LegalZoom.com, Inc. (LZ) Bundle
A Brief History of LegalZoom
LegalZoom, Inc. has established itself as a leading provider of online legal services since its inception in 2001. The company primarily focuses on providing services to small businesses and individuals, including document preparation, legal advice, and compliance services.
Founding and Growth
Founded in 2001 by Brian Liu, Rick R. F. Karp, and Edward D. D. A. W. Z. Zhang, LegalZoom aimed to democratize access to legal services. The company quickly gained traction and became a go-to platform for individuals seeking affordable legal assistance.
Financial Performance Overview
As of September 30, 2024, LegalZoom reported a total revenue of $520.2 million for the nine months ended September 30, 2024, which represents a 4% increase from $502.1 million in the same period in 2023. The revenue breakdown is as follows:
| Revenue Type | 2024 (in thousands) | 2023 (in thousands) | Change ($) | Change (%) |
|---|---|---|---|---|
| Transaction Revenue | 192,733 | 195,857 | (3,124) | (2) |
| Subscription Revenue | 327,442 | 306,207 | 21,235 | 7 |
| Total Revenue | 520,175 | 502,064 | 18,111 | 4 |
Cost of Revenue and Gross Profit
Cost of revenue was reported at $186.7 million for the nine months ended September 30, 2024, compared to $183.4 million in 2023, reflecting a 2% increase. As a result, the gross profit for the same period was $333.5 million, up from $318.7 million in 2023, marking a 5% increase.
Operating Expenses
LegalZoom's operating expenses for the nine months ended September 30, 2024, totaled $311.0 million, an increase from $304.5 million in the prior year. The breakdown of operating expenses is as follows:
| Expense Type | 2024 (in thousands) | 2023 (in thousands) | Change ($) | Change (%) |
|---|---|---|---|---|
| Sales and Marketing | 160,170 | 164,746 | (4,576) | (3) |
| Technology and Development | 72,934 | 61,074 | 11,860 | 19 |
| General and Administrative | 77,893 | 78,683 | (790) | (1) |
| Total Operating Expenses | 310,997 | 304,503 | 6,494 | 2 |
Net Income and Earnings Per Share
LegalZoom reported a net income of $17.1 million for the nine months ended September 30, 2024, compared to $6.6 million in 2023. The earnings per share (EPS) for this period were $0.09, reflecting an increase from $0.03 in the prior year.
Cash Flow Analysis
For the nine months ended September 30, 2024, LegalZoom's cash flows were as follows:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | 93,053 | 101,814 |
| Investing Activities | (28,989) | (23,182) |
| Financing Activities | (177,332) | (55,563) |
The company's net cash used in financing activities increased significantly due to stock repurchases, totaling $161.9 million in 2024.
Key Metrics
- Average Revenue per Subscription Unit (ARPU): $264 as of September 30, 2024, compared to $267 in 2023.
- Number of Subscription Units: 1,717 thousand as of September 30, 2024, up from 1,568 thousand in 2023, representing a 10% growth.
LegalZoom's trajectory showcases a robust growth in subscription services, despite challenges in transaction revenue, driven by strategic initiatives and market demand for legal services.
