[LegalZoom First Quarter 2025 Results](index=1&type=section&id=LegalZoom%20First%20Quarter%202025%20Results) [Financial & Performance Highlights](index=1&type=section&id=First%20Quarter%202025%20Highlights) LegalZoom reported strong Q1 2025 results, exceeding expectations with 5% year-over-year revenue growth to $183.1 million, driven by an 8% increase in subscription revenue to $116.3 million Q1 2025 Key Financial Metrics (vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | % Change (YoY) | | :--- | :--- | :--- | :--- | | Total Revenue | $183.1M | $174.2M | 5% | | Subscription Revenue | $116.3M | $107.9M | 8% | | Transaction Revenue | $66.9M | $66.3M | 1% | | Net Income | $5.1M | $4.7M | 8% | | Adjusted EBITDA | $37.0M | $27.9M | 33% | | Adjusted EBITDA Margin | 20% | 16% | +400 bps | | Diluted Net Income per Share | $0.03 | $0.02 | 50% | | Free Cash Flow | $41.3M | $24.7M | 67% | - Subscription units at period end increased by **20%** year-over-year, reaching **1.924 million**[11](index=11&type=chunk) - Business formations decreased by **6%** year-over-year, while the average order value (AOV) saw a slight decline of **1%** to **$196**[9](index=9&type=chunk) [Operational Highlights & Strategic Initiatives](index=2&type=section&id=First%20Quarter%202025%20Operational%20Highlights) During the quarter, LegalZoom acquired Formation Nation, which contributed $8.6 million in revenue, appointed a new Chief Technology Officer, sold an office property, and increased its share repurchase authorization - Acquired Formation Nation on February 10, 2025, which contributed **$8.6 million** in revenue for the quarter post-acquisition[10](index=10&type=chunk) - Appointed Pratik Savai as Chief Technology Officer to spearhead technology advancements, including the use of generative AI[10](index=10&type=chunk) - Sold an office property, receiving net cash proceeds of approximately **$37.1 million**[10](index=10&type=chunk) - The Board of Directors approved a **$100.0 million** increase in its share repurchase program, leaving an aggregate of approximately **$150.0 million** for future repurchases[10](index=10&type=chunk) [Financial Outlook](index=3&type=section&id=Financial%20Outlook) LegalZoom reiterated its full-year 2025 guidance, projecting approximately 5% revenue growth and $165 million in Adjusted EBITDA, while providing Q2 2025 revenue and Adjusted EBITDA ranges Q2 2025 Outlook | Metric | Guidance Range (in millions) | | :--- | :--- | | Revenue | $181M - $185M | | Adjusted EBITDA | $37M - $41M | Full Year 2025 Outlook | Metric | Guidance | | :--- | :--- | | Revenue Growth (YoY) | ~5% | | Adjusted EBITDA | ~$165M | [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) [Unaudited Condensed Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to $532.7 million from $373.9 million at year-end 2024, primarily driven by a rise in cash and goodwill, leading to a doubling of total stockholders' equity Balance Sheet Summary (in thousands) | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $209,973 | $142,064 | | Goodwill | $141,131 | $63,318 | | Total Assets | $532,666 | $373,883 | | Total Liabilities | $345,454 | $280,626 | | Total Stockholders' Equity | $187,212 | $93,257 | [Unaudited Condensed Consolidated Statements of Operations](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2025, revenue increased to $183.1 million, with gross profit improving to $116.6 million, and a significant gain on asset sale boosting net income to $5.1 million Statement of Operations Summary (in thousands) | Account | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Revenue | $183,110 | $174,214 | | Gross Profit | $116,550 | $105,830 | | Gain on sale of assets | $14,337 | $0 | | Income from Operations | $8,966 | $5,055 | | Net Income | $5,127 | $4,744 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, net cash from operating activities significantly increased to $50.7 million, with investing activities reflecting an acquisition offset by an asset sale, resulting in a net cash increase of $67.9 million Cash Flow Summary (in thousands) | Activity | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $50,703 | $34,194 | | Net cash used in investing activities | ($20,450) | ($9,477) | | Net cash provided by (used in) financing activities | $37,604 | ($22,271) | | Net increase in cash and cash equivalents | $67,909 | $2,410 | | Cash and cash equivalents, at end of period | $209,973 | $228,129 | [Non-GAAP Financial Measures & Reconciliations](index=8&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) [Reconciliation of Net Income to Adjusted EBITDA](index=8&type=section&id=Adjusted%20EBITDA%20and%20Adjusted%20EBITDA%20Margin) The company reconciled its Q1 2025 net income of $5.1 million to an Adjusted EBITDA of $37.0 million, primarily by adding back stock-based compensation and depreciation, and subtracting a gain on asset sale Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net income | $5,127 | $4,744 | | Stock-based compensation | $29,756 | $14,856 | | Depreciation and amortization | $10,406 | $7,670 | | Gain on sale of assets held for sale | ($14,337) | — | | **Adjusted EBITDA** | **$37,012** | **$27,902** | [Reconciliation of Net Income to Non-GAAP Net Income](index=9&type=section&id=Non-GAAP%20Net%20Income%2C%20Non-GAAP%20Net%20Income%20Margin%20and%20diluted%20Non-GAAP%20Net%20Income%20Per%20Share) Non-GAAP net income for Q1 2025 increased 30% to $23.8 million, reconciled from GAAP net income by adjusting for stock-based compensation and an asset sale gain, resulting in a diluted Non-GAAP EPS of $0.13 Reconciliation of Net Income to Non-GAAP Net Income (in thousands) | Line Item | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net income | $5,127 | $4,744 | | Stock-based compensation | $29,756 | $14,856 | | Gain on sale of assets held for sale | ($14,337) | — | | **Non-GAAP net income** | **$23,822** | **$18,344** | Non-GAAP Net Income Per Share | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Non-GAAP net income per share — diluted | $0.13 | $0.09 | [Reconciliation to Free Cash Flow](index=10&type=section&id=Free%20Cash%20Flow) Free cash flow for Q1 2025 surged 67% to $41.3 million, derived from net cash provided by operating activities less purchases of property and equipment Free Cash Flow Calculation (in thousands) | Line Item | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $50,703 | $34,194 | | Purchase of property and equipment | ($9,378) | ($9,477) | | **Free cash flow** | **$41,325** | **$24,717** |

