LZ - Earnings call transcript Q2 2022

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Operator

Good day and thank you for standing by. Welcome to the LegalZoom’s Second Quarter 2022 Earnings Conference Call. At this all, participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. conference recorded. today's advice be is being Please I to Head your like to of conference over hand the speaker Relations. would now Investor today, Danny Vivier, Please go ahead.

Danny Vivier

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

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

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

addition, certain also non-GAAP discuss we will In financial measures.

business prepared substitute Reconciliations accordance not regarding intended isolation considered investors.legalzoom.com. GAAP section with Our these helpful comparable our at are GAAP. non-GAAP measures the investors. CEO these in or for The financial and most to in and Relations non-GAAP in all of measures be Investor results of we forth believe our as measures use are a making set decisions to to website provide information to measures directly CFO measures the

Now, I over the to Dan. turn call will

Dan Wernikoff

transformation. everyone. afternoon, LegalZoom lead ago years to good almost a and to came three I product Danny, Thanks

it. that strong COVID we to from journey tailwind detour. We took and During clearly the by created benefited pandemic, a leaned-in hard

for I'll me. in are our up at more a the came first about material down in to in to more a weakness large accountability win outline year-over-year, Today I that to revenue squarely ahead a also actions opportunity is million, along market in our environment brief was our look QX lapping needed revenue the this spend very share reminder a In adjust we blame that a environment, transaction I'll on and sharpening I we growing than reiterating how current for to issue it's focus, $XXX But the how give today's I'll now offset that results. untapped while in comparables inability period, the our don't call be see the clear while before. different As is macro COVID with clear clear markets, to different revenue on ever product in bit adjusting and by earnings QX the X% caused are we products be short-term, talking gain our are want the I XX%. of today's to overview subscription long-term. performance,. environment. difficult, a X% to while place Instead macro call, time

the Information quarter, U.S. down while formation was Data second in declined business the XX%. Our XX% Census

fulfillment. force marketing spend. shift approach, more quarter. variable given million in adjusting to of reduction second in the cost costs, efficiencies, automating demand. In $XX and to been durable a product our order critical conservative adjusted approach we we the process, our mix post-tax more outside the expect quarter, near-term. environment. a season, conservative are focused to to actions quick down staffing we're roles, the experts external funnel forward efficiencies reverting faster levels to and order completed hiring Adjusted reverting the going drove During variable down marketing to and driving was with manage most in we've primarily EBITDA that taking We're more a intra-quarter our expenses. strategy, lower of a align structure to Similar This We've driving in tech and leading brought to eliminate will

the We shares our current authorization under continue to repurchase during quarter.

Given in our active and the the confidence back the of are remain in we business, intend to half year.

into needs We continue That business, customers where the we we against progress need ecosystem, Final testing the of know especially, is this building innovating those scaling recessionary to integrating development. are, core to pipeline core environment. quarter, factors; XX% an and make the on of track. they the to seeking up against means the and test exposed attorneys an variant segmenting growth the at and a to experience. our in remains SMB tests of three meet During cost-sensitive lineup we SMBs experts in price. lineup have affordable traffic

ongoing Our the goal testing for be remains some of national a time. rollout recognizing this will end year, by

to engagement create directly SMB from XX% limited integration myLZ channel custom the of increasing with become created early channel. favor our In and was now services is when Wix dependence a workflow, into product an also lineup The business time, Wix of transactional formation introduce creating can are a accounts. increase the past, to new seeing a artifact is also myLZ. the of the We're outside of ago. as year this apply formation a share a subscription by the transactional address in quarter, to of to in of well. experience. some a formations second the of growth, with LegalZoom In compliance, customers continue rates, that customers reducing myLZ our are SMB's linking form after results while experience model. desktop an long-term XX% both a we'll learnings the results revenue, myLZ. need an them focus. in from is myLZ new optimizing on strongest great a to showing experience business Time their newly Priority retention, aligned those take created the new a the up mobile strategy Although as The account, a driving conversion on and cost with will mix and our upfront formation shift promising, therefore gains. website back will site example opportunity to hub and

