LegalZoom.com, Inc. (Nasdaq: LZ), the No. 1 choice in online small
business formations, today announced results for its fourth quarter
and year ended December 31, 2023, including the following
highlights:
- Revenue was $158.7 million for the
quarter, up 8% year-over-year.
- Transaction revenue was $51.9
million for the quarter, compared to $55.3 million in the same
period in 2022, down 6% year-over-year.
- Subscription revenue was $106.7
million for the quarter, compared to $91.4 million in the same
period in 2022, an increase of 17% year-over-year. The increase was
driven by a 7% year-over-year increase in average revenue per
subscription unit and the addition of 104 thousand net new
subscription units added during the trailing twelve months.
- Gross margin was 65% for the quarter
and 68% in the same period in 2022.
- Net income was $7.4 million for the
quarter, or 5% of revenue, compared to net income of $1.7 million,
or 1% of revenue, in the same period in 2022.
- Adjusted EBITDA was $33.4 million
for the quarter, or 21% of revenue, compared to $26.5 million, or
18% of revenue, for the same period in 2022.
- Non-GAAP net income was
$24.1 million for the quarter compared
to Non-GAAP net income of $19.0 million in the same
period in 2022.
- Cash and cash equivalents were
$225.7 million as of December 31, 2023 compared to $189.1
million as of December 31, 2022.
- Cash flows provided by operating
activities were $22.5 million for the quarter ended
December 31, 2023 compared to cash flows provided by operating
activities of $21.8 million in the same period in 2022.
- Free cash flow was
$14.1 million for the quarter ended December 31, 2023
compared to $16.2 million in the same period in 2022.
- Basic and diluted net income per
share was $0.04 for the quarter compared to a basic and diluted net
income per share of $0.01 for the same period in 2022, and basic
and diluted Non-GAAP net income per share was $0.13 for
the quarter in 2023 compared to basic Non-GAAP net income per share
of $0.10 for the same period in 2022.
- Launched new products during the quarter ended
December 31, 2023:
- In November 2023 we
announced the launch of a new business license offering. This new
offering is built on a proprietary nationwide database that matches
a small business profile with the required licenses and permits at
all levels of government.
- In December 2023 we launched a new Beneficial Ownership
Information Report to help customers satisfy the federally mandated
beneficial ownership information reporting rule under the Corporate
Transparency Act, which went into effect on January 1, 2024.
“I’m excited with the progress we made this quarter, including
the rollout of our new Business License and Beneficial Ownership
Information Report services. We are entering 2024 with a strong
foundation to drive growth. Our investments in technology, a much
broader ecosystem of services and an expanding base of more engaged
subscribers put us in a strong position as we enter the year,” said
Dan Wernikoff, LegalZoom’s Chief Executive Officer.
Noel Watson, LegalZoom’s Chief Financial Officer added, “In the
fourth quarter we achieved both revenue and Adjusted EBITDA above
the top end of our guidance range, contributing to our solid full
year 2023 performance. For the full year, we experienced a 15%
year-over-year growth in subscription revenue and a 74%
year-over-year increase in Adjusted EBITDA margin as we continue to
drive operational efficiencies in our business. We expect to build
on this momentum in 2024 with our outlook reflecting another year
of Adjusted EBITDA margin expansion.”
