LegalZoom Reports Third Quarter 2026 Financial Results

• Revenue of $195.1 million, up 3% year-over-year, above the midpoint of the Company’s guidance range
• Subscription revenue of $139.7 million, up 11% year-over-year, marking the sixth consecutive quarter of double digit-subscription revenue growth
• Net income of $8.1 million and net income margin of 4%, with net income margin increasing approximately 180 basis points year-over-year
• Adjusted EBITDA of $50.0 million and Adjusted EBITDA margin of 26%, at the midpoint of the Company’s guidance range, with Adjusted EBITDA margin increasing approximately 130 basis points year-over-year
• Completed $14.6 million of share repurchases in the quarter, with approximately $65.8 million remaining under the existing authorization as of September 30, 2026
• Ended the quarter with cash and cash equivalents of $181.7 million and delivered $39.9 million in cash from operating activities and $34.1 million in free cash flow with no debt outstanding as of September 30, 2026
• Reiterating the midpoint of full-year 2026 revenue outlook of approximately $800.0 million, or 6% year-over-year growth, and narrowing the range to $797.0–$803.0 million; updating Adjusted EBITDA outlook to a range of $180.0-$185.0 million, or Adjusted EBITDA margin of approximately 23% at the midpoint, reflecting a challenging customer acquisition environment and continued investment behind LegalZoom’s growth priorities and channel diversification
  

MOUNTAIN VIEW, Calif., Nov. 04, 2026 (GLOBE NEWSWIRE) -- LegalZoom (Nasdaq: LZ), America’s #1 online legal services company, today announced results for its third quarter ended September 30, 2026.

"Revenue from human-in-the-loop subscription services grew 17% year-over-year and now represents 49% of total revenue,” said Jeff Stibel, Chairman and Chief Executive Officer of LegalZoom. “These results give us confidence to accelerate our investment in bringing expert support into the customer relationship from the first purchase, pairing AI with accountable expertise to make our services more useful.”

“Subscription growth continues to offset customer acquisition pressure, supporting an unchanged $800 million midpoint for our full-year revenue outlook,” said Noel Watson, Chief Operating Officer and Chief Financial Officer. “Our updated Adjusted EBITDA outlook reflects the cost of that environment and our continued investment in channel diversification and the sales and service capabilities behind our higher-value offerings. With $181.7 million in cash and no debt, we have the financial capacity to fund these priorities.”

Third Quarter 2026 Highlights

• Revenue was $195.1 million for the quarter, up 3% year-over-year.
  • Transaction revenue of $55.5 million decreased 14% year-over-year.
  • Subscription revenue of $139.7 million grew 11% year-over-year.
• Net income was $8.1 million for the quarter, or 4% of revenue, compared to a net income of $4.5 million, or 2% of revenue, in the same period in 2025.
• Adjusted EBITDA was $50.0 million for the quarter, or 26% of revenue, compared to $46.3 million, or 24% of revenue, in the same period in 2025.
• Non-GAAP net income was $31.4 million for the quarter compared to $31.0 million in the same period in 2025.
• Cash and cash equivalents were $181.7 million as of September 30, 2026 compared to $203.1 million as of December 31, 2025.
• Cash flows provided by operating activities were $39.9 million for the quarter ended September 30, 2026 compared to $54.2 million in the same period in 2025.
• Free cash flow was $34.1 million for the quarter ended September 30, 2026 compared to $47.0 million in the same period in 2025.
• Basic and diluted net income per share was $0.05 for the quarter, compared to basic and diluted net income per share of $0.03 and $0.02, respectively, for the same period in 2025. Basic and diluted Non-GAAP net income per share was $0.19 for the quarter, compared to basic and diluted Non-GAAP net income per share of $0.17 for the same period in 2025.
  
  

Key Business Metrics and Non-GAAP Financial Measures
(Unaudited, in thousands except AOV, ARPU and percentages)

Financial Guidance and Outlook

For the full year ending December 31, 2026, LegalZoom is reiterating the midpoint of its revenue outlook and updating its Adjusted EBITDA outlook as follows:

• Revenue is expected to be in the range of $797 million to $803 million, or 6% year-over-year growth at the midpoint. This compares to the Company’s previous outlook in the range of $795 million to $805 million, also approximately 6% growth at the midpoint. LegalZoom’s outlook continues to reflect the scaling of its higher-value growth initiatives and ongoing momentum from its partner channel, partially offset by continued pressure in customer acquisition for the remainder of the year.
• Adjusted EBITDA is expected to be in the range of $180 million to $185 million, or approximately 6% year-over-year growth and a 23% margin at the midpoint. This compares to the Company’s previous Adjusted EBITDA outlook of $190 million to $195 million, or 12% year-over-year growth, and a 24% margin at the midpoint. Compared to the previous outlook, more than half of the change reflects continued investment in channel diversification, including partnerships, affiliates and AI channels, approximately one quarter reflects higher costs in paid customer acquisition channels, and the remainder reflects investment in higher-value expert services, as well as seasonal investment in sales capabilities ahead of the first quarter peak in business formations.

For the fourth quarter ending December 31, 2026 LegalZoom expects:

• Revenue in the range of $190 million to $196 million, or 1% year-over-year growth at the midpoint.
  
  
• Adjusted EBITDA in the range of $48 million to $53 million, a 1% year-over-year growth at the midpoint, and a 26% margin.
  

Webcast and Conference Call Information

A webcast and conference call to discuss third quarter 2026 results is scheduled for today, November 4, 2026, at 4:30 p.m. Eastern time/1:30 p.m. Pacific time. Those interested in participating in the conference call are invited to register Here.

