LegalZoom Reports Third Quarter 2024 Financial Results
LegalZoom reported strong Q3 2024 results with revenue of $168.6 million, up 1% year-over-year. Subscription revenue grew 5% to $110.7 million, while transaction revenue decreased 7% to $57.9 million. The company achieved record Q3 net income of $11.1 million with a 7% margin and record Adjusted EBITDA of $47.1 million with a 28% margin. Subscription units increased 10% year-over-year, while transaction units grew 8%. The company repurchased 3.8 million shares for $24.7 million and increased its share repurchase authorization by $40.0 million to $215.0 million.
LegalZoom ha riportato risultati solidi per il terzo trimestre del 2024, con un fatturato di 168,6 milioni di dollari, in aumento dell'1% rispetto all'anno precedente. I ricavi da abbonamento sono cresciuti del 5%, raggiungendo 110,7 milioni di dollari, mentre i ricavi da transazioni sono diminuiti del 7%, scendendo a 57,9 milioni di dollari. L'azienda ha registrato un utile netto trimestrale record di 11,1 milioni di dollari, con un margine del 7%, e un EBITDA rettificato record di 47,1 milioni di dollari, con un margine del 28%. Le unità di abbonamento sono aumentate del 10% anno su anno, mentre le unità di transazione sono cresciute dell'8%. L'azienda ha riacquistato 3,8 milioni di azioni per 24,7 milioni di dollari e ha aumentato la sua autorizzazione per il riacquisto di azioni di 40,0 milioni di dollari, portandola a 215,0 milioni di dollari.
LegalZoom informó resultados sólidos para el tercer trimestre de 2024, con ingresos de 168,6 millones de dólares, un aumento del 1% interanual. Los ingresos por suscripción crecieron un 5% alcanzando 110,7 millones de dólares, mientras que los ingresos por transacciones disminuyeron un 7% a 57,9 millones de dólares. La compañía logró un ingreso neto récord de 11,1 millones de dólares en el tercer trimestre con un margen del 7% y un EBITDA ajustado récord de 47,1 millones de dólares con un margen del 28%. Las unidades de suscripción aumentaron un 10% interanual, mientras que las unidades de transacción crecieron un 8%. La empresa adquirió 3,8 millones de acciones por 24,7 millones de dólares y aumentó su autorización de recompra de acciones en 40,0 millones de dólares, llevándola a 215,0 millones de dólares.
LegalZoom는 2024년 3분기 실적이 좋았다고 보고하였으며, 매출은 1억 6860만 달러로 전년 대비 1% 증가했습니다. 구독 수익은 5% 증가하여 1억 1070만 달러에 달했고, 거래 수익은 7% 감소하여 5790만 달러로 떨어졌습니다. 회사는 3분기 순이익 1110만 달러를 기록하며 7%의 마진을 보였고, 조정 EBITDA는 4710만 달러로 28%의 마진을 기록했습니다. 구독 단위는 전년 대비 10% 증가했으며, 거래 단위는 8% 성장했습니다. 회사는 2470만 달러에 380만 주를 재매입하였고, 자사주 매입 승인을 4000만 달러 증가시켜 총 2억 1500만 달러로 늘렸습니다.
LegalZoom a rapporté de solides résultats pour le troisième trimestre 2024, avec des revenus de 168,6 millions de dollars, en hausse de 1% par rapport à l'année précédente. Les revenus d'abonnement ont augmenté de 5% pour atteindre 110,7 millions de dollars, tandis que les revenus de transaction ont diminué de 7% à 57,9 millions de dollars. L'entreprise a réalisé un bénéfice net record pour le T3 de 11,1 millions de dollars avec une marge de 7% et un EBITDA ajusté record de 47,1 millions de dollars avec une marge de 28%. Les unités d'abonnement ont augmenté de 10% d'une année sur l'autre, tandis que les unités de transaction ont crû de 8%. L'entreprise a racheté 3,8 millions d'actions pour 24,7 millions de dollars et a augmenté son autorisation de rachat d'actions de 40,0 millions de dollars, la portant à 215,0 millions de dollars.
