LegalZoom (LZ)
NASDAQ:LZ
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LegalZoom
(NASDAQ:LZ)
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Rating:63Neutral
Price Target:
$6.50
▲(0.15% Upside)
Action:ReiteratedDate:05/09/26
The score is primarily supported by strong cash flow and a conservatively levered balance sheet, reinforced by a constructive earnings update with raised full-year guidance and expected margin expansion from AI efficiencies. Offsetting these positives are weak technicals (price below key moving averages) and a challenging valuation profile (very high P/E and no dividend support), which meaningfully limit the overall score.
Positive Factors
Strong cash generation
Consistent, robust operating and free cash flow (TTM OCF ~$178M, FCF ~$148M) plus a conservatively levered balance sheet provide durable financial flexibility to fund product investment, partnerships and buybacks without raising leverage, underpinning multi‑quarter strategic optionality.
Negative Factors
Compressed profitability margins
Operating and net margins have materially compressed versus 2024 (TTM net ~2.0%, EBIT ~2.5% vs prior net ~4.4%, EBIT ~6.4%). Persistently thin margins limit reinvestment capacity and make the business sensitive to slower growth or sustained higher expenses over the next several quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation
Consistent, robust operating and free cash flow (TTM OCF ~$178M, FCF ~$148M) plus a conservatively levered balance sheet provide durable financial flexibility to fund product investment, partnerships and buybacks without raising leverage, underpinning multi‑quarter strategic optionality.
Read all positive factors
LegalZoom (LZ) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.05B
Dividend YieldN/A
Average Volume (3M)2.61M
Price to Earnings (P/E)224.5
Beta (1Y)1.11
Revenue Growth12.87%
EPS Growth-63.11%
CountryUS
Employees964
SectorIndustrials
Sector Strength72
IndustrySpecialty Business Services
Share Statistics
EPS (TTM)0.07
Shares Outstanding171,647,770
10 Day Avg. Volume3,069,453
30 Day Avg. Volume2,608,198
Financial Highlights & Ratios
PEG Ratio-2.34
Price to Book (P/B)10.33
Price to Sales (P/S)2.35
P/FCF Ratio12.00
Enterprise Value/Market Cap0.84
Enterprise Value/Revenue1.13
Enterprise Value/Gross Profit1.72
Enterprise Value/Ebitda11.96
Forecast
1Y Price Target
$8.29Price Target Upside27.67% Upside
Rating ConsensusHold
Number of Analyst Covering8
EPS Forecast (FY)0.74
Revenue Forecast (FY)$818.15M
LegalZoom Business Overview & Revenue Model
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 intellectua...
How the Company Makes Money
LegalZoom primarily generates revenue by charging customers for (1) one-time transactions and (2) ongoing subscriptions related to legal and compliance needs. A key stream is fees for business formation and other legal-document-related offerings, ...
LegalZoom Earnings Call Summary
Earnings Call Date:May 06, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 06, 2026
Earnings Call Sentiment Positive
The call conveyed solid top‑line growth, improved profitability and clear progress on strategic initiatives (subscription ARPU expansion, partnerships, AI efficiencies). Management raised full‑year guidance and demonstrated operating leverage from AI, while noting deliberate, front‑loaded marketing spend, ongoing product optimization (concierge) and seasonal transaction variability. Overall the positives (revenue beats, raised outlook, efficiency gains and partnership momentum) outweigh the near‑term headwinds (higher S&M spend, cash use for buybacks, seasonality and early‑stage AI partner contributions).Positive Updates
Top-line Growth and Upgraded Full‑Year Guidance
Total revenue of $207 million, up 13% year‑over‑year and ahead of expectations; full‑year 2026 revenue guidance raised to $810–$830 million (≈8% YoY growth at midpoint) and adjusted EBITDA guidance to $190–$200 million (≈13% YoY growth at midpoint).
Negative Updates
Significantly Higher Sales & Marketing Spend
Sales and marketing spend was $72 million (35% of revenue), up 29% YoY; customer acquisition marketing increased 25% and non‑CAM S&M rose ~45%, reflecting front‑loaded investments during peak formation seasonality and partner onboarding costs.
Read all updates
Q1-2026 Updates
Positive
Negative
Top-line Growth and Upgraded Full‑Year Guidance
Total revenue of $207 million, up 13% year‑over‑year and ahead of expectations; full‑year 2026 revenue guidance raised to $810–$830 million (≈8% YoY growth at midpoint) and adjusted EBITDA guidance to $190–$200 million (≈13% YoY growth at midpoint).
