LZ - Earnings call transcript Q2 2021

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Operator

Thank you for standing by and welcome to LegalZoom Second Quarter 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers presentation, there'll be a question and answer session. [Operator Instructions] Please be advised that today's call may be recorded. [Operator Instructions] I'll now like to hand the call over to Danny Vivier, Head of Investor Relations. ahead. go Please

Danny Vivier

Hello, earnings operator. to second LegalZoom's Thank call. and XXXX conference quarter you, welcome

Joining Dan today Watson, me is our and Executive Chief Noel Officer; Financial Officer. Wernikoff, our Chief

from forward-looking review statements Exchange statements we guarantee and be statements this could make reminder, results be to the us to "believe," the such by Results and update of Commission and and of identified not reports are be call. for "will," "expect," today's our a As differ materially a information materially. obligation "plan," can on making they're forward-looking a as "anticipate," We could These on cause will except the on required as The any results. as forward-looking based all or not to section risk word that you available as use disclaim law. any to this the date. "intent," forward-looking discussion of should contemplated forward-looking of factors expressions, our performance Securities similar statements upon future we filings caution by with statements. call those by different the relied We of "confident" factor the

GAAP. non-GAAP Investor In the Reconciliations prepared Relation addition, non-GAAP set substitute section with comparable measures for directly in as an a also our measures not financial GAAP to isolation most are be in financial considered results certain of of at and we will discuss measures. the non-GAAP intended are The or investors.legalzoom.com. all GAAP accordance forth to website measures

to I'll Now, Dan. over call turn the

Dan Wernikoff

all as enjoyed public our support for leading along journey. of you in meeting company. to the and first Thank the Noel everyone. earnings us joining welcome, appreciated I IPO And today our Danny. up you the weeks many and for a call Thanks,

to remind mission LegalZoom of here and to we we want the are I opportunity ahead the leveraging and legal our we priorities continue so a disrupt reflect small significant to of years the need in them. need moment all these A turn take We so ago, of with the quarter of as everyone seriously, U.S. and can as empower a our started more second vision for to are believe by everyone to covering today our to with us. XX success businesses Before very the do then on the discuss be We economy; review the that a inspiring results services I pandemic. our a tools navigate responsibility thrive, that duration democratized as year, services technology. little global over purpose afford they small access take knowing businesses we LegalZoom legal

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and customer The relentlessly LegalZoom have follow easy completed differentiated built know legal questionnaires human are on and involvement. compliance experience still to simple. little business government product we formation First, makes that with to can product that complex and focused the is to efficiently forms be

affordability that score promoter's a Our than of products' of has traditional net ease of attorneys. XX, double use more and in of resulted

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very creates expertise These compliant to high specific ending now growth gains our and XX% with benefit quarter of We by proliferation or at SMB COVID-XX strength team digital we durable are the on the It's and within since before. accelerated XXXX. adjusted And and help we're higher more and of of results offline over the remember superior focused key second million revenue to formations to of attorneys period. emphasis positive operate at for ability with pleased right with today our the to quarter, interaction. focus market growth revenue ever share of as to making unpack leadership the and of system I'd efforts broad detail. experience effect support it remember approximately companies results a will three across for counties. best-in-class growth making like that our side to I'll is with which results enabling our an leading half highlight the profitability team second XXXX. growth. business flow states in an macro higher areas for our available are had a and future. for provider. network within It towards LegalZoom of year-over-year. impacted The lead U.S. is consecutive Noel factors continue In to summary, the believe business independent like into the attractive experience $XX to and accelerated topline navigate proven the great period is that a The both important we our our these of we are attractive with was should times category typical SMB mix we've from high have through SMBs metrics which our matter quality a methodically and easier legal latter by spend rise at XX in on shift our into Well, to expertise all XXXX In ending quarterly need finally, since small overview mix this business are transactional complexity believe with to $XXX XXXX scale. of formations second I'd they is quarter we're growth our topline three XX% are a next built reflected writing This signal XX% an the We've that a tailwinds it. growth the side. drive than in EBITDA well-positioned company new scores let investments poised deep building Components of with rates to Third, remainder my driven on of revenue. in have economy reposition the technology the of provide The start a period year. support important shift and leading big to by quarterly up that values time momentum legals the tools the the domain businesses. the to million be average we chapter a which promoter entering a our formation resonation customers executive order public business brand up our geography as in attorneys when a compliance attorney customers our leader. resilience than for are legal that

experience. is core offerings our formations first marketing to core scaling and the The factor product

