LZ

Let’s dig into the relative performance of LegalZoom (NASDAQ:LZ) and its peers as we unravel the now-completed Q2 online marketplace earnings season. Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission-paying sellers, generating flywheel scale effects that feed back into further customer acquisition. The 12 online marketplace stocks we track reported a mixed Q2. As a group, revenues beat analysts’ consensus estimates by 0.8% while next quarter’s revenue guidance was 1.8% below. Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 7.1% since the latest earnings results. Founded by famous lawyer Robert Shapiro, LegalZoom (NASDAQ:LZ) offers online legal services and documentation assistance for individuals and businesses. LegalZoom reported revenues of $205.3 million, up 6.6% year on year. This print was in line with analysts’ expectations, but overall, it was a softer quarter for the company with revenue and EBITDA guidance for next quarter missing analysts’ expectations significantly. "Since late 2024, we've deliberately repositioned LegalZoom around subscription relationships that pair AI with trusted human expertise," said Jeff Stibel, Chairman and Chief Executive Officer of LegalZoom. The market seems disappointed with the results as the stock is down 24.8% since reporting and currently trades at $6.09. Is now the time to buy LegalZoom? Access our full analysis of the earnings results here, it’s free. Founded in 2009 and a publicly traded company since 2017, Sea (NYSE:SE) started as a gaming platform and has since expanded to offer a variety of services such as e-commerce, digital payments, and financial services across Southeast Asia. Sea reported revenues of $7.81 billion, up 45.7% year on year, outperforming analysts’ expectations by 8.3%. The business had an exceptional quarter with an impressive beat of analysts’ EBITDA estimates and solid growth in its users. Sea scored the biggest analyst estimate beat in the group. The company reported 68.1 million users, up 10.2% year on year. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 14.5% since reporting. It currently trades at $112.45. Is now the time to buy Sea? Access our full analysis of the earnings results here, it’s free. Originally featuring a library that included many of founder Jon Oringer’s photos, Shutterstock (NYSE:SSTK) is now a digital platform where customers can license and use hundreds of millions of pieces of content. Shutterstock reported revenues of $221.8 million, down 16.9% year on year, falling short of analysts’ expectations by 12.4%. It was a disappointing quarter, leaving some shareholders looking for more. Shutterstock delivered the weakest performance against analyst estimates and slowest revenue growth among its peers. As expected, the stock is down 6.6% since the results and currently trades at $5.62. Read our full analysis of Shutterstock’s results here. Founded in 2014, ACV Auctions (NYSE:ACVA) is an online auction marketplace for car dealers and wholesalers to buy and sell used cars. ACV Auctions reported revenues of $213.9 million, up 10.4% year on year. This result missed analysts’ expectations by 0.6%. It was a slower quarter as it also recorded EBITDA guidance for next quarter missing analysts’ expectations and full-year revenue guidance meeting analysts’ expectations. ACV Auctions pulled off the highest full-year guidance raise in the group. The stock is down 5.3% since reporting and currently trades at $6.88. Read our full, actionable report on ACV Auctions here, it’s free. Founded to help people in rural areas get online medical consultations, Teladoc Health (NYSE:TDOC) is a telemedicine platform that facilitates remote doctor’s visits. Teladoc reported revenues of $606.9 million, down 4% year on year. This print came in 1.3% below analysts’ expectations. Overall, it was a softer quarter as it also produced revenue guidance for next quarter missing analysts’ expectations significantly and EBITDA guidance for next quarter missing analysts’ expectations significantly. Teladoc had the weakest guidance update and weakest full-year guidance update of the whole group. The stock is down 30.8% since reporting and currently trades at $6.36. Read our full, actionable report on Teladoc here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

LegalZoom’s second quarter results reflected the impact of rapid changes in online search dynamics. Management attributed the quarter’s performance to a mix of solid subscription growth and the accelerating adoption of AI-powered services, but also acknowledged significant headwinds from declining Google-driven customer acquisition. CEO Jeffrey Stibel cited a “material change and a step down” in Google search, which pressured traditional traffic and business formation volumes. The company’s shift toward higher-value, human-in-the-loop offerings helped offset some pressure, but the abrupt onset of new search realities was a key theme. Is now the time to buy LZ? Find out in our full research report (it’s free). Revenue: $205.3 million vs analyst estimates of $205.5 million (6.6% year-on-year growth, in line) Adjusted EPS: $0.16 vs analyst estimates of $0.15 (7% beat) Adjusted EBITDA: $45.9 million vs analyst estimates of $40.92 million (22.4% margin, 12.2% beat) The company dropped its revenue guidance for the full year to $800 million at the midpoint from $820 million, a 2.4% decrease EBITDA guidance for the full year is $192.5 million at the midpoint, below analyst estimates of $195 million Operating Margin: 5.2%, up from -1.6% in the same quarter last year Subscription Units: 1.89 million, down 63,000 year on year Billings: $203.2 million at quarter end, up 4% year on year Market Capitalization: $931.7 million While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Eleanor Smith (JPMorgan) asked about the pace and impact of higher-value product adoption. CEO Jeffrey Stibel said, “We are actually seeing real strength” in human-in-the-loop offerings, though packaging and renewal cycles are under review. Smith (JPMorgan) followed up on AI partnerships. Stibel explained that LegalZoom’s early moves with AI platforms are producing incremental traffic, now about 3% of LLC formations, and could offset Google’s decline over time. Sang-Jin Byun (Jefferies) questioned the timing and potential duration of the Google traffic shift. Stibel and CFO Noel Watson clarified the change was abrupt and structural, with guidance assuming no near-term recovery or further deterioration. Matthew Condon (Citizens Bank) asked about the rationale for increased brand investment. Stibel argued that brand authority is crucial for AI-driven discovery and partnerships, while Watson noted it enhances customer trust and pricing power. Patrick McIlwee (William Blair) probed how LegalZoom is managing marketing spend amid search volatility. Watson responded that spend is shifting from Google to new channels, with brand and partnerships prioritized despite slower returns. In the coming quarters, the StockStory team will be monitoring (1) LegalZoom’s progress in scaling AI-driven and partnership channels for customer acquisition, (2) the effectiveness of workforce reductions and automation in supporting margin expansion, and (3) the adoption rate of higher-value subscription services. The pace at which AI integrations convert to meaningful traffic and transaction volumes will be a crucial signpost for sustainable growth. LegalZoom currently trades at $5.46, down from $8.10 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members). ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time. Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 4:30 p.m. ET Head of Investor Relations - Madeline Crane Chairman and Chief Executive Officer - Jeffrey Stibel Chief Operating Officer and Chief Financial Officer - Noel Watson Operator: Good day, and thank you for standing by. Welcome to LegalZoom's Second Quarter 26 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded. I would now like to hand the call over to your first speaker today, Madeline Crane, Head of Investor Relations. Please go ahead. Madeleine Crane: Thank you, operator. Welcome to LegalZoom's second quarter 26 earnings conference call. Joining me today is Jeffrey Stibel, our Chairman and Chief Executive Officer and Noel Watson, our chief operating officer and chief financial officer. As a reminder, we will be making forward-looking statements on this call. These forward-looking statements can be identified by the use of words such as believe, expect, plan, anticipate, will, intend, and similar expressions. And are not and should not be relied upon as a guarantee of future performance or results. Such forward-looking statements are based on management's assumptions and expectations, information available to us as of today's date. These forward-looking statements are also subject to risks and uncertainties that could cause actual results to differ materially from such statements. These risks and uncertainties are referred to in the press release we issued today and in the Risk Factors section of our most recent quarterly report on Form 10 Q filed with the Securities and Exchange Commission. Except as required by law, we do not plan to publicly update or revise any forward-looking statements whether as a result of any new information, future events, or otherwise. In addition, we will also discuss certain non GAAP financial measures. We use non GAAP measures in making decisions regarding our business, and we believe these measures provide helpful information to investors. These non GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations of all non GAAP measures to the most directly comparable GAAP measure are set forth in our investor presentation which can be found on the Investor Relations section of our website at investors.legalzoom.com. I will now turn the call over to Jeff. Jeffrey Stibel: Thank you, Madeleine. and thank you all for joining our call. LegalZoom continues to execute against our strategy of building the leading services and expertise platform for small businesses. Combining AI with trusted human expertise. We delivered second quarter revenue of $205 million up 7% year over year, and in line with our guidance. Adjusted EBITDA of $46 million increased approximately 18% year-over-year. Well ahead of the high end of our guidance. Q2 also marked our fifth consecutive quarter of double digit subscription growth. Since late 24, we have steadily increased the mix of recurring subscription revenue in our business by acquiring customers who find ongoing value in our platform. These results reflect the momentum of the growth levers we have been building for the last year. Expanding our portfolio of expert and service offerings, accelerating the use of AI across the business, and intentionally diversifying how we acquire customers. Making our go to market model more resilient, less dependent on any single channel. Those investments in diversification were built for exactly this moment. During the quarter, Google accelerated their shift to AI powered search. With AI generated answers increasingly replacing traditional clicks. This is affecting top-of-funnel traffic across our industry. And I