LegalZoom Sees Q1 Adjusted EBITDA of $34M-$36M
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 16 hours ago
0mins
Should l Buy LZ?
Sees Q1 adjusted EBITDA $34M-$36M. Noel Watson, LegalZoom's COO and CFO, added, "We delivered strong results in 2025 with continued subscription momentum, expanding margins, and record free cash flow generation. Building on that performance, we are guiding to approximately 8% revenue growth at the midpoint in 2026 reflecting solid organic growth and continued Adjusted EBITDA expansion from disciplined execution and a focus on higher-value services, all of which we believe will accelerate in future years. Underscoring our confidence in the business and our commitment to shareholder returns, our Board has approved a $100 million increase to our existing share repurchase authorization."
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Analyst Views on LZ
Wall Street analysts forecast LZ stock price to rise
7 Analyst Rating
4 Buy
2 Hold
1 Sell
Moderate Buy
Current: 6.970
Low
9.00
Averages
12.42
High
15.00
Current: 6.970
Low
9.00
Averages
12.42
High
15.00
About LZ
LegalZoom.com, Inc. provides an online platform for legal services, transforming how individuals and small businesses navigate the legal system. The Company offers the tools and guidance people need to confidently manage everything from business formation and compliance to estate planning and ongoing legal support. Its platform includes professional expertise and other products, both legal and non-legal, to meet the needs of small businesses. Its offerings include ongoing compliance, business licenses, accounting, virtual mailbox and e-signature solutions, trademark filings, and estate plans. Its transaction products for small businesses include business formation and intellectual property. Its transaction products for consumers include consumer, estate planning and other. Its compliance subscriptions provide assistance with state-mandated regulatory filings, such as corporate annual reports. The Company operates across 50 states and in over 3,000 counties in the United States.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
LegalZoom Q4 2025 Earnings Call Insights
- Significant Revenue Growth: LegalZoom reported full-year 2025 revenue of $756 million, an 11% increase exceeding initial expectations, indicating successful strategic integration of AI and human resources, with projected revenue for 2026 ranging from $805 million to $825 million, reflecting approximately 8% year-over-year growth.
- Strong Subscription Performance: Subscription revenue rose 13% to $131 million in 2025, with subscription units reaching 1.94 million, a 10% year-over-year increase, demonstrating the effectiveness of ongoing investments in high-value subscriptions and AI-driven services, enhancing customer loyalty.
- Operational Efficiency Improvement: The management completed a 5% headcount reduction to improve operating leverage while preserving investments in high-growth initiatives, with adjusted EBITDA expected between $190 million and $200 million for 2026, reflecting improved gross margins and effective cost management.
- Market Strategy Adjustment: LegalZoom plans to increase market share by expanding human-in-the-loop services and high-value subscriptions, with management emphasizing a continued focus on quality customer acquisition and operational discipline to support sustainable future growth.
See More
LegalZoom Q4 Earnings Report Analysis
- Earnings Performance: LegalZoom reported a Q4 non-GAAP EPS of $0.17, missing expectations by $0.01, while revenue reached $190.3 million, a 17.7% year-over-year increase, exceeding forecasts by $5.59 million, indicating resilience in revenue growth despite EPS shortfall.
- Financial Guidance: The company anticipates Q1 2026 revenue between $200 million and $203 million, reflecting a 10% year-over-year growth at the midpoint, showcasing confidence in ongoing growth initiatives, although timing shifts in marketing investments may impact short-term profitability.
- Full-Year Outlook: LegalZoom expects full-year 2026 revenue in the range of $805 million to $825 million, with an 8% year-over-year growth at the midpoint, while adjusted EBITDA is projected between $190 million and $200 million, reflecting a 13% year-over-year growth, highlighting improvements in cost management and gross margins.
- Market Reaction: Despite strong revenue growth, LegalZoom's shares fell by 3.12%, reflecting investor caution regarding profit expectations, which may affect the company's future market performance and investor confidence.
See More
LegalZoom Set to Announce Q4 Earnings on February 19
- Earnings Announcement Date: LegalZoom.com (LZ) is set to release its Q4 earnings on February 19 after market close, with consensus EPS estimate at $0.18, reflecting a 5.3% year-over-year decline, while revenue is expected to reach $184.85 million, indicating a 14.3% year-over-year growth, showcasing the company's potential for revenue expansion.
