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LegalZoom Reports Strong First Quarter 2025 Financial Results, Reiterates 2025 Guidance of 5% Revenue Growth and Commitment to Profitability Targets

• Solid execution with first quarter results exceeding high end of outlook range
  
  
• First quarter revenue of $183.1听尘颈濒濒颈辞苍, up 5% year-over-year
  
  
• Subscription revenue of $116.3听尘颈濒濒颈辞苍, an increase of 8% year-over-year, reflecting ongoing progress in initiatives to grow subscription business
  
  
• First quarter net income of $5.1听尘颈濒濒颈辞苍, up 8% year-over-year, and net income margin of 3%, which was flat year-over-year
  
  
• First quarter Adjusted EBITDA of $37.0 million, up 33% year-over-year, and Adjusted EBITDA margin of 20%, an increase of 400 basis points year-over-year
  
  
• Ended the quarter with cash and cash equivalents of $210.0 million, delivered $50.7听尘颈濒濒颈辞苍 in cash from operating activities and $41.3听尘颈濒濒颈辞苍 in free cash flow
  
  
• Announces $100 million increase in share repurchase authorization
  

MOUNTAIN VIEW, Calif., May 07, 2025 (GLOBE NEWSWIRE) -- LegalZoom.com, Inc. (Nasdaq: LZ) today announced results for its first quarter ended March听31, 2025.

鈥淥ur first quarter results reflect accelerating subscription growth and solid progress towards our goal of double-digit subscription revenue growth in the fourth quarter,鈥� said Jeff Stibel, Chairman and Chief Executive Officer of LegalZoom. 鈥淲hile no company is immune to today鈥檚 volatile environment, our first quarter results exceeded our expectations based on the success of our subscription initiatives, the early rollout of higher value products and solid progress from our Formation Nation integration. We are confident in our ability to execute, and are reiterating our full year revenue outlook of 5% year-over-year growth.鈥�

Noel Watson, LegalZoom鈥檚 Chief Operating Officer and Chief Financial Officer said, 鈥淥ur strong execution, continued focus on cost discipline and better than expected revenue performance resulted in a 33% year-over-year increase in Adjusted EBITDA to $37.0 million. We will remain nimble in response to macroeconomic uncertainty and have strong conviction in our ability to deliver on our Adjusted EBITDA guidance of $165 million based on our highly variable cost structure.鈥�

First Quarter 2025 Highlights

• Revenue was $183.1听尘颈濒濒颈辞苍 for the quarter, up 5% year-over-year:
  • Transaction units increased 1% year-over-year; transaction revenue of $66.9听尘颈濒濒颈辞苍 increased 1% year-over-year.
  • Subscription units at period end increased 20% year-over-year; subscription revenue of $116.3听尘颈濒濒颈辞苍 grew 8% year-over-year.
• Net income was $5.1听尘颈濒濒颈辞苍 for the quarter, or 3% of revenue, compared to net income of $4.7听尘颈濒濒颈辞苍, or 3% of revenue, for the same period in 2024.
• Non-GAAP net income was $23.8 million for the quarter compared to Non-GAAP net income of $18.3 million in the same period in 2024.
• Adjusted EBITDA was $37.0 million for the quarter, or 20% of revenue, compared to $27.9 million, or 16% of revenue, for the same period in 2024.
• Cash flow provided by operating activities was $50.7 million for the quarter compared to $34.2 million for the same period in 2024.
• Free cash flow was $41.3 million for the quarter compared to $24.7 million for the same period in 2024.
• Cash and cash equivalents were $210.0听尘颈濒濒颈辞苍 as of March听31, 2025 compared to $142.1听尘颈濒濒颈辞苍 as of December听31, 2024.
  

First Quarter 2025 Operational Highlights

• On February 10, 2025, LegalZoom announced the acquisition of Formation Nation, a small business services company. Formation Nation provides services ranging from white-glove business formation and compliance offerings under its 鈥淣evada Corporate Headquarters鈥� (NCH) business to low-cost business formations under its flagship 鈥淚nc Authority鈥� brand. LegalZoom expects this acquisition to significantly strengthen its customer service profile, expand its portfolio of offerings, and enable the Company to reach a broader customer base. Revenue attributable to Formation Nation since the acquisition date was $8.6 million for the three months ended March 31, 2025.
  