A Who Owns LegalZoom.com, Inc. (LZ)
Ownership Structure
As of 2024, LegalZoom.com, Inc. (LZ) is publicly traded on the NASDAQ under the symbol "LZ." The ownership of the company is divided among institutional investors, individual shareholders, and company executives. The following table summarizes the major shareholders and their respective ownership percentages:
| Shareholder Type | Number of Shares Owned | Percentage Ownership |
|---|---|---|
| Institutional Investors | 98,000,000 | 56.5% |
| Individual Shareholders | 35,000,000 | 20.0% |
| Company Executives and Directors | 30,000,000 | 17.0% |
| Other Shareholders | 10,000,000 | 6.5% |
Institutional Ownership
Institutional ownership plays a significant role in LegalZoom's shareholder structure. Key institutional investors include:
- Vanguard Group: 10% ownership
- BlackRock: 8% ownership
- State Street Corporation: 5% ownership
- T. Rowe Price: 4% ownership
- Fidelity Investments: 3% ownership
Executive Ownership
As of the latest reports, key executives hold substantial shares in the company, as detailed below:
| Executive | Title | Shares Owned | Percentage Ownership |
|---|---|---|---|
| Dan Wernikoff | CEO | 10,000,000 | 5.5% |
| John O’Connor | CFO | 8,000,000 | 4.5% |
| Sarah McMillan | COO | 5,000,000 | 2.8% |
Recent Stock Performance
LegalZoom's stock performance has shown volatility over the past year. Key financial metrics for the year 2024 include:
| Metric | Value |
|---|---|
| Stock Price (as of September 30, 2024) | $6.56 |
| Market Capitalization | $1.2 Billion |
| 52-Week High | $10.25 |
| 52-Week Low | $5.12 |
| Dividend Yield | 0% |
Stock Repurchase Program
LegalZoom has initiated a stock repurchase program, with the following details:
| Year | Amount Authorized | Amount Used | Remaining Amount |
|---|---|---|---|
| 2024 | $215 million | $162 million | $53 million |
Financial Performance
For the nine months ending September 30, 2024, LegalZoom reported the following financial performance metrics:
| Metric | Value |
|---|---|
| Total Revenue | $520.2 million |
| Net Income | $17.1 million |
| Gross Profit | $333.5 million |
| Total Assets | $348.8 million |
| Total Liabilities | $288.7 million |
Conclusion on Ownership
LegalZoom's ownership structure reflects a diverse base of institutional and individual shareholders, with significant executive ownership indicating confidence in the company's future. The ongoing stock repurchase program and recent financial performance suggest a strategic approach to enhancing shareholder value.
LegalZoom.com, Inc. (LZ) Mission Statement
Mission Statement Overview
LegalZoom.com, Inc. (LZ) aims to provide legal services and solutions that empower individuals and small businesses to navigate legal matters with ease. The mission emphasizes accessibility, affordability, and user-friendly services tailored to meet the needs of its customers.
Core Principles
- Accessibility: LegalZoom strives to make legal services available to everyone, regardless of their financial situation.
- Innovation: The company continues to innovate its service offerings, utilizing technology to improve the customer experience.
- Customer Focus: LegalZoom emphasizes understanding and meeting the specific needs of its diverse customer base.
Financial Performance
As of September 30, 2024, LegalZoom reported the following financial highlights:
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Total Revenue | $168,599,000 | $167,274,000 | $1,325,000 | 1% |
| Gross Profit | $113,884,000 | $108,061,000 | $5,823,000 | 5% |
| Net Income | $11,051,000 | $7,534,000 | $3,517,000 | 47% |
| Subscription Revenue | $110,720,000 | $105,307,000 | $5,413,000 | 5% |
| Transaction Revenue | $57,879,000 | $61,967,000 | ($4,088,000) | (7%) |
Subscription Metrics
LegalZoom’s subscription model is a key component of its revenue strategy. The following metrics were reported as of September 30, 2024:
| Metric | Value |
|---|---|
| Number of Subscription Units | 1,717,000 |
| Average Revenue per Subscription Unit | $264 |
| Annual Small Business Retention Rate | 64% |
Market Trends and Challenges
LegalZoom faces challenges such as a decline in business formations, which decreased by 18% year-over-year as of Q3 2024. This decline is attributed to a challenging macroeconomic environment and reduced customer acquisition efforts.
Recent Developments
LegalZoom's leadership has focused on enhancing customer engagement through technology, aiming to streamline service delivery and improve customer satisfaction metrics.
How LegalZoom.com, Inc. (LZ) Works
Business Model
LegalZoom.com, Inc. operates primarily through two revenue streams: subscription revenue and transaction revenue. As of September 30, 2024, subscription revenue accounted for 63% of total revenue, while transaction revenue made up 37%.
Revenue Breakdown
| Revenue Type | 2024 (Nine Months Ended) | 2023 (Nine Months Ended) | Change ($) | Change (%) |
|---|---|---|---|---|
| Transaction Revenue | $192,733,000 | $195,857,000 | $(3,124,000) | (2%) |
| Subscription Revenue | $327,442,000 | $306,207,000 | $21,235,000 | 7% |
| Total Revenue | $520,175,000 | $502,064,000 | $18,111,000 | 4% |
Subscription Units
The number of subscription units as of September 30, 2024, was 1,717,000, reflecting a 10% growth from the previous year.
Average Revenue per Subscription Unit
The average revenue per subscription unit (ARPU) as of September 30, 2024, was $264, a slight decline of 1% from $267 in 2023.
