LegalZoom Reports Fourth Quarter and Full Year 2024 Financial Results; Announces 2025 Guidance of 5% Revenue Growth and Expanding Margins
-- Continued strong execution with Q4 and full year 2024 financial results
at high end of outlook range
-- Ongoing progress towards initiatives to grow subscription business;
full-year subscription revenue of $436.2 million up 6% year-over-year
-- Full-year net income of $30.0 million, up 115% year-over-year, and net
income margin of 4%
-- Full year Adjusted EBITDA of $148.1 million, up 25% year-over-year, and
Adjusted EBITDA margin of 22%, reflecting approximately 380 basis point
expansion in Adjusted EBITDA margin
-- $142.1 million of cash and cash equivalents and no debt outstanding as of
December 31, 2024
-- Subsequent to year end, announced the acquisition of Formation Nation to
support growth strategy
MOUNTAIN VIEW, Calif., Feb. 26, 2025 (GLOBE NEWSWIRE) -- LegalZoom.com, Inc. (Nasdaq: LZ), a leading online platform for legal services, today announced results for its fourth quarter and year ended December 31, 2024.
"We are making solid progress against our goal to position LegalZoom for long-term, sustainable growth," said Jeff Stibel, Chairman and Chief Executive Officer of LegalZoom. "Our execution in 2025 includes a narrowed focus on our core legal and compliance competencies, quality customer acquisition, and a continued emphasis on prioritizing recurring subscription revenue. Our efforts will be supported by driving greater brand awareness, providing best-in-class service, weaving expertise through our products, and pricing for the value we provide."
Noel Watson, LegalZoom's Chief Operating Officer and Chief Financial Officer said, "LegalZoom demonstrated strong execution in the fourth quarter with results at or above the high-end of our outlook. In 2025, we remain committed to accelerating subscription revenue growth and expect to exit the year with a double-digit increase in subscription revenue while driving continued operating efficiencies and delivering a strong margin profile."
Fourth Quarter 2024 Highlights
-- Revenue was $161.7 million for the quarter, up 2% year-over-year.
-- Transaction revenue was $53.0 million for the quarter, compared to
$51.9 million in the same period in 2023, up 2% year-over-year.
-- Subscription revenue was $108.7 million for the quarter, compared
to $106.7 million in the same period in 2023, up 2%
year-over-year. The increase was driven by the addition of 0.2
million net new subscription units during the trailing twelve
months.
-- Gross margin was 67% for the quarter compared to 65% in the same period
in 2023.
-- Net income was $12.9 million for the quarter, or 8% of revenue, compared
to $7.4 million, or 5% of revenue, in the same period in 2023.
-- Adjusted EBITDA was $44.2 million for the quarter, or 27% of revenue,
compared to $33.4 million, or 21% of revenue, for the same period in
2023.
-- Non-GAAP net income was $32.6 million for the quarter compared to $24.1
million in the same period in 2023.
-- Cash and cash equivalents were $142.1 million as of December 31, 2024
compared to $225.7 million as of December 31, 2023.
-- Cash flows provided by operating activities were $42.6 million for the
quarter ended December 31, 2024 compared to $22.5 million in the same
period in 2023.
-- Free cash flow was $35.9 million for the quarter ended December 31, 2024
compared to $14.1 million in the same period in 2023.
-- Basic and diluted net income per share was $0.07 for the quarter compared
to a basic and diluted net income per share of $0.04 for the same period
in 2023. Basic and diluted Non-GAAP net income per share was $0.19 for
the quarter in 2024 compared to basic and diluted Non-GAAP net income per
share of $0.13 for the same period in 2023.
-- Subsequent to the end of the quarter, on February 10, 2025, LegalZoom
announced the acquisition of Formation Nation, Inc., a small business
services company. The acquisition supports LegalZoom's growth initiatives
and, inclusive of synergies, is expected to positively contribute to
Adjusted EBITDA and be accretive to Non-GAAP net income per share in the
first year of the acquisition.
Key Business Metrics and Non-GAAP Financial Measures
(Unaudited, in thousands except AOV, ARPU and percentages)
Three Months Ended % Growth Year Ended % Growth
December 31, (Decline) December 31, (Decline)
--------------------------
2024 2023 YOY 2024 2023 YOY
----------- ------------ ------------ -----------
Total revenue $161,706 $158,663 2% $681,881 $660,727 3%
Transaction
revenue $ 52,959 $ 51,923 2% $245,692 $247,780 (1)%
Subscription
revenue $108,747 $106,740 2% $436,189 $412,947 6%
Gross Profit $108,321 $102,756 5% 441,788 421,464 5%
Gross Margin 67% 65% 3% 65% 64% 2%
Net Income $ 12,854 $ 7,382 74% $ 29,963 $ 13,953 115%
Net income margin 8% 5% 60% 4% 2% 100%
Net Income per
share -- basic: $ 0.07 $ 0.04 75% $ 0.17 $ 0.07 143%
Net Income per
share --
diluted: $ 0.07 $ 0.04 75% $ 0.16 $ 0.07 129%
Net cash provided
by operating
activities $ 42,586 $ 22,495 89% 135,639 124,308 9%
Non-GAAP
Financial
Measures
Non-GAAP net
income $ 32,598 $ 24,134 35% $ 99,451 $ 80,475 24%
Non-GAAP net
income per share
-- basic: $ 0.19 $ 0.13 46% $ 0.55 $ 0.42 31%
Non-GAAP net
income per share
-- diluted: $ 0.19 $ 0.13 46% $ 0.54 $ 0.41 32%
Adjusted EBITDA $ 44,204 $ 33,438 32% $148,114 $118,691 25%
Adjusted EBITDA
margin 27% 21% 29% 22% 18% 22%
Free cash flow $ 35,879 $ 14,121 154% $ 99,943 $ 92,715 8%
Key Business
Metrics
Transaction units 241 215 12% 1,123 1,043 8%
Business
formations 96 113 (15)% 482 581 (17)%
Average order
value $(AOV.AU)$ $ 220 $ 242 (9)% $ 219 $ 238 (8)%
Subscription
units at period
end 1,766 1,545 14% 1,766 1,545 14%
Average revenue
per subscription
unit (ARPU) at
period end $ 263 $ 277 (5)% $ 263 $ 277 (5)%
Certain percentages may not recalculate due to rounding.
Financial Guidance and Outlook
Our guidance for the first quarter ending March 31, 2025 is as follows:
-- Revenue is expected to be in the range of $175 million to $179 million
-- Adjusted EBITDA is expected to be in the range of $33 million to $36
million
Our guidance for the full year ending December 31, 2025 is as follows:
-- Revenue growth of approximately 5% year-over-year -- Adjusted EBITDA margin of approximately 23%
Webcast and Conference Call Information
A webcast and conference call to discuss fourth quarter and full year 2024 results is scheduled for today, February 26, 2025, at 4:30 p.m. Eastern time/1:30 p.m. Pacific time. Those interested in participating in the conference call are invited to register Here.
A live audio webcast of the event will be available on the LegalZoom Investor Relations website: https://investors.legalzoom.com/. An archived replay of the webcast also will be available shortly after the live event.
Forward-Looking Statements
This press release contains forward-looking statements. We intend 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, statements regarding our quarterly and annual guidance.
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