believe vertical to able customer As with the covered in maintaining by most a ramping XX% the period XX-day share were cost acquisition offline alone. now started acquisition transaction massive upfront accelerate now clear tech spends We our take XXXX competition. growth time payback investment digital grow the of significantly our is spend tight from adoption, our a with and little we up very leader while in annually. We with to marketing revenue

by is improved additional to We monetization that new driven and continue are at room as add we scaling cohorts particularly opportunities confident LCD's higher spend retention. customer there immediate our

and We overall such into returns. channels and are as paid spend social, media entering also digital improve allocation model new mix optimize video leveraging

of share leadership, the term, continue to and to earned the put channels. of addition the a brand organic both add are In our also comes we'll to is with will we despite function. investments near to need build an team tools Today, right traffic debt focused our our making a them the to and and from drive larger This marketing performance on traffic. In minority in-house our SEO SEO brand efforts, best-in-class they problem opportunity. the

is line-up subscription company AB and sells streamlining experience technology our testing The the testing the constrained to mindset process customer leverage optimizing cross the share arrived improvements to motion investments our our bundles. the gains term, purchase satisfaction. the severely making XXXX, other rapidly and a critical conversion, stacks core and formation scale. at to near When our focused our needed product drive we'll product. in centric capacity. products we we refining In plan to by are subscription quickly our our We improving Today, on late be questionnaires, of to modernize LegalZoom in set I platform, first has drive

in building early begun of We unique second position the X/Xrds giving XXXX, businesses lifecycle. when had key not growth they us upgrading formed factor note that Our a very SMB's subscription of their ecosystem services. approximately on through our customers SMB LegalZoom in is

forming of are and access we material a accelerate be do within tax business. their set of frequent revenue in is bundle LLC in-house infrastructure their aggressively this earn the expect to the we annual bullish long-term have an a It's Tax deliver a formations early very good our build and provide do time year From small relationship tax how ourselves. most can our testing subscription investing accelerate example introducing product formation, support strategy. need we'll XX% relate we the parallel, rollout at implications over be or we and in and tune of year, customer's these we the in filings. services that to received to In opportunity right build of here offers second of of near commercialization Tax anticipated compliance. not time will driver and businesses monthly last LZ to of operational them CPA's days by of their to on and traffic, have bookkeeping fine to The half trust work formation traffic. remain accounts to the our not to a in Tax October we LZ to and help our to want tax products more to business. LZ we future operate XXX% accountant opportunity business CPA we to solution growth. across existing scale and advice services launched meet to while expertise questions will tax of its out able an complete demand. at With they'll Certain which expect As term,

bring best-in-class our accounts, payments, significant also plan made and to to in our with strategic In business relevant other checking offer customers adjacencies. hosting, We a change we services we solutions website the by approach. expand third-party XXXX, to partnering

with recurring bounty structures actively payment partnerships two-way built miles. strategic partnerships on We’re of share and favor existing transitioning in well-integrated our one-way revenue

approach to We this expect That the over retention at and transition better drive lead we term. partner customer our line in to are revenue a time. ARPU will weigh this near higher confident in on change

us growth in and is Delivering businesses feel service click just products is integrated support can third away. factor that Our three key a can ways. integrating final expert so this small confident attorneys help our into

it increase customers attracting the of new will First, never is category without would if that by an available attorney considered we needed. digital knowing our believe TAM share have

formation. for attorney higher cost core its Second, premium offering, our when first opportunities still to than at as offline we subscription AOV a will digital provide drive rates lower but be it'll attorneys third, solution a assisted as Earlier at And customers alternatives. we our our themselves $XXX. Late existing journey for trademarked into meaningful let help expect and sell can introduced to file focus formation. this increase launch, time in we product, will a we've our solution of AOV. ways cross trademark services year, we'll a attorney choose conversion most percent or part seen this bundle it of the of priced select our independent the begin $XXX now integrate of uplift testing significant driving file to users with on-ramp customer into attorney LLC option a with a the year, popular our attorneys new Since on

our fully market and long-term strategy we to Tax is learn. our test and a play much LZ So as go-to integrating initiative, to anticipate evolve we attorneys

company story Let we public process beginning an me a of end IPO meeting that just company. also proud years are for has growth come. strong the for demands very ahead quarter an as this by for while of a team We well. the the and delivering potential LegalZoom the to saying excited incredibly believe is I'm as incredible journey such many

We will both Officer, also our With to hand Noel are potential. investments that Watson. have achieve high that, conviction it making Chief we I'll that over the Financial

