-- Revenue of $206.8 million, up 13% year-over-year; reflecting continued
growth in higher-value subscriptions and contributions from compliance
product enhancements
-- Subscription revenue of $130.2 million up 12% year-over-year, driven by
growth in differentiated human-in-the-loop service offerings
-- Net income of $1.1 million and net income margin of 1%
-- Adjusted EBITDA of $36.5 million and Adjusted EBITDA margin of 18%
-- Commitment to shareholder returns; completed $43.5 million of share
repurchases in the quarter
-- Ended the quarter with cash and cash equivalents of $183.2 million,
delivered $47.3 million in cash from operating activities and $41.0
million in free cash flow with no debt outstanding as of March 31, 2026
MOUNTAIN VIEW, Calif., May 06, 2026 (GLOBE NEWSWIRE) -- LegalZoom (Nasdaq: LZ), America's #1 online legal services company, today announced results for its first quarter ended March 31, 2026.
"LegalZoom delivered another strong quarter, clearly illustrating that our strategy is working," said Jeff Stibel, Chairman and Chief Executive Officer of LegalZoom. "In an AI-driven world, we win by getting customers to the finish line, combining technology with real human expertise to complete the last mile."
Noel Watson, LegalZoom's Chief Operating Officer and Chief Financial Officer, added, "We delivered strong first quarter results, with 13% revenue growth ahead of expectations. Our performance was driven by momentum in higher-value subscriptions and increased seasonal strength in annual report filings from our enhanced compliance offering. Importantly, our core growth drivers continue to build and will scale through the back half of the year, supporting our increased full-year revenue outlook."
First Quarter 2026 Highlights
-- Revenue was $206.8 million for the quarter, up 13% year-over-year.
-- Transaction revenue of $76.6 million increased 15% year-over-year.
-- Subscription revenue of $130.2 million grew 12% year-over-year.
-- Net income was $1.1 million for the quarter, or 1% of revenue, compared
to $5.1 million, or 3% of revenue, in the same period in 2025.
-- Adjusted EBITDA was $36.5 million for the quarter, or 18% of revenue,
compared to $37.0 million, or 20% of revenue, in the same period in 2025.
-- Non-GAAP net income was $22.1 million for the quarter compared to $23.8
million in the same period in 2025.
-- Cash and cash equivalents were $183.2 million as of March 31, 2026
compared to $203.1 million as of December 31, 2025.
-- Cash flows provided by operating activities were $47.3 million for the
quarter ended March 31, 2026 compared to $50.7 million in the same period
in 2025.
-- Free cash flow was $41.0 million for the quarter ended March 31, 2026
compared to $41.3 million in the same period in 2025.
-- Basic and diluted net income per share was $0.01 for the quarter compared
to a basic and diluted net income per share of $0.03 for the same period
in 2025. Basic and diluted Non-GAAP net income per share was $0.13 and
$0.12, respectively, for the quarter in 2026 compared to basic and
diluted Non-GAAP net income per share of $0.13 for the same period in
2025.
Key Business Metrics and Non-GAAP Financial Measures
(Unaudited, in thousands except AOV, ARPU and percentages)
Three Months Ended
March 31, % Growth
(Decline)
-----------
2026 2025 YOY
------- ------- -----------
Total revenue $206,781 $183,110 13%
Transaction revenue $ 76,623 $ 66,853 15%
Subscription revenue $130,158 $116,257 12%
Gross profit $132,253 $116,550 13%
Gross margin 64% 64% --%
Net Income $ 1,104 $ 5,127 (78)%
Net income margin 1% 3% (67)%
Net Income per share --
basic: $ 0.01 $ 0.03
Net Income per share --
diluted: $ 0.01 $ 0.03
Net cash provided by
operating activities $ 47,282 $ 50,703 (7)%
Non-GAAP Financial Measures
Non GAAP net income $ 22,070 $ 23,822 (7)%
Non GAAP net income per share
-- basic: $ 0.13 $ 0.13
Non GAAP net income per share
-- diluted: $ 0.12 $ 0.13
Adjusted EBITDA $ 36,462 $ 37,012 (1)%
Adjusted EBITDA margin 18% 20% (10)%
Free cash flow $ 40,974 $ 41,325 (1)%
Key Business Metrics
Transaction units 375 341 10%
Business formations 142 131 8%
Average order value (AOV) $ 205 $ 196 5%
Subscription units at period
end 1,920 1,924 --%
Average revenue per
subscription unit (ARPU) at
period end $ 263 $ 252 4%
Certain percentages may not recalculate due to rounding.
