LegalZoom (LZ) AI Stock Analysis

• Market Cap: $1.20B
• Dividend Yield: N/A
• Average Volume (3M): 4.44M
• Price to Earnings (P/E): 82.1
• Beta (1Y): 1.07
• 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: 172,922,380
• 10 Day Avg. Volume: 3,708,762
• 30 Day Avg. Volume: 4,439,414
• PEG Ratio: -2.34
• Price to Book (P/B): 10.33
• Price to Sales (P/S): 2.35
• P/FCF Ratio: 12.00
• Enterprise Value/Market Cap: 0.87
• Enterprise Value/Revenue: 1.38
• Enterprise Value/Gross Profit: 2.10
• Enterprise Value/Ebitda: 13.04
• 1Y Price Target: $9.14
• Price Target Upside: 30.01% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8
• EPS Forecast (FY): 0.74
• Revenue Forecast (FY): $818.20M

• Rating: 66 Neutral
• Price Target: $7.00 ▼(-0.43% Downside)
• Action: Reiterated Date: 02/21/26
• Date: Action: Reiterated 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

LegalZoom’s record FCF ($148M FY2025) shows durable operating cash generation that funds reinvestment, share repurchases, and strategic initiatives without relying on external financing. Strong cash conversion increases resilience and supports multi-quarter investment in AI and partner distribution.

Balance Sheet Strength

A conservatively levered balance sheet with substantial cash and an undrawn revolver provides financial flexibility for M&A, product investment and buybacks. Low fixed obligations reduce downside risk and allow management to fund multi‑period growth initiatives without stressing liquidity.

Subscription Momentum

Accelerating subscription growth and rising subscription revenue increase recurring, predictable cash flows and upsell potential. A larger subscriber base supports higher lifetime value, better unit economics over time, and underpins strategy to shift mix to higher‑value human‑in‑the‑loop services.

Negative Factors

Thin Profitability

Compressed operating and net margins leave limited buffer versus cost increases or weaker demand. Sustaining growth while restoring margins is required to maintain cash returns; otherwise, thin profitability constrains reinvestment and increases sensitivity to cyclical shocks over coming months.

High Sales & Marketing Spend

Management is front‑loading customer acquisition, brand and partner investments which depress near‑term EBITDA and free cash flow. If incremental customer economics or ARPU uplift lag expectations, sustained high CAC and partner costs could erode margins and slow durable profitability recovery.

AI Competitive Risk

Major AI entrants expanding legal drafting/automation represent a structural threat to commoditized document and research services. LegalZoom’s long‑term economics depend on winning higher‑value human‑in‑the‑loop offerings and partner distribution to offset potential price compression and reduced demand for basic legal tasks.

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 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

Strong cash generation (TTM operating cash flow ~$178M; free cash flow ~$148M) and low leverage (debt-to-equity ~0.08) support financial stability. Offsetting this, TTM profitability is thin and has compressed versus 2024 (net margin ~2.0%, EBIT margin ~2.5%) despite solid gross margin (~66%).

Income Statement

TTM (Trailing-Twelve-Months) revenue is about $756M with modest growth (~3.9%). Profitability is positive but thin: net margin is ~2.0% and EBIT margin is ~2.5%, down meaningfully from 2024 (net margin ~4.4%, EBIT margin ~6.4%). A key strength is consistently strong gross margin (~66%), but the step-down in operating and net profitability in TTM suggests higher costs or reinvestment pressure versus last year.

Balance Sheet

The balance sheet is conservatively levered in TTM: total debt is low (~$14M) versus equity (~$172M), keeping leverage modest (debt-to-equity ~0.08). Assets have expanded versus 2024, and returns on equity in TTM (~8%) are positive, though well below 2024’s unusually high level (likely aided by a smaller equity base). A historical weak spot is prior-period volatility in equity/returns (including negative equity in 2020), but current capitalization looks stable.

Cash Flow

Cash generation is a standout. TTM operating cash flow is strong (~$178M) and free cash flow is ~ $148M, well above recent years, even though free cash flow declined ~5% versus the prior period. Free cash flow remains healthy relative to earnings, supporting financial flexibility. The main watch item is that cash flow did not expand in line with reported earnings momentum year-to-year (and growth turned slightly negative in TTM), suggesting some normalization after prior gains.

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

• Technical Analysis Sentiment: Negative
• Last Price: 7.03
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• 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 Negative. The current price of 7.03 is below the 20-day moving average (MA) of 7.29, below the 50-day MA of 8.73, and below the 200-day MA of 9.49, indicating a bearish trend. The MACD of -0.60 indicates Negative momentum. The RSI at 41.65 is Neutral, neither overbought nor oversold. The STOCH value of 59.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LZ.

LegalZoom Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UNF	77 Outperform	$4.02B	31.07	6.50%	0.71%	0.20%	2.72%
ABM	73 Outperform	$2.62B	17.18	9.10%	2.20%	4.62%	102.72%
LZ	66 Neutral	$1.20B	82.09	11.64%	―	7.17%	-5.86%
MMS	64 Neutral	$4.03B	11.50	22.09%	1.38%	2.36%	11.30%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
FA	63 Neutral	$2.05B	-58.19	-2.66%	―	93.41%	-2515.85%
CBZ	60 Neutral	$1.44B	16.27	7.44%	―	59.19%	-35.47%

LegalZoom Corporate Events

LegalZoom Posts Strong 2025 Results, Expands Buyback Plan

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 income of $15.4 million, Adjusted EBITDA of $172.2 million with a 23% margin, and record operating and free cash flow, ending the year with $203.1 million in cash and no debt, while highlighting AI-enabled services and a shift toward higher-value subscriptions.

For the fourth quarter of 2025, revenue increased 18% year-over-year to $190.3 million with 20% growth in subscription revenue, though net income for the period declined to $6.1 million as margins compressed. Alongside introducing 2026 guidance that calls for mid‑single‑digit to high‑single‑digit revenue growth and continued margin expansion, LegalZoom’s board approved a $100 million increase to the company’s share repurchase authorization on February 19, 2026, underscoring management’s confidence in its cash generation and long-term growth strategy.

The most recent analyst rating on (LZ) stock is a Buy with a $11.00 price target. To see the full list of analyst forecasts on LegalZoom stock, see the LZ Stock Forecast page.