Download PDF

1. Company Snapshot

1.a. Company Description

LegalZoom.com, Inc.operates an online platform for legal and compliance solutions in the United States.The company's platform offers products and services, including business formations, creating estate planning documents, protecting intellectual property, completing certain forms and agreements, providing access to independent attorney advice, and connecting customers with experts for tax preparation and bookkeeping services.


It serves small businesses and individuals.LegalZoom.com, Inc.was incorporated in 1999 and is headquartered in Glendale, California.

Show Full description

1.b. Last Insights on LZ

LegalZoom's recent performance was driven by strong Q2 2025 earnings, with revenue and profitability exceeding expectations. The Formation Nation acquisition accelerated upmarket expansion, supporting higher-margin offerings. A new partnership with OpenAI enables up to 30 million users to access LegalZoom's resources within ChatGPT, opening a new monetization stream. Additionally, the company launched a streamlined provisional patent filing product to help businesses protect intellectual property. Earnings per share (EPS) reached $0.15, a 50% increase year-over-year.

1.c. Company Highlights

2. LegalZoom's Q3 2025 Earnings: A Strong Performance

LegalZoom reported record third-quarter revenue of $190 million, a 13% increase year-over-year, driven by subscription revenue growth of 13%. The company's adjusted EBITDA margin remained strong at 24%, resulting from disciplined execution and continued efficiency gains. Earnings per share (EPS) came in at $0.17, slightly below estimates of $0.2. The company's free cash flow was $47 million, up 114% compared to the same period in 2024.

Publication Date: Nov -23

📋 Highlights
  • Record Revenue Growth: Achieved $190M revenue (Q3 2025), up 13% YoY, driven by 13% subscription revenue growth.
  • Strong Profitability: Maintained 24% adjusted EBITDA margin ($46M) and generated $47M free cash flow (+114% YoY).
  • Expanded Market Focus: Shifted strategy to serve existing businesses, driving 12% YoY increase in business formations (259K transaction units).
  • Strategic Financial Outlook: Raised 2025 revenue guidance to $748–$752M (10% growth midpoint) and Q4 EBITDA margin to 26%.

Financial Performance

The company's financial performance was robust, with a 2% increase in transaction units to 259,000 and a 12% year-over-year increase in business formations. The average order value was $251, up 11% versus the same period last year. LegalZoom's adjusted EBITDA was $46 million, representing a margin of 24%. The company's strong cash position and healthy free cash flow generation enabled it to repurchase approximately 1.8 million shares at an average price of $9.91 per share for a total of $17.6 million during Q3.

Strategic Priorities

LegalZoom is expanding its focus areas beyond business formation to serve existing businesses, positioning itself to capture a greater share of its serviceable addressable market. The company is developing higher-value products and investing in AI to address the needs of small businesses. As Jeff Stibel highlighted, the company is "leveraging AI to create personalized experiences and augment human expertise." The company's concierge suite of products, such as compliance concierge, is driving business forward, and the partnership with OpenAI is a key area of focus.

Valuation

With a P/E Ratio of 57.22 and an EV/EBITDA of 20.11, the market is pricing in significant growth expectations. The company's ROE is 21.52%, indicating a strong return on equity. The Free Cash Flow Yield is 8.09%, suggesting a reasonable valuation. Given the company's raised 2025 revenue outlook, with expected revenue between $748 million and $752 million, representing growth of 10% at the midpoint, and adjusted EBITDA in the range of $168 million to $170 million, the stock may be poised for further growth. Analysts estimate next year's revenue growth at 7.0%.

Outlook

LegalZoom's performance positions it well to address the needs of existing and established small businesses, and the company is confident in its ability to continue to grow and perform, even in uncertain macro conditions. The company's diversified and insulated growth-oriented business model, combined with its focus on unit growth through bundling and driving tests, is expected to drive continued success.

3. NewsRoom

Card image cap

LegalZoom Renews Commitment to Defy Ventures to Support Entrepreneurship Programs for Currently and Formerly Incarcerated Individuals

Dec -02

Source: businesswire.com

Card image cap

Geode Capital Management LLC Sells 116,668 Shares of LegalZoom.com, Inc. $LZ

Nov -29

Source: defenseworld.net

Card image cap

Is LegalZoom Stock a Buy or Sell After the Chief Legal Officer Dumped Over 23,000 Shares?