LegalZoom berichtete über starke Ergebnisse im dritten Quartal 2024, mit einem Umsatz von 168,6 Millionen Dollar, was einem Anstieg von 1% im Vergleich zum Vorjahr entspricht. Die Abonnementeinnahmen stiegen um 5% auf 110,7 Millionen Dollar, während die Transaktionsumsätze um 7% auf 57,9 Millionen Dollar sanken. Das Unternehmen erzielte ein Rekord-Nettoeinkommen von 11,1 Millionen Dollar im dritten Quartal bei einer Marge von 7% und ein Rekord-EBITDA von 47,1 Millionen Dollar mit einer Marge von 28%. Die Abonnementeinheiten nahmen um 10% im Jahresvergleich zu, während die Transaktionseinheiten um 8% wuchsen. Das Unternehmen kaufte 3,8 Millionen Aktien für 24,7 Millionen Dollar zurück und erhöhte seine Genehmigung für Aktienrückkäufe um 40,0 Millionen Dollar auf 215,0 Millionen Dollar.
- Record Q3 net income of $11.1 million, up 47% YoY
- Record Q3 Adjusted EBITDA of $47.1 million, up 40% YoY
- Subscription revenue grew 5% YoY to $110.7 million
- Subscription units increased 10% YoY
- Gross margin improved to 68% from 65% YoY
- Operating cash flow increased 15% YoY to $31.6 million
- Transaction revenue declined 7% YoY to $57.9 million
- Business formations decreased 18% YoY
- Average order value (AOV) declined 13% YoY to $227
- Average revenue per subscription unit (ARPU) decreased 1% YoY to $264
- Cash and cash equivalents decreased to $112.5M from $225.7M at year-end 2023
Insights
LegalZoom's Q3 results demonstrate solid financial performance with notable improvements in profitability metrics. Net income surged 47% YoY to
The strategic shift towards subscription-based revenue is showing promising results, with subscription revenue growing
The company's capital allocation strategy includes aggressive share repurchases, with
- Third quarter subscription revenue of
$110.7 million , an increase of5% year-over-year - Meaningful preliminary progress towards initiatives to grow subscription business; 300 basis point increase in subscription revenue mix year-over-year
- Record third quarter Net Income of
$11.1 million and Net Income margin of7% - Record third quarter Adjusted EBITDA of
$47.1 million and Adjusted EBITDA margin of28% - Share repurchases of
$24.7 million reduced outstanding shares by2% ; increased existing share repurchase authorization by$40.0 million to total$215.0 million subsequent to quarter end
MOUNTAIN VIEW, Calif., Nov. 06, 2024 (GLOBE NEWSWIRE) -- LegalZoom.com, Inc. (Nasdaq: LZ) today announced results for its third quarter ended September 30, 2024.
“I am pleased with the early strides we are making against our key execution priorities,” said Jeff Stibel, Chairman and Chief Executive Officer of LegalZoom. “During the quarter, we made progress in reorienting our commercialization and sales efforts to subscription offerings and updating our pricing to better reflect the value we provide. As we focus our efforts on our core legal and compliance offerings for small businesses and consumers, our goal is to attract high-value customers who will grow alongside LegalZoom.”
Noel Watson, LegalZoom’s Chief Operating Officer and Chief Financial Officer said, “Our strong execution drove third quarter results at or above the high-end of our outlook. We achieved a
Third Quarter 2024 Highlights
- Revenue was
$168.6 million for the quarter, up1% year-over-year:- Transaction units increased
8% year-over-year; transaction revenue of$57.9 million decreased7% year-over-year. - Subscription units increased
10% year-over-year; subscription revenue of$110.7 million grew5% year-over-year.
- Transaction units increased
- Net income was
$11.1 million for the quarter, or7% of revenue, compared to net income of$7.5 million , or5% of revenue, for the same period in 2023. - Non-GAAP net income was
$29.7 million for the quarter compared to Non-GAAP net income of$23.3 million in the same period in 2023. - Adjusted EBITDA was
$47.1 million for the quarter, or28% of revenue, compared to$33.7 million , or20% of revenue, for the same period in 2023. - Cash flow provided by operating activities was
$31.6 million for the quarter compared to$27.4 million for the same period in 2023. - Free cash flow was
$22.0 million for the quarter compared to$19.4 million for the same period in 2023. - Repurchased 3.8 million shares of common stock for a total cost of
$24.7 million , at an average price of$6.56 per share. - Cash and cash equivalents were
$112.5 million as of September 30, 2024 compared to$225.7 million as of December 31, 2023.