want to be specific about what it means for us because there are 2 very different currents underneath it. The first is the pressure in our updated outlook, and it is concentrated in 1 place. The majority of our traditional search traffic both organic and paid, historically run through Google. As AI generated answers replace clicks on informational queries, fewer of those visits reach us. And paid inventory has become more expensive. That pressure is real, and we are feeling it now. To be clear, this is the repricing of a single legacy channel. It is significant but bounded. The second current runs the other way. Across the AI platforms where discovery is moving, we start from essentially zero. So every visit is incremental. That traffic grew more than 250% quarter-over-quarter. Today, we have the highest brand references across AI platforms of any competitor. Our exposure to the old channels being repriced, Our position in the new channels represents upside. And our outlook reflects the full weight of the first and very little of the second. This is a change in how customers find us not in what they need from us. We have responded by doubling down on channel diversification. Expanding partnerships, strengthening our brand, and increasing our presence across AI driven channels. I will discuss those efforts in more detail shortly. Across each of our key growth levers, 1 principle remains constant. AI has made answers abundant, but it has not made them accountable. When entrepreneurs move from asking questions to completing important legal, compliance, and business tasks, human expertise, accountability, and trusted execution still matter. We have seen this directly in our engagement data, and that is where LegalZoom has differentiated itself for more than 25 years. Our first growth lever is expanding our portfolio of human in the loop offerings. We have discussed these offerings for several quarters, but we now have real scale and real growth to show for it. And we want to give more color on both. This lever is working, increasingly displacing our older, lower value products. We believe this remains 1 of our strongest competitive advantages. And 1 of our most attractive long term growth opportunities. Our portfolio spans 2 complementary layers across our subscription and transaction offerings. First, our service layer. Including registered agent, and virtual mail subscriptions. Which provides the operational infrastructure businesses rely on to stay organized and operate with confidence. Second, our expert layer. This includes legal plans, IP related services, and our do it for me concierge offerings, that have now been rebranded as business manager. This layer combines professional guidance, technology, to help customers solve more complex business needs. In Q2, revenue from our human in the loop subscription services grew approximately 20% year-over-year. And now represents ~65% of subscription revenue. On a total company basis, our human in the loop subscriptions are now >40% of total revenue. That growth reflects both increased adoption of our higher value products and our ability to thoughtfully price services like registered agent, and business manager as we continue expanding our service offerings. We also experienced significant growth in our legal plans. Where bundling legal subscriptions into formation packages is introducing more customers to ongoing legal guidance and driving higher engagement with attorney cons consultations. We believe AI is educating customers more but they are still turning to us for answers. This is evidenced by a >35% year over year increase in customer utilization of our legal plans this past quarter. We are seeing similar demand in our transactional expert services, including attorney assisted trademark filings, and business manager reinstatements. Early evidence that customers will pay for expertise at each stage of the business life cycle. Ultimately, our human-in-the-loop portfolio is allowing us to address a greater portion of our addressable market beyond business formations. By combining technology, with trusted human expertise, we believe we are well positioned to serve both new entrepreneurs and the millions of established small businesses that need ongoing legal and compliance support as their business evolves and grows. Moving to our next growth lever. As a reminder, over the past year, we have been intentionally diversifying our customer acquisition channels by expanding partnerships strengthening our brand, investing in AI driven distribution. The evolving search landscape reinforces the importance of that strategy. To clarify the mechanics behind what I described earlier, in the second quarter, we saw fewer high intent visits from Google's informational search query. As AI-generated answers, reduced click through to websites. While competition for paid inventory increased. Driving higher cost per click and making paid search less efficient. Those dynamics have translated into lower customer acquisition through our traditional search channels. And ultimately, lower business formation volume. Importantly, the pressure is most concentrated in informational search traffic. And does not reflect a structural change in the underlying opportunity we see across partnerships brand, and AI driven channels. We are accelerating execution on each of those fronts. At the same time, our objective is not simply to maximize formation volume. It is to acquire new and existing small businesses who are more likely to build long term relationships with LegalZoom. 1 of the clearest examples is our partnerships business. 12 months ago, partnerships represented a relatively small portion of our acquisition strategy. Today, leveraging our category leadership, we have created meaningful momentum as we continue to expand both the breadth of our partner ecosystem and the depth of those relationships. Customers who come through our partners typically arrive with higher intent and stronger engagement. Creating better opportunities to introduce our subscription offerings and build deeper customer relationships. In Q2, total order volumes from partnerships increased to ~11% of total orders. Up from ~4% a year ago. We achieved this through the continued expansion of our partner portfolio. Deeper embedded integrations, and investing in our partner go to market program. We continue to see a healthy pipeline of opportunities and remain confident this channel will play an increasingly important role in our growth over time. We have recently welcomed new partners, including USAA, AAA, PayPal, and Adobe. Further expanding LegalZoom's presence across trusted brands serving small businesses. We are systematically building this new acquisition engine. 1 focused on repeatability, attractive unit economics, and growing customer lifetime value. Our marketing investments remain focused on improving both awareness and customer quality. In response to the recent traffic changes, we are deepening our investments beyond traditional search into new channels. Including strategic partnerships, emerging AI referral channels, and upper-funnel media. Additionally, we are closely monitoring and aggressively adapting to new AI enabled features within the traditional search space. such as AI Max. We are focused on widening our competitive differentiation through attorney backed experiences, bundled offerings, and industry leading guarantees. Giving customers more reason to choose LegalZoom. Returns from our brand investments remain strong. In Q2, unaided brand awareness increased approximately 10% year over year. While aided awareness increased ~18%. Today, >70% of US households are familiar with LegalZoom. As awareness grows, we are experiencing improvements in the efficiency of our performance marketing helping us attract more qualified customers across our paid channels. Finally, our approach to emerging AI channels. Over the past year, we have announced integrations across ChatGPT, Claw, Copilot, Perplexity. We have also been testing, selling, and onboarding AI products directly to small business customers through our business managers. We view these as components of a broader AI distribution strategy rather than stand alone partnerships. As entrepreneurs incorporate AI tools into how they form, operate, and grow their businesses our objective is simple. Ensure they look to LegalZoom as the legal layer of AI throughout the small business life cycle. This approach has 3 components. First, we are investing in visibility. Helping ensure LegalZoom's position as 1 of the most trusted and frequently referenced brands for business formations and compliance across leading AI platforms. Much like we previously established our position in traditional search, we have been deliberately focused on generative engine optimization or GDO, Over the past year, to ensure we surface favorably inside AI generated answers. And we are doubling down on that investment. What differentiates our approach is authority. A factor we know carries significant weight in how AI platforms rank and surface brands. As the only online formations provider with an owned law firm, we have a structural advantage our peers cannot replicate. Attorney written content, That positions us earn citations and AI generated responses in a way that is genuinely unique to LegalZoom. Second, we are testing and scaling customer acquisition within emerging AI experiences. Including paid AI environments, as new distribution models develop. As I noted earlier, traffic from AI platforms grew more than 250% quarter-over-quarter. And accounted for ~3% of our LLC formations traffic in June. These visitors also arrive with high intent, and convert at higher rates than traditional organic search traffic. And third, we are embedding LegalZoom directly into AI workflows. Through integrations like ChatGPT, Claude, and most recently Microsoft Copilot. Making it easier for customers to move seamlessly from asking questions to taking action. We recently announced a new agent integration directly into the Microsoft 365 Copilot. Allowing users to evaluate business formation options, manage business compliance, and connect with attorneys without leaving their daily Microsoft workflow. We are pleased with our early progress. Today, LegalZoom has partnered with the leading AI companies and is at the forefront of AI integrations. Giving us confidence we are well positioned as AI becomes an increasingly important source of customer discovery. Lastly, we continue to focus on leveraging AI to improve both the customer experience and how we operate our business. Today, we announced the next step in our organizational evolution, a transformation we began more than a year ago. We are simplifying how LegalZoom is organized, sharpening our strategic focus, and aligning resources behind our highest priority growth opportunities. That work is enabled in part by AI. Which is now embedded across our operations. Allowing us to serve customers with greater speed and consistency. As part of these changes, we have reduced our workforce by ~13%. These decisions are never easy. And I want to thank our departing colleagues for their many contributions to LegalZoom. We