LegalZoom.com (NASDAQ:LZ) Issues Quarterly Earnings Results, Beats Expectations By $0.01 EPS

LegalZoom.com (NASDAQ:LZ) released its earnings results on Wednesday. The company reported $0.16 EPS for the quarter, topping the consensus estimate of $0.15 by $0.01, FiscalAI reports. The business had revenue of $205.29 million during the quarter, compared to analysts’ expectations of $205.83 million. LegalZoom.com had a return on equity of 11.53% and a net margin of 1.46%.The firm’s revenue was up 6.6% on a year-over-year basis. During the same quarter last year, the firm posted $0.15 earnings per share.

Here are the key takeaways from LegalZoom.com’s conference call:

• Q2 revenue rose 7% to $205 million and adjusted EBITDA increased 18% to $46 million, exceeding the high end of guidance. Adjusted EBITDA margin expanded to 22%, while free cash flow reached $34 million.
• Higher-value, human-in-the-loop offerings continued to gain traction: related subscription revenue grew approximately 20% year over year, represented 65% of subscription revenue, and legal-plan utilization increased more than 35%. Subscription revenue rose 11%, supported by pricing, stable retention, and greater adoption of legal, compliance, and expert services.
• LegalZoom is diversifying customer acquisition beyond Google Search. Partnership orders increased to 11% of total orders from 4% a year ago, while traffic from AI platforms grew more than 250% sequentially and reached roughly 3% of LLC formation traffic in June.
• Google’s shift toward AI-generated search answers reduced informational-search clicks, increased paid-search costs, and contributed to a 5% decline in business formations and a 1% decline in transaction revenue. Management expects this pressure to persist through year-end, guiding Q3 revenue growth to roughly 2% and full-year revenue growth to approximately 6% at the midpoint.
• The company announced a company-wide workforce reduction of approximately 13%, following a 5% reduction earlier in the year. The actions are expected to generate about $7 million in net 2026 savings and $14 million annually, but will result in roughly $6 million of restructuring charges, primarily in Q3.

LegalZoom.com Stock Down 31.1%

LZ traded down $2.52 during trading on Thursday, hitting $5.58. 8,010,624 shares of the company’s stock were exchanged, compared to its average volume of 3,055,718. LegalZoom.com has a fifty-two week low of $5.22 and a fifty-two week high of $12.40. The stock has a market cap of $957.81 million, a P/E ratio of 92.43, a PEG ratio of 1.40 and a beta of 1.28. The business’s 50 day moving average is $6.76 and its two-hundred day moving average is $6.75.

Insider Activity

In other LegalZoom.com news, CEO Jeffrey M. Stibel bought 125,000 shares of the stock in a transaction that occurred on Monday, May 11th. The shares were bought at an average price of $6.15 per share, for a total transaction of $768,750.00. Following the acquisition, the chief executive officer directly owned 2,955,609 shares of the company’s stock, valued at approximately $18,176,995.35. The trade was a 4.42% increase in their position. The acquisition was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through the SEC website. Also, CFO Noel Bertram Watson sold 15,000 shares of the firm’s stock in a transaction dated Monday, May 18th. The shares were sold at an average price of $6.45, for a total transaction of $96,750.00. Following the completion of the transaction, the chief financial officer directly owned 2,041,847 shares in the company, valued at approximately $13,169,913.15. The trade was a 0.73% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Corporate insiders own 7.40% of the company’s stock.

