LegalZoom.com (LZ) investor relations material

AI partnerships and technology integration

• Early AI integrations like Cloud Connector and ChatGPT Formations app show higher conversion rates and greater subscription upgrades compared to traditional channels, leading to higher customer lifetime value.

• LegalZoom is the leading reference for business formations on AI platforms, including ChatGPT.

• Current AI partnerships do not involve payment for placement; revenue models are still evolving, with initial tests in AI-driven ad placements.

• AI is leveraged to drive significant cost efficiencies in fulfillment, sales, service, and operations, boosting margins through 2027.

• AI enables profitability and scalability in expert product lines, such as trademarks and patents, and supports new offerings like Concierge.

Partnership channel expansion

• Partnerships have grown from 4% to 10% of order volume, with a target of 25%+ as best practice.

• Partnerships provide access to higher-value, more established customers and offer significant room for further growth.

• Economic structures vary by partner, typically involving revenue-share or fixed fees tied to conversion, and often include exclusivity and long-term commitments.

• Partnership channel economics are at or better than traditional search, with a focus on integration and customer experience.

• Exclusive, long-term partnerships are prioritized when they align with customer and business needs.

Attorney and accountant network

• Legal plan consultations outside Arizona use a per-subscriber fee model with independent law firms, offering attractive subscription margins.

• Seasonality in legal plan revenue aligns with overall business seasonality, being more weighted to the first half of the year.

• Expansion into accountant services will follow the established legal network model, with similar margin and pricing profiles.

• Bundling legal and accounting services increases value, supporting higher retention and potential pricing flexibility.