LegalZoom cuts 2026 adjusted EBITDA outlook to $180M–$185M
Full-year revenue guidance retains an approximately $800 million midpoint, while the Adjusted EBITDA outlook is lower than the prior range.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
8-K
Rhea-AI Filing Summary
LegalZoom.com, Inc. reported third-quarter 2026 revenue of $195.1 million, up 3% year over year. Subscription revenue rose 11% to $139.7 million, while transaction revenue fell 14% to $55.5 million. Net income was $8.1 million versus $4.5 million a year earlier; Adjusted EBITDA was $50.0 million versus $46.3 million, with margin of 26% versus 24%.
Operating cash flow was $39.9 million and free cash flow was $34.1 million, down from $54.2 million and $47.0 million, respectively. Cash and cash equivalents were $181.7 million as of September 30, 2026, and the company reported no debt. It repurchased $14.6 million of shares during the quarter, with approximately $65.8 million remaining under the authorization as of September 30, 2026.
For full-year 2026, revenue guidance is $797 million to $803 million, with approximately 6% growth at the midpoint; the Adjusted EBITDA outlook is $180 million to $185 million, versus the prior $190 million to $195 million range. LegalZoom cited investment in channel diversification and expert services, higher paid-acquisition costs, and seasonal sales-capability spending. Fourth-quarter outlook is $190 million to $196 million in revenue and $48 million to $53 million in Adjusted EBITDA.
3 points · 0 major1 major · 4 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- Moderate pointSubscription revenue reached $139.7 million, up 11% year over year.
- Moderate pointNet income rose 79% to $8.1 million in the third quarter.
- Moderate pointAdjusted EBITDA rose 8% to $50.0 million in the third quarter.
Negative
- Major point. Forward-looking: it has not happened yet and may not happen.Adjusted EBITDA guidance fell to $180 million to $185 million from $190 million to $195 million.
- Moderate pointTransaction revenue fell 14% to $55.5 million in the third quarter.
- Moderate pointOperating cash flow declined 26% to $39.9 million year over year.
- Moderate pointFree cash flow declined 27% to $34.1 million year over year.
Filing Explained
At
8-K Event Classification
3 items: 2.02, 7.01, 9.01
3 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 7.01
Regulation FD Disclosure
Disclosure
Material non-public information disclosed under Regulation Fair Disclosure, often investor presentations or guidance.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, or exhibit attachments filed with this report.
Key Figures
Revenue: $195.1 million
Subscription revenue: $139.7 million
Net income: $8.1 million
+5 more
8 metrics
Revenue
$195.1 million
Three months ended September 30, 2026; up 3% year over year
Subscription revenue
$139.7 million
Three months ended September 30, 2026; up 11% year over year
Net income
$8.1 million
Three months ended September 30, 2026; up 79% year over year
Adjusted EBITDA
$50.0 million
Three months ended September 30, 2026; up 8% year over year
Operating cash flow
$39.9 million
Three months ended September 30, 2026; down 26% year over year
Free cash flow
$34.1 million
Three months ended September 30, 2026; down 27% year over year
Cash and cash equivalents
$181.7 million
As of September 30, 2026
Share repurchases
$14.6 million
Completed during the third quarter of 2026
Key Terms
Adjusted EBITDA, Free cash flow, human-in-the-loop, Average revenue per subscription unit (ARPU)
4 terms
Adjusted EBITDA financial
"Adjusted EBITDA as net income adjusted to exclude"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
Free cash flow financial
"Free cash flow is a liquidity measure used by management"
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
human-in-the-loop technical
"human-in-the-loop subscription services"
Human-in-the-loop describes systems where people supervise, check, or make final decisions on work performed by automated tools or algorithms. Like a pilot overseeing an autopilot, humans step in to catch errors, interpret nuance, and apply judgment that machines may miss. For investors, this matters because human oversight can reduce operational and regulatory risk, improve decision quality, and increase trust in results produced by automated systems.
Average revenue per subscription unit (ARPU) financial
"Average revenue per subscription unit (ARPU) at period end"
Average revenue per subscription unit (ARPU) is the typical amount of money a company earns from each active subscription during a given period, found by dividing subscription revenue by the number of subscription units (for example active users, accounts, or seats). Investors use ARPU like an "average bill per customer" to see whether customers are paying more or less over time, which signals pricing strength, upsell success, or revenue risk from churn.