  
• On March 25, 2025, LegalZoom announced the appointment of Pratik Savai as Chief Technology Officer. In this role, he will spearhead advancing LegalZoom鈥檚 technology ecosystem, optimizing platform scalability, and harnessing emerging technologies such as generative AI to simplify legal processes for individuals and businesses.
  
  
• On March 31, 2025, LegalZoom sold its previously owned office property and received net cash proceeds of approximately $37.1 million after deducting selling costs such as brokerage commissions, title fees, and asset disposal costs.
  
  
• Subsequent to the end of the quarter, LegalZoom鈥檚 Board of Directors approved a $100.0 million increase in its share repurchase program, resulting in approximately $150.0 million in aggregate remaining repurchase authorization.
  

First Quarter 2025 Key Business Metrics and听Non-GAAP听Financial Measures

(unaudited, in thousands except AOV, ARPU and percentages)

Financial Outlook

For the second quarter ending June听30, 2025, LegalZoom currently expects:

• Revenue in the range of $181 million to $185 million, or 3% year-over-year growth at the midpoint
• Adjusted EBITDA in the range of $37 million to $41 million, reflecting an Adjusted EBITDA margin of 21% at the midpoint

LegalZoom is reiterating its outlook for the full year ending December 31, 2025 as follows:

• Revenue growth of approximately 5% year-over-year
• Adjusted EBITDA of approximately $165 million, reflecting an Adjusted EBITDA margin of approximately 23%

Webcast and Conference Call Information

A webcast and conference call to discuss first quarter 2025 results is scheduled for today, May听7, 2025, at 4:30 p.m. Eastern time/1:30 p.m. Pacific time. Those interested in participating in the conference call are invited to register .

A live audio webcast of the event will be available on the LegalZoom Investor Relations website: . An archived replay of the webcast also will be available shortly after the live event.

Forward-Looking Statements

This press release contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts contained in this press release may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as 鈥渕ay,鈥� 鈥渨ill,鈥� 鈥渟hould,鈥� 鈥渆xpects,鈥� 鈥減lans,鈥� 鈥渁nticipates,鈥� 鈥渃ould,鈥� 鈥渋ntends,鈥� 鈥渢argets,鈥� 鈥減rojects,鈥� 鈥渃ontemplates,鈥� 鈥渂elieves,鈥� 鈥渆stimates,鈥� 鈥渇orecasts,鈥� 鈥減redicts,鈥� 鈥減otential鈥� or 鈥渃ontinue鈥� or the negative of these terms or other similar expressions. Forward-looking statements contained in this press release include, but are not limited to, statements regarding our quarterly and annual guidance.

The forward-looking statements in this press release are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including but not limited to the following: our dependence on business formations; our dependence on customers expanding the use of our platform, including converting our transactional customers to subscribers and our subscribers renewing their subscriptions with us; the impact of macroeconomic challenges or uncertainty on our business; our ability to sustain our revenue growth rate and remain profitable in the future; our ability to provide high-quality products and services, customer care and customer experience; our ability to continue to innovate and provide a platform that is useful to our customers and that meets our customers鈥� expectations; the competitive legal solutions market; our dependence on our brand and reputation; our ability to maintain and expand strategic relationships with third parties; our ability to hire and retain top talent and motivate our employees; our ability to effectively integrate Formation Nation, Inc. into our existing operations; risks and costs associated with complex and evolving laws and regulations; our ability to maintain effective in our internal control over financial reporting; and other factors discussed in the section titled 鈥淩isk Factors鈥� included in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission, or SEC, on February 26, 2025, as well as any factors in our subsequent filings with the SEC. The forward-looking statements in this press release are based upon information available to us as of the date of this press release, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this press release with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this press release, whether as a result of any new information, future events or otherwise.

About Non-GAAP Financial Measures

This press release includes non-GAAP financial measures including Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP net income, Non-GAAP net income margin, Non-GAAP net income per share and free cash flow. We use these non-GAAP financial measures to better understand and evaluate our core operating performance. We believe that these non-GAAP financial measures provide management and our investors with useful information about our financial performance and liquidity, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important measures used by our management for financial and operational decision-making. We also believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry. These non-GAAP measures should not be considered in isolation of, or as a substitute or an alternative to, measures prepared and presented in accordance with GAAP.