Noel Watson

we new business good guidance for our driving And start quarter wrap our overview model. that our with were Dan. in everyone. the growth scale we're introduce an opportunity operating customer going with with offer When formation higher allowing values. start would results We'll ongoing financial review operating EBITDA positive of model. our which high And full-year Thanks, leverage the as to subscription QX, I'm since with That's our for earnings financial We afternoon, up customers a to to call, long-term also drive we an and to durable which adjusted growth. us XXXX. this first is to ecosystem, the use and reinvest enjoy LegalZoom services, to business a why starts with us allows business lifetime

the subscription growing an attractive acquisition covered further are leading a in In are Our spends, on a transactional both XX% unit the equity, customer penetrate near services base purchase revenues of In term, and economics. at vertical. alone laser from drive Apart providing returns, business annual high it's behind components. between subscriptions the favorable our leveraging experience our overall our formations of dynamic. subscription play opportunity upfront the transactional evenly and revenue upfront leaving by share of the market the margin customer front built growing legal position, to superior capital working focused and brand us on in we large

we making are drive the strong revenue. growth So, mix on and expect market as infrastructure by larger and half investments long-term, marketing metrics share our we focused the over of this of profitability supported call, sustainable possibility we right people prioritizing achieve flow are objectives, in to topline subscription results. In cash

financial Transaction year-over-year. to I'd report came revenue through up Total KPI's. period will the we out take GAAP in of results. XX% our Now, representing second year-over-year. on transaction $XXX XX% revenue, quarter like you revenue million, XX% up three at revenue was total Total

events. first, The and business This LLC, Inc., formations. formation includes non-profit is

has our formation is more added the the and LegalZoom's business ongoing value major process then through a for in up life formed formations higher and able values. business share driving strategic establishing We our services with second business relationship than of year-over-year. to XXX,XXX to XX% the been quarter customer And products Turning on completed priority.

up spike in completed transaction up XXX,XXX we at the impact in which other year to offset year-over-year planning. our we on planning a planning In of had involving we quarter quarter, following business half report to the unit. from the in year. Our offering in our includes registered transaction subscription the property the order total formations share AOV strength business related given saw over includes revenue, transactions intellectual third average the second average a contribution the shift being addition KPIs. expect business which in decline continue second AOV units quarter. XX% The take us business we $XXX was second up units, continued formations, second in the before and XX% the revenue we represents And account demand each in we small will weight KPI's agent into value. was Which positive state subscription Tax. XX% largest compliance back of formations, larger for revenue was country. in trust for for overall and year-over-year. by When revenue such unit, registered the agent representing a our the businesses our KPI, solutions, in onset to expect year-over-year. in state an year-over-year state also Average for units growth formations and as Subscription last we X/Xrds two as those In COVID-XX. transaction came of adjacent transaction providers strength AOV the Approximately registered one service XX% with primary expect Apart of the agent making LZ subscription these of service,

As at outstanding, the units had year-over-year subscription asset revenue quarter, of bulk over June we this On second units XX% up a units end subscription basis, the were first subscription XXth, XXXX, quarter. the driving of X.X our up XX,XXX from growth. of million

subscription up majority quarter average ARPU From annual XX ARPU the subscription revenues second using the our or per X% is we ARPU giving months measure contribution of the annual subscriptions of at Please outstanding revenue second subscription the on XXXX, terms. KPI built are year-over-year. note, The vast unit. $XXX, was last

channel In a in total XX% final the representing aligned up line away Our year-over-year strategic partners not with transition you're quarter. performance from sequential we legacy from the was revenue that lower near-term, our we revenue do revenue in partnership direction. expect as line item, comes partner X% which second of our our

of the an with on opportunity partners focused are complete ecosystem recurring to revenue As Dan described long-term earlier, multi-brand structures. we build

XX% Sales basis a of following and expenses filing share otherwise stated. of all Cost revenue, the million XX% from last our carries revenue the fees at media largest $XX the which in marketing, QX cost our up margin of in of XX% were includes of XX% and sales gross lower in over year. of item build to of in continue as in revenue, down brand Within where period and Now our was metrics mix up are customer formations margins, quarter operating and was margin expenses, non-GAAP And and other marketing fulfilment volume turning came digital which government just spend. our on XX% towards spend came second unless to at business is XX% a leadership. our million and million year profile. transaction representing cost acquisition a $XX as to we scale aggressively shifted the versus line $XX to grow revenue. on Gross last year-over-year and spend