Earnings Snapshot
Revenue: $195.1 million · Guidance included
Three months ended September 30, 2026
Revenue
$195.1 million
Up 3% year over year
Subscription revenue
$139.7 million
Up 11% year over year
Net income
$8.1 million
Up 79% year over year
Adjusted EBITDA
$50.0 million
Up 8% year over year
Operating cash flow
$39.9 million
Down 26% year over year
Free cash flow
$34.1 million
Down 27% year over year
Guidance
For full-year 2026, revenue is expected to be $797 million to $803 million and Adjusted EBITDA $180 million to $185 million. For the fourth quarter, revenue is expected to be $190 million to $196 million and Adjusted EBITDA $48 million to $53 million.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were LZ's third-quarter 2026 revenue and net income?
LegalZoom reported $195.1 million in revenue, up 3% year over year, and $8.1 million in net income, compared with $4.5 million in the third quarter of 2025.
What is LZ's 2026 Adjusted EBITDA outlook?
LegalZoom expects full-year 2026 Adjusted EBITDA of $180 million to $185 million, with approximately 6% year-over-year growth and a 23% margin at the midpoint. Its previous outlook was $190 million to $195 million, with 12% growth and a 24% margin at the midpoint.
Why did LZ update its 2026 Adjusted EBITDA outlook?
LegalZoom said more than half of the change reflects continued investment in channel diversification, including partnerships, affiliates and AI channels. Approximately one quarter reflects higher paid customer acquisition costs; the remainder reflects investment in higher-value expert services and seasonal investment in sales capabilities ahead of the first-quarter peak in business formations.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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): November 4, 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 November 4, 2026 , LegalZoom.com, Inc. (“LegalZoom”) issued a press release announcing its results of operations for the three and nine months ended September 30, 2026. 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 November 4, 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 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number | Description | |||||||
99.1 | Earnings Press Release of LegalZoom.com, Inc. dated November 4, 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: | By: | /s/ Noel Watson | ||||||
| Noel Watson | ||||||||
| Chief Financial Officer | ||||||||
3
Exhibit 99.1
LegalZoom Reports Third Quarter 2026 Financial Results
•Revenue of $195.1 million, up 3% year-over-year, above the midpoint of the Company’s guidance range
•Subscription revenue of $139.7 million, up 11% year-over-year, marking the sixth consecutive quarter of double digit-subscription revenue growth
•Net income of $8.1 million and net income margin of 4%, with net income margin increasing approximately 180 basis points year-over-year
•Adjusted EBITDA of $50.0 million and Adjusted EBITDA margin of 26%, at the midpoint of the Company’s guidance range, with Adjusted EBITDA margin increasing approximately 130 basis points year-over-year
•Completed $14.6 million of share repurchases in the quarter, with approximately $65.8 million remaining under the existing authorization as of September 30, 2026
•Ended the quarter with cash and cash equivalents of $181.7 million and delivered $39.9 million in cash from operating activities and $34.1 million in free cash flow with no debt outstanding as of September 30, 2026
•Reiterating the midpoint of full-year 2026 revenue outlook of approximately $800.0 million, or 6% year-over-year growth, and narrowing the range to $797.0–$803.0 million; updating Adjusted EBITDA outlook to a range of $180.0-$185.0 million, or Adjusted EBITDA margin of approximately 23% at the midpoint, reflecting a challenging customer acquisition environment and continued investment behind LegalZoom’s growth priorities and channel diversification
MOUNTAIN VIEW, California – November 4, 2026 – LegalZoom (Nasdaq: LZ), America’s #1 online legal services company, today announced results for its third quarter ended September 30, 2026.
"Revenue from human-in-the-loop subscription services grew 17% year-over-year and now represents 49% of total revenue,” said Jeff Stibel, Chairman and Chief Executive Officer of LegalZoom. “These results give us confidence to accelerate our investment in bringing expert support into the customer relationship from the first purchase, pairing AI with accountable expertise to make our services more useful.”
“Subscription growth continues to offset customer acquisition pressure, supporting an unchanged $800 million midpoint for our full-year revenue outlook,” said Noel Watson, Chief Operating Officer and Chief Financial Officer. “Our updated Adjusted EBITDA outlook reflects the cost of that environment and our continued investment in channel diversification and the sales and service capabilities behind our higher-value offerings. With $181.7 million in cash and no debt, we have the financial capacity to fund these priorities.”
