LegalZoom.com, Inc.

LegalZoom.com, Inc. operates an online legal-services platform for individuals and small businesses. It earns transaction revenue from services such as business formations and recurring revenue from registered-agent, compliance, legal-advice and other subscriptions. LegalZoom combines software with an independent attorney network and its own law firm. Jeff Stibel is chairman and chief executive. Its shares trade on the Nasdaq Global Select Market as LZ, and its financial year ends December 31.

Latest quarterly results

Adjusted EBITDA excludes interest expense and income, taxes, depreciation, amortization, stock-based compensation and specified other items. The current quarter's reconciliation includes $19.0 million of stock-based pay, $5.8 million of restructuring costs and $0.9 million of transaction-related expenses. Gross profit increased to $138.1 million from $127.9 million.

Forecast history

The November update holds the $800 million revenue midpoint while reducing each end of the adjusted EBITDA range by $10 million. Management attributes more than half of the reduction to channel diversification, about a quarter to higher paid-acquisition costs, and the remainder to expert services and seasonal sales capacity.

For the fourth quarter, management expects revenue of $190 million to $196 million and adjusted EBITDA of $48 million to $53 million. Third-quarter revenue and EBITDA both met the respective $192 million to $196 million and $49 million to $51 million ranges issued in August.

Subscription and customer-acquisition trends

Subscription revenue rose 11% in the third quarter while transaction revenue fell 14%. Business-formation orders declined to 110,000 from 126,000. Paid subscription units at September 30 declined to 1.854 million from 1.959 million a year earlier, with changes to formation bundles shifting the mix from accounting services toward legal advice.

Average revenue per subscription unit increased to $280 from $256. This annual measure divides the previous twelve months of subscription revenue by the average unit count at the beginning and end of that period. Pricing and higher-value legal-advice subscriptions supported the increase.

Management says Google search and advertising-policy changes have reduced unpaid traffic and increased reliance on paid search. Customer-acquisition marketing spending rose to $51.1 million from $44.2 million in the quarter. Total sales and marketing expense rose to $76.9 million from $67.8 million.

Cash flow, debt and shareholder returns

Third-quarter operating cash flow was $39.9 million, versus $54.2 million a year earlier. Capital spending was $5.8 million, versus $7.2 million. Company-defined free cash flow, operating cash less purchases of property and equipment including capitalized software, was $34.1 million, versus $47.0 million.

For the first nine months, operating cash flow was $126.7 million and free cash flow $108.8 million, compared with $144.1 million and $119.9 million a year earlier. Cash and equivalents were $181.7 million at September 30, versus $203.1 million at December 31, 2025. There was no borrowing debt. Operating lease liabilities of $14.1 million were separate.

An undrawn $100 million revolving facility was fully available and matures July 14, 2030. It is secured by substantially all relevant assets and carries a leverage test when specified borrowing usage is exceeded.

LegalZoom recorded $14.6 million of third-quarter program repurchases and $103.6 million in the first nine months, with $65.8 million of authorization remaining. Program repurchase cash payments were $103.2 million for the first nine months; another $14.8 million of cash related to shares surrendered for employee tax withholding.

Partnership, acquisition and restructuring developments

In September 2026, LegalZoom extended its agreement with Accounting Fulfillment Services, which operates as 1-800Accountant, through December 31, 2030. The arrangement includes minimum revenue commitments from the partner and marketing and customer-referral obligations for LegalZoom.

The Formation Nation acquisition was completed on February 10, 2025, for total consideration of $83.2 million, including cash, working-capital adjustments and shares. During 2026, LegalZoom paid about $13.1 million of deferred consideration and interest after the holdback period ended.

The workforce reduction announced in August covers about 13% of employees. LegalZoom recognized approximately $6 million of restructuring charges and related costs in the third quarter. Around $1.4 million remained accrued at September 30, with payment expected in the fourth quarter.