believe these changes position us to execute with greater focus, quality, and speed. While continuing to invest behind our key growth initiatives. Stepping back, while the current search environment has created near term pressure, it reinforces, not changes, the strategy we have been building. We are growing higher value, human in the loop subscription relationships. We are expanding beyond traditional customer acquisition through partnerships, brand, and AI. And we are using AI not only to help customers succeed, but to make LegalZoom a faster, more efficient, and more agile company. We believe the companies that win in this next chapter will not simply be the ones that answer questions. But be the ones that help customers take action with confidence. For more than 25 years, that is been LegalZoom's role. We believe our combination of technology, trust and expertise, and long term customer relationships positions us well for the future. I am personally proud of our team for their unwavering dedication to our company and to 1 another. To each of you, you continue showing up for our customers, and that says everything about who you are. I am grateful to be part of LegalZoom. Thank you, and I will now turn it over to Noel to discuss our second quarter financial results and updated outlook in more detail. Noel? Noel Watson: Thanks, Jeffrey, and good afternoon, everyone. We continue to make disciplined investments to drive higher quality subscription revenue growth. Diversify customer acquisition, and improve operating efficiency while delivering strong profitability. Our second quarter results demonstrate meaningful progress across each of these priorities. In Q2, subscription revenue represented 65% of total revenue. An increase of 300 basis points year-over-year, supported by stable retention, and ARPU growth. Adjusted EBITDA of $46 million came in above the high end of our guidance range, driven by a significant improvement in gross margin, as we leverage AI and automation to improve both the quality and efficiency with which we deliver our services to our customers. Adjusted EBITDA margin was 22%, which translated into strong free cash flow generation of $34 million. Turning now to our second quarter results in more detail. Unless otherwise stated, all comparisons will be on a year-over-year basis. Revenue for the quarter was $205 million representing 7% growth and in line with the midpoint of our guidance range. Subscription revenue increased 11% to $133 million We are continuing to shift the composition of our business toward recurring revenue streams as we aim to drive stronger customer lifetime value and more durable long term growth. Subscription revenue showed continued momentum across our human in the loop subscription portfolio, including our legal advisory subscriptions, reflecting increased bundling within select formation offerings. Registered agent, building on last year's pricing and value initiatives, and continued growth in virtual mail, and business manager. As a result, ARPU grew 5%, benefiting primarily from higher pricing in our human in the loop offerings. We continue to expect ARPU to be the primary driver of subscription growth throughout the year, As we focus on shifting our mix towards higher value offerings, we are seeing an expected decline in lower value subscriptions bundled within the formation package, we expect to continue through the remainder of the year. As a result, we ended the quarter with ~1.9 million subscription units. down ~3%. Importantly, retention remained stable, supported by strength across our compliance offerings and human in the loop services and ongoing improvements to our customer experience. Transaction revenue was $72 million down 1%. Reflecting lower business formations, partially offset by continued growth in our consumer and IP related offerings. Once again, the growth in IP reflects increasing demand for our expert led services. Transaction units increased 1% to ~281 thousand driven primarily by higher annual report filing volumes for our compliance customers. We processed approximately 125 thousand businesses during the quarter, a decline of ~5%. Reflecting the shift to AI powered search that Jeffrey described earlier. Importantly, formations from strategic partnerships continued to offset a portion of that pressure and represented a growing share of overall formation volume. Transaction AOV was $256, down ~2% primarily due to changes in composition of our bundled small business offerings resulting in an increased allocation of order value shifting to subscription products. This decrease was partially offset by an increase in higher value consumer and IP related offerings. Finally, deferred revenue declined ~$2 million sequentially. Turning to profitability. All metrics are on a non GAAP basis. We continue to expand profitability, while investing behind the long term growth priorities Jeffrey outlined. Gross profit increased to $146 million while gross margin expanded approximately 250 basis points to 71%. This improvement reflects a favorable subscription mix and continued customer care and fulfillment efficiencies due to increasing automation across our operation. Sales and marketing expenses increased 14%, including a 13% increase in customer acquisition marketing. Reflecting the dynamic search environment, and investment in our diversified customer acquisition initiatives. Consistent with our focus on customer quality over volume, we are prioritizing acquisition spend in channels we believe will have the strongest defensibility and unit economics, over the long term. Non CAM sales and marketing expenses increased ~$3 million or 20%. Largely from targeted investments in our sales organization. Which is supporting the expert led revenue growth you are seeing in these results. Technology and development expenses declined 4%, while G&A declined 10%. Improving overall operating leverage. Those efforts resulted in adjusted EBITDA of $46 million an increase of 18% with adjusted EBITDA margin expanding approximately 22 basis points. Our balance sheet remains a source of strength, and continues to provide us with significant financial flexibility During the quarter, we generated $34 million in free cash flow an increase of 7%. Reflecting the continued profitability and cash generating nature of our business. We maintain a debt free balance sheet and our $100 million revolving credit facility remains fully undrawn. We ended the quarter with $167 million in cash and cash equivalents. A sequential decline from the first quarter includes approximately $46 million for 7.3 million shares repurchased. Partially offset by the free cash flow generation. As of June 30, 2026, we had ~$80 million remaining under our authorization. Looking ahead, we continue to expect strong free cash flow generation for the full year, providing the flexibility to execute a balanced capital allocation strategy. That includes investing behind our key growth opportunities, evaluating strategic M&A opportunities, and the ability to return excess capital to shareholders. Turning now to our outlook. For the full year, we expect revenue in the range of $795 million to $805 million representing year over year growth of approximately 6% at the midpoint. Our guidance assumes the continued scaling of our subscription growth initiative. And ongoing momentum from our partner channel, partially offset by a more cautious view of customer acquisition for the remainder of the year. This is based on the impact of the experience changes Google implemented during the quarter and that have persisted through today. Our outlook assumes the current search environment remains broadly consistent through year end. As customer discovery continues to evolve, we expect to be navigating increased uncertainty with regard to the performance of traditional search channels. While we are encouraged by the progress we are making through partnerships, increased investment in our brand and emerging AI distribution channels, those initiatives will take time to fully compensate the near term impact of these recent changes. For the third quarter, we expect revenue of $192 million to $196 million representing year over year growth of approximately 2% at the midpoint. Our guidance assumes a high single to low double digit decline in transaction revenue based on the aforementioned acquisition trend. Turning to profitability. We continue to execute against the AI enabled operating model we have been building for more than a year. As we have discussed in prior earnings calls, our profitability outlook has assumed continued productivity improvements from AI disciplined cost management, the evolution of our operating model. The organizational actions we announced today represent the next phase of that evolution. Over the past year, we have invested in AI capabilities, redesigned workflows, and simplified how work gets done across the company. Earlier this year, we announced a 5% workforce reduction as part of that Today's actions continue that work by further simplifying our organizational structure and aligning resources behind our highest priority growth initiatives. Resulting in a 13% headcount reduction. Over time, we expect this to further strengthen operating leverage and support sustained profitable growth. We expect these workforce actions to result in ~$7 million of net in year savings or ~$14 million on an annualized basis. We also expect ~$6 million of restructuring and related charges primarily in the third quarter. We now expect full year adjusted EBITDA of $190 million to $195 million representing an adjusted EBITDA margin of approximately 24% at the midpoint. Our profitability outlook expects continued gross margin improvement focused expense management and the benefits of our evolving AI enabled operating model. For the third quarter, we expect adjusted EBITDA of $49 million to $51 million or a margin of approximately 26% at the midpoint. Inclusive of the impact from the workforce actions announced today. As we look ahead, our focus is on what is within our driving high value human in the loop subscriptions growth, accelerating our partnerships momentum, deepening our brand presence, and converting our early AI channel traction into durable opportunity. We are executing against each of those fronts staying focused on customer quality, margin expansion, and free cash flow generation. Finally, I would like to thank all of our employees for their continued resilience and commitment to our customers and our organization. Your hard work and focus have been instrumental in executing our strategy positioning LegalZoom for long term success. With that, I will turn the call back to the operator for questions. Operator: Thank you. As mentioned, at this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. Your first question comes from the line of Eleanor Smith with JPMorgan. Your line is now open. Ella Smith: Good evening. Thank you for taking my questions. So first, I was hoping to ask about the higher value initiatives. It seems like they are taking longer to benefit the top What have you learned about the go to market motion on those new higher value products like in the