- Historical Performance Review: Over the past two years, LegalZoom has beaten EPS estimates 75% of the time and revenue estimates 88% of the time, indicating a level of stability and reliability in financial performance that could bolster investor confidence going forward.
- Expectation Revision Dynamics: In the last three months, EPS estimates have seen one upward revision and one downward revision, while revenue estimates have experienced one upward revision with no downward adjustments, reflecting a cautiously optimistic outlook from analysts regarding the company's future performance.
- Market Reaction: LegalZoom presented at Barclays' 23rd Annual Global Technology Conference, and despite a downturn in enterprise software stocks as analysts assess growth acceleration amid AI impacts, LegalZoom's performance remains in focus, potentially influencing its stock price trajectory.
See More
Software Stocks Under Pressure from AI Tool Launch
- Market Panic Intensifies: Following Anthropic's rollout of a legal automation tool, software and data service stocks faced pressure, with the S&P 500 Software & Services Index dropping 4% on Thursday and nearly 20% year-to-date, reflecting heightened market fears of AI-driven disruption.
- Shorting Trend Emerges: RBC BlueBay's CIO Mark Dowding noted that short interest in the software sector has reached a two-year high, with many private debt funds having as much as 30% exposure to software, potentially leading to further reverberations across capital markets.
- Traditional Lending Risks: Dowding emphasized the significant representation of software in traditional bank lending, as the bearish sentiment on software stocks has led many business development companies to trade at discounts of 20% to 30% of their net asset value, indicating market concerns about future stability.
- Dual Nature of AI Impact: Despite market fears regarding the disruptive potential of AI tools, a16z partner Anish Acharya stated that there is still much software to build, asserting that while AI can automate tasks, it cannot fully replace human jobs, highlighting the importance of personal relationships in customer support.
See More
LegalZoom CEO Highlights AI as a Chance for Growth Amid Claude's Stock Surge
- Investor Reaction: Investors are perceived to be overreacting to the launch of Anthropic's AI tool for legal services.
- LegalZoom's Stock Impact: LegalZoom.com experienced a nearly 20% drop in its stock price following the announcement of the new AI tool.
See More
Software Sector Faces AI Tool Shock
- Market Panic Intensifies: The release of new AI tools by Anthropic has triggered a sell-off in software-as-a-service and data provider stocks, with the S&P 500 Software & Services Index dropping over 4% on Thursday and down about 20% year-to-date, indicating market concerns over traditional software business models.
- Divergent Views on AI: While Nvidia CEO Jensen Huang and Arm Holdings CEO Rene Haas argue that AI will enhance existing software tools rather than replace them, there remains a split among analysts regarding the long-term impact of AI on the software industry, with some warning that AI could compress profit margins.
- Hedge Fund Shorting Strategy: As of Wednesday, approximately $24 billion in software stocks have been shorted by hedge funds, reflecting a pessimistic outlook on the future of the software sector, although some analysts describe this panic as
See More
LegalZoom Q4 2025 Earnings Call Insights
- Significant Revenue Growth: LegalZoom reported full-year 2025 revenue of $756 million, an 11% increase exceeding initial expectations, indicating successful strategic integration of AI and human resources, with projected revenue for 2026 ranging from $805 million to $825 million, reflecting approximately 8% year-over-year growth.
- Strong Subscription Performance: Subscription revenue rose 13% to $131 million in 2025, with subscription units reaching 1.94 million, a 10% year-over-year increase, demonstrating the effectiveness of ongoing investments in high-value subscriptions and AI-driven services, enhancing customer loyalty.
- Operational Efficiency Improvement: The management completed a 5% headcount reduction to improve operating leverage while preserving investments in high-growth initiatives, with adjusted EBITDA expected between $190 million and $200 million for 2026, reflecting improved gross margins and effective cost management.
- Market Strategy Adjustment: LegalZoom plans to increase market share by expanding human-in-the-loop services and high-value subscriptions, with management emphasizing a continued focus on quality customer acquisition and operational discipline to support sustainable future growth.