Third Quarter 2024 Key Business Metrics and Non-GAAP Financial Measures
(unaudited, in thousands except AOV, ARPU and percentages)
| Three Months Ended September 30, | % Growth | Nine Months Ended September 30, | % Growth | ||||||||||||||||||
| (Decline) | (Decline) | ||||||||||||||||||||
| 2024 | 2023 | YOY | 2024 | 2023 | YOY | ||||||||||||||||
| Total revenue | $ | 168,599 | $ | 167,274 | 1 | % | $ | 520,175 | $ | 502,064 | 4 | % | |||||||||
| Transaction revenue | $ | 57,879 | $ | 61,967 | (7 | %) | $ | 192,733 | $ | 195,857 | (2 | %) | |||||||||
| Subscription revenue | $ | 110,720 | $ | 105,307 | 5 | % | $ | 327,442 | $ | 306,207 | 7 | % | |||||||||
| Gross profit | $ | 113,884 | $ | 108,061 | 5 | % | $ | 333,467 | $ | 318,708 | 5 | % | |||||||||
| Gross margin | 68 | % | 65 | % | 5 | % | 64 | % | 63 | % | 2 | % | |||||||||
| Net Income | $ | 11,051 | $ | 7,534 | 47 | % | $ | 17,109 | $ | 6,571 | 160 | % | |||||||||
| Net income margin | 7 | % | 5 | % | 40 | % | 3 | % | 1 | % | 200 | % | |||||||||
| Net Income per share — basic: | $ | 0.06 | $ | 0.04 | 50 | % | $ | 0.09 | $ | 0.03 | 200 | % | |||||||||
| Net Income per share — diluted: | $ | 0.06 | $ | 0.04 | 50 | % | $ | 0.09 | $ | 0.03 | 200 | % | |||||||||
| Net cash provided by operating activities | $ | 31,613 | $ | 27,441 | 15 | % | $ | 93,053 | $ | 101,814 | (9 | %) | |||||||||
| Non-GAAP Financial Measures | |||||||||||||||||||||
| Non GAAP net income | $ | 29,699 | $ | 23,308 | 27 | % | $ | 66,853 | $ | 56,341 | 19 | % | |||||||||
| Non GAAP net income per share — basic: | $ | 0.17 | $ | 0.12 | 42 | % | $ | 0.37 | $ | 0.29 | 28 | % | |||||||||
| Non GAAP net income per share — diluted: | $ | 0.17 | $ | 0.12 | 42 | % | $ | 0.36 | $ | 0.29 | 24 | % | |||||||||
| Adjusted EBITDA | $ | 47,096 | $ | 33,740 | 40 | % | $ | 103,910 | $ | 85,253 | 22 | % | |||||||||
| Adjusted EBITDA margin | 28 | % | 20 | % | 40 | % | 20 | % | 17 | % | 18 | % | |||||||||
| Free cash flow | $ | 21,975 | $ | 19,448 | 13 | % | $ | 64,064 | $ | 78,594 | (18 | %) | |||||||||
| Key Business Metrics | |||||||||||||||||||||
| Transaction units | 255 | 237 | 8 | % | 883 | 828 | 7 | % | |||||||||||||
| Business formations | 113 | 137 | (18 | %) | 386 | 468 | (18 | %) | |||||||||||||
| Average order value (AOV) | $ | 227 | $ | 262 | (13 | %) | $ | 218 | $ | 236 | (8 | %) | |||||||||
| Subscription units at period end | 1,717 | 1,568 | 10 | % | 1,717 | 1,568 | 10 | % | |||||||||||||
| Average revenue per subscription unit (ARPU) at period end | $ | 264 | $ | 267 | (1 | %) | $ | 264 | $ | 267 | (1 | %) | |||||||||
| Certain percentages may not recalculate due to rounding. | |||||||||||||||||||||
Financial Outlook
For the fourth quarter ending December 31, 2024, LegalZoom currently expects:
- Revenue in the range of
$158 million to$162 million - Adjusted EBITDA in the range of
$40 million to$44 million
LegalZoom has updated its full-year financial outlook to reflect three quarters of financial results as well as the Company’s latest expectations for Census EIN application trends and current business initiatives. For the full year ending December 31, 2024, LegalZoom currently expects:
- Revenue in the range of
$678 million to$682 million - Adjusted EBITDA in the range of
$144 million to$148 million - Free cash flow in the range of
$80 million to$85 million
Webcast and Conference Call Information
A webcast and conference call to discuss third quarter 2024 results is scheduled for today, November 6, 2024, 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.