exited services service And update generating soon with is our quick in personalized myLZ our to directly XX from second room customers their $XX over LZ any the improve. and to its million of there very site account leveraging tax. launched fully our finally, is base, XX,XXX Tax. clear information. will paying core And there's they and Having see life, quarter over This early effort a provide legal recurring a ago annualized without We a subscribers the months on LLC synergy revenue. significant between data,

season channel the Our during outperform season. stabilized now peak pre-tax levels. the in But tax rates

have was operational experience engaging with with more with To too to we accountants, what our first owners. process beyond Promoter outside that through learned, service Given interaction and in when challenges of packaging year completing of and opportunities make changes. that highest Net the we that SMBs the a also return And pre-revenue are to accessible we've experts made pricing, Score our deliver, have relevant pricing complex. but we any and the be the to engaging clear,

leadership attention started, hustles need this enabling than barrier I new and we'll Stepping of are XXXX. from we ecosystem launch business. lowering a the formation is continue We and it's turning vastly to end a greater also on there, this stabilized of of our in is just our when confident Tax arrived. We team revenue it company As is went Class than the to still the can entire that we do our of year. the incredibly the stage. on since win. We're We've healthy new levels. XXXX XX% SMB our tools is have are XX% ago, SMBs since reducing the XXX,XXX services side the Earth create health formations and Mail, expand to formations forecasted. powerful, I different a beyond public had better subscribers, above gone year to over and longer that changed. and forming the business. of The and higher more seeing platforms we incrementally XXX,XXX are further service. from to have macro. conditions Part services base to and attrition ours a due the work XX% in than Remote Business being QX than our and building subscription formation a with now LZ taking pre-COVID of X.X business and our close said and acquisition evolution about and million result, under we're That next of channel is dependence back view of was have to to do XXX,XXX Over are higher pace employee

from we macro tailwind have the a moved still headwind, that acknowledge transactional model. a business As largely we have to to

drive While we formation. revenue continue result to XX% our of attached still transaction volume roughly news and mix, the in of is improvements total a a to subscriptions

progress, that. the macro, our our detaching haven't made we back we While performance will made from guidance illustrate XXXX half enough and

position allow down we our markets Leaders the share us gains. be in as Reducing change and brand down and expanding on be year the more to reduction to marketing the have product. and scaling media begin nimble. key also about the brand measurement brand That's spending first in impact will spend During we doubling and for going talked we will our leveraging material IPO, revenues. consolidate The commitments subscription our transaction us will demonstrating efforts.

we our anticipate products. spend affects more, Additionally, agents less SMBs and compliance opportunities, and scrutinize as spend renewal for will particularly contracts, economy are the which attaching registered existing

from of reduction, these growth. are guidance seven XX% the With $XXX this million year-over-year adjustments, full we year managing of $XXX expenses a by are topline growth midpoint to closely. revenue midpoint reducing points or million or we Given X%

Despite hiring or we durable mentioned, eliminating reducing million of are revenue. increasing CAM, roles, drive platform products, are we EBITDA investments only I we're critical to discretionary $XX our most the limiting and our that to revision, X% full guidance topline in our accelerating efficiencies. adjusted spend, primarily year As

brands responsive environment. rest err of more expenses, the share be on growth with the to and primarily efficient focus us side in of product-driven year, For the in allowing spend, nimble gains, our will this to lowering being and CAM, on reduction

been We've to we expect as we on our work future. risks in mentality. Given I'll a more to of us We're and strategy small focused the We're begin more share EBITDA an margin that XXXX, we and that been changes dynamic lineup, us entrepreneurs result call to try a and of with into XX% sector rotations seen front last and grow seek to evolve the over inspired to work. SMBs delivering years The unprecedented also will an doing the the understanding the the of industry the these environment make gaps It's control businesses. to businesses, while all even in team to to adjusted the innovation, time the by new COVID. a we're of a spaces, with run have the to competence same in we a model, for growth. half unknown by growth product-led Noel. we they within. the that, critical of ingenuity operating making in to that with how period policies opportunity feel than changes, LegalZoom rely new two drive We And We've with XX% what ever and and due build. can. on are as strong of hand in while seen their I'm that COVID fear stronger formations in can is in our transform unlock adjacent the we're related small continue economy, filling business with and growth, and adjusting the to continue we evolving innovating evolve it changing business how mitigate

