LegalZoom.com (NASDAQ:LZ) Issues Earnings Results

LegalZoom.com (NASDAQ:LZ) announced its quarterly earnings results on Wednesday. The company reported $0.19 EPS for the quarter, meeting the consensus estimate of $0.19, FiscalAI reports. LegalZoom.com had a return on equity of 15.83% and a net margin of 2.13%. The business had revenue of $195.15 million for the quarter, compared to analyst estimates of $193.83 million. During the same quarter in the prior year, the company posted $0.17 EPS. The company’s quarterly revenue was up 2.6% on a year-over-year basis.

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

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

LegalZoom.com Stock Performance

Shares of LZ traded down $0.97 during midday trading on Thursday, hitting $5.93. 3,720,279 shares of the stock were exchanged, compared to its average volume of 2,989,654. LegalZoom.com has a 52-week low of $5.10 and a 52-week high of $12.40. The stock has a fifty day simple moving average of $6.16 and a 200 day simple moving average of $6.53. The firm has a market cap of $1.01 billion, a P/E ratio of 65.94, a P/E/G ratio of 1.26 and a beta of 1.16.

More LegalZoom.com News

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

• Positive Sentiment: Third-quarter revenue was $195.15 million, above the $193.83 million estimate and up 2.6% year over year. EPS of $0.19 matched the consensus cited by MarketBeat and rose from $0.17 a year earlier. MarketBeat earnings report
• Neutral Sentiment: LegalZoom has a reported consensus analyst price target of $7.30, above the roughly $5.84 price cited in the news, though the target is not a guarantee of a recovery. Consensus target price article
• Negative Sentiment: Bank of America cut its rating on LZ from “buy” to “underperform,” a bearish analyst call that may weigh on investor sentiment. Bank of America ratings
• Negative Sentiment: Despite the revenue beat, reports cited search-related pressure and targeted investments as challenges; LegalZoom forecast FY2026 adjusted EBITDA of $180 million–$185 million. Its earnings release was followed by a reported 20.3% share-price drop, suggesting investors focused on concerns beyond the headline sales figure. FY2026 outlook and search pressure

Insiders Place Their Bets

In related news, insider Nicole Miller sold 33,479 shares of the stock in a transaction dated Tuesday, August 18th. The stock was sold at an average price of $5.51, for a total transaction of $184,469.29. Following the transaction, the insider owned 943,453 shares of the company’s stock, valued at approximately $5,198,426.03. This represents a 3.43% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CFO Noel Watson sold 83,629 shares of LegalZoom.com stock in a transaction dated Friday, August 21st. The shares were sold at an average price of $5.83, for a total value of $487,557.07. Following the completion of the transaction, the chief financial officer directly owned 1,407,801 shares of the company’s stock, valued at approximately $8,207,479.83. This represents a 5.61% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. Insiders sold 577,475 shares of company stock valued at $3,375,197 over the last ninety days. Insiders own 7.40% of the company’s stock.

Wall Street Analysts Forecast Growth

A number of analysts recently issued reports on the company. JPMorgan Chase & Co. downgraded LegalZoom.com from an “overweight” rating to a “neutral” rating and cut their price objective for the stock from $8.00 to $7.00 in a research report on Thursday, August 6th. Wall Street Zen raised shares of LegalZoom.com from a “hold” rating to a “buy” rating in a research report on Saturday, September 26th. William Blair cut shares of LegalZoom.com from an “outperform” rating to a “market perform” rating in a research report on Thursday, August 6th. Weiss Ratings lowered shares of LegalZoom.com from a “hold (c-)” rating to a “sell (d+)” rating in a research note on Thursday, October 29th. Finally, Bank of America cut shares of LegalZoom.com from a “buy” rating to an “underperform” rating in a research report on Thursday. Five investment analysts have rated the stock with a Hold rating and four have assigned a Sell rating to the stock. According to MarketBeat, LegalZoom.com presently has an average rating of “Reduce” and a consensus target price of $7.30.

About LegalZoom.com

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

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