Shares of LegalZoom.com, Inc (LZ) surged over 7% on November 7, 2024, after the online legal services provider reported better-than-expected financial results for the third quarter and raised its full-year guidance.

LegalZoom's Q3 revenue grew modestly by 1% year-over-year to $168.6 million, driven by a 5% increase in higher-margin subscription revenue. The company's focus on shifting towards subscription offerings is paying off, with the segment now contributing 66% of total revenue, up from 63% a year ago.

Notably, LegalZoom achieved a record adjusted EBITDA margin of 28% in Q3, reflecting strong bottom-line performance. Adjusted EBITDA surged 40% year-over-year to $47.1 million, well above analysts' expectations. The company's net income also increased substantially, rising 47% to $11.1 million.

Encouraged by the robust Q3 performance, LegalZoom raised its full-year 2024 adjusted EBITDA guidance to a range of $144-$148 million, up from the previous $135-$145 million range. The company also generated strong free cash flow of $22 million during the quarter and increased its share buyback authorization, signaling management's confidence in the business.