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 on our business, including as a result of inflation, global conflict, supply chain issues and recessionary concerns; 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 other factors discussed in the section titled “Risk Factors” included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 filed with the Securities and Exchange Commission, or SEC, on August 7, 2024, as well as those 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. To supplement our unaudited condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States, or GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different from similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and liquidity and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We believe that these non-GAAP financial measures provide 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 are presenting these non-GAAP measures to assist investors in seeing our financial performance using a management view and because we 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.
We define Adjusted EBITDA as Net income (loss) adjusted to exclude interest expense, interest income, provision for (benefit from) income taxes, depreciation and amortization, other expense (income), net, stock-based compensation, impairment of goodwill, long-lived and other assets, legal expenses, restructuring expenses, transaction-related expenses and certain non-recurring income and expenses from time to time. Our Adjusted EBITDA financial measure differs from GAAP in that it excludes certain items of income and expense. 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, prepare and approve our annual budget, develop short and long-term operational plans and determine appropriate compensation plans for our employees. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team and board of directors. 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. Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared and presented in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net income (loss), which is the nearest GAAP equivalent of Adjusted EBITDA. Some of these limitations include that the non-GAAP financial measure:
- 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 other 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 (loss) adjusted to exclude amortization of acquired intangible assets, stock-based compensation expense, certain transaction-related expenses, and certain non-recurring income and expenses from time to time, net of related income tax impacts. Our Non-GAAP net income financial measure differs from GAAP in that it excludes certain items of income and expense. We define Net income (loss) margin as net loss as a percentage of revenue. We define Non-GAAP net income (loss) margin as Non-GAAP net income (loss) as a percentage of revenue. We define Non-GAAP net income (loss) per share attributable to common stockholders as Non-GAAP net income (loss) divided by basic and diluted weighted-average common stock. We believe Non-GAAP net income (loss) and Non-GAAP net income (loss) per share attributable to common stockholders are operating performance measures that provide investors and analysts with useful supplemental information about the financial performance of our business.
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 consider Free cash flow to be an important measure because it 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, cash can be used to maintain a strong balance sheet and invest in future growth. 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. Accordingly, it should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash used in or provided by operating activities.
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 business formation in the United States. Driven by a mission to unleash entrepreneurship, LegalZoom delivers comprehensive legal and compliance products and expertise for small business owners through easy-to-use technology. From free business formations to business management solutions and professional advisory services, LegalZoom supports millions of small business owners and their families throughout the entrepreneurial journey. Founded on the belief that everyone should have affordable access to legal and financial expertise, LegalZoom empowers entrepreneurs to make their dream a reality. For more information, please visit www.legalzoom.com.
