom First Quarter 2025 Results](index=1&type=section&id=LegalZoom%20First%20Quarter%202025%20Results) [Financial & Performance Highlights](index=1&type=section&id=First%20Quarter%202025%20Highlights) LegalZoom reported strong Q1 2025 results, exceeding expectations with 5% year-over-year revenue growth to $183.1 million, driven by an 8% increase in subscription revenue to $116.3 million Q1 2025 Key Financial Metrics (vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | % Change (YoY) | | :--- | :--- | :--- | :--- | | Total Revenue | $183.1M | $174.2M | 5% | | Subscription Revenue | $116.3M | $107.9M | 8% | | Transaction Revenue | $66.9M | $66.3M | 1% | | Net Income | $5.1M | $4.7M | 8% | | Adjusted EBITDA | $37.0M | $27.9M | 33% | | Adjusted EBITDA Margin | 20% | 16% | +400 bps | | Diluted Net Income per Share | $0.03 | $0.02 | 50% | | Free Cash Flow | $41.3M | $24.7M | 67% | - Subscription units at period end increased by **20%** year-over-year, reaching **1.924 million**[11](index=11&type=chunk) - Business formations decreased by **6%** year-over-year, while the average order value (AOV) saw a slight decline of **1%** to **$196**[9](index=9&type=chunk) [Operational Highlights & Strategic Initiatives](index=2&type=section&id=First%20Quarter%202025%20Operational%20Highlights) During the quarter, LegalZoom acquired Formation Nation, which contributed $8.6 million in revenue, appointed a new Chief Technology Officer, sold an office property, and increased its share repurchase authorization - Acquired Formation Nation on February 10, 2025, which contributed **$8.6 million** in revenue for the quarter post-acquisition[10](index=10&type=chunk) - Appointed Pratik Savai as Chief Technology Officer to spearhead technology advancements, including the use of generative AI[10](index=10&type=chunk) - Sold an office property, receiving net cash proceeds of approximately **$37.1 million**[10](index=10&type=chunk) - The Board of Directors approved a **$100.0 million** increase in its share repurchase program, leaving an aggregate of approximately **$150.0 million** for future repurchases[10](index=10&type=chunk) [Financial Outlook](index=3&type=section&id=Financial%20Outlook) LegalZoom reiterated its full-year 2025 guidance, projecting approximately 5% revenue growth and $165 million in Adjusted EBITDA, while providing Q2 2025 revenue and Adjusted EBITDA ranges Q2 2025 Outlook | Metric | Guidance Range (in millions) | | :--- | :--- | | Revenue | $181M - $185M | | Adjusted EBITDA | $37M - $41M | Full Year 2025 Outlook | Metric | Guidance | | :--- | :--- | | Revenue Growth (YoY) | ~5% | | Adjusted EBITDA | ~$165M | [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) [Unaudited Condensed Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to $532.7 million from $373.9 million at year-end 2024, primarily driven by a rise in cash and goodwill, leading to a doubling of total stockholders' equity Balance Sheet Summary (in thousands) | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $209,973 | $142,064 | | Goodwill | $141,131 | $63,318 | | Total Assets | $532,666 | $373,883 | | Total Liabilities | $345,454 | $280,626 | | Total Stockholders' Equity | $187,212 | $93,257 | [Unaudited Condensed Consolidated Statements of Operations](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2025, revenue increased to $183.1 million, with gross profit improving to $116.6 million, and a significant gain on asset sale boosting net income to $5.1 million Statement of Operations Summary (in thousands) | Account | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Revenue | $183,110 | $174,214 | | Gross Profit | $116,550 | $105,830 | | Gain on sale of assets | $14,337 | $0 | | Income from Operations | $8,966 | $5,055 | | Net Income | $5,127 | $4,744 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, net cash from operating activities significantly increased to $50.7 million, with investing activities reflecting an acquisition offset by an asset sale, resulting in a net cash increase of $67.9 million Cash Flow Summary (in thousands) | Activity | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $50,703 | $34,194 | | Net cash used in investing activities | ($20,450) | ($9,477) | | Net cash provided by (used in) financing activities | $37,604 | ($22,271) | | Net increase in cash and cash equivalents | $67,909 | $2,410 | | Cash and cash equivalents, at end of period | $209,973 | $228,129 | [Non-GAAP Financial Measures & Reconciliations](index=8&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) [Reconciliation of Net Income to Adjusted EBITDA](index=8&type=section&id=Adjusted%20EBITDA%20and%20Adjusted%20EBITDA%20Margin) The company reconciled its Q1 2025 net income of $5.1 million to an Adjusted EBITDA of $37.0 million, primarily by adding back stock-based compensation and depreciation, and subtracting a gain on asset sale Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net income | $5,127 | $4,744 | | Stock-based compensation | $29,756 | $14,856 | | Depreciation and amortization | $10,406 | $7,670 | | Gain on sale of assets held for sale | ($14,337) | — | | **Adjusted EBITDA** | **$37,012** | **$27,902** | [Reconciliation of Net Income to Non-GAAP Net Income](index=9&type=section&id=Non-GAAP%20Net%20Income%2C%20Non-GAAP%20Net%20Income%20Margin%20and%20diluted%20Non-GAAP%20Net%20Income%20Per%20Share) Non-GAAP net income for Q1 2025 increased 30% to $23.8 million, reconciled from GAAP net income by adjusting for stock-based compensation and an asset sale gain, resulting in a diluted Non-GAAP EPS of $0.13 Reconciliation of Net Income to Non-GAAP Net Income (in thousands) | Line Item | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net income | $5,127 | $4,744 | | Stock-based compensation | $29,756 | $14,856 | | Gain on sale of assets held for sale | ($14,337) | — | | **Non-GAAP net income** | **$23,822** | **$18,344** | Non-GAAP Net Income Per Share | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Non-GAAP net income per share — diluted | $0.13 | $0.09 | [Reconciliation to Free Cash Flow](index=10&type=section&id=Free%20Cash%20Flow) Free cash flow for Q1 2025 surged 67% to $41.3 million, derived from net cash provided by operating activities less purchases of property and equipment Free Cash Flow Calculation (in thousands) | Line Item | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $50,703 | $34,194 | | Purchase of property and equipment | ($9,378) | ($9,477) | | **Free cash flow** | **$41,325** | **$24,717** |

