LegalZoom.com, Inc. Q4 FY2025 earnings call

• Jeff Stibel discussed LegalZoom's 25th anniversary, strategy of combining AI with human expertise, and how AI is accelerating entrepreneurship. Moved flagship automated formation product to free in 2023. Focus on human-in-the-loop strategy with expert layer (legal advice subscriptions, trademark/IP services, concierge offerings) and service layer (registered agent, virtual mail). - Noel Watson detailed financial results, noting 11% revenue growth in 2025, 18% revenue growth in Q4 2025, and focus on durable subscription growth and margin expansion. Talked about ARPU, transaction trends, profitability metrics, share repurchases, and confidence in the business trajectory.

Full year 2025 revenue grew 11% to $756 million. Subscription revenue increased 13% to $500 million+ (approximate). Fourth quarter 2025 total revenue was $190 million, up 18%. Subscription revenue was $131 million, up 20%. Transaction revenue was $59 million, up 12%. Full year adjusted EBITDA was $172 million, 23% margin. Fourth quarter adjusted EBITDA was $50 million, 26% margin. Deferred revenue declined by $10 million sequentially. ARPU was $266 for the quarter, up 1% year-over-year. Transaction units declined 1% to 239,000, but excluding BOIR and Formation Nation, transaction units increased 5%. Processed 112,000 business formations in the quarter, up 17% year-over-year. Average order value was $248 for the quarter, up 13% year-over-year.

• Full year 2026 revenue expected in range of $805 million to $825 million, ~8% growth at midpoint. - Full year 2026 adjusted EBITDA expected in range of $190 million to $200 million, ~13% growth at midpoint. - First quarter 2026 revenue expected in range of $200 million to $203 million, ~10% growth at midpoint. - First quarter 2026 adjusted EBITDA expected in range of $34 million to $36 million, ~5% decline at midpoint. - CAM spend expected to grow slightly faster than revenue in 2026, with timing optimized to peak seasonality.

Q: Are there any early metrics on how the concierge product is doing?

A: There are early proof points and green shoots, factored into 2026 expectations conservatively, and it's one of the biggest growth drivers.

Q: Given the strength of the business formation environment, do you see any likeliness of sizing up customer acquisition marketing throughout the year?

A: Yes, Q1 marketing spend accelerated, looking for right types of customers, marketing is performance-based.

Q: On the revenue growth guide and cadence throughout the year, is it a function of tougher compares?

A: Yes, due to comping challenges from initiatives like Formation Nation, 1-800 Accountant tax partnerships, and pricing in 2025.

Q: What needs to go right to be a durable double-digit grower?

A: Human-in-the-loop strategy to expand serviceable addressable market and capture new market from AI opening up legal problems for small business owners.

Q: How are conversations with partners like Perplexity, OpenAI?

A: Deeply focused, both parties identify problem of AI completing most but needing last-mile legal service, working on partnership and integration.

Q: Contribution from Formation Nation to subscription and transaction revenue in Q4?

A: In Q4, Formation Nation contributed about $9.8 million on transaction side and $5.7 million in subscription revenue, expected to continue growing in 2026.

Q: Additional investments needed for human-in-the-loop and new products?

A: Significant investment, with AI driving savings in other areas, and balance between revenue growth and profitability.

Q: Conversations on acquiring existing businesses and competitive dynamics?

A: Started with own base, leveraged partners, competitive landscape mostly pure-play software providers, focus on working with them to dominate SAM.

Q: Impact of lapping compliance pricing and bundling strategy?

A: Growth acceleration from multiple fronts including bundling, pricing action, retention improvement, multifaceted.

Q: How to think about formations growth and share?

A: Keenly focused on quality share, macro environment supportive, expectation to meet guidance regardless.

Q: 3% organic growth in 2025 and 8% guide?

A: 3% organic growth in 2025, 8% guide has organic acceleration, concierge compliance-oriented products doing well.

Q: Impact of agentic legal tools on workflows and billing terms?

A: Accelerant internally for scaling, externally drives SAM, AI search impacts traffic with higher qualified traffic converting better.

Q: Tools for reorienting to higher-value clients and brand marketing?

A: Leveraging AI systems, bringing in service and expert layers, brand marketing in Q1 through connected TV, YouTube, social channels, paying dividends short term.

Q: Success in moving Formation Nation customer base to upsell?

A: Similar to LegalZoom, slower than desired, but continuing to drive conversion and subscription where appropriate.