LegalZoom.com, Inc. (LZ) valuation at a glance
LegalZoom.com, Inc. (LZ) trades below the fair value estimate shown here. At $5.61 versus a $7.50 estimate, that is a 34% upside.
- Price
- $5.61
- Fair value estimate
- $7.50
- Upside
- +34%
- Market cap
- $939M
- P/S (TTM)
- 1.2×
Overview
LZ
LegalZoom.com, Inc.
IndustrialsSMB ServicesLegal TechAI DisruptionSearch DependentSubscriptionBuyback
$5.61-30.7%
Market Cap
$939M
SEC Form 10-K for fiscal 2025 (filed Feb 23 2026) and Form 10-Q for the quarter ended Jun 30 2026 (filed Aug 5 2026), cross-checked against SEC XBRL company facts and a yfinance harvest. US domestic filer.
P/E (TTM)
55.8×
via financials
Rev Growth YoY
10.9%
+10.9%SEC filing
Gross Margin
66.7%
SEC filing
FCF Yield
15.9%
calculated
Upside to FV
+33.7%
vs fair value
Conviction
2/5On 5 August 2026 LegalZoom beat its own margin guidance, raised gross margin to 68%, and cut full-year revenue guidance by 2.4% because of what it called an industry-wide shift in customer discovery away from traditional search. The stock fell 30.7% the next day. That reaction is the entire analytical question: the market did not reprice $20M of revenue, it repriced the sentence 'no recovery in traditional search assumed'. This is the same mechanism NerdWallet described three days earlier, arriving at a second company in a different industry. The offsetting caution is that reported free cash flow of $149.6M leans on $98.2M of stock-based compensation and a deferred-revenue balance larger than the cash balance.
Research Depth
ScreeningDeep ResearchFull Model
Updated today
Quality Snowflake
Overall 61/100
Value4/5
Future1/2
Past4/4
Health3/4
Dividend0/1
Each axis scores the checks for which data is available (filled = pass, hollow = no data). Computed from the sourced metrics on this page, not a third-party rating.
Thesis
LegalZoom sells business formation and ongoing legal compliance to small businesses: LLC and corporation filings, registered agent service, annual reports, estate planning documents and attorney subscriptions. On 5 August 2026 it reported a second quarter that was, on almost every profitability measure, good. Revenue rose 7% to $205.3M, gross margin expanded from 65% to 68%, adjusted EBITDA of $45.9M came in ahead of the high end of guidance, GAAP operating income swung from a $3.1M loss to a $10.7M profit, and the company repurchased $45.5M of stock. Then it cut full-year revenue guidance from $810-830M to $795-805M and gave the reason: 'the recent industry-wide shift in customer discovery away from traditional search'. Chief executive Jeff Stibel added that the outlook assumes 'no recovery in traditional search'. The stock fell 30.7% the next day, from $8.10 to $5.61. Hold the two facts together, because the gap between them is the investment case. The revenue cut was 2.4% at the midpoint. The adjusted EBITDA guidance moved from $190-200M to $190-195M, a 1.3% trim. The most plausible reading is that the market did not remove a third of the equity value because $20M of revenue moved, but because a company that had RAISED guidance three months earlier now says the channel that brings it customers is not coming back, and because that is the second such statement from a search-dependent business in a week. That is an inference about why a price moved, which is never directly observable, and it is the inference this page is built on. A reader who thinks the decline was instead a liquidity or positioning event should discount everything that follows. The operating detail supports both readings. Subscription revenue rose 11% to $133.4M, a fifth consecutive quarter of double-digit growth, but subscription units at period end FELL 3% to 1.892 million while revenue per unit rose 5% to $270. Business formations fell 5%. So the customer base is contracting while the monetization of the remainder improves, which is exactly the pattern this site has now documented at Fiverr, at NerdWallet and here. Against the bull case sit two cautions this page will not soften. Reported trailing free cash flow of $149.6M is real cash, but $98.2M of stock-based compensation was added back to get there, so a large share of the cash generation is compensation paid in equity rather than cash, and the company spent $89.0M in six months on buybacks largely to offset the resulting dilution. And deferred revenue of $221.4M exceeds the $167.2M cash balance, so customers have prepaid for more service than the company holds in cash. Conviction 2 of 5: the disagreement is genuine and the price move was violent, but the cash quality is materially weaker than the headline yield suggests.