Key Business Metrics and Non-GAAP Financial
Measures
(Unaudited, in thousands except AOV, ARPU and percentages)
|
Three Months Ended |
|
% Growth |
|
Year Ended |
|
% Growth |
|
December 31, |
|
(Decline) |
|
December 31, |
|
(Decline) |
|
|
2023 |
|
|
|
2022 |
|
|
YOY |
|
|
2023 |
|
|
|
2022 |
|
|
YOY |
Revenue |
$ |
158,663 |
|
|
$ |
146,626 |
|
|
8 |
% |
|
$ |
660,727 |
|
|
$ |
619,979 |
|
|
7 |
% |
Business formations |
|
113 |
|
|
|
115 |
|
|
(2 |
)% |
|
|
581 |
|
|
|
474 |
|
|
23 |
% |
Transaction units |
|
215 |
|
|
|
211 |
|
|
2 |
% |
|
|
1,043 |
|
|
|
929 |
|
|
12 |
% |
Average order value (AOV) |
$ |
242 |
|
|
$ |
262 |
|
|
(8 |
)% |
|
$ |
238 |
|
|
$ |
281 |
|
|
(15 |
)% |
Subscription units at period
end |
|
1,545 |
|
|
|
1,441 |
|
|
7 |
% |
|
|
1,545 |
|
|
|
1,441 |
|
|
7 |
% |
Average revenue per
subscription unit (ARPU) at period end |
$ |
277 |
|
|
$ |
259 |
|
|
7 |
% |
|
$ |
277 |
|
|
$ |
259 |
|
|
7 |
% |
Net income (loss) |
$ |
7,382 |
|
|
$ |
1,744 |
|
|
323 |
% |
|
$ |
13,953 |
|
|
$ |
(48,733 |
) |
|
129 |
% |
Adjusted EBITDA |
$ |
33,438 |
|
|
$ |
26,466 |
|
|
26 |
% |
|
$ |
118,691 |
|
|
$ |
63,705 |
|
|
86 |
% |
Net income (loss) margin |
|
5 |
% |
|
|
1 |
% |
|
291 |
% |
|
|
2 |
% |
|
|
(8 |
)% |
|
127 |
% |
Adjusted EBITDA margin |
|
21 |
% |
|
|
18 |
% |
|
16 |
% |
|
|
18 |
% |
|
|
10 |
% |
|
74 |
% |
Net cash provided by operating
activities |
$ |
22,495 |
|
|
$ |
21,822 |
|
|
3 |
% |
|
$ |
124,308 |
|
|
$ |
73,837 |
|
|
68 |
% |
Free cash flow |
$ |
14,121 |
|
|
$ |
16,165 |
|
|
(13 |
)% |
|
$ |
92,715 |
|
|
$ |
51,739 |
|
|
79 |
% |
Certain
percentages may not recalculate due to rounding. |
Financial Guidance and Outlook
Our guidance for the first quarter ending March 31, 2024 is as
follows:
- Revenue is expected
to be in the range of $172 million to $176 million
- Adjusted EBITDA is
expected to be in the range of $25 million to $27 million
Our guidance for the full year ending December 31, 2024 is as
follows:
- Revenue is expected
to be in the range of $700 million to $720 million
- Adjusted EBITDA is
expected to be in the range of $135 million to $145 million
Webcast and Conference Call Information
A webcast and conference call to discuss fourth quarter and full
year 2023 results is scheduled for today, February 22, 2024,
at 4:30 p.m. Eastern time/1:30 p.m. Pacific time. Those interested
in participating in the conference call are invited to register
Here.
A live audio webcast of the event will be available on the
LegalZoom Investor Relations website:
https://investors.legalzoom.com. An archived replay of the webcast
also will be available shortly after the live event.
Forward-Looking Statements
This press release contains forward-looking statements. We
intend such forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements contained in
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements other than
statements of historical facts contained in this press release may
be forward-looking statements. In some cases, you can identify
forward-looking statements by terms such as “may,” “will,”
“should,” “expects,” “plans,” “anticipates,” “could,” “intends,”
“targets,” “projects,” “contemplates,” “believes,” “estimates,”
“forecasts,” “predicts,” “potential” or “continue” or the negative
of these terms or other similar expressions. Forward-looking
statements contained in this press release include, but are not
limited to, statements regarding our quarterly and annual
guidance.
The forward-looking statements in this press release are only
predictions. We have based these forward-looking statements largely
on our current expectations and projections about future events and
financial trends that we believe may affect our business, financial
condition and results of operations. Forward-looking statements
involve known and unknown risks, uncertainties and other important
factors that may cause our actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements, including but not limited to the
following: our dependence on business formations and fluctuations
or declines in the number of business formations may adversely
affect our business; our dependence on customers expanding the use
of our platform, including converting our transactional customers
to subscribers and our subscribers renewing their subscriptions
with us; the impact of macroeconomic challenges on our business,
including as a result of inflation, global conflict, supply chain
issues and recessionary concerns; our ability to sustain our
revenue growth rate and remain profitable in the future; our
ability to provide high-quality products and services, customer
care and customer experience; our ability to continue to innovate
and provide a platform that is useful to our customers and that
meets our customers’ expectations; the competitive legal solutions
market; our dependence on our brand and reputation; our ability to
maintain and expand strategic relationships with third parties; our
ability to hire and retain top talent and motivate our employees;
risks and costs associated with complex and evolving laws and
regulations; our ability to maintain effective in our internal
control over financial reporting; and other factors discussed in
the section titled “Risk Factors” included in our Quarterly Report
on Form 10-Q for the three months ended September 30, 2023 filed
with the Securities and Exchange Commission, or SEC, on November 7,
2023, as well as those in our subsequent filings with the SEC. The
forward-looking statements in this press release are based upon
information available to us as of the date of this press release,
and while we believe such information forms a reasonable basis for
such statements, such information may be limited or incomplete, and
our statements should not be read to indicate that we have
conducted an exhaustive inquiry into, or review of, all potentially
available relevant information. These statements are inherently
uncertain and investors are cautioned not to unduly rely upon these
statements.
