LegalZoom.com (NASDAQ:LZ) Announces Quarterly Earnings Results

LegalZoom.com (NASDAQ:LZ) posted its quarterly earnings data on Wednesday. The company reported $0.19 earnings per share (EPS) for the quarter, hitting the consensus estimate of $0.19, FiscalAI reports. LegalZoom.com had a net margin of 2.56% and a return on equity of 23.09%. The company had revenue of $195.15 million for the quarter, compared to the consensus estimate of $193.83 million. During the same quarter in the previous year, the firm posted $0.17 EPS. The business’s revenue was up 2.6% compared to the same quarter last year.

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

• Third-quarter revenue rose 3% to $195 million, while adjusted EBITDA increased 8% to $50 million, a 26% margin. Subscription revenue grew 11% to $140 million, and human-in-the-loop subscriptions reached 49% of revenue, up approximately 17% year over year.
• LegalZoom maintained its full-year revenue midpoint of $800 million but cut its adjusted EBITDA outlook to $180 million–$185 million, citing tougher customer-acquisition economics and targeted investments. Management expects transaction revenue to decline at a mid-teens rate in Q4.
• Search headwinds weighed on transactions: revenue fell 14%, formations declined 13% to about 110,000, and transaction average order value dropped 12%. Subscription units were down 5%, although retention held steady at 57% and the subscription base grew slightly excluding certain lower-value products.
• The company is investing in partnerships, affiliates, AI advertising, and expanded Business Manager services to diversify acquisition and build recurring customer relationships; those investments are pressuring near-term profitability. Management cited early traction, including doubled Q3 sales through Chase Offers versus Q2 and nearly 50% quarter-over-quarter growth in AI referral traffic, while noting AI volumes remain small.

LegalZoom.com Trading Down 10.8%

Shares of LZ traded down $0.64 on Friday, reaching $5.31. 2,187,539 shares of the company’s stock were exchanged, compared to its average volume of 2,994,080. LegalZoom.com has a 12 month low of $5.10 and a 12 month high of $10.88. The business has a 50 day moving average price of $6.16 and a two-hundred day moving average price of $6.52. The stock has a market capitalization of $908.90 million, a P/E ratio of 43.88, a price-to-earnings-growth ratio of 1.30 and a beta of 1.16.

LegalZoom.com News Roundup

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

• Positive Sentiment: Third-quarter revenue rose 2.6% year over year to $195.15 million, topping the $193.83 million estimate. EPS was $0.19, up from $0.17 a year earlier and in line with the consensus figure cited in the earnings report. LegalZoom quarterly earnings report
• Neutral Sentiment: LegalZoom forecast $180 million to $185 million in adjusted EBITDA for fiscal 2026, while noting pressure from search and planned investments. The outlook offers a profitability benchmark, though the headwinds temper its significance. LegalZoom EBITDA outlook
• Negative Sentiment: Business-formation volume fell 13% year over year to 110,000, a sign of softness in a key part of the business. Human-in-the-loop subscriptions accounted for 49% of third-quarter revenue, highlighting the company’s evolving revenue mix. LegalZoom investor takeaways
• Negative Sentiment: The stock fell sharply after results and crossed below its 200-day moving average. Bank of America downgraded LZ from “buy” to “underperform,” while JPMorgan lowered its target from $7 to $6 and kept a “neutral” rating, reinforcing concerns about the outlook. Stock crosses below 200-day moving average after downgrade

Analyst Ratings Changes

A number of equities analysts have recently commented on the stock. Bank of America downgraded shares of LegalZoom.com from a “buy” rating to an “underperform” rating in a report on Thursday. JPMorgan Chase & Co. dropped their price target on shares of LegalZoom.com from $7.00 to $6.00 and set a “neutral” rating for the company in a research report on Thursday. Weiss Ratings lowered LegalZoom.com from a “hold (c-)” rating to a “sell (d+)” rating in a research note on Thursday, October 29th. Wall Street Zen upgraded LegalZoom.com from a “hold” rating to a “buy” rating in a research report on Saturday, September 26th. Finally, William Blair lowered LegalZoom.com from an “outperform” rating to a “market perform” rating in a research note on Thursday, August 6th. Five research analysts have rated the stock with a Hold rating and four have assigned a Sell rating to the company’s stock. Based on data from MarketBeat, the stock has a consensus rating of “Reduce” and a consensus price target of $7.10.

Insider Transactions at LegalZoom.com

In related news, insider Nicole Miller sold 43,996 shares of the firm’s stock in a transaction on Monday, August 17th. The shares were sold at an average price of $5.51, for a total value of $242,417.96. Following the completion of the transaction, the insider owned 976,932 shares of the company’s stock, valued at approximately $5,382,895.32. This trade represents a 4.31% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through this hyperlink. 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. Also, CFO Noel Watson sold 416,371 shares of LegalZoom.com stock in a transaction dated Thursday, August 20th. The shares were sold at an average price of $5.91, for a total value of $2,460,752.61. Following the completion of the sale, the chief financial officer directly owned 1,491,430 shares in the company, valued at approximately $8,814,351.30. This represents a 21.82% decrease in their position. The SEC filing for this sale provides additional information. Over the last three months, insiders sold 577,475 shares of company stock valued at $3,375,197. Insiders own 7.40% of the company’s stock.

LegalZoom.com Company Profile

LegalZoom.com, Inc is an online platform that provides legal, compliance and tax-related products and services to individuals, families and small businesses. The company’s platform is designed to make common legal and administrative processes more accessible through digital tools, guided services and access to independent professionals.

LegalZoom’s offerings include business formation services for limited liability companies and corporations, registered-agent services, annual compliance support, business licensing and trademark services.