LegalZoom (NASDAQ: LZ) lifts buyback after strong 2025 cash flow
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
LegalZoom.com, Inc. reported solid growth for 2025 and increased its share repurchase authorization by
Despite GAAP net income declining to
For 2026, LegalZoom guides to revenue of
Positive
- Strong 2025 growth and profitability: Revenue rose to
$756.0 million , up11% year over year, with Adjusted EBITDA increasing16% to$172.2 million and a23% margin, highlighting operating leverage in LegalZoom’s subscription-led model. - Record free cash flow and robust balance sheet: Free cash flow reached a record
$147.9 million , up48% , and cash and cash equivalents grew to$203.1 million with no debt outstanding as ofDecember 31, 2025 . - Increased capital return via buybacks: The Board approved a
$100.0 million increase to LegalZoom’s stock repurchase program, expanding capacity to return capital to shareholders alongside strong cash generation.
Negative
- Pressure on GAAP profitability: Full-year GAAP net income fell to
$15.4 million , down49% year over year, and net income margin declined to2% , indicating higher expenses and reliance on non-GAAP measures for profit growth.
Insights
LegalZoom combines steady growth, strong cash generation and a larger buyback.
LegalZoom delivered 2025 revenue of
Cash generation was a standout: operating cash flow reached
Management guides 2026 revenue to
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K
____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 19, 2026
____________________
(Exact name of Registrant as Specified in Its Charter)
____________________
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||
Registrant’s Telephone Number, Including Area Code: (323 ) 962-8600
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
____________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On February 19, 2026, LegalZoom.com, Inc. (“LegalZoom”) issued a press release announcing its results of operations for the year ended December 31, 2025. A copy of that press release is furnished as Exhibit 99.1 to this report.
The information furnished pursuant to Item 2.02 of this report, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless LegalZoom specifically states that the information is to be considered “filed” under the Exchange Act or incorporates it by reference into a filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 7.01 Regulation FD Disclosure.
Also on February 19, 2026, LegalZoom updated its investor presentation and supplemental financial report, which contain financial results and related information regarding LegalZoom. The investor presentation and supplemental financial report are available on LegalZoom’s Investor Relations website at https://investors.legalzoom.com.
Item 8.01 Other Events.
Also on February 19, 2026, LegalZoom announced that its Board of Directors approved a $100.0 million increase in LegalZoom’s stock repurchase program. Repurchases pursuant to LegalZoom’s stock repurchase program may be made from time to time, based on market conditions, legal requirements and other corporate considerations, through any manner, including open market transactions, accelerated stock repurchase agreements, or privately negotiated transactions with third parties, and in such amounts as management deems appropriate. LegalZoom may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its shares of common stock. The stock repurchase program, which has no fixed expiration date, does not obligate LegalZoom to acquire any particular amount of common stock and may be modified, suspended or terminated at any time at the discretion of LegalZoom’s Board of Directors.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number | Description | |||||||
99.1 | Earnings Press Release of LegalZoom.com, Inc. dated February 19, 2026. | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| LegalZoom.com, Inc. | ||||||||
Date: February 19, 2026 | By: | /s/ Noel Watson | ||||||
| Noel Watson | ||||||||
| Chief Financial Officer | ||||||||
3
Exhibit 99.1
LegalZoom Reports Strong Fourth Quarter and Full Year 2025 Financial Results
Q4 2025 revenue and Adjusted EBITDA exceeds outlook
Introduces strong 2026 guidance
Announces $100 million increase to share repurchase authorization
•Full-year revenue of $756.0 million up 11% year-over-year, reflecting emphasis on subscription initiatives and contributions from the Formation Nation acquisition
•Full-year subscription revenue of $492.5 million up 13% year-over-year, driven by focus on higher-value customers and differentiated human-in-the-loop service offerings
•Full-year net income of $15.4 million and net income margin of 2%
•Full-year Adjusted EBITDA of $172.2 million and Adjusted EBITDA margin of 23%
•Record full-year operating cash flow of $178.2 million, up 31% year-over-year, and record free cash flow of $147.9 million, up 48% year-over-year
•$203.1 million of cash and cash equivalents and no debt outstanding as of December 31, 2025
MOUNTAIN VIEW, California – February 19, 2026 – LegalZoom.com, Inc. (Nasdaq: LZ), a leading online platform for legal services, today announced results for its fourth quarter and year ended December 31, 2025.