You should read this press release with the understanding that
our actual future results, levels of activity, performance and
achievements may be materially different from what we expect. We
qualify all of our forward-looking statements by these cautionary
statements. Except as required by applicable law, we do not plan to
publicly update or revise any forward-looking statements contained
in this press release, whether as a result of any new information,
future events or otherwise.
About Non-GAAP Financial Measures
This press release includes non-GAAP financial
measures including Adjusted EBITDA, Adjusted EBITDA
margin, Non-GAAP net income, Non-GAAP net income margin,
Non-GAAP net income per share and Free cash flow. To supplement our
unaudited condensed consolidated financial statements, which are
prepared and presented in accordance with generally accepted
accounting principles in the United States, or GAAP, we use
certain non-GAAP financial measures, as described below,
to understand and evaluate our core operating performance.
These non-GAAP financial measures, which may be different
from similarly titled measures used by other companies, are
presented to enhance investors’ overall understanding of our
financial performance and liquidity and should not be considered a
substitute for, or superior to, the financial information prepared
and presented in accordance with GAAP. We believe that
these non-GAAP financial measures provide useful
information about our financial performance and liquidity, enhance
the overall understanding of our past performance and future
prospects and allow for greater transparency with respect to
important measures used by our management for financial and
operational decision-making. We are presenting
these non-GAAP measures to assist investors in seeing our
financial performance using a management view and because we
believe that these measures provide an additional tool for
investors to use in comparing our core financial performance over
multiple periods with other companies in our industry.
We define Adjusted EBITDA as Net income (loss) adjusted to
exclude interest expense, interest income, provision for (benefit
from) income taxes, depreciation and amortization, other expense
(income), net, stock-based compensation, impairment of goodwill,
long-lived and other assets, legal expenses, restructuring
expenses, transaction-related expenses and certain other
non-recurring income and expenses from time to time. Our Adjusted
EBITDA financial measure differs from GAAP in that it excludes
certain items of income and expense. We define Adjusted EBITDA
margin as Adjusted EBITDA as a percentage of revenue.
Adjusted EBITDA is one of the primary performance measures used
by our management and our board of directors to understand and
evaluate our financial performance and operating trends, including
period-to-period comparisons, prepare and approve our annual
budget, develop short and long-term operational plans and determine
appropriate compensation plans for our employees. Accordingly, we
believe that Adjusted EBITDA provides useful information to
investors and others in understanding and evaluating our results of
operations in the same manner as our management team and board of
directors. In assessing our performance, we exclude certain
expenses that we believe are not comparable period over period or
that we believe are not indicative of our underlying operating
performance. Adjusted EBITDA should not be considered in isolation
of, or as an alternative to, measures prepared and presented in
accordance with GAAP. There are a number of limitations related to
the use of Adjusted EBITDA rather than net income (loss), which is
the nearest GAAP equivalent of Adjusted EBITDA. Some of these
limitations include that the non-GAAP financial measure:
- may be calculated differently by other
companies in our industry, limiting its usefulness as a comparative
measure;
- does not reflect our capital
expenditures, future requirements for capital expenditures or
contractual commitments;
- excludes depreciation and amortization
and, although these are non-cash expenses, the assets being
depreciated may be replaced in the future;
- does not reflect changes in, or cash
requirements for, our working capital needs;
- excludes stock-based compensation
expense, which has been, and will continue to be, a significant
recurring expense for our business and an important part of our
compensation strategy; and
- does not reflect certain other expenses
that we do not consider representative of our underlying operating
performance, but that reduce cash available to us.
We define Non-GAAP net income as net income (loss) adjusted to
exclude amortization of acquired intangible assets, stock-based
compensation expense, certain transaction-related expenses, and
certain other non-recurring income and expenses from time to time,
net of related income tax impacts. Our Non-GAAP net income
financial measure differs from GAAP in that it excludes certain
items of income and expense. We define Net income (loss) margin as
net loss as a percentage of revenue. We define Non-GAAP net income
(loss) margin as Non-GAAP net income (loss) as a percentage of
revenue. We define Non-GAAP net income (loss) per share
attributable to common stockholders as Non-GAAP net income (loss)
divided by basic and diluted weighted-average common stock. We
believe Non-GAAP net income (loss) and Non-GAAP net income (loss)
per share attributable to common stockholders are operating
performance measures that provide investors and analysts with
useful supplemental information about the financial performance of
our business.
