LegalZoom.com (NASDAQ:LZ) Posts Earnings Results, Beats Expectations By $0.01 EPS

by · The Markets Daily

LegalZoom.com (NASDAQ:LZ – Get Free Report) released its earnings results on Wednesday. The company reported $0.16 EPS for the quarter, beating the consensus estimate of $0.15 by $0.01, FiscalAI reports. LegalZoom.com had a return on equity of 11.53% and a net margin of 1.46%.The firm had revenue of $205.29 million during the quarter, compared to analyst estimates of $205.83 million. During the same period in the prior year, the firm posted $0.15 earnings per share. The business’s quarterly revenue was up 6.6% compared to the same quarter last year.

Here are the key takeaways from LegalZoom.com’s conference call:

  • Q2 revenue rose 7% to $205 million and adjusted EBITDA increased 18% to $46 million, exceeding the high end of guidance. Adjusted EBITDA margin expanded to 22%, while free cash flow reached $34 million.
  • Higher-value, human-in-the-loop offerings continued to gain traction: related subscription revenue grew approximately 20% year over year, represented 65% of subscription revenue, and legal-plan utilization increased more than 35%. Subscription revenue rose 11%, supported by pricing, stable retention, and greater adoption of legal, compliance, and expert services.
  • LegalZoom is diversifying customer acquisition beyond Google Search. Partnership orders increased to 11% of total orders from 4% a year ago, while traffic from AI platforms grew more than 250% sequentially and reached roughly 3% of LLC formation traffic in June.
  • Google’s shift toward AI-generated search answers reduced informational-search clicks, increased paid-search costs, and contributed to a 5% decline in business formations and a 1% decline in transaction revenue. Management expects this pressure to persist through year-end, guiding Q3 revenue growth to roughly 2% and full-year revenue growth to approximately 6% at the midpoint.
  • The company announced a company-wide workforce reduction of approximately 13%, following a 5% reduction earlier in the year. The actions are expected to generate about $7 million in net 2026 savings and $14 million annually, but will result in roughly $6 million of restructuring charges, primarily in Q3.

LegalZoom.com Stock Down 3.6%

Shares of LegalZoom.com stock traded down $0.30 on Wednesday, hitting $8.10. 2,261,928 shares of the company traded hands, compared to its average volume of 2,379,321. LegalZoom.com has a 12-month low of $5.22 and a 12-month high of $12.40. The company has a 50-day moving average price of $6.76 and a 200 day moving average price of $6.75. The company has a market cap of $1.39 billion, a PE ratio of 135.02, a PEG ratio of 1.40 and a beta of 1.28.

Analyst Upgrades and Downgrades

Several research analysts recently commented on the stock. Citigroup cut their price target on shares of LegalZoom.com from $8.50 to $7.50 and set a “neutral” rating on the stock in a report on Friday, May 22nd. JPMorgan Chase & Co. reduced their price target on LegalZoom.com from $11.00 to $8.00 and set an “overweight” rating for the company in a report on Wednesday, June 24th. UBS Group decreased their price objective on shares of LegalZoom.com from $8.00 to $7.00 and set a “neutral” rating for the company in a report on Thursday, May 7th. Weiss Ratings reiterated a “sell (d+)” rating on shares of LegalZoom.com in a report on Thursday, July 2nd. Finally, Wall Street Zen upgraded shares of LegalZoom.com from a “hold” rating to a “buy” rating in a research note on Tuesday, July 28th. Three investment analysts have rated the stock with a Buy rating, three have given a Hold rating and three have assigned a Sell rating to the company’s stock. According to data from MarketBeat, the company has a consensus rating of “Hold” and a consensus price target of $8.25.

