-- does not reflect certain other expenses that the Company does not 
      consider representative of its underlying operating performance, but that 
      reduce cash available. 

Free cash flow is a liquidity measure used by management in evaluating the cash generated by operations after purchases of property and equipment including capitalized internal-use software. The Company considers free cash flow to be an important measure because it provides useful information to management and investors about the amount of cash generated by the Company's business that can be used for strategic opportunities, including investing in the business and strengthening the balance sheet. Once the Company's business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth. The usefulness of free cash flow as an analytical tool has limitations because it excludes certain items that are settled in cash, does not represent residual cash flow available for discretionary expenses, does not reflect future contractual commitments, and may be calculated differently by other companies in the Company's industry. Accordingly, it should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash used in or provided by operating activities.

Non-GAAP Reconciliations

Preliminary Adjusted EBITDA and Preliminary Adjusted EBITDA Margin

The following tables present reconciliations of preliminary net income to preliminary Adjusted EBITDA for the quarter and year ended December 31, 2024 (preliminary; unaudited):

 
                               Three months               Twelve months 
                             ended December 31,         ended December 31, 
                                                     ----------------------- 
                                   2024                       2024 
                        ----  ---------------  ----      --------------  --- 
                                 (in thousands, except percentages) 
   Reconciliation of 
   preliminary net 
   income to 
   preliminary 
   Adjusted EBITDA 
   Net income              $           12,854         $          29,963 
   Interest expense                       201                       446 
   Interest income                     (1,303)                   (7,850) 
   (Benefit from) 
    Provision for 
    income taxes                         (388)                   13,120 
   Depreciation and 
    amortization                        9,636                    34,927 
   Other expense 
    (income), net                       1,747                       (98) 
   Stock-based 
    compensation                       22,024                    71,510 
   Restructuring 
    costs(1)                             (567)                    6,096 
Adjusted EBITDA            $           44,204         $         148,114 
                        ----  ---------------  ----      --------------  --- 
Net income margin                           8%                        4% 
                        ----  ---------------   ---      -------------- 
      Adjusted EBITDA 
       margin                              27%                       22% 
                        ----  ---------------   ---      -------------- 
 

(1) Restructuring costs related to the reduction of the Company's global workforce, which include salary and benefits for impacted employees.

Free Cash Flow

The following tables present reconciliations of preliminary net cash provided by operating activities to preliminary free cash flow each for the quarter and year ended December 31, 2024 (preliminary; unaudited):

 
                                 Three months             Twelve months 
                               ended December 31,       ended December 31, 
                                                     ----------------------- 
                                      2024                     2024 
                            ---  --------------      ---  -------------- 
                                             (in thousands) 
   Reconciliation of 
   preliminary net cash 
   provided by operating 
   activities to 
   preliminary free cash 
   flow 
   Net cash provided by 
    operating activities                 42,586                  135,639 
Purchase of property and 
 equipment                               (6,707)                 (35,696) 
                            ---  --------------      ---  -------------- 
  Total free cash flow        $          35,879        $          99,943 
                            ---  --------------      ---  -------------- 
 

Forward-Looking Statements

This press release contains forward-looking statements. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts contained in this press release may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "targets," "projects," "contemplates," "believes," "estimates, " "forecasts," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions. Forward-looking statements contained in this press release include, but are not limited to, the Company's estimated preliminary unaudited fourth quarter and full year 2024 results, the anticipated benefits of the acquisition, and the expected synergies from the acquisition.

The forward-looking statements in this press release are only predictions. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including but not limited to, the effect of the acquisition on the Company's operating results and business; the Company's ability to retain key personnel due to the acquisition; the Company's ability to maintain relationships with customers, strategic partners and other business partners; risks that the acquisition disrupts current plans and operations; the Company's ability to successfully integrate Formation Nation's operations into its existing operations; diversion of management's time on the integration of Formation Nation; the Company's ability to execute on its business strategies relating to the acquisition and realize expected benefits and synergies; the Company's ability to compete effectively, including in response to actions its competitors may take following the acquisition; the completion of the Company's audit, final adjustments, and other developments that may arise in the course of audit and review procedures; and other factors discussed in the section titled "Risk Factors" included in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 filed with the Securities and Exchange Commission on November 6, 2024, as well as any factors contained in the Company's subsequent filings with the Securities and Exchange Commission. The forward-looking statements in this press release are based upon information available to the Company as of the date of this press release, and while the Company believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and the Company's statements should not be read to indicate that it has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this press release with the understanding that the Company's actual future results, levels of activity, performance and achievements may be materially different from what it expects. The Company qualifies all of its forward-looking statements by these cautionary statements. Except as required by applicable law, the Company does not plan to publicly update or revise any forward-looking statements contained in this press release, whether as a result of any new information, future events or otherwise.

About LegalZoom

LegalZoom is a leading online platform for business formation in the United States. Driven by a mission to unleash entrepreneurship, LegalZoom delivers comprehensive legal and compliance products and expertise for small business owners through easy-to-use technology. From free business formations to business management solutions and professional advisory services, LegalZoom supports millions of small business owners and their families throughout the entrepreneurial journey. Founded on the belief that everyone should have affordable access to legal and financial expertise, LegalZoom empowers entrepreneurs to make their dream a reality. For more information, please visit www.legalzoom.com.

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(END) Dow Jones Newswires

February 10, 2025 16:30 ET (21:30 GMT)