LegalZoom.com Q1 Earnings Call Highlights

Key Points

• LegalZoom reported Q1 revenue of $207 million (up 13% YoY) and adjusted EBITDA of over $36 million; subscription revenue rose 12% to $130 million and the company raised its full-year revenue guide to $810–$830 million while maintaining adjusted EBITDA guidance of $190–$200 million.
• Management emphasized a human-in-the-loop strategy and momentum in expert-led offerings, with Concierge Suite now generating over three times average ARPU and expert-led revenue growing more than twice the overall business year‑over‑year, though Concierge is still early in its lifecycle.
• LegalZoom is pursuing AI-driven efficiencies (e.g., trademark search time down 55%, patent drafting 30% faster, ~40% of chat inquiries resolved end-to-end) while returning capital via ~$43 million of share repurchases and finishing the quarter debt-free with $183 million in cash.

LegalZoom.com NASDAQ: LZ reported first-quarter 2026 results that management said reflected continued progress in repositioning the company around a “subscription-led, AI-enabled platform” for small businesses. Chairman and CEO Jeff Stibel said LegalZoom has become “a different company than it was two years ago,” pointing to revenue growth and profitability that exceeded internal expectations.

Total revenue increased 13% year over year to $207 million, while adjusted EBITDA exceeded $36 million, according to Chief Operating Officer and Chief Financial Officer Noel Watson. “Our results this quarter reflect continued progress in shifting the business toward higher value, subscription-driven revenue,” Watson said, adding that the company is also “quickly scaling efficiencies across the business” using AI.

Management highlights human-in-the-loop strategy and Concierge momentum

Stibel emphasized LegalZoom’s focus on combining automation with professional guidance, describing AI as reshaping the “first mile” of the customer journey while arguing that expert judgment remains critical at the “last mile” for high-stakes decisions. He said the company’s “human-in-the-loop strategy remains central” to differentiation, spanning both a service layer (including registered agent and virtual mail) and an expert layer (including legal plans, IP services, and Concierge Suite).

In prepared remarks, Stibel said revenue across expert-led offerings grew “more than two times faster than our overall business year-over-year and continues to accelerate.” He called Concierge Suite a standout performer, describing it as “now at over three times average ARPU.” Stibel also cited compliance needs as a key opportunity, saying the company estimates “nearly 1/3 of U.S. small businesses are in bad standing or at risk of falling out of compliance each year,” and claimed LegalZoom is “the only provider offering a fully managed, do-it-for-me, reinstatement and compliance solution.”

During the Q&A, Stibel said Concierge is still early in its lifecycle, with the company “just getting through the first set of renewal cycles.” He said LegalZoom has not disclosed the size and scale of Concierge, citing two reasons: the company is currently sourcing leads only from its existing customer base, and it is still refining the product, including pricing and potential add-ons. “We’re still looking at pricing,” he said, adding that the company is evaluating whether to include additional professional services within Concierge over time.

Financial performance driven by subscriptions, compliance filings, and IP

Watson said subscription revenue increased 12% to $130 million, marking LegalZoom’s “fourth consecutive quarter of double-digit growth.” He attributed performance to human-in-the-loop services, including registered agent services that benefited from pricing initiatives implemented last year, along with higher revenue from legal plans bundled into certain formation offerings and contributions from virtual mail and Concierge Suite.

Watson also noted strength in compliance offerings, which he said was supported by improved retention tied to customer experience enhancements rolled out over the past year, including “Annual Report Auto-filing.” Average revenue per user (ARPU) rose 4% year over year. Watson said the company expects ARPU to be “the primary driver of subscription growth throughout the year,” while noting that subscription units were stable year over year at approximately 1.92 million due to a shift away from lower-value bundled subscriptions and toward higher-value offerings.

Transaction revenue increased 15% to $77 million. Watson said transaction revenue benefited from “higher than expected annual report filing activity” within compliance, while also citing strength in trademark and IP offerings and a full-quarter contribution from Formation Nation. Growth was “partially offset by the expected decline in BOIR revenue,” he added. Average order value was $205, up 5%, which Watson attributed to packaging changes in formation bundles and lapping of lower-value BOIR transactions in the prior year.