Noel Watson

at of of outlook $XXX I'll guidance Dan. million, remainder top the revenue the quarter our our of a Total up today came performance for period at X% Thanks end our afternoon in end year-over-year year. Good the everyone. in with and with start in GAAP range. the second review the

with prior came trademark typical transaction down order second quarter, compared products. priced the quarter to value year XX in million expected was the the was the sequentially and formations a of same year-over-year Average line and our from up in an X% continue in patterns at We due year. acceleration in in As period as the XXX,XXX down lap business business we Year-over-year DIY AOV QX, revenue discontinuation formation. last challenging in to XXX first from the of seasonal fulfillment XX% X% lower business. surge completed at comparisons

primarily rollout year-over-year to driven of expect second premium by Going offering. phased half, forward, our in the AOV the we decline

growth in third the slowing we've within million, compliance-related year-over-year. XX% revenue macro our volume cost up in of formation reduces among year-over-year. significant perform introduction of also see believe second at SMB subscription core rates on transaction That products, customers. without we which our The in increasing materially gross next As second quarter beginning French of XX% to $XXX additions, and quarter, the result these is continue to the up turn share drive our into our the subscription We're retention expecting which discussed, truth of nicely driver in a was slow to spend offerings. quarter pressure growth coming $XX for as ARPU expect we we beginning sensitivity of volumes, are and particularly of and impact to Registered yields the revenue. in environment year. Agent number said primary the Subscription

growth strategic We is of the in as share subscription similar thanks revenue year-over-year direction. of Partnership longer the higher XX% to our million to Earth legacy a down expect like in in LZ with and becoming second ARPU quarter our Tax back Mail partnerships greater the Class services line year business. no lap we $X half

We partner the revenue on remain an remainder the of year. steady dollar basis expect for to absolute

Customer was costs revenue year-over-year, $X QX Slight of Tax. by Gross in of the in a at turning came we've quarter, driven approximately X% the Sales was XX% margins second down marketing not in QX year. at year. to year. of the came supporting in last of in expenses from LZ periods $XX decline acquisition we accretive of CPAs that up of where largely revenue, non-GAAP in $XX incurred last investments half second all incur up XX% year-over-year Now, basis. expect to spend and our XX% million in metrics costs the quarter, following are million in in-house of second in to million, from or do production on made margin approximately the the prior XX% grow

stress funnel of were and which environment. absolute were below and allocation. million, [ph] spend in in largely reduce $XX navigate degree to response efficiencies mentioned, back the channels, operating spend Dan Technology year, As the general pivot media second greatest inter-quarter our and to and flexibility of basis. our the us We provides administrative expectations, an development spend due on believe to to lower direct the plan was we and million help uncertain spend dollar out $XX both quarter kicked half

quarter, for fall of we the Deferred our cost continue $XX activity lightning. We quarter, the million spend. execute In average on million managing compared second largely to revenue EBITDA our also declined of quarter per rigorously $XX.XX of total repurchase range second the to share million discretionary was million. the the a our shares at and we XX are in authorization. stock of price the an in $X period. repurchase only repurchase guidance expect will the non-essential our ahead XXX for share critical of hire top total common a We're million million reducing dev We to fixed at and X.XX limiting roles, which new of XXXX. in of most tech on structure Adjusted $XX

in repurchase to shares quarter. continued have We the third

XXth, cash XXXX, no million cash have of June debt of and outstanding. As and $XXX equivalents we

call, comments of on quarter specifics the earlier guide As drivers revised on down I'll key full third in Dan guidance my to year our our focus XXXX. and hit the the of the

