LegalZoom.com (NASDAQ:LZ) Posts Earnings Results, Misses Expectations By $0.01 EPS

LegalZoom.com (NASDAQ:LZ) posted its earnings results on Thursday. The company reported $0.17 earnings per share for the quarter, missing analysts’ consensus estimates of $0.18 by ($0.01), FiscalAI reports. LegalZoom.com had a return on equity of 9.91% and a net margin of 3.05%.The business had revenue of $190.27 million during the quarter, compared to the consensus estimate of $184.85 million. During the same quarter last year, the firm earned $0.19 earnings per share. The business’s quarterly revenue was up 17.7% on a year-over-year basis.

Here are the key takeaways from LegalZoom.com’s conference call:

• LegalZoom is pivoting to an AI-enabled human-in-the-loop strategy—combining automated workflows with legal experts—to capture the “last mile” of legal work and expand beyond formations into higher-value services for existing businesses.
• 2025 results showed solid execution: revenue grew 11% to $756M, Adjusted EBITDA was $172M (23% margin), subscription revenue rose 13% for the year and 20% in Q4, and full-year free cash flow hit a record $148M.
• 2026 guidance targets revenue of $805M–$825M (~8% growth) and a wide Adjusted EBITDA range ($100M–$200M) with a Q1 EBITDA decline due to front‑loaded brand and partner marketing, indicating progress but some near‑term variability.
• Strong capital return and liquidity: LegalZoom repurchased ~$80M of stock in 2025 (4.3M shares in Q4), increased its buyback authorization by $100M, ended Q4 with $203M cash, and has an undrawn $100M revolver.
• Investments and integration costs are pressuring near‑term margins and cash flow: sales & marketing spend rose (including CAM and Formation Nation-related costs), non‑CAM S&M jumped 103%, Q4 free cash flow fell 22% sequentially, and the company completed a 5% headcount reduction.

LegalZoom.com Stock Down 2.6%

LZ traded down $0.18 on Friday, reaching $6.87. 874,868 shares of the company traded hands, compared to its average volume of 3,805,070. The company has a market cap of $1.22 billion, a P/E ratio of 58.17, a price-to-earnings-growth ratio of 1.19 and a beta of 1.22. LegalZoom.com has a one year low of $6.47 and a one year high of $12.40. The firm has a fifty day simple moving average of $9.06 and a two-hundred day simple moving average of $9.78.

Insider Activity at LegalZoom.com

In other news, CFO Noel Bertram Watson sold 15,000 shares of LegalZoom.com stock in a transaction that occurred on Wednesday, February 18th. The shares were sold at an average price of $6.96, for a total transaction of $104,400.00. Following the completion of the sale, the chief financial officer owned 1,480,860 shares of the company’s stock, valued at approximately $10,306,785.60. The trade was a 1.00% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which is accessible through this link. Company insiders own 5.90% of the company’s stock.

Institutional Investors Weigh In On LegalZoom.com

Several hedge funds have recently modified their holdings of the business. Goldman Sachs Group Inc. raised its stake in LegalZoom.com by 165.3% in the fourth quarter. Goldman Sachs Group Inc. now owns 3,730,487 shares of the company’s stock worth $37,044,000 after buying an additional 2,324,481 shares in the last quarter. Boston Partners bought a new stake in LegalZoom.com during the third quarter valued at about $20,686,000. Qube Research & Technologies Ltd lifted its position in shares of LegalZoom.com by 180.5% during the second quarter. Qube Research & Technologies Ltd now owns 1,797,252 shares of the company’s stock valued at $16,014,000 after buying an additional 1,156,462 shares during the last quarter. Norges Bank purchased a new stake in shares of LegalZoom.com during the fourth quarter valued at about $10,526,000. Finally, Lazard Asset Management LLC boosted its holdings in shares of LegalZoom.com by 507.3% in the 2nd quarter. Lazard Asset Management LLC now owns 1,104,734 shares of the company’s stock valued at $9,842,000 after buying an additional 922,829 shares in the last quarter. Hedge funds and other institutional investors own 81.99% of the company’s stock.

