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LegalZoom
(NASDAQ:LZ)
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Rating:64Neutral
Price Target:
$8.00
▲(23.27% Upside)
Action:Reiterated
Date:06/05/26
The score is driven primarily by solid financial quality (strong cash flow and low leverage) and a constructive earnings call (raised guidance and improving efficiency). These positives are meaningfully offset by weak technical trend (trading below major moving averages) and a stretched valuation (P/E ~92.8 with no dividend support).
Positive Factors
Strong cash generation and conservative balance sheet
Sustained high operating and free cash flow with minimal debt provides durable financial flexibility. This supports reinvestment in product, partnerships, buybacks or cushioning seasonality without refinancing risk, strengthening capital allocation and survivability over the next several quarters.
Negative Factors
Thin profitability and margin pressure
Very low net margins and declining EBITDA margin limit the company's ability to absorb higher marketing or investment spend while still delivering returns. Persistent margin pressure reduces free cash flow upside and constrains reinvestment capacity and shareholder returns over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation and conservative balance sheet
Sustained high operating and free cash flow with minimal debt provides durable financial flexibility. This supports reinvestment in product, partnerships, buybacks or cushioning seasonality without refinancing risk, strengthening capital allocation and survivability over the next several quarters.
Read all positive factors
LegalZoom (LZ) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.24B
Dividend YieldN/A
Average Volume (3M)2.67M
Price to Earnings (P/E)113.5
Beta (1Y)1.24
Revenue Growth12.87%
EPS Growth-63.11%
CountryUS
Employees1,196
SectorIndustrials
Sector Strength72
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.07
Shares Outstanding171,647,770
10 Day Avg. Volume2,688,470
30 Day Avg. Volume2,674,524
Financial Highlights & Ratios
PEG Ratio-2.34
Price to Book (P/B)10.33
Price to Sales (P/S)2.35
P/FCF Ratio12.00
Enterprise Value/Market Cap0.63
Enterprise Value/Revenue1.01
Enterprise Value/Gross Profit1.53
Enterprise Value/Ebitda10.50
Forecast
1Y Price Target
$7.33Price Target Upside12.99% Upside
Rating ConsensusHold
Number of Analyst Covering7
EPS Forecast (FY)0.74
Revenue Forecast (FY)$821.84M
LegalZoom Business Overview & Revenue Model
Company Description
LegalZoom.com, Inc. offers a digital platform that provides legal and regulatory services across the United States. This web-based portal is designed to support both individuals and small businesses, offering a broad spectrum of solutions. Its com...
How the Company Makes Money
LegalZoom primarily generates revenue by charging customers for (1) one-time transactions and (2) ongoing subscriptions related to legal and compliance needs. A key stream is fees for business formation and other legal-document-related offerings, ...
LegalZoom Earnings Call Summary
Earnings Call Date:May 06, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 06, 2026
Earnings Call Sentiment Positive
The call conveyed solid top‑line growth, improved profitability and clear progress on strategic initiatives (subscription ARPU expansion, partnerships, AI efficiencies). Management raised full‑year guidance and demonstrated operating leverage from AI, while noting deliberate, front‑loaded marketing spend, ongoing product optimization (concierge) and seasonal transaction variability. Overall the positives (revenue beats, raised outlook, efficiency gains and partnership momentum) outweigh the near‑term headwinds (higher S&M spend, cash use for buybacks, seasonality and early‑stage AI partner contributions).Positive Updates
Top-line Growth and Upgraded Full‑Year Guidance
Total revenue of $207 million, up 13% year‑over‑year and ahead of expectations; full‑year 2026 revenue guidance raised to $810–$830 million (≈8% YoY growth at midpoint) and adjusted EBITDA guidance to $190–$200 million (≈13% YoY growth at midpoint).
Negative Updates
Significantly Higher Sales & Marketing Spend
Sales and marketing spend was $72 million (35% of revenue), up 29% YoY; customer acquisition marketing increased 25% and non‑CAM S&M rose ~45%, reflecting front‑loaded investments during peak formation seasonality and partner onboarding costs.
Read all updates
Q1-2026 Updates
Positive
Negative
Top-line Growth and Upgraded Full‑Year Guidance
Total revenue of $207 million, up 13% year‑over‑year and ahead of expectations; full‑year 2026 revenue guidance raised to $810–$830 million (≈8% YoY growth at midpoint) and adjusted EBITDA guidance to $190–$200 million (≈13% YoY growth at midpoint).