million revenue or of million, growth $XXX year-over-year of XXXX, $XXX to midpoint. we quarter third the at X% expect total The

impacts growth [indiscernible] in We rating. to expect QX of quarters and first seasonality. retention slight rates, multiple from and subscription declining revenue driven toward LZ revenue Tax outdoor and tax decelerate LZ year volume, pressure skew half Tax by of the the formation a

of or EBITDA adjusted to XX% revenue We the midpoint. $XX expect at $XX of million, million

for are spend non-committed As we Dan quarter the third grand mentioned, greater to in pulling flexibility. allow

quarter, continue spends customer on respond in we'll review market expect dynamically We to third a conditions. the but declining acquisition based

For year or X% XXXX, total million the revenue $XXX the $XXX to midpoint. expect of we full at million, growth

$XX or In we are committed our XXXX, EBITDA infrastructure leverage expect of the efficiencies investments expenses, We managing up midpoint. revenue adjusted and on margins. driving X% our million, at from our realizing to focus at

mentioned, for open delivering we And Dan with the by As adjusted to share expect XX%. let's also grow EBITDA margin call XX%, questions. of while that, an

Operator

Our come Instructions] question Citi. [Operator first from of from Ron will line Josey

Your line is open.

Ron Josey

forward? want can taking on a growth about formation question then then national sub I confidence formations do guess you happen gain needs the being share what picture Noel. share of as products you to half around down? to Dan, comment drivers And that year in in overall you. bigger these Thanks is share turn macro launched to gains in in achieve just two-part on and on new those Noel, growing are and just the last back what for just on that more the maybe Great. the going continued rollout decline to talk to So, lead materially results Thank maybe think might follow-up One was question. this expected that overall, the you to business gains share XXXX XXXX. to maybe slowing I gives

Dan Wernikoff

early that and on yes, customers an Yes, reflection we've as that when types lineup top other and that the able scale talked the a innovate are a we're to which demonstrate question, driving in is the Thanks business. we the Secretary is gain premium The we would premium this the price, brand pay we've customers what be share see, XX%, there's past, other and we're we first efficiencies And lineup, we many of big that able our it's are there they Ron. which to know a of ensuring this that just, is willing margin two of also had DIY of is One can is out that do And solution. costs is share we XXXX. about of gain. know with what put for a to premium control, XX%, there. State. But point, we goals out to on we the for on thing

expertise component expertise from who then can't we a So, there's want are cost-sensitive, people And to lineup. the and extra who premium but separately, they there legal have are attorney, guidance. -- an afford so really seeking but are it people some

And we're that with group after going lineup. our well the as so components premium who

sequencing control, We So, model. lineup. gains. and in share see subscription and read of see mix to see we've a that more And again, our going we're -- early different states. getting testing which transactional a And versus aggressively positive. this existing relative growth, different is We is indication confident. the been very variants us customer making the that's model, today's all We towards shift, we're

start of giving is higher seeing see to even today. instance, to components it, acceleration, some test, than at some which mobile, look a So, us rates the higher in we even do have like we're what when to for see we of conversion you what indication

lineup a see reflection set from expect So, in of of what next market yes, going year. it's to be that to a are and completely new offerings a we rebuilt

guide, of what that's I'll mean, things. that really think of in is of as I multi-layered. a been have, about peer through maybe And And then think couple into go data question our we as walk is macro, group going some well. the different a done, we I that be the just half. is happening there's sets to back we've a thoughtful this we what we've On that's

little off, than expectations visibility So, a would have we one to macro haven't softer talked first as relative we things is into the has itself, our thought that it the dissolution. we about also be. much But just been of

have down, can are overall prior calls relatively been this been some while see failure rates. been in And XX-month going forming, retention not older cohorts also but only we see has businesses going our of up rate talked and churn that And so we we remained can how our has stable. about has

you of cause year, renewal we our of still an have the If but root end data through that, about to really at think process. it's the annual last have because subscription peaked Dissolution that work from dissolution. you

or good And XXXX. is, The dissolution so getting still lower rates been some all we're the impact of some than that play they throughout out. headwinds seeing of news are had that

well And are that And get impact before that I'd we we're of you recession. so anticipating aren't we would how as we're will we attach to metrics want how some bullish one, we be our the piece then well. the that have say think on to a considering retention if we see about and that the the resolve as that start last And macro. guidance, as already that in of metrics have in we some itself,

us maybe conservative, just the turn little little view corner bit And a so bullish see about and that that's of a more point macro. being but we before to of stabilized the bit completely want have we a

