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LegalZoom
(NASDAQ:LZ)
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Rating:71Outperform
Price Target:
$9.00
▲(19.05% Upside)
Action:Reiterated
Date:08/06/26
The score is driven primarily by solid financial performance (strong cash generation, improving profitability, and low leverage) and constructive technical momentum (trading above key moving averages). These positives are tempered by a very expensive valuation (high P/E) and a mixed outlook from the latest earnings call, where strong execution and margin progress are offset by search-driven demand/CAC headwinds and more cautious near-term guidance.
Positive Factors
Shift to recurring, higher-value subscriptions
A rising share of subscription revenue and higher ARPU create more predictable, higher-margin cash flows versus one-time transactions. This structural shift increases customer lifetime value, supports margin sustainability, and makes growth less dependent on formation volume cycles over the next 2–6 months and beyond.
Negative Factors
Structural search disruption from Google AI
A durable change in search behavior is reducing discovery via traditional search, pressuring transaction volumes and raising CAC. Because formation transactions were a core top-of-funnel driver, persistent lower formation traffic can structurally slow growth and require sustained, potentially costly channel diversification.
Read all positive and negative factors
Positive Factors
Negative Factors
Shift to recurring, higher-value subscriptions
A rising share of subscription revenue and higher ARPU create more predictable, higher-margin cash flows versus one-time transactions. This structural shift increases customer lifetime value, supports margin sustainability, and makes growth less dependent on formation volume cycles over the next 2–6 months and beyond.
Read all positive factors
LegalZoom (LZ) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.35B
Dividend YieldN/A
Average Volume (3M)2.58M
Price to Earnings (P/E)123.2
Beta (1Y)1.31
Revenue Growth12.87%
EPS Growth-63.11%
CountryUS
Employees1,196
SectorIndustrials
Sector Strength72
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.10
Shares Outstanding171,647,770
10 Day Avg. Volume2,229,880
30 Day Avg. Volume2,583,592
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 Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$7.70Price Target Upside1.85% Upside
Rating ConsensusHold
Number of Analyst Covering7
EPS Forecast (FY)0.74
Revenue Forecast (FY)$822.05M
LegalZoom Business Overview & Revenue Model
Company Description
LegalZoom.com, Inc. offers a digital platform that provides legal and regulatory services across the United States. This web-based portal is designed to support both individuals and small businesses, offering a broad spectrum of solutions. Its com...
How the Company Makes Money
LegalZoom primarily makes money by selling (1) one-time legal-related products and (2) recurring subscription services, with additional revenue from partner/facilitated offerings tied to business formation and operations.
1) Transactional (one-ti...
LegalZoom Earnings Call Summary
Earnings Call Date:Aug 05, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 11, 2026
Earnings Call Sentiment Positive
The call presents a mix of strong operational and financial execution—revenue growth, improving margins, positive free cash flow, significant progress shifting the business toward higher-value human-in-the-loop subscriptions, and accelerating partnerships and AI distribution—while acknowledging a material near-term headwind from Google’s AI-driven search repricing that reduced formation volumes and increased acquisition costs. Management has provided conservative near-term guidance, is actively diversifying channels, and enacted a ~13% workforce reduction to improve operating leverage. Overall, the positives around margin expansion, cash generation, subscription mix shift, partnership gains, and early AI traction outweigh the near-term traffic and formation headwinds.Positive Updates
Revenue Growth and Profitability
Q2 revenue of $205 million, up 7% year-over-year and in line with guidance; adjusted EBITDA $46 million, up ~18% YoY and above the high end of guidance; adjusted EBITDA margin ~22%.
Negative Updates
Search Environment Disruption from Google AI
Google's shift to AI-generated answers reduced click-through on informational queries, decreasing organic and paid search traffic and increasing paid search costs; company cites a material, structural step down concentrated in traditional search channels.
Read all updates
Q2-2026 Updates
Positive
Negative
Revenue Growth and Profitability
Q2 revenue of $205 million, up 7% year-over-year and in line with guidance; adjusted EBITDA $46 million, up ~18% YoY and above the high end of guidance; adjusted EBITDA margin ~22%.