Third Quarter 2026 Highlights
•Revenue was $195.1 million for the quarter, up 3% year-over-year.
◦Transaction revenue of $55.5 million decreased 14% year-over-year.
◦Subscription revenue of $139.7 million grew 11% year-over-year.
•Net income was $8.1 million for the quarter, or 4% of revenue, compared to a net income of $4.5 million, or 2% of revenue, in the same period in 2025.
•Adjusted EBITDA was $50.0 million for the quarter, or 26% of revenue, compared to $46.3 million, or 24% of revenue, in the same period in 2025.
•Non-GAAP net income was $31.4 million for the quarter compared to $31.0 million in the same period in 2025.
•Cash and cash equivalents were $181.7 million as of September 30, 2026 compared to $203.1 million as of December 31, 2025.
•Cash flows provided by operating activities were $39.9 million for the quarter ended September 30, 2026 compared to $54.2 million in the same period in 2025.
•Free cash flow was $34.1 million for the quarter ended September 30, 2026 compared to $47.0 million in the same period in 2025.
•Basic and diluted net income per share was $0.05 for the quarter, compared to basic and diluted net income per share of $0.03 and $0.02, respectively, for the same period in 2025. Basic and diluted Non-GAAP net income per share was $0.19 for the quarter, compared to basic and diluted Non-GAAP net income per share of $0.17 for the same period in 2025.
Key Business Metrics and Non-GAAP Financial Measures
(Unaudited, in thousands except AOV, ARPU and percentages)
| Three Months Ended September 30, | % Growth | Nine Months Ended September 30, | % Growth | ||||||||||||||||||||||||||||||||
| (Decline) | (Decline) | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | YOY | 2026 | 2025 | YOY | ||||||||||||||||||||||||||||||
| Total revenue | $ | 195,146 | $ | 190,158 | 3 | % | $ | 607,216 | $ | 565,777 | 7 | % | |||||||||||||||||||||||
| Transaction revenue | $ | 55,473 | $ | 64,799 | (14) | % | $ | 203,986 | $ | 204,263 | — | % | |||||||||||||||||||||||
| Subscription revenue | $ | 139,673 | $ | 125,359 | 11 | % | $ | 403,230 | $ | 361,514 | 12 | % | |||||||||||||||||||||||
| Gross profit | $ | 138,063 | $ | 127,887 | 8 | % | $ | 410,246 | $ | 369,548 | 11 | % | |||||||||||||||||||||||
| Gross margin | 71 | % | 67 | % | 6 | % | 68 | % | 65 | % | 5 | % | |||||||||||||||||||||||
| Net Income | $ | 8,061 | $ | 4,509 | 79 | % | $ | 14,348 | $ | 9,370 | 53 | % | |||||||||||||||||||||||
| Net income margin | 4 | % | 2 | % | 100 | % | 2 | % | 2 | % | — | % | |||||||||||||||||||||||
| Net Income per share — basic: | $ | 0.05 | $ | 0.03 | 67 | % | $ | 0.08 | $ | 0.05 | 60 | % | |||||||||||||||||||||||
| Net Income per share — diluted: | $ | 0.05 | $ | 0.02 | 150 | % | $ | 0.08 | $ | 0.05 | 60 | % | |||||||||||||||||||||||
| Net cash provided by operating activities | $ | 39,873 | $ | 54,226 | (26) | % | $ | 126,702 | $ | 144,068 | (12) | % | |||||||||||||||||||||||
| Non-GAAP Financial Measures | |||||||||||||||||||||||||||||||||||
| Non GAAP net income | $ | 31,443 | $ | 30,996 | 1 | % | $ | 80,957 | $ | 83,147 | (3) | % | |||||||||||||||||||||||
| Non GAAP net income per share — basic: | $ | 0.19 | $ | 0.17 | 12 | % | $ | 0.47 | $ | 0.46 | 2 | % | |||||||||||||||||||||||
| Non GAAP net income per share — diluted: | $ | 0.19 | $ | 0.17 | 12 | % | $ | 0.46 | $ | 0.45 | 2 | % | |||||||||||||||||||||||
| Adjusted EBITDA | $ | 50,045 | $ | 46,323 | 8 | % | $ | 132,405 | $ | 122,300 | 8 | % | |||||||||||||||||||||||
| Adjusted EBITDA margin | 26 | % | 24 | % | 8 | % | 22 | % | 22 | % | — | % | |||||||||||||||||||||||