Bull Case
The Cut Was SmallFull-year revenue guidance moved from $810-830M to $795-805M, a 2.4% reduction at the midpoint, and adjusted EBITDA guidance from $190-200M to $190-195M, a 1.3% trim that still represents about 12% growth on fiscal 2025. The share price fell 30.7%. Unless the guidance is a way-station to something much worse, the price move is several multiples of the fundamental revision.
Profitability Is Improving, Not DeterioratingSecond-quarter gross margin rose from 65% to 68%, adjusted EBITDA margin from 20% to 22%, and GAAP operating income swung from a $3.1M loss a year earlier to a $10.7M profit. Net income was $5.2M against a $0.3M loss. General and administrative expense fell 17.9% year over year to $30.4M and technology and development fell 7.3%. Every line except revenue growth moved the right way.
The Subscription Base Is The BusinessSubscription revenue of $133.4M is 65% of the total and grew 11%, the fifth consecutive quarter of double-digit growth. Registered agent service and annual compliance filings are statutory requirements rather than discretionary purchases: a company that has formed an entity must maintain it or lose good standing. That is a materially more durable revenue stream than the one-time formation transaction that brings the customer in.
No Debt, Real CashThe company states it had no debt outstanding at June 30 2026. The only balance-sheet obligation resembling debt is $15.1M of operating lease liabilities. Cash was $167.2M, and second-quarter free cash flow as the company defines it was $33.7M against $31.6M a year earlier. There is no refinancing risk and no covenant that a revenue miss could trip.
Buying Stock AggressivelyLegalZoom repurchased $43.5M in the first quarter of 2026 and $45.5M in the second, $89.0M in six months, with about $80.4M remaining under the authorization. Shares outstanding fell from 177.6 million at the fiscal 2025 year end to 167.5 million by June 30 2026, a 5.7% reduction in half a year. Prior years were larger still, at $165.0M in fiscal 2024 and $80.5M in fiscal 2025.
Positioned For Where Discovery MovesManagement's answer to the search problem is that discovery is moving rather than disappearing. Stibel says the company has partnered with leading AI companies and claims more brand references across AI platforms than any competitor, and states that the guidance assumes none of that scales. The partnership and brand-reference claims are management assertions that no filing quantifies and no outsider can currently verify, so they carry no weight here beyond establishing what management intends. If discovery genuinely relocates to AI assistants rather than evaporating, a brand with statutory-compliance products and human expert review is a more natural survivor than a pure template seller.
Bear Case
Cash Flow Is Substantially StockThis is the number that should govern the multiple. Trailing free cash flow is $149.6M, but trailing stock-based compensation is $98.2M. Stock compensation is a real cost of employing people that happens not to consume cash, so adding it back produces a cash flow figure that overstates what accrues to existing shareholders. Trailing GAAP net income is $16.8M against that $149.6M. On enterprise value against GAAP EBITDA of $69.5M the multiple is 11.3 times, not the 5.3 times that enterprise value against free cash flow implies.
The Buyback Is Largely A Dilution OffsetThe company spent $89.0M on repurchases in six months while issuing $44.9M of stock compensation over the same period. Roughly half the buyback is running to stand still against dilution rather than returning capital. Cash fell from $203.1M to $167.2M across those six months, so the repurchase is being funded partly from the balance sheet rather than entirely from surplus cash flow.
Customers Have Prepaid More Than The Cash BalanceDeferred revenue was $221.4M at June 30 2026 against cash of $167.2M. That is customer money collected for subscription services not yet delivered, and it grew $17.5M in the first half, which flatters operating cash flow by that amount. Current assets of about $212.2M sit against current liabilities of $318.1M, a current ratio of 0.67. The obligation is service delivery rather than cash repayment, which is why this is survivable, but any analysis treating the cash balance as unencumbered is wrong.
The Base Is ShrinkingSubscription units at period end fell 3% year over year to 1.892 million, from 1.955 million. Business formations fell 5% to 125,000 in the quarter. Average order value fell 2%. Revenue grew because revenue per subscription unit rose 5% to $270. A subscription business losing units while raising price is running the same play as a marketplace losing buyers while raising take rate: it works until the price increases stop sticking.
