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 million, up 5% year-over-year 
 
   -- Subscription revenue of $116.3 million, an increase of 8% year-over-year, 
      reflecting ongoing progress in initiatives to grow subscription business 
 
   -- First quarter net income of $5.1 million, 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 million in cash from operating activities and 
      $41.3 million 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 31, 2025.

"Our first quarter results reflect accelerating subscription growth and solid progress towards our goal of double-digit subscription revenue growth in the fourth quarter," said Jeff Stibel, Chairman and Chief Executive Officer of LegalZoom. "While no company is immune to today's 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."

Noel Watson, LegalZoom's Chief Operating Officer and Chief Financial Officer said, "Our 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."

First Quarter 2025 Highlights

   -- Revenue was $183.1 million for the quarter, up 5% year-over-year: 
 
          -- Transaction units increased 1% year-over-year; transaction revenue 
             of $66.9 million increased 1% year-over-year. 
 
          -- Subscription units at period end increased 20% year-over-year; 
             subscription revenue of $116.3 million grew 8% year-over-year. 
 
   -- Net income was $5.1 million for the quarter, or 3% of revenue, compared 
      to net income of $4.7 million, 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 million as of March 31, 2025 
      compared to $142.1 million as of December 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 "Nevada Corporate Headquarters" (NCH) business to 
      low-cost business formations under its flagship "Inc Authority" 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's 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's 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 Non-GAAP Financial Measures

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

 
                         Three Months Ended March 31,     % Growth 
                                                          (Decline) 
                               2025            2024          YOY 
                           -------------   ------------  ----------- 
Total revenue           $        183,110  $     174,214      5% 
    Transaction 
     revenue            $         66,853  $      66,317      1% 
    Subscription 
     revenue            $        116,257  $     107,897      8% 
Gross profit            $        116,550  $     105,830     10% 
Gross margin                         64%            61%      5% 
Net Income              $          5,127  $       4,744      8% 
Net income margin                     3%             3%     --% 
Net Income per share 
 -- basic:              $           0.03  $        0.03     --% 
Net Income per share 
 -- diluted:            $           0.03  $        0.02     50% 
Net cash provided by 
 operating 
 activities             $         50,703  $      34,194     48% 
Non-GAAP Financial 
Measures 
Non GAAP net income     $         23,822  $      18,344     30% 
Non GAAP net income 
 per share -- basic:    $           0.13  $        0.10     30% 
Non GAAP net income 
 per share -- 
 diluted:               $           0.13  $        0.09     44% 
Adjusted EBITDA         $         37,012  $      27,902     33% 
Adjusted EBITDA 
 margin                              20%            16%     25% 
Free cash flow                    41,325         24,717     67% 
Key Business Metrics 
Transaction units                    341            336      1% 
Business formations                  131            139     (6%) 
Average order value 
 $(AOV.AU)$                  $            196  $         198     (1%) 
Subscription units at 
 period end                        1,924          1,605     20% 
Average revenue per 
 subscription unit 
 (ARPU) at period 
 end                    $            252  $         272     (7%) 
Certain percentages may not recalculate due to rounding. 
 
 

Financial Outlook

For the second quarter ending June 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 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 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.

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