Our strategy spend or market revenue. as overall down or initiatives is product and and organization. grow conditions as approach to quarter or quickly best-in-class were is be expect dialled future to of by efficiency long-term. ongoing million this parallel, up view in item we channel General which in invest the out we based development a cost owning were. and of testing administrative in to and In technology that line was X% will over performance fast second a million In X% portion revenue. $XX $XX a quarter governed we new period, the build revenue Technology can the as investments is of that as a ROI spend brand allocated driven improve

the of the the In revenue of cost or total, XXXX, XX% $XX but was expect revenue. quarter In We have expect million EBITDA a OpEx our our long-term, about below line the approximately G&A do transaction quarter in of one-time slower expenses third in we than in Adjusted we other ins. annual slightly XX% second to to that of growth non-GAAP return XX%. grow quarter. million at pace $X not were

the XXth, offerings into flow million $X We flow equivalence revenue million subscriptions From the of Cash million including QX, filings of reduction accounts continue an our was Xnd, as down base a IPO cash differed in revenue differed cash $X was grew $XXX base of into by to were as quarter, due subscription. the we and XXXX we which primarily upfront recognized cash build collected period the in decrease growing and On discounts The full Term in raised over million year. from same from to $XX working last July revenue net of million. $XXX our million rateably second Free June free capital our as million commissions and of $X XXXX. a our and cash Loan. from underwriting repaid payable. $XXX in term

As growth. strong allocation invest inorganic our we think by drives use to to use that cash, in us and position balance to capital of sheet sustainable priority and look and ahead our of the long-term organic opportunity

million the formations expect the accelerated the full-year, the we'll quarter, the QX And to portion for COVID-XX impacted of remainder and $XXX The activity outlook year, Now, revenue of quarter the we $XXX In demand $XXX million. the the in growth end of XXXX, on in of million. quarter QX $XXX XXXX. of in early quarter. from expect a second business the economy. will to revenue due an turn pent to had of in unlock the of we pandemic effect In our formations XXXX a conversely million onset the XXXX, you've year. business during part at the rate Total of of up by to in third formation uncertainty last in prior be business throughout present

of revenue believe XXXX, million we spend. customer a additional or the roughly approach the In not the because have dynamic scaling and we acquisition at in such we currently mid-XX. to environment efficient be $XX shares of are adjusted guidance our EBITDA see, believe opportunities full-year will We an we providing expect that we to specific there million adjusted after quarterly one XX% EBITDA as $XX go to

forward translate underlying of the our second driving that, execute questions. and against with reiterating into is health go returns. let to on growth our by continuing call, outside look squarely me leadership shareholder Q&A focussed move we strategy. that results that end the We Before business believe results as quarter's to of we will portion the long-term team let's reinforced And to the believe which

Operator

Instructions] comes question Our first [Operator Auty you. J.P. Morgan. of Thank from Sterling

open. Your line is

Sterling Auty

Hi guys, talking was the kind to into market. come first the a tying of actually little Delta the thanks. about welcome public variant terms and in of COVID. off what question bit Noel Yes, guidance of My is With have impact you potential the crystal seen year? this in far has any thinking the a know, half business you so but back And here forefront, in I to of quarter? how impacts the the are ball nobody about

Dan Wernikoff

Yes. Well, thanks for the questions, Sterling.

just strong First going a team to want work while by it, off, backdrop I the acknowledge, deliver very to quarter, the public. great in of

but that the seasonality which cleared actually actually I'm bit pattern a So, of little more a there's first interesting. in we're general. and been seeing yes normalized its We're summer

As instead our year, reflect And that we levels the with we historically impacted the year us QX is to opposite. beginning last coming year towards and see at those if increased, on then, us, saw a we relative of peak. normally last shutdown exact end because staying which which of of which actually COVID this QX at the you'd

You'd see month. see I beginning you and of hit drop-off of at end the QX QX. peak the the in summer the mean, a as happening you're

that was aren’t normalized and but pattern a a softness little we coming for unexpected bit surprised say I more that see will back all had July little not incredibly us. So, a to bit

right then said, time as creep backdrop. up the variant unique As very we a and People at for period well. of it's that time first delta the saw you travelling very

really well, do in to we're while have territory. we acknowledge pacing this So, we're unique

they for have Yes, are completely do Yes, them. they restrictions? have SMBs, business? Now but also they open some

Our bit yes. cautious, downed people people to are little a more locked they know be starting

business. a very makes by tough From But strong. a And are. so, visibility to lack businesses resilient surprised just time of how I'm small that relatively actually launch remain all formations again perspective, our it historical

so, we couple this seeing. how in really no we're large us of definitely play terms what out surprise at but I see the to need point months there is for of mean And next

Noel Watson

To we're here all feel jump the QX maybe just by to execution for represents if how Sterling, on like that, that confident it at broad second execute But certain strong just our we point that a QX to your note results we're question, have believe a the ranges provided we in a level the can add with deliver we set and the can variables Zoom'ers. and and of presented to and that I uncertainty. of that we play of take also continue are I'd to ranges results results your outcomes fairly number of reflect continued within quick there that and provided. pleased a