“LegalZoom is built for where the market is going. AI is transforming how legal work starts, which is opening up new markets. We are winning by delivering customers to the finish line with trust, judgment, and execution," said Jeff Stibel, Chairman and Chief Executive Officer of LegalZoom. "Our strategy is simple: lead in automation and win the last mile with human-in-the-loop expertise. By serving both new entrepreneurs and established businesses, and supporting them across their full lifecycle, we are expanding our role from a point solution to a long-term partner. We believe this evolution will strengthen our competitive position, deepen customer relationships, and position LegalZoom for sustained growth in the years ahead.”
Noel Watson, LegalZoom’s Chief Operating Officer and Chief Financial Officer, added, “We delivered strong results in 2025 with continued subscription momentum, expanding margins, and record free cash flow generation. Building on that performance, we are guiding to approximately 8% revenue growth at the midpoint in 2026 reflecting solid organic growth and continued Adjusted EBITDA expansion from disciplined execution and a focus on higher-value services, all of which we believe will accelerate in future years. Underscoring our confidence in the business and our commitment to shareholder returns, our Board has approved a $100 million increase to our existing share repurchase authorization.”
Fourth Quarter 2025 Highlights
•Revenue was $190.3 million for the quarter, up 18% year-over-year.
◦Transaction revenue was $59.3 million for the quarter, compared to $53.0 million in the same period in 2024, up 12% year-over-year.
◦Subscription revenue was $130.9 million for the quarter, compared to $108.7 million in the same period in 2024, up 20% year-over-year.
•Gross margin was 68% for the quarter compared to 67% in the same period in 2024.
•Net income was $6.1 million for the quarter, or 3% of revenue, compared to $12.9 million, or 8% of revenue, in the same period in 2024.
•Adjusted EBITDA was $49.9 million for the quarter, or 26% of revenue, compared to $44.2 million, or 27% of revenue, in the same period in 2024.
•Non-GAAP net income was $31.1 million for the quarter compared to $32.6 million in the same period in 2024.
•Cash and cash equivalents were $203.1 million as of December 31, 2025 compared to $142.1 million as of December 31, 2024.
•Cash flows provided by operating activities were $34.1 million for the quarter ended December 31, 2025 compared to $42.6 million in the same period in 2024.
•Free cash flow was $28.0 million for the quarter ended December 31, 2025 compared to $35.9 million in the same period in 2024.
•Basic and diluted net income per share was $0.03 for the quarter compared to a basic and diluted net income per share of $0.07 for the same period in 2024. Basic and diluted Non-GAAP net income per share was $0.18 and $0.17, respectively, for the quarter in 2025 compared to basic and diluted Non-GAAP net income per share of $0.19 for the same period in 2024.
