LegalZoom.com, Inc. (LZ) 2025 Annual Report: Key Investor Insights

Overview

LegalZoom.com, Inc. has released its 2025 Annual Report, providing a comprehensive review of its financial performance, operational strategy, and risk factors. The company, a leading online platform for legal services, continues to transform how individuals and small businesses navigate the legal system through intuitive technology and access to experienced attorneys.

Key Points for Investors

• Business Formation Services Drive Revenue:
  LegalZoom’s transaction revenue is primarily generated from business formation services. In both 2024 and 2025, this segment represented the largest share of total transaction orders, making the company highly sensitive to fluctuations in U.S. business formations.
• Subscription Revenue Growth Decelerates:
  The company experienced a deceleration in subscription revenue growth during 2024. If improvement in this area does not materialize, it could adversely impact LegalZoom’s business, financial condition, and share price. Any shortfall in subscription growth versus market expectations may be particularly price sensitive.
• History of Net Losses:
  LegalZoom reported an accumulated deficit of \$1,134.4 million as of December 31, 2025. The company warns that continued losses or inability to maintain profitability could depress its value and impair future operations, capital raising, or expansion efforts.
• Quarterly Results May Fluctuate:
  The company cautions that future quarterly results may be volatile due to numerous factors—such as macroeconomic conditions, interest rates, consumer spending, business formation rates, product changes, and competitive pressures. This volatility could result in periods where results fall below analyst or market expectations, negatively impacting share price.
• Competitive and Innovation Risks:
  LegalZoom faces fierce competition from both online and offline providers. The legal solutions market is highly competitive, and the company’s ability to maintain a leading position depends on ongoing innovation, customer experience, and brand reputation. The company is investing in new technologies, including artificial intelligence (AI), but acknowledges compliance and reputational risks associated with AI integration.
• Acquisition Risk:
  LegalZoom acquired Formation Nation in February 2025. While such acquisitions may offer growth opportunities, they also pose risks such as integration difficulties, unforeseen expenditures, dilution to shareholders, and inability to realize anticipated synergies. These risks could negatively impact operating results and share value.
• Long-Term Strategy vs. Short-Term Performance:
  Management emphasizes a commitment to long-term value for stakeholders, which may at times conflict with short- or medium-term financial interests. This could make LegalZoom stock less appealing to investors focused on short-term returns.
• Regulatory and Compliance Risks:
  LegalZoom operates under complex and evolving U.S. and foreign laws. Any failure or perceived failure to comply could result in regulatory inquiries, lawsuits, additional costs, or changes to service offerings. The report notes the uncertainty and potential material impact of future legal requirements.
• Internal Control and Reporting:
  The company affirms that its management’s assessment of internal controls over financial reporting have been attested by its independent auditor. However, any future inability to maintain effective internal controls could erode investor confidence and result in share price declines.
• Market Value and Shareholder Rights:
  As of June 30, 2025, the aggregate market value of voting stock held by non-affiliates was approximately \$1.3 billion, based on a closing price of \$8.91 per share. The company is listed on the Nasdaq Global Select Market under the ticker symbol “LZ”.

Important Price-Sensitive Issues

• Subscription Growth Slowdown: This is a critical area for LegalZoom, as any further deceleration or below-expectation growth in subscription revenue may be viewed negatively by investors and could result in share price declines.
• Net Losses and Accumulated Deficit: The sustained losses and significant deficit raise concerns about the company’s ability to achieve consistent profitability, which is a key metric for institutional investors.
• Acquisition Integration Risks: The acquisition of Formation Nation introduces potential for operational disruption, dilution, and failure to achieve synergies, representing a risk to near-term earnings and shareholder value.
• Innovation and AI Risks: The integration of artificial intelligence in offerings, while presenting growth opportunities, also introduces compliance and reputational risks. Any negative developments in this area could materially impact LegalZoom’s brand and financial results.
• Regulatory Uncertainty: Evolving laws and regulations in the U.S. and abroad could impact LegalZoom’s business model, increase costs, or restrict offerings.

Summary of Risk Factors

• Dependence on business formations and economic conditions.
• Need to convert transactional customers to subscribers and renewals.
• Challenges in maintaining growth and managing volatility in quarterly results.
• Competitive threats and requirement for ongoing innovation.
• Risks from failing to provide high-quality products and services.
• Brand and reputational risks, especially with AI integration.
• Talent retention and dependence on key personnel.
• Risks associated with acquisitions, including dilution and integration difficulties.
• Complex regulatory environment and compliance risks.
• Potential conflicts between long-term strategy and short-term shareholder interests.

Corporate and Investor Information

LegalZoom is headquartered in Mountain View, California and was incorporated in Delaware in 2007. Investors can access SEC filings, governance documents, and press releases via its Investor Relations website. The company is a “large accelerated filer” under SEC rules and is not an emerging growth company or a shell company.

Disclaimer

This article is a summary and analysis of LegalZoom.com, Inc.’s 2025 Annual Report, intended for informational purposes only. It does not constitute financial advice or a recommendation to buy or sell shares. Investors should review the full SEC filing and consult professional advisors before making investment decisions. Past performance is not indicative of future results.

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