Sterling Auty

That opportunity. compete, that former tax, partner, your sense. struggling most of employer loaded you opportunity question. understand talk your a And with you they're a and relationship my bit little follow-ups of of that makes a one in getting about lot with in then, to the the tax It's get. is popular I When it, you so to the going forward the for marketplace

Noel Watson

online the called we through doesn’t important where it's clear. Intuit one and for that experts. That's in customers clickable as have which actually the instance question channel it of to provide well and tax of on at channel taxes Lizard Thanks Yes. directly in with important this completing work top and terms a Intuit advice an relatively leveraging it's providing on establishing like the is ProAdvisor for as Intuit both practices large product. products really services

And with of Intuit. on LegalZoom practice have as think wholesale partners QuickBooks online a now can the side. one that we giant relationship You

just they as XX% partner. all almost of full tax we we're and And us, internally providing relationship at businesses. really them they're tax many as for questions also our small So, trusted with small We when But to they helping customers. to are that end-of-year business has CPA's they legal distribute filing have for a no note formed important that have to looking have questions. thing our actually account our own have to is and come us here

just and we natural partner a and us a we amazing There's wheel Online called role just so with wheel. place wanted So, want to QuickBooks there to play not it's for them. out did recreate an the to

Sterling Auty

guys. Thank Okay. you,

Noel Watson

Sterling. Thanks,

Operator

Elliott Elizabeth from with Morgan comes question next The you. Thank Stanley.

line Your open. is

Elizabeth Elliott

translate congratulations Hi, help guys sign I you you seeing for or a over penetration. that digital us are what penetration? points on second show was some the can qualitatively Understanding you other better has strong And to slow so quarter. marketing how seeing market, moving posted is seated could to question. thinking drive at marketing better the either if of the quantitatively much really so thank been that are it for understand signs when a

Dan Wernikoff

about with you opportunities. significantly. thereafter. that up in different growth is really a having efficient things then lot I'd spend. seeing mean, which one marketing is we I is XX-day great I is from One we're just assist. is growth X) And improving now conversion turn more spot, in the than of started couple But X) our that the Growing I a attorney payback is of and there X) the you're guess can't scaling much and value mean and becoming having doing experience pretty then efficient now that Yes. a product core. helping lifetime get more on journey what we A three the right We to that adjacencies opportunities. talk point is have us

in point a we're of XX% we're drive TAM up where to year-over-year. trying talking increases So, to north about that spend

what trying we're exactly that's this do point. to at so, And

and like can data Media we're video use engine new such see search different channels interplay different channels. social, our We're OTT, we're to also optimization. understand entering digital where tools doing increasing between in us that and Modeling through as You investment Mix the able and

incremental often but back like feel to There'll in of efficiency level of we forward, reassess steps have then to up an times to at have new levers. that two the times be a important a we us. lot start scale as general, spend it's you one for start step you'll channel, So,

Elizabeth Elliott

just a be world Okay. and that it Can may side thinking it I other how a formations, business longer-term, as kind COVID more right And understanding people But think follow-up. and now that of to the operate is the changed has opportunity. many COVID. business tough fundamentally then about creates there that comp relates some in

the the next or some rate couple these tough business how new get what of think kind of above pre-COVID turning do it need kind over years, of we level? you through to structurally as So, of thought of formations below comp, you about

Dan Wernikoff

realizing their people in form definitely quickly a Yes, some some the people I the it is because enablement of there's tailwinds digital was there's to house tools. mean, it. trend they think reality cases where going in to then, that. been relatively I mean in they've also of above do we can just forced it's business interesting reality adopting regulatory that really There And pre-COVID.

from a liability or them an standpoint people but from actually were status are platforms employee to work on requiring Some that requesting an form legal help who now standpoint. like also as entity the

opening continuing in this as the increase last a and see in you're dramatic a in QX bit we actually year So, in Noel formation. mentioned bump right, comments, because QX just is a little there of saw we

instance. lap higher And it'll so, was we to that it we back significantly was where in a have get to think that but for normalized than back XXXX we level were when

Elizabeth Elliott

so much. you thank Great,

Dan Wernikoff

you. Thank

Operator

Thank you.