Read all positive updates
Company Guidance
LegalZoom raised full‑year 2026 revenue guidance to $810–$830 million (about +8% year‑over‑year at the midpoint) and expects adjusted EBITDA of $190–$200 million (about +13% YoY at the midpoint); for Q2 it guides revenue of $203–$207 million (≈+6% at the midpoint) and adjusted EBITDA of $40–$42 million, and says EBITDA should build through the year driven by improved gross margin, disciplined cost management and AI efficiencies realized in the back half. For context, Q1 results were $207 million revenue (+13% YoY) with adjusted EBITDA of $36 million (18% margin), subscription revenue of $130 million (+12%), ~1.92 million subscription units, transaction revenue of $77 million (+15%), AOV $205 (+5%), 375k transaction units (including 142k formations, +8%), deferred revenue up $20 million sequentially, free cash flow $41 million, $183 million cash, and 5.3 million shares repurchased for $43 million (≈$126 million remaining authorization).LegalZoom Financial Statement Overview
Summary
Income Statement
68
Positive
Balance Sheet
79
Positive
Cash Flow
74
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 779.71M | 756.04M | 681.88M | 660.73M | 619.98M | 575.08M |
| Gross Profit | 513.79M | 498.08M | 441.79M | 421.46M | 408.88M | 385.72M |
| EBITDA | 75.03M | 81.14M | 80.59M | 60.06M | -23.62M | -74.88M |
| Net Income | 11.40M | 15.43M | 29.96M | 13.95M | -48.73M | -108.66M |
Balance Sheet | ||||||
| Total Assets | 491.86M | 530.92M | 373.88M | 447.82M | 405.39M | 431.01M |
| Cash, Cash Equivalents and Short-Term Investments | 183.15M | 203.10M | 142.06M | 225.72M | 189.08M | 239.30M |
| Total Debt | 15.22M | 24.39M | 7.88M | 9.02M | 11.28M | 0.00 |
| Total Liabilities | 344.95M | 359.03M | 280.63M | 278.98M | 263.02M | 233.46M |
| Stockholders Equity | 146.91M | 171.88M | 93.26M | 168.83M | 142.38M | 197.55M |
Cash Flow | ||||||
| Free Cash Flow | 147.57M | 147.92M | 99.94M | 92.72M | 51.74M | 42.41M |
| Operating Cash Flow | 174.78M | 178.20M | 135.64M | 124.31M | 73.84M | 54.15M |
| Investing Cash Flow | -25.93M | -40.08M | -35.70M | -31.55M | -30.62M | -77.67M |
| Financing Cash Flow | -175.71M | -77.26M | -183.28M | -56.15M | -93.34M | 123.36M |
LegalZoom Technical Analysis
Positive
6.49
Price Trends
6.25
Positive
6.28
Positive
7.96
Negative
Market Momentum
0.32
Negative
70.68
Negative
86.90
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LZ, the sentiment is Positive. The current price of 6.49 is above the 20-day moving average (MA) of 6.27, above the 50-day MA of 6.25, and below the 200-day MA of 7.96, indicating a neutral trend. The MACD of 0.32 indicates Negative momentum. The RSI at 70.68 is Negative, neither overbought nor oversold. The STOCH value of 86.90 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LZ.
LegalZoom Risk Analysis
LegalZoom disclosed 40 risk factors in its most recent earnings report. LegalZoom reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
LegalZoom Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $2.98B | 8.41 | 21.75% | 1.38% | -1.44% | 33.09% | |
71 Outperform | $2.03B | 14.88 | 8.32% | ― | 28.34% | 67.93% | |
69 Neutral | $3.35B | 397.15 | 0.66% | ― | 53.53% | ― | |
67 Neutral | $2.61B | 17.09 | 8.94% | 2.20% | 6.53% | 107.41% | |
67 Neutral | $4.72B | 41.05 | 6.24% | 0.71% | 1.41% | -22.01% | |
64 Neutral | $1.24B | 113.46 | 6.38% | ― | 12.87% | -63.11% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
LZ
LegalZoom
7.25
-1.68
-18.81%
ABM
ABM Industries
44.60
-3.60
-7.48%
CBZ
CBIZ
37.79
-35.02
-48.10%
MMS
Maximus
56.63
-14.50
-20.38%
UNF
UniFirst
271.78
94.89
53.64%
FA
First Advantage
19.54
2.36
13.74%
LegalZoom Corporate Events
Executive/Board ChangesShareholder Meetings
LegalZoom Shareholders Approve Board Appointment and Governance Matters
Positive
Jun 4, 2026
At LegalZoom.com, Inc.’s 2026 annual meeting of stockholders held on June 3, 2026, shareholders elected Sivan Whiteley as a Class II director for a three-year term, solidifying board continuity and governance stability for the legal services...
Business Operations and StrategyStock BuybackFinancial Disclosures
LegalZoom Delivers Strong Q1 Growth and Raises Outlook
Positive
May 6, 2026
On May 6, 2026, LegalZoom reported first-quarter 2026 results that exceeded its own expectations, with revenue rising 13% year over year to $206.8 million, driven by higher-value subscriptions, enhanced compliance products and a 10% increase in tr...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.