Read all positive updates
Company Guidance
LegalZoom raised full‑year 2026 revenue guidance to $810–$830 million (about +8% year‑over‑year at the midpoint) and expects adjusted EBITDA of $190–$200 million (about +13% YoY at the midpoint); for Q2 it guides revenue of $203–$207 million (≈+6% at the midpoint) and adjusted EBITDA of $40–$42 million, and says EBITDA should build through the year driven by improved gross margin, disciplined cost management and AI efficiencies realized in the back half. For context, Q1 results were $207 million revenue (+13% YoY) with adjusted EBITDA of $36 million (18% margin), subscription revenue of $130 million (+12%), ~1.92 million subscription units, transaction revenue of $77 million (+15%), AOV $205 (+5%), 375k transaction units (including 142k formations, +8%), deferred revenue up $20 million sequentially, free cash flow $41 million, $183 million cash, and 5.3 million shares repurchased for $43 million (≈$126 million remaining authorization).LegalZoom Financial Statement Overview
Summary
Income Statement
63
Positive
Balance Sheet
74
Positive
Cash Flow
82
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 779.71M | 756.04M | 681.88M | 660.73M | 619.98M | 575.08M |
| Gross Profit | 513.79M | 498.08M | 441.79M | 421.46M | 408.88M | 385.72M |
| EBITDA | 73.95M | 81.14M | 80.59M | 60.06M | -23.62M | -74.88M |
| Net Income | 11.40M | 15.43M | 29.96M | 13.95M | -48.73M | -108.66M |
Balance Sheet | ||||||
| Total Assets | 491.86M | 530.92M | 373.88M | 447.82M | 405.39M | 431.01M |
| Cash, Cash Equivalents and Short-Term Investments | 183.15M | 203.10M | 142.06M | 225.72M | 189.08M | 239.30M |
| Total Debt | 15.22M | 24.39M | 7.88M | 9.02M | 11.28M | 0.00 |
| Total Liabilities | 344.95M | 359.03M | 280.63M | 278.98M | 263.02M | 233.46M |
| Stockholders Equity | 146.91M | 171.88M | 93.26M | 168.83M | 142.38M | 197.55M |
Cash Flow | ||||||
| Free Cash Flow | 147.57M | 147.92M | 99.94M | 92.72M | 51.74M | 42.41M |
| Operating Cash Flow | 174.78M | 178.20M | 135.64M | 124.31M | 73.84M | 54.15M |
| Investing Cash Flow | -25.93M | -40.08M | -35.70M | -31.55M | -30.62M | -77.67M |
| Financing Cash Flow | -175.71M | -77.26M | -183.28M | -56.15M | -93.34M | 123.36M |
LegalZoom Technical Analysis
Neutral
6.49
Price Trends
6.43
Positive
7.98
Negative
8.99
Negative
Market Momentum
-0.08
Negative
58.10
Neutral
93.23
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LZ, the sentiment is Neutral. The current price of 6.49 is above the 20-day moving average (MA) of 5.94, above the 50-day MA of 6.43, and below the 200-day MA of 8.99, indicating a neutral trend. The MACD of -0.08 indicates Negative momentum. The RSI at 58.10 is Neutral, neither overbought nor oversold. The STOCH value of 93.23 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for LZ.
LegalZoom Risk Analysis
LegalZoom disclosed 40 risk factors in its most recent earnings report. LegalZoom reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
LegalZoom Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $3.38B | 8.91 | 21.75% | 1.38% | -1.44% | 33.09% | |
69 Neutral | $4.39B | 49.97 | 6.24% | 0.71% | 0.76% | -8.22% | |
67 Neutral | $2.74B | 235.83 | 0.66% | ― | 53.53% | ― | |
65 Neutral | $2.35B | 17.89 | 8.80% | 2.20% | 5.59% | 100.00% | |
64 Neutral | $1.66B | 2.56 | 8.32% | ― | 28.34% | 67.93% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
63 Neutral | $1.05B | 224.52 | 6.38% | ― | 12.87% | -63.11% |
* Industrials Sector Average
LZ
LegalZoom
6.13
-2.90
-32.12%
ABM
ABM Industries
40.20
-9.25
-18.71%
CBZ
CBIZ
30.92
-41.51
-57.31%
MMS
Maximus
64.27
-9.87
-13.31%
UNF
UniFirst
252.41
69.69
38.14%
FA
First Advantage
15.96
-1.70
-9.63%
LegalZoom Corporate Events
Business Operations and StrategyStock BuybackFinancial Disclosures
LegalZoom Delivers Strong Q1 Growth and Raises Outlook
Positive
May 6, 2026
On May 6, 2026, LegalZoom reported first-quarter 2026 results that exceeded its own expectations, with revenue rising 13% year over year to $206.8 million, driven by higher-value subscriptions, enhanced compliance products and a 10% increase in tr...
Business Operations and StrategyStock BuybackFinancial Disclosures
LegalZoom Posts Strong 2025 Results, Expands Buyback Plan
Positive
Feb 19, 2026
On February 19, 2026, LegalZoom reported that full-year 2025 revenue rose 11% to $756.0 million, driven by 13% growth in subscription revenue to $492.5 million and contributions from its Formation Nation acquisition. The company posted 2025 net in...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.