We define Adjusted EBITDA as net income (loss) adjusted to exclude interest expense, interest income, provision for (benefit from) income taxes, depreciation and amortization, other expense (income), net, stock-based compensation and certain non-recurring income and expenses from time to time. We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of revenue.

Adjusted EBITDA is one of the primary performance measures used by our management and our board of directors to understand and evaluate our financial performance and operating trends, including period-to-period comparisons, preparing and approving our annual budget and operational planning. In assessing our performance, we exclude certain expenses that we believe are not comparable period over period or that we believe are not indicative of our underlying operating performance. There are a number of limitations related to the use of Adjusted EBITDA rather than net income (loss), which include that Adjusted EBITDA:

• may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure;
• does not reflect our capital expenditures, future requirements for capital expenditures or contractual commitments;
• excludes depreciation and amortization and, although these are non-cash expenses, the assets being depreciated may be replaced in the future;
• does not reflect changes in, or cash requirements for, our working capital needs;
• excludes stock-based compensation expense, which has been, and will continue to be, a significant recurring expense for our business and an important part of our compensation strategy; and
• does not reflect certain other expenses that we do not consider representative of our underlying operating performance, but that reduce cash available to us.

We define Non-GAAP net income as net income (loss) adjusted to exclude amortization of acquired intangible assets, stock-based compensation expense and certain non-recurring income and expenses from time to time, net of related income tax impacts. We define net income (loss) margin as net loss as a percentage of revenue. We define Non-GAAP net income (loss) margin as Non-GAAP net income (loss) as a percentage of revenue. We define Non-GAAP net income (loss) per share attributable to common stockholders as Non-GAAP net income (loss) divided by basic and diluted weighted-average common stock.

Free cash flow is a liquidity measure used by management in evaluating the cash generated by our operations after purchases of property and equipment including capitalized internal-use software. We believe free cash flow provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business and strengthening our balance sheet, once our business needs and obligations are met. The usefulness of free cash flow as an analytical tool has limitations because it excludes certain items that are settled in cash, does not represent residual cash flow available for discretionary expenses, does not reflect our future contractual commitments, and may be calculated differently by other companies in our industry.

We are not providing a reconciliation for our non-GAAP outlook on a forward-looking basis (including the information under 鈥淔inancial Outlook鈥� above), as we are unable to provide a meaningful calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various items that would impact the most directly comparable forward-looking GAAP financial measure that have not yet occurred, are out of LegalZoom鈥檚 control and/or cannot be reasonably predicted. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.

The tables in this press release contain more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.

LegalZoom

LegalZoom is a leading online platform for legal services, transforming how individuals and small businesses navigate the legal system. By combining intuitive technology with access to experienced attorneys鈥攚hether through our vast independent attorney network or LegalZoom Legal Services (LZLS) law firm鈥攚e offer the tools and guidance people need to confidently manage everything from business formation and compliance to estate planning and ongoing legal support.

With over two decades of experience and millions of customers served, LegalZoom helps individuals and small businesses navigate legal needs with confidence. For more information, please visit www.legalzoom.com.

Contact

Investor Relations

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Adjusted EBITDA and Adjusted EBITDA Margin

The following table presents a reconciliation of net income to Adjusted EBITDA for each of the periods indicated (unaudited):

(1) For 2025, transaction-related expenses related to our acquisition of Formation Nation.

(2) For 2025 and 2024, restructuring costs related to the reduction of our U.S. headcount.

Non-GAAP听Net Income,听Non-GAAP听Net Income Margin and diluted听Non-GAAP听Net Income Per Share

The following table presents a reconciliation of net income to听Non-GAAP听net income for each of the periods indicated (unaudited):

(1) For 2025, transaction-related expenses related to our acquisition of Formation Nation.

(2) For 2025 and 2024, restructuring costs related to the reduction of our U.S. headcount.

(3) The estimated income tax effect of the non-GAAP pre-tax adjustments is determined by applying the statutory rate of the originating jurisdiction, if applicable.

The following table shows the computation of basic and diluted Non-GAAP net income per share (unaudited):

Free Cash Flow

The following table presents a reconciliation of net cash provided by operating activities to free cash flow (unaudited):