last few months? And I am just wondering, they coming with any higher churn or tougher go to market motion than your existing subscription products? Jeffrey Stibel: Sure. Thanks, Eleanor. We are actually pretty encouraged with the higher value products. And, you know, if you look at our human in the loop offerings generally, both service and expertise, those are growing at orders of magnitude faster than the rest of the business. So we are we are actually seeing real strength there. You know, they are now approaching 20%, in terms of growth and ~40% of total revenue. So we are we are actually seeing what we believe is good strength there. We are just coming up on renewal cycles. We are just starting to reevaluate how we package, how we promote, and how we engage. But we are, you know, we are pretty encouraged. Ella Smith: Perfect. Thank you, Jeffrey. And for a follow-up, you were early to partner with some of the AI majors, so I am just curious what you envision that you could still do to drive improvement in business formation traffic from those AI majors. Jeffrey Stibel: Yeah. Great question. We continue to be excited I think we were, you know, very early to adopt generally and likely first in our category. I think there is 3 key areas, and we are starting to see proof points in each of them. The, you know, the first from our standpoint is just visibility and brand recognition. And, you know, we know we have the authority advantage and, you know, are, you know, are driving positive results there. The second is with respect to going in through GEO and AEO where we are having, you know, significant strength and then paid opportunities as those start to emerge particularly right now with ChatGPT. And, you know, I think you are seeing growth already. it is starting from a small base, but we are talking about 250% growth, you know, and now approaching ~3% of traffic. So it is material. And it has the opportunity for us to, you know, to lap that structural step down from Google, much more quickly. Ella Smith: Great. Thank you, Jeffrey. Thank you, Noel. Noel Watson: Thank you, Eleanor. Jeffrey Stibel: Thank you. Operator: Your next question comes from the line of John Byun with Jefferies. Your line is now open. Sang-Jin Byun: Thanks very much. This is Sang-Jin Byun for Brent Thill at Jefferies. Just a 2 question. I guess on the shift in traffic that you mentioned, I mean, looked like some of it had been happening for some time. So wondering, you know, did it during the quarter? You know, is there a point in time during Q2 when this became much more noticeable? And, you know, is there are you is it possible it could get worse at this time? I have a quick follow-up. Jeffrey Stibel: Yeah. You bet. that is that is a fair question. And, you know, let me let me answer directly. We have obviously seen that slow steady shift, you know, away from Google search into, you know, AI native environments. But what happened most recently was a structural shift. And you know, Google alone literally called it the biggest change to their search box since they introduced the search box. So this was a material change and a step down. We believe we understand it. We believe we fully take into account that change into our guidance, and we are trying to be proactive here. We think it is the right thing to do because we are seeing this, you know, industry worldwide. This is a structural shift in terms of what Google is doing. Noel Watson: And Sang-Jin, just to build on that, you know, the impact that we saw was really in the back half of the quarter. And the performance that we have seen after that structural step down been relatively consistent since then and quarter to date. And so that extrapolation is what we have included as a baseline expectation in our guidance. So the expectation is that it is consistent through the end of the year. Not building in any expectation around recovery, or further degradation. And that is what gives us confidence in our guide. Sang-Jin Byun: Great. Thank you very much for that. And the 13% reduction in force just wanted to see if you get talk a little bit about the timeline. Is that pretty much complete? Is it broad based? Any particular departments that I more impacted? Thank you. Noel Watson: Yeah. So the workforce reduction was effective today and was the announcement. We included specifics on the size of impact both in year and annualized. It was a company wide reorganization. We really looked cross at everywhere in terms of how we can reimagine work streams and speed up decision making and improve execution. So you will see it impact various funk all the functions kind of across the organization. Sang-Jin Byun: Thank you. Operator: Thank you. Your next question comes from the line of Matthew Condon with Citizens Bank. Your line is now open. Matthew Condon: Thank you so much for taking my questions. My first 1, just on the on the Google search trends that you are seeing, are there any quantitative stats you can give us either as a percentage of business formations or anything to we can get comfortable with just the size of Google as far as your track today. So if anything gets worse in the future, we can start to think about what the what the impact could be. Noel Watson: Yeah. Google, obviously, historically has been 1 of our primary channels. It speaks to the effort in the strategic focus that we have had around channel diversification here for a number of quarters. We have been heavily focused on investing in brand, heavily focused on our partner channel and driving new partnerships and investing in existing partnerships. And then Jeffrey talked earlier about progress we are making with GEO, AEO, and even spending into LLMs to drive progress. If you think about our the guidance that we provided, that is really a reflection of the impact that we are seeing from a new acquisition standpoint. We guided to high single digit to low double digit decline in transactions. Revenue in the back half of the year. So I think you can you can size it off of that And you can read more broadly on know, on the stats with what is happening with Google traffic generally. Jeffrey Stibel: You know, our confidence in part comes from the fact that this was rolled out, we believe, fully in the US First, and it is now being rolled out internationally. We have a diminished amount. de minimis amount of international traffic. So, you know, we think we have got a good handle on that. Matthew Condon: that is very helpful. And then just as we think about some of the brand investments that you guys are making, why do you feel like that now is the time to do that? Is there some impacts to Google search traffic and that could ultimately affect the effectiveness of your brand spend, the return on your brand spend. Jeffrey Stibel: Yeah. I would argue that brand recognition and, you know, in the power and authority of our brand is 1 of our biggest strengths. And, you know, we are able to see the, you know, the improvement in that recognition and that authority very quickly with brand recognition. And that immediately translates to authority with AI. So it helps significantly with AEO and GEO. So from, you know, from our from our standpoint, it is critically important as we migrate away from Google and into the partnership and AI channels to have strength in brand and have our brand be recognized as the trusted brand in the space. Noel Watson: It also helps on the partnership front and in you know, direct to site traffic as well as when you think about search engines, there is a brand component of spend there that is, you know, a very high returning. Spend. So anything that can enhance our brand, is in today's environment, I think, is hugely positive for And I will close with the fact that, you know, when you look at our higher value services, particularly human in the loop, and them now at and above, you know, that 40% mark, Our goal is to push that further both in terms of the value that we offer and ultimately the price that we are able to receive. And a lot of that comes from being a trusted brand. Matthew Condon: Thank you so much. You bet. Thanks, Matt. Operator: Thank you. Your next question comes from the line of Patrick McIlwee with William Blair. Your line is now open. Patrick McIlwee: Hi, team. Thanks for taking the questions. So given the fluidity around Google search, can you just talk about how you evaluate the CAM spend and the overall marketing spend looking into the back half of the year? I think we had already expected lots of CAM in the back half given some of the front loading you did, but just any thoughts on how your spending plans have evolved would be helpful. Noel Watson: Yeah. I think a couple of questions there. So first, in terms of our spend level, we are it is definitely an area where we are making some investments. Especially as we make this transition around channel diversification. So, again, brand is a slower returning spend. So as we ramp up spend there, we expect it to take more time for that to generate the same ROAS. And in our partner channels, as we onboard new partners, those start sub-optimized and we iterate and optimize those over time. So we have built in some space for us to make some investment in CAM. We expect overall CAM on the full year to step up a couple points relative to the prior year. And strategically, as we think about spend on the whole, I mean, we first are performance oriented, but we are looking clearly at opportunities to be shifting spend away from Google wherever possible. Patrick McIlwee: Okay. Thanks, Noel, And so I understand it is a dynamic environment, but your Q3 guide points to a pretty sharp decel. To growth, I think, you know, in the low single digit range. Can you just talk about what signals you are looking for before you can talk a little bit more confidently about, you know, optimizing your top of funnel and, inevitably getting back to a reacceleration towards your prior growth targets? Jeffrey Stibel: Yeah. I mean, look. I will I will say at a high level, this happened relatively abruptly. Google, you know, very recently made this announcement. So I think it behooves us and others to be conservative in the short term for the, you know, the opportunities and that shift. That said, our, you know, our focus has been for, you know, quite a long time, north of 18 months, to diversify our channels. And we knew that Google was a very, very large concentration risk for us. And we have been diversifying away from it. You know, over time. Because this was abrupt, we were not able to, you know, to overcome it as quickly as we would like right now. But I think that we put ourselves in a position with this guide to give ourselves the flexibility and the time that we need to execute and, you know, and continue the effort that we have already done, you know, both from, you know, shifting our partnerships from 4% to now 11%, which is up from ~10% last quarter. AI going, you know, you know, 250% increase which is now representing 3% of traffic. That should continue to accelerate. And, you know, and we are going to push on those diversification channels. But we wanted to make sure that we had the risk built in immediately. But