Free cash flow is a liquidity measure used by management in
evaluating the cash generated by our operations after purchases of
property and equipment including
capitalized internal-use software. We consider Free cash
flow to be an important measure because it provides useful
information to management and investors about the amount of cash
generated by our business that can be used for strategic
opportunities, including investing in our business and
strengthening our balance sheet. Once our business needs and
obligations are met, cash can be used to maintain a strong balance
sheet and invest in future growth. The usefulness of Free cash flow
as an analytical tool has limitations because it excludes certain
items that are settled in cash, does not represent residual cash
flow available for discretionary expenses, does not reflect our
future contractual commitments, and may be calculated differently
by other companies in our industry. Accordingly, it should not be
considered in isolation or as a substitute for analysis of other
GAAP financial measures, such as net cash used in or provided by
operating activities.
We are not providing a reconciliation for our
non-GAAP outlook on a forward-looking basis (including the
information under “Financial Guidance and Outlook” above), as we
are unable to provide a meaningful calculation or estimation of
reconciling items and the information is not available without
unreasonable effort. This is due to the inherent difficulty of
forecasting the timing or amount of various items that would impact
the most directly comparable forward-looking GAAP financial measure
that have not yet occurred, are out of LegalZoom’s control and/or
cannot be reasonably predicted.
Forward-looking non-GAAP financial measures provided
without the most directly comparable GAAP financial measures may
vary materially from the corresponding GAAP financial measures.
The tables in this press release contain more details on the
GAAP financial measures that are most directly comparable
to non-GAAP financial measures and the related
reconciliations between these financial measures.
LegalZoom
LegalZoom is a leading online platform for business formation in
the United States, or U.S. Our unique position at business
inception allows us to become a trusted business advisor,
supporting the evolving needs of a new business throughout its
lifecycle, and we have expanded our platform to include
professional expertise and other products, both legal and
non-legal, to better meet the needs of small businesses. Driven by
a mission to unleash entrepreneurship, we deliver comprehensive
legal, tax, accounting and compliance products and expertise to
millions of small business owners and their families through
easy-to-use technology. We operate across all 50 states and in over
3,000 counties in the U.S., with over two decades of experience in
simplifying the legal and compliance process for our customers and
empowering entrepreneurs with services that help to make their
dream a reality. For more information, please
visit www.legalzoom.com.
Contact
Investor Relations
investor@legalzoom.com
LegalZoom.com,
Inc.Unaudited Condensed Consolidated Balance
Sheets(In thousands, except par values)
|
December 31, |
|
|
2023 |
|
|
|
2022 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
225,719 |
|
|
$ |
189,082 |
|
Accounts receivable, net of allowance |
|
11,738 |
|
|
|
13,177 |
|
Prepaid expenses and other current assets |
|
15,159 |
|
|
|
16,699 |
|
Current assets held for sale |
|
22,722 |
|
|
|
22,722 |
|
Total current assets |
|
275,338 |
|
|
|
241,680 |
|
Property and equipment,
net |
|
48,232 |
|
|
