LegalZoom.com (LZ) Q4 2024 earnings summary

Executive summary

• Largest digital player in a $51B U.S. legal and compliance market, with 4.6M businesses formed and 1.8M active subscriptions as of December 31, 2024.

• Focused on optimizing subscription business, reorienting go-to-market strategy, and leveraging AI to deliver expertise.

• Narrowed focus to core legal and compliance solutions, aiming for sustainable, predictable growth.

• Q4 and full year 2024 results reached the high end of outlook, with strong execution and focus on subscription growth.

• Acquired Formation Nation in February 2025, expected to be accretive to non-GAAP EPS and Adjusted EBITDA, expanding offerings and customer base.

Financial highlights

• FY 2024 GAAP revenue grew 3% year-over-year to $682M; Q4 2024 revenue was $162M, up 2% year-over-year, at the high end of guidance.

• FY 2024 Adjusted EBITDA was $148M, up 25% year-over-year, with margin improving to 22%; Q4 Adjusted EBITDA was $44M, a 32% increase, with a 27% margin.

• Free cash flow for 2024 reached $99.9M, with Q4 free cash flow at $36M, up from $14M in Q4 2023.

• Ended Q4 with $142M in cash and no debt.

• FY 2024 non-GAAP gross profit was $467M, up 6% year-over-year, with margin improving from 66% to 68%.

Outlook and guidance

• FY 2025 revenue expected to grow approximately 5% year-over-year, assuming flat macro conditions.

• Q1 2025 revenue guidance: $175M–$179M; Adjusted EBITDA: $33M–$36M.

• Full-year 2025 Adjusted EBITDA margin expected at 23%, with double-digit subscription revenue growth exiting Q4 2025.

• Guidance assumes flat macro for business formations and voluntary beneficial ownership filing.

• Guidance reflects conservative assumptions due to volatility in beneficial ownership filing requirements.