Legalzoom.Com, Inc. (LZ)
NASDAQ:LZ
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LegalZoom
(NASDAQ:LZ)
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Rating:66Neutral
Price Target:
$6.50
▲(12.26% Upside)
Action:ReiteratedDate:02/21/26
The score is supported primarily by strong free-cash-flow generation and a conservatively levered balance sheet, alongside constructive FY2026 guidance and continued capital return via buybacks. These positives are tempered by compressed operating/net profitability and weak technicals with the stock trading well below key moving averages, plus a high P/E that makes valuation less forgiving.
Positive Factors
Free Cash Flow Generation
LegalZoom's strong, recurring free cash flow provides durable internal funding for product development, M&A, and shareholder returns. Record FY2025 FCF improves resilience against cyclical revenue swings and funds front‑loaded investments without forcing reliance on external financing.
Negative Factors
Compressed Profitability
Operating and net margins have materially compressed versus the prior year, limiting the firm's ability to convert revenue growth into earnings. Thin profitability raises sensitivity to cost increases and requires sustained margin recovery to justify continued reinvestment and buybacks.
Read all positive and negative factors
Positive Factors
Negative Factors
Free Cash Flow Generation
LegalZoom's strong, recurring free cash flow provides durable internal funding for product development, M&A, and shareholder returns. Record FY2025 FCF improves resilience against cyclical revenue swings and funds front‑loaded investments without forcing reliance on external financing.
Read all positive factors
LegalZoom (LZ) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.00B
Dividend YieldN/A
Average Volume (3M)2.95M
Price to Earnings (P/E)115.1
Beta (1Y)1.08
Revenue Growth7.17%
EPS Growth-5.86%
CountryUS
Employees964
SectorIndustrials
Sector Strength72
IndustrySpecialty Business Services
Share Statistics
EPS (TTM)0.17
Shares Outstanding172,922,380
10 Day Avg. Volume2,531,610
30 Day Avg. Volume2,950,689
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 Cap0.85
Enterprise Value/Revenue1.12
Enterprise Value/Gross Profit1.70
Enterprise Value/Ebitda10.56
Forecast
1Y Price Target
$8.33Price Target Upside43.87% Upside
Rating ConsensusHold
Number of Analyst Covering8
EPS Forecast (FY)0.74
Revenue Forecast (FY)$818.20M
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 generates revenue primarily by selling online legal service packages and ongoing subscriptions tied to business formation, compliance, and legal support. Key revenue streams include: (1) Transactional/legal product fees: One-time fees fo...
LegalZoom Earnings Call Summary
Earnings Call Date:Feb 19, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Positive
The call communicated solid, broad-based progress: accelerating subscription growth, stronger revenue and margin expansion for FY2025, record full-year free cash flow, successful integration of Formation Nation, and a clear strategic shift toward higher-value human-in-the-loop services and partner distribution. Near-term headwinds include higher sales and marketing spend (front-loaded into Q1), a Q4 free cash flow dip, slight transactional unit pressure from BOIR elimination, and a modest ARPU uplift so far. Management provided constructive 2026 guidance emphasizing continued margin improvement and durable subscription-led growth while investing in brand, partnerships and concierge offerings.Positive Updates
Full-Year Revenue and Growth
Total revenue for FY2025 grew 11% to $756 million (inclusive of Formation Nation), with organic revenue growth of 3% year-over-year.
Negative Updates
Q4 Free Cash Flow Decline
Free cash flow in Q4 was $28 million, down 22% year-over-year from $36 million, primarily driven by timing of working capital changes.
Read all updates
Q4-2025 Updates
Positive
Negative
Full-Year Revenue and Growth
Total revenue for FY2025 grew 11% to $756 million (inclusive of Formation Nation), with organic revenue growth of 3% year-over-year.
