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LegalZoom Reports Second Quarter 2026 Financial Results

August 5, 2026 4:01 PM

MOUNTAIN VIEW, Calif., Aug. 05, 2026 (GLOBE NEWSWIRE) -- LegalZoom (Nasdaq: LZ), America’s #1 online legal services company, today announced results for its second quarter ended June 30, 2026.

"Since late 2024, we've deliberately repositioned LegalZoom around subscription relationships that pair AI with trusted human expertise," said Jeff Stibel, Chairman and Chief Executive Officer of LegalZoom. "That strategy is working. While demand for what we do is intact, discovery is moving. We have been actively building new customer acquisition channels for more than a year, and our outlook fully reflects today's environment, with no recovery in traditional search assumed. In the AI channels where discovery is heading, every visit is incremental. We've partnered with the leading AI companies, we have more brand references across AI platforms than any competitor, and we haven't assumed how quickly this scales. That's the upside we're positioned to capture."

"We're updating our revenue expectations based on recent changes in the customer acquisition environment, while our profitability outlook reflects the discipline of our operating model," said Noel Watson, Chief Operating Officer and Chief Financial Officer. "We continue to improve operating efficiency, expand margins and generate strong cash flow while investing behind the initiatives that support our long-term growth strategy."

Second Quarter 2026 Highlights

Key Business Metrics and Non-GAAP Financial Measures
(Unaudited, in thousands except AOV, ARPU and percentages)

Three Months Ended
June 30,
 % Growth Six Months Ended
June 30,		 % Growth
(Decline) (Decline)
2026
 2025 YOY 2026 2025 YOY
Total revenue$205,289 $192,509 7% $412,070 $375,619 10%
Transaction revenue$71,890 $72,611 (1)% $148,513 $139,464 6%
Subscription revenue$133,399 $119,898 11% $263,557 $236,155 12%
Gross profit$139,930 $125,111 12% $272,183 $241,661 13%
Gross margin 68% 65% 5% 66% 64% 3%
Net Income (loss)$5,183 $(266) n/m $6,287 $4,861 29%
Net income (loss) margin 3% —% n/m 2% 1% 100%
Net Income (loss) per share — basic:$0.03 $— n/m $0.04 $0.03 33%
Net Income (loss) per share — diluted:$0.03 $— n/m $0.04 $0.03 33%
Net cash provided by operating activities$39,547 $39,139 1% $86,829 $89,842 (3)%
Non-GAAP Financial Measures
Non GAAP net income$27,444 $28,329 (3)% $49,515 $52,151 (5)%
Non GAAP net income per share — basic:$0.16 $0.16 —% $0.28 $0.29 (3)%
Non GAAP net income per share — diluted:$0.16 $0.15 7% $0.28 $0.29 (3)%
Adjusted EBITDA$45,898 $38,965 18% $82,360 $75,977 8%
Adjusted EBITDA margin 22% 20% 10% 20% 20% —%
Free cash flow$33,690 $31,609 7% $74,664 $72,934 2%
Key Business Metrics
Transaction units 281 278 1% 656 619 6%
Business formations 125 131 (5)% 267 262 2%
Average order value (AOV)$256 $262 (2)% $227 $225 1%
Subscription units at period end 1,892 1,955 (3)% 1,892 1,955 (3)%
Average revenue per subscription unit (ARPU) at period end$270 $256 5% $270 $256 5%
Certain percentages may not recalculate due to rounding.

Financial Guidance and Outlook
LegalZoom is updating its revenue outlook and Adjusted EBITDA outlook for the full year ending December 31, 2026 as follows:

For the third quarter ending September 30, 2026 LegalZoom expects:

Webcast and Conference Call Information
A webcast and conference call to discuss second quarter 2026 results is scheduled for today, August 5, 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.

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 in our 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 March 31, 2026 filed with the Securities and Exchange Commission (the “SEC”) on May 6, 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 (loss) 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 (loss) adjusted to exclude interest expense, interest income, provision for (benefit from) 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 (loss), which include that Adjusted EBITDA:

We define Non-GAAP net income as net income (loss) 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 (loss) margin as net loss as a percentage of revenue. We define Non-GAAP net income (loss) margin as Non-GAAP net income as a percentage of revenue. We define Non-GAAP net income (loss) per share attributable to common stockholders as Non-GAAP net income (loss) 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.