AI Attacks The Product, Not Just The ChannelThe discovery problem is the one management named, but it is the second-order risk. The first-order risk is that a general-purpose language model drafts an operating agreement, a will or articles of incorporation adequately and for nothing. The defensible part of LegalZoom is the statutory filing and registered-agent service, which is administrative rather than intellectual. The document product that historically brought customers through the door is precisely what automation does well.
Management Was Wrong Three Months AgoOn May 6 2026 LegalZoom RAISED full-year revenue guidance to $810-830M from $805-825M, and the release was headlined 'Results Ahead of Expectations'. Eleven weeks later it cut to $795-805M citing a shift in customer discovery. Whatever changed was either not visible to management in early May or not judged material then. That is a short interval in which to lose confidence in the forecast, and it is a reason to discount the new guidance rather than to underwrite it.
Key Metrics
Market Cap
$939M
SEC Form 10-K for fiscal 2025 (filed Feb 23 2026) and Form 10-Q for the quarter ended Jun 30 2026 (filed Aug 5 2026), cross-checked against SEC XBRL company facts and a yfinance harvest. US domestic filer.
Enterprise Value
$787M
calculated
Revenue (TTM)
$793M
SEC filing
P/E (TTM)
55.8×
via financials
Forward P/E
–
consensus
P/S (TTM)
1.2×
via financials
P/B
7.4×
via financials
EV/EBITDA
11.3×
calculated
PEG
–
calculated
Revenue Growth
10.9%
SEC filing
Gross Margin
66.7%
SEC filing
Operating Margin
4.1%
SEC filing
Net Margin
2.1%
SEC filing
Free Cash Flow
$150M
SEC filing
FCF Yield
15.9%
calculated
Debt / Equity
0.1×
SEC filing
Current Ratio
0.7×
SEC filing
Short Interest
12.0%
exchange
Institutional Own.
–
13F
Insider Own.
5.6%
proxy
Shares Out.
167.5M
SEC filing
Float
116.5M
exchange
Valuation
Price vs Fair Value
Bear$4.00
Base$7.50
Bull$11.00
Now $5.61
Bear Case
$4.00
Search discovery keeps eroding and the AI channels do not replace it at comparable economics. Subscription units keep falling faster than price rises, and the 2027 revenue line declines outright. Marketing spend has to keep rising to defend volume, as it already is, and adjusted EBITDA falls back toward $150M with free cash flow near $100M once buybacks stop absorbing the balance sheet. The market pays about 5x that free cash flow for a business in structural decline, roughly $500M of enterprise value, plus cash of about $150M, giving around $650M of equity on roughly 165M shares, near $3.94. Call it $4.00. Probability ~35%.
Base Case
$7.50
The revised guidance holds: revenue of $795-805M and adjusted EBITDA of $190-195M for 2026, with the subscription mix continuing to offset transaction weakness. Free cash flow settles near $140M once the stock-compensation add-back is understood for what it is. The market pays about 8x for a low-growth, cash-generative, debt-free SMB services business, roughly $1.12B of enterprise value plus about $160M of cash, giving roughly $1.28B of equity across about 165M shares, close to $7.76, tempered to $7.50. Below the published analyst mean of $8.30, which was set before the decline and is stale. Probability ~45%.
Bull Case
$11.00
The AI-channel partnerships convert. Discovery genuinely relocates rather than disappearing, LegalZoom's brand presence inside assistant answers converts at better economics than paid search did, and subscription units stabilise while ARPU keeps rising. Free cash flow reaches $160M and the market re-rates to about 12x, roughly $1.92B of enterprise value plus cash, about $2.07B of equity on roughly 163M shares after buybacks, near $12.70, tempered to $11.00 for the stock-compensation drag that does not go away in any scenario. Above the published analyst high of $10.00. Probability ~20%.
DCF Summary
DCF awaiting Phase 2+
Discounted cash-flow model is built once research reaches the deep-research stage.
Historical Multiples
| Year | P/E | P/S | EV/EBITDA |
|---|---|---|---|
| FY23 | 158.2× | 3.4× | 48.2× |
| FY24 | 45.1× | 2.0× | 18.5× |
| FY25 | 114.5× | 2.3× | 25.5× |
| TTM · | 55.8× | 1.2× | 11.3× |
Current multiple highlighted vs trailing history.