Core Insights - LegalZoom reported strong first quarter results with a revenue of $183.1 million, reflecting a 5% year-over-year growth, driven by an 8% increase in subscription revenue to $116.3 million [5][6][29] - The company achieved an Adjusted EBITDA of $37.0 million, marking a 33% increase year-over-year, with an Adjusted EBITDA margin of 20% [5][6][34] - LegalZoom reiterated its full-year revenue outlook of 5% year-over-year growth, despite macroeconomic uncertainties [2][5] Financial Performance - First quarter net income was $5.1 million, an 8% increase from the previous year, maintaining a net income margin of 3% [5][6][29] - Non-GAAP net income for the quarter was $23.8 million, up 30% year-over-year, with a Non-GAAP net income margin of 13% [6][34] - Cash and cash equivalents at the end of the quarter totaled $210.0 million, up from $142.1 million at the end of 2024 [5][6][26] Operational Highlights - The company experienced a 20% increase in subscription units year-over-year, indicating successful subscription growth initiatives [5][6][7] - LegalZoom's acquisition of Formation Nation contributed $8.6 million in revenue since the acquisition date [8] - The company announced a $100 million increase in its share repurchase authorization, bringing the total to approximately $150 million [5][8] Key Business Metrics - Transaction revenue was $66.9 million, a 1% increase year-over-year, with transaction units also up by 1% [6][7] - Average revenue per subscription unit (ARPU) decreased by 7% to $252 [7] - Free cash flow for the quarter was $41.3 million, a significant increase of 67% year-over-year [6][37]