A live audio webcast of the event will be available on the LegalZoom Investor Relations website: https://investors.legalzoom.com. An archived replay of the webcast also will be available shortly after the live event.

Forward-Looking Statements

This press release contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts contained in this press release may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this press release include, but are not limited to, statements regarding our quarterly and annual guidance and the drivers of such guidance.

The forward-looking statements in this press release are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including but not limited to the following: our dependence on business formations; our dependence on customers expanding the use of our platform, including converting our transactional customers to subscribers and our subscribers renewing their subscriptions with us; the impact of macroeconomic challenges or uncertainty on our business; our ability to remain profitable in the future; our ability to provide high-quality products and services, customer care and customer experience; our ability to continue to innovate and provide a platform that is useful to our customers and that meets our customers’ expectations; the competitive legal solutions market; our dependence on our brand and reputation; our ability to maintain and expand strategic relationships with third parties; our ability to hire and retain top talent and motivate our employees; risks and costs associated with complex and evolving laws and regulations; our ability to maintain effective internal control over financial reporting; and any factors discussed in the section titled “Risk Factors” included in our Quarterly Report on Form 10-Q for the three months ended June 30, 2026 filed with the Securities and Exchange Commission (the “SEC”) on August 5, 2026, as well as any factors in our subsequent filings with the SEC. The forward-looking statements in this press release are based upon information available to us as of the date of this press release, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this press release with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this press release, whether as a result of any new information, future events or otherwise.

About Non-GAAP Financial Measures

This press release includes non-GAAP financial measures including Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP net income, Non-GAAP net income margin, Non-GAAP net income per share and free cash flow. We use these non-GAAP financial measures to better understand and evaluate our core operating performance. We believe that these non-GAAP financial measures provide management and our investors with useful information about our financial performance and liquidity, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important measures used by our management for financial and operational decision-making. We also believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry. These non-GAAP measures should not be considered in isolation of, or as a substitute or an alternative to, measures prepared and presented in accordance with GAAP.

We define Adjusted EBITDA as net income adjusted to exclude interest expense, interest income, provision for income taxes, depreciation and amortization, other expense (income), net, stock-based compensation and certain non-recurring income and expenses from time to time. We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of revenue.

Adjusted EBITDA is one of the primary performance measures used by our management and our board of directors to understand and evaluate our financial performance and operating trends, including period-to-period comparisons, preparing and approving our annual budget and operational planning. In assessing our performance, we exclude certain expenses that we believe are not comparable period over period or that we believe are not indicative of our underlying operating performance. There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which include that Adjusted EBITDA:

• may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure;
• does not reflect our capital expenditures, future requirements for capital expenditures or contractual commitments;
• excludes depreciation and amortization and, although these are non-cash expenses, the assets being depreciated may be replaced in the future;
• does not reflect changes in, or cash requirements for, our working capital needs;
• excludes stock-based compensation expense, which has been, and will continue to be, a significant recurring expense for our business and an important part of our compensation strategy; and
• does not reflect certain expenses that we do not consider representative of our underlying operating performance, but that reduce cash available to us.

We define Non-GAAP net income as net income adjusted to exclude amortization of acquired intangible assets, stock-based compensation expense and certain non-recurring income and expenses from time to time, net of related income tax impacts. We define net income margin as net income as a percentage of revenue. We define Non-GAAP net income margin as Non-GAAP net income as a percentage of revenue. We define Non-GAAP net income per share attributable to common stockholders as Non-GAAP net income divided by basic and diluted weighted-average common stock.

Free cash flow is a liquidity measure used by management in evaluating the cash generated by our operations after purchases of property and equipment including capitalized internal-use software. We believe free cash flow provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business and strengthening our balance sheet, once our business needs and obligations are met. The usefulness of free cash flow as an analytical tool has limitations because it excludes certain items that are settled in cash, does not represent residual cash flow available for discretionary expenses, does not reflect our future contractual commitments, and may be calculated differently by other companies in our industry.

We are not providing a reconciliation for our non-GAAP outlook on a forward-looking basis (including the information under “Financial Guidance and Outlook” above), as we are unable to provide a meaningful calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various items that would impact the most directly comparable forward-looking GAAP financial measure that have not yet occurred, are out of LegalZoom’s control and/or cannot be reasonably predicted. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.

The tables in this press release contain more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.

LegalZoom

LegalZoom is a leading online platform for legal services, transforming how individuals and small businesses navigate the legal system. By combining intuitive technology with access to experienced attorneys, whether through our vast independent attorney network or our own law firm, we offer the tools and guidance people need to confidently manage everything from business formation and compliance to intellectual property protection and ongoing business management and legal support.

As AI reshapes how legal work gets done, LegalZoom is at the forefront of the human-in-the-loop approach, ensuring that the speed and efficiency of AI is always backed by the judgment and accountability of qualified professionals. With over two decades of experience and millions of customers served, LegalZoom helps individuals and small businesses navigate legal needs with confidence. For more information, please visit www.legalzoom.com.

Contact

Investor Relations

investor@legalzoom.com

Adjusted EBITDA and Adjusted EBITDA Margin
The following table presents a reconciliation of net income to Adjusted EBITDA for each of the periods indicated (unaudited):

Non-GAAP Net Income, Non-GAAP Net Income Margin and diluted Non-GAAP Net Income Per Share
The following table presents a reconciliation of net income to Non-GAAP net income for each of the periods indicated (unaudited):

The following table shows the computation of basic and diluted Non-GAAP net income per share (unaudited):

Free Cash Flow
The following table presents a reconciliation of net cash provided by operating activities to free cash flow (unaudited):