left room for without baking into the opportunity that we believe we will achieve. Noel Watson: Yeah. And in the meantime, as we focus on the acceleration of channel diversification, it is worth reminding that you know, the business is almost 2 thirds subscription, so there is a durability and a bit of an insulation there that helps while we are making a shift. And we continue to make investments on the subscription side as well. Jeffrey mentioned, you know, the higher value services and expert led services that we are focused on in driving subscription. Also, we continue to make improvements in engagement that we think will lead to retention. And, you know, we have also shown that we have had pricing power across numerous subscriptions. So while the, you know, the impact from Google you know, is structural at least for now, and we will continue to try to optimize against that. It does have some impact on new customer acquisition, which creates some pressure in the back half of the year and into 2027, especially since there is some lag effect on the subscription side. With all of these efforts, we are excited about it, feel confident that we can work to offset that impact. Patrick McIlwee: Okay. Thank you both for the thoughts. Thank you. Thank you, Patrick. Operator: Thank you. Your last question comes from the line of Kishan Patel with Raymond James. Your line is now open. Kishan Patel: Hey. This is Kishan Patel on for Josh Beck. Can you elaborate on the differences in conversion and acquisition costs you see between AI overviews and AI mode versus the traditional 10-blue link referral traffic within the Google search channel? And what are you seeing in terms of SMB adoption for AI tools on your platform? And what are key opportunities and risks to keep in mind? Thank you. Jeffrey Stibel: You bet. So, Kishan, for now, paid AI is still quite small and really coming largely from ChatGPT and, to a lesser extent, Google with, you know, with some of their native AI search. it is largely similar in terms of, in terms of conversion and, you know, in other metrics and dynamics. But we find that we have got higher intent customers generally. that is going to change as this scales, and we expect it to scale, but it is, you know, it is higher intent And the important thing there is what it means is people are going through an education process, which works very well for what we are doing with human in the loop. And, you know, what we hope and expect is we are going to find increased opportunities to be able to upsell and cross sell those customers to service oriented and expert oriented services. And I think that is part of the reason why that cohort has accelerated in terms of growth. Which I think is pretty important. In terms of the adoption of AI and being able to sell that directly to our SMBs. We actually just started testing that. And, you know, the tests have been pretty encouraging so far. So it is early We have, you know, we have started that largely this quarter, with a partner. But, I think that this is a product that people are looking for in the subset of our customers are going to be encouraged to go through us to do it in part because you need a service layer. You have got to remember, these are naive small businesses. Are curious about how to use and adopt AI. But they need an onboarding process. And, you know, if we do this right, we could in effect become the small business operating system. And, you know, and that is something that, that is both encouraging and exciting for us, but quite early. Kishan Patel: Thanks very much. Operator: Thank you. Thank you. This does conclude the question and answer session. And we want to thank you for your participation in today's conference. This concludes the program, so you may disconnect. Before you buy stock in LegalZoom.com, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and LegalZoom.com wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 12, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. LegalZoom (LZ) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Revenue: $205 million in Q2 2026, up 7% year-over-year. Subscription Revenue: $133 million, up 11% year-over-year, representing 65% of total revenue. Transaction Revenue: $72 million, down 1% year-over-year. Adjusted EBITDA: $46 million, up 18% year-over-year, with a margin of 22%. Gross Margin: Expanded approximately 250 basis points to 71%. Free Cash Flow: $34 million in Q2, up 7% year-over-year. Subscription Units: Approximately 1.9 million, down 3% year-over-year. Transaction Units: Approximately 281,000, up 1% year-over-year. Business Formations: Approximately 125,000 processed, down 5% year-over-year. Average Revenue Per User (ARPU): Increased 5% year-over-year. Transaction AOV: $256, down 2% year-over-year. Cash and Cash Equivalents: $167 million at end of Q2, with a debt-free balance sheet. Full-Year 2026 Revenue Guidance: $795 million to $805 million, representing approximately 6% growth at the midpoint. Full-Year 2026 Adjusted EBITDA Guidance: $190 million to $195 million, representing a margin of approximately 24% at the midpoint. Q3 2026 Revenue Guidance: $192 million to $196 million, representing approximately 2% growth at the midpoint. Q3 2026 Adjusted EBITDA Guidance: $49 million to $51 million, representing a margin of approximately 26% at the midpoint. Warning! GuruFocus has detected 4 Warning Sign with LZ. Is LZ fairly valued? Test your thesis with our free DCF calculator. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. LegalZoom.com Inc (NASDAQ:LZ) delivered Q2 revenue of $205 million, up 7% year-over-year, and adjusted EBITDA of $46 million, up 18%, exceeding the high end of guidance. Subscription revenue grew 11% to $133 million, with human-in-the-loop subscriptions now representing 65% of subscription revenue and over 40% of total revenue. Partnership channel momentum is strong, with total order volumes from partnerships increasing to 11% of total orders, up from 4% a year ago, and new partners including USAA, AAA, PayPal, and Adobe. Traffic from AI platforms grew more than 250% quarter-over-quarter, accounting for approximately 3% of LLC formations traffic in June, with higher conversion rates than traditional organic search. Gross margin expanded approximately 250 basis points to 71%, driven by AI and automation efficiencies, and the company generated $34 million in free cash flow during the quarter. Brand awareness improved, with unaided awareness up 10% and aided awareness up 18% year-over-year, and over 70% of U.S. households are now familiar with LegalZoom. Google's shift to AI-powered search has reduced traditional search traffic and increased paid inventory costs, leading to lower business formation volume and a cautious full-year outlook. Full-year revenue guidance was lowered to $795-$805 million, reflecting a more cautious view of customer acquisition for the remainder of the year. Q3 revenue guidance of $192-$196 million implies only 2% year-over-year growth, with transaction revenue expected to decline high single to low double digits. The company reduced its workforce by approximately 13% as part of an organizational restructuring, which may impact morale and operational continuity. Subscription units declined 3% to approximately 1.9 million, reflecting an expected decline in lower-value subscriptions bundled within formation packages. Transaction revenue decreased 1% to $72 million, and business formations declined 5% to approximately 125,000, impacted by the search environment. Q: Can you elaborate on the differences in conversion and acquisition costs you see between AI Overviews and AI Mode versus traditional referral traffic within Google Search? What are you seeing in terms of SMB adoption for AI tools on your platform? A: Jeff Stibel (Chairman and CEO) noted that paid AI is still small, coming largely from ChatGPT and Google's native AI search. Conversion metrics are similar, but customers arriving via AI have higher intent. He highlighted that these customers are going through an education process, which aligns well with LegalZoom's human-in-the-loop offerings, creating opportunities for upselling and cross-selling. Regarding SMB adoption, the company has just started testing selling AI products directly to customers, with encouraging early results. Stibel believes this could position LegalZoom as a "small business operating system" if executed correctly. Q: Given the fluidity around Google Search, how do you evaluate customer acquisition marketing (CAM) spend and overall marketing spend looking into the back half of the year? A: Noel Watson (COO and CFO) explained that the company is making investments in channel diversification, noting that brand spend takes longer to generate returns and new partner channels start sub-optimized. He expects full-year CAM to step up a couple of points relative to the prior year. Strategically, the company is performance-oriented but is actively looking to shift spend away from Google wherever possible. Q: Your Q3 guide points to a sharp deceleration in growth. What signals are you looking for before you can talk more confidently about optimizing your top of funnel and getting back to re-acceleration? A: Jeff Stibel (Chairman and CEO) stated that the Google changes were abrupt, so the company is being conservative in the short run. He emphasized that the guidance provides flexibility to execute on diversification efforts, such as growing partnerships (from 4% to 11% of orders) and AI traffic (250% increase, now 3% of traffic). Noel Watson (COO and CFO) added that the business is almost two-thirds subscription, providing durability and insulation while the shift occurs. Stibel noted that while the Google impact is structural and creates pressure into 2027, the company is confident it can offset the impact through its diversification efforts. Q: Did the shift in traffic from Google accelerate during the quarter? Is it possible it could get worse? A: Jeff Stibel (Chairman and CEO) confirmed that Google's change was a structural shift, which Google itself called the biggest change to their search box since its introduction. Noel Watson (COO and CFO) added that the impact was seen in the back half of the quarter, and performance has been relatively consistent since then. The guidance assumes this consistent performance through year-end, without building in expectations for recovery or further degradation. Q: Can you provide quantitative stats on the size of Google as a percentage of your traffic or business formations today? A: Noel Watson (COO and CFO) noted that Google has historically been one of the company's primary channels, which is why channel diversification has been a strategic focus. He pointed to the guidance of high single-digit to low double-digit declines in transaction revenue in the back half of the year as a reflection of the impact. Jeff Stibel (Chairman and CEO) added that the change was rolled out fully in the U.S. first and is now rolling out internationally, where the company has minimal traffic, giving them confidence in their assessment. Q: Why do you feel now is the time to make brand investments, given the impact on Google Search traffic