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) | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | YOY | 2025 | 2024 | YOY | ||||||||||||||||||||||||||||||
| Total revenue | $ | 190,266 | $ | 161,706 | 18 | % | $ | 756,043 | $ | 681,881 | 11 | % | |||||||||||||||||||||||
| Transaction revenue | $ | 59,319 | $ | 52,959 | 12 | % | $ | 263,582 | $ | 245,692 | 7 | % | |||||||||||||||||||||||
| Subscription revenue | $ | 130,947 | $ | 108,747 | 20 | % | $ | 492,461 | $ | 436,189 | 13 | % | |||||||||||||||||||||||
| Gross Profit | $ | 128,535 | $ | 108,321 | 19 | % | 498,083 | 441,788 | 13 | % | |||||||||||||||||||||||||
| Gross Margin | 68 | % | 67 | % | 1 | % | 66 | % | 65 | % | 2 | % | |||||||||||||||||||||||
| Net Income | $ | 6,058 | $ | 12,854 | (53) | % | $ | 15,427 | $ | 29,963 | (49) | % | |||||||||||||||||||||||
| Net income margin | 3 | % | 8 | % | (63) | % | 2 | % | 4 | % | (50) | % | |||||||||||||||||||||||
| Net Income per share — basic: | $ | 0.03 | $ | 0.07 | (57) | % | $ | 0.09 | $ | 0.17 | (47) | % | |||||||||||||||||||||||
| Net Income per share — diluted: | $ | 0.03 | $ | 0.07 | (57) | % | $ | 0.08 | $ | 0.16 | (50) | % | |||||||||||||||||||||||
| Net cash provided by operating activities | $ | 34,129 | $ | 42,586 | (20) | % | 178,197 | 135,639 | 31 | % | |||||||||||||||||||||||||
| Non-GAAP Financial Measures | |||||||||||||||||||||||||||||||||||
| Non-GAAP net income | $ | 31,102 | $ | 32,598 | (5) | % | $ | 114,249 | $ | 99,451 | 15 | % | |||||||||||||||||||||||
| Non-GAAP net income per share — basic: | $ | 0.18 | $ | 0.19 | (5) | % | $ | 0.64 | $ | 0.55 | 16 | % | |||||||||||||||||||||||
| Non-GAAP net income per share — diluted: | $ | 0.17 | $ | 0.19 | (11) | % | $ | 0.62 | $ | 0.54 | 15 | % | |||||||||||||||||||||||
| Adjusted EBITDA | $ | 49,894 | $ | 44,204 | 13 | % | $ | 172,193 | $ | 148,114 | 16 | % | |||||||||||||||||||||||
| Adjusted EBITDA margin | 26 | % | 27 | % | (4) | % | 23 | % | 22 | % | 5 | % | |||||||||||||||||||||||
| Free cash flow | $ | 27,995 | $ | 35,879 | (22) | % | $ | 147,920 | $ | 99,943 | 48 | % | |||||||||||||||||||||||
| Key Business Metrics | |||||||||||||||||||||||||||||||||||
| Transaction units | 239 | 241 | (1) | % | 1,117 | 1,123 | (1) | % | |||||||||||||||||||||||||||
| Business formations | 112 | 96 | 17 | % | 500 | 482 | 4 | % | |||||||||||||||||||||||||||
| Average order value (AOV) | $ | 248 | $ | 220 | 13 | % | $ | 236 | $ | 219 | 8 | % | |||||||||||||||||||||||
| Subscription units at period end | 1,939 | 1,766 | 10 | % | 1,939 | 1,766 | 10 | % | |||||||||||||||||||||||||||
| Average revenue per subscription unit (ARPU) at period end | $ | 266 | $ | 263 | 1 | % | $ | 266 | $ | 263 | 1 | % | |||||||||||||||||||||||
| Certain percentages may not recalculate due to rounding. | |||||||||||||||||||||||||||||||||||
Financial Guidance and Outlook
Our guidance for the first quarter ending March 31, 2026 is as follows:
•Revenue is expected to be in the range of $200 million to $203 million, or 10% year-over-year growth at the midpoint. Our outlook assumes continued execution of our growth initiatives.
•Adjusted EBITDA is expected to be in the range of $34 million to $36 million, a 5% year-over-year decrease at the midpoint, reflecting a shift in timing of marketing investments to align with peak business formation seasonality.
Our guidance for the full year ending December 31, 2026 is as follows:
•Revenue is expected to be in the range of $805 million to $825 million, or 8% year-over-year growth at the midpoint. Our outlook reflects continued momentum of our growth initiatives including higher-value customer acquisition and an emphasis on differentiated human-in-the-loop service offerings.
•Adjusted EBITDA is expected to be in the range of $190 million to $200 million, or 13% year-over-year growth at the midpoint, reflecting improved gross margins and disciplined cost management.
Webcast and Conference Call Information
A webcast and conference call to discuss fourth quarter and full year 2025 results is scheduled for today, February 19, 2026, 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.