| Free cash flow | $ | 34,119 | $ | 46,990 | (27) | % | $ | 108,783 | $ | 119,924 | (9) | % | |||||||||||||||||||||||
| Key Business Metrics | |||||||||||||||||||||||||||||||||||
| Transaction units | 249 | 259 | (4) | % | 905 | 878 | 3 | % | |||||||||||||||||||||||||||
| Business formations | 110 | 126 | (13) | % | 377 | 388 | (3) | % | |||||||||||||||||||||||||||
| Average order value (AOV) | $ | 222 | $ | 251 | (12) | % | $ | 225 | $ | 233 | (3) | % | |||||||||||||||||||||||
| Subscription units at period end | 1,854 | 1,959 | (5) | % | 1,854 | 1,959 | (5) | % | |||||||||||||||||||||||||||
| Average revenue per subscription unit (ARPU) at period end | $ | 280 | $ | 256 | 9 | % | $ | 280 | $ | 256 | 9 | % | |||||||||||||||||||||||
| Certain percentages may not recalculate due to rounding. | |||||||||||||||||||||||||||||||||||
Financial Guidance and Outlook
For the full year ending December 31, 2026, LegalZoom is reiterating the midpoint of its revenue outlook and updating its Adjusted EBITDA outlook as follows:
•Revenue is expected to be in the range of $797 million to $803 million, or 6% year-over-year growth at the midpoint. This compares to the Company’s previous outlook in the range of $795 million to $805 million, also approximately 6% growth at the midpoint. LegalZoom’s outlook continues to reflect the
scaling of its higher-value growth initiatives and ongoing momentum from its partner channel, partially offset by continued pressure in customer acquisition for the remainder of the year.
•Adjusted EBITDA is expected to be in the range of $180 million to $185 million, or approximately 6% year-over-year growth and a 23% margin at the midpoint. This compares to the Company’s previous Adjusted EBITDA outlook of $190 million to $195 million, or 12% year-over-year growth, and a 24% margin at the midpoint. Compared to the previous outlook, more than half of the change reflects continued investment in channel diversification, including partnerships, affiliates and AI channels, approximately one quarter reflects higher costs in paid customer acquisition channels, and the remainder reflects investment in higher-value expert services, as well as seasonal investment in sales capabilities ahead of the first quarter peak in business formations.
For the fourth quarter ending December 31, 2026 LegalZoom expects:
•Revenue in the range of $190 million to $196 million, or 1% year-over-year growth at the midpoint.
•Adjusted EBITDA in the range of $48 million to $53 million, a 1% year-over-year growth at the midpoint, and a 26% margin.
Webcast and Conference Call Information
A webcast and conference call to discuss third quarter 2026 results is scheduled for today, November 4, 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 and the drivers of such 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 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; risks and costs associated with complex and evolving laws and regulations; our ability to maintain effective 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 June 30, 2026 filed with the Securities and Exchange Commission (the “SEC”) on August 5, 2026, 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 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 income 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 Guidance and 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 our own law firm, we offer the tools and guidance people need to confidently manage everything from business formation and compliance to intellectual property protection and ongoing business management and legal support.
