LegalZoom.com (NASDAQ:LZ) Releases Quarterly Earnings Results, Beats Expectations By $0.01 EPS

Key Points

• LegalZoom beat quarterly EPS expectations, reporting $0.16 versus the $0.15 consensus estimate. Revenue rose 6.6% year over year to $205.29 million, slightly below expectations.
• Q2 revenue increased about 7% to $205 million, while adjusted EBITDA rose 18% to $46 million and free cash flow reached $34 million. Higher-value subscription offerings gained traction, with related subscription revenue up roughly 20%.
• Google’s AI-driven search changes and a 13% workforce reduction are creating near-term challenges. Management expects roughly 2% Q3 revenue growth and about 6% full-year growth, while restructuring charges are expected to total approximately $6 million.

LegalZoom.com (NASDAQ:LZ - Get Free Report) announced its quarterly earnings data on Wednesday. The company reported $0.16 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $0.15 by $0.01, FiscalAI reports. The firm had revenue of $205.29 million for the quarter, compared to the consensus estimate of $205.83 million. LegalZoom.com had a net margin of 1.46% and a return on equity of 11.53%. The business's revenue for the quarter was up 6.6% on a year-over-year basis. During the same period in the prior year, the company posted $0.15 earnings per share.

Here are the key takeaways from LegalZoom.com's conference call:

• Q2 revenue rose 7% to $205 million and adjusted EBITDA increased 18% to $46 million, exceeding the high end of guidance. Adjusted EBITDA margin expanded to 22%, while free cash flow reached $34 million.
• Higher-value, human-in-the-loop offerings continued to gain traction: related subscription revenue grew approximately 20% year over year, represented 65% of subscription revenue, and legal-plan utilization increased more than 35%. Subscription revenue rose 11%, supported by pricing, stable retention, and greater adoption of legal, compliance, and expert services.
• LegalZoom is diversifying customer acquisition beyond Google Search. Partnership orders increased to 11% of total orders from 4% a year ago, while traffic from AI platforms grew more than 250% sequentially and reached roughly 3% of LLC formation traffic in June.
• Google’s shift toward AI-generated search answers reduced informational-search clicks, increased paid-search costs, and contributed to a 5% decline in business formations and a 1% decline in transaction revenue. Management expects this pressure to persist through year-end, guiding Q3 revenue growth to roughly 2% and full-year revenue growth to approximately 6% at the midpoint.
• The company announced a company-wide workforce reduction of approximately 13%, following a 5% reduction earlier in the year. The actions are expected to generate about $7 million in net 2026 savings and $14 million annually, but will result in roughly $6 million of restructuring charges, primarily in Q3.

LegalZoom.com Stock Down 3.6%

LZ traded down $0.30 on Wednesday, reaching $8.10. The company's stock had a trading volume of 2,261,928 shares, compared to its average volume of 2,379,321. LegalZoom.com has a fifty-two week low of $5.22 and a fifty-two week high of $12.40. The company has a market capitalization of $1.39 billion, a price-to-earnings ratio of 135.02, a P/E/G ratio of 1.40 and a beta of 1.28. The stock has a 50 day moving average of $6.76 and a two-hundred day moving average of $6.75.

Insider Activity

In other news, insider Nicole Miller sold 19,199 shares of the firm's stock in a transaction that occurred on Tuesday, May 19th. The shares were sold at an average price of $6.58, for a total transaction of $126,329.42. Following the transaction, the insider directly owned 1,119,222 shares in the company, valued at approximately $7,364,480.76. This trade represents a 1.69% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the SEC, which is accessible through this link. 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, CEO Jeffrey M. Stibel acquired 125,000 shares of the stock in a transaction on Monday, May 11th. The stock was acquired at an average cost of $6.15 per share, for a total transaction of $768,750.00. Following the acquisition, the chief executive officer directly owned 2,955,609 shares in the company, valued at $18,176,995.35. This represents a 4.42% increase in their position. Additional details regarding this purchase are available in the official SEC disclosure. Corporate insiders own 7.40% of the company's stock.

Institutional Inflows and Outflows

Several large investors have recently added to or reduced their stakes in the stock. Brighton Jones LLC bought a new stake in LegalZoom.com during the 4th quarter worth about $185,000. Amundi bought a new position in LegalZoom.com in the 1st quarter valued at $196,000. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. increased its stake in shares of LegalZoom.com by 3.0% in the 1st quarter. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. now owns 74,980 shares of the company's stock valued at $646,000 after buying an additional 2,161 shares during the period. Goldman Sachs Group Inc. raised its position in shares of LegalZoom.com by 9.5% during the first quarter. Goldman Sachs Group Inc. now owns 1,313,429 shares of the company's stock worth $11,309,000 after acquiring an additional 113,769 shares during the last quarter. Finally, UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC lifted its stake in shares of LegalZoom.com by 1.7% during the first quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC now owns 275,978 shares of the company's stock valued at $2,376,000 after acquiring an additional 4,607 shares during the period. Institutional investors and hedge funds own 81.99% of the company's stock.

Wall Street Analyst Weigh In

A number of brokerages recently issued reports on LZ. Citigroup cut their target price on LegalZoom.com from $8.50 to $7.50 and set a "neutral" rating on the stock in a report on Friday, May 22nd. UBS Group reduced their price objective on LegalZoom.com from $8.00 to $7.00 and set a "neutral" rating for the company in a report on Thursday, May 7th. JPMorgan Chase & Co. lowered their price objective on LegalZoom.com from $11.00 to $8.00 and set an "overweight" rating on the stock in a research note on Wednesday, June 24th. Weiss Ratings reaffirmed a "sell (d+)" rating on shares of LegalZoom.com in a report on Thursday, July 2nd. Finally, Wall Street Zen raised shares of LegalZoom.com from a "hold" rating to a "buy" rating in a report on Tuesday, July 28th. Three research analysts have rated the stock with a Buy rating, three have given a Hold rating and three have assigned a Sell rating to the stock. According to MarketBeat.com, the stock presently has an average rating of "Hold" and a consensus price target of $8.25.

LegalZoom.com Company Profile

LegalZoom.com, Inc NASDAQ: LZ operates as a leading online legal technology company that provides a broad range of legal and business services to individuals, families and small businesses. Through its digital platform, the company offers customized legal documents and filing services, including business formation (LLCs, corporations and nonprofits), estate planning (wills and trusts), intellectual property protection (trademarks and copyrights), and ongoing compliance support. LegalZoom also connects customers with independent attorneys for consultations on matters such as family law, immigration and real estate.

Founded in 2001 by entrepreneurs Brian Lee, Brian P.

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