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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