Core Insights - LegalZoom reported strong first quarter results with a revenue of $183.1 million, reflecting a 5% year-over-year growth, driven by an 8% increase in subscription revenue to $116.3 million [5][6][29] - The company achieved an Adjusted EBITDA of $37.0 million, marking a 33% increase year-over-year, with an Adjusted EBITDA margin of 20% [5][6][34] - LegalZoom reiterated its full-year revenue outlook of 5% year-over-year growth, despite macroeconomic uncertainties [2][5] Financial Performance - First quarter net income was $5.1 million, an 8% increase from the previous year, maintaining a net income margin of 3% [5][6][29] - Non-GAAP net income for the quarter was $23.8 million, up 30% year-over-year, with a Non-GAAP net income margin of 13% [6][34] - Cash and cash equivalents at the end of the quarter totaled $210.0 million, up from $142.1 million at the end of 2024 [5][6][26] Operational Highlights - The company experienced a 20% increase in subscription units year-over-year, indicating successful subscription growth initiatives [5][6][7] - LegalZoom's acquisition of Formation Nation contributed $8.6 million in revenue since the acquisition date [8] - The company announced a $100 million increase in its share repurchase authorization, bringing the total to approximately $150 million [5][8] Key Business Metrics - Transaction revenue was $66.9 million, a 1% increase year-over-year, with transaction units also up by 1% [6][7] - Average revenue per subscription unit (ARPU) decreased by 7% to $252 [7] - Free cash flow for the quarter was $41.3 million, a significant increase of 67% year-over-year [6][37]

Company Overview - LegalZoom.com, Inc. is a leading online platform for legal services, transforming how individuals and small businesses navigate the legal system [2][3] - The company combines intuitive technology with access to experienced attorneys, offering tools and guidance for business formations, compliance, estate planning, and ongoing legal support [2] Upcoming Investor Conferences - LegalZoom management will participate in the Jefferies 2025 Software & Internet Conference on May 28, 2025, with a fireside chat led by CEO Jeff Stibel and CFO Noel Watson [4] - The company will also participate in the William Blair 45th Annual Growth Stock Conference on June 4, 2025, with CFO Noel Watson hosting a fireside chat and investor meetings on June 3 and 4 [4] Investor Relations - A live audio webcast and replay of the presentations from these conferences will be available on the LegalZoom Investor Relations website [1]

Core Viewpoint - LegalZoom.com, Inc. is set to report its financial results for the first quarter of 2025 on May 7, 2025, after market close, indicating a focus on transparency and communication with investors [1]. Group 1: Financial Reporting - The financial results for the first quarter ended March 31, 2025, will be announced on May 7, 2025 [1]. - A conference call and webcast will be hosted by the CEO and CFO at 4:30 p.m. ET on the same day to discuss the results [1]. Group 2: Company Overview - LegalZoom is a leading online platform for legal services, aimed at transforming how individuals and small businesses navigate the legal system [3]. - The company combines technology with access to experienced attorneys, providing tools for business formations, compliance, estate planning, and ongoing legal support [3]. - With over two decades of experience and millions of customers served, LegalZoom helps clients manage their legal needs confidently [4].

Core Insights - LegalZoom.com, Inc. has appointed Pratik Savai as the new Chief Technology Officer to enhance its technology ecosystem and leverage emerging technologies like generative AI to simplify legal processes for users [1][2] - Pratik Savai has a strong background in technology leadership, having previously served as CTO at Elation Health and held significant roles at Cornerstone OnDemand, contributing to substantial revenue growth and team scaling [2][3] - The company aims to reshape access to legal services through innovative technology solutions, enhancing efficiency, accessibility, and customer experience in the legal industry [3] Company Overview - LegalZoom is a prominent online platform that assists individuals and small businesses in navigating the legal system by combining technology with access to experienced attorneys [4] - The platform has served millions of customers over two decades, providing tools and guidance for various legal needs, including business formation, compliance, and estate planning [5]