Financial Data and Key Metrics Changes - The company achieved record third-quarter revenue of $190 million, reflecting a 13% year-over-year increase, exceeding expectations [5][23] - Subscription revenue also grew by 13%, marking the third consecutive quarter of sequential growth [6][22] - Adjusted EBITDA margin remained strong at 24%, despite increased investments in product and AI [6][26] - Free cash flow for the quarter was $47 million, up 114% compared to the same period in 2024 [26][27] - The company raised its full-year revenue growth outlook to 10%, effectively doubling its initial guidance [6][28] Business Line Data and Key Metrics Changes - Subscription units increased to approximately 1.96 million, a 14% increase year-over-year, driven by bundling solutions [23] - Transaction revenue increased by 12% to $65 million, largely due to the acquisition of Formation Nation [24] - Average order value rose to $251, up 11% year-over-year, driven by higher-priced concierge services [25] Market Data and Key Metrics Changes - The company noted a 25% year-over-year increase in its partner channel for the third quarter [15] - The partnership with 1-800 ACCOUNTANT continues to exceed expectations, with plans to bundle tax advice with legal advice [12][19] Company Strategy and Development Direction - The company is focusing on expanding its subscription business and enhancing value for customers, particularly existing small businesses [8][9] - There is a strategic shift towards integrating AI with human expertise to improve service offerings [16][18] - The company aims to diversify its service offerings beyond business formation to include compliance and tax services [12][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties by diversifying its revenue streams [63][65] - The company is optimistic about the long-term potential of its business, particularly in serving both new and established small businesses [29] Other Important Information - The company has made organizational changes to better integrate AI into its product offerings, including appointing a new Senior Vice President for Product [19][20] - The company repurchased approximately 1.8 million shares during the quarter, reflecting a strong cash position [27] Q&A Session Summary Question: How is pricing and bundling contributing to subscription growth? - Management indicated that pricing and bundling are important levers for growth, with competitors also raising prices in response [30] Question: Can you elaborate on the White Glove concierge offering? - The offering combines expertise from attorneys and accountants to address customer needs effectively, focusing on compliance and other services [32][34] Question: What is the contribution of Formation Nation to revenues? - Formation Nation contributed approximately $9 million to transaction revenue and over $5.5 million to subscription revenue during the quarter [47] Question: How is the partnership with 1-800 ACCOUNTANT structured? - The partnership is designed to ensure a minimum revenue threshold with a revenue share on top, focusing on highly accretive products [50] Question: What insights can you share about the future of AI in legal services? - Management believes that while AI will play a significant role, human expertise will remain essential for providing legal advice and services [56][59] Question: How much of the recent performance is macro-driven versus internal initiatives? - Management emphasized that while macro factors are considered, the focus is on diversifying and insulating the business from such influences [62][65]

