Revenue growth accelerated to 12.9% in 2026Q1, yet operating margins remain strained at 1.3% due to SG&A expenses surging to $109.9M.
| Sales/Revenue | 779.71M | 756.04M | 681.88M | 660.73M | 619.98M | 575.08M | 470.64M | 408.38M | 156.07M | 120.77M |
| Revenue Growth % | 12.87% | 10.88% | 3.2% | 6.57% | 7.81% | 22.19% | 15.24% | 161.67% | 29.22% | - |
| Cost of Goods Sold | 265.93M | 257.96M | 240.09M | 239.26M | 211.09M | 189.36M | 154.56M | 136.91M | 80.44M | 60.64M |
| COGS % of Revenue | - | 34.12% | 35.21% | 36.21% | 34.05% | 32.93% | 32.84% | 33.53% | 51.54% | 50.21% |
| Gross Profit | 513.79M | 498.08M | 441.79M | 421.46M | 408.88M | 385.72M | 316.07M | 271.46M | 75.63M | 60.13M |
| Gross Margin % | 65.89% | 65.88% | 64.79% | 63.79% | 65.95% | 67.07% | 67.16% | 66.47% | 48.46% | 49.79% |
| Gross Profit Growth % | - | 12.74% | 4.82% | 3.08% | 6.01% | 22.03% | 16.43% | 258.94% | 25.78% | - |
| Operating Expenses | 493.69M | 483.72M | 406.21M | 400.4M | 450.62M | 470.79M | 267.14M | 210.88M | 69.35M | 63.85M |
| OpEx % of Revenue | - | 63.98% | 59.57% | 60.6% | 72.68% | 81.87% | 56.76% | 51.64% | 44.44% | 52.87% |
| Selling, General & Admin | 414.7M | 405.5M | 316.62M | 317.22M | 379.94M | 385.87M | 222.41M | 173.68M | 61.23M | 56.35M |
| SG&A % of Revenue | - | 53.63% | 46.43% | 48.01% | 61.28% | 67.1% | 47.26% | 42.53% | 39.24% | 46.66% |
| Research & Development | 80.22M | 81.94M | 89.58M | 83.18M | 70.43M | 84M | 41.86M | 37.2M | 8.12M | 7.51M |
| R&D % of Revenue | - | 10.84% | 13.14% | 12.59% | 11.36% | 14.61% | 8.89% | 9.11% | 5.2% | 6.22% |
| Other Operating Expenses | -912K | -3.72M | 0 | 0 | 248K | 924K | 2.87M | 0 | 0 | 0 |
| Operating Income | 20.1M | 14.36M | 35.58M | 21.06M | -41.74M | -85.08M | 48.93M | 63.16M | 6.28M | -3.73M |
| Operating Margin % | 2.58% | 1.9% | 5.22% | 3.19% | -6.73% | -14.79% | 10.4% | 15.47% | 4.02% | -3.09% |
| Operating Income Growth % | - | -59.64% | 68.96% | 150.45% | 50.94% | -273.86% | -22.53% | 906.1% | 268.45% | - |
| EBITDA | 55.6M | 61.77M | 72.64M | 49.13M | -17.95M | -68.39M | 69.03M | 79.55M | 10.84M | -218K |
| EBITDA Margin % | 7.13% | 8.17% | 10.65% | 7.44% | -2.89% | -11.89% | 14.67% | 19.48% | 6.95% | -0.18% |
| EBITDA Growth % | -29.81% | -14.96% | 47.84% | 373.8% | 73.76% | -199.07% | -13.23% | 633.88% | 5072.48% | - |
| D&A (Non-Cash Add-back) | 35.5M | 47.41M | 37.06M | 28.07M | 23.79M | 16.69M | 20.1M | 16.39M | 4.56M | 3.51M |
| EBIT | 25.7M | 33.73M | 43.53M | 31.99M | -47.41M | -91.57M | 51.8M | 48.84M | 6.28M | -3.73M |
| Net Interest Income | 4.97M | 6.28M | 7.4M | 8.81M | 1.54M | -27.98M | -35.5M | -38.56M | -153K | -15K |
| Interest Income | 7.73M | 7.57M | 7.85M | 9.31M | 1.8M | 61K | 0 | 0 | 0 | 0 |
| Interest Expense | 436K | 1.29M | 446K | 493K | 260K | 28.05M | 35.5M | 38.56M | 153K | 15K |
| Other Income/Expense | 5.54M | 18.08M | 7.5M | 10.44M | -5.93M | -34.54M | -36.61M | 0 | -153K | -15K |
| Pretax Income | 25.64M | 32.44M | 43.08M | 31.49M | -47.67M | -119.61M | 12.32M | 10.28M | 6.13M | -3.74M |
| Pretax Margin % | 3.29% | 4.29% | 6.32% | 4.77% | -7.69% | -20.8% | 2.62% | 2.52% | 3.92% | -3.1% |
| Income Tax | 14.24M | 17.01M | 13.12M | 17.54M | 1.06M | -10.95M | 2.43M | 3.16M | -6M | 282K |
| Effective Tax Rate % | 55.52% | 52.44% | 30.45% | 55.7% | -2.22% | 9.16% | 19.71% | 30.74% | -97.93% | -7.54% |
| Net Income | 11.4M | 15.43M | 29.96M | 13.95M | -48.73M | -108.66M | 9.9M | 7.44M | 12.12M | -4.02M |
| Net Margin % | 1.46% | 2.04% | 4.39% | 2.11% | -7.86% | -18.9% | 2.1% | 1.82% | 7.77% | -3.33% |
| Net Income Growth % | -62.42% | -48.51% | 114.74% | 128.63% | 55.15% | -1198.06% | 32.96% | -38.6% | 401.27% | - |
| Net Income (Continuing) | 11.4M | 15.43M | 29.96M | 13.95M | -48.73M | -108.66M | 9.9M | 7.44M | 12.12M | -4.02M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | 0.06 | 0.08 | 0.16 | 0.07 | -0.25 | -0.55 | 0.04 | 0.06 | 0.10 | -0.03 |
| EPS Growth % | -62.77% | -50% | 122.84% | 128.72% | 54.55% | -1590.51% | -37.77% | -38.74% | 401.56% | - |
| EPS (Basic) | - | 0.09 | 0.17 | 0.07 | -0.25 | -0.55 | 0.04 | 0.06 | 0.10 | -0.03 |
| Diluted Shares Outstanding | 177.01M | 184.69M | 182.87M | 194.41M | 195.83M | 198.08M | 196.66M | 125.42M | 125.25M | 125.25M |
