Cash conversion is strong with OCF/NI of 7.63 in 2026Q2 and FCF margin of 16.4%, but aggressive buybacks ($45.5M) and SBC ($23.6M) exceeding net income warrant scrutiny.
LegalZoom.com, Inc. (LZ) cash flow statement — 9-year operating, investing & financing cash flows
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'11 | Dec'10 |
|---|
| Cash from Operations | 175.18M | 178.2M | 135.64M | 124.31M | 73.84M | 54.15M | 93.05M | 52.7M | 13.72M | 1.49M |
| Operating CF Margin % | - | 23.57% | 19.89% | 18.81% | 11.91% | 9.42% | 19.77% | 12.9% | 8.79% | 1.23% |
| Operating CF Growth % | 45.97% | 31.38% | 9.12% | 68.35% | 36.35% | -41.8% | 76.58% | 284.02% | 822.18% | - |
| Net Income | 16.85M | 15.43M | 29.96M | 13.95M | -48.73M | -108.66M | 9.9M | 7.44M | 12.12M | -4.02M |
| Depreciation & Amortization | 48.48M | 47.41M | 37.06M | 28.07M | 23.79M | 16.69M | 20.1M | 16.39M | 4.56M | 3.51M |
| Stock-Based Compensation | 98.22M | 113.71M | 71.51M | 66.02M | 80.47M | 112.6M | 12.89M | 5.18M | 944K | 1.31M |
| Deferred Taxes | 20.18M | 6.63M | -4.55M | 4.71M | -806K | -11.6M | 1.32M | 472K | -6.93M | 4.3M |
| Other Non-Cash Items | 1.13M | -14.27M | 875K | -2.04M | 7.05M | 21.43M | 10.48M | 16.35M | -215K | -3.93M |
| Working Capital Changes | -9.69M | 9.29M | 784K | 13.59M | 12.06M | 23.7M | 38.36M | 6.86M | 3.24M | 322K |
| Change in Receivables | 3.28M | -11.8M | 3.23M | 1.44M | -2.5M | -1.51M | 954K | -413K | -1.49M | -834K |
| Change in Inventory | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -2.21M | 4.4M | 4.8M |
| Change in Payables | 587K | -3.66M | -817K | 5.03M | -6.61M | 2.36M | 12.42M | 3.91M | -227K | 757K |
| Cash from Investing | -25.42M | -40.08M | -35.7M | -31.55M | -30.62M | -77.67M | -12.73M | -20.72M | -6.06M | -4.67M |
| Capital Expenditures | -25.53M | -30.28M | -35.7M | -31.59M | -22.1M | -11.74M | -10.59M | -18.35M | -6.56M | -4.72M |
| CapEx % of Revenue | 3.22% | 4% | 5.23% | 4.78% | 3.56% | 2.04% | 2.25% | 4.49% | 4.2% | 3.91% |
| Acquisitions | -37.05M | -48.47M | 0 | 0 | -2.53M | -61.52M | -2.14M | 313K | 0 | 49K |
| Investments | - | - | - | - | - | - | - | - | - | - |
| Other Investing | 37.05M | 37.05M | 0 | 38K | -5.99M | -3.28M | 0 | -313K | 502K | 48K |
| Cash from Financing | -199.52M | -77.26M | -183.28M | -56.15M | -93.34M | 123.36M | -15.09M | -12.85M | 277K | 3.39M |
| Debt Issued (Net) | 2K | -2K | -25K | -35K | -14K | -524.33M | -5.38M | -5.38M | -384K | 503K |
| Equity Issued (Net) | -147.49M | -34.76M | -165.01M | -54.87M | -92.69M | 666.88M | -8.41M | -6.25M | 0 | 0 |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | -112K | -284K | -877K | 0 | 0 |
| Share Repurchases | -147.86M | -80.53M | -165.01M | -54.87M | -95.13M | 0 | -8.41M | -6.25M | 0 | 0 |
| Other Financing | -52.03M | -42.49M | -18.25M | -1.24M | -641K | -19.08M | -1.01M | -353K | 661K | 2.88M |
| Net Change in Cash | -49.81M | 61.04M | -83.66M | 36.64M | -50.22M | 99.83M | 65.29M | 18.63M | 7.94M | 201K |
| Free Cash Flow | 149.65M | 147.92M | 99.94M | 92.72M | 51.74M | 42.41M | 82.46M | 34.35M | 7.16M | -3.23M |
| FCF Margin % | 18.88% | 19.56% | 14.66% | 14.03% | 8.35% | 7.38% | 17.52% | 8.41% | 4.59% | -2.68% |
| FCF Growth % | 14.42% | 48% | 7.8% | 79.2% | 21.99% | -48.57% | 140.09% | 379.69% | 321.47% | - |
| FCF per Share | 0.87 | 0.80 | 0.55 | 0.48 | 0.26 | 0.21 | 0.42 | 0.27 | 0.06 | -0.03 |
| FCF Conversion (FCF/Net Income) | 8.88x | 11.55x | 4.53x | 8.91x | -1.52x | -0.50x | 9.40x | 7.08x | 1.13x | -0.37x |
| Interest Paid | 0 | 0 | 0 | 0 | 0 | 12.28M | 27.86M | 37.28M | 15K | 0 |
| Taxes Paid | 0 | 0 | 26.19M | 6.6M | 741K | 1.46M | 1.49M | 1.47M | 754K | 110K |
Quick answers to the most common questions about buying LZ stock.