|
30,823 |
|
Goodwill |
|
63,318 |
|
|
|
63,229 |
|
Intangible assets, net |
|
13,735 |
|
|
|
18,900 |
|
Deferred income taxes |
|
29,015 |
|
|
|
29,380 |
|
Operating lease right-of-use
assets |
|
8,518 |
|
|
|
11,148 |
|
Available-for-sale debt
securities |
|
1,159 |
|
|
|
995 |
|
Other assets |
|
8,503 |
|
|
|
9,240 |
|
Total assets |
$ |
447,818 |
|
|
$ |
405,395 |
|
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
32,282 |
|
|
$ |
25,312 |
|
Accrued expenses and other current liabilities |
|
61,678 |
|
|
|
57,373 |
|
Deferred revenue |
|
167,951 |
|
|
|
164,200 |
|
Operating lease liabilities |
|
2,052 |
|
|
|
2,317 |
|
Total current liabilities |
|
263,963 |
|
|
|
249,202 |
|
Operating lease liabilities,
non-current |
|
6,966 |
|
|
|
8,958 |
|
Deferred revenue |
|
490 |
|
|
|
892 |
|
Other liabilities |
|
7,565 |
|
|
|
3,968 |
|
Total liabilities |
|
278,984 |
|
|
|
263,020 |
|
Commitments and
contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.001 par value; 100,000 shares authorized at
December 31, 2023 and 2022, none issued or outstanding at December
31, 2023 and 2022 |
|
— |
|
|
|
— |
|
Common stock, $0.001 par value; 1,000,000 shares authorized;
188,538 and 190,822 shares issued and outstanding at December 31,
2023 and 2022, respectively |
|
189 |
|
|
|
190 |
|
Additional paid-in capital |
|
1,101,474 |
|
|
|
1,032,550 |
|
Accumulated deficit |
|
(933,061 |
) |
|
|
(891,862 |
) |
Accumulated other comprehensive income |
|
232 |
|
|
|
1,497 |
|
Total stockholders’
equity |
|
168,834 |
|
|
|
142,375 |
|
Total liabilities and
stockholders’ equity |
$ |
447,818 |
|
|
$ |
405,395 |
|
LegalZoom.com,
Inc.Unaudited Condensed Consolidated Statements of
Operations(In thousands, except per share amounts)
|
|
Three months endedDecember 31, |
|
Twelve months endedDecember 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue |
|
$ |
158,663 |
|
|
$ |
146,626 |
|
|
$ |
660,727 |
|
|
$ |
619,979 |
|
Cost of revenue |
|
|
55,907 |
|
|
|
47,448 |
|
|
|
239,263 |
|
|
|
211,095 |
|
Gross profit |
|
|
102,756 |
|
|
|
99,178 |
|
|
|
421,464 |
|
|
|
408,884 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
46,126 |
|
|
|
47,920 |
|
|
|
210,872 |
|
|
|
263,884 |
|
Technology and development |
|
|
22,107 |
|
|
|
18,821 |
|
|
|
83,181 |
|
|
|
70,434 |
|
General and administrative |
|
|
27,669 |
|
|
|
27,497 |
|
|
|
106,352 |
|
|
|
116,057 |
|
Impairment of long-lived assets |
|
|
— |
|
|
|
11 |
|
|
|
— |
|
|
|
248 |
|
Total operating expenses |
|
|
95,902 |
|
|
|
94,249 |
|
|
|
400,405 |
|
|
|
450,623 |
|
Income (loss) from
operations |
|
|
6,854 |
|
|
|
4,929 |
|
|
|
21,059 |
|
|
|
(41,739 |
) |
Interest expense |
|
|
(254 |
) |
|
|
(71 |
) |
|
|
(493 |
) |
|
|
(260 |
) |
Interest income |
|
|
2,711 |
|
|
|
1,103 |
|
|
|
9,307 |
|
|
|
1,803 |
|
Other income (expense), net |
|
|
1,185 |
|
|
|
1,625 |
|
|
|
1,621 |
|
|
|
(4,477 |
) |
Impairment of other equity security |
|
|
— |
|
|
|
(3,000 |
) |
|
|
— |
|
|
|
(3,000 |
) |
Income (loss) before income
taxes |
|
|
10,496 |
|
|
|
4,586 |
|
|
|
31,494 |
|
|
|
(47,673 |
) |
Provision for (benefit from) income taxes |
|
|
3,114 |
|
|
|
2,842 |
|
|
|
17,541 |
|
|
|
1,060 |
|
Net Income (Loss) |
|
$ |
7,382 |
|
|
$ |
1,744 |
|
|
$ |
13,953 |
|
|
$ |
(48,733 |
) |
Net income (loss) attributable
to common stockholders—basic |
|
$ |
7,382 |
|
|
$ |
1,744 |
|
|
$ |
13,953 |
|
|
$ |
(48,733 |
) |
Net income (loss) attributable
to common stockholders—diluted |
|
$ |
7,382 |
|
|
$ |
1,744 |
|
|
$ |
13,953 |
|
|
$ |
(48,733 |
) |
Net income (loss) per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
Basic |
|
|
0.04 |
|
|
|
0.01 |
|
|
|
0.07 |