Peer Comparison
| Ticker | Mkt Cap | P/E | P/S | EV/EBITDA | Rev Growth | Gross Mgn | Net Mgn |
|---|---|---|---|---|---|---|---|
| LZ | $0.94B | 55.8× | 1.2× | 11.3× | +10.9% | 66.7% | 2.1% |
| NRDS | $0.58B | 9.4× | 0.7× | 4.0× | +21.7% | 93.0% | 8.1% |
| YELP | $1.39B | 10.0× | 0.9× | 5.8× | +0.8% | 90.0% | 9.5% |
| TREE | $0.46B | 2.5× | 0.4× | 6.1× | +25.3% | 96.4% | 14.3% |
| EVER | $0.84B | 7.6× | 1.2× | 8.5× | +24.6% | 97.5% | 15.3% |
| ZD | $1.90B | 42.0× | 1.4× | 6.0× | -1.9% | 85.3% | 3.3% |
Financials
| Line Item | Q2 2025 | Q2 2026 | YoY |
|---|---|---|---|
| Total Revenue Transaction $71.9M (down 1%) + subscription $133.4M (up 11%) | $192.5M | $205.3M | +6.6% |
| Cost of Revenue Falling in absolute terms while revenue grew | $67.4M | $65.4M | -3% |
| Gross Profit Gross margin 65% to 68% | $125.1M | $139.9M | +11.8% |
| Sales & Marketing Up 13.3% against 6.6% revenue growth. For the half year it rose 20.3% against 9.7%. The cost of replacing lost search discovery. | $69.6M | $78.8M | +13.3% |
| Technology & Development | $21.6M | $20.0M | -7.3% |
| General & Administrative | $37.0M | $30.4M | -17.9% |
| Income (Loss) From Operations GAAP. A genuine swing to profit. | ($3.1M) | $10.7M | – |
| Net Income (Loss) | ($0.3M) | $5.2M | – |
| Adjusted EBITDA (non-GAAP) Ahead of the high end of guidance. Excludes stock compensation, which is why it is far above GAAP operating income. | $39.0M | $45.9M | +17.8% |
| Diluted Average Shares Buyback outpacing dilution | 180.9M | 171.6M | -5.1% |
| Item | Jun 30 2026 | Dec 31 2025 |
|---|---|---|
| Cash & Equivalents Fell $35.9M on $89.0M of buybacks | $167.2M | $203.1M |
| Goodwill | $140.7M | $140.7M |
| Total Assets | $466.4M | $511.5M |
| Deferred Revenue (current) Customer prepayments for services not yet delivered. Larger than the cash balance. | $221.2M | $203.7M |
| Accounts Payable | $35.9M | $27.2M |
| Total Current Liabilities Against about $212.2M of current assets, so a current ratio of 0.67 | $318.1M | $318.5M |
| Operating Lease Liabilities The only debt-like obligation. Company reports no debt outstanding. | $15.1M | $14.4M |
| Total Liabilities | $339.2M | $339.6M |
| Shareholders' Equity Fell on buybacks against an accumulated deficit of $1,217.9M | $127.2M | $171.9M |
| Shares Issued & Outstanding Down 5.7% in six months | 167.5M | 177.6M |
| Component | H1 2025 | H1 2026 | FY2025 |
|---|---|---|---|
| Net Income | $4.9M | $6.3M | $15.4M |
| Stock-Based Compensation The dominant non-cash add-back. Trailing twelve months is $98.2M against $16.8M of net income. | $60.4M | $44.9M | $113.7M |
| Depreciation & Amortization | $21.7M | $22.4M | $36.3M |
| Change in Deferred Revenue Customer prepayment growth, a source of operating cash | $29.6M | $17.5M | — |
| Operating Cash Flow | $89.8M | $86.8M | $178.2M |
| Purchases of Property & Equipment | ($16.9M) | ($12.2M) | ($30.3M) |
| Free Cash Flow Trailing $149.6M. Read against $98.2M of stock compensation before applying a multiple. | $72.9M | $74.7M | $147.9M |
| Repurchase of Common Stock $165.0M in fiscal 2024. About $80.4M authorization remained after Q2 2026. | ($20.4M) | ($89.0M) | ($80.5M) |
Source: SEC Form 10-K for fiscal 2025 filed February 23 2026 and Form 10-Q for the quarter ended June 30 2026 filed August 5 2026, cross-checked against SEC XBRL company facts. The peer set above is deliberately the search-dependent cohort rather than legal-services companies, because the disagreement being priced here is about customer discovery, not about law. That choice has a cost the reader should hold onto: most of those comparables earn advertising or lead-generation revenue at gross margins in the high eighties or nineties, while LegalZoom fulfils a service at 67%. The cohort is the right one for judging how the market is pricing search exposure and the wrong one for judging what multiple this business deserves on its own economics. Three points of care on these statements. First, EBITDA is shown on a GAAP basis, operating income plus depreciation and amortization, which gives $69.5M trailing. The company guides on adjusted EBITDA, which was $45.9M in the second quarter alone, and the difference is very largely stock-based compensation of $98.2M over the trailing year. Both are legitimate measures; they are not interchangeable, and the enterprise-value multiple differs by roughly a factor of two and a half depending on which is used. Second, deferred revenue of $221.4M exceeds the cash balance of $167.2M, and its $17.5M increase in the first half is a source of operating cash flow. Third, the first half of fiscal 2025 included a $14.3M gain on the sale of assets held for sale inside operating income, so the year-on-year operating comparison flatters 2026 unless that is stripped out.