View Our Latest Stock Report on LegalZoom.com

Insider Buying and Selling

In other LegalZoom.com news, insider Nicole Miller sold 19,199 shares of the firm’s stock in a transaction dated Tuesday, May 19th. The stock was sold at an average price of $6.58, for a total transaction of $126,329.42. Following the transaction, the insider directly owned 1,119,222 shares in the company, valued at $7,364,480.76. This trade represents a 1.69% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available at the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CEO Jeffrey M. Stibel bought 125,000 shares of the business’s stock in a transaction on Monday, May 11th. The shares were purchased at an average cost of $6.15 per share, with a total value of $768,750.00. Following the transaction, the chief executive officer owned 2,955,609 shares in the company, valued at approximately $18,176,995.35. The trade was a 4.42% increase in their ownership of the stock. The disclosure for this purchase is available in the SEC filing. 7.40% of the stock is currently owned by corporate insiders.

Institutional Trading of LegalZoom.com

Large investors have recently added to or reduced their stakes in the company. Arrowstreet Capital Limited Partnership boosted its stake in shares of LegalZoom.com by 20.8% in the 3rd quarter. Arrowstreet Capital Limited Partnership now owns 4,408,170 shares of the company’s stock valued at $45,757,000 after purchasing an additional 758,367 shares during the last quarter. Goldman Sachs Group Inc. raised its holdings in LegalZoom.com by 165.3% during the fourth quarter. Goldman Sachs Group Inc. now owns 3,730,487 shares of the company’s stock worth $37,044,000 after acquiring an additional 2,324,481 shares in the last quarter. Boston Partners boosted its holdings in shares of LegalZoom.com by 81.0% in the 4th quarter. Boston Partners now owns 3,623,111 shares of the company’s stock valued at $36,054,000 after buying an additional 1,621,125 shares during the last quarter. Franklin Resources Inc. increased its holdings in LegalZoom.com by 2.8% during the third quarter. Franklin Resources Inc. now owns 3,327,296 shares of the company’s stock worth $34,537,000 after buying an additional 90,599 shares during the last quarter. Finally, Dimensional Fund Advisors LP increased its holdings in LegalZoom.com by 12.7% during the fourth quarter. Dimensional Fund Advisors LP now owns 3,021,764 shares of the company’s stock worth $30,007,000 after buying an additional 340,780 shares during the last quarter. 81.99% of the stock is owned by institutional investors.

Key LegalZoom.com News

Here are the key news stories impacting LegalZoom.com this week:

  • Positive Sentiment: LegalZoom reported second-quarter adjusted earnings of $0.16 per share, topping the $0.15 consensus estimate and matching the prior-year result. Revenue rose 6.6% year over year to $205.3 million, broadly in line with expectations. LegalZoom Surpasses Q2 Earnings Estimates
  • Positive Sentiment: Subscription revenue increased 11% to $133.4 million, marking the fifth consecutive quarter of double-digit growth. The company attributed the performance to human-in-the-loop offerings and pricing initiatives. LegalZoom Reports Second Quarter 2026 Financial Results
  • Positive Sentiment: Profitability and shareholder returns were also supportive: adjusted EBITDA was $45.9 million, ahead of the high end of guidance, while LegalZoom generated $33.7 million in free cash flow and repurchased $45.5 million of stock. It ended the quarter with $167.2 million in cash and no debt.
  • Neutral Sentiment: LegalZoom is expanding its distribution through Microsoft 365 Copilot, potentially improving access to its legal-services offerings, although the immediate financial contribution was not disclosed. LegalZoom Brings Legal Services to Microsoft 365 Copilot
  • Negative Sentiment: Full-year 2026 revenue guidance was reduced to $795 million-$805 million, well below the approximately $822 million analyst consensus. Third-quarter revenue guidance of $192 million-$196 million also trails the $204.4 million consensus, signaling weaker near-term demand and overshadowing the quarterly earnings beat. LegalZoom Updates 2026 Guidance

About LegalZoom.com

(Get Free Report)

LegalZoom.com, Inc (NASDAQ: LZ) operates as a leading online legal technology company that provides a broad range of legal and business services to individuals, families and small businesses. Through its digital platform, the company offers customized legal documents and filing services, including business formation (LLCs, corporations and nonprofits), estate planning (wills and trusts), intellectual property protection (trademarks and copyrights), and ongoing compliance support. LegalZoom also connects customers with independent attorneys for consultations on matters such as family law, immigration and real estate.

Founded in 2001 by entrepreneurs Brian Lee, Brian P.

Featured Stories