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LegalZoom.com, Inc. (NASDAQ:LZ), a legal technology company with a market capitalization of $1.61 billion and impressive gross profit margins of 65.5%, announced Monday that it entered into an amendment to its revolving credit facility, according to a statement based on a recent SEC filing. According to InvestingPro data, the company maintains a strong financial position, holding more cash than debt on its balance sheet.
Under the amended agreement, the company’s total revolving loan commitments decreased from $150 million to $100 million. The amendment also extends the maturity date of the revolving loan commitments from July 2, 2026, to July 14, 2030. The provisions allowing up to $20 million for letters of credit and up to $10 million in same-day swingline loans remain unchanged.
Interest on U.S. dollar borrowings under the facility will continue to be calculated at either the Secured Overnight Financing Rate (Term SOFR) plus a margin between 2.00% and 1.25%, or a margin between 1.00% and 0.25% added to the highest of the administrative agent’s prime rate, the Federal Funds rate plus 0.50%, or one-month Term SOFR plus 1%. The amendment introduces an additional 0.25% reduction in interest rate margins if the company achieves a total net first lien leverage ratio of 1.00 to 1.00.
The commitment fee, initially set at 0.35%, remains subject to a reduction of 0.10% if the total net first lien leverage ratio does not exceed 3.50 to 1.00, with a further reduction of 0.05% if the ratio reaches 1.00 to 1.00. The amendment also removes the 0.10% credit spread adjustment to the Term SOFR benchmark for all available interest periods.
Other material terms of the revolving credit facility remain unchanged. As of the amendment date, LegalZoom reported no outstanding borrowings or letters of credit under the facility and confirmed compliance with all financial covenants.
This information is based on a press release statement included in LegalZoom’s recent SEC filing.
In other recent news, LegalZoom.com Inc. reported its first-quarter 2025 earnings, achieving an earnings per share of $0.13 and exceeding revenue expectations with $183.1 million, marking a 5% year-over-year increase. Subscription revenue, a significant focus for the company, grew by 8%, reinforcing a shift towards recurring revenue streams. LegalZoom has reaffirmed its full-year revenue growth target of approximately 5%, with projections for double-digit subscription revenue growth by the fourth quarter of 2025. JPMorgan has expressed a positive outlook on LegalZoom’s financial performance, increasing its price target to $12.00 while maintaining an Overweight rating, citing the company’s potential to outperform market expectations for revenue and earnings.
Meanwhile, JMP Securities has maintained its Market Perform rating for LegalZoom, noting the company’s strong brand position but highlighting ongoing strategic challenges. The firm pointed out LegalZoom’s efforts to focus on high-value buyers and expressed concerns over the reversal of its freemium strategy, which could pressure the company to differentiate its product offerings amid robust competition. LegalZoom’s integration of Formation Nation has contributed approximately $8.6 million in revenue for the first quarter, reflecting the company’s strategic growth initiatives. The company continues to focus on quality customer acquisition and strategic partnerships, aiming to leverage new technologies to enhance customer engagement.
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