Business Performance - LegalZoom reported a 12% increase in business formation transactions for the three months ended September 30, 2025, totaling 126,000 compared to 113,000 in the same period of 2024 [124]. - The number of transactions increased by 2% to 259,000 for the three months ended September 30, 2025, driven by the Formation Nation acquisition and an increase in Annual Report filings [126]. - Total revenue for the three months ended September 30, 2025, was $190,158,000, representing a 13% increase from $168,599,000 in the same period of 2024 [160]. - Subscription revenue increased by 13% to $125,359,000, driven by approximately $5.6 million from the acquisition of Formation Nation and a 10% increase in compliance-related subscriptions [165]. - Transaction revenue rose by 12% to $64,799,000, primarily due to $9.1 million from Formation Nation and increased revenue from Annual Report and Trademark filings [164]. - Total revenue for the nine months ended September 30, 2025 was $565.8 million, a 9% increase from $520.2 million in 2024, with subscription revenue accounting for 64% of total revenue [177]. - Transaction revenue increased by 6% year-over-year, primarily due to $23.4 million from the acquisition of Formation Nation [178]. - Subscription revenue grew by 10% year-over-year, driven by $12.5 million from the acquisition of Formation Nation and a 7% increase in compliance-related subscriptions [179]. Financial Metrics - Average order value rose by 11% to $251 for the three months ended September 30, 2025, compared to $227 in the same period of 2024 [130]. - Average revenue per subscription unit (ARPU) decreased by 3% to $256 as of September 30, 2025, compared to $264 in 2024, attributed to a shift towards lower-priced subscription offerings [136]. - The annual small business retention rate was approximately 57% as of September 30, 2025, influenced by the bundling of lower-retaining subscriptions into business formation offerings [138]. - Gross profit for the three months ended September 30, 2025, was $127,887,000, reflecting a 12% increase from $113,884,000 in the prior year [168]. - Net income for the three months ended September 30, 2025, was $4,509,000, down from $11,051,000 in the same period of 2024 [160]. - The adjusted EBITDA for the nine months ended September 30, 2025, was $122.3 million, with an adjusted EBITDA margin of 22% [216]. - Adjusted EBITDA decreased from $47.1 million for the three months ended September 30, 2024 to $46.3 million for the three months ended September 30, 2025, primarily due to a $15.5 million increase in operating expenses [218]. - Adjusted EBITDA increased from $103.9 million for the nine months ended September 30, 2024 to $122.3 million for the nine months ended September 30, 2025, driven by a $45.6 million increase in revenue [219]. - Free cash flow increased from $64.1 million for the nine months ended September 30, 2024 to $119.9 million for the nine months ended September 30, 2025, primarily due to a $51.0 million increase in net cash provided by operating activities [222]. Expenses and Costs - Cost of revenue for the three months ended September 30, 2025, was $62,271,000, a 14% increase from $54,715,000 in 2024, mainly due to a $5.7 million rise in filing fees [166]. - Operating expenses for the three months ended September 30, 2025, totaled $121,394,000, compared to $97,615,000 in 2024, with sales and marketing expenses being the largest category [160]. - Stock-based compensation expense increased to $28,369,000 for the three months ended September 30, 2025, compared to $15,715,000 in 2024, due to new RSUs granted [161]. - Sales and marketing expenses for the three months ended September 30, 2025 increased by $21.5 million, a 47% increase year-over-year, primarily due to a $10.3 million rise in customer acquisition marketing spend [169]. - Technology and development expenses decreased by $3.7 million, or 16%, for the three months ended September 30, 2025, mainly due to a reduction in headcount [170]. - General and administrative expenses rose by $5.9 million, or 21%, for the three months ended September 30, 2025, driven by a $13.1 million increase in stock-based compensation [171]. - Cost of revenue increased by $9.5 million, or 5%, for the nine months ended September 30, 2025, mainly due to a $11.5 million rise in filing fees related to the Formation Nation acquisition [181]. - General and administrative expenses for the nine months ended September 30, 2025 increased by $32.4 million, or 42%, primarily due to a $39.1 million rise in stock-based compensation [185]. Cash Flow and Liquidity - As of September 30, 2025, the company had cash and cash equivalents of $237.2 million, an increase of $95.1 million from December 31, 2024, primarily due to stock option exercises and cash from operating activities [192]. - Net cash provided by operating activities for the nine months ended September 30, 2025, was $144.1 million, up from $93.1 million in the same period of 2024 [204]. - The company reported a net income of $9.4 million for the nine months ended September 30, 2025, with stock-based compensation and other non-cash expenses totaling $114.8 million [206]. - Net cash used in investing activities was $34.1 million, primarily due to the acquisition of Formation Nation for $48.5 million and $24.1 million in property and equipment purchases [208]. - The company utilized $15.0 million in financing activities, mainly for $37.6 million in stock repurchases and a $20.0 million settlement of RSU tax withholding [210]. - The company has a stock repurchase program with approximately $112.0 million remaining for future repurchases as of September 30, 2025 [196]. - The Amended Revolving Facility provides for $100.0 million in available borrowings, with no outstanding borrowings as of September 30, 2025 [197]. - The company anticipates that its available cash and cash equivalents will be sufficient to meet operational cash needs for at least the next twelve months [194]. Economic and Market Factors - LegalZoom's future performance is expected to be influenced by macroeconomic factors, the share of small and medium-sized businesses, and the ability to combine AI with human expertise [119][120]. - The company continues to monitor the impacts of the evolving macroeconomic environment on its business operations [120]. - Inflation has not had a material effect on the company's business, but significant inflationary pressures could harm its financial condition and results of operations [230]. - The foreign currency transaction gain was immaterial during the nine months ended September 30, 2025, with a 10% adverse change in foreign exchange rates expected to be immaterial [228][229]. - The company does not expect to be exposed to fluctuations in interest rates for the foreseeable future due to no outstanding debt subject to interest rate risk [227].