As AI reshapes how legal work gets done, LegalZoom is at the forefront of the human-in-the-loop approach, ensuring that the speed and efficiency of AI is always backed by the judgment and accountability of qualified professionals. 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)
| September 30, 2026 | December 31, 2025 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 181,702 | $ | 203,100 | |||||||
Accounts receivable, net of allowance | 23,860 | 20,589 | |||||||||
Prepaid expenses and other current assets | 22,536 | 18,234 | |||||||||
Total current assets | 228,098 | 241,923 | |||||||||
Property and equipment, net | 50,256 | 58,045 | |||||||||
Goodwill | 140,705 | 140,705 | |||||||||
Intangible assets, net | 13,322 | 18,152 | |||||||||
Operating lease right-of-use assets | 13,022 | 13,414 | |||||||||
Deferred income taxes | 21,435 | 31,884 | |||||||||
Other assets | 6,457 | 7,399 | |||||||||
Total assets | $ | 473,295 | $ | 511,522 | |||||||
Liabilities and stockholders’ equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 36,307 | $ | 27,167 | |||||||
Accrued expenses and other current liabilities | 56,979 | 83,361 | |||||||||
Deferred revenue | 219,812 | 203,653 | |||||||||
Operating lease liabilities | 5,040 | 4,338 | |||||||||
Total current liabilities | 318,138 | 318,519 | |||||||||
Operating lease liabilities, non-current | 9,047 | 10,025 | |||||||||
Deferred revenue | 208 | 277 | |||||||||
Other liabilities | 10,734 | 10,819 | |||||||||
Total liabilities | 338,127 | 339,640 | |||||||||
Commitments and contingencies | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $0.001 par value; 100,000 shares authorized at September 30, 2026 and December 31, 2025, none issued or outstanding at September 30, 2026 and December 31, 2025 | — | — | |||||||||
Common stock, $0.001 par value; 1,000,000 shares authorized; 166,192 shares and 177,624 shares issued and outstanding at September 30, 2026 and December 31, 2025, respectively | 168 | 179 | |||||||||
Additional paid-in capital | 1,359,127 | 1,305,936 | |||||||||
Accumulated deficit | (1,224,473) | (1,134,414) | |||||||||
Accumulated other comprehensive income | 346 | 181 | |||||||||
Total stockholders’ equity | 135,168 | 171,882 | |||||||||
Total liabilities and stockholders’ equity | $ | 473,295 | $ | 511,522 | |||||||
LegalZoom.com, Inc.
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
Revenue | $ | 195,146 | $ | 190,158 | $ | 607,216 | $ | 565,777 | ||||||||||||||||||
| Cost of revenue | 57,083 | 62,271 | 196,970 | 196,229 | ||||||||||||||||||||||
Gross profit | 138,063 | 127,887 | 410,246 | 369,548 | ||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
| Sales and marketing | 76,909 | 67,835 | 234,426 | 198,793 | ||||||||||||||||||||||
Technology and development | 14,297 | 19,485 | 53,949 | 62,442 | ||||||||||||||||||||||
General and administrative | 33,313 | 34,074 | 94,913 | 110,291 | ||||||||||||||||||||||
| Gain on sale of assets held for sale | — | — | — | (14,337) | ||||||||||||||||||||||
Total operating expenses | 124,519 | 121,394 | 383,288 | 357,189 | ||||||||||||||||||||||
Income from operations | 13,544 | 6,493 | 26,958 | 12,359 | ||||||||||||||||||||||
| Interest expense | (77) | (152) | (879) | (499) | ||||||||||||||||||||||
| Interest income | 1,427 | 2,139 | 4,702 | 5,691 | ||||||||||||||||||||||
Other (expense) income, net | (31) | (102) | 47 | 897 | ||||||||||||||||||||||
Income before income taxes | 14,863 | 8,378 | 30,828 | 18,448 | ||||||||||||||||||||||
Provision for income taxes | 6,802 | 3,869 | 16,480 | 9,078 | ||||||||||||||||||||||
| Net income | $ | 8,061 | $ | 4,509 | $ | 14,348 | $ | 9,370 | ||||||||||||||||||
| Net income attributable to common stockholders—basic and diluted | ||||||||||||||||||||||||||
Net income per share — basic: | $ | 0.05 | $ | 0.03 | $ | 0.08 | $ | 0.05 | ||||||||||||||||||
Net income per share — diluted: | $ | 0.05 | $ | 0.02 | $ | 0.08 | $ | 0.05 | ||||||||||||||||||
| Weighted-average shares used to compute net income per share: | ||||||||||||||||||||||||||
| Weighted-average shares used to compute net income per share — basic: | 167,185 | 180,057 | 172,749 | 179,231 | ||||||||||||||||||||||
| Weighted-average shares used to compute net income per share — diluted: | 168,942 | 186,731 | 175,323 | 185,329 | ||||||||||||||||||||||