|
|
|
(0.25 |
) |
Diluted |
|
|
0.04 |
|
|
|
0.01 |
|
|
|
0.07 |
|
|
|
(0.25 |
) |
Weighted-average shares used
to compute net income (loss) per share attributable to common
stockholders: |
|
|
|
|
|
|
|
|
Basic |
|
|
188,223 |
|
|
|
192,401 |
|
|
|
190,466 |
|
|
|
195,829 |
|
Diluted |
|
|
192,827 |
|
|
|
193,327 |
|
|
|
194,415 |
|
|
|
195,829 |
|
LegalZoom.com,
Inc.Unaudited Condensed Consolidated Statements of
Cash Flows(In thousands)
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
Cash flows from
operating activities |
|
|
|
Net income (loss) |
$ |
13,953 |
|
|
$ |
(48,733 |
) |
Adjustments to reconcile net
income (loss) to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
25,383 |
|
|
|
21,745 |
|
Amortization of debt issuance costs |
|
227 |
|
|
|
227 |
|
Amortization of right-of-use assets |
|
2,692 |
|
|
|
2,049 |
|
Stock-based compensation |
|
66,015 |
|
|
|
80,469 |
|
Impairment of long-lived assets |
|
— |
|
|
|
248 |
|
Impairment of other equity security |
|
— |
|
|
|
3,000 |
|
Deferred income taxes |
|
4,712 |
|
|
|
(793 |
) |
Change in fair value of contingent consideration |
|
(836 |
) |
|
|
(150 |
) |
Unrealized foreign exchange (gain) loss |
|
(1,387 |
) |
|
|
3,558 |
|
Other |
|
(39 |
) |
|
|
168 |
|
Changes in operating assets and liabilities, net of effects of
business combination: |
|
|
|
Accounts receivable |
|
1,441 |
|
|
|
(2,505 |
) |
Prepaid expenses and other current assets |
|
1,557 |
|
|
|
(523 |
) |
Other assets |
|
435 |
|
|
|
179 |
|
Accounts payable |
|
5,025 |
|
|
|
(6,609 |
) |
Accrued expenses and other liabilities |
|
4,119 |
|
|
|
6,535 |
|
Operating lease liabilities |
|
(2,319 |
) |
|
|
(2,135 |
) |
Income tax payable |
|
(4 |
) |
|
|
28 |
|
Deferred revenue |
|
3,334 |
|
|
|
17,079 |
|
Net cash provided by operating
activities |
|
124,308 |
|
|
|
73,837 |
|
Cash flows from
investing activities |
|
|
|
Acquisitions, net of cash
acquired |
|
— |
|
|
|
(2,532 |
) |
Asset acquisition, net of cash
acquired |
|
— |
|
|
|
(6,299 |
) |
Proceeds from acquisition
working capital adjustment |
|
— |
|
|
|
307 |
|
Purchase of property and
equipment |
|
(31,593 |
) |
|
|
(22,098 |
) |
Other |
|
38 |
|
|
|
— |
|
Net cash used in investing
activities |
|
(31,555 |
) |
|
|
(30,622 |
) |
Cash flows from
financing activities |
|
|
|
Repayment of finance and
capital lease obligations |
|
(35 |
) |
|
|
(14 |
) |
Payment of contingent
consideration |
|
— |
|
|
|
(600 |
) |
Repurchase and retirement of
common stock |
|
(54,873 |
) |
|
|
(95,126 |
) |
Payment of stock repurchase
costs |
|
(100 |
) |
|
|
— |
|
Shares surrendered for
settlement of minimum statutory tax withholdings |
|
(9,587 |
) |
|
|
(41 |
) |
Proceeds from issuance of
stock under employee stock plans |
|
8,445 |
|
|
|
2,438 |
|
Net cash used in financing
activities |
|
(56,150 |
) |
|
|
(93,343 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
34 |
|
|
|
(87 |
) |
Net increase (decrease) in
cash and cash equivalents |
|
36,637 |
|
|
|
(50,215 |
) |
Cash and cash equivalents, at
beginning of the period |
|
189,082 |
|
|
|
239,297 |
|
Cash and cash equivalents, at
end of the period |
$ |
225,719 |
|
|
$ |
189,082 |
|
Adjusted EBITDA and Adjusted EBITDA Margin
The following table presents a reconciliation of net income
(loss) to Adjusted EBITDA for each of the periods indicated
(unaudited):
|
|
Three months endedDecember 31, |
|
Twelve months endedDecember 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(in thousands, except percentages) |
Reconciliation of Net
income (loss) to Adjusted EBITDA |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
7,382 |
|
|
$ |
1,744 |
|
|
$ |
