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LegalZoom shares soar as revenue beats and guidance raised

Published 05/11/2025, 22:54
LegalZoom shares soar as revenue beats and guidance raised
LZ
-0.53%

Investing.com -- LegalZoom.com, Inc. (NASDAQ:LZ) reported third-quarter revenue that exceeded analyst expectations and raised its full-year outlook, sending shares soaring 17.4% in after-hours trading on Wednesday.

The legal technology company posted revenue of $190.16 million for the quarter, surpassing the analyst consensus of $183.21 million and marking a 13% increase YoY. However, adjusted earnings per share came in at $0.17, missing analyst estimates of $0.19 by $0.02.

LegalZoom’s subscription revenue, which makes up the bulk of its business, grew 13% YoY to $125.4 million, driven primarily by growth in compliance offerings. Transaction revenue increased 12% to $64.8 million, with business formations up 12% compared to the same period last year.

"Our results further validate the strategic shift we made in our business," said Jeff Stibel, Chairman and Chief Executive Officer of LegalZoom. "We are more energized than ever to build on our momentum—expanding our focus beyond business formation to unlock new opportunities with the roughly 36 million U.S. existing small businesses."

The company raised its full-year 2025 revenue guidance to between $748 million and $752 million, above the consensus estimate of $735.7 million. For the fourth quarter, LegalZoom expects revenue between $182 million and $186 million, also exceeding analyst expectations of $176.7 million.

Despite the revenue growth, adjusted EBITDA decreased slightly to $46.3 million from $47.1 million in the same period last year, with margins contracting from 28% to 24%. The company maintained its adjusted EBITDA margin outlook for the full year at approximately 23%.

Free cash flow more than doubled to $47 million compared to $22 million in the third quarter of 2024. LegalZoom ended the quarter with $237.2 million in cash and cash equivalents, up from $142.1 million at the end of 2024.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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