LegalZoom.com, Inc. reported fourth‑quarter and full‑year 2025 results on February 19, 2026. Revenue rose 17.7% year‑over‑year to $190.3 million, beating the consensus range of $184.33 million to $184.85 million by roughly 3.2%. Adjusted earnings per share fell short of the $0.18 estimate, coming in at $0.17, a miss of $0.01 or 5.6%. GAAP EPS matched consensus at $0.03, but the adjusted figure is the metric most closely watched by investors.
The company’s operating margin contracted to 6.6% in Q4 2025 from 8.1% a year earlier, reflecting higher operating expenses and a shift in revenue mix toward lower‑margin transactional services. In contrast, the adjusted EBITDA margin improved to 23% from 22% in FY 2024, driven by a 23% increase in adjusted EBITDA to $172.2 million. The margin expansion indicates that, after absorbing the cost of scaling AI‑augmented services, the company is generating more earnings before interest, taxes, depreciation and amortization per dollar of revenue.
Management raised its full‑year 2026 revenue outlook to $805 million–$825 million, up from the prior guidance of $800.5 million, and lifted adjusted EBITDA guidance to $190 million–$200 million, above the previous estimate of $189.4 million. Q1 2026 revenue guidance of $200 million–$203 million is roughly 10% higher than the prior year’s $184.3 million, while adjusted EBITDA guidance of $34 million–$36 million signals a modest 5% decline from the prior year’s $36.5 million, reflecting front‑loaded marketing spend. The upward revision of revenue and EBITDA guidance signals management’s confidence in sustained demand for its subscription‑based legal services and the monetization of its AI platform.
The board approved a $100 million increase to the share‑repurchase authorization, raising the total authorized amount to $415 million. The expansion demonstrates management’s belief that the company’s intrinsic value exceeds its current market price and provides a vehicle to return capital to shareholders while funding growth initiatives.
"LegalZoom is built for where the market is going. AI is transforming how legal work starts, which is opening up new markets. We are winning by delivering customers to the finish line with trust, judgment, and execution," said Jeff Stibel, Chairman and Chief Executive Officer. "Our strategy is simple: lead in automation and win the last mile with human‑in‑the‑loop expertise. By serving both new entrepreneurs and established businesses, and supporting them across their full lifecycle, we are expanding our role from a point solution to a long‑term partner. We believe this evolution will strengthen our competitive position, deepen customer relationships, and position LegalZoom for sustained growth in the years ahead," added Stibel. Noel Watson, Chief Operating Officer and Chief Financial Officer, noted that the company delivered strong results in 2025 with continued subscription momentum, expanding margins, and record free cash flow generation, and that the guidance reflects solid organic growth and disciplined execution.
The results underscore a strategic pivot toward higher‑margin subscription services and AI‑driven offerings. Subscription revenue grew 20% year‑over‑year in Q4 2025, while transactional revenue, which carries lower margins, increased at a slower pace. The contraction in operating margin is attributed to higher operating expenses and integration costs associated with the Formation Nation acquisition and increased marketing spend to support the AI platform. Despite these headwinds, the company’s adjusted EBITDA margin improvement signals that the AI layer is beginning to deliver higher‑margin growth, and the guidance suggests that management expects the benefits of this shift to accelerate in 2026.
In summary, LegalZoom’s Q4 2025 earnings reveal a company that is successfully scaling its subscription business and AI capabilities, even as it navigates short‑term margin pressure from investment in growth. The upgraded revenue and EBITDA guidance, coupled with an expanded share‑repurchase program, indicate strong confidence in the company’s long‑term trajectory and a commitment to returning value to shareholders.
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