LegalZoom.com (LZ) Q4 2025 earnings summary

Executive summary

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

• 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.

• Net income declined 49% year-over-year to $15.4 million, reflecting higher non-cash and non-recurring expenses.

• Ended the year with $203.1 million in cash and 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; subscription revenue grew 20% to $130.9 million.

• Q4 gross margin was 68%–71%, flat or up year-over-year depending on GAAP or non-GAAP basis.

• Q4 Adjusted EBITDA was $49.9 million (26% margin), up from $44.2 million (27% margin) in Q4 2024.

• Free cash flow for FY 2025 was $148 million, up 48% year-over-year; Q4 free cash flow was $28 million.

• 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 expected between $190 million and $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.

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

• Marketing spend is expected to increase slightly faster than revenue to support brand and partner channels.