Nov -23

Source: fool.com

Card image cap

LegalZoom Announces Upcoming Conference Participation

Nov -19

Source: globenewswire.com

Card image cap

Campbell & CO Investment Adviser LLC Invests $247,000 in LegalZoom.com, Inc. $LZ

Nov -18

Source: defenseworld.net

Card image cap

LegalZoom: No Near-Term Catalyst To Drive A Re-Rating

Nov -09

Source: seekingalpha.com

Card image cap

LegalZoom: A Value Stock To Bank On

Nov -07

Source: seekingalpha.com

Card image cap

LegalZoom.com, Inc. (LZ) Q3 2025 Earnings Call Transcript

Nov -06

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.75%)

6. Segments

Subscription

Expected Growth: 8%

LegalZoom.com's 8% subscription growth is driven by increasing demand for online legal services, expansion into new markets, and strategic partnerships. Additionally, the company's user-friendly platform, competitive pricing, and high customer satisfaction rates contribute to its growing subscriber base.

Transaction

Expected Growth: 10%

LegalZoom.com, Inc.'s 10% growth is driven by increasing demand for online legal services, expansion into new markets, and strategic partnerships. The rise of entrepreneurship and small businesses fuels the need for affordable legal solutions, while LegalZoom's user-friendly platform and competitive pricing attract customers. Additionally, the company's investments in digital marketing and customer acquisition strategies contribute to its growth momentum.

7. Detailed Products

Business Formation

LegalZoom provides business formation services, including LLC formation, corporation formation, and nonprofit formation, to help entrepreneurs start and run their businesses.

Trademark Registration

LegalZoom offers trademark registration services to help businesses protect their brand identities and intellectual property.

Estate Planning

LegalZoom provides estate planning services, including wills, trusts, and powers of attorney, to help individuals plan for the future.

Divorce and Family Law

LegalZoom offers divorce and family law services, including divorce filings, child custody agreements, and prenuptial agreements.

Patent and Copyright Services

LegalZoom provides patent and copyright services to help inventors and creators protect their intellectual property.

Business Compliance

LegalZoom offers business compliance services, including annual report filings, business license compliance, and tax compliance.

Real Estate Services

LegalZoom provides real estate services, including deed preparation, title searches, and foreclosure services.

8. LegalZoom.com, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

LegalZoom.com, Inc. offers a unique online legal document preparation and filing service, making it difficult for substitutes to emerge.

Bargaining Power Of Customers

While customers have some bargaining power due to the availability of alternative legal services, LegalZoom.com, Inc.'s strong brand and convenience factor mitigate this power.

Bargaining Power Of Suppliers

LegalZoom.com, Inc. has a diversified supplier base, reducing the bargaining power of individual suppliers.

Threat Of New Entrants

While there are barriers to entry in the online legal services market, new entrants can still emerge, but LegalZoom.com, Inc.'s established brand and market share provide a competitive advantage.

Intensity Of Rivalry

The online legal services market is highly competitive, with several established players, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 5.08%
Debt Cost 10.18%
Equity Weight 94.92%
Equity Cost 10.18%
WACC 10.18%
Leverage 5.36%

11. Quality Control: LegalZoom.com, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
LegalZoom

A-Score: 4.7/10

Value: 2.4

Growth: 6.6

Quality: 7.2

Yield: 0.0

Momentum: 9.0

Volatility: 3.0

1-Year Total Return ->

View Full Report
Stock-Card
Kodak

A-Score: 4.5/10

Value: 7.2

Growth: 4.7

Quality: 3.8

Yield: 0.0

Momentum: 9.0

Volatility: 2.3

1-Year Total Return ->

View Full Report
Stock-Card
Team

A-Score: 3.8/10

Value: 10.0

Growth: 3.0

Quality: 6.1

Yield: 0.0

Momentum: 2.0

Volatility: 1.7

1-Year Total Return ->

View Full Report
Stock-Card
DLH

A-Score: 3.8/10

Value: 8.0

Growth: 5.8

Quality: 3.9

Yield: 0.0

Momentum: 1.0

Volatility: 4.0

1-Year Total Return ->

View Full Report
Stock-Card
Performant Financial

A-Score: 3.4/10

Value: 4.6

Growth: 3.9

Quality: 4.5

Yield: 0.0

Momentum: 2.5

Volatility: 4.7

1-Year Total Return ->

View Full Report
Stock-Card
Wilhelmina

A-Score: 3.3/10

Value: 6.7

Growth: 2.4

Quality: 6.5

Yield: 0.0

Momentum: 1.5

Volatility: 3.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

9.38$

Current Price

9.38$

Potential

-0.00%

Expected Cash-Flows