LegalZoom (LZ) AI Stock Analysis

• Market Cap: $1.80B
• Dividend Yield: N/A
• Average Volume (3M): 2.07M
• Price to Earnings (P/E): 81.8
• Beta (1Y): 1.02
• Revenue Growth: 7.17%
• EPS Growth: -5.86%
• Country: US
• Employees: 964
• Sector: Industrials
• Sector Strength: 72
• Industry: Specialty Business Services
• EPS (TTM): 0.17
• Shares Outstanding: 177,270,260
• 10 Day Avg. Volume: 1,788,343
• 30 Day Avg. Volume: 2,068,667
• PEG Ratio: 0.34
• Price to Book (P/B): 14.51
• Price to Sales (P/S): 1.98
• P/FCF Ratio: 13.54
• Enterprise Value/Market Cap: 0.95
• Enterprise Value/Revenue: 2.36
• Enterprise Value/Gross Profit: 3.59
• Enterprise Value/Ebitda: 22.54
• 1Y Price Target: $11.90
• Price Target Upside: 17.01% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): 0.64
• Revenue Forecast (FY): $748.89M

• Rating: 72 Outperform
• Price Target: $10.50 ▲(3.24% Upside)

LegalZoom's overall stock score reflects strong financial performance and positive earnings call sentiment, which are the most significant factors. However, the high P/E ratio and mixed technical indicators suggest caution. The company's strategic initiatives and robust cash flow provide a positive outlook, but valuation concerns and technical resistance may limit short-term upside.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies, enhancing long-term financial stability.

Strategic Partnerships

Strategic partnerships with leading tech firms like OpenAI can enhance product offerings and competitive positioning, driving future growth.

Cash Flow Generation

Strong cash flow generation supports reinvestment opportunities and financial flexibility, underpinning sustainable long-term growth.

Negative Factors

Profit Margin Pressure

Decreasing profit margins may indicate rising costs or pricing pressure, potentially impacting long-term profitability if not addressed.

Leadership Changes

Leadership changes can disrupt strategic initiatives and create uncertainty, potentially affecting the company's ability to execute long-term plans.

ARPU Decline

Declining ARPU suggests potential challenges in maintaining pricing power or customer value perception, impacting revenue growth.

LegalZoom Business Overview & Revenue Model

Company Description

LegalZoom is a leading online legal services provider that offers a range of services to individuals and small businesses. Founded in 2001, the company operates primarily in the legal tech sector, providing products such as business formation services, trademark registration, estate planning, and compliance solutions. LegalZoom aims to make legal services more accessible and affordable, leveraging technology to streamline legal processes for its users.

How the Company Makes Money

LegalZoom generates revenue through a subscription-based model and one-time fees for specific services. Key revenue streams include fees from business formation packages, trademark registrations, and other legal document services. The company also offers premium services, such as access to licensed attorneys for legal advice, which can attract additional revenue. Significant partnerships with various legal professionals and organizations enhance their service offerings and contribute to their earnings by expanding their customer base and providing a diverse range of legal solutions.

LegalZoom Financial Statement Overview

Summary

LegalZoom exhibits strong financial performance with consistent revenue growth and solid profitability margins. The company's low leverage and strong return on equity highlight its financial stability. While there are slight pressures on profitability margins, the robust cash flow generation provides a cushion for future investments and growth opportunities.

Income Statement

LegalZoom's income statement shows a consistent revenue growth trend with a 3.05% increase in the TTM period. The gross profit margin remains strong at 65.71%, indicating efficient cost management. However, the net profit margin slightly decreased to 4.07% from 4.39% in the previous year, suggesting some pressure on profitability. The EBIT and EBITDA margins have also declined, indicating potential challenges in operational efficiency.

Balance Sheet

The balance sheet reflects a solid financial position with a low debt-to-equity ratio of 0.07, indicating minimal leverage and financial risk. The return on equity is strong at 21.52%, showcasing effective use of equity to generate profits. The equity ratio stands at 36.64%, suggesting a stable capital structure with a healthy proportion of equity financing.

Cash Flow

LegalZoom's cash flow statement highlights a robust free cash flow growth rate of 19.13% in the TTM period, demonstrating strong cash generation capabilities. The operating cash flow to net income ratio is 0.50, indicating efficient conversion of income into cash. The free cash flow to net income ratio is high at 0.80, reflecting effective cash management and potential for reinvestment or debt reduction.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	727.48M	681.88M	660.73M	619.98M	575.08M	470.64M
Gross Profit	477.87M	441.79M	421.46M	408.88M	385.72M	316.07M
EBITDA	76.14M	80.59M	60.06M	-23.62M	-74.88M	71.90M
Net Income	22.22M	29.96M	13.95M	-48.73M	-108.66M	9.90M
Balance Sheet
Total Assets	551.10M	373.88M	447.82M	405.39M	431.01M	252.06M
Cash, Cash Equivalents and Short-Term Investments	237.15M	142.06M	225.72M	189.08M	239.30M	114.47M
Total Debt	14.68M	7.88M	9.02M	11.28M	0.00	515.39M
Total Liabilities	349.18M	280.63M	278.98M	263.02M	233.46M	802.70M
Stockholders Equity	201.92M	93.26M	168.83M	142.38M	197.55M	-550.63M
Cash Flow
Free Cash Flow	155.80M	99.94M	92.72M	51.74M	42.41M	82.46M
Operating Cash Flow	186.65M	135.64M	124.31M	73.84M	54.15M	93.05M
Investing Cash Flow	-40.76M	-35.70M	-31.55M	-30.62M	-77.67M	-12.73M
Financing Cash Flow	-20.98M	-183.28M	-56.15M	-93.34M	123.36M	-15.09M

LegalZoom Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 10.17
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LZ, the sentiment is Positive. The current price of 10.17 is above the 20-day moving average (MA) of 9.48, above the 50-day MA of 9.86, and above the 200-day MA of 9.39, indicating a bullish trend. The MACD of 0.05 indicates Negative momentum. The RSI at 61.78 is Neutral, neither overbought nor oversold. The STOCH value of 87.68 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LZ.

LegalZoom Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MMS	74 Outperform	$4.78B	15.93	18.14%	1.37%	2.36%	11.30%
LZ	72 Outperform	$1.80B	81.75	16.96%	―	7.17%	-5.86%
UNF	68 Neutral	$3.03B	21.83	6.93%	0.81%	0.20%	2.72%
ABM	66 Neutral	$2.80B	24.85	6.32%	2.32%	4.27%	-24.06%
CBZ	66 Neutral	$2.91B	35.22	7.44%	―	59.19%	-35.47%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
FA	51 Neutral	$2.56B	-17.52	-12.48%	―	93.41%	-2515.85%

LegalZoom Corporate Events

LegalZoom Reports Strong Q3 2025 Financial Results

LegalZoom reported strong financial results for the third quarter of 2025, with a 13% year-over-year increase in revenue to $190.2 million, driven by growth in subscription services. Despite a decrease in net income from $11.1 million in 2024 to $4.5 million in 2025, the company raised its full-year revenue guidance, anticipating approximately 10% growth. The strategic shift towards enhancing offerings for small businesses and the integration of AI and technology are seen as foundational for LegalZoom’s future growth and long-term value creation.