| Basic Shares Outstanding | 174.87M | 178.8M | 180.21M | 190.47M | 195.83M | 198.08M | 196.66M | 125.06M | 125.25M | 125.25M |
| Dividend Payout Ratio | - | - | - | - | - | - | 2.87% | - | - | - |
High Customer Acquisition Costs
According to recent quarterly financial statements, LegalZoom achieved a 12.9% year-over-year revenue growth in 2026Q1, marking a notable acceleration from the low single-digit growth rates observed throughout 2024, suggesting that recent strategic shifts in the business formation funnel are beginning to gain meaningful traction.
The recent uptick in top-line performance appears to be driven by a combination of volume-based acquisition and potential pricing adjustments within the subscription segment. Investors should monitor whether this growth is sustainable or if it reflects a temporary surge in demand related to external regulatory changes like the Corporate Transparency Act.
As reported in the income statement data, LegalZoom's operating margin has compressed to 1.3% in 2026Q1, down significantly from the 9.6% peak seen in 2024Q3, indicating that the company is struggling to translate its 64% gross margin into meaningful bottom-line profitability amidst rising operational expenditures.
The persistent gap between gross and operating margins suggests that the company's business model remains heavily reliant on high-cost customer acquisition strategies. This lack of operating leverage warrants further investigation into whether the current marketing spend is effectively driving long-term customer lifetime value or merely subsidizing low-margin transactional volume.
Based on the provided financial figures, SG&A expenses have surged to $109.9M in 2026Q1, representing a substantial increase that has effectively neutralized the gains from gross profit, suggesting that the company has yet to achieve the necessary scale to decouple revenue growth from aggressive marketing and administrative spending.
The inability to scale operating income in proportion to revenue growth implies that the company's current cost structure is highly sensitive to marketing intensity. This dynamic suggests that any future margin expansion will likely require a fundamental shift in how the company acquires and retains its subscription-based user base.
Analysis of the income statement reveals that stock-based compensation, which reached as high as $30.6M in 2025Q2, has historically exerted significant pressure on net income, raising questions about the quality of reported earnings and the true economic cost of the company's human capital strategy during recent periods.
The volatility in net income, which swung from a loss in 2025Q2 to a marginal profit in 2026Q1, appears heavily influenced by non-cash items and fluctuating operating expenses. Investors should monitor the impact of these compensation structures on future dilution and the company's ability to generate consistent, GAAP-compliant profitability.
While management emphasizes the transition to a recurring subscription model, the data suggests that the company remains vulnerable to competitive pressures, as evidenced by the recent margin volatility and the high cost of maintaining brand salience in a crowded market for small business services.
Short-term growth in revenue may be masking underlying churn risks or a reliance on lower-quality, freemium-acquired customers who may not convert to high-margin compliance services. The market should remain cautious regarding whether the current growth trajectory can be maintained without further eroding the company's already thin operating margins.
Quick answers to the most common questions about buying LZ stock.
For fiscal year 2025, LegalZoom.com, Inc. (LZ) reported total revenue of $756.0M. This represents a 526.0% increase compared to $120.8M in 2010.
LegalZoom.com, Inc. (LZ) is profitable, generating $15.4M in net income for the fiscal year ending 2025 with a net profit margin of 2.0%.
LegalZoom.com, Inc. (LZ) reported an operating income of $14.4M, resulting in an operating profit margin of 1.9%. This margin reflects the operational efficiency of the business before interest and taxes.
LegalZoom.com, Inc. (LZ) generated $498.1M in gross profit for the year, representing a gross profit margin of 65.9%. This demonstrates the company's core pricing power and production efficiency.