LegalZoom.com (NASDAQ:LZ – Get Free Report) announced its quarterly earnings results on Wednesday. The company reported $0.19 earnings per share for the quarter, hitting analysts’ consensus estimates of $0.19, FiscalAI reports. The business had revenue of $195.15 million for the quarter, compared to analysts’ expectations of $193.83 million. LegalZoom.com had a return on equity of 15.83% and a net margin of 2.13%. The business’s quarterly revenue was up 2.6% on a year-over-year basis. During the same period in the prior year, the firm earned $0.17 EPS.
Here are the key takeaways from LegalZoom.com’s conference call:
- Third-quarter revenue rose 3% to $195 million, while adjusted EBITDA increased 8% to $50 million, a 26% margin. Subscription revenue grew 11% to $140 million, and human-in-the-loop subscriptions reached 49% of revenue, up approximately 17% year over year.
- LegalZoom maintained its full-year revenue midpoint of $800 million but cut its adjusted EBITDA outlook to $180 million–$185 million, citing tougher customer-acquisition economics and targeted investments. Management expects transaction revenue to decline at a mid-teens rate in Q4.
- Search headwinds weighed on transactions: revenue fell 14%, formations declined 13% to about 110,000, and transaction average order value dropped 12%. Subscription units were down 5%, although retention held steady at 57% and the subscription base grew slightly excluding certain lower-value products.
- The company is investing in partnerships, affiliates, AI advertising, and expanded Business Manager services to diversify acquisition and build recurring customer relationships; those investments are pressuring near-term profitability. Management cited early traction, including doubled Q3 sales through Chase Offers versus Q2 and nearly 50% quarter-over-quarter growth in AI referral traffic, while noting AI volumes remain small.
LegalZoom.com Trading Up 3.2%
LegalZoom.com stock traded up $0.21 during midday trading on Wednesday, reaching $6.91. 4,008,864 shares of the stock traded hands, compared to its average volume of 2,451,164. LegalZoom.com has a fifty-two week low of $5.22 and a fifty-two week high of $12.40. The firm has a market cap of $1.18 billion, a price-to-earnings ratio of 51.46, a PEG ratio of 1.26 and a beta of 1.16. The firm has a fifty day moving average price of $6.14 and a two-hundred day moving average price of $6.54.
Insider Activity at LegalZoom.com
In other news, insider Nicole Miller sold 33,479 shares of the business’s stock in a transaction that occurred on Tuesday, August 18th. The stock was sold at an average price of $5.51, for a total transaction of $184,469.29. Following the completion of the transaction, the insider directly owned 943,453 shares in the company, valued at approximately $5,198,426.03. The trade was a 3.43% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is accessible through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CFO Noel Watson sold 83,629 shares of the stock in a transaction that occurred on Friday, August 21st. The stock was sold at an average price of $5.83, for a total value of $487,557.07. Following the completion of the transaction, the chief financial officer directly owned 1,407,801 shares of the company’s stock, valued at $8,207,479.83. This trade represents a 5.61% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Insiders sold 577,475 shares of company stock worth $3,375,197 in the last 90 days. 7.40% of the stock is owned by company insiders.
Wall Street Analysts Forecast Growth
LZ has been the topic of several recent research reports. JPMorgan Chase & Co. lowered LegalZoom.com from an “overweight” rating to a “neutral” rating and reduced their price objective for the company from $8.00 to $7.00 in a research report on Thursday, August 6th. Weiss Ratings lowered LegalZoom.com from a “hold (c-)” rating to a “sell (d+)” rating in a research report on Thursday, October 29th. Wall Street Zen raised LegalZoom.com from a “hold” rating to a “buy” rating in a research report on Saturday, September 26th. Finally, William Blair cut LegalZoom.com from an “outperform” rating to a “market perform” rating in a research note on Thursday, August 6th. Five investment analysts have rated the stock with a Hold rating and three have issued a Sell rating to the company. According to data from MarketBeat.com, the stock presently has an average rating of “Reduce” and a consensus target price of $7.30.
Get Our Latest Research Report on LegalZoom.com
About LegalZoom.com
LegalZoom.com, Inc is an online platform that provides legal, compliance and tax-related products and services to individuals, families and small businesses. The company’s platform is designed to make common legal and administrative processes more accessible through digital tools, guided services and access to independent professionals.
LegalZoom’s offerings include business formation services for limited liability companies and corporations, registered-agent services, annual compliance support, business licensing and trademark services.
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