LegalZoom (NASDAQ:LZ) Posts Better-Than-Expected Sales In Q1, Stock Soars
Is now the time to buy LegalZoom? Find out in our full research report.
LegalZoom (LZ) Q1 CY2025 Highlights:
Revenue: $183.1 million vs analyst estimates of $177.2 million (5.1% year-on-year growth, 3.4% beat)
EPS (GAAP): $0.03 vs analyst estimates of $0.01 ($0.02 beat)
Adjusted EBITDA: $37.01 million vs analyst estimates of $34.91 million (20.2% margin, 6% beat)
Revenue Guidance for Q2 CY2025 is $183 million at the midpoint, roughly in line with what analysts were expecting
EBITDA guidance for the full year is $165 million at the midpoint, in line with analyst expectations
Operating Margin: 4.9%, up from 2.9% in the same quarter last year
Free Cash Flow Margin: 22.6%, similar to the previous quarter
Subscription Units: 1.92 million, up 319,000 year on year
Market Capitalization: $1.32 billion
'Our first quarter results reflect accelerating subscription growth and solid progress towards our goal of double-digit subscription revenue growth in the fourth quarter,' said Jeff Stibel, Chairman and Chief Executive Officer of LegalZoom.
Company Overview
Founded by famous lawyer Robert Shapiro, LegalZoom (NASDAQ:LZ) offers online legal services and documentation assistance for individuals and businesses.
Sales Growth
A company's long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last three years, LegalZoom grew its sales at a sluggish 5% compounded annual growth rate. This fell short of our benchmark for the consumer internet sector and is a poor baseline for our analysis.
LegalZoom Quarterly Revenue
This quarter, LegalZoom reported year-on-year revenue growth of 5.1%, and its $183.1 million of revenue exceeded Wall Street's estimates by 3.4%. Company management is currently guiding for a 3.2% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 4.7% over the next 12 months, similar to its three-year rate. This projection doesn't excite us and suggests its newer products and services will not lead to better top-line performance yet.
Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
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