Shares of LegalZoom.com, Inc (NASDAQ: LZ) surged over 8% in pre-market trading on November 7th, after the online legal services provider reported better-than-expected third-quarter results and raised its full-year guidance. The company's stock soared, reflecting investor optimism about LegalZoom's strategic shift towards high-margin subscription offerings and a focus on attracting high-value customers.
LegalZoom reported revenue of $169 million for the quarter, up 1% year-over-year and at the high end of its guidance. While transaction revenue declined by 7% due to softness in business formations, the company's subscription revenue grew by a solid 5%, driven by strength in compliance-related offerings. Notably, LegalZoom achieved a record adjusted EBITDA margin of 28%, reflecting robust bottom-line performance and the benefits of its subscription-focused strategy.
During the earnings call, CEO Jeffrey Stibel emphasized the company's efforts to reposition its products and services, aligning pricing with the value delivered to customers. Through targeted pricing tests and product bundling, LegalZoom aims to attract high-intent customers who are more likely to engage with its subscription offerings long-term. This approach has already yielded positive results, with the company successfully shifting customers towards higher-value formation packages and upselling compliance subscriptions.
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