Core Insights - LegalZoom's shares increased by 6.8% following the release of strong third-quarter financial results that exceeded revenue expectations and provided a positive outlook for the next quarter [1][2] Financial Performance - LegalZoom reported revenue of $190.2 million for the third quarter, marking a 12.8% increase year-over-year, surpassing Wall Street forecasts [2] - The company's revenue guidance for the fourth quarter is set at $184 million at the midpoint, approximately 4% above analyst expectations [2] - GAAP earnings per share were $0.02, aligning with expectations, although subscription units fell short of estimates [2] Market Reaction - LegalZoom's stock has shown volatility, with 14 movements greater than 5% in the past year, indicating that the market views the recent news as significant but not fundamentally altering its perception of the company [4] - The stock has risen 42.9% since the beginning of the year, currently trading at $10.81 per share, close to its 52-week high of $11.18 reached in August 2025 [6]

Financial Data and Key Metrics Changes - The company achieved record third-quarter revenue of $190 million, reflecting a 13% year-over-year increase, exceeding expectations [5][23] - Subscription revenue also grew by 13%, marking the third consecutive quarter of sequential growth [6][22] - Adjusted EBITDA margin remained strong at 24%, despite increased investments in product and AI [6][26] - Free cash flow for the quarter was $47 million, up 114% compared to the same period in 2024 [26][27] - The company raised its full-year revenue growth outlook to 10%, effectively doubling its initial guidance [6][28] Business Line Data and Key Metrics Changes - Subscription units increased to approximately 1.96 million, a 14% increase year-over-year, driven by bundling solutions [23] - Transaction revenue increased by 12% to $65 million, largely due to the acquisition of Formation Nation [24] - Average order value rose to $251, up 11% year-over-year, driven by higher-priced concierge services [25] Market Data and Key Metrics Changes - The company noted a 25% year-over-year increase in its partner channel for the third quarter [15] - The partnership with 1-800 ACCOUNTANT continues to exceed expectations, with plans to bundle tax advice with legal advice [12][19] Company Strategy and Development Direction - The company is focusing on expanding its subscription business and enhancing value for customers, particularly existing small businesses [8][9] - There is a strategic shift towards integrating AI with human expertise to improve service offerings [16][18] - The company aims to diversify its service offerings beyond business formation to include compliance and tax services [12][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties by diversifying its revenue streams [63][65] - The company is optimistic about the long-term potential of its business, particularly in serving both new and established small businesses [29] Other Important Information - The company has made organizational changes to better integrate AI into its product offerings, including appointing a new Senior Vice President for Product [19][20] - The company repurchased approximately 1.8 million shares during the quarter, reflecting a strong cash position [27] Q&A Session Summary Question: How is pricing and bundling contributing to subscription growth? - Management indicated that pricing and bundling are important levers for growth, with competitors also raising prices in response [30] Question: Can you elaborate on the White Glove concierge offering? - The offering combines expertise from attorneys and accountants to address customer needs effectively, focusing on compliance and other services [32][34] Question: What is the contribution of Formation Nation to revenues? - Formation Nation contributed approximately $9 million to transaction revenue and over $5.5 million to subscription revenue during the quarter [47] Question: How is the partnership with 1-800 ACCOUNTANT structured? - The partnership is designed to ensure a minimum revenue threshold with a revenue share on top, focusing on highly accretive products [50] Question: What insights can you share about the future of AI in legal services? - Management believes that while AI will play a significant role, human expertise will remain essential for providing legal advice and services [56][59] Question: How much of the recent performance is macro-driven versus internal initiatives? - Management emphasized that while macro factors are considered, the focus is on diversifying and insulating the business from such influences [62][65]

Financial Performance - LegalZoom's Q3 2025 revenue reached $190 million, a 13% increase year-over-year[17] - The company's Q3 2025 Non-GAAP Net Income was $31 million, up 4% year-over-year[17,77] - Adjusted EBITDA for Q3 2025 was $46 million, representing a 24% margin[17] - Subscription revenue in Q3 2025 grew by 12% year-over-year to $125 million[17,49] - Transaction revenue for Q3 2025 was $65 million, a 12% increase year-over-year[17,55] Market Opportunity and Strategy - LegalZoom operates in a large $51 billion market for life & business planning, business management, and expert assistance[19,21] - The company aims to optimize its subscription business, reorient its go-to-market strategy, and leverage AI to deliver expertise[29] - LegalZoom has 2 million active legal & compliance subscriptions[21] Financial Guidance - LegalZoom projects Q4 2025 total revenue to be between $182 million and $186 million and adjusted EBITDA between $46 million and $48 million[68] - For the full year 2025, LegalZoom anticipates total revenue of $748 million to $752 million and adjusted EBITDA of $168 million to $170 million, with an adjusted EBITDA margin of approximately 23%[68]