Transaction units rose 10% to 375,000. Watson said LegalZoom processed 142,000 business formations in the quarter, up 8%, driven by a full-quarter contribution from Formation Nation and increased formation volume from partnerships.

Partnerships expand, while AI ecosystem integrations remain early

Stibel said partnerships are a key growth lever for diversifying customer acquisition. In the quarter, he said partnerships drove order volume equal to 10% of total orders, up from 4% a year earlier. He highlighted new partnerships including LinkedIn and Chase, and pointed to GoDaddy as a strategic partnership where LegalZoom is now “the sole legal services provider across their ecosystem.”

Stibel and Watson also discussed LegalZoom’s early efforts to embed within AI ecosystems, including a LegalZoom connector for Claude and a LegalZoom ChatGPT formations app, both launched in the first quarter. However, when asked about traffic from those AI-related partnerships, Stibel said it was “too early for it to be material,” describing the work as “still test and learn.” He said the more meaningful partnership growth is coming from GoDaddy, Chase, LinkedIn, and others, with AI channels expected to evolve over time.

Watson said LegalZoom is heavily performance-marketing oriented and measures return on ad spend “on a daily basis,” while also tracking “unaided brand awareness,” which the company said increased 19% year over year in the quarter. Stibel said the company’s marketing approach is intended to position LegalZoom as “the choice,” including through exclusive relationships with channels that serve small businesses.

AI efficiency initiatives and capital allocation updates

Watson said LegalZoom is “rapidly transitioning to a fully AI-native organization,” with tools deployed broadly and supported by training. He detailed several operational metrics the company attributed to AI adoption:

• Trademark classification search time reduced by 55% across law firm workflows.

• Patent drafting accelerated by 30%.

• AI-powered coaching reduced missed sales opportunities by “roughly a third.”

• Agentic AI resolved approximately 40% of customer care chat inquiries end-to-end.

On profitability, Watson reported non-GAAP gross margin of 67%, flat year over year, with more efficient service delivery offset by higher filing fees. Sales and marketing expense totaled $72 million, or 35% of revenue, up 29%. Watson attributed the increase to a 25% rise in customer acquisition marketing due to timing of investments around formation seasonality and diversification into brand and partnerships, as well as a $5 million increase in non-CAM sales and marketing expenses tied to a full quarter of Formation Nation and investments in the sales team.

Technology and development costs were $14 million, down 6%, while general and administrative expenses rose 2% to $15 million. Adjusted EBITDA was $36 million, representing an 18% margin, Watson said.

Free cash flow was $41 million, flat year over year. Watson said the company remains debt-free, with its $100 million revolving credit facility undrawn. LegalZoom ended the quarter with $183 million in cash and cash equivalents, down $20 million sequentially, which Watson said reflected share repurchases and a $13 million payment of deferred consideration related to the Formation Nation acquisition, partially offset by free cash flow.

During the first quarter, LegalZoom repurchased approximately 5.3 million shares for $43 million, leaving about $126 million remaining under its authorization as of March 31, 2026. Watson said the company has “remained active” in the market in the second quarter, calling it a reflection of confidence in the long-term value of the business relative to current valuation.

Outlook raised for revenue; EBITDA outlook maintained

Watson raised the company’s full-year revenue outlook to a range of $810 million to $830 million, representing approximately 8% year-over-year growth at the midpoint. LegalZoom maintained its adjusted EBITDA outlook of $190 million to $200 million, which Watson said represents about 13% growth at the midpoint.

For the second quarter, LegalZoom expects revenue of $203 million to $207 million, representing approximately 6% growth at the midpoint. Watson said the outlook reflects the “full lapping” of the Formation Nation acquisition and seasonally lower annual report filing volume compared with the first quarter. Adjusted EBITDA is expected to be $40 million to $42 million.

Watson said the company expects adjusted EBITDA to “build throughout the year,” supported by improved gross margin, disciplined cost management, and AI-driven efficiencies expected to be realized in the back half of 2026.

About LegalZoom.com NASDAQ: LZ

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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