Institutional Trading of LegalZoom.com

A number of hedge funds and other institutional investors have recently added to or reduced their stakes in LZ. Invesco Ltd. lifted its holdings in shares of LegalZoom.com by 17.6% in the fourth quarter. Invesco Ltd. now owns 224,563 shares of the company’s stock valued at $2,230,000 after purchasing an additional 33,543 shares in the last quarter. Mercer Global Advisors Inc. ADV boosted its position in shares of LegalZoom.com by 18.2% during the fourth quarter. Mercer Global Advisors Inc. ADV now owns 42,864 shares of the company’s stock valued at $426,000 after buying an additional 6,586 shares during the last quarter. Beacon Pointe Advisors LLC bought a new stake in LegalZoom.com during the fourth quarter worth $2,051,000. EP Wealth Advisors LLC bought a new stake in LegalZoom.com during the fourth quarter worth $429,000. Finally, Mackenzie Financial Corp raised its position in LegalZoom.com by 19.5% in the 4th quarter. Mackenzie Financial Corp now owns 206,541 shares of the company’s stock valued at $2,082,000 after buying an additional 33,718 shares during the last quarter. 81.99% of the stock is owned by institutional investors.

Key LegalZoom.com News

Here are the key news stories impacting LegalZoom.com this week:

• Positive Sentiment: Second-quarter adjusted earnings were $0.16 per share, exceeding the $0.15 consensus estimate, while revenue rose 6.6% year over year to $205.3 million. LegalZoom Surpasses Q2 Earnings Estimates
• Positive Sentiment: Subscription revenue increased 11% to $133.4 million, marking the company’s fifth consecutive quarter of double-digit subscription growth. Adjusted EBITDA of $45.9 million exceeded the high end of guidance, and the margin expanded to 22%. LegalZoom Reports Second Quarter 2026 Financial Results
• Positive Sentiment: LegalZoom repurchased $45.5 million of stock during the quarter and retained approximately $80.4 million under its authorization. The company ended June with $167.2 million in cash, no debt, and $33.7 million in free cash flow. LegalZoom Reports Second Quarter 2026 Financial Results
• Neutral Sentiment: JPMorgan reaffirmed its neutral rating but reduced its price target to $7 from $8, still implying potential upside from recent levels. Benzinga Analyst Rating Report
• Negative Sentiment: LegalZoom lowered its full-year 2026 revenue outlook to $795 million-$805 million, below the roughly $822 million consensus estimate. Third-quarter revenue guidance of $192 million-$196 million also trails the $204.4 million consensus. Management cited an industry-wide shift in customer discovery away from traditional search, including the impact of Google and AI search changes. LegalZoom 2026 Revenue Outlook
• Negative Sentiment: William Blair downgraded LZ from “outperform” to “market perform,” adding to investor concerns about near-term growth. William Blair Downgrade

Wall Street Analysts Forecast Growth

A number of equities analysts have issued reports on LZ shares. William Blair cut LegalZoom.com from an “outperform” rating to a “market perform” rating in a report on Thursday. JPMorgan Chase & Co. reiterated a “neutral” rating and issued a $7.00 price objective (down from $8.00) on shares of LegalZoom.com in a research note on Thursday. UBS Group dropped their target price on shares of LegalZoom.com from $8.00 to $7.00 and set a “neutral” rating on the stock in a research report on Thursday, May 7th. Weiss Ratings reissued a “sell (d+)” rating on shares of LegalZoom.com in a research note on Thursday, July 2nd. Finally, Wall Street Zen upgraded shares of LegalZoom.com from a “hold” rating to a “buy” rating in a report on Tuesday, July 28th. One investment analyst has rated the stock with a Buy rating, five have issued a Hold rating and three have assigned a Sell rating to the company’s stock. According to data from MarketBeat, LegalZoom.com has an average rating of “Reduce” and an average price target of $8.08.

LegalZoom.com Company Profile

LegalZoom.com, Inc (NASDAQ: LZ) operates as a leading online legal technology company that provides a broad range of legal and business services to individuals, families and small businesses. Through its digital platform, the company offers customized legal documents and filing services, including business formation (LLCs, corporations and nonprofits), estate planning (wills and trusts), intellectual property protection (trademarks and copyrights), and ongoing compliance support. LegalZoom also connects customers with independent attorneys for consultations on matters such as family law, immigration and real estate.

Founded in 2001 by entrepreneurs Brian Lee, Brian P.