LegalZoom.com, Inc. (LZ)
NASDAQIndustrialsSoftware - ApplicationSnapshot 2026-09-09
$5.81-3.49%
Close 2026-09-09 · 1-day change
NASDAQIndustrialsSoftware - ApplicationSnapshot 2026-09-09
Broken: Primary pillar broken — Cash from operations improves or holds steady near $195M annually: FY26 OCF guidance $190M-$195M vs $195M target.
LegalZoom grows revenue about 8% a year, driven by partner channels. Cash flow is solid near $195 million annually. The company trades cheap versus peers with a PE of 22 and free cash flow yield of 11%. Management focuses on scaling growth and improving cash flow.
Profit margins and operating income have declined recently, showing cost control issues. Cash from operations fell from $50.7M to $47.3M year over year. If revenue growth slows below 8%, the business could struggle to justify its valuation.
The stock trades about 30% below our fair value near $16. Analysts expect about 8% revenue growth. Our view aligns with consensus on growth but sees upside from improving margins and cash flow.
Breaks if: Annualized cash from operations falls below $180 million in FY26
Improve cash flow through operational efficiencies and strategic initiatives.
This is not a price target or investment advice.
A long-form read on the 1–3 year hold thesis. It updates when the weekly evidence changes.
This investment represents a stable growth opportunity with a focus on revenue expansion and cost management. The current thesis is intact, but recent earnings performance has been neutral, indicating a need for careful monitoring.
The market appears to have priced in a high valuation compared to peers, suggesting that expectations are somewhat elevated. With a premium valuation, investors may expect strong performance to justify the current price.
Management is focused on increasing revenue and improving operating efficiency, which has shown positive results in recent quarters. However, there is a high risk associated with the current sector backdrop, which could impact future performance.
The long-term thesis hinges on whether LZ can raise guidance in the next quarter and if key sector bellwethers continue to perform well. Any signs of weakness in the broader sector could negatively affect LZ's momentum.
The most important moves since the prior daily snapshot.
Yes, our read has strengthened. The latest earnings beat supports this improved outlook. There are no new threats impacting the thesis.
as of 2026-09-09
Review the evidence to watch, what would become a concern, and what would make it less concerning.
Not investment advice. Scores describe historical and current data; they are not forecasts of future returns. Consult a licensed advisor before making investment decisions.
Breaks if: Operating income remains below $5 million per quarter over next 4 quarters
Breaks if: YoY revenue growth falls below 8% in FY26
Focus on growing total revenue through subscription and partner channel expansion, adapting to AI-driven market changes.
Stated as a priority in 4 of last 4 quarters. Revenue grew from $190.3 million in 2025-Q4 to $205.3 million in 2026-Q2, a 7.8% increase, with subscription revenue up 11% year-over-year in 2026-Q2. Management's focus on subscription growth and AI-driven customer acquisition channels is delivering consistent revenue growth.
“Revenue of $205.3 million, up 7% year-over-year, driven by subscription revenue increasing 11%”
“Revenue was $206.8 million for the quarter, up 13% year-over-year; subscription revenue grew 12%”
“Revenue was $190.3 million for the quarter, up 18% year-over-year; subscription revenue up 20%”
“Revenue was $190.2 million, reflecting continued growth in higher-value subscriptions”
Overall, LZ's fundamentals are stable, but the high valuation and sector risks warrant cautious observation. Not investment advice.