13,953 |
|
|
$ |
(48,733 |
) |
Interest expense |
|
|
254 |
|
|
|
71 |
|
|
|
493 |
|
|
|
260 |
|
Interest income |
|
|
(2,711 |
) |
|
|
(1,103 |
) |
|
|
(9,307 |
) |
|
|
(1,803 |
) |
Provision for income
taxes |
|
|
3,114 |
|
|
|
2,842 |
|
|
|
17,541 |
|
|
|
1,060 |
|
Depreciation and
amortization |
|
|
7,322 |
|
|
|
5,558 |
|
|
|
25,383 |
|
|
|
21,745 |
|
Other (income) expense,
net |
|
|
(1,185 |
) |
|
|
(1,625 |
) |
|
|
(1,621 |
) |
|
|
4,477 |
|
Stock-based compensation |
|
|
15,010 |
|
|
|
15,979 |
|
|
|
66,015 |
|
|
|
80,469 |
|
Impairment of other equity
security |
|
|
— |
|
|
|
3,000 |
|
|
|
— |
|
|
|
3,000 |
|
Impairment of long-lived
assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
237 |
|
Transaction-related
expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
758 |
|
Restructuring costs(1) |
|
|
3,863 |
|
|
|
— |
|
|
|
4,666 |
|
|
|
1,795 |
|
Certain other non-recurring
expenses(2) |
|
|
389 |
|
|
|
— |
|
|
|
1,568 |
|
|
|
440 |
|
Adjusted EBITDA |
|
$ |
33,438 |
|
|
$ |
26,466 |
|
|
$ |
118,691 |
|
|
$ |
63,705 |
|
Net income (loss) margin |
|
|
5 |
% |
|
|
1 |
% |
|
|
2 |
% |
|
|
(8 |
)% |
Adjusted EBITDA margin |
|
|
21 |
% |
|
|
18 |
% |
|
|
18 |
% |
|
|
10 |
% |
(1) |
For 2023, restructuring costs related to the reduction of our U.S.
and U.K. headcount. For 2022, restructuring expenses related to a
phased severance event to reduce the U.S. headcount in June and
August 2022. Restructuring expenses include salary and benefits for
the impacted employees and are included in general and
administrative expenses in the consolidated statements of
operations. |
(2) |
For 2023, certain other
non-recurring expenses included costs incurred by us in conjunction
with the secondary offerings of shares of our common stock by a
selling stockholder in September 2023 and November 2023. For 2022,
certain other non-recurring expenses included costs related to the
departure of a member of management. |
Non-GAAP Net
Income, Non-GAAP Net Income Margin and
diluted Non-GAAP Net Income Per Share
The following table presents a reconciliation of net income
(loss) to Non-GAAP net income for each of the periods
indicated (unaudited):
|
|
Three months endedDecember 31, |
|
Twelve months endedDecember 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(in thousands, except per share amounts) |
Reconciliation of Net
income (loss) to Non-GAAP Net income |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
7,382 |
|
|
$ |
1,744 |
|
|
$ |
13,953 |
|
|
$ |
(48,733 |
) |
Amortization of acquired
intangible assets |
|
|
1,291 |
|
|
|
1,291 |
|
|
|
5,165 |
|
|
|
3,532 |
|
Stock-based compensation |
|
|
15,010 |
|
|
|
15,979 |
|
|
|
66,015 |
|
|
|
80,469 |
|
Impairment of other
equity security |
|
|
— |
|
|
|
3,000 |
|
|
|
— |
|
|
|
3,000 |
|
Impairment of long-lived
assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
237 |
|
Transaction-related
expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
758 |
|
Restructuring expenses |
|
|
3,863 |
|
|
|
— |
|
|
|
4,666 |
|
|
|
1,795 |
|
Certain
other non-recurring expenses(1) |
|
|
389 |
|
|
|
— |
|
|
|
1,568 |
|
|
|
440 |
|
Income tax effects(2) |
|
|
(3,801 |
) |
|
|
(3,010 |
) |
|
|
(10,892 |
) |
|
|
(10,243 |
) |
Non-GAAP net income |
|
$ |
24,134 |
|
|
$ |
19,004 |
|
|
$ |
80,475 |
|
|
$ |
31,255 |
|
Net income (loss) margin |
|
|
5 |
% |
|
|
1 |
% |
|
|
2 |
% |
|
|
(8 |
%) |
Non-GAAP net income margin |
|
|
15 |
% |
|
|
13 |
% |
|
|
12 |
% |
|
|
5 |
% |
Net income (loss) per share
attributable to common stockholders—basic and diluted |
|
$ |
0.04 |
|
|
$ |
0.01 |
|
|
$ |
0.07 |
|
|
$ |
(0.25 |
) |
Non-GAAP net income per
share—basic |
|