could affect the effectiveness of brand spend? A: Jeff Stibel (Chairman and CEO) argued that brand recognition and authority are the company's biggest strengths, which translate directly to authority with AI platforms and help with AI Overviews and generative engine optimization. Noel Watson (COO and CFO) added that brand strength also helps on the partnership front and with direct-to-site traffic, making it a high-returning spend in the current environment. Q: The higher value initiatives seem to be taking longer to benefit the top line. What have you learned about the go-to-market motion on those new higher value products like Concierge? Are they coming with higher churn or a tougher go-to-market motion? A: Noel Watson (COO and CFO) stated that the company is encouraged with the higher value products, noting that human-in-the-loop offerings are growing at orders of magnitude faster than the rest of the business, approaching 20% growth and now representing 40% of total revenue. He mentioned that the company is just coming up on renewal cycles and is reevaluating how to package, promote, and engage customers, but remains encouraged by the results. Q: You were early to partner with some of the AI majors. What do you envision you could still do to drive improvement in business formation traffic from those AI majors? A: Jeff Stibel (Chairman and CEO) outlined three key areas: visibility and brand recognition, where the company has an authority advantage; generative engine optimization (GEO) and answer engine optimization (AEO), where they are seeing significant strength; and paid opportunities as they emerge, particularly with ChatGPT. He noted that AI traffic grew 250% and is approaching 3% of traffic, which is material and could help the company lap the structural step down from Google more quickly. Q: Can you talk about the timeline and scope of the 13% workforce reduction? Is it complete and broad-based? A: Noel Watson (COO and CFO) confirmed that the workforce reduction was effective on the day of the announcement. It was a company-wide reorganization, looking cross-functionally at how to reimagine work streams, speed up decision-making, and improve execution. The impact will be seen across all functions in the organization. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management identified a structural step-down in traditional search traffic due to Google's shift toward AI-generated answers, which has increased cost-per-click and reduced informational query click-throughs. The company is intentionally transitioning from a volume-centric formation model to a high-value, human-in-the-loop subscription model, which now accounts for over 40% of total revenue. Strategic channel diversification is accelerating, with partnerships growing from 4% to 11% of total orders year-over-year, providing higher-intent customers and more resilient unit economics. AI is being utilized to bridge the gap between 'abundant answers' and 'accountable execution,' leveraging the company's owned law firm to establish authority in Generative Engine Optimization (GEO). A 13% workforce reduction was implemented to simplify the organizational structure and align resources behind high-priority growth initiatives enabled by AI-embedded operations. Management views the current search repricing as a bounded legacy channel issue, while emerging AI referral channels grew 250% quarter-over-quarter from a near-zero base. Full-year revenue guidance was revised to $795-$805 million, assuming the current challenging search environment remains consistent through year-end without further degradation or immediate recovery. The company expects a high single to low double-digit decline in transaction revenue for the third quarter, reflecting the persistent pressure on new customer acquisition from traditional search. Profitability targets were raised, with adjusted EBITDA margin expected to reach 26% in Q3, driven by $14 million in annualized savings from restructuring and AI-enabled efficiencies. Management anticipates a lag effect where current acquisition headwinds will create pressure on subscription growth into 2027, despite stable retention and pricing power in the existing base. Future growth is predicated on 'legal layer' integrations into AI workflows, such as Microsoft 365 Copilot, to capture customers at the point of discovery. A 13% headcount reduction was announced, following a 5% reduction earlier in the year, to accelerate decision-making and improve operating leverage. Restructuring charges of approximately $6 million are expected, primarily impacting the third quarter results. Customer Acquisition Marketing (CAM) as a percentage of revenue is expected to increase as the company invests in slower-returning brand awareness to offset search traffic declines. Concentration risk in Google search remains the primary near-term headwind, described by management as the most significant change to the search landscape in Google's history. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management reported that human-in-the-loop offerings are growing 'orders of magnitude faster' than the core business, now growing at approximately 20%. The company is currently entering the first major renewal cycles for these products to evaluate long-term retention and packaging effectiveness. The structural step-down in traffic occurred in the back half of Q2 and has remained relatively consistent through the start of Q3. Management clarified that the impact is concentrated in the U.S. market where AI search features were first deployed, providing a baseline for their conservative guidance. Traffic from AI platforms currently represents approximately 3% of LLC formation traffic but exhibits higher intent and higher conversion rates than traditional organic search. Management believes AI discovery leads to a more educated customer, which aligns better with their higher-priced expert and concierge service layers.

Interested in LegalZoom.com, Inc.? Here are five stocks we like better. Q2 results exceeded profitability expectations: Revenue rose 7% year over year to $205 million, while adjusted EBITDA increased 18% to $46 million. Subscription revenue grew 11% to $133 million and represented 65% of total revenue. Google search changes pressured customer acquisition: AI-generated search answers reduced organic traffic and made paid search more expensive, contributing to a 5% decline in business formations. LegalZoom is expanding partnerships and AI distribution, with AI-platform traffic up more than 250% quarter over quarter. Outlook reflects slower growth but stronger margins: The company lowered its full-year revenue forecast to $795 million–$805 million while raising adjusted EBITDA guidance to $190 million–$195 million. A 13% workforce reduction is expected to generate about $14 million in annualized savings. LegalZoom.com (NASDAQ:LZ) reported second-quarter revenue of $205 million, up 7% from a year earlier and in line with its guidance, while adjusted EBITDA increased 18% to $46 million and exceeded the high end of its outlook. Chairman and CEO Jeff Stibel said the company’s results reflected continued growth in subscription services, investments in artificial intelligence and efforts to diversify customer acquisition beyond traditional search. However, management also said recent changes to Google’s search experience created pressure on traffic, customer acquisition and business formation volume, prompting LegalZoom to reduce its full-year revenue outlook. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control Subscription revenue rose 11% year over year to $133 million and represented 65% of total revenue, up 300 basis points from the prior-year period. The company said this was its fifth consecutive quarter of double-digit subscription growth. Stibel said human-in-the-loop subscription services, which combine technology with professional support, grew about 20% year over year and accounted for 65% of subscription revenue. Those offerings represented more than 40% of total company revenue. → 3 Drone Stocks That Should Soar After the Summer Slump The company’s service offerings include Registered Agent and Virtual Mail subscriptions, while its expert-led offerings include legal plans, intellectual-property-related services and Business Manager, formerly called Do It For Me Concierge. LegalZoom said it saw increased use of legal plans as it bundled legal subscriptions with certain formation packages. Customer utilization of legal plans rose more than 35% year over year during the quarter, according to Stibel. Chief Operating Officer and Chief Financial Officer Noel Watson said average revenue per user increased 5%, primarily due to pricing in human-in-the-loop offerings. Subscription units, however, declined 3% to about 1.9 million as the company shifted away from lower-value subscriptions bundled with formation packages. → The Bitcoin Comeback May Already Be Underway—2 ETFs for Exposure Transaction revenue declined 1% to $72 million. LegalZoom processed approximately 125,000 business formations, down 5% from a year earlier, while transaction units increased 1% to roughly 281,000, supported by annual report filing volumes from compliance customers. Management said Google’s expanded use of AI-generated answers has reduced clicks from informational search queries and increased competition for paid search inventory. Stibel characterized the development as a “structural shift” in Google search that was particularly noticeable in the back half of the second quarter. Watson said performance following the initial decline had remained relatively consistent through the current quarter. LegalZoom’s outlook assumes the current search environment continues through the end of 2026, without assuming either a recovery or further deterioration. Stibel said the impact is concentrated in traditional Google search, a historically significant acquisition channel, rather than reflecting a change in customer demand for legal, compliance and business-formation services. The company said paid search has become less efficient as cost per click has risen. LegalZoom has been expanding alternative acquisition channels, including partnerships, brand marketing and AI-driven referrals. Partnership order volume increased to 11% of total orders during the second quarter, compared with 4% a year earlier. The company cited recently added partners including USAA, AAA, PayPal and Adobe. Traffic from AI platforms grew more than 250% quarter over quarter and represented about 3% of LegalZoom’s LLC formation traffic in June, Stibel said. He added that AI-platform visitors have shown higher intent and higher conversion rates than visitors from traditional organic search. The company has announced integrations with ChatGPT, Claude, Microsoft Copilot and Perplexity. LegalZoom recently introduced an agent integration within Microsoft 365 Copilot that enables users to assess formation options, manage compliance needs and connect with attorneys within Microsoft’s workflow. LegalZoom reported non-GAAP gross profit of $146 million, with gross margin expanding about 250 basis points to 71%. Watson attributed the improvement to a more favorable