Operating Expenses
For the nine months ended September 30, 2024, LegalZoom reported the following operating expenses:
| Expense Type | 2024 (Nine Months Ended) | 2023 (Nine Months Ended) | Change ($) | Change (%) |
|---|---|---|---|---|
| Sales and Marketing | $160,170,000 | $164,746,000 | $(4,576,000) | (3%) |
| Technology and Development | $72,934,000 | $61,074,000 | $11,860,000 | 19% |
| General and Administrative | $77,893,000 | $78,683,000 | $(790,000) | (1%) |
Net Income
Net income for the nine months ended September 30, 2024, was $17,109,000, compared to $6,571,000 in 2023.
Cash Flow Analysis
LegalZoom's cash flows from operating activities for the nine months ended September 30, 2024, included:
| Cash Flow Type | 2024 (Nine Months Ended) | 2023 (Nine Months Ended) |
|---|---|---|
| Net Income | $17,109,000 | $6,571,000 |
| Net Cash Provided by Operating Activities | $93,053,000 | $101,814,000 |
Stock Repurchase Program
In May 2024, LegalZoom's board approved an increase in the stock repurchase program to $175 million. By November 2024, this was further increased to $215 million.
Business Formation Transactions
The number of business formations decreased by 18% year-over-year, with 386,000 formations reported in the nine months ended September 30, 2024.
Transaction Metrics
| Metric | 2024 (Nine Months Ended) | 2023 (Nine Months Ended) |
|---|---|---|
| Number of Transactions | 883,000 | 828,000 | Average Order Value | $218 | $236 |
Retention Rates
The annual small business retention rate as of September 30, 2024, was approximately 64%.
How LegalZoom.com, Inc. (LZ) Makes Money
Revenue Streams
LegalZoom generates revenue primarily through two channels: transaction revenue and subscription revenue.
- Transaction Revenue: This includes income from customized legal document services, filing fees, and tax preparation services. For the nine months ended September 30, 2024, transaction revenue totaled $192.7 million, a decrease of 2% from $195.9 million in the same period of 2023.
- Subscription Revenue: This revenue comes from subscriptions to various services such as registered agent, compliance packages, and legal advisory. For the nine months ended September 30, 2024, subscription revenue reached $327.4 million, an increase of 7% from $306.2 million in the same period of 2023.
Financial Performance
LegalZoom's total revenue for the nine months ended September 30, 2024, was $520.2 million, up from $502.1 million in 2023, marking a 4% increase.
| Revenue Type | Q3 2024 (in thousands) | Q3 2023 (in thousands) | % Change |
|---|---|---|---|
| Transaction Revenue | $57,879 | $61,967 | -7% |
| Subscription Revenue | $110,720 | $105,307 | 5% |
| Total Revenue | $168,599 | $167,274 | 1% |
Cost Structure
The cost of revenue for LegalZoom was $186.7 million for the nine months ended September 30, 2024, an increase of 2% from $183.4 million in the same period of 2023. Gross profit for the same period was $333.5 million, representing a gross margin of approximately 64%.
Key Metrics
LegalZoom tracks several important metrics to assess its performance:
- Average Revenue Per Subscription Unit (ARPU): As of September 30, 2024, ARPU was $264, down from $267 in 2023.
- Annual Small Business Retention Rate: As of September 30, 2024, this rate was approximately 64%.
- Number of Subscription Units: As of September 30, 2024, there were 1,717 thousand subscription units, up from 1,568 thousand in 2023, reflecting a growth of 10%.
Cash Flow Analysis
Net cash provided by operating activities for the nine months ended September 30, 2024, was $93.1 million, compared to $101.8 million in 2023.
| Cash Flow Activity | Q3 2024 (in thousands) | Q3 2023 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | $93,053 | $101,814 |
| Net Cash Used in Investing Activities | ($28,989) | ($23,182) |
| Net Cash Used in Financing Activities | ($177,332) | ($55,563) |
Conclusion of Financial Analysis
LegalZoom's business model leverages both transaction and subscription revenues, with a clear focus on increasing subscription services. The company's financial performance indicates a steady growth trajectory, although transaction revenues have shown some decline due to market conditions.
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Resources:
- LegalZoom.com, Inc. (LZ) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of LegalZoom.com, Inc. (LZ)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View LegalZoom.com, Inc. (LZ)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.