$ |
0.13 |
|
|
$ |
0.10 |
|
|
$ |
0.42 |
|
|
$ |
0.16 |
|
Non-GAAP net income per
share—diluted |
|
$ |
0.13 |
|
|
$ |
0.10 |
|
|
$ |
0.41 |
|
|
$ |
0.16 |
|
Weighted-average shares used
to compute net income (loss) per share attributable to common
stockholders—basic |
|
|
188,223 |
|
|
|
192,401 |
|
|
|
190,466 |
|
|
|
195,829 |
|
Weighted-average shares used
to compute net income (loss) per share attributable to common
stockholders—diluted |
|
|
192,827 |
|
|
|
193,327 |
|
|
|
194,415 |
|
|
|
195,829 |
|
Weighted-average shares used
to compute Non-GAAP net income per share attributable to common
stockholders—basic |
|
|
188,223 |
|
|
|
192,401 |
|
|
|
190,466 |
|
|
|
195,829 |
|
Weighted-average shares used
to compute Non-GAAP net income per share attributable to
common stockholders—diluted |
|
|
192,827 |
|
|
|
193,327 |
|
|
|
194,415 |
|
|
|
197,808 |
|
(1) |
For 2023, certain other non-recurring expenses included costs
incurred by us in conjunction with the secondary offerings of
shares of our common stock by a selling stockholder in September
2023 and November 2023. For 2022, certain other non-recurring
expenses included costs related to the departure of a member of
management. |
(2) |
The estimated income tax effect
of the non-GAAP pre-tax adjustments is determined by
applying the statutory rate of the originating jurisdiction, if
applicable. |
The following table shows the computation of basic and diluted
Non-GAAP net income per share attributable to common stockholders
(unaudited):
|
|
Three months endedDecember 31, |
|
Twelve months endedDecember 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
(in thousands, except per share amounts) |
Non-GAAP net income
and Non-GAAP net income per share attributable to common
stockholders: |
|
|
|
|
|
|
|
|
Non-GAAP net income |
|
$ |
24,134 |
|
$ |
19,004 |
|
$ |
80,475 |
|
$ |
31,255 |
Reconciliation of
denominator for net income (loss) per share attributable to common
stockholders to Non-GAAP net income per share attributable to
common stockholders: |
|
|
|
|
|
|
|
|
Weighted-average shares used to compute Non-GAAP net income per
share attributable to common stockholders—basic: |
|
|
188,223 |
|
|
192,401 |
|
|
190,466 |
|
|
195,829 |
Effect of potentially dilutive securities: |
|
|
|
|
|
|
|
|
Stock options |
|
|
1,478 |
|
|
484 |
|
|
1,380 |
|
|
1,410 |
Restricted stock unit |
|
|
3,118 |
|
|
442 |
|
|
2,558 |
|
|
566 |
Employee stock purchase plan |
|
|
8 |
|
|
— |
|
|
11 |
|
|
3 |
Weighted-average common stock used in
computing Non-GAAP net income per share attributable to
common stockholders—diluted |
|
|
192,827 |
|
|
193,327 |
|
|
194,415 |
|
|
197,808 |
Non-GAAP net income per share attributable to common
stockholders—basic |
|
$ |
0.13 |
|
$ |
0.10 |
|
$ |
0.42 |
|
$ |
0.16 |
Non-GAAP net income per share attributable to common
stockholders—diluted |
|
$ |
0.13 |
|
$ |
0.10 |
|
$ |
0.41 |
|
$ |
0.16 |
Free Cash Flow
The following table presents a reconciliation of net cash
provided by operating activities to free cash flow (unaudited):
|
|
Three months endedDecember 31, |
|
Twelve months endedDecember 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(in thousands) |
Reconciliation of Net
Cash Provided by Operating Activities to Free Cash
Flow |
|
|
|
|
|
|
|
|
Net cash provided by operating
activities |
|
$ |
22,495 |
|
|
$ |
21,822 |
|
|
$ |
124,308 |
|
|
$ |
73,837 |
|
Purchase of property and
equipment |
|
|
(8,374 |
) |
|
|
(5,657 |
) |
|
|
(31,593 |
) |
|
|
(22,098 |
) |
Total free cash flow |
|
$ |
14,121 |
|
|
$ |
16,165 |
|
|
$ |
92,715 |
|
|
$ |
51,739 |
|
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