Company Overview - LegalZoom.com, Inc. is a leading online platform for legal services, transforming how individuals and small businesses navigate the legal system [2][3] - The company combines intuitive technology with access to experienced attorneys, offering tools and guidance for business formations, compliance, estate planning, and ongoing legal support [2] Upcoming Investor Conferences - LegalZoom management will participate in the Jefferies 2025 Software & Internet Conference on May 28, 2025, with a fireside chat led by CEO Jeff Stibel and CFO Noel Watson [4] - The company will also participate in the William Blair 45th Annual Growth Stock Conference on June 4, 2025, with CFO Noel Watson hosting a fireside chat and investor meetings on June 3 and 4 [4] Investor Relations - A live audio webcast and replay of the presentations from these conferences will be available on the LegalZoom Investor Relations website [1]

Core Viewpoint - LegalZoom.com, Inc. is set to report its financial results for the first quarter of 2025 on May 7, 2025, after market close, indicating a focus on transparency and communication with investors [1]. Group 1: Financial Reporting - The financial results for the first quarter ended March 31, 2025, will be announced on May 7, 2025 [1]. - A conference call and webcast will be hosted by the CEO and CFO at 4:30 p.m. ET on the same day to discuss the results [1]. Group 2: Company Overview - LegalZoom is a leading online platform for legal services, aimed at transforming how individuals and small businesses navigate the legal system [3]. - The company combines technology with access to experienced attorneys, providing tools for business formations, compliance, estate planning, and ongoing legal support [3]. - With over two decades of experience and millions of customers served, LegalZoom helps clients manage their legal needs confidently [4].

Core Insights - LegalZoom.com, Inc. has appointed Pratik Savai as the new Chief Technology Officer to enhance its technology ecosystem and leverage emerging technologies like generative AI to simplify legal processes for users [1][2] - Pratik Savai has a strong background in technology leadership, having previously served as CTO at Elation Health and held significant roles at Cornerstone OnDemand, contributing to substantial revenue growth and team scaling [2][3] - The company aims to reshape access to legal services through innovative technology solutions, enhancing efficiency, accessibility, and customer experience in the legal industry [3] Company Overview - LegalZoom is a prominent online platform that assists individuals and small businesses in navigating the legal system by combining technology with access to experienced attorneys [4] - The platform has served millions of customers over two decades, providing tools and guidance for various legal needs, including business formation, compliance, and estate planning [5]

Core Viewpoint - LegalZoom.com, Inc. has appointed Pratik Savai as the new Chief Technology Officer to enhance its technology ecosystem and leverage emerging technologies like generative AI to simplify legal processes for users [1][2]. Company Overview - LegalZoom is a leading online platform that transforms how individuals and small businesses navigate the legal system by combining intuitive technology with access to experienced attorneys [4]. - The company has served millions of customers over two decades, providing tools and guidance for various legal needs, including business formation, compliance, and estate planning [5]. Leadership and Expertise - Pratik Savai is recognized as an innovative leader with extensive technical expertise, having previously served as CTO at Elation Health, where he led teams to create transformative solutions for small businesses and large health providers [2]. - His prior experience includes a 16-year tenure at Cornerstone OnDemand, where he focused on workforce agility and contributed to building businesses with over $840 million in recurring subscription revenues [2]. Vision and Goals - Pratik Savai expressed excitement about joining LegalZoom at a pivotal time, emphasizing the company's role in reshaping access to legal services and creating opportunities for businesses and individuals [3]. - He aims to collaborate with the technology team to drive innovation and enhance efficiency, accessibility, and customer experience in the legal industry [3].

Group 1 - The article emphasizes the importance of exploring smaller-cap stocks during volatile market conditions to identify potential investment opportunities [1] - It highlights the experience of Gary Alexander, who has a background in technology companies and has been involved with startups, indicating a strong understanding of current industry trends [1] - The article mentions that Gary Alexander has been a contributor to Seeking Alpha since 2017 and has been featured in various web publications, showcasing his credibility in the investment community [1] Group 2 - There is a focus on the need for investors to look beyond conventional stocks to achieve better market performance [1] - The article suggests that smaller-cap stocks may offer significant upside potential compared to larger, more established companies [1]