Lu Mario from with Barclays. comes next Our question

Your line open. is

Mario Lu

again. congrats Great. Thanks all on the first and questions quarter for taking the

The I has was first that during wondering year retention if services And color recent thus cohorts trended a could far. retention. bit just still on early particular, newer came some months. how Thanks. addition on a question ago. I retention is the additional has of on if In know pandemic I it's from in expert provide aided the you

Dan Wernikoff

subscriptions. say as well. to annual maybe a that We of happened the most here. the everybody need XX in sure we just just driven are make It's accelerated little indicators, what it's last And primarily commentary tracks as leading tell. Yes. and business formations about bit year. the on month August they talk we And look really What annual by at to the of one and too that July the bake post early to growth is probably here thing subscriptions I'd retention

where element complete will data so, if And is of QX looks it. haven’t of we that and to having be. like. now subscription anything units you which periods into this that was essentially concerned just expected right the say what we it it were has for seen visibility to on sort forecast us interim It I in there within right spot pointing not an has instance

be succeeding. likelihood a attorney going will people an of on accountant more businesses that services know it'd As the relates much when have impact whether an that or forward. that that it expert have with retention We expert work an and to small

that adopt improve. our factor how a more And customers which so, do it's we many expect of time it'll just will guidance services And over of probably of those expert it. drive

a and So, CPA pillars Tax strategy, our in side. there. that's the but that also it attorney LZ two why just big assistance we're layering think so of One where we're if you adjacencies there's is

then get right through get can can the way. expert on off people that to the and So, have go along an advice they foot

Mario Lu

That competitive one then, Great. just the sense. makes And landscape.

from year. You reinvesting guess, peers, I color Thanks. in in the terms they the are what marketing into see any of and any guys there doing your color would half same be are of this you back back helpful.

Dan Wernikoff

I with we've changes competitive Yes. seen think don’t I any the mean landscape.

expect digitally services to thing of to squarely focused time delivered we're over are The continue emulate that as that people we only there I today. think our legal is X% be model. on

when about attorney And as offline an an now technology. so, accountant we it's well who doesn’t offline as really it's or think someone competition, leverage

can our And working so, score relative of three solution an as we that times of that in attorney. score two promoter it's see comfortable in one they're times buying work measured they to with a someone superior net promoter work with promoter, product, net they offline an directly it's the alternatives. when we our works attorney. When with it. over And experts, have of feel you When those

try be that And so, model the with us and we I on And most. there's think our who emulate competition people know business focus going to to that's directly. the we compete

Mario Lu

thank Great, you.

Dan Wernikoff

Thank you.

Operator

you. Thank

with Credit Stephen Our Ju next Suisse. from question comes

Your line is open.

Stephen Ju

much. so Thanks, Okay.

well. I'll So, congratulations my add as

the question. guys, following-up So on tax earlier

new last I October. think, Advisory products subscription out came Tax like you with

So, as and like of far. you're Thanks. you rate has like go tax adoption around kind so incremental product seeing. this been the rates offerings, it's that widening path of What ARPU in perhaps your what

Dan Wernikoff

individual we're attach ARPU. we Stephen. But why of what is on AOV between Yes. one go rate up it there in times tax rates had. We provide will one and and relationship on reason not terms question, subscription I cart to been and tend the a will is tax Thanks for and products. the And rate often actually because our the the for how mix what solving down that have will say go depending surprised the is by we've of

that wouldn’t subscription an think named a of when tax have bat on rate. think you LegalZoom, par rate attorney attach that's noted with our would seeing product for company I've I off that the before attach legal right we're think pretty much necessarily similar you which our rate tax this the a

us one feel relationship cross with start start base. now doing in here testing services. getting have and expert I some it way. here and really we're the of So, are the symbiotic to helping put confident our in probably interesting access opportunities doing to to expert is too think it sales primarily of terms when that We providing other a to outbound feeling of about do right continue of early reads showing the promise. to and once success We're some feel initially customer started by are. in where the one of there's things itself. we're you they're we And just we're you we there said support the other you of product how We lots is between some helping helps you business, start is have And like sales increase lots attach the you to this there

early the good. I and think but in journey but So, feeling very

Noel Watson

add Yes. that with to And just that. maybe to

in way have of the all the perfect demand that sure consumer protecting One focused as some really issue the up to the sure that on our we is right the formations are investing tax good demand, now important It's entire we that of before ways many really get we're actually we're focus get point. throttling unload the us business. is on experience scaling whatsoever. and that we in attached make of in do meet base. and the really through here for We we're seeing the no operational side operations making demand we a Yes. Right that cases around and experience sort actively to flow

little just sure the ready that so, see a there point to And experience the it. the us close we're perfect bit for broader you'll there's to on testing channels then do the and getting that customers where go is that we're channel at insuring and as and is making point working the really

Stephen Ju

Okay. Thank you.