Catalysts
Aug 5 '26
Guidancehigh relevance
The guidance cut that removed a third of the equity value
Full-year revenue guidance went from $810-830M to $795-805M and adjusted EBITDA from $190-200M to $190-195M, attributed to an industry-wide shift in customer discovery away from traditional search, with no recovery in search assumed. The shares fell 30.7% the following session, from $8.10 to $5.61, on volume of about 6.4 million shares against a three-month average near 2.9 million. This is the event that created the situation on this page, and it is three days old.
Q3 '26
Earningshigh relevance
Third quarter results, the first test of the new guidance
The three numbers that matter are subscription units at period end against the 1.892 million just reported, revenue per subscription unit against $270, and sales and marketing as a share of revenue against the 38.4% it reached in the second quarter. If units stabilise while ARPU holds, the mix argument is working. If marketing has to rise again to hold units, the bear case is operating.
2026-27
Strategyhigh relevance
Whether the AI-channel partnerships convert
Management's stated answer to search decay is partnership with leading AI companies and brand presence inside assistant answers, and it says the guidance assumes none of this scales. That makes it a genuine free option if it works and a genuine problem if the channel simply shrinks. Watch for any disclosure that quantifies traffic or bookings originating from AI assistants, which no company in this cohort has yet provided.
2026-27
Capital Return
Buyback pace against a falling cash balance
About $80.4M remained under the authorization after the second quarter. The company spent $89.0M in six months while cash fell from $203.1M to $167.2M. Continuing at that pace at $5.61 would be far more accretive than the repurchases done at higher prices, but it would also keep drawing down a balance sheet that already carries more deferred revenue than cash. The choice management makes here is informative about how they read their own guidance.
2026-27
Macro
Small-business formation volumes
Business formations fell 5% year over year to 125,000 in the second quarter. That series is cyclical, tied to small-business confidence and the labour market, and it is separate from the discovery question. A recovery in formations would lift the transaction line independently of search, and would help separate the cyclical component of the weakness from the structural one.
Ongoing
Disruptionhigh relevance
General-purpose models and legal documents
The slower-moving risk is not discovery but the product. Every improvement in a general assistant's ability to draft and explain a formation document, an operating agreement or a will removes part of the reason to pay for one. The compliance and registered-agent services are far more defensible because they are statutory administration rather than drafting. Watch the transaction-versus-subscription revenue split as the cleanest public proxy for how that is going.