Financial Guidance and Outlook
LegalZoom is increasing its revenue outlook and maintaining its Adjusted EBITDA outlook for the full year ending December 31, 2026 as follows:
-- Revenue is expected to be in the range of $810 million to $830 million,
or 8% year-over-year growth at the midpoint. This compares to the
Company's previous revenue outlook in the range of $805 million to $825
million. LegalZoom's outlook reflects the continued scaling of our
higher-value growth initiatives and ongoing momentum from our partner
channel through the remainder of the year.
-- Adjusted EBITDA is expected to be in the range of $190 million to $200
million, or 13% year-over-year growth at the midpoint, reflecting
improved gross margin, disciplined cost management and AI-driven
efficiencies realized in the back-half of the year.
For the second quarter ending June 30, 2026 LegalZoom expects:
-- Revenue in the range of $203 million to $207 million, or 6%
year-over-year growth at the midpoint. Relative to the first quarter,
this growth rate reflects a full lapping of the Formation Nation
acquisition as well as a reduced volume of annual reports filings due to
seasonality.
-- Adjusted EBITDA in the range of $40 million to $42 million, a 5%
year-over-year increase at the midpoint.
Webcast and Conference Call Information
A webcast and conference call to discuss first quarter 2026 results is scheduled for today, May 6, 2026, 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 Here.
A live audio webcast of the event will be available on the LegalZoom Investor Relations website: https://investors.legalzoom.com/. 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 "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "targets," "projects," "contemplates," "believes," "estimates," "forecasts," "predicts," "potential" or "continue" 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' 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; risks and costs associated with complex and evolving laws and regulations; our ability to maintain effective in our internal control over financial reporting; and any factors discussed in
the section titled "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (the "SEC") on February 23, 2026, 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 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, 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 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 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 margin as net loss as a percentage of revenue. We define Non-GAAP net income margin as Non-GAAP net income as a percentage of revenue. We define Non-GAAP net income per share attributable to common stockholders as Non-GAAP net income 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 "Financial Guidance and Outlook" 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's 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--whether through our vast independent attorney network or the LegalZoom-owned law firm--we 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
investor@legalzoom.com
LegalZoom.com, Inc.
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except par values)
March 31, December 31,
2026 2025
------------ --------------
Assets
Current assets:
Cash and cash equivalents $ 183,152 $ 203,100
Accounts receivable, net of allowance 24,573 20,589
Prepaid expenses and other current
assets 20,551 18,234
Total current assets 228,276 241,923
Property and equipment, net 55,589 58,045
Goodwill 140,705 140,705
Intangible assets, net 16,542 18,152
Operating lease right-of-use assets 14,199 13,414
Deferred income taxes 29,446 31,884
Other assets 7,101 7,399
---------- ----------
Total assets $ 491,858 $ 511,522
========== ==========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 38,126 $ 27,167
Accrued expenses and other current
liabilities 57,373 83,361
Deferred revenue 223,242 203,653
Operating lease liability 4,743 4,338
---------- ----------
Total current liabilities 323,484 318,519
Operating lease liability, non-current 10,479 10,025
Deferred revenue 260 277
Other liabilities 10,727 10,819
---------- ----------
Total liabilities 344,950 339,640
---------- ----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value;
100,000 shares authorized at March
31, 2026 and December 31, 2025, none
issued or outstanding at March 31,
2026 and December 31, 2025 -- --
Common stock, $0.001 par value;
1,000,000 shares authorized; 173,402
shares and 177,624 shares issued and
outstanding at March 31, 2026 and
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