Operator

William with next Thank question Blair. you. And comes Matt from Pfau

open. is line Your

Matt Pfau

at line my Can I to and partner the give item ask for great guys, you become thanks update in And on program. growth? you're us contributor revenue that that more just revamp could a on an where taking when Hi to question. results. wanted of

Dan Wernikoff

Yes. Thanks Matt. for the question,

time is one revamping lot this probably progress worst. that looks a most done areas the the I we're of partnerships. and think with that think made yet I the the of everything we've Because ways same at it in we've

to really necessarily quarter, strong bidirectional all with brands really four different to rethinking they’ve are traffic them our back our be We their brands also we customers. willing of And that brands. relationships didn’t us. historically customers and offer this to customers. were to offering one-way signed partnerships more tactical have of excited that bounty, directly brands about market This how just directional somewhat last we’re bases large with that the So, to established been but services couldn’t on actually

a this doing they All had that historically pilot early are things solution been type of of of very now just by we them, the of this conversion we're couple never or leveraging can for see immediately I it the right can you mode data And the the results in also we're which see one almost improvements that and targeting is but have would of offering in done are. say and them strong. the point business you at a right cases

make the again with. these back companies these testing, growth relationships. almost hopefully slow bidirectional year-over-year up But because an area more build flat being rate been between are ratable most our will Flipping there's partnering more who of to are again accretive of to the we lot it sure There next experiences good in in terms years. is its this and be of of has rate. it's couple a want a again growth to where been So, down to

Matt Pfau

formations. Great. on And follow-up to just business want the

look your in this business take to continue half did first estimation? you guys or of direct quarter you the can the formations As year, share of BG

Dan Wernikoff

one of decided And the interesting. and we've Yes. things it's actually

directional a So, data, census is macro noisy. also people indicator at date EIN the look great pretty the it's of that but the most

requires it who've those trying For account EIN. through a be been typically it looking which that are data, And to get of that inclusive loan. it's has an companies to PPP bank a at processed

you might So, need entity. you an but the may EIN formed have not

If your hire and you to have you an an get you employee you employee, EIN. and you to first actually have it's if an bankrupt, have go EIN,

drive to have a and regular value term said our take strategy this an feeling the about at things annual year. before, to basis. how on these that It's but, want it macro kind We'd are which have. So, doing are We we data probably choose are will and good something consider data. of proprietary is true businesses I dislocated not that's from that secretary is forming and And going as things release basis. that state pretty don’t like to are share whole looking it through on we we're

Matt Pfau

Got a appreciate guys. I lot, it. Thanks it.

Dan Wernikoff

you. Thank

Noel Watson

Thank you.

Operator

The Andrew Thank comes question next JMP Boone with from Securities. you.

Your line open. is

Andrew Boone

spend And it Hi that? a but do is guidance biggest didn’t probably Understood understood Why how and we guys, profitability aren’t spend think dynamic is swing with this think the about thanks you taking for a more wide that marketing XX%. based and it's done there. has I the questions. guys we're in about all for currently like you environment giving

Dan Wernikoff

that? Do take you want to

Noel Watson

Sure.

Dan Wernikoff

not. better I

Noel Watson

majority your guard vast a mean, from is wheels so uptick. ROI spend, we're the -- it ROI up year-over-year against which was point based acquisition spend. our the allocation We performance and for it's spend I still to to massive Yes. setting standpoint the thanks is and In is marketing XX% a for and of our Andrew question. customer

opportunities up. the approach make we that opportunities that continue that new base for ROI longer-term learning of allocation sure spend We is it. can the to see testing so The keep to into that on are we there dial kind and for are for can channels an we we more us will tweak taking stepping as different we're or down up aggressive. And also we where be

As opportunities we're to partner other which things efficiencies. we're to learning things we're that that like we just relationships are monetize our our attention like the attention sure expand through customer creating paying LZ And LTV through channel also, our to conjunction to Tax, making in to paying and and and looking grow.

equation. And material opportunity, we continue to plan do spend. That'll even up aggressively. marketing our that additional is some become so, our as Or allow LTV overall to those to stay monetization spending visibility us aggressive more into our in

Dan Wernikoff

we return there, sort are Yes. the different channels, -- thing interplay because at marginal new is we the channels. add we're and entering lot measure we really between of I'd the cut and also that, on The only look of a well a spend twice once

And up to add would is on we investments and the is what make in But should gentle then going also to I spend smaller a that scale. at just different I in we are call percentage And partnerships for there on spend that the because The a just basis can one thing lays looking there we're where And in areas brand that. almost would is and increase that measure see of its it's a sort marketing dollar start what so, up. spend basis. then you continue reallocate looking and more awareness.