See More
LegalZoom Q4 Earnings Report Analysis
- Earnings Performance: LegalZoom reported a Q4 non-GAAP EPS of $0.17, missing expectations by $0.01, while revenue reached $190.3 million, a 17.7% year-over-year increase, exceeding forecasts by $5.59 million, indicating resilience in revenue growth despite EPS shortfall.
- Financial Guidance: The company anticipates Q1 2026 revenue between $200 million and $203 million, reflecting a 10% year-over-year growth at the midpoint, showcasing confidence in ongoing growth initiatives, although timing shifts in marketing investments may impact short-term profitability.
- Full-Year Outlook: LegalZoom expects full-year 2026 revenue in the range of $805 million to $825 million, with an 8% year-over-year growth at the midpoint, while adjusted EBITDA is projected between $190 million and $200 million, reflecting a 13% year-over-year growth, highlighting improvements in cost management and gross margins.
- Market Reaction: Despite strong revenue growth, LegalZoom's shares fell by 3.12%, reflecting investor caution regarding profit expectations, which may affect the company's future market performance and investor confidence.
See More
LegalZoom Set to Announce Q4 Earnings on February 19
- Earnings Announcement Date: LegalZoom.com (LZ) is set to release its Q4 earnings on February 19 after market close, with consensus EPS estimate at $0.18, reflecting a 5.3% year-over-year decline, while revenue is expected to reach $184.85 million, indicating a 14.3% year-over-year growth, showcasing the company's potential for revenue expansion.
- Historical Performance Review: Over the past two years, LegalZoom has beaten EPS estimates 75% of the time and revenue estimates 88% of the time, indicating a level of stability and reliability in financial performance that could bolster investor confidence going forward.
- Expectation Revision Dynamics: In the last three months, EPS estimates have seen one upward revision and one downward revision, while revenue estimates have experienced one upward revision with no downward adjustments, reflecting a cautiously optimistic outlook from analysts regarding the company's future performance.
- Market Reaction: LegalZoom presented at Barclays' 23rd Annual Global Technology Conference, and despite a downturn in enterprise software stocks as analysts assess growth acceleration amid AI impacts, LegalZoom's performance remains in focus, potentially influencing its stock price trajectory.
See More
Software Stocks Under Pressure from AI Tool Launch
- Market Panic Intensifies: Following Anthropic's rollout of a legal automation tool, software and data service stocks faced pressure, with the S&P 500 Software & Services Index dropping 4% on Thursday and nearly 20% year-to-date, reflecting heightened market fears of AI-driven disruption.
- Shorting Trend Emerges: RBC BlueBay's CIO Mark Dowding noted that short interest in the software sector has reached a two-year high, with many private debt funds having as much as 30% exposure to software, potentially leading to further reverberations across capital markets.
- Traditional Lending Risks: Dowding emphasized the significant representation of software in traditional bank lending, as the bearish sentiment on software stocks has led many business development companies to trade at discounts of 20% to 30% of their net asset value, indicating market concerns about future stability.
- Dual Nature of AI Impact: Despite market fears regarding the disruptive potential of AI tools, a16z partner Anish Acharya stated that there is still much software to build, asserting that while AI can automate tasks, it cannot fully replace human jobs, highlighting the importance of personal relationships in customer support.
See More
LegalZoom CEO Highlights AI as a Chance for Growth Amid Claude's Stock Surge
- Investor Reaction: Investors are perceived to be overreacting to the launch of Anthropic's AI tool for legal services.
- LegalZoom's Stock Impact: LegalZoom.com experienced a nearly 20% drop in its stock price following the announcement of the new AI tool.
See More
Software Sector Faces AI Tool Shock
- Market Panic Intensifies: The release of new AI tools by Anthropic has triggered a sell-off in software-as-a-service and data provider stocks, with the S&P 500 Software & Services Index dropping over 4% on Thursday and down about 20% year-to-date, indicating market concerns over traditional software business models.
- Divergent Views on AI: While Nvidia CEO Jensen Huang and Arm Holdings CEO Rene Haas argue that AI will enhance existing software tools rather than replace them, there remains a split among analysts regarding the long-term impact of AI on the software industry, with some warning that AI could compress profit margins.
- Hedge Fund Shorting Strategy: As of Wednesday, approximately $24 billion in software stocks have been shorted by hedge funds, reflecting a pessimistic outlook on the future of the software sector, although some analysts describe this panic as
See More