Read all positive updates
Company Guidance
LegalZoom updated its outlook assuming the current AI-driven search environment persists, guiding full-year revenue of $795M–$805M (≈6% growth at the midpoint) and full-year adjusted EBITDA of $190M–$195M (≈24% margin at the midpoint), with Q3 revenue of $192M–$196M (≈2% growth at the midpoint) and Q3 adjusted EBITDA of $49M–$51M (≈26% margin at the midpoint); the company expects a high‑single to low‑double digit decline in transaction revenue in Q3, anticipates continued strong free cash flow generation, and expects the recently announced ~13% workforce reduction to yield ~$7M of in‑year savings (~$14M annualized) with ~ $6M of restructuring charges primarily in Q3.LegalZoom Financial Statement Overview
Summary
Income Statement
71
Positive
Balance Sheet
78
Positive
Cash Flow
86
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 792.49M | 756.04M | 681.88M | 660.73M | 619.98M | 575.08M |
| Gross Profit | 528.61M | 498.08M | 441.79M | 421.46M | 408.88M | 385.72M |
| EBITDA | 75.48M | 81.14M | 80.59M | 60.06M | -23.62M | -74.88M |
| Net Income | 16.85M | 15.43M | 29.96M | 13.95M | -48.73M | -108.66M |
Balance Sheet | ||||||
| Total Assets | 466.36M | 530.92M | 373.88M | 447.82M | 405.39M | 431.01M |
| Cash, Cash Equivalents and Short-Term Investments | 167.23M | 203.10M | 142.06M | 225.72M | 189.08M | 239.30M |
| Total Debt | 15.14M | 24.39M | 7.88M | 9.02M | 11.28M | 0.00 |
| Total Liabilities | 339.20M | 359.03M | 280.63M | 278.98M | 263.02M | 233.46M |
| Stockholders Equity | 127.16M | 171.88M | 93.26M | 168.83M | 142.38M | 197.55M |
Cash Flow | ||||||
| Free Cash Flow | 190.62M | 147.92M | 99.94M | 92.72M | 51.74M | 42.41M |
| Operating Cash Flow | 222.47M | 178.20M | 135.64M | 124.31M | 73.84M | 54.15M |
| Investing Cash Flow | -31.73M | -40.08M | -35.70M | -31.55M | -30.62M | -77.67M |
| Financing Cash Flow | -260.37M | -77.26M | -183.28M | -56.15M | -93.34M | 123.36M |
LegalZoom Technical Analysis
Negative
7.56
Price Trends
6.74
Negative
6.46
Negative
7.69
Negative
Market Momentum
0.04
Positive
35.08
Neutral
29.27
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 7.56 is above the 20-day moving average (MA) of 7.55, above the 50-day MA of 6.74, and below the 200-day MA of 7.69, indicating a bearish trend. The MACD of 0.04 indicates Positive momentum. The RSI at 35.08 is Neutral, neither overbought nor oversold. The STOCH value of 29.27 is Neutral, 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 |
|---|---|---|---|---|---|---|---|
72 Outperform | $2.95B | 25.15 | 6.60% | ― | 14.32% | 22.34% | |
71 Outperform | $1.35B | 123.16 | 10.41% | ― | 12.87% | -63.11% | |
71 Outperform | $3.17B | 8.95 | 21.72% | 2.11% | -1.44% | 33.09% | |
67 Neutral | $2.81B | 18.36 | 8.94% | 2.38% | 6.53% | 107.41% | |
67 Neutral | $5.09B | 44.26 | 5.32% | 0.49% | 1.41% | -22.01% | |
65 Neutral | $3.40B | 403.25 | 1.93% | ― | 53.53% | ― | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
LZ
LegalZoom
5.77
-5.21
-47.45%
ABM
ABM Industries
48.54
2.04
4.39%
CBZ
CBIZ
54.50
-8.69
-13.75%
MMS
Maximus
59.19
-20.86
-26.06%
UNF
UniFirst
290.37
119.39
69.82%
FA
First Advantage
24.01
7.38
44.38%
LegalZoom Corporate Events
Business Operations and StrategyStock BuybackFinancial Disclosures
LegalZoom Reports Strong Q2 2026 Results, Boosts Outlook
Positive
Aug 5, 2026
Since late 2024, LegalZoom has been repositioning its model around subscription relationships, a strategy that underpinned solid second-quarter 2026 results and reinforced its shift toward AI-driven customer acquisition channels. The company repor...
Executive/Board ChangesShareholder Meetings
LegalZoom Shareholders Approve Board Appointment and Governance Matters
Positive
Jun 4, 2026
At LegalZoom.com, Inc.’s 2026 annual meeting of stockholders held on June 3, 2026, shareholders elected Sivan Whiteley as a Class II director for a three-year term, solidifying board continuity and governance stability for the legal services...
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...
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.