Noel Watson

to just wanted on comment Ron gains. earlier -- around I Dan's just And share build

also growth, revenue note, talked because SKU. off customer the is growth, a order free of willing where about we're subscription. example the average formations this trade benefit there value, being a for transaction we've and And is trade and an with to off Just incremental offering

ecosystem transactional And been out revenue. upfront of so trade-off in leveraging side of building at that the value, drive to customer really the benefit long-term subscription help we've it's the the the but

Ron Josey

you, Dan. Thank Noel. you, Great. Thank

Dan Wernikoff

Thanks Ron.

Operator

next comes Our Andrew from JMP Boone Securities. question from

line Your open. is

Andrew Boone

of data thanks It Two the guys have. more and want like please. sounds in a guys of questions. you business seeing terms are macro. you formations deterioration afternoon, I Good for in the my of terms to understand taking

look this down July you morning, was Bureau of, X%. kind Census at recorded If

your you of just in help Census available more there? terms much. increasing Bureau? marketing efficiency? what that? something changes just And And to us So, going understand publicly seeing you Or we via are so basis? are just should think Thanks Can how guys go-forward what on different what's then about efficiency plans about than talk the a

Dan Wernikoff

there there mean, published what noted a answered, see saw we We've are we the in definitely on decline. macro, also may slightly And than just there's be the Yes, lighter we Andrew. redundant it anomalies yes, Thanks I on bit the expected. I but little it with had today the census from and was the data. that that census a was a data X% month-to-month, reporting macro

if the much was prior you So recall lower. month

we I failed, existing we think we point have. of that of the have some about about talk think the as I now. and already add-on that a subscription. little to the accounting how of bit entity. of of Again, on some see be subscriptions or unique a about for subscription see we happening. reflect But are that. And example, data that data our compliance subscriptions renewal. low a they're a a it he working is our then way We a that, consumer you're that their are little formations that back on, is our $X,XXX bit quite have good we through is news unique foreshadowing it, two, annual are to separately, and that thing year. their that Noel's right to probably, looking business quarter will bit we mean, If is around see very sort relationship have half when we're renewal we're more conservative added and subscribers then between point talking bit the Small little not starting an mentioned, little as are is a because for dissolutions we're and we're point high a retention ARPU. of mentioned is I us I thinking a business some of in And just, dissolutions. and I sentiment And the reversal we that probably

a do we if to those there environment. so is be impacted recessionary type expect And

gains, long efficiency working time. the been we've for at that's On a something diligently

even Before our into market in back a we had we everything office. with solution, to could knew premium automate we go the

accelerate, to And a expected, they provide we we are than we've little project can to bit continue should less of the better project sense so of of the working which really customers. that where going on just season, so That and we're to customer we've straight-through know businesses we and And and small experience and actually CPAs the invest curve. also we always recognizing to a leaner run of focusing grow we there's gone return, product on executing terms number good that. the really now mentioned support flow that, so to the areas than a grow. they efficiency, But And used the we and compiled very automatically much can Post-tax not processing where we is much when our they tax, in much additional outside what as the the We that And be. is for because State. automatically experience processed expect are kind been there efficiency. of really be the season, technology customer which we orders now for were on OpEx we're for considered that. Secretary solve in we the required not now of in are orders one to to And have continue faster place future. but has through first then then point need

Noel Watson

did quarter, the question, nimble modeling. uncertainty, into in did just the we quickly spend into channels, marketing given which macro that this changes the wanted the to given we in be so did just uncertain build we mix media some and create quarter headwinds some reason And performance we more flexibility dynamically. respond actually inefficiencies to can that experience we in more Andrew, And the efficiencies been is to just just environment, our marketing -- our have historically, we shifting react In shift performance-based quarter. we we've can back as started this to -- on the efficiencies and

Dan Wernikoff

sort modeling thinking before, seen we actually very spend half, But down actually, look brand the media more spend. means was terms spend, And And history. just looking that back back mix is be Yes. heading want a that good you're returning new about of what our at really means modeling but environment, have if mix in specifically. of in that cautious as we like it media into bringing of in to

Andrew Boone

Thank you.