LegalZoom.com, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | 14,348 | $ | 9,370 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 33,283 | 33,118 | |||||||||
Amortization of debt issuance costs | 143 | 161 | |||||||||
| Amortization of right-of-use assets | 2,982 | 2,371 | |||||||||
Stock-based compensation | 63,909 | 88,763 | |||||||||
Gain on sale of assets held for sale | — | (14,337) | |||||||||
| Gain on sale of available-for-sale debt security | — | (648) | |||||||||
Loss on disposal of property and equipment | 15 | 150 | |||||||||
Deferred income taxes | 10,482 | 5,504 | |||||||||
| Change in fair value of other equity security | — | (302) | |||||||||
Unrealized foreign exchange loss | 275 | 58 | |||||||||
| Other | — | 102 | |||||||||
Changes in operating assets and liabilities, net of effects of business combination: | |||||||||||
Accounts receivable | (3,273) | (11,659) | |||||||||
Prepaid expenses and other current assets | (4,342) | (897) | |||||||||
Other assets | 814 | 1,003 | |||||||||
Accounts payable | 9,928 | 1,923 | |||||||||
Accrued expenses and other liabilities | (15,107) | 1,425 | |||||||||
| Operating lease liabilities | (2,869) | (1,791) | |||||||||
Income tax payable | 22 | 246 | |||||||||
Deferred revenue | 16,092 | 29,508 | |||||||||
Net cash provided by operating activities | 126,702 | 144,068 | |||||||||
Cash flows from investing activities | |||||||||||
| Acquisition, net of cash acquired | — | (48,468) | |||||||||
Purchase of property and equipment | (17,919) | (24,144) | |||||||||
| Proceeds from sale of available-for-sale debt security | — | 1,507 | |||||||||
| Proceeds from sale of assets held for sale | — | 37,051 | |||||||||
Net cash used in investing activities | (17,919) | (34,054) | |||||||||
Cash flows from financing activities | |||||||||||
Repayment of capital lease obligations | — | (2) | |||||||||
Payment of deferred consideration from business acquisition | (12,514) | — | |||||||||
| Payment of debt issuance costs | — | (841) | |||||||||
| Share repurchase costs (excise tax) | — | (1,264) | |||||||||
| Repurchase of common stock | (103,223) | (37,621) | |||||||||
Shares surrendered for settlement of minimum statutory tax withholding | (14,841) | (19,965) | |||||||||
| Proceeds from issuance of stock under employee stock plans | 518 | 44,662 | |||||||||
Net cash used in financing activities | (130,060) | (15,031) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (121) | 107 | |||||||||
Net (decrease) increase in cash and cash equivalents | (21,398) | 95,090 | |||||||||
Cash and cash equivalents, at beginning of the period | 203,100 | 142,064 | |||||||||
Cash and cash equivalents, at end of the period | $181,702 | $237,154 | |||||||||
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 September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||||
| Reconciliation of net income to Adjusted EBITDA | ||||||||||||||||||||||||||
| Net income | $ | 8,061 | $ | 4,509 | $ | 14,348 | $ | 9,370 | ||||||||||||||||||
| Interest expense | 77 | 152 | 879 | 499 | ||||||||||||||||||||||
| Interest income | (1,427) | (2,139) | (4,702) | (5,691) | ||||||||||||||||||||||
| Provision for income taxes | 6,802 | 3,869 | 16,480 | 9,078 | ||||||||||||||||||||||
| Depreciation and amortization | 10,872 | 11,373 | 33,283 | 33,118 | ||||||||||||||||||||||
| Other expense (income), net | 31 | 102 | (47) | (897) | ||||||||||||||||||||||
| Stock-based compensation | 18,999 | 28,369 | 63,909 | 88,763 | ||||||||||||||||||||||
Transaction-related expenses(1) | 863 | — | 1,467 | 1,543 | ||||||||||||||||||||||
| Gain on sale of assets held for sale | — | — | — | (14,337) | ||||||||||||||||||||||
Restructuring costs(2) | 5,767 | 88 | 6,788 | 854 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 50,045 | $ | 46,323 | $ | 132,405 | $ | 122,300 | ||||||||||||||||||
| Net income margin | 4 | % | 2 | % | 2 | % | 2 | % | ||||||||||||||||||
| Adjusted EBITDA margin | 26 | % | 24 | % | 22 | % | 22 | % | ||||||||||||||||||
(1) For 2025, transaction-related expenses are primarily related to our acquisition of Formation Nation. For 2026, transaction-related expenses are related to the evaluation and pursuit of strategic transactions.