The forward-looking statements in this press release are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our 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 following: our dependence on business formations; our dependence on customers expanding the use of our platform, including converting our transactional customers to subscribers and our subscribers renewing their subscriptions with us; the impact of macroeconomic challenges or uncertainty on our business; our ability to sustain our revenue growth rate and remain profitable in the future; our ability to provide high-quality products and services, customer care and customer experience; our ability to continue to innovate and provide a platform that is useful to our customers and that meets our customers’ expectations; the competitive legal solutions market; our dependence on our brand and reputation; our ability to maintain and expand strategic relationships with third parties; our ability to hire and retain top talent and motivate our employees; our ability to effectively integrate Formation Nation, Inc. into our existing operations; risks and costs associated with complex and evolving laws and regulations; our ability to maintain effective in our internal control over financial reporting; and any factors discussed in the section titled “Risk Factors” included in our Quarterly Report on Form 10-Q for the three months ended September 30, 2025 filed with the Securities and Exchange Commission, or SEC, on November 5, 2025, as well as any factors in our subsequent filings with the SEC. The forward-looking statements in this press release are based upon information available to us as of the date of this press release, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have 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 our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do 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 Non-GAAP Financial Measures
This press release includes non-GAAP financial measures including Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP net income, Non-GAAP net income margin, Non-GAAP net income per share and free cash flow. We
use these non-GAAP financial measures to better understand and evaluate our core operating performance. We believe that these non-GAAP financial measures provide management and our investors with useful information about our financial performance and liquidity, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important measures used by our management for financial and operational decision-making. We also believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry. These non-GAAP measures should not be considered in isolation of, or as a substitute or an alternative to, measures prepared and presented in accordance with GAAP.
We define Adjusted EBITDA as net income adjusted to exclude interest expense, interest income, provision for (benefit from) income taxes, depreciation and amortization, other expense (income), net, stock-based compensation and certain non-recurring income and expenses from time to time. We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of revenue.
Adjusted EBITDA is one of the primary performance measures used by our management and our board of directors to understand and evaluate our financial performance and operating trends, including period-to-period comparisons, preparing and approving our annual budget and operational planning. In assessing our performance, we exclude certain expenses that we believe are not comparable period over period or that we believe are not indicative of our underlying operating performance. There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which include that Adjusted EBITDA:
•may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure;
•does not reflect our capital expenditures, future requirements for capital expenditures or contractual commitments;
•excludes depreciation and amortization and, although these are non-cash expenses, the assets being depreciated may be replaced in the future;
•does not reflect changes in, or cash requirements for, our working capital needs;
•excludes stock-based compensation expense, which has been, and will continue to be, a significant recurring expense for our business and an important part of our compensation strategy; and
•does not reflect certain expenses that we do not consider representative of our underlying operating performance, but that reduce cash available to us.
We define Non-GAAP net income as net income adjusted to exclude amortization of acquired intangible assets, stock-based compensation expense and certain non-recurring income and expenses from time to time, net of related income tax impacts. We define net income margin as net loss as a percentage of revenue. We define Non-GAAP net income margin as Non-GAAP net income as a percentage of revenue. We define Non-GAAP net income per share attributable to common stockholders as Non-GAAP net income divided by basic and diluted weighted-average common stock.
Free cash flow is a liquidity measure used by management in evaluating the cash generated by our operations after purchases of property and equipment including capitalized internal-use software. We believe free cash flow provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business and strengthening our balance sheet, once our business needs and obligations are met. 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 our future contractual commitments, and may be calculated differently by other companies in our industry.
We are not providing a reconciliation for our non-GAAP outlook on a forward-looking basis (including the information under “Financial Outlook” above), as we are unable to provide a meaningful calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various items that would impact the most directly comparable forward-looking GAAP financial measure that have not yet occurred, are out of LegalZoom’s control and/or cannot be reasonably predicted. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.
The tables in this press release contain more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.
LegalZoom
LegalZoom is a leading online platform for legal services, transforming how individuals and small businesses navigate the legal system. By combining intuitive technology with access to experienced attorneys—whether
through our vast independent attorney network or the LegalZoom-owned law firm—we offer the tools and guidance people need to confidently manage everything from business formation and compliance to estate planning and ongoing legal support.
With over two decades of experience and millions of customers served, LegalZoom helps individuals and small businesses navigate legal needs with confidence. For more information, please visit www.legalzoom.com.
Contact
Investor Relations
investor@legalzoom.com
LegalZoom.com, Inc.
