LegalZoom.com Inc (LZ, Financial), a leading online platform for legal solutions, has released its financial results for the third quarter ended September 30, 2023. The company reported an 8% increase in revenue year-over-year, amounting to $167.3 million. This growth was bolstered by a significant 14% rise in subscription revenue, which totaled $104.5 million for the quarter. The filing date for these results was November 7, 2023.
Financial Highlights and Performance Metrics
LegalZoom.com Inc (LZ, Financial) demonstrated a solid financial performance with several key metrics indicating growth. The company's net income stood at $7.5 million, or 5% of revenue, marking a notable improvement from a net loss of $12.0 million, or 8% of revenue, in the same period last year. Adjusted EBITDA doubled year-over-year to $33.7 million, representing 20% of revenue. The company also reported a healthy cash and cash equivalents balance of $212.1 million, with no debt outstanding as of September 30, 2023.
Transaction revenue experienced a slight decline of 2% year-over-year, primarily due to a reduction in average order value, which was partially offset by a 5% increase in transaction unit volume. Despite this, the company's subscription business showed robust growth, with a 2% year-over-year increase in average revenue per subscription unit and the addition of 153 thousand net new subscription units over the trailing twelve months.
Operational and Strategic Developments
LegalZoom.com Inc (LZ, Financial) has maintained a strong focus on product innovation and expansion. The company launched several new products, including a Business Licenses compliance product, an accounting solution named LZ Books, an AI-powered document summarization tool called Doc Assist, and a revamped Legal Forms library. These initiatives reflect the company's commitment to providing comprehensive legal and compliance solutions to small business owners.
We had another strong quarter of financial performance, but equally important, we continue to demonstrate increased product velocity with the release of Business Licenses and the continued evolution of Legal Forms," said Dan Wernikoff, LegalZoom’s Chief Executive Officer.
Our third quarter results outperformed our expectations and reflect strong growth in business formations as well as strength in our subscriptions business. This, combined with our continued focus on profitability, drove third quarter Adjusted EBITDA of $33.7 million, double the prior-year period," added Noel Watson, LegalZoom’s Chief Financial Officer.
Stockholder Return Activity and Financial Outlook
During the third quarter, LegalZoom.com Inc (LZ, Financial) repurchased approximately 4.7 million shares of its common stock for a total of $45.1 million, exhausting its existing $150 million stock repurchase program. The board of directors has authorized a new stock repurchase program of up to $100.0 million with no expiration date.
For the fourth quarter ending December 31, 2023, LegalZoom.com Inc (LZ, Financial) expects revenue to be in the range of $155 million to $157 million, with Adjusted EBITDA anticipated to be between $28 million and $30 million. The full-year guidance has been updated, with revenue now expected to be between $657 million and $659 million and Adjusted EBITDA projected to be in the range of $114 million to $116 million.
The company's continued growth, strategic product launches, and strong financial position underscore its commitment to supporting small business owners and entrepreneurs. LegalZoom.com Inc (LZ, Financial) remains focused on leveraging its platform to deliver value to its customers and shareholders alike.
Explore the complete 8-K earnings release (here) from LegalZoom.com Inc for further details.
