LegalZoom.com (NASDAQ:LZ) Trading Down 5.8% Following Weak Earnings

LegalZoom.com, Inc. (NASDAQ:LZ) shares traded down 5.8% on Friday after the company announced weaker than expected quarterly earnings. The stock traded as low as $6.57 and last traded at $6.6430. 1,976,159 shares were traded during mid-day trading, a decline of 48% from the average session volume of 3,818,944 shares. The stock had previously closed at $7.05.

The company reported $0.17 earnings per share for the quarter, missing the consensus estimate of $0.18 by ($0.01). LegalZoom.com had a net margin of 3.05% and a return on equity of 9.91%. The company had revenue of $190.27 million for the quarter, compared to analysts’ expectations of $184.85 million. During the same period in the previous year, the firm earned $0.19 earnings per share. The firm’s revenue for the quarter was up 17.7% on a year-over-year basis.

LegalZoom.com announced that its Board of Directors has initiated a share buyback plan on Thursday, February 19th that authorizes the company to buyback $100.00 million in shares. This buyback authorization authorizes the company to purchase up to 8.1% of its shares through open market purchases. Shares buyback plans are typically a sign that the company’s management believes its shares are undervalued.

LegalZoom.com News Summary

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

• Positive Sentiment: Q4 and full‑year results showed revenue and cash flow strength: Q4 revenue beat consensus ($190.3M vs. $184.9M), full‑year revenue +11% and record operating cash flow and free cash flow; company reports Adjusted EBITDA exceeded outlook and ended the year with $203.1M cash and no debt. GlobeNewswire: Press Release
• Positive Sentiment: Board authorized a $100 million share repurchase (up to ~8.1% of shares), signaling management views the stock as undervalued and returning capital to shareholders. RTT News: Buyback
• Positive Sentiment: Revenue guidance for FY‑2026 ($805M–$825M) is at or slightly above consensus; Q1 revenue guide ($200M–$203M) is roughly in line — supports continued top‑line growth expectations. (See company release above.)
• Neutral Sentiment: Results were mixed: EPS missed by $0.01 (reported $0.17 vs. $0.18 consensus) even as revenue grew strongly year‑over‑year — margin/earnings leverage remains a watch item. MarketBeat: Earnings
• Neutral Sentiment: Management commentary (earnings call transcript) will be important for clarity on margin drivers, customer mix (upmarket shift) and cadence of subscription growth. Seeking Alpha: Transcript
• Neutral Sentiment: Reported short interest data appears anomalous/insignificant in the filings today and is not presenting a meaningful days‑to‑cover signal.
• Negative Sentiment: JPMorgan has reduced its price target and issued a more cautious outlook on LZ, citing concerns that temper upside expectations — that analyst tone likely pressured the shares. AmericanBankingNews: JPMorgan Pessimistic Forecast (Earlier JPMorgan note lowering PT from $14 to $11 was reported as well.) Benzinga: PT Cut
• Negative Sentiment: Insider selling: CFO Noel Watson sold 15,000 shares at about $6.96. While not large relative to his holdings, insider sales can create near‑term downward pressure. SEC Form 4

Wall Street Analysts Forecast Growth

Several equities research analysts recently commented on the stock. Zacks Research cut shares of LegalZoom.com from a “hold” rating to a “strong sell” rating in a research report on Monday, January 19th. JPMorgan Chase & Co. reduced their price objective on LegalZoom.com from $14.00 to $11.00 and set an “overweight” rating on the stock in a research report on Wednesday. Citigroup lowered their price target on shares of LegalZoom.com from $12.00 to $10.50 and set a “neutral” rating on the stock in a research report on Friday, November 21st. Morgan Stanley increased their price target on shares of LegalZoom.com from $8.50 to $9.00 and gave the company an “underweight” rating in a research note on Thursday, November 13th. Finally, Wall Street Zen lowered LegalZoom.com from a “strong-buy” rating to a “buy” rating in a research report on Saturday, November 1st. Three analysts have rated the stock with a Buy rating, four have issued a Hold rating and two have assigned a Sell rating to the company’s stock. According to data from MarketBeat, the stock presently has a consensus rating of “Hold” and a consensus price target of $10.90.

Insider Transactions at LegalZoom.com

In other news, CFO Noel Bertram Watson sold 15,000 shares of LegalZoom.com stock in a transaction dated Wednesday, February 18th. The stock was sold at an average price of $6.96, for a total value of $104,400.00. Following the sale, the chief financial officer directly owned 1,480,860 shares of the company’s stock, valued at approximately $10,306,785.60. The trade was a 1.00% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which can be accessed through this hyperlink. Corporate insiders own 5.90% of the company’s stock.

Institutional Investors Weigh In On LegalZoom.com

Several institutional investors and hedge funds have recently added to or reduced their stakes in LZ. Exchange Traded Concepts LLC acquired a new stake in shares of LegalZoom.com in the third quarter valued at $34,000. Parkside Financial Bank & Trust purchased a new position in LegalZoom.com during the 3rd quarter worth $40,000. Clearstead Advisors LLC increased its holdings in shares of LegalZoom.com by 58.5% in the third quarter. Clearstead Advisors LLC now owns 3,906 shares of the company’s stock valued at $41,000 after purchasing an additional 1,441 shares during the period. Osaic Holdings Inc. raised its stake in shares of LegalZoom.com by 477.3% during the 2nd quarter. Osaic Holdings Inc. now owns 4,555 shares of the company’s stock worth $41,000 after buying an additional 3,766 shares in the last quarter. Finally, EverSource Wealth Advisors LLC boosted its stake in shares of LegalZoom.com by 976.4% in the second quarter. EverSource Wealth Advisors LLC now owns 4,564 shares of the company’s stock valued at $41,000 after buying an additional 4,140 shares in the last quarter. Institutional investors and hedge funds own 81.99% of the company’s stock.

LegalZoom.com Stock Performance

The firm’s 50-day simple moving average is $9.06 and its 200 day simple moving average is $9.78. The company has a market capitalization of $1.18 billion, a PE ratio of 55.63, a price-to-earnings-growth ratio of 1.19 and a beta of 1.22.

About LegalZoom.com

LegalZoom.com, Inc (NASDAQ: LZ) operates as a leading online legal technology company that provides a broad range of legal and business services to individuals, families and small businesses. Through its digital platform, the company offers customized legal documents and filing services, including business formation (LLCs, corporations and nonprofits), estate planning (wills and trusts), intellectual property protection (trademarks and copyrights), and ongoing compliance support. LegalZoom also connects customers with independent attorneys for consultations on matters such as family law, immigration and real estate.

Founded in 2001 by entrepreneurs Brian Lee, Brian P.