LegalZoom.com (LZ) Q4 2025 earnings summary

Executive summary

• Achieved $756 million in revenue for FY 2025, up 11% year-over-year, driven by strong subscription growth, the Formation Nation acquisition, and a strategic shift to AI-enabled, human-in-the-loop legal services.

• Subscription revenue rose 13% to $492.5 million, while transaction revenue increased 7% to $263.6 million.

• Adjusted EBITDA reached $172.2 million (23% margin), up 16% year-over-year; Non-GAAP net income was $114.2 million, up 15% year-over-year, while net income declined to $15.4 million due to higher non-cash expenses.

• Record full-year operating cash flow of $178.2 million, up 31%, and free cash flow of $148 million, up 48% year-over-year.

• Ended the year with $203.1 million in cash, no debt, and announced a $100 million increase to share repurchase authorization.

Financial highlights

• Q4 2025 revenue was $190.3 million, up 18% year-over-year, with subscription revenue up 20% to $130.9 million.

• Q4 gross margin was 68%–71%, flat or up year-over-year.

• Q4 Adjusted EBITDA was $49.9 million (26% margin), up from $44.2 million in Q4 2024.

• Q4 free cash flow was $28 million, down from $35.9 million in Q4 2024.

• Full-year Non-GAAP gross profit was $524 million (69% margin), up from $467 million (68% margin) in FY 2024.

Outlook and guidance

• FY 2026 revenue guidance is $805 million–$825 million, representing 8% year-over-year growth at midpoint.

• Adjusted EBITDA guidance for 2026 is $190 million–$200 million, or 13% growth at midpoint.

• Q1 2026 revenue expected at $200 million–$203 million (10% growth at midpoint); Adjusted EBITDA $34 million–$36 million, reflecting timing of marketing investments.

• Growth expected to be driven by higher-value offerings, ARPU, and continued investment in AI-enabled, human-in-the-loop services.