Financial Performance - LegalZoom's Q3 2025 revenue reached $190 million, a 13% increase year-over-year[17] - The company's Q3 2025 Non-GAAP Net Income was $31 million, up 4% year-over-year[17,77] - Adjusted EBITDA for Q3 2025 was $46 million, representing a 24% margin[17] - Subscription revenue in Q3 2025 grew by 12% year-over-year to $125 million[17,49] - Transaction revenue for Q3 2025 was $65 million, a 12% increase year-over-year[17,55] Market Opportunity and Strategy - LegalZoom operates in a large $51 billion market for life & business planning, business management, and expert assistance[19,21] - The company aims to optimize its subscription business, reorient its go-to-market strategy, and leverage AI to deliver expertise[29] - LegalZoom has 2 million active legal & compliance subscriptions[21] Financial Guidance - LegalZoom projects Q4 2025 total revenue to be between $182 million and $186 million and adjusted EBITDA between $46 million and $48 million[68] - For the full year 2025, LegalZoom anticipates total revenue of $748 million to $752 million and adjusted EBITDA of $168 million to $170 million, with an adjusted EBITDA margin of approximately 23%[68]

Financial Performance - LegalZoom reported record third quarter revenue of $190.2 million, representing a 13% year-over-year increase[5]. - Subscription revenue reached $125.4 million, also up 13% year-over-year, driven by growth in compliance offerings[5]. - Net income for the quarter was $4.5 million, a decrease of 59% compared to $11.1 million in the same period in 2024, resulting in a net income margin of 2%[6]. - Adjusted EBITDA was $46.3 million, down 2% from $47.1 million in the same period in 2024, with an adjusted EBITDA margin of 24%[6]. - Revenue for the three months ended September 30, 2025, was $190,158,000, representing a 12.5% increase from $168,599,000 in the same period of 2024[29]. - Gross profit for the nine months ended September 30, 2025, was $369,548,000, up from $333,467,000 in 2024, indicating an increase of 10.8%[29]. - Net income for the three months ended September 30, 2025, was $4,509,000, a decrease of 59.1% compared to $11,051,000 in the same period of 2024[29]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $122,300,000, compared to $103,910,000 in 2024, reflecting an increase of 17.6%[33]. - Non-GAAP net income for Q3 2025 was $30,996,000, compared to $29,699,000 in Q3 2024, reflecting a year-over-year increase of 4.4%[35]. - Non-GAAP net income margin for Q3 2025 was 16%, down from 18% in Q3 2024[35]. - Basic Non-GAAP net income per share for Q3 2025 was $0.17, unchanged from Q3 2024[37]. - Diluted Non-GAAP net income per share for Q3 2025 was $0.17, also unchanged from Q3 2024[37]. - The company reported a net income of $4,509,000 for Q3 2025, a decrease from $11,051,000 in Q3 2024, reflecting a decline of 59%[35]. Cash Flow and Liquidity - Cash flow from operating activities was $54.2 million, a 72% increase from $31.6 million in the same period in 2024[6]. - Free cash flow for the quarter was $47.0 million, up 114% from $22.0 million in the same period in 2024[6]. - LegalZoom ended the quarter with cash and cash equivalents of $237.2 million, up from $142.1 million as of December 31, 2024[6]. - Cash and cash equivalents at the end of the period on September 30, 2025, were $237,154,000, up from $142,064,000 at the beginning of the period[31]. - The company reported a net cash provided by operating activities of $144,068,000 for the nine months ended September 30, 2025, compared to $93,053,000 in 2024, an increase of 55%[31]. - Net cash provided by operating activities for the nine months ended September 2025 was $144,068,000, compared to $93,053,000 for the same period in 2024, an increase of 55%[38]. - Free cash flow for Q3 2025 was $46,990,000, significantly higher than $21,975,000 in Q3 2024, representing a 113% increase[38]. Guidance and Future Outlook - LegalZoom expects fourth quarter revenue to be in the range of $182 million to $186 million, indicating a 14% year-over-year growth at the midpoint[8]. - The company raised its full-year 2025 revenue guidance to approximately $748 million to $752 million, reflecting a 10% year-over-year growth at the midpoint[14]. Assets and Liabilities - Total assets increased to $551,104,000 as of September 30, 2025, from $373,883,000 as of December 31, 2024, marking a growth of 47.5%[27]. - Total liabilities rose to $349,183,000 as of September 30, 2025, compared to $280,626,000 at the end of 2024, an increase of 24.4%[27]. - The company’s deferred revenue as of September 30, 2025, was $213,807,000, up from $174,643,000 at the end of 2024, indicating a growth of 22.4%[27]. Expenses - Sales and marketing expenses for the three months ended September 30, 2025, were $67,835,000, a significant increase of 46.6% from $46,287,000 in the same period of 2024[29]. - Total stock-based compensation for the nine months ended September 2025 was $88,763,000, compared to $49,486,000 in the same period of 2024, an increase of 79%[35]. - The company incurred restructuring costs of $88,000 in Q3 2025, down from $5,917,000 in Q3 2024[36]. Subscription Metrics - The number of subscription units at period end was 1,959, a 14% increase compared to 1,717 in the same period in 2024[7]. - LegalZoom reported a net cash provided by operating activities of $144,068,000 for the nine months ended September 30, 2025, compared to $93,053,000 in 2024, an increase of 55%[31].