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except par values)
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 203,100 | $ | 142,064 | |||||||
| Accounts receivable, net of allowances of $2,281 and $2,121, respectively | 20,589 | 8,511 | |||||||||
| Prepaid expenses and other current assets | 18,234 | 17,926 | |||||||||
| Current assets held for sale | — | 22,722 | |||||||||
| Total current assets | 241,923 | 191,223 | |||||||||
| Property and equipment, net | 58,045 | 59,788 | |||||||||
| Goodwill | 140,705 | 63,318 | |||||||||
| Intangible assets, net | 18,152 | 8,653 | |||||||||
| Operating lease right-of-use assets | 13,414 | 7,189 | |||||||||
| Deferred income taxes | 31,884 | 34,696 | |||||||||
| Available-for-sale debt security (amortized cost of $0 and $848), respectively | — | 1,377 | |||||||||
| Other assets | 7,399 | 7,639 | |||||||||
| Total assets | $ | 511,522 | $ | 373,883 | |||||||
| Liabilities and stockholders’ equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 27,167 | $ | 31,150 | |||||||
| Accrued expenses and other current liabilities | 83,361 | 57,928 | |||||||||
| Deferred revenue | 203,653 | 174,643 | |||||||||
| Operating lease liabilities | 4,338 | 1,861 | |||||||||
| Total current liabilities | 318,519 | 265,582 | |||||||||
| Operating lease liabilities, non-current | 10,025 | 6,018 | |||||||||
| Deferred revenue | 277 | 381 | |||||||||
| Other liabilities | 10,819 | 8,645 | |||||||||
| Total liabilities | 339,640 | 280,626 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity: | |||||||||||
| Preferred stock, $0.001 par value 100,000 shares authorized at December 31, 2025 and 2024, none issued or outstanding at December 31, 2025 and 2024 | — | — | |||||||||
| Common stock, $0.001 par value; 1,000,000 and 1,000,000 shares authorized; 177,624 and 173,619 shares issued and outstanding at December 31, 2025 and 2024, respectively | 179 | 175 | |||||||||
| Additional paid-in capital | 1,305,936 | 1,161,538 | |||||||||
| Accumulated deficit | (1,134,414) | (1,069,317) | |||||||||
| Accumulated other comprehensive income | 181 | 861 | |||||||||
| Total stockholders’ equity | 171,882 | 93,257 | |||||||||
| Total liabilities and stockholders’ equity | $ | 511,522 | $ | 373,883 | |||||||
LegalZoom.com, Inc.
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Revenue | $ | 190,266 | $ | 161,706 | $ | 756,043 | $ | 681,881 | ||||||||||||||||||
| Cost of revenue | 61,731 | 53,385 | 257,960 | 240,093 | ||||||||||||||||||||||
| Gross profit | 128,535 | 108,321 | 498,083 | 441,788 | ||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Sales and marketing | 62,952 | 47,514 | 261,745 | 207,684 | ||||||||||||||||||||||
| Technology and development | 19,499 | 16,650 | 81,941 | 89,584 | ||||||||||||||||||||||
| General and administrative | 33,466 | 31,046 | 143,758 | 108,939 | ||||||||||||||||||||||
| Gain on sale of assets held for sale | — | — | (14,337) | — | ||||||||||||||||||||||
| Total operating expenses | 115,917 | 95,210 | 473,107 | 406,207 | ||||||||||||||||||||||
| Income from operations | 12,618 | 13,111 | 24,976 | 35,581 | ||||||||||||||||||||||
| Interest expense | (795) | (201) | (1,294) | (446) | ||||||||||||||||||||||
| Interest income | 1,878 | 1,303 | 7,569 | 7,850 | ||||||||||||||||||||||
| Other income, net | 290 | (1,747) | 1,187 | 98 | ||||||||||||||||||||||
| Income before income taxes | 13,991 | 12,466 | 32,438 | 43,083 | ||||||||||||||||||||||
| Provision for (benefit from) income taxes | 7,933 | (388) | 17,011 | 13,120 | ||||||||||||||||||||||
| Net income | $ | 6,058 | $ | 12,854 | $ | 15,427 | $ | 29,963 | ||||||||||||||||||
| Net income per share: | ||||||||||||||||||||||||||
| Basic | $ | 0.03 | $ | 0.07 | $ | 0.09 | $ | 0.17 | ||||||||||||||||||
| Diluted | $ | 0.03 | $ | 0.07 | $ | 0.08 | $ | 0.16 | ||||||||||||||||||
| Weighted-average shares used to compute net income per share: | ||||||||||||||||||||||||||
| Basic | 177,561 | 173,239 | 178,798 | 180,210 | ||||||||||||||||||||||
| Diluted | 182,360 | 175,393 | 184,690 | 182,865 | ||||||||||||||||||||||
LegalZoom.com, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | 15,427 | $ | 29,963 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 44,123 | 34,927 | |||||||||