Operator

our moment question. One next for

question of the William line next from Pfau Our to Matthew comes Blair.

line open. Your is

Matthew Pfau

Wanted the guys. retention comments Thanks, more. to a into little dig Great. bit

the mentioned factor are you that one that's driving dissolutions higher. So

the just higher expectation you the was tax that in driving sort churn than higher prepared cited have? that the to besides in Anything that also seeing else attrition I general the have macro think of concerns remarks, was you're expected. half it back that's

Dan Wernikoff

Yes. there's just mean things and I I is replay think of mean, that really couple I a dissolutions it. interesting. I'll

We haven't unpacking. call, actually unique. dissolutions parallel. so hit, usually it almost X% worth to saw growth, formations probably They when really COVID before macro we is in on which -- go talked about it's move the or the accelerate When in

stage the stimulus. little propped healthy to they got because you really more is up of which like As bit stimulus, feel of of also both were a late fast, growing but a we environment,

of in got actually, the to then end last formations going but was year, was dissolutions the growth we down, As going up.

period see building of and environment, that dissolution kind and sort out of that four the impact that's that's a And of you quarters what of worst post over rate. we're right can now. so

better the the healthy as Tax we things attach though, that's actually over and we so the we was those we of to little resolve had an as offset good differently. is we thought. always which becomes been can going attached we And as what little a news customers experience than much providing much people know more thing exactly months. strong happened. not XX reality got issue month were to this, So And down. expected, pretty cohorts, channel, need larger. would result we because different. we a The two and bit is but then was one do a are it's retention we I bit overall for say performed to has the understand there pretty builds in on there We tax. over And is, meaning profile. rate showing actually LZ the just XX-month time, that way that's the XX We've about older rate our retention down, been impacted talked it

Matthew Pfau

terms And follow-up helpful. Very of it. just guide. the subscription one Got in

if So, growth. sequential just took in seasonality second quarter? helpful if decently assumed believe back of the be year, understand in revenue Because subscription subscription we cost Tax us help would be the growth -- maybe even XX% of it could how half no the ahead you we LZ would I

are what second to from in revenue to that subscription components fourth down the and quarter? relative perspective, third numeric that be sequentially the driving a So are quarter the maybe

Noel Watson

prep. the is timing a But there's tax of fact we're not specifics, that tied Tax going timing I'm the relatively there talking recognition drivers, Obviously, drivers. just the some dollars because break a we're Yes. overall. small few revenue into that out component LZ still to the sure to was of that's

the -- our slowing And of so there's see and prepared additions to side. heavier flow remarks, our our kind as growth you're an QX. couple the so reflection and you lag formations QX -- a our in a seeing some we is business slowdown flows and and bit of business, growth. of reflection core of revenue a On in of terms a as slowing through talked it. you it our period start of in also that of prior That of that our last important in the quarters, the into on But slowing to component is gross of formations it's what see a core subscription

Matthew Pfau

Thanks it. guys. it. Appreciate Got

Operator

next Thank question. you. One moment for our

Stanley. of line Morgan the from Elizabeth from Porter comes question next Our

Your open. line is

Elizabeth Porter

Great. could costs, tougher ask and just kind Thank focus the product needed. that's that the in over are demand year. last the wanted really given risk lower CAM I the Or What's impact education to controlling to the of the kind see new guys solutions the encouraging has nascency having today despite for of environment. about you market matured lineup? the Thanks. the you market so of