LegalZoom (LZ) AI Stock Analysis

• Market Cap: $1.93B
• Dividend Yield: N/A
• Average Volume (3M): 2.40M
• Price to Earnings (P/E): 67.4
• Beta (1Y): 0.90
• Revenue Growth: 4.19%
• EPS Growth: 48.69%
• Country: US
• Employees: 964
• Sector: Industrials
• Sector Strength: 80
• Industry: Specialty Business Services
• EPS (TTM): 0.15
• Shares Outstanding: 180,249,370
• 10 Day Avg. Volume: 3,529,423
• 30 Day Avg. Volume: 2,396,766
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.73
• Enterprise Value/Revenue: 2.00
• Enterprise Value/Gross Profit: 3.04
• Enterprise Value/Ebitda: 20.03
• 1Y Price Target: $11.36
• Price Target Upside: 3.46% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 8

• Rating: 76 Outperform
• Price Target: $12.00 ▲(9.29% Upside)

LegalZoom's overall stock score is driven by strong financial performance and bullish technical indicators. The company's strategic focus on subscription growth and partnerships enhances its market position. However, high valuation and challenges in retention rates and ARPU present risks. Governance improvements and financial oversight add to the positive outlook.

Positive Factors

Brand Strategy

LegalZoom maintains a considerable lead over its competition in terms of brand awareness and plans to shift marketing spend toward a more strategic brand marketing push.

Earnings

LegalZoom reported strong quarterly results with revenue and free cash flow exceeding estimates, showcasing strong financial performance.

Future Growth

Management raised its revenue guidance for 2025, indicating confidence in future growth and strategic direction.

Negative Factors

Macroeconomic Impact

The degree of growth in macro-level business formations will inevitably impact LegalZoom’s ability to grow subscriptions, potentially limiting expansion opportunities.

Retention Rates

Retention rates dropped to 59% this quarter, down from 60% last quarter and 63% in the year-ago period, indicating potential challenges in maintaining customer loyalty.

Subscription Challenges

Management expects lower renewal rates from the initial bundled cohort, which may impact future subscription revenue.

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 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.

How the Company Makes Money

LegalZoom makes money primarily through a subscription-based model and one-time transaction fees for its various services. The company offers several subscription plans that provide ongoing legal advice and support, catering to both businesses and individuals. Additionally, LegalZoom generates revenue from one-time services such as business formations, trademark registrations, and estate planning document preparation. Partnerships with legal professionals and other service providers also contribute to its revenue by enhancing its product offerings and expanding its customer base. The company leverages its online platform to reach a broad audience, making legal services more accessible and driving its revenue growth.

LegalZoom Financial Statement Overview

Summary

LegalZoom's financial statements reflect strong revenue growth, profitability improvements, and a stable balance sheet. The company's low leverage and robust cash flow generation present a positive outlook with manageable financial risks.

Income Statement

LegalZoom's income statement shows strong performance with a consistent revenue growth rate from $575.08M in 2021 to $690.78M in TTM (Trailing-Twelve-Months), marking a significant growth trajectory. The gross profit margin is robust at 64.95% for TTM, indicating efficient cost management. Net profit margin improved to 4.39% in TTM, reflecting better profitability. EBIT and EBITDA margins are also improving, showing operational efficiency.

Balance Sheet

The balance sheet is solid with a healthy equity position and improving financial stability. The debt-to-equity ratio is low at 0.08, indicating low leverage and financial risk. Return on Equity (ROE) is strong at 16.21% in TTM, showing effective use of equity. The equity ratio stands at 35.14%, highlighting a stable financial structure.

Cash Flow

Cash flow analysis indicates strong cash generation capabilities with a notable free cash flow growth of 16.62% in TTM. The operating cash flow to net income ratio at 5.01 suggests efficient cash flow conversion. Free cash flow to net income ratio is solid at 3.84, reflecting strong cash profitability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	705.92M	681.88M	660.73M	619.98M	575.08M	470.64M
Gross Profit	463.87M	441.79M	421.46M	408.88M	385.72M	316.07M
EBITDA	70.34M	80.59M	60.06M	-25.93M	-60.80M	71.90M
Net Income	28.77M	29.96M	13.95M	-48.73M	-108.66M	9.90M
Balance Sheet
Total Assets	543.03M	373.88M	447.82M	405.39M	431.01M	252.06M
Cash, Cash Equivalents and Short-Term Investments	217.03M	142.06M	225.72M	189.08M	239.30M	114.47M
Total Debt	14.39M	7.88M	9.02M	11.28M	0.00	515.39M
Total Liabilities	348.98M	280.63M	278.98M	263.02M	233.46M	802.70M
Stockholders Equity	194.05M	93.26M	168.83M	142.38M	197.55M	-550.63M
Cash Flow
Free Cash Flow	130.79M	99.94M	92.72M	51.74M	42.41M	82.46M
Operating Cash Flow	164.04M	135.64M	124.31M	73.84M	54.15M	93.05M
Investing Cash Flow	-43.16M	-35.70M	-31.55M	-30.62M	-77.67M	-12.73M
Financing Cash Flow	-22.50M	-183.28M	-56.15M	-93.34M	123.36M	-15.09M

LegalZoom Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 10.98
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 10.98 is above the 20-day moving average (MA) of 9.88, above the 50-day MA of 9.27, and above the 200-day MA of 8.67, indicating a bullish trend. The MACD of 0.51 indicates Negative momentum. The RSI at 66.32 is Neutral, neither overbought nor oversold. The STOCH value of 40.89 is Neutral, 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	76 Outperform	$4.81B	15.74	17.61%	1.38%	3.40%	13.75%
LZ	76 Outperform	$1.93B	67.40	22.58%	―	4.19%	48.69%
ABM	75 Outperform	$2.98B	38.32	4.30%	2.05%	3.52%	-67.27%
UNF	74 Outperform	$3.11B	21.45	7.15%	0.77%	4.18%	18.93%
CBZ	65 Neutral	$3.49B	38.39	7.84%	―	46.49%	-25.62%
Sector *	58 Neutral	HK$14.01B	4.01	-3.70%	5.60%	2.26%	-61.32%
FA	53 Neutral	$2.84B	549.40	-13.57%	―	65.34%	-633.72%

LegalZoom Corporate Events

LegalZoom Reports Strong Q2 2025 Financial Results

On August 7, 2025, LegalZoom reported strong financial results for the second quarter of 2025, with revenue reaching $192.5 million, a 9% increase year-over-year. Despite a slight net loss of $0.3 million, the company saw significant growth in subscription revenue and adjusted EBITDA, leading to an increased revenue growth outlook for 2025 from 5% to 8%.

LegalZoom Amends Credit Agreement, Reduces Loan Commitments

On July 14, 2025, LegalZoom.com, Inc. amended its credit agreement, reducing its revolving loan commitments from $150 million to $100 million while extending the maturity date to July 14, 2030. The amendment also introduces interest rate margin reductions based on leverage ratios and removes a credit spread adjustment, indicating a strategic financial restructuring to optimize the company’s credit facilities.

LegalZoom Elects Directors and Approves Key Decisions

On June 3, 2025, LegalZoom.com, Inc. held its annual meeting of stockholders where key decisions were made. Two directors, Nathan Gooden and Neil Tolaney, were elected to serve three-year terms. Additionally, PricewaterhouseCoopers LLP was ratified as the company’s independent registered public accounting firm for 2025, and the compensation of the company’s named executive officers was approved. These decisions are likely to impact the company’s governance and financial oversight positively.