| Amortization of debt issuance costs | 210 | 227 | |||||||||
| Amortization of right-of-use assets | 3,287 | 2,132 | |||||||||
| Stock-based compensation | 113,708 | 71,510 | |||||||||
| Gain on sale of assets held for sale | (14,337) | — | |||||||||
| Change in fair value of other equity security | (302) | — | |||||||||
| Gain on sale of available-for-sale debt security | (758) | — | |||||||||
| Deferred income taxes | 6,634 | (4,552) | |||||||||
| Unrealized foreign exchange loss | 75 | 648 | |||||||||
| Non-cash interest expense | 548 | — | |||||||||
| Other | 293 | — | |||||||||
| Changes in operating assets and liabilities, net of effects of business combinations: | |||||||||||
| Accounts receivable | (11,802) | 3,227 | |||||||||
| Prepaid expenses and other current assets | (252) | (2,775) | |||||||||
| Other assets | 926 | 707 | |||||||||
| Accounts payable | (3,657) | (817) | |||||||||
| Accrued expenses and other liabilities | 7,147 | (4,156) | |||||||||
| Operating lease liabilities | (2,647) | (1,942) | |||||||||
| Income tax payable | 255 | (44) | |||||||||
| Deferred revenue | 19,319 | 6,584 | |||||||||
| Net cash provided by operating activities | 178,197 | 135,639 | |||||||||
| Cash flows from investing activities | |||||||||||
| Acquisitions, net of cash acquired | (48,468) | — | |||||||||
| Purchase of property and equipment | (30,277) | (35,696) | |||||||||
| Proceeds from sale of available-for-sale debt security | 1,617 | — | |||||||||
| Proceeds from sale of assets held for sale | 37,051 | — | |||||||||
| Net cash used in investing activities | (40,077) | (35,696) | |||||||||
| Cash flows from financing activities | |||||||||||
| Repayment of finance lease obligations | (2) | (25) | |||||||||
| Payment of debt issuance costs | (841) | — | |||||||||
| Repurchase of common stock | (80,532) | (165,014) | |||||||||
| Payment of share repurchase excise taxes and repurchase costs | (1,264) | (169) | |||||||||
| Shares surrendered for settlement of minimum statutory tax withholding | (40,387) | (20,491) | |||||||||
| Proceeds from issuance of stock under employee stock plans | 45,770 | 2,414 | |||||||||
Net cash used in financing activities | (77,256) | (183,285) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 172 | (313) | |||||||||
| Net increase (decrease) in cash and cash equivalents | 61,036 | (83,655) | |||||||||
| Cash and cash equivalents, at beginning of the period | 142,064 | 225,719 | |||||||||
| Cash and cash equivalents, at end of the period | $203,100 | $142,064 | |||||||||
Adjusted EBITDA and Adjusted EBITDA Margin
The following table presents a reconciliation of net income to Adjusted EBITDA for each of the periods indicated (unaudited):
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||||
| Reconciliation of net income to Adjusted EBITDA | ||||||||||||||||||||||||||
| Net income | $ | 6,058 | $ | 12,854 | $ | 15,427 | $ | 29,963 | ||||||||||||||||||
| Interest expense | 795 | 201 | 1,294 | 446 | ||||||||||||||||||||||
| Interest income | (1,878) | (1,303) | (7,569) | (7,850) | ||||||||||||||||||||||
| Provision for (benefit from) income taxes | 7,933 | (388) | 17,011 | 13,120 | ||||||||||||||||||||||
| Depreciation and amortization | 11,005 | 9,636 | 44,123 | 34,927 | ||||||||||||||||||||||
| Other (income) expense, net | (290) | 1,747 | (1,187) | (98) | ||||||||||||||||||||||
| Stock-based compensation | 24,945 | 22,024 | 113,708 | 71,510 | ||||||||||||||||||||||
Acquisition and related expenses(1) | 1,326 | — | 2,869 | — | ||||||||||||||||||||||
| Gain on sale of assets held for sale | — | — | (14,337) | — | ||||||||||||||||||||||
Restructuring costs(2) | — | (567) | 854 | 6,096 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 49,894 | $ | 44,204 | $ | 172,193 | $ | 148,114 | ||||||||||||||||||
| Net income margin | 3 | % | 8 | % | 2 | % | 4 | % | ||||||||||||||||||
| Adjusted EBITDA margin | 26 | % | 27 | % | 23 | % | 22 | % | ||||||||||||||||||
(1) For 2025, acquisition and related expenses are primarily related to our acquisition of Formation Nation. Additional costs incurred are related to the evaluation and pursuit of strategic transactions.