subscription mix and automation-driven efficiencies in customer care and service fulfillment. Adjusted EBITDA margin increased about 220 basis points to 22%, and free cash flow rose 7% to $34 million. The company ended the quarter with $167 million in cash and cash equivalents, no debt and a fully undrawn $100 million revolving credit facility. During the quarter, LegalZoom repurchased approximately 7.3 million shares for about $46 million. As of June 30, the company had about $80 million remaining under its repurchase authorization. LegalZoom also announced a workforce reduction of approximately 13%, effective immediately. Watson said the company-wide reorganization affects all functions and is intended to simplify workflows, accelerate decisions and align resources with priority growth initiatives. The action is expected to generate approximately $7 million in net savings during 2026 and about $14 million in annualized savings. The company expects roughly $6 million in restructuring-related charges, primarily in the third quarter. For the full year, LegalZoom now expects revenue of $795 million to $805 million, representing approximately 6% growth at the midpoint. The company expects third-quarter revenue of $192 million to $196 million, or approximately 2% growth at the midpoint. The outlook assumes high-single-digit to low-double-digit transaction revenue declines in the second half as the company navigates the effects of the new search environment. Management said its investments in partnerships, brand marketing and AI distribution will take time to offset the near-term pressure on traditional search acquisition. LegalZoom raised its full-year adjusted EBITDA outlook to $190 million to $195 million, implying a margin of approximately 24% at the midpoint. Third-quarter adjusted EBITDA is expected to be $49 million to $51 million, including the impact of the workforce actions. 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "LegalZoom.com Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Revenue of $205.3 million, up 7% year-over-year, driven by subscription revenue increasing 11% year-over-year, representing LegalZoom’s fifth consecutive quarter of double digit subscription revenue growth Subscription revenue of $133.4 million up 11% year-over-year from strength in human-in-the-loop offerings and pricing initiatives Net income of $5.2 million and net income margin of 3%; with net income margin increasing approximately 260 basis points year-over-year Adjusted EBITDA of $45.9 million and Adjusted EBITDA margin of 22%, ahead of the high end of our guidance range; with Adjusted EBITDA margin increasing approximately 220 basis points year-over-year Commitment to shareholder returns; completed $45.5 million of share repurchases in the quarter, with approximately $80.4 million remaining under the existing authorization Ended the quarter with cash and cash equivalents of $167.2 million and delivered $39.5 million in cash from operating activities and $33.7 million in free cash flow with no debt outstanding as of June 30, 2026 Updating full-year 2026 revenue outlook to $795.0-$805.0 million and Adjusted EBITDA to $190.0-$195.0 million, reflecting the recent industry-wide shift in customer discovery away from traditional search, while maintaining strong margin discipline MOUNTAIN VIEW, Calif., Aug. 05, 2026 (GLOBE NEWSWIRE) -- LegalZoom (Nasdaq: LZ), America’s #1 online legal services company, today announced results for its second quarter ended June 30, 2026. "Since late 2024, we've deliberately repositioned LegalZoom around subscription relationships that pair AI with trusted human expertise," said Jeff Stibel, Chairman and Chief Executive Officer of LegalZoom. "That strategy is working. While demand for what we do is intact, discovery is moving. We have been actively building new customer acquisition channels for more than a year, and our outlook fully reflects today's environment, with no recovery in traditional search assumed. In the AI channels where discovery is heading, every visit is incremental. We've partnered with the leading AI companies, we have more brand references across AI platforms than any competitor, and we haven't assumed how quickly this scales. That's the upside we're positioned to capture." "We're updating our revenue expectations based on recent changes in the customer acquisition environment, while our profitability outlook reflects the discipline of our operating model," said Noel Watson, Chief Operating Officer and Chief Financial Officer. "We continue to improve operating efficiency, expand margins and generate strong cash flow while investing behind the initiatives that support our long-term growth strategy." Second Quarter 2026 Highlights Revenue was $205.3 million for the quarter, up 7% year-over-year. Net income was $5.2 million for the quarter, or 3% of revenue, compared to a net loss of $0.3 million, or less than 1% of revenue, in the same period in 2025. Adjusted EBITDA was $45.9 million for the quarter, or 22% of revenue, compared to $39.0 million, or 20% of revenue, in the same period in 2025. Non-GAAP net income was $27.4 million for the quarter compared to $28.3 million in the same period in 2025. Cash and cash equivalents were $167.2 million as of June 30, 2026 compared to $203.1 million as of December 31, 2025. Cash flows provided by operating activities were $39.5 million for the quarter ended June 30, 2026 compared to $39.1 million in the same period in 2025. Free cash flow was $33.7 million for the quarter ended June 30, 2026 compared to $31.6 million in the same period in 2025. Basic and diluted net income per share was $0.03 for the quarter compared to a basic and diluted net loss per share of $— for the same period in 2025. Basic and diluted Non-GAAP net income per share was $0.16 for the quarter compared to basic and diluted Non-GAAP net income per share of $0.16 and $0.15, respectively, for the same period in 2025. Key Business Metrics and Non-GAAP Financial Measures(Unaudited, in thousands except AOV, ARPU and percentages) Financial Guidance and OutlookLegalZoom is updating its revenue outlook and Adjusted EBITDA outlook for the full year ending December 31, 2026 as follows: Revenue is expected to be in the range of $795 million to $805 million, or 6% year-over-year growth at the midpoint. This compares to the Company’s previous revenue outlook in the range of $810 million to $830 million, or 8% growth at the midpoint. LegalZoom’s outlook reflects the continued scaling of our higher-value growth initiatives and ongoing momentum from our partner channel, partially offset by a more cautious view of customer acquisition for the remainder of the year. Adjusted EBITDA is expected to be in the range of $190 million to $195 million, reflecting 12% year-over-year growth at the midpoint, and a 24% margin. This compares to the Company’s previous Adjusted EBITDA outlook of $190 million to $200 million, or 13% year-over-year growth, and a 24% margin. LegalZoom’s outlook reflects disciplined cost management, ongoing gross margin improvement and the benefits from a 13% workforce reduction announced today. For the third quarter ending September 30, 2026 LegalZoom expects: Revenue in the range of $192 million to $196 million, or 2% year-over-year growth at the midpoint. Adjusted EBITDA in the range of $49 million to $51 million, an 8% year-over-year increase at the midpoint, and a 26% margin. Webcast and Conference Call InformationA webcast and conference call to discuss second quarter 2026 results is scheduled for today, August 5, 2026, at 4:30 p.m. Eastern time/1:30 p.m. Pacific time. Those interested in participating in the conference call are invited to register Here. A live audio webcast of the event will be available on the LegalZoom Investor Relations website: https://investors.legalzoom.com. An archived replay of the webcast also will be available shortly after the live event. Forward-Looking Statements This press release contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts contained in this press release may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this press release include, but are not limited to, statements regarding our quarterly and annual guidance. The forward-looking statements in this press release are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including but not limited to the following: our dependence on business formations; our dependence on customers expanding the use of our platform, including converting our transactional customers to subscribers and our subscribers renewing their subscriptions with us; the impact of macroeconomic challenges or uncertainty on our business; our ability to remain profitable in the future; our ability to provide high-quality products and services, customer care and customer experience; our ability to continue to innovate and provide a platform that is useful to our customers and that meets our customers’ expectations; the competitive legal solutions market; our dependence on our brand and reputation; our ability to maintain and expand strategic relationships with third parties; our ability to hire and retain top talent and motivate our employees; risks and costs associated with complex and evolving laws and regulations; our ability to maintain effective in our internal control over financial reporting; and any factors discussed in the section titled “Risk Factors” included in our Quarterly Report on Form 10-Q for the three months ended March 31, 2026 filed with the Securities and Exchange Commission (the “SEC”) on May 6, 2026, as well as any factors in our subsequent filings with the SEC. The forward-looking statements in this press release are based upon information available to us as of the date of this press release, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. You should read this press release with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this press release, whether as a result of any new information, future events or otherwise. About Non-GAAP Financial Measures This press release includes non-GAAP financial measures including Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP net income, Non-GAAP net income (loss) margin, Non-GAAP net income per share and free cash flow. We use these non-GAAP financial measures to better understand and evaluate our core operating performance. We believe that these non-GAAP financial measures provide management and our investors with useful information about our financial performance and liquidity, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important measures used by our management for financial and operational decision-making. We also believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry. These non-GAAP measures should not be considered in isolation of, or as a substitute or an alternative to, measures prepared and presented in accordance with GAAP. We define Adjusted EBITDA as net income (loss) adjusted to exclude interest expense, interest income, provision for (benefit from) income taxes, depreciation and amortization, other expense (income), net, stock-based compensation and certain non-recurring income and expenses from time to time. We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of