Core Viewpoint - LegalZoom.com, Inc. is set to present at the Citi 2025 Global TMT Conference, highlighting its position as a leading online platform for legal services [1]. Company Overview - LegalZoom is transforming how individuals and small businesses navigate the legal system by combining technology with access to experienced attorneys [3]. - The company has over two decades of experience and has served millions of customers, providing confidence in managing legal needs [4]. Event Details - The management's fireside chat will take place on September 3, 2025, at 4:10 p.m. ET, with a live audio webcast available on the LegalZoom Investor Relations website [2].

Financial Performance - LegalZoom's GAAP revenue for Q2 2025 was $193 million, a 9% increase year-over-year[17] - Adjusted EBITDA for Q2 2025 was $39 million, representing a 20% margin, a 400 bps increase[17] - Subscription revenue for Q2 2025 reached $120 million, a 10% increase year-over-year[17] - Non-GAAP net income for Q2 2025 was $28 million, a 51% increase year-over-year[17] - Adjusted gross profit for Q2 2025 was $132 million, a 6% increase year-over-year, with a margin of 69%[17,47] - The company projects revenue growth of approximately 8% year-over-year for FY25 and anticipates an Adjusted EBITDA margin of approximately 23%[68] Market Opportunity and Strategy - LegalZoom operates in a large market with a total addressable market (SAM) of $51 billion[22] - The company estimates the Life & Business Planning SAM to be $13 billion and the Business Management SAM to be $15 billion[18,19] - LegalZoom estimates it holds approximately 9% market share in the digital formations market[18] - Three key focus areas are optimizing the subscription business, reorienting the go-to-market strategy, and leveraging AI to deliver expertise[29]

LegalZoom Conference Call Summary Company Overview - **Company**: LegalZoom.com (LZ) - **Industry**: Online legal services for small businesses - **Market Position**: Market leader in the online legal services space, offering a comprehensive suite of services and products for individuals and businesses across the United States [2][4] Core Business Model and Services - **Service Offerings**: LegalZoom started with estate planning and has expanded to include small business formation, compliance support, legal service plans, and partnerships with service providers like Bank of America and Wix [4][6][7] - **Market Opportunity**: Only 4% of legal services are delivered online in the U.S., indicating significant growth potential due to underinvestment in technology within traditional legal firms [8][9] Competitive Landscape - **Competition**: LegalZoom faces competition from: - Secretary of state sites offering free formation services [11] - Online DIY legal services without attorney support [12] - Traditional offline attorneys, which still account for the largest portion of legal spending [13] Strategic Shifts - **Transition to Subscription Model**: LegalZoom is shifting from a transactional model to a subscription-based model, with nearly two-thirds of the business now subscription-based. This change aims to provide predictability in revenue and improve operational efficiency [14][17] - **Partnership Strategy**: The company has narrowed its focus on core competencies and has engaged in partnerships to enhance service offerings, such as moving its tax service to a partner, which improved margins [21][24][25] Financial Performance and Guidance - **Revenue Growth**: LegalZoom is guiding for a 5% top-line growth this year, with subscription revenue growth at 8% in Q1, indicating a reacceleration after previous slowdowns [31][32] - **Business Formations**: Business formations are currently 50% higher than pre-pandemic levels, although they saw a 5% decline in Q1. The company aims to focus on quality customer acquisition rather than sheer volume [46][47][48] Technology and Innovation - **AI Integration**: LegalZoom is focusing on leveraging AI to enhance customer service and operational efficiency, with a new CTO prioritizing AI initiatives [53][55] - **Search Engine Partnership**: The company has partnered with an AI-driven search engine to improve its visibility and service offerings in the legal space [57][58] Capital Allocation and Future Plans - **Cash Flow and Share Repurchases**: LegalZoom has over $200 million on its balance sheet and has been active in share repurchases, with $165 million repurchased last year. The company plans to maintain flexibility for potential M&A opportunities [60][61][62] - **M&A Interests**: The company is interested in acquiring services or products that align with customer needs, particularly smaller formation players with existing subscriber bases [63] Additional Insights - **Customer Experience Improvements**: LegalZoom has made significant investments in infrastructure to enhance customer experience and operational efficiency [19][20] - **Pricing Strategy**: The company has reverted pricing on certain products and is testing price increases, indicating a focus on aligning pricing with value [38][39][41]

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]