Core Insights - LegalZoom reported a record third quarter revenue of $190.2 million, reflecting a 13% year-over-year growth, driven by a strong performance in subscription revenue [5][6][7] - The company is optimistic about its strategic shift, focusing on expanding services to the existing 36 million small businesses in the U.S. by integrating AI and technology with human expertise [2][5] - LegalZoom has raised its full-year 2025 revenue guidance, anticipating approximately 10% year-over-year growth at the midpoint [2][9] Financial Performance - Revenue for the third quarter was $190.2 million, up 13% from $168.6 million in the same period last year [5][7] - Subscription revenue reached $125.4 million, also a 13% increase year-over-year, primarily due to growth in compliance offerings [5][6] - Net income for the quarter was $4.5 million, a decline from $11.1 million in Q3 2024, resulting in a net income margin of 2% compared to 7% in the previous year [5][6][7] - Adjusted EBITDA was $46.3 million, down from $47.1 million in Q3 2024, with an adjusted EBITDA margin of 24% compared to 28% in the same period last year [5][6][7] Cash Flow and Liquidity - LegalZoom ended the quarter with cash and cash equivalents of $237.2 million, an increase from $142.1 million at the end of 2024 [5][6] - The company generated $54.2 million in cash from operating activities, significantly up from $31.6 million in Q3 2024 [6][7] - Free cash flow for the quarter was $47.0 million, compared to $22.0 million in the same period last year, indicating a 114% increase [6][7] Business Metrics - Transaction revenue was $64.8 million, a 12% increase year-over-year, while total transaction units grew by 2% [6][7] - Average order value (AOV) increased to $251, up 11% from $227 in Q3 2024 [7] - Subscription units at the end of the period reached 1,959, a 14% increase from 1,717 in the previous year [7] Future Outlook - For Q4 2025, LegalZoom expects revenue in the range of $182 million to $186 million, representing a 14% year-over-year growth at the midpoint [9] - The full-year revenue guidance is now set between $748 million to $752 million, reflecting a 10% year-over-year growth at the midpoint [9]

