Nasdaq:LZ
LEGALZOOM.COM, INC.
A leading provider of online legal services and business formation tools driving digital transformation in the legal sector.
Key Metrics
Investment Thesis
Bull Case
Investors might buy this stock given its dominant market position, substantial cash balance providing flexibility for acquisitions or share repurchases, and consistent revenue growth over the last three years. The shift toward recurring subscription models offers potential for improved earnings visibility as the business matures beyond one-time transaction fees.
Bear Case
Potential buyers should avoid this stock due to volatile net income that swung from a loss in 2022 to $15.4M in 2025, indicating instability in core profitability. High marketing expenses relative to revenue and a large retained earnings deficit signal underlying financial stress that could limit future expansion capabilities.
About LEGALZOOM.COM, INC.
LegalZoom.com Inc. provides online legal services including document preparation, business formation, and attorney referrals primarily serving the North American market. The company leverages technology to streamline access to legal solutions while maintaining a hybrid model that includes professional legal advice components.
Analysis
Management Discussion
The company reported a net profit of $15.4M in 2025 following strong cash flow from operations of $178.2M, though operating expenses including marketing reached $261.7M reflecting ongoing growth investments. While total assets grew to $511.5M with significant cash reserves of $203.1M, the net income decline from $30M in 2024 suggests margin pressure or one-time costs impacting profitability.
Industry Overview
The online legal services industry is experiencing rapid digitization as consumers increasingly seek affordable, accessible alternatives to traditional law firms for routine matters. This shift creates opportunities for scalable tech platforms while posing existential threats to legacy legal service models that have not adapted to remote assistance.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $620.0M | $660.7M | $681.9M | $756.0M |
| Cost of Revenue | $211.1M | $239.3M | $240.1M | $258.0M |
| Gross Profit | $408.9M | $421.5M | $441.8M | $498.1M |
| Operating Expenses | $450.6M | $400.4M | $406.2M | $473.1M |
| Operating Income | $-41.7M | $21.1M | $35.6M | $25.0M |
| Marketing | $263.9M | $210.9M | $207.7M | $261.7M |
| Stock-Based Comp | $80.5M | $66.0M | $71.5M | $113.7M |
| D&A | $18.2M | $20.2M | $29.8M | $36.3M |
| Amortization | $3.5M | $5.2M | $5.1M | $7.8M |
| Other OpEx | $186.7M | $189.5M | $198.5M | $211.4M |
| Non-Operating Income | $-5.9M | $10.4M | $7.5M | $7.5M |
| Interest Expense | — | $493.0K | — | — |
| Interest Income | — | — | $7.8M | $7.6M |
| Pre-Tax Income | $-47.7M | $31.5M | $43.1M | $32.4M |
| Income Tax | $1.1M | $17.5M | $13.1M | $17.0M |
| Continuing Ops | $-48.7M | $14.0M | $30.0M | $15.4M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $-48.7M | $14.0M | $30.0M | $15.4M |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $-48.7M | $14.0M | $30.0M | $15.4M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $241.7M | $275.3M | $191.2M | $241.9M |
| Cash & Equivalents | $189.1M | $225.7M | $142.1M | $203.1M |
| Accounts Receivable | $13.2M | $11.7M | $8.5M | $20.6M |
| Prepaid Expenses | $16.7M | $15.2M | $17.9M | $18.2M |
| Other Current Assets | $22.7M | $22.7M | $22.7M | $0 |
| Long-Term Assets | $163.7M | $172.5M | $182.7M | $269.6M |
| PP&E (Net) | $30.8M | — | — | — |
| Intangibles | $18.9M | $13.7M | $8.7M | $18.2M |
| Goodwill | $63.2M | $63.3M | $63.3M | $140.7M |
| Operating Leases | $11.1M | $8.5M | $7.2M | $13.4M |
| Other LT Assets | $39.6M | $86.9M | $103.5M | $97.3M |
| Total Assets | $405.4M | $447.8M | $373.9M | $511.5M |
| Current Liabilities | $249.2M | $264.0M | $265.6M | $318.5M |
| Accounts Payable | $25.3M | $32.3M | $31.1M | $27.2M |
| Current Leases | $2.3M | $2.1M | $1.9M | $4.3M |
| Deferred Revenue | $164.2M | $168.0M | $174.6M | $203.7M |
| Other Current Liab | $0 | $0 | $0 | $0 |
| Long-Term Liabilities | $13.8M | $15.0M | $15.0M | $21.1M |
| LT Operating Leases | $9.0M | $7.0M | $6.0M | $10.0M |
| Other LT Liab | $4.0M | $7.6M | $8.6M | $10.8M |
| Total Liabilities | $263.0M | $279.0M | $280.6M | $339.6M |
| Shareholders' Equity | $142.4M | $168.8M | $93.3M | $171.9M |
| Retained Earnings | $-891.9M | $-933.1M | $-1.07B | $-1.13B |
| AOCI | $1.5M | $232.0K | $861.0K | $181.0K |
| Total L&E | $405.4M | $447.8M | $373.9M | $511.5M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $-48.7M | $14.0M | $30.0M | $15.4M |
| Non-Cash Adjustments | $104.8M | $103.6M | $107.2M | $130.9M |
| Working Capital Changes | $17.7M | $6.7M | $-1.5M | $31.8M |
| Cash from Operations | $73.8M | $124.3M | $135.6M | $178.2M |
| Capital Expenditures | $22.1M | $31.6M | $35.7M | $30.3M |
| Cash from Investing | $-30.6M | $-31.6M | $-35.7M | $-40.1M |
| Share Buybacks | $95.1M | $54.9M | — | $80.5M |
| Cash from Financing | $-93.3M | $-56.1M | $-183.3M | $-77.3M |
| FX Effect | $-87.0K | $34.0K | $-313.0K | $172.0K |
| Net Change in Cash | $-50.2M | $36.6M | $-83.7M | $61.0M |
| Beginning Cash | $239.3M | $189.1M | $225.7M | $142.1M |
| Ending Cash | $189.1M | $225.7M | $142.1M | $203.1M |
Frequently Asked Questions
How does LEGALZOOM.COM, INC. make money?
The company's revenue streams are driven by direct-to-consumer document filing, subscription-based business formation platforms for startups, and attorney referral fees generated through its marketplace connecting consumers with licensed legal professionals.
What are the main risks for LZ?
Regulatory changes affecting the practice of law online, intense competition from low-cost document automation providers, potential economic downturns reducing consumer demand for business formation services, and reliance on third-party attorney networks for referral quality control.
What is LZ's competitive advantage?
LegalZoom benefits from a highly recognizable brand name built over two decades, a massive proprietary database of legal templates updated regularly, and significant network effects that lower customer acquisition costs compared to new entrants.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.