LegalZoom.com Inc Q2 2025 Earnings Call Highlights: Revenue Growth Surpasses Expectations Amid Strategic Acquisitions

LegalZoom.com Inc reported a 9% YoY increase in total revenue, reaching $193 million, surpassing expectations. Subscription revenue grew by 10%, driven by compliance offerings and the new compliance concierge product suite. The company achieved a 20% adjusted EBITDA margin and raised its full-year revenue guidance from 5% growth to 8%. However, ARPU decreased by 6% YoY, retention rates slightly decreased, and transaction units decreased by 5%.

LegalZoom.com Inc. (LZ) reported a robust second quarter (Q2) 2025, with total revenue increasing by 9% year-over-year (YoY) to reach $193 million, surpassing analyst expectations. Subscription revenue grew by 10%, driven by compliance offerings and the newly launched Compliance Concierge product suite. The company achieved a 20% adjusted EBITDA margin and raised its full-year revenue guidance from 5% growth to 8%.

However, the company also faced some challenges. Average revenue per user (ARPU) decreased by 6% YoY, retention rates slightly decreased, and transaction units decreased by 5%. Despite these challenges, CEO Jeffrey M. Stibel expressed confidence in the company's growth trajectory, attributing the strong performance to the stabilization of the business and the early success of premium, solution-based subscription services.

The company's strategic acquisition of Formation Nation, which integrated over 130 sales professionals and enabled the company to realign its brand messaging and cross-sell new premium offerings, also contributed to the positive results. The acquisition delivered $12 million in transaction revenue in Q2, with the first half of the year expected to be stronger than the second half.

LegalZoom's focus on artificial and human intelligence for premium services, as well as its partnerships with AI companies like Perplexity and OpenAI, is expected to drive future growth. The company's AI strategy is seen as a "TAM expander," opening new customer segments and future opportunities.

While the company remains cautious about the volatile macro environment, it is confident in its ability to decouple business performance from these trends. Management expects operational efficiencies and automation to offset any temporary pressures on margins.

In conclusion, LegalZoom's Q2 2025 earnings call highlighted the company's accelerated progress in its subscription-led strategy, the early success of premium DIFM offerings, and the strengthening of its financial profile. The company's focus on AI, enhanced service delivery, and integration of Formation Nation positions it for continued growth and margin improvement, despite ongoing macroeconomic uncertainties.

References:
[1] https://seekingalpha.com/news/4482816-legalzoom-raises-2025-revenue-growth-outlook-to-8-percent-while-advancing-ai-powered