Core Insights - Artificial intelligence (AI) is identified as the greatest investment opportunity of the current era, with a strong emphasis on the urgent need for energy to support its growth [1][2][3] - A specific company is highlighted as a key player in the AI energy sector, owning critical energy infrastructure assets that are essential for meeting the increasing energy demands of AI technologies [3][7][8] Investment Landscape - Wall Street is investing hundreds of billions into AI, but there is a pressing concern regarding the energy supply needed to sustain this growth [2] - AI data centers, such as those powering large language models, consume energy equivalent to that of small cities, indicating a significant strain on global power grids [2] - The company in focus is positioned to capitalize on the rising demand for electricity, which is becoming a vital commodity in the digital age [3][6] Company Profile - The company is described as a "toll booth" operator in the AI energy boom, benefiting from the export of American LNG and the onshoring of manufacturing due to tariffs [5][6] - It possesses critical nuclear energy infrastructure assets, making it integral to America's future power strategy [7] - The company is noted for its capability to execute large-scale engineering, procurement, and construction projects across various energy sectors, including oil, gas, and renewables [7] Financial Position - The company is completely debt-free and has a substantial cash reserve, amounting to nearly one-third of its market capitalization, which positions it favorably compared to other energy firms burdened by debt [8] - It also holds a significant equity stake in another AI-related company, providing investors with indirect exposure to multiple growth opportunities without the associated premium costs [9][10] Market Sentiment - There is a growing interest from hedge funds in this company, which is considered undervalued and off the radar, trading at less than seven times earnings [10][11] - The company is recognized for delivering real cash flows and owning critical infrastructure, making it a compelling investment opportunity in the context of the AI and energy sectors [11][12]

Core Insights - LegalZoom.com, Inc. will report its financial results for the third quarter ended September 30, 2025, on November 5, 2025, after market close [1] - A conference call and webcast will be hosted by CEO Jeff Stibel and COO/CFO Noel Watson at 4:30 p.m. ET on the same day to discuss the financial results [2] Company Overview - LegalZoom is a leading online platform for legal services, providing tools and guidance for individuals and small businesses to navigate the legal system [4] - The company combines technology with access to experienced attorneys, offering services such as business formations, compliance, estate planning, and ongoing legal support [4] - With over two decades of experience, LegalZoom has served millions of customers, enhancing confidence in managing legal needs [5]

Group 1 - Madison Small Cap Fund's second-quarter 2025 investor letter indicates a rebound in equities following a pause in tariff implementation, with the Russell 2000 Index up 8.5% for the quarter and down only 1.79% year-to-date [1] - The Madison Small Cap Fund (class Y) returned 4.42% in the quarter, underperforming compared to the Russell 2000 and Russell 2500 indices [1] - LegalZoom.com, Inc. (NASDAQ:LZ) is highlighted as a stock of interest, with a one-month return of -0.19% and a 52-week gain of 59.25%, closing at $10.67 per share with a market capitalization of $1.923 billion [2] Group 2 - LegalZoom.com, Inc. (NASDAQ:LZ) reported a 9% year-over-year revenue increase to $193 million in the second quarter [3] - Despite improvements in fundamentals under new management, Madison Small Cap Fund decided to sell its small position in LegalZoom.com, Inc. due to concerns about the addressable market size and execution capabilities [3] - LegalZoom.com, Inc. is not among the 30 most popular stocks among hedge funds, with 35 hedge fund portfolios holding the stock at the end of the second quarter, up from 32 in the previous quarter [3]

Core Insights - LegalZoom.com Inc. (NASDAQ:LZ) has been identified as one of the 14 best small-cap stocks to buy currently, with Citi upgrading its price target from $10 to $12 while maintaining a Neutral rating [1][3]. Financial Performance - LegalZoom reported Q2 FY2025 earnings with revenue of $192.5 million, surpassing estimates of $182.7 million, reflecting a year-over-year growth of 9% [2]. - The company's subscription strategy is yielding positive results, with enhancements in product packaging, pricing, and personalization leading to increased customer engagement, particularly in compliance services [2]. Strategic Developments - On August 19, LegalZoom expanded its intellectual property legal services to include patent filings through its law firm, LZ Legal Services, offering affordable patent protection using intelligent technology and licensed patent attorneys [3]. - The demand for intellectual property protection is at an all-time high, prompting LegalZoom to innovate the provisional patent application filing process to make it faster, simpler, and more affordable [4]. Market Outlook - As of September 5, the average price target for LegalZoom is $12, indicating a potential upside of approximately 16.28% from current levels [4]. - LegalZoom operates an online platform catering to the legal, compliance, and business management needs of SMEs and consumers in the U.S. [5].

Group 1 - LegalZoom is recognized as a market leader in online legal and compliance services [1] - The company is expanding into new business areas and shifting towards a subscription model [1] - Significant changes have been implemented within the organization over the past year [1]