(2) For 2025 and 2024, restructuring costs are related to the reduction of our U.S. headcount.
Non-GAAP Net Income, Non-GAAP Net Income Margin and diluted Non-GAAP Net Income Per Share
The following table presents a reconciliation of net income to Non-GAAP net income for each of the periods indicated (unaudited):
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||||||||||
| Reconciliation of Net income to Non-GAAP Net income | ||||||||||||||||||||||||||
| Net income | $ | 6,058 | $ | 12,854 | $ | 15,427 | $ | 29,963 | ||||||||||||||||||
| Amortization of acquired intangible assets | 1,610 | 1,266 | 7,801 | 5,082 | ||||||||||||||||||||||
| Stock-based compensation | 24,945 | 22,024 | 113,708 | 71,510 | ||||||||||||||||||||||
Acquisition-related expenses(1) | 1,326 | — | 2,869 | — | ||||||||||||||||||||||
Restructuring expenses(2) | — | (567) | 854 | 6,096 | ||||||||||||||||||||||
| Gain on sale of assets held for sale | — | — | (14,337) | — | ||||||||||||||||||||||
Income tax effects(3) | (2,837) | (2,979) | (12,073) | (13,200) | ||||||||||||||||||||||
| Non-GAAP net income | 31,102 | 32,598 | 114,249 | 99,451 | ||||||||||||||||||||||
| Net income margin | 3 | % | 8 | % | 2 | % | 4 | % | ||||||||||||||||||
| Non-GAAP net income margin | 16 | % | 20 | % | 15 | % | 15 | % | ||||||||||||||||||
| Net income per share—basic | $ | 0.03 | $ | 0.07 | $ | 0.09 | $ | 0.17 | ||||||||||||||||||
| Net income per share— diluted | $ | 0.03 | $ | 0.07 | $ | 0.08 | $ | 0.16 | ||||||||||||||||||
| Non-GAAP net income per share—basic | $ | 0.18 | $ | 0.19 | $ | 0.64 | $ | 0.55 | ||||||||||||||||||
| Non-GAAP net income per share—diluted | $ | 0.17 | $ | 0.19 | $ | 0.62 | $ | 0.54 | ||||||||||||||||||
| Weighted-average shares used to compute net income per share—basic | 177,561 | 173,239 | 178,798 | 180,210 | ||||||||||||||||||||||
| Weighted-average shares used to compute net income per share—diluted | 182,360 | 175,393 | 184,690 | 182,865 | ||||||||||||||||||||||
| Weighted-average shares used to compute Non-GAAP net income per share—basic | 177,561 | 173,239 | 178,798 | 180,210 | ||||||||||||||||||||||
| Weighted-average shares used to compute Non-GAAP net income per share—diluted | 182,360 | 175,393 | 184,690 | 182,865 | ||||||||||||||||||||||
(1)For 2025, acquisition and related expenses are primarily related to our acquisition of Formation Nation. Additional costs incurred are related to the evaluation and pursuit of strategic transactions.
(2)For 2025 and 2024, restructuring costs are related to the reduction of our U.S. headcount.