One businesses and high you squarely your small business. starting concept destination, platform, still that but we have you of if ask we're lower the a of the that what our of do, the on awareness focused the understanding really a bigger being level place this product level of get have, to form we opportunities we

we're for ways looking that arrangements. out way get so, broader a through brand to And in

the And back a bit activity that the of year. half so, see to little you'll more in start probably of

Andrew Boone

tells Okay. That question. thanks. nicely And and then very next the

that Do from LegalZoom to to what's online? you big that and just fact offline quoting assist the faster getting people of that step the is given awareness cheaper than just function think a versus piece unlocks or hand? how versus hurdle biggest move is alternatives, So, education

Dan Wernikoff

Yes.

don’t is knows formation. there like not anybody it's a There's things, category. which of think around mean an really little this of a about category I I defined is I business those component think awareness this

knowing And the so, just able we who establish they to some you having doing we're they'll people you like just really will product need that, into trying of if problem, of that's them attorney. backstop that most soon on their a a that if may you'll have run the access them. establish it help and attorneys be fear an again, and And as don’t that. where But have require own attorney feel to people try as available

people's is acceptance of spend. And of part and category of what ecosystem so, together want more on out we having two to be that our a are But ecosystem obviously going and those important. them fuel to then team drive factors core really be part extremely the with putting are our our

Andrew Boone

you. Thank Great.

Dan Wernikoff

you, Thank Andrew.

Operator

The you. Thank Brent from comes question next Thill Jefferies. with

Your line is open.

Unidentified Analyst

thank Byun I of Thank have you. and how proceeds maybe my in This could peak year to a you you is us delve remind Thill. John to product due are you. And or then quarter near-term, terms into One, investment, factors. two this of what the not for between biggest should it different Brent from if in be maybe expect other priorities then, questions. the COVID

Dan Wernikoff

refund we where people it's Yes, money year of an consumer a component tax of seen John. their the a the you, for sort a that the at tax start see traditionally becomes Great. the refund seasonality beginning almost get of business. people new business, Thank and we've seed lot also the aspirational

end really was QX QX the weakest back momentum. one was pattern natural seasonality. to through of for year normal we been for of cycle QX of we it sort formations. to to off the the at some we've quarter year return And beginning the with in started accelerate of this see of that Last it's COVID. And build lot the of way a until started quarters, there got it's it of the up, of opposite April kind all being rest see year. QX QX you then and So, the off generally happens peak lowest is taper with exact at And the QX.

relative because where it investment around the lot today. idea secular encouraging I actually our core that to use. I was what easier we that mean can now. our From we to products This product normal framework FY'XX the that's is a tailwind form in in level think so, whole is that now a And do and the we go back we're standpoint, which I'll being of to in of businesses There platform were of launched seasonality a again gets we new seeing site. the core the again at year, redesign different to a completely

we made experience also And conversion where purchase that where improvements My call we can then focused now and completely gone of investing your since ecosystem hub go responsive it Account, parts experience on-demand. We with gets can post you as message year. like the saw been we've experts in throughout then, where recomercializing your with the we're building with LZ in we've now Tax with engage schedule we're or quickly and and a new mobile it also pretty this you experts creating in on formation and our

can are is services and QuickBooks is company. to up get business the an a now which that and different we value regular tax say a bases extremely want in seeing we the where LZ investment, invoice place offering relationship where probably right too they're of service one full see essentially coming You can investment the I'd spinning back of on that product events be we big getting tax terms wholesale again the forward stash But Tax the on from filing, to where compliant you your compliant happening in are start offer. site. that Online within And in large tax customers

that's other doesn’t is go a I area investing that we significant one today, next LZ So, can want the our we But be one. of before there future. really stop where right We we Tax. adjacency to in to investment. that opportunity And get areas really think at think

Unidentified Analyst

Great. Thank you.

Operator

over further closing we're at And like Dan I'd this Chief no questions Mr. currently hand Officer, to the time. back conference Wernikoff, comments. Executive for you. Thank showing to

Dan Wernikoff

of journey in thank of want Zoom'ers to to feel It's lot just want I work a guys. thank Yes. the out broader team, obviously to Noel like keep we've business point. small it's the dinged beginning when quarter. the deeper I work excited been we're you on get to innovating hard And to to the business. the we're And at the into the forward done who've really you road way. a catching I excited with and this look of to get really all to and there back here. they'll very next go public all in up for

safe safe. Stay we'll be soon. So, everybody stay and talking

Operator

today's conference for you participation. concludes This call. your Thank

Everyone wonderful You may a now disconnect. day. have

LegalZoom.com (LZ) 13 Aug 212021 Q2 Earnings call transcript