Risks
| Risk | Category | Severity | Probability | Impact on Thesis |
|---|---|---|---|---|
| Trailing free cash flow of $149.6M includes an add-back of $98.2M of stock-based compensation, against trailing GAAP net income of $16.8M. On enterprise value to GAAP EBITDA the multiple is 11.3 times rather than the 5.3 times implied by enterprise value to free cash flow. | Cash Quality | High | Certain | The headline free-cash-flow yield of 15.9% is the single most likely reason a screener surfaces this company, and it is the number most likely to mislead. Stock compensation is a real cost of employing people that is settled in equity, so the shareholder either accepts dilution or funds a buyback to offset it. LegalZoom is doing the latter, which converts the non-cash cost into a cash one. |
| Management cut full-year revenue guidance on August 5 2026 citing an industry-wide shift in customer discovery away from traditional search, and stated that the outlook assumes no recovery in traditional search. | Disruption | High | Certain | The company has removed search recovery from its own forecast. That is a more definitive statement than any peer in this cohort has made and it applies to the top of the funnel for the whole business. If AI-channel discovery does not replace the lost volume at comparable acquisition economics, marketing spend must keep rising to hold units, which is already visible in sales and marketing rising 20.3% against 9.7% revenue growth in the first half. |
| Subscription units at period end fell 3% year over year to 1.892 million and business formations fell 5%, while revenue per subscription unit rose 5% to $270. Average order value fell 2%. | Business Model | High | Certain | Revenue growth is now coming from price rather than volume across both halves of the business. That can continue for several periods and is genuinely a mix improvement while it lasts, but a subscription base that shrinks every quarter eventually caps the price increases, because the customers most willing to absorb them are the ones already retained. |
| Deferred revenue of $221.4M exceeds cash of $167.2M, and its $17.5M increase supplied part of first-half operating cash flow. Current assets of about $212.2M sit against $318.1M of current liabilities, a current ratio of 0.67. | Balance Sheet | Medium | Certain | The obligation is to deliver service rather than to repay cash, which is why a sub-1.0 current ratio is survivable here and normal for prepaid subscription models. But the cash balance is not unencumbered, the deferred-revenue tailwind to operating cash flow reverses if new subscription sales slow, and the company is spending that same cash on buybacks. |
| On May 6 2026 the company raised full-year revenue guidance to $810-830M under the headline 'Results Ahead of Expectations'. On August 5 2026 it cut to $795-805M. | Forecast Reliability | Medium | Certain | Eleven weeks separated a raise from a cut on a structural cause. Either the deterioration was not visible in early May or it was not judged material then. Any valuation anchored on the new guidance should carry a discount for the demonstrated speed at which this particular forecast can move. |
| The core document product is directly substitutable by general-purpose language models, which draft formation documents, operating agreements and wills at no marginal cost. | Disruption | Medium | High | The registered-agent and compliance-filing services are administrative and statutory, and are far more defensible. The drafting product is not. Since the transaction product is what historically acquires the customer who then subscribes, erosion at the front of the funnel eventually reaches the subscription base even if the subscription product itself is safe. |
Technical Snapshot
52-Week Range
$5.22$5.61$12.40
RSI (14)
32.2
neutral
50-Day MA
$6.75
-16.9%below
200-Day MA
$7.71
-27.2%below
Avg Vol (30d)
2.9M
+123%vs average
Support Levels
$5.44$5.28$5.22
Resistance Levels
$8.10$8.41$8.49
Price path reconstructed from the 52-week range, current price, and 50/200-day moving averages. Connect a live market-data feed for production.
Ownership & Insider Activity
Top Institutional Holders via 13F filings
13F holdings pending
Institutional holder detail awaiting filing.
Insider Activity
Institutions hold the overwhelming majority of this register and the float is large relative to the company, at about 116.5 million shares of the 167.5 million outstanding. Insiders are reported at roughly 5.6%. The institutional-ownership percentage is not published as a figure on this page because the yfinance field for it is unreliable across this dataset, and a stock that fell 30.7% in a single session three days ago will have had material register turnover that no quarterly filing has yet captured. Short interest was about 12.0% of the float before the decline. The most informative ownership fact here is not a holder, it is the issuer. LegalZoom repurchased $165.0M of stock in fiscal 2024, $80.5M in fiscal 2025, and then $43.5M and $45.5M in the first two quarters of 2026, taking shares outstanding from 177.6 million at the fiscal 2025 year end to 167.5 million by June 30 2026. About $80.4M remained under the authorization. Set that against $98.2M of trailing stock-based compensation and the picture is clear: roughly half of this buyback is offsetting dilution rather than returning capital, and it was executed at prices between roughly $7 and $10 against a share price now of $5.61. The decision management makes about the remaining authorization at this price is the most useful forward signal available on the register.
No open-market insider transactions
None reported in the recent Form 4 window.
