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what it is
LegalZoom sells online legal help to people and small businesses, from forming an LLC to handling trademarks and estate plans.
how it gets paid
Last year Legalzoom made $756M in revenue. Business formation was the main engine at $302.4M, or 40% of sales.
why it's growing
Revenue grew 10.9% last year. Revenue was up 198% vs. prior year, while EPS rose 150%.
what just happened
Revenue hit $566M, with EPS at $0.05 and gross margin at 65.3%.
At a glance
B+ balance sheet — decent shape, but not bulletproof
83.8x trailing p/e — you're paying up for this one
32.1% return on capital — every dollar works hard here
$0.16 fy2024 eps est
$682M fy2024 rev est
xvary composite: 64/100 — average
What they do
LegalZoom sells online legal help to people and small businesses, from forming an LLC to handling trademarks and estate plans.
Legal problems are annoying, repetitive, and expensive. LegalZoom makes them feel like software instead of a law office. It serves all 50 states and more than 3,000 counties, which means you get a national front door with local reach. Return on capital was 32.1% in 2024. Return on capital → profit from each dollar invested → this business converts a small asset base into solid economics.
How they make money
$756M
annual revenue · their business grew +10.9% last year
Business formation
$302.4M
Compliance and tax
$173.9M
Estate planning
$105.8M
Trademark filings
$98.3M
Other business services
$75.6M
The products that matter
business entity filings
Business Formation
inside the $453M transaction bucket
this is the front door. the disclosed transaction bucket produced $453M and grew 8%, which tells you one-time filings still matter even as the company tries to keep customers longer.
transaction-led
recurring legal membership
Business Attorney Plan
part of $303M subscription revenue
subscription revenue reached $303M and grew 15%. that's the cleaner business line because recurring revenue is less dependent on constant new customer acquisition.
15% growth
consumer document workflow
Legal Documents
71% gross margin backdrop
the document engine is why gross margin stays at 71%. the risk is obvious: if AI turns drafting into a commodity, this category gets easier to attack.
margin driver
Key numbers
83.8x
trailing p/e
P/E → price-to-earnings → how much you pay for each dollar of profit. You are paying a luxury multiple for a company with $0.07 trailing EPS.
$756M
ttm revenue
This is a real business with scale, but the market cap of about $1B means investors are still paying up for future margin expansion.
10.7%
operating margin
Operating margin → profit after running the business → so what: LegalZoom is profitable, but not profitable enough to make 83.8x earnings feel cheap.
32.1%
return on capital
Return on capital → profit from money invested → so what: the business model is efficient even if the stock price already knows it.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 2 — safer than 80% of stocks
- price stability 15 / 100
- long-term debt $10M (1% of capital)
B+ — functional but not a standout on the balance sheet.
Total return vs. market
Return history isn't available for LZ right now.
source: institutional data · return history unavailable
What just happened
beat estimates
Revenue hit $566M, with EPS at $0.05 and gross margin at 65.3%.
Revenue was up 198% vs. prior year, while EPS rose 150%. Annual revenue was $756M, up 10.9%, so the big quarterly jump needs to be read against the full-year pace.
$566M
revenue
$0.05
eps
65.3%
gross margin
the number that mattered
The number that matters is 65.3% gross margin, because gross margin → money left after direct costs → so what: LegalZoom still has software-like economics even with legal-service complexity.
source: company earnings report, 2026
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What could go wrong
the #1 risk is AI turning legal documents into a cheaper commodity. That goes straight at the part of the model supporting 71% gross margins.
med
AI document generation gets good enough
If customers can draft formation docs, contracts, and filings with cheaper AI tools, LegalZoom's core convenience advantage narrows fast.
A hit to pricing would matter immediately because 71% gross margin is doing most of the business-model heavy lifting.
med
2026 growth lands closer to 3.2% than 8%
Last year's full-business growth was 3.2%. Management is guiding for 8% next. If that reacceleration fails, the stock still has a 77x trailing p/e attached to a low-growth profile.
The valuation would have less room to hide because premium multiples need visible acceleration, not just a good quarter.
med
High gross margin never turns into strong net margin
A 71% gross margin business posting only a 2.0% net margin is telling you customer acquisition, support, and operating expense are still eating most of the benefit.
If scale does not improve profitability, investors stop treating this like a platform and start treating it like a marketing-heavy service business.
med
Regulatory or legal scrutiny adds friction
The company's own filings cite investigations and lawsuits as material risks. For a business built around legal workflows, trust and compliance are not side issues.
Even without a disclosed dollar amount here, extra legal cost or operating limits would pressure already-thin bottom-line margins.
A slowdown from 13% Q4 growth to 8% guided 2026 growth would already test sentiment. If that comes with pressure on the 71% gross margin or the 2.0% net margin stays stuck, the premium multiple becomes the risk.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
q1 2026 earnings report
Estimated for may 6, 2026. The number that matters is not just the quarter — it's whether management still sounds confident in that 8% full-year growth target.
margin
71% gross margin versus 2.0% net margin
This gap is the entire debate. If operating leverage shows up, the stock can defend a premium multiple. If it does not, the multiple starts to look aspirational.
mix shift
subscription growth holding above transaction growth
Subscription revenue grew 15% versus 8% for transaction revenue. You want that relationship to keep holding because recurring revenue is the cleaner story.
competition
AI tools getting embedded in legal workflows
If cheaper drafting tools become good enough for small-business filings and consumer documents, LegalZoom will have to defend convenience, trust, and brand rather than just the form itself.
Analyst rankings
valuation setup
premium
77.0x trailing earnings versus 21.3x for the broader U.S. professional services group. In human-speak, the market is already assuming LegalZoom ends up looking more scalable than it does today.
street tone
mixed
A recent visible move was Barclays cutting the stock to Underweight on mar 4, 2026. The issue was market size, not whether the product exists.
operating read-through
watch
$190M of q4 revenue beat expectations, but 2026 growth guidance sits at 8%. Analysts will care more about sustained reacceleration than about one clean quarter.
source: institutional data
Institutional activity
institutional ownership data for LZ is being compiled.
source: institutional data
Price targets
3-5 year target range
n/a
n/a
$10
current price
n/a
target midpoint · n/a from current
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