Contact
Investor Relations
investor@legalzoom.com
| LegalZoom.com, Inc. | |||||||
| Unaudited Condensed Consolidated Balance Sheets | |||||||
| (In thousands, except par values) | |||||||
| September 30, 2024 | December 31, 2023 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 112,477 | $ | 225,719 | |||
| Accounts receivable, net | 11,518 | 11,738 | |||||
| Prepaid expenses and other current assets | 20,491 | 15,159 | |||||
| Current assets held for sale | 22,722 | 22,722 | |||||
| Total current assets | 167,208 | 275,338 | |||||
| Property and equipment, net | 59,692 | 48,232 | |||||
| Goodwill | 63,318 | 63,318 | |||||
| Intangible assets, net | 9,919 | 13,735 | |||||
| Operating lease right-of-use assets | 7,352 | 8,518 | |||||
| Deferred income taxes | 31,734 | 29,015 | |||||
| Available-for-sale debt securities | 1,386 | 1,159 | |||||
| Other assets | 8,232 | 8,503 | |||||
| Total assets | $ | 348,841 | $ | 447,818 | |||
| Liabilities and stockholders’ equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 27,922 | $ | 32,282 | |||
| Accrued expenses and other current liabilities | 57,027 | 61,678 | |||||
| Deferred revenue | 185,795 | 167,951 | |||||
| Operating lease liabilities | 1,876 | 2,052 | |||||
| Total current liabilities | 272,620 | 263,963 | |||||
| Operating lease liabilities, non-current | 6,171 | 6,966 | |||||
| Deferred revenue | 427 | 490 | |||||
| Other liabilities | 9,485 | 7,565 | |||||
| Total liabilities | 288,703 | 278,984 | |||||
| Commitments and contingencies | |||||||
| Stockholders’ equity: | |||||||
| Preferred stock, | — | — | |||||
| Common stock, | 174 | 189 | |||||
| Additional paid-in capital | 1,140,852 | 1,101,474 | |||||
| Accumulated deficit | (1,079,917 | ) | (933,061 | ) | |||
| Accumulated other comprehensive (loss) income | (971 | ) | 232 | ||||
| Total stockholders’ equity | 60,138 | 168,834 | |||||
| Total liabilities and stockholders’ equity | $ | 348,841 | $ | 447,818 | |||
| LegalZoom.com, Inc. | ||||||||||||||||
| Unaudited Condensed Consolidated Statements of Operations | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | $ | 168,599 | $ | 167,274 | $ | 520,175 | $ | 502,064 | ||||||||
| Cost of revenue | 54,715 | 59,213 | 186,708 | 183,356 | ||||||||||||
| Gross profit | 113,884 | 108,061 | 333,467 | 318,708 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | 46,287 | 51,071 | 160,170 | 164,746 | ||||||||||||
| Technology and development | 23,179 | 21,491 | 72,934 | 61,074 | ||||||||||||
| General and administrative | 28,149 | 25,243 | 77,893 | 78,683 | ||||||||||||
| Total operating expenses | 97,615 | 97,805 | 310,997 | 304,503 | ||||||||||||
| Income from operations | 16,269 | 10,256 | 22,470 | 14,205 | ||||||||||||
| Interest expense | (72 | ) | (68 | ) | (245 | ) | (239 | ) | ||||||||
| Interest income | 1,345 | 2,691 | 6,547 | 6,596 | ||||||||||||
| Other (expense) income, net | 1,741 | (882 | ) | 1,845 | 436 | |||||||||||
| Income before income taxes | 19,283 | 11,997 | 30,617 | 20,998 | ||||||||||||
| Provision for income taxes | 8,232 | 4,463 | 13,508 | 14,427 | ||||||||||||
| Net income | $ | 11,051 | $ | 7,534 | $ | 17,109 | $ | 6,571 | ||||||||
| Net income per share — basic: | $ | 0.06 | $ | 0.04 | $ | 0.09 | $ | 0.03 | ||||||||
| Net income per share — diluted: | $ | 0.06 | $ | 0.04 | $ | 0.09 | $ | 0.03 | ||||||||
| Weighted-average shares used to compute net income per share — basic: | 174,862 | 191,033 | 182,551 | 191,222 | ||||||||||||
| Weighted-average shares used to compute net income per share — diluted: | 176,353 | 197,454 | 185,374 | 194,953 | ||||||||||||
| LegalZoom.com, Inc. | ||||||||