revenue. Adjusted EBITDA is one of the primary performance measures used by our management and our board of directors to understand and evaluate our financial performance and operating trends, including period-to-period comparisons, preparing and approving our annual budget and operational planning. In assessing our performance, we exclude certain expenses that we believe are not comparable period over period or that we believe are not indicative of our underlying operating performance. There are a number of limitations related to the use of Adjusted EBITDA rather than net income (loss), which include that Adjusted EBITDA: may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure; does not reflect our capital expenditures, future requirements for capital expenditures or contractual commitments; excludes depreciation and amortization and, although these are non-cash expenses, the assets being depreciated may be replaced in the future; does not reflect changes in, or cash requirements for, our working capital needs; excludes stock-based compensation expense, which has been, and will continue to be, a significant recurring expense for our business and an important part of our compensation strategy; and does not reflect certain expenses that we do not consider representative of our underlying operating performance, but that reduce cash available to us. We define Non-GAAP net income as net income (loss) adjusted to exclude amortization of acquired intangible assets, stock-based compensation expense and certain non-recurring income and expenses from time to time, net of related income tax impacts. We define net income (loss) margin as net loss as a percentage of revenue. We define Non-GAAP net income (loss) margin as Non-GAAP net income as a percentage of revenue. We define Non-GAAP net income (loss) per share attributable to common stockholders as Non-GAAP net income (loss) divided by basic and diluted weighted-average common stock. Free cash flow is a liquidity measure used by management in evaluating the cash generated by our operations after purchases of property and equipment including capitalized internal-use software. We believe free cash flow provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business and strengthening our balance sheet, once our business needs and obligations are met. The usefulness of free cash flow as an analytical tool has limitations because it excludes certain items that are settled in cash, does not represent residual cash flow available for discretionary expenses, does not reflect our future contractual commitments, and may be calculated differently by other companies in our industry. We are not providing a reconciliation for our non-GAAP outlook on a forward-looking basis (including the information under “Financial Guidance and Outlook” above), as we are unable to provide a meaningful calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various items that would impact the most directly comparable forward-looking GAAP financial measure that have not yet occurred, are out of LegalZoom’s control and/or cannot be reasonably predicted. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures. The tables in this press release contain more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures. About LegalZoom LegalZoom is a leading online platform for legal services, transforming how individuals and small businesses navigate the legal system. By combining intuitive technology with access to experienced attorneys, whether through our vast independent attorney network or our own law firm, we offer the tools and guidance people need to confidently manage everything from business formation and compliance to intellectual property protection and ongoing business management and legal support. As AI reshapes how legal work gets done, LegalZoom is at the forefront of the human-in-the-loop approach, ensuring that the speed and efficiency of AI is always backed by the judgment and accountability of qualified professionals. With over two decades of experience and millions of customers served, LegalZoom helps individuals and small businesses navigate legal needs with confidence. For more information, please visit www.legalzoom.com. ContactInvestor [email protected] Adjusted EBITDA and Adjusted EBITDA Margin The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for each of the periods indicated (unaudited): Non-GAAP Net Income, Non-GAAP Net Income (Loss) Margin and diluted Non-GAAP Net Income Per Share The following table presents a reconciliation of net income (loss) to Non-GAAP net income for each of the periods indicated (unaudited): The following table shows the computation of basic and diluted Non-GAAP net income per share (unaudited): Free Cash Flow The following table presents a reconciliation of net cash provided by operating activities to free cash flow (unaudited):

Online legal service provider LegalZoom (NASDAQ:LZ) met Wall Street’s revenue expectations in Q2 CY2026, with sales up 6.6% year on year to $205.3 million. On the other hand, next quarter’s revenue guidance of $194 million was less impressive, coming in 4.6% below analysts’ estimates. Its GAAP profit of $0.03 per share was in line with analysts’ consensus estimates. Is now the time to buy LegalZoom? Find out in our full research report. Revenue: $205.3 million vs analyst estimates of $205.5 million (6.6% year-on-year growth, in line) EPS (GAAP): $0.03 vs analyst estimates of $0.03 (in line) Adjusted EBITDA: $45.9 million vs analyst estimates of $40.92 million (22.4% margin, 12.2% beat) The company dropped its revenue guidance for the full year to $800 million at the midpoint from $820 million, a 2.4% decrease EBITDA guidance for the full year is $192.5 million at the midpoint, below analyst estimates of $195 million Operating Margin: 5.2%, up from -1.6% in the same quarter last year Free Cash Flow Margin: 16.4%, down from 19.8% in the previous quarter Subscription Units: 1.89 million, down 63,000 year on year Market Capitalization: $1.44 billion "Since late 2024, we've deliberately repositioned LegalZoom around subscription relationships that pair AI with trusted human expertise," said Jeff Stibel, Chairman and Chief Executive Officer of LegalZoom. Founded by famous lawyer Robert Shapiro, LegalZoom (NASDAQ:LZ) offers online legal services and documentation assistance for individuals and businesses. A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last three years, LegalZoom grew its sales at a tepid 7.6% compounded annual growth rate. This wasn’t a great result compared to the rest of the consumer internet sector, but there are still things to like about LegalZoom. This quarter, LegalZoom grew its revenue by 6.6% year on year, and its $205.3 million of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 2% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 6.8% over the next 12 months, similar to its three-year rate. This projection is underwhelming and implies its newer products and services will not catalyze better top-line performance yet. At least the company is tracking well in other measures of financial health. ALSO WORTH WATCHING: Nvidia’s Quiet Partner. Nvidia’s chips cost a hundred grand. The connectors that make them work cost even more. One company makes them all. Every AI server needs specialized infrastructure the chip companies don’t make. High-speed cables. Power connectors. Thermal sensors. This 90-year-old company built a monopoly on it. The AI boom just started. This stock is still flying under the radar. Claim The Stock Ticker Here for FREE. As an online marketplace, LegalZoom generates revenue growth by increasing both the number of users on its platform and the average order size in dollars. Over the last two years, LegalZoom’s subscription units, a key performance metric for the company, increased by 10.7% annually to 1.89 million in the latest quarter. This growth rate is strong for a consumer internet business and indicates people love using its offerings. Unfortunately, LegalZoom’s subscription units decreased by 63,000 in Q2, a 3.2% drop since last year. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t moving the needle for users yet. Average revenue per user (ARPU) is a critical metric to track because it measures how much the company earns in transaction fees from each user. ARPU also gives us unique insights into a user’s average order size and LegalZoom’s take rate, or “cut”, on each order. LegalZoom’s ARPU growth has been exceptional over the last two years, averaging 17.2%. Its ability to increase monetization while growing its subscription units at an impressive rate reflects the strength of its platform, as its users are spending significantly more than last year. This quarter, LegalZoom’s ARPU clocked in at $270. It grew by 5.5% year on year, faster than its subscription units. We were impressed by how significantly LegalZoom blew past analysts’ EBITDA expectations this quarter. On the other hand, its full-year revenue guidance missed and its revenue guidance for next quarter fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 13.9% to $6.98 immediately following the results. The latest quarter from LegalZoom’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.

LegalZoom (LZ) came out with quarterly earnings of $0.16 per share, beating the Zacks Consensus Estimate of $0.15 per share. This compares to earnings of $0.15 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +6.67%. A quarter ago, it was expected that this online platform for legal services would post earnings of $0.13 per share when it actually produced earnings of $0.12, delivering a surprise of -7.69%. Over the last four quarters, the company has surpassed consensus EPS estimates just once. LegalZoom, which belongs to the Zacks Industrial Services industry, posted revenues of $205.29 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 0.34%. This compares to year-ago revenues of $192.51 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. LegalZoom shares have lost about 15.4% since the beginning of the year versus the S&P 500's gain of 13%. While LegalZoom has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for LegalZoom was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.22 on $204.65 million in revenues for the coming quarter and $0.77 on $823.36 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Industrial Services is currently in the bottom 32% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the broader Zacks Industrial Products sector, Helios Technologies (HLIO), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 10. This maker of screw-in hydraulic cartridge valves and manifolds is expected to post quarterly earnings of $0.80 per share in its upcoming report, which represents a year-over-year change of +35.6%. The consensus EPS estimate for the quarter has been revised 4.1% higher over the last 30 days to the current level. Helios Technologies' revenues are expected to be $230.36 million, up 8.4% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report LegalZoom.com, Inc. (LZ) : Free Stock Analysis Report Helios Technologies, Inc (HLIO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research