Financial Data and Key Metrics Changes - The company achieved fourth quarter revenue of $162 million, marking a 2% year-over-year increase, with subscription revenue also growing by 2% due to stronger compliance-related subscriptions [12][39] - Adjusted EBITDA for Q4 was $44 million, representing a 27% margin, which is a 32% year-over-year increase compared to $33 million in the same period last year [16][44] - Full-year adjusted EBITDA was $148 million, reflecting a 25% year-over-year growth, with adjusted EBITDA margins increasing by 380 basis points to 22% [35][36] Business Line Data and Key Metrics Changes - Subscription revenue reached $109 million in Q4, up 2% year-over-year, while transaction revenue was $53 million, also up 2% [39][37] - The company recorded 241,000 transaction units in Q4, a 12% increase, but business formations declined by 15% to 96,000 units [38][39] - Average order value decreased by 9% to $220, driven by a higher mix of lower-priced transactions [40] Market Data and Key Metrics Changes - The company noted a decline in formations faster than the overall US business formations, indicating a strategic shift towards attracting higher-value customers [13] - The average revenue per user (ARPU) was $263 for Q4, down 5% due to pricing changes in compliance-related subscriptions [40] Company Strategy and Development Direction - The company is focusing on optimizing its subscription business, reorienting its go-to-market strategy, and leveraging AI to enhance service delivery [8][9] - A new marketing campaign is set to launch in spring 2025, emphasizing the company's premium positioning in the legal services market [22] - The acquisition of Formation Nation is expected to enhance customer service, expand offerings, and strengthen market position [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a 5% year-over-year revenue growth in 2025, with expectations of reaccelerating subscription revenue growth [15][50] - The company anticipates challenges from the beneficial ownership filing requirement and the discontinuation of new customer acquisition related to its tax offering, which may impact revenue growth [51][52] - Management emphasized a focus on quality over quantity in customer acquisition, aiming to build a more sustainable business model [121][122] Other Important Information - The company ended Q4 with cash and cash equivalents of $142 million and remains debt-free [46] - Free cash flow for Q4 was $36 million, significantly exceeding expectations, attributed to improved adjusted EBITDA and working capital changes [45][71] Q&A Session Summary Question: Update on registered agent price change and differentiation - Management highlighted the positive impact of raising the registered agent price from $199 to $249, emphasizing the strength of their service and technology compared to competitors [61][66] Question: Comments on Q4 free cash flow performance - Management noted strong Q4 free cash flow performance due to exceeding adjusted EBITDA expectations and favorable working capital changes, with expectations for continued strong conversion in 2025 [71][75] Question: Details on Formation Nation acquisition impact - Management confirmed that Q1 and full-year guidance includes the impact of Formation Nation, with plans to integrate and shift their business model towards subscriptions [80][82] Question: Subscription net unit adds and drivers - Management attributed strong subscription net unit adds to bundling strategies and improved compliance offerings, with expectations for continued growth in 2025 [100][104] Question: Strategy for partnerships and future growth - Management discussed the importance of diversifying go-to-market strategies and leveraging partnerships to enhance customer acquisition and service offerings [111][115] Question: Market share focus and Formation Nation's role - Management clarified the shift towards quality share over market share, with expectations that Formation Nation will contribute positively to business formation counts [117][124] Question: Long-term vision for AI capabilities - Management outlined plans to leverage AI to augment expertise and improve operational efficiencies, enhancing customer service and product offerings [130][135] Question: Marketing strategy and brand spend - Management detailed a shift in marketing strategy to increase brand spend and focus on education, moving away from a heavy reliance on search marketing [139][142]

Michael Wiggins De Oliveira is an inflection investor. This means buying into cheap companies at the moment when their narrative is changing and the business is on a path toward becoming significantly more profitable over the next year.With a focus on tech and “the Great Energy Transition (including uranium)”, Michael runs a concentrated portfolio with approximately 15 to 20 stocks and an average holding period of 18 months. Through his 10+ years analyzing countless companies, Michael has accumulated outsta ...

FEBRUARY 2025 Investor Presentation Forward-looking statements disclaimer This presentation 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 presentation may be forward-looking statements. In some cases, you can identify ...