(2) For 2026 and 2025, restructuring costs are related to the reduction of our global 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 September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||||||||||
| Reconciliation of net income to Non-GAAP net income | ||||||||||||||||||||||||||
| Net income | $ | 8,061 | $ | 4,509 | $ | 14,348 | $ | 9,370 | ||||||||||||||||||
| Amortization of acquired intangible assets | 1,610 | 2,163 | 4,830 | 6,191 | ||||||||||||||||||||||
| Stock-based compensation | 18,999 | 28,369 | 63,909 | 88,763 | ||||||||||||||||||||||
Transaction-related expenses(1) | 863 | — | 1,467 | 1,543 | ||||||||||||||||||||||
Restructuring costs(2) | 5,767 | 88 | 6,788 | 854 | ||||||||||||||||||||||
| Gain on sale of assets held for sale | — | — | — | (14,337) | ||||||||||||||||||||||
Income tax effects(3) | (3,857) | (4,133) | (10,385) | (9,237) | ||||||||||||||||||||||
| Non-GAAP net income | 31,443 | 30,996 | 80,957 | 83,147 | ||||||||||||||||||||||
| Net income margin | 4 | % | 2 | % | 2 | % | 2 | % | ||||||||||||||||||
| Non-GAAP net income margin | 16 | % | 16 | % | 13 | % | 15 | % | ||||||||||||||||||
| Net income per share — basic | $ | 0.05 | $ | 0.03 | $ | 0.08 | $ | 0.05 | ||||||||||||||||||
| Net income per share — diluted | $ | 0.05 | $ | 0.02 | $ | 0.08 | $ | 0.05 | ||||||||||||||||||
| Non-GAAP net income per share — basic | $ | 0.19 | $ | 0.17 | $ | 0.47 | $ | 0.46 | ||||||||||||||||||
| Non-GAAP net income per share — diluted | $ | 0.19 | $ | 0.17 | $ | 0.46 | $ | 0.45 | ||||||||||||||||||
| Weighted-average shares used to compute net income per share — basic | 167,185 | 180,057 | 172,749 | 179,231 | ||||||||||||||||||||||
| Weighted-average shares used to compute net income per share — diluted | 168,942 | 186,731 | 175,323 | 185,329 | ||||||||||||||||||||||
| Weighted-average shares used to compute Non-GAAP net income per share — basic | 167,185 | 180,057 | 172,749 | 179,231 | ||||||||||||||||||||||
| Weighted-average shares used to compute Non-GAAP net income per share — diluted | 168,942 | 186,731 | 175,323 | 185,329 | ||||||||||||||||||||||
(1)For 2025, transaction-related expenses are primarily related to our acquisition of Formation Nation. For 2026, transaction-related expenses are related to the evaluation and pursuit of strategic transactions.
(2)For 2026 and 2025, restructuring costs are related to the reduction of our global 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 September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||||||||||
| Non-GAAP net income and Non-GAAP net income per share: | ||||||||||||||||||||||||||
| Non-GAAP net income | $ | 31,443 | $ | 30,996 | $ | 80,957 | $ | 83,147 | ||||||||||||||||||
| 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: | 167,185 | 180,057 | 172,749 | 179,231 | ||||||||||||||||||||||
| Effect of potentially dilutive securities: | ||||||||||||||||||||||||||
| Options to purchase common stock | 31 | 84 | 33 | 56 | ||||||||||||||||||||||
| RSUs and PSUs | 1,719 | 6,523 | 2,535 | 6,009 | ||||||||||||||||||||||
| Employee stock purchase plan | 7 | 67 | 6 | 33 | ||||||||||||||||||||||
| Weighted-average common stock used in computing Non-GAAP net income per share — diluted | 168,942 | 186,731 | 175,323 | 185,329 | ||||||||||||||||||||||
| Non-GAAP net income per share — basic | $ | 0.19 | $ | 0.17 | $ | 0.47 | $ | 0.46 | ||||||||||||||||||
| Non-GAAP net income per share — diluted | $ | 0.19 | $ | 0.17 | $ | 0.46 | $ | 0.45 | ||||||||||||||||||
Free Cash Flow
The following table presents a reconciliation of net cash provided by operating activities to free cash flow (unaudited):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow | ||||||||||||||||||||||||||
| Net cash provided by operating activities | 39,873 | 54,226 | 126,702 | 144,068 | ||||||||||||||||||||||
| Purchase of property and equipment | (5,754) | (7,236) | (17,919) | (24,144) | ||||||||||||||||||||||
| Free cash flow | $ | 34,119 | $ | 46,990 | $ | 108,783 | $ | 119,924 | ||||||||||||||||||