Peer Comparison
| Ticker | Mkt Cap | P/E | P/S | EV/EBITDA | Rev Growth | Gross Mgn | Net Mgn |
|---|---|---|---|---|---|---|---|
| LZ | $0.94B | 55.8× | 1.2× | 11.3× | +10.9% | 66.7% | 2.1% |
| NRDS | $0.58B | 9.4× | 0.7× | 4.0× | +21.7% | 93.0% | 8.1% |
| YELP | $1.39B | 10.0× | 0.9× | 5.8× | +0.8% | 90.0% | 9.5% |
| TREE | $0.46B | 2.5× | 0.4× | 6.1× | +25.3% | 96.4% | 14.3% |
| EVER | $0.84B | 7.6× | 1.2× | 8.5× | +24.6% | 97.5% | 15.3% |
| ZD | $1.90B | 42.0× | 1.4× | 6.0× | -1.9% | 85.3% | 3.3% |
Recognizable sector comparables. Multiples are trailing-twelve-month figures from market and exchange data; lowest multiple in each column highlighted. Loss-making peers show no P/E.
Research Notes
2026-08-07Internal (40-agent DeepSeek pass via OpenRouter + yfinance ground truth + 10-K/10-Q verification)
DEEP INTEL: LZ, a 2.4% guidance cut that removed 30.7% of the equity value
Built from a 40-agent qualitative pass costing $0.029, with every number verified afterwards against the fiscal 2025 10-K, the second-quarter 2026 10-Q filed two days ago, SEC XBRL company facts and a yfinance harvest. The model contributed no figures by design. Its most valuable contribution was flagging, unprompted, that a prepaid subscription business holds customer money on the balance sheet and that operating cash flow would be flattered by deferred-revenue growth. That sent me to the balance sheet, where deferred revenue of $221.4M turns out to EXCEED the $167.2M cash balance, and to the cash flow statement, where the deferred-revenue change supplied $17.5M of first-half operating cash flow. It also flagged the capitalised-software question, which cleared. Setup: a company that beat its own margin guidance and cut its revenue guidance by 2.4%, and lost nearly a third of its market value the next day because of the stated reason. Conviction 2/5, held down by cash quality rather than by the disagreement itself.
2026-08-05LegalZoom Q2 2026 results, Form 8-K Exhibit 99.1
The sentence that cost a third of the market capitalization
The guidance paragraph reads that LegalZoom is updating its outlook 'reflecting the recent industry-wide shift in customer discovery away from traditional search, while maintaining strong margin discipline'. Revenue guidance went from $810-830M to $795-805M, about 6% growth at the midpoint against 8% previously. Adjusted EBITDA went from $190-200M to $190-195M, still about 12% growth. Chief executive Jeff Stibel: '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.' He added that the company has partnered with leading AI companies and has 'more brand references across AI platforms than any competitor', and that the outlook assumes nothing about how quickly that scales. The quarter itself beat: adjusted EBITDA of $45.9M was above the high end of guidance, gross margin reached 68% against 65%, and GAAP operating income swung from a $3.1M loss to a $10.7M profit. The shares fell from $8.10 to $5.61 the next session, a 30.7% decline.
2026-05-06LegalZoom Q1 2026 results, Form 8-K Exhibit 99.1
Eleven weeks earlier, guidance went up
The first-quarter release is headlined 'LegalZoom Reports First Quarter Financial Results Ahead of Expectations; Raises Full-Year Revenue Outlook'. Revenue was $206.8M, up 13% year over year. Guidance was RAISED to $810-830M from $805-825M, with the company citing 'the continued scaling of our higher-value growth initiatives and ongoing momentum from our partner channel through the remainder of the year'. Adjusted EBITDA guidance of $190-200M was maintained. Stibel said that 'in an AI-driven world, we win by getting customers to the finish line, combining technology with real human expertise to complete the last mile'. Subscription units at that point were 1.920 million against 1.924 million a year earlier, essentially flat, with ARPU of $263 against $252. By the second quarter units had fallen to 1.892 million. The interval between raising and cutting on a structural cause was eleven weeks, which is the strongest available argument for discounting the current guidance rather than underwriting it.
