Free cash flow remains volatile, with margins fluctuating between 8.9% and 24.7% over the last ten quarters, while the OCF/NI ratio of 42.83 in 2026Q1 suggests earnings quality is heavily influenced by non-cash accruals.
| Cash from Operations | 174.78M | 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 % | 88.58% | 31.38% | 9.12% | 68.35% | 36.35% | -41.8% | 76.58% | 284.02% | 822.18% | - |
| Net Income | 11.4M | 15.43M | 29.96M | 13.95M | -48.73M | -108.66M | 9.9M | 7.44M | 12.12M | -4.02M |
| Depreciation & Amortization | 48.49M | 47.41M | 37.06M | 28.07M | 23.79M | 16.69M | 20.1M | 16.39M | 4.56M | 3.51M |
| Stock-Based Compensation | 59.01M | 0 | 71.51M | 66.02M | 80.47M | 112.6M | 12.89M | 5.18M | 944K | 1.31M |
| Deferred Taxes | 7.08M | 6.63M | -4.55M | 4.71M | -806K | -11.6M | 1.32M | 472K | -6.93M | 4.3M |
| Other Non-Cash Items | 46.59M | 98.6M | 875K | -2.04M | 7.05M | 21.43M | 10.48M | 16.35M | -215K | -3.93M |
| Working Capital Changes | 2.21M | 9.29M | 784K | 13.59M | 12.06M | 23.7M | 38.36M | 6.86M | 3.24M | 322K |
| Change in Receivables | -6.64M | -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 | 2.26M | -3.66M | -817K | 5.03M | -6.61M | 2.36M | 12.42M | 3.91M | -227K | 757K |
| Cash from Investing | -25.93M | -40.08M | -35.7M | -31.55M | -30.62M | -77.67M | -12.73M | -20.72M | -6.06M | -4.67M |
| Capital Expenditures | -27.21M | -30.28M | -35.7M | -31.59M | -22.1M | -11.74M | -10.59M | -18.35M | -6.56M | -4.72M |
| CapEx % of Revenue | 3.49% | 4% | 5.23% | 4.78% | 3.56% | 2.04% | 2.25% | 4.49% | 4.2% | 3.91% |
| Acquisitions | -37.4M | -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 | -175.71M | -77.26M | -183.28M | -56.15M | -93.34M | 123.36M | -15.09M | -12.85M | 277K | 3.39M |
| Debt Issued (Net) | 2K | 0 | -25K | -35K | -14K | -524.33M | -5.38M | -5.38M | -384K | 503K |
| Equity Issued (Net) | -121.76M | -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 | -124M | -80.53M | -165.01M | -54.87M | -95.13M | 0 | -8.41M | -6.25M | 0 | 0 |
| Other Financing | -53.95M | -42.49M | -18.25M | -1.24M | -641K | -19.08M | -1.01M | -353K | 661K | 2.88M |
| Net Change in Cash | -26.82M | 61.04M | -83.66M | 36.64M | -50.22M | 99.83M | 65.29M | 18.63M | 7.94M | 201K |
| Free Cash Flow | 147.57M | 147.92M | 99.94M | 92.72M | 51.74M | 42.41M | 82.46M | 34.35M | 7.16M | -3.23M |
| FCF Margin % | 18.93% | 19.56% | 14.66% | 14.03% | 8.35% | 7.38% | 17.52% | 8.41% | 4.59% | -2.68% |
| FCF Growth % | 26.61% | 48% | 7.8% | 79.2% | 21.99% | -48.57% | 140.09% | 379.69% | 321.47% | - |
| FCF per Share | 0.83 | 0.80 | 0.55 | 0.48 | 0.26 | 0.21 | 0.42 | 0.27 | 0.06 | -0.03 |
| FCF Conversion (FCF/Net Income) | 12.94x | 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 |
High Customer Acquisition Costs
Based on reported financial statements, LegalZoom exhibits a significant disconnect between net income and operating cash flow, with OCF/NI ratios frequently exceeding 5.0x, which suggests that reported earnings are heavily influenced by non-cash items and do not fully reflect the underlying cash-generating capacity of the business.
The persistent gap between net income and operating cash flow indicates that accounting profits are not currently representative of the company's actual liquidity generation. Investors should monitor whether this divergence is driven by aggressive capitalization of costs or timing differences in subscription revenue recognition, as it complicates the assessment of true operational profitability.
As reported in quarterly filings, LegalZoom's free cash flow margins have fluctuated between 8.9% and 24.7% over the last ten quarters, indicating that the company's ability to convert revenue into cash remains highly sensitive to the timing of discretionary marketing spend and seasonal business formation cycles.
While the company maintains positive free cash flow, the lack of a stable trajectory suggests that management prioritizes top-line growth through aggressive customer acquisition over consistent cash flow expansion. This volatility warrants caution, as it implies that any reduction in marketing spend could potentially impact the company's competitive positioning in the business formation market.
According to recent SEC filings, LegalZoom's capital expenditures as a percentage of revenue have trended between 3.1% and 5.7%, suggesting that the company maintains a relatively light asset base despite the ongoing need to invest in its digital platform and automated filing infrastructure to remain competitive.
The moderate capital intensity reflects a business model that relies more on software maintenance and platform development than on heavy physical infrastructure. However, the consistent level of investment suggests that the company must continue to spend on technology to defend its market share against lower-cost, automated entrants in the legal services space.
Based on the provided cash flow data, LegalZoom has utilized significant cash for share repurchases, including $43.5M in 2026Q1, which appears aggressive given the company's thin operating margins and the ongoing requirement to fund high customer acquisition costs to maintain its current market position.
The decision to prioritize share repurchases over potential debt reduction or strategic acquisitions may signal management's confidence in the long-term value of the business. Nevertheless, investors should consider whether these capital returns are sustainable if the company's core business formation volume faces headwinds from a cooling small business environment.
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.