About 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
[email protected]

LegalZoom.com, Inc.
Unaudited Condensed Consolidated Balance Sheets
(Inthousands, except par values)
June 30,
2026		 December 31,
2025
Assets
Current assets:
Cash and cash equivalents$167,227 $203,100
Accounts receivable, net of allowance 19,759 20,589
Prepaid expenses and other current assets 25,187 18,234
Total current assets 212,173 241,923
Property and equipment, net 53,540 58,045
Goodwill 140,705 140,705
Intangible assets, net 14,932 18,152
Operating lease right-of-use assets 14,150 13,414
Deferred income taxes 24,095 31,884
Other assets 6,764 7,399
Total assets$466,359 $511,522
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$35,875 $27,167
Accrued expenses and other current liabilities 56,055 83,361
Deferred revenue 221,180 203,653
Operating lease liabilities 5,003 4,338
Total current liabilities 318,113 318,519
Operating lease liabilities, non-current 10,133 10,025
Deferred revenue 234 277
Other liabilities 10,723 10,819
Total liabilities 339,203 339,640
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 100,000 shares authorized at June 30, 2026 and December 31, 2025, none issued or outstanding at June 30, 2026 and December 31, 2025 — —
Common stock, $0.001 par value; 1,000,000 shares authorized; 167,451 shares and 177,624 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively 169 179
Additional paid-in capital 1,344,473 1,305,936
Accumulated deficit (1,217,855) (1,134,414)
Accumulated other comprehensive income 369 181
Total stockholders’ equity 127,156 171,882
Total liabilities and stockholders’ equity$466,359 $511,522


LegalZoom.com, Inc.
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
Revenue $205,289 $192,509 $412,070 $375,619
Cost of revenue 65,359 67,398 139,887 133,958
Gross profit 139,930 125,111 272,183 241,661
Operating expenses:
Sales and marketing 78,849 69,580 157,517 130,958
Technology and development 20,047 21,635 39,652 42,957
General and administrative 30,384 36,996 61,600 76,217
Gain on sale of assets held for sale — — — (14,337)
Total operating expenses 129,280 128,211 258,769 235,795
Income (loss) from operations 10,650 (3,100) 13,414 5,866
Interest expense (126) (165) (802) (347)
Interest income 1,627 2,069 3,275 3,552
Other (expense) income, net (3) 652 78 999
Income (loss) before income taxes 12,148 (544) 15,965 10,070
Provision for (benefit from) income taxes 6,965 (278) 9,678 5,209
Net income (loss) $5,183 $(266) $6,287 $4,861
Net income (loss) attributable to common stockholders—basic and diluted
Net income (loss) per share — basic: $0.03 $— $0.04 $0.03
Net income (loss) per share — diluted: $0.03 $— $0.04 $0.03
Weighted-average shares used to compute net income (loss) per share:
Weighted-average shares used to compute net income (loss) per share — basic: 170,189 180,880 175,568 178,837
Weighted-average shares used to compute net income (loss) per share — diluted: 171,641 180,880 177,627 182,694


LegalZoom.com, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
Six Months Ended June 30,
2026 2025
Cash flows from operating activities
Net income$6,287 $4,861
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 22,411 21,745
Amortization of debt issuance costs 95 112
Amortization of right-of-use assets 1,887 1,484
Stock-based compensation 44,910 60,394
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 97
Deferred income taxes 7,825 (5,725)
Change in fair value of other equity security — (302)
Unrealized foreign exchange loss 248 31
Changes in operating assets and liabilities, net of effects of business combination:
Accounts receivable 828 (14,254)
Prepaid expenses and other current assets (6,979) 3,726
Other assets 522 83
Accounts payable 8,698 4,454
Accrued expenses and other liabilities (15,566) (697)
Operating lease liabilities (1,852) (1,056)
Income tax payable 15 239
Deferred revenue 17,485 29,635
Net cash provided by operating activities 86,829 89,842
Cash flows from investing activities
Acquisition, net of cash acquired — (48,468)
Purchase of property and equipment (12,165) (16,908)
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 (12,165) (26,818)
Cash flows from financing activities
Repayment of capital lease obligations — (2)
Payment of deferred consideration from business acquisition (12,514) —
Share repurchase costs (excise tax) — (1,264)
Repurchase of common stock (89,010) (20,419)
Shares surrendered for settlement of minimum statutory tax withholding (9,459) (11,172)
Proceeds from issuance of stock under employee stock plans 518 44,657
Net cash (used in) provided by financing activities (110,465) 11,800
Effect of exchange rate changes on cash and cash equivalents (72) 147
Net (decrease) increase in cash and cash equivalents (35,873) 74,971
Cash and cash equivalents, at beginning of the period 203,100 142,064
Cash and cash equivalents, at end of the period$167,227 $217,035