| Unaudited Condensed Consolidated Statements of Cash Flows | ||||||||
| (In thousands) | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 17,109 | $ | 6,571 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 25,291 | 18,061 | ||||||
| Amortization of right-of-use assets | 1,848 | 2,011 | ||||||
| Amortization of debt issuance costs | 170 | 170 | ||||||
| Stock-based compensation | 49,486 | 51,005 | ||||||
| Deferred income taxes | (741 | ) | 10,818 | |||||
| Change in fair value of contingent consideration | — | (836 | ) | |||||
| Unrealized foreign exchange (gain) loss | (1,277 | ) | (179 | ) | ||||
| Other | 49 | (39 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 220 | (946 | ) | |||||
| Prepaid expenses and other current assets | (5,321 | ) | (785 | ) | ||||
| Other assets | 58 | 345 | ||||||
| Accounts payable | (3,736 | ) | 5,992 | |||||
| Accrued expenses and other liabilities | (6,175 | ) | (992 | ) | ||||
| Operating lease liabilities | (1,654 | ) | (1,723 | ) | ||||
| Income tax payable | (52 | ) | 16 | |||||
| Deferred revenue | 17,778 | 12,325 | ||||||
| Net cash provided by operating activities | 93,053 | 101,814 | ||||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | (28,989 | ) | (23,220 | ) | ||||
| Other | — | 38 | ||||||
| Net cash used in investing activities | (28,989 | ) | (23,182 | ) | ||||
| Cash flows from financing activities | ||||||||
| Repayment of capital lease obligations | (19 | ) | (27 | ) | ||||
| Repurchase of common stock | (161,959 | ) | (54,873 | ) | ||||
| Shares surrendered for settlement of minimum statutory tax withholding | (17,216 | ) | (6,353 | ) | ||||
| Proceeds from issuance of stock under employee stock plans | 1,862 | 5,690 | ||||||
| Net cash used in financing activities | (177,332 | ) | (55,563 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | 26 | (4 | ) | |||||
| Net (decrease) increase in cash and cash equivalents | (113,242 | ) | 23,065 | |||||
| Cash and cash equivalents, at beginning of the period | 225,719 | 189,082 | ||||||
| Cash and cash equivalents, at end of the period | $ | 112,477 | $ | 212,147 | ||||
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):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (in thousands, except percentages) | ||||||||||||||||
| Reconciliation of net income to Adjusted EBITDA | ||||||||||||||||
| Net income | $ | 11,051 | $ | 7,534 | $ | 17,109 | $ | 6,571 | ||||||||
| Interest expense | 72 | 68 | 245 | 239 | ||||||||||||
| Interest income | (1,345 | ) | (2,691 | ) | (6,547 | ) | (6,596 | ) | ||||||||
| Provision for income taxes | 8,232 | 4,463 | 13,508 | 14,427 | ||||||||||||
| Depreciation and amortization | 9,195 | 6,655 | 25,291 | 18,061 | ||||||||||||
| Other (income) expense, net | (1,741 | ) | 882 | (1,845 | ) | (436 | ) | |||||||||
| Stock-based compensation | 15,715 | 15,582 | 49,486 | 51,005 | ||||||||||||
| Restructuring costs(1) | 5,917 | 68 | 6,663 | 803 | ||||||||||||
| Certain non-recurring expenses(2) | — | 1,179 | — | 1179 | ||||||||||||
| Adjusted EBITDA | $ | 47,096 | $ | 33,740 | $ | 103,910 | $ | 85,253 | ||||||||
| Net income margin | 7 | % | 5 | % | 3 | % | 1 | % | ||||||||
| Adjusted EBITDA margin | 28 | % | 20 | % | 20 | % | 17 | % | ||||||||
(1) For 2024, restructuring expenses related to the reduction of our U.S. headcount. For 2023, restructuring expenses related to the reduction of our U.K. headcount, which was substantially complete by December 31, 2023.
(2) For 2023, certain non-recurring expenses included costs incurred in conjunction with the secondary offering of 16,100,000 shares of our common stock by a selling stockholder during the three months ended September 30, 2023.