2026-08-05LegalZoom Q2 2026 Form 10-Q, balance sheet and cash flow statement
Where the free cash flow actually comes from
The cash flow statement for the six months to June 30 2026 reconciles net income of $6,287 thousand to operating cash flow of $86,829 thousand. The bridge is dominated by stock-based compensation of $44,910 thousand, depreciation and amortization of $22,411 thousand, deferred income taxes of $7,825 thousand and an increase in deferred revenue of $17,485 thousand. Capital expenditure was $12,165 thousand, giving free cash flow of $74,664 thousand, which matches the company's published figure. Trailing twelve-month stock compensation is $98.2M against trailing free cash flow of $149.6M and trailing GAAP net income of $16.8M. On the balance sheet at June 30 2026, deferred revenue of $221,180 thousand current plus $234 thousand non-current stands against cash of $167,227 thousand, and total current liabilities of $318,113 thousand against current assets of about $212,173 thousand. The company reports no debt outstanding; the $15.1M of lease liabilities is the only debt-like item. None of this makes the cash flow fake. It makes the multiple you should pay for it lower than the headline yield implies.
2026-08-07Cross-company observation (DeepValue Radar)
The second company in one week to blame search discovery
On February 25 2026 NerdWallet's chief executive attributed organic search headwinds to consumers turning to AI overviews and large language models over traditional search. On August 5 2026 LegalZoom cut full-year revenue guidance citing an industry-wide shift in customer discovery away from traditional search, and said its outlook assumes no recovery. These are unrelated companies in unrelated industries, a personal-finance comparison marketplace and a small-business legal services provider, giving the same diagnosis of the same channel within months of each other. The market's treatment of the two differs sharply and instructively. NerdWallet trades at about 4.4 times trailing free cash flow with a 21.3% yield after a gradual de-rating. LegalZoom took its de-rating in a single session. Both are now priced as though the channel does not recover. The distinguishing question, and the reason the conviction ratings differ, is cash quality: NerdWallet's free cash flow is largely cash earnings with stock compensation of about $29M, while LegalZoom's includes a $98.2M stock-compensation add-back. Same disagreement, different quality of the thing being bought.
2026-08-07yfinance and SEC XBRL (computed, USD)
What the market is paying, and why the analyst targets on this page are stale
At the August 6 2026 close of $5.61 the market capitalization on the 167,451 thousand shares reported outstanding at June 30 2026 is about $939.4M. Cash was $167.2M with no debt beyond $15.1M of lease liabilities, so enterprise value is about $787.3M. Trailing twelve-month revenue is $792.5M, GAAP net income $16.8M, GAAP operating income $32.5M and free cash flow $149.6M. That puts enterprise value at about 5.3 times free cash flow and 11.3 times GAAP EBITDA of $69.5M, and the free-cash-flow yield on market capitalization at 15.9%. The shares are 54.8% below the $12.40 fifty-two-week high and closed within 7% of the $5.22 fifty-two-week low, with the 200-day moving average at $7.71 and a 14-day relative strength index of 32.2. Volume on the decline was about 6.4 million shares against a three-month average near 2.9 million. Two data cautions. The five published analyst price targets, a mean of $8.30 with a low of $7.00 and a high of $10.00, were all set BEFORE the guidance cut and the 30.7% decline, so the entire published range sitting above the current price reflects staleness rather than conviction and should not be read as consensus upside. And yfinance reports 171.6 million shares outstanding against the 167.5 million stated in the June 30 2026 balance sheet; the filed figure is used throughout this page.
LegalZoom.com, Inc. valuation questions
Is LegalZoom.com, Inc. (LZ) stock undervalued?
Against the fair value estimate shown on this page, LegalZoom.com, Inc. trades below: $5.61 today versus a $7.50 estimate, about +34%. The methodology and per-scenario sources are set out in the Valuation section. Treat it as research, not advice, and do your own homework.
What is LegalZoom.com, Inc.'s fair value?
The fair value estimate shown for LZ is $7.50. Its valuation scenarios span bear $4.00, base $7.50, bull $11.00. See the Valuation section for the basis of each.
What is LegalZoom.com, Inc.'s market cap?
LegalZoom.com, Inc. (LZ) has a market capitalization (its market value, often searched as "net worth") of $939M, and an enterprise value of $787M.
What is the bull and bear case for LZ?
Valuation scenarios: bull $11.00, base $7.50, bear $4.00. Each reflects a distinct set of assumptions; the drivers and sources are detailed in the Valuation section above.