(3)The estimated income tax effect of the non-GAAP pre-tax adjustments is determined by applying the statutory rate of the originating jurisdiction, if applicable.
The following table shows the computation of basic and diluted Non-GAAP net income per share (unaudited):
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||||||||||
| Non-GAAP net income and Non-GAAP net income per share: | ||||||||||||||||||||||||||
| Non-GAAP net income | $ | 31,102 | $ | 32,598 | $ | 114,249 | $ | 99,451 | ||||||||||||||||||
| Reconciliation of denominator for net income per share to Non-GAAP net income per share: | ||||||||||||||||||||||||||
| Weighted-average shares used to compute net income per share—basic: | 177,561 | 173,239 | 178,798 | 180,210 | ||||||||||||||||||||||
| Effect of potentially dilutive securities: | ||||||||||||||||||||||||||
| Stock options | 86 | 59 | 53 | 754 | ||||||||||||||||||||||
| Restricted stock units | 4,690 | 2,092 | 5,808 | 1,893 | ||||||||||||||||||||||
| Employee stock purchase plan | 23 | 3 | 31 | 8 | ||||||||||||||||||||||
| Weighted-average common stock used in computing Non-GAAP net income per share—diluted | 182,360 | 175,393 | 184,690 | 182,865 | ||||||||||||||||||||||
| Non-GAAP net income per share—basic | $ | 0.18 | $ | 0.19 | $ | 0.64 | $ | 0.55 | ||||||||||||||||||
| Non-GAAP net income per share—diluted | $ | 0.17 | $ | 0.19 | $ | 0.62 | $ | 0.54 | ||||||||||||||||||
Free Cash Flow
The following table presents a reconciliation of net cash provided by operating activities to free cash flow (unaudited):
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow | ||||||||||||||||||||||||||
| Net cash provided by operating activities | 34,129 | 42,586 | 178,197 | 135,639 | ||||||||||||||||||||||
| Purchase of property and equipment | (6,134) | (6,707) | (30,277) | (35,696) | ||||||||||||||||||||||
| Total free cash flow | $ | 27,995 | $ | 35,879 | $ | 147,920 | $ | 99,943 | ||||||||||||||||||
FAQ
How did LegalZoom (LZ) perform financially in full-year 2025?
LegalZoom reported 2025 revenue of $756.0 million, up 11% year over year. Subscription revenue grew 13% to $492.5 million. Adjusted EBITDA reached $172.2 million with a 23% margin, while free cash flow climbed 48% to $147.9 million, showing strong cash generation.
What were LegalZoom’s key fourth quarter 2025 results?
In Q4 2025, LegalZoom generated revenue of $190.3 million, up 18% year over year. Subscription revenue rose 20% to $130.9 million. Adjusted EBITDA was $49.9 million, or 26% of revenue, while GAAP net income was $6.1 million, a 3% margin.
What 2026 guidance did LegalZoom (LZ) provide for revenue and EBITDA?
For 2026, LegalZoom expects revenue of $805–$825 million, about 8% growth at the midpoint. Adjusted EBITDA is guided to $190–$200 million, roughly 13% growth at the midpoint, supported by improved gross margins and disciplined cost management according to management’s outlook.
How strong is LegalZoom’s balance sheet at the end of 2025?
At December 31, 2025, LegalZoom held $203.1 million of cash and cash equivalents and no debt. Total assets were $511.5 million and stockholders’ equity was $171.9 million, providing financial flexibility to fund growth initiatives and share repurchases.
What changes did LegalZoom make to its share repurchase program?
LegalZoom’s Board approved a $100.0 million increase to its stock repurchase program. Repurchases may occur via open market purchases, accelerated stock repurchase agreements, or privately negotiated transactions and can be modified or suspended, with no fixed expiration date specified.
How did LegalZoom’s GAAP and Non-GAAP profitability trends differ in 2025?
In 2025, GAAP net income declined to $15.4 million with a 2% margin. However, Non-GAAP net income rose to $114.2 million and Adjusted EBITDA increased to $172.2 million, reflecting add-backs such as stock-based compensation and acquisition-related items.
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Legalzoom.Com, Inc.
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Specialty Business Services
Services-computer Processing & Data Preparation
United States
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