Adjusted EBITDA and Adjusted EBITDA Margin

The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for each of the periods indicated (unaudited):

Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
(in thousands, except percentages)
Reconciliation of net income (loss) to Adjusted EBITDA
Net income (loss) $5,183 $(266) $6,287 $4,861
Interest expense 126 165 802 347
Interest income (1,627) (2,069) (3,275) (3,552)
Provision for (benefit from) income taxes 6,965 (278) 9,678 5,209
Depreciation and amortization 11,274 11,339 22,411 21,745
Other expense (income), net 3 (652) (78) (999)
Stock-based compensation 23,596 30,638 44,910 60,394
Transaction-related expenses(1) — — 604 1,543
Gain on sale of assets held for sale — — — (14,337)
Restructuring costs(2) 378 88 1,021 766
Adjusted EBITDA $45,898 $38,965 $82,360 $75,977
Net income (loss) margin 3% —% 2% 1%
Adjusted EBITDA margin 22% 20% 20% 20%


(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 (Loss) Margin and diluted Non-GAAP Net Income Per Share

The following table presents a reconciliation of net income (loss) to Non-GAAP net income for each of the periods indicated (unaudited):

Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
(in thousands, except per share amounts)
Reconciliation of net income to Non-GAAP net income
Net income (loss) $5,183 $(266) $6,287 $4,861
Amortization of acquired intangible assets 1,610 2,381 3,220 4,028
Stock-based compensation 23,596 30,638 44,910 60,394
Transaction-related expenses(1) — — 604 1,543
Restructuring costs(2) 378 88 1,021 766
Gain on sale of assets held for sale — — — (14,337)
Income tax effects(3) (3,323) (4,512) (6,527) (5,104)
Non-GAAP net income 27,444 28,329 49,515 52,151
Net income (loss) margin 3% —% 2% 1%
Non-GAAP net income (loss) margin 13% 15% 12% 14%
Net income (loss) per share — basic $0.03 $— $0.04 $0.03
Net income (loss) per share — diluted $0.03 $— $0.04 $0.03
Non-GAAP net income per share — basic $0.16 $0.16 $0.28 $0.29
Non-GAAP net income per share — diluted $0.16 $0.15 $0.28 $0.29
Weighted-average shares used to compute net income (loss) per share — basic 170,189 180,880 175,568 178,837
Weighted-average shares used to compute net income (loss) per share — diluted 171,641 180,880 177,627 182,694
Weighted-average shares used to compute Non-GAAP net income per share — basic 170,189 180,880 175,568 178,837
Weighted-average shares used to compute Non-GAAP net income per share — diluted 171,641 184,482 177,627 182,694


(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 June 30, Six Months Ended June 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 $27,444 $28,329 $49,515 $52,151
Reconciliation of denominator for net income per share to Non-GAAP net income per share:
Weighted-average shares used to compute net income (loss) per share — basic: 170,189 180,880 175,568 178,837
Effect of potentially dilutive securities:
Options to purchase common stock 31 58 34 59
RSUs and PSUs 1,410 3,526 2,019 3,782
Employee stock purchase plan 11 18 6 16
Weighted-average common stock used in computing Non-GAAP net income per share — diluted 171,641 184,482 177,627 182,694
Non-GAAP net income per share — basic $0.16 $0.16 $0.28 $0.29
Non-GAAP net income per share — diluted $0.16 $0.15 $0.28 $0.29

Free Cash Flow

The following table presents a reconciliation of net cash provided by operating activities to free cash flow (unaudited):

Three Months Ended June 30, Six Months Ended June 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 39,547 39,139 86,829 89,842
Purchase of property and equipment (5,857) (7,530) (12,165) (16,908)
Free cash flow $33,690 $31,609 $74,664 $72,934



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Source: LegalZoom.com, Inc.

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