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):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||
| Reconciliation of Net income to Non-GAAP net income | ||||||||||||||||
| Net income | $ | 11,051 | $ | 7,534 | $ | 17,109 | $ | 6,571 | ||||||||
| Amortization of acquired intangible assets | 1,275 | 1,292 | 3,816 | 3,874 | ||||||||||||
| Stock-based compensation | 15,715 | 15,582 | 49,486 | 51,005 | ||||||||||||
| Restructuring costs(1) | 5,917 | 68 | 6,663 | 803 | ||||||||||||
| Certain non-recurring expenses(2) | — | 1,179 | — | 1,179 | ||||||||||||
| Income tax effects (3) | (4,259 | ) | (2,347 | ) | (10,221 | ) | (7,091 | ) | ||||||||
| Non-GAAP net income | $ | 29,699 | $ | 23,308 | $ | 66,853 | $ | 56,341 | ||||||||
| Net income margin | 7 | % | 5 | % | 3 | % | 1 | % | ||||||||
| Non-GAAP net income margin | 18 | % | 14 | % | 13 | % | 11 | % | ||||||||
| Net income per share — basic | $ | 0.06 | $ | 0.04 | $ | 0.09 | $ | 0.03 | ||||||||
| Net income per share — diluted | $ | 0.06 | $ | 0.04 | $ | 0.09 | $ | 0.03 | ||||||||
| Non-GAAP net income per share — basic | $ | 0.17 | $ | 0.12 | $ | 0.37 | $ | 0.29 | ||||||||
| Non-GAAP net income per share — diluted | $ | 0.17 | $ | 0.12 | $ | 0.36 | $ | 0.29 | ||||||||
| Weighted-average shares used to compute net income per share — basic | 174,862 | 191,033 | 182,551 | 191,222 | ||||||||||||
| Weighted-average shares used to compute net income per share — diluted | 176,353 | 197,454 | 185,374 | 194,953 | ||||||||||||
| Weighted-average shares used to compute Non-GAAP net income per share — basic | 174,862 | 191,033 | 182,551 | 191,222 | ||||||||||||
| Weighted-average shares used to compute Non-GAAP net income per share — diluted | 176,353 | 197,454 | 185,374 | 194,953 | ||||||||||||
(1) For 2024, restructuring expenses related to the reduction of our U.S. headcount. For 2023, restructuring expenses related to the reduction of our U.K. headcount, which was substantially complete by December 31, 2023.
(2) For 2023, certain non-recurring expenses included costs incurred in conjunction with the secondary offering of 16,100,000 shares of our common stock by a selling stockholder during the three months ended September 30, 2023.
(3) The estimated income tax effect of the non-GAAP pre-tax adjustments is determined by applying the statutory rate of the originating jurisdiction, if applicable.
The following table shows the computation of basic and diluted Non-GAAP net income per share (unaudited):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| (in thousands, except per share amounts) | ||||||||||||
| Non-GAAP net income and Non-GAAP net income per share: | ||||||||||||
| Non-GAAP net income | $ | 29,699 | $ | 23,308 | $ | 66,853 | $ | 56,341 | ||||
| Reconciliation of denominator for net income per share to Non-GAAP net income per share: | ||||||||||||
| Weighted-average shares used to compute net income per share — basic: | 174,862 | 191,033 | 182,551 | 191,222 | ||||||||
| Effect of potentially dilutive securities: | ||||||||||||
| Options to purchase common stock | 114 | 2,699 | 986 | 1,347 | ||||||||
| RSUs | 1,377 | 3,702 | 1,827 | 2,372 | ||||||||
| Employee stock purchase plan | — | 20 | 10 | 12 | ||||||||
| Weighted-average common stock used in computing Non-GAAP net income per share — diluted | 176,353 | 197,454 | 185,374 | 194,953 | ||||||||
| Non-GAAP net income per share — basic | $ | 0.17 | $ | 0.12 | $ | 0.37 | $ | 0.29 | ||||
| Non-GAAP net income per share — diluted | $ | 0.17 | $ | 0.12 | $ | 0.36 | $ | 0.29 | ||||
Free Cash Flow
The following table presents a reconciliation of net cash provided by operating activities to free cash flow (unaudited):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow | ||||||||||||||||
| Net cash provided by operating activities | $ | 31,613 | $ | 27,441 | $ | 93,053 | $ | 101,814 | ||||||||
| Purchase of property and equipment | (9,638 | ) | (7,993 | ) | (28,989 | ) | (23,220 | ) | ||||||||
| Free cash flow | $ | 21,975 | $ | 19,448 | $ | 64,064 | $ | 78,594 | ||||||||
FAQ
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