DoD tests AI models that make it easy to switch from vendors like Palantir
On Thursday, Raymond (NSE:RYMD) James reaffirmed a Market Perform rating on shares of LegalZoom.com Inc (NASDAQ:LZ), currently valued at $1.53 billion. The research firm’s analyst, Josh Beck, highlighted LegalZoom’s strong performance, which was driven by growth in both transaction and subscription services. According to InvestingPro data, the company has demonstrated solid financial health with a 64.14% gross profit margin and 4.65% revenue growth in the last twelve months. LegalZoom’s recent financial report surpassed expectations with approximately 5% revenue growth projected for 2025, a figure that outpaces Wall Street’s forecasts. This optimistic outlook is partly attributed to the company’s acquisition of Formation Nation, valued between $70 million and $85 million.
Beck expressed confidence in LegalZoom’s strategic pricing adjustments, including a 25% increase in registered agent pricing to $249, and the company’s move towards a subscription model complemented by a well-defined segmentation strategy, such as premium LegalZoom branding. Despite these positive developments, Raymond James maintained its Market Perform rating due to the desire for clearer visibility into sustainable double-digit revenue growth. InvestingPro analysis suggests the stock is currently undervalued, with 13 additional ProTips available for subscribers looking to make informed investment decisions.
LegalZoom’s fourth-quarter revenue and EBITDA aligned with previously announced expectations, with transaction and subscription figures exceeding predictions. This was partly due to higher transaction units than anticipated and a temporary halt in customer acquisition for the Tax product, which impacted subscription revenues.
In response to the recent earnings report and the Formation Nation acquisition, Raymond James has adjusted its future estimates for LegalZoom. The firm increased its revenue projections by 5% for 2025 and 8% for 2026, reflecting the Formation Nation contribution and an expected acceleration in subscription revenue growth. This adjustment also takes into account a one-time 4 percentage point headwind in 2025 related to Tax and BOIR (back office infrastructure requirements). Correspondingly, the adjusted EBITDA estimates have been raised by 8% for 2025 and 11% for 2026, considering the anticipated revenue increase and disciplined management of headcount and customer acquisition management (CAM) spending. For a comprehensive analysis of LegalZoom’s valuation and growth prospects, including exclusive financial metrics and expert insights, access the detailed Pro Research Report available on InvestingPro.
In other recent news, LegalZoom.com Inc. reported its fourth-quarter 2024 financial results, surpassing earnings expectations with an EPS of $0.19 against the forecasted $0.16. The company’s revenue also exceeded projections, reaching $162 million compared to the expected $160.81 million, marking a 2% year-over-year increase. LegalZoom has set a revenue growth target of 5% for 2025, with first-quarter revenue guidance between $175 million and $179 million. The company also announced the acquisition of Formation Nation, a move expected to contribute positively to adjusted EBITDA in the first year. LegalZoom launched new AI-powered products and confirmed a price increase for its registered agent services, which rose from $199 to $249. Analysts at JPMC and Barclays (LON:BARC) inquired about the company’s pricing strategy and the integration of Formation Nation, highlighting the ongoing shifts toward a subscription-based model. The firm also plans to diversify its marketing spend, emphasizing its brand as a premium provider of online legal and compliance services.
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