LegalZoom.com (LZ) Earnings Date & Reports

Key Takeaways

• LegalZoom (LZ) is expected to report third-quarter 2026 results in early November, with management guiding to revenue of $192 million–$196 million and Adjusted EBITDA of $49 million–$51 million.
• Analyst consensus points to revenue of roughly $193 million–$195 million and non-GAAP earnings per share of about $0.20.
• Changes to Google search results are pressuring customer acquisition, and third-quarter guidance implies a meaningful decline in transaction volume.
• Subscription revenue remains the standout, having grown by double digits for five consecutive quarters on higher-value "human-in-the-loop" offerings.
• The prior report triggered a roughly 30% single-day selloff after full-year revenue guidance was cut, so investors will watch closely for any signs of stabilization.

Earnings Context and Why It Matters

LegalZoom is America's largest online legal services platform, helping individuals and small businesses handle business formation, compliance, and estate planning. Over the past two years, the company has repositioned itself around higher-value subscriptions that pair artificial intelligence with human expertise. That shift is working on the subscription side, but a broader change in how customers discover services online has created a new headwind. Management has warned that Google search algorithm updates are reducing traditional search-driven traffic, directly pressuring transaction revenue. This upcoming quarterly earnings report will therefore test whether durable subscription growth and newer acquisition channels—including partnerships and AI platforms—can offset declining search-driven demand and stabilize the growth outlook.

Earnings Expectations

For the third quarter ending September 30, 2026, LegalZoom has guided to revenue of $192 million to $196 million, representing roughly 2% year-over-year growth at the midpoint, and Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $49 million to $51 million, or about a 26% margin. Wall Street consensus aligns closely with this range, projecting revenue near $193 million–$195 million and non-GAAP (non-Generally Accepted Accounting Principles) earnings per share of approximately $0.20.

For context, in the second quarter of 2026 the company reported revenue of $205.3 million, up 7% year over year, with subscription revenue of $133.4 million (up 11%) and transaction revenue of $71.9 million (down 1%). Non-GAAP diluted earnings per share was $0.16, and Adjusted EBITDA reached $45.9 million, a 22% margin. The step-down implied in third-quarter guidance largely reflects a high-single-digit to low-double-digit decline in transaction volume, driven by the search-related traffic shift.

Key metrics investors will monitor include subscription growth, average revenue per user (ARPU), transaction units, business formations, and average order value (AOV). Historically, the stock has reacted sharply to these prints: shares fell roughly 30% the day after second-quarter results, underscoring how sensitive the valuation is to guidance changes.

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Market Reaction and Investor Sentiment

Sentiment heading into the third-quarter report remains cautious. The stock is down roughly 39% over the trailing 52 weeks, and elevated short interest—about 7% of shares outstanding—reflects ongoing skepticism about the company's near-term growth trajectory. The abrupt guidance cut in August reset investor expectations, and the market now appears to be pricing in a slower, search-constrained transaction environment. The key risk is that the decline in search-driven customer discovery proves more persistent than management's current outlook assumes. On the other hand, five straight quarters of double-digit subscription growth and an expanding Adjusted EBITDA margin give bulls a foundation to argue that the quality of revenue is improving even as the top line decelerates.

Forward Outlook and Key Factors to Monitor

The most important question after this report will be whether LegalZoom reaffirms its full-year 2026 outlook of $795 million to $805 million in revenue and $190 million to $195 million in Adjusted EBITDA. That guidance already assumes no recovery in traditional search, so any improvement in transaction trends would be viewed positively, while another cut would likely pressure the shares further.

Investors should also watch the pace of margin expansion. The company announced a 13% workforce reduction in August as part of an AI-driven operating model, with annualized savings expected to reach roughly $14 million. Whether those efficiencies translate into the 24% full-year Adjusted EBITDA margin target will be a key test of execution.

Finally, monitor the growth of newer acquisition channels. Partnerships with GoDaddy, LinkedIn, and Chase, along with AI integrations such as ChatGPT and Claude, are early but strategically important. Their ability to replace lost search traffic—combined with continued ARPU growth in higher-value subscription tiers—will determine whether LegalZoom's subscription-led repositioning can sustain the business through this period of discovery disruption.

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