Read all positive updates
Company Guidance
LegalZoom guided FY2026 revenue of $805–$825 million (≈8% y/y at the midpoint vs. ~3% organic growth in 2025) and adjusted EBITDA of $190–$200 million (≈13% growth at the midpoint), noting expected gross‑margin improvement and disciplined cost management offset by higher product and marketing investments; for Q1 2026 they forecast revenue of $200–$203 million (≈10% growth at the midpoint) and adjusted EBITDA of $34–$36 million (≈5% y/y decline at the midpoint) due to front‑loaded CAM/brand and partner spend. Management expects modest subscription unit growth in 2026 as they lap bundling (ended Q4 with ~1.94 million subscription units, +10% y/y; Q4 ARPU $266, +1% y/y), reiterated confidence in free‑cash‑flow generation (record FY2025 FCF $148M, +48% y/y), and highlighted a cash balance of $203M, an undrawn $100M revolver and a board‑approved $100M increase to the share‑repurchase authorization.LegalZoom Financial Statement Overview
Summary
Income Statement
63
Positive
Balance Sheet
74
Positive
Cash Flow
82
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 756.04M | 681.88M | 660.73M | 619.98M | 575.08M |
| Gross Profit | 498.08M | 441.79M | 421.46M | 408.88M | 385.72M |
| EBITDA | 81.14M | 80.59M | 60.06M | -23.62M | -74.88M |
| Net Income | 15.43M | 29.96M | 13.95M | -48.73M | -108.66M |
Balance Sheet | |||||
| Total Assets | 530.92M | 373.88M | 447.82M | 405.39M | 431.01M |
| Cash, Cash Equivalents and Short-Term Investments | 203.10M | 142.06M | 225.72M | 189.08M | 239.30M |
| Total Debt | 24.39M | 7.88M | 9.02M | 11.28M | 0.00 |
| Total Liabilities | 359.03M | 280.63M | 278.98M | 263.02M | 233.46M |
| Stockholders Equity | 171.88M | 93.26M | 168.83M | 142.38M | 197.55M |
Cash Flow | |||||
| Free Cash Flow | 147.92M | 99.94M | 92.72M | 51.74M | 42.41M |
| Operating Cash Flow | 178.20M | 135.64M | 124.31M | 73.84M | 54.15M |
| Investing Cash Flow | -40.08M | -35.70M | -31.55M | -30.62M | -77.67M |
| Financing Cash Flow | -77.26M | -183.28M | -56.15M | -93.34M | 123.36M |
LegalZoom Technical Analysis
Negative
5.79
Price Trends
7.29
Negative
8.58
Negative
9.21
Negative
Market Momentum
-0.38
Negative
30.14
Neutral
12.28
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LZ, the sentiment is Negative. The current price of 5.79 is below the 20-day moving average (MA) of 6.37, below the 50-day MA of 7.29, and below the 200-day MA of 9.21, indicating a bearish trend. The MACD of -0.38 indicates Negative momentum. The RSI at 30.14 is Neutral, neither overbought nor oversold. The STOCH value of 12.28 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 |
|---|---|---|---|---|---|---|---|
78 Outperform | $4.37B | 21.89 | 6.45% | 0.71% | 0.20% | 2.72% | |
67 Neutral | $3.60B | 12.60 | 21.76% | 1.38% | 2.36% | 11.30% | |
66 Neutral | $1.00B | 115.09 | 8.17% | ― | 7.17% | -5.86% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
63 Neutral | $1.97B | -72.27 | -2.68% | ― | 93.41% | -2515.85% | |
60 Neutral | $2.24B | 17.89 | 8.80% | 2.20% | 4.62% | 102.72% | |
60 Neutral | $1.48B | 27.64 | 6.21% | ― | 59.19% | -35.47% |
* Industrials Sector Average
LZ
LegalZoom
5.79
-3.40
-37.00%
ABM
ABM Industries
38.22
-8.86
-18.81%
CBZ
CBIZ
26.88
-48.31
-64.25%
MMS
Maximus
66.03
-1.00
-1.50%
UNF
UniFirst
251.47
74.75
42.30%
FA
First Advantage
11.29
-2.93
-20.60%
LegalZoom Corporate Events
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.