LegalZoom.com announced that its Board of Directors has authorized a share repurchase plan on Thursday, February 19th that authorizes the company to buyback $100.00 million in shares. This buyback authorization authorizes the company to reacquire up to 8.1% of its stock through open market purchases. Stock buyback plans are generally a sign that the company’s board of directors believes its stock is undervalued.

LegalZoom.com News Summary

Here are the key news stories impacting LegalZoom.com this week:

• Positive Sentiment: Company reported strong full‑year operating performance: 2025 revenue $756.0M (up 11% Y/Y), record operating cash flow of $178.2M and free cash flow of $147.9M; no debt and $203.1M cash on hand — supports balance‑sheet strength and cash returns. GlobeNewswire Release
• Positive Sentiment: Board authorized a $100M share repurchase (up to ~8.1% of shares) — management signaling the stock may be undervalued and increasing buyback-driven EPS support. RTT News
• Neutral Sentiment: Revenue beat while EPS slightly missed: Q4 revenue $190.27M vs. $184.85M expected (revenue +17.7% Y/Y); EPS $0.17 vs. $0.18 expected — top‑line growth is healthy but margin/earnings optics are mixed. Earnings Release & Call
• Neutral Sentiment: Company issued FY‑2026 revenue guidance of $805M–$825M (above consensus ~$802M) and Q1 revenue guidance ~$200M–$203M (roughly in line) — guidance shows continued revenue growth but EPS guidance was not provided in detail. (See press materials.) Slide Deck / Guidance
• Neutral Sentiment: Full Q4 earnings call transcript is available for detail on margin drivers, subscription strategy and Formation Nation acquisition contributions — useful for investors modeling forward margins and customer mix. Seeking Alpha Transcript
• Negative Sentiment: Q4 EPS missed estimates ($0.17 vs. $0.18 consensus) and EPS declined versus prior year ($0.19) — earnings weakness may temper near‑term multiple expansion. Zacks
• Negative Sentiment: JPMorgan lowered its 12‑month price target from $14 to $11 (while keeping an overweight rating), signaling more cautious upside expectations from a major bank analyst. Benzinga / TickerReport coverage
• Negative Sentiment: CFO Noel Watson sold 15,000 shares (~$104k) on Feb 18; the sale is small relative to total holdings but may be viewed negatively by some investors. SEC filing: SEC Form 4
• Neutral Sentiment: Short‑interest reporting in the feed appears inconsistent (shows 0), so it’s not a clear signal of bearish positioning at this time.

Analyst Upgrades and Downgrades

LZ has been the subject of a number of recent research reports. Zacks Research cut LegalZoom.com from a “hold” rating to a “strong sell” rating in a report on Monday, January 19th. Morgan Stanley lifted their price objective on shares of LegalZoom.com from $8.50 to $9.00 and gave the stock an “underweight” rating in a research note on Thursday, November 13th. William Blair upgraded shares of LegalZoom.com from a “market perform” rating to an “outperform” rating in a research report on Thursday, November 6th. JPMorgan Chase & Co. lowered their target price on shares of LegalZoom.com from $14.00 to $11.00 and set an “overweight” rating for the company in a report on Wednesday. Finally, Wall Street Zen downgraded shares of LegalZoom.com from a “strong-buy” rating to a “buy” rating in a report on Saturday, November 1st. Three analysts have rated the stock with a Buy rating, four have issued a Hold rating and two have issued a Sell rating to the stock. According to MarketBeat, the stock currently has an average rating of “Hold” and an average target price of $10.90.

LegalZoom.com Company Profile

LegalZoom.com, Inc (NASDAQ: LZ) operates as a leading online legal technology company that provides a broad range of legal and business services to individuals, families and small businesses. Through its digital platform, the company offers customized legal documents and filing services, including business formation (LLCs, corporations and nonprofits), estate planning (wills and trusts), intellectual property protection (trademarks and copyrights), and ongoing compliance support. LegalZoom also connects customers with independent attorneys for consultations on matters such as family law, immigration and real estate.

Founded in 2001 by entrepreneurs Brian Lee, Brian P.