📊 LZ Key Takeaways
Is Legalzoom.com, Inc.. (LZ) a Good Investment?
LegalZoom exhibits severe profitability deterioration with net income declining 48.5% YoY despite 10.9% revenue growth, revealing critical operational inefficiencies. The razor-thin 1.3% operating margin, 0.5% net margin, and sub-1.0 current ratio indicate the company is struggling operationally and facing liquidity stress despite holding $183.2M in cash. The disconnect between healthy 64% gross margins and collapsing operating margins suggests fundamental operational challenges that require immediate resolution.
LegalZoom shows solid top-line growth, strong gross margins, and excellent free cash flow generation, supported by a debt-free balance sheet and a large cash position. However, the quality of earnings is mixed because operating and net margins remain thin, net income was flat, and diluted EPS fell sharply, indicating limited operating leverage and potential dilution or higher cost pressure.
Why Buy Legalzoom.com, Inc.. Stock? LZ Key Strengths
- Strong gross margin of 64% demonstrates pricing power and solid underlying business model
- Debt-free balance sheet with $183.2M cash position and zero long-term debt provides significant financial flexibility
- Positive operating cash flow of $47.3M and strong free cash flow margin of 19.8% show genuine cash generation capability
- Revenue grew 10.9% year over year with a strong 65.9% gross margin
- Free cash flow is robust at $147.92M, equal to a 19.6% FCF margin
- Balance sheet risk is low with $203.10M in cash and no long-term debt
LZ Stock Risks: Legalzoom.com, Inc.. Investment Risks
- Net income collapsed 48.5% YoY with operating margin at critical 1.3% level, indicating severe operational stress
- Current ratio of 0.71x signals immediate liquidity concerns with current liabilities exceeding current assets
- Abysmal returns metrics (ROE 0.8%, ROA 0.2%, EPS down 50%) suggest company is barely profitable and destroying shareholder value
- Operating margin of 3.3% and net margin of 2.0% leave little buffer if costs rise or growth slows
- Net income was flat and diluted EPS declined 50.0%, suggesting weak earnings conversion for shareholders
- Current and quick ratios of 0.76x indicate tight short-term liquidity despite the cash balance
Key Metrics to Watch
- Operating margin trend and timeline to reach 10%+ sustainable profitability
- Current ratio and working capital management - must improve above 1.0x to eliminate liquidity risk
- SG&A expense ratio as percentage of revenue to identify operational efficiency improvements
- Operating margin expansion and net income growth
- Diluted EPS trend versus free cash flow and revenue growth
Legalzoom.com, Inc.. (LZ) Financial Metrics & Key Ratios
💡 AI Analyst Insight
The current ratio below 1.0x warrants monitoring of short-term liquidity.
LZ Profit Margin, ROE & Profitability Analysis
LZ vs Technology Sector: How Legalzoom.com, Inc.. Compares
How Legalzoom.com, Inc.. compares to Technology sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is Legalzoom.com, Inc.. Stock Overvalued? LZ Valuation Analysis 2026
Based on fundamental analysis, Legalzoom.com, Inc.. has mixed fundamental signals relative to the Technology sector in 2026.
Note: This is a fundamental analysis based on SEC filings. For P/E ratio, price targets, and market-based valuation, consult financial data providers. This is not investment advice.
Legalzoom.com, Inc.. Balance Sheet: LZ Debt, Cash & Liquidity
LZ Revenue & Earnings Growth: 5-Year Financial Trend
5-Year Trend Summary: Legalzoom.com, Inc..'s revenue has grown significantly by 31% over the 5-year period, indicating strong business expansion. The most recent EPS of $0.07 reflects profitable operations.
LZ Revenue Growth, EPS Growth & YoY Performance
LZ Quarterly Earnings & Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q1 2026 | $183.1M | $1.1M | $0.01 |
| Q3 2025 | $168.6M | -$266.0K | $0.02 |
| Q2 2025 | $177.4M | -$266.0K | $0.00 |
| Q1 2025 | $174.2M | $4.7M | $0.02 |
| Q3 2024 | $167.3M | $1.3M | $0.03 |
| Q2 2024 | $168.9M | -$963.0K | $-0.01 |
| Q1 2024 | $165.9M | -$2.4M | $-0.01 |
| Q3 2023 | $155.3M | $1.4M | $0.03 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
Legalzoom.com, Inc.. Dividends, Buybacks & Capital Allocation
LZ SEC Filings: Latest 10-K & 10-Q Analysis
Access official SEC EDGAR filings for Legalzoom.com, Inc.. (CIK: 0001286139)
📋 Recent SEC Filings
❓ Frequently Asked Questions about LZ
What is the AI rating for LZ?
Legalzoom.com, Inc.. (LZ) has a Combined AI Rating of SELL from Claude (SELL) and ChatGPT (HOLD) with 78% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are LZ's key strengths?
Claude: Strong gross margin of 64% demonstrates pricing power and solid underlying business model. Debt-free balance sheet with $183.2M cash position and zero long-term debt provides significant financial flexibility. ChatGPT: Revenue grew 10.9% year over year with a strong 65.9% gross margin. Free cash flow is robust at $147.92M, equal to a 19.6% FCF margin.
What are the risks of investing in LZ?
Claude: Net income collapsed 48.5% YoY with operating margin at critical 1.3% level, indicating severe operational stress. Current ratio of 0.71x signals immediate liquidity concerns with current liabilities exceeding current assets. ChatGPT: Operating margin of 3.3% and net margin of 2.0% leave little buffer if costs rise or growth slows. Net income was flat and diluted EPS declined 50.0%, suggesting weak earnings conversion for shareholders.
What is LZ's revenue and growth?
Legalzoom.com, Inc.. reported revenue of $206.8M.
Does LZ pay dividends?
Legalzoom.com, Inc.. does not currently pay dividends.
Where can I find LZ SEC filings?
Official SEC filings for Legalzoom.com, Inc.. (CIK: 0001286139) including 10-K, 10-Q, and 8-K reports are available on SEC EDGAR.
What is LZ's EPS?
Legalzoom.com, Inc.. has a diluted EPS of $0.01.
How is the AI analysis conducted?
Two independent AI systems — Claude (Anthropic) and ChatGPT (OpenAI) — analyze SEC EDGAR filings including 10-K annual reports and 10-Q quarterly reports. Each AI evaluates financial health, profitability ratios, balance sheet strength, and growth metrics. The combined rating reflects both perspectives for balanced insights.
Is LZ a good stock to buy right now?
Based on our AI fundamental analysis in May 2026, Legalzoom.com, Inc.. has a SELL rating with 78% confidence. Review the strengths and risks sections above before making a decision. This is not investment advice.
Is LZ stock overvalued or undervalued?
Valuation metrics for LZ: ROE of 0.8% (sector avg: 22%), net margin of 0.5% (sector avg: 18%). Compare these metrics with sector averages to assess valuation.
Should I buy LZ stock in 2026?
Our dual AI analysis gives Legalzoom.com, Inc.. a combined SELL rating for 2026. Revenue is data pending, with profitability at or below sector average. Always conduct your own research.
What is LZ's free cash flow?
Legalzoom.com, Inc..'s operating cash flow is $47.3M, with capital expenditures of $6.3M. FCF margin is 19.8%.
How does LZ compare to other Technology stocks?
Vs Technology sector averages: Net margin 0.5% (avg: 18%), ROE 0.8% (avg: 22%), current ratio 0.71 (avg: 2.5).