LegalZoom.com, Inc. (LZ) generated $178.2M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
LegalZoom.com, Inc. (LZ) generated $147.9M in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
LegalZoom.com, Inc. (LZ) spent $30.3M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, LegalZoom.com, Inc. (LZ) spent $80.5M on share repurchases. This shows the company's commitment to returning capital to its equity investors.
Key Metrics
Top Statement Risk
Margin compression and demand deceleration
Metrics are mathematically derived from official filings.
Cash Conversion Outpaces Reported Earnings
Operating cash flow consistently exceeds net income, with OCF/NI ratios ranging from 2.86 to 42.83 over the past ten quarters, indicating strong cash conversion despite thin profitability.
The persistent gap between net income and operating cash flow is driven by substantial non-cash charges, particularly stock-based compensation averaging over $20 million per quarter and depreciation and amortization around $11 million. This suggests that reported earnings understate the company's cash-generating ability, but investors should note that SBC is a real economic cost that dilutes shareholders. The high OCF/NI multiples, such as 7.63 in 2026Q2, reflect the low base of net income rather than exceptional cash generation.
Free Cash Flow Remains Resilient Despite Guidance Cut
Free cash flow margins have held in the mid-teens to low-twenties, reaching 16.4% in 2026Q2, even as revenue growth decelerates and management lowers guidance, suggesting cash generation is more stable than earnings.
FCF has remained positive and relatively stable, ranging from $17.4 million to $47.0 million over the past ten quarters, with margins between 9.8% and 24.7%. The recent dip in revenue growth and the EPS miss have not yet translated into a significant FCF contraction, indicating that the company's cash flow is supported by its subscription-based model. However, the deceleration in revenue growth and the lowered guidance suggest that FCF growth may slow in coming quarters, warranting close monitoring.
Capital Intensity Declines as Platform Matures
Capital expenditures as a percentage of revenue have fallen from 5.7% in 2024Q3 to 2.9% in 2026Q2, indicating a shift toward a more asset-light model with lower maintenance capex requirements.
The declining capex-to-revenue ratio suggests that LegalZoom's platform requires less incremental investment to support growth, which is typical for software companies. This trend, combined with stable D&A around $12 million per quarter, implies that the company is not heavily reinvesting in fixed assets, freeing up cash for other uses. The low capital intensity supports the sustainability of FCF margins, but investors should assess whether this underinvestment could eventually limit service quality or capacity.
Working Capital Swings Reflect Subscription Timing
Working capital changes have been volatile, ranging from -$10.5 million to +$17.2 million over the past ten quarters, likely due to the timing of subscription billings and deferred revenue recognition.
The quarterly fluctuations in working capital are consistent with a subscription-based model where cash is collected upfront but revenue is recognized over time. Positive working capital changes in some quarters, such as +$10.1 million in 2026Q1, may indicate strong collections or deferred revenue growth, while negative changes in others, like -$10.5 million in 2025Q4, could reflect payouts or timing mismatches. These swings are not alarming but add noise to quarterly cash flow comparisons.
Aggressive Buybacks Offset Thin Earnings
LegalZoom has deployed over $300 million in share repurchases over the past ten quarters, including $45.5 million in 2026Q2, while paying no dividends, signaling a focus on returning capital to shareholders.
The company has consistently repurchased shares, with buybacks ranging from $3.1 million to $114.1 million per quarter, totaling approximately $334 million over the period. This aggressive buyback program, funded by strong operating cash flow, suggests management believes the stock is undervalued and is using cash to support EPS. However, given the thin net margins and the recent EPS miss, the sustainability of this pace may be questioned, especially if cash flow growth slows.
Cumulative Cash Generation Exceeds Net Income
Over the past ten quarters, cumulative operating cash flow of $400.5 million far exceeds cumulative net income of $51.5 million, highlighting a significant divergence driven by non-cash charges.
The cumulative gap of approximately $349 million between operating cash flow and net income underscores the impact of stock-based compensation and depreciation, which are non-cash but real costs. This divergence indicates that the company's cash-generating ability is stronger than its reported profitability, but it also raises questions about earnings quality. Investors should adjust for SBC when valuing the company, as it represents a recurring dilution of shareholder value.
What the Cash Flow Statement Obscures
Stock-based compensation of $23.6 million in 2026Q2 exceeds net income, and acquisitions like the $37.1 million in 2025Q4 may mask underlying cash flow quality, warranting scrutiny.
The cash flow statement presents SBC as a non-cash add-back, but it represents real dilution to shareholders, and the company's heavy use of SBC suggests that reported operating cash flow overstates the cash available to shareholders. Additionally, acquisition-related cash outflows, such as the $37.1 million in 2025Q4, are not captured in FCF, potentially understating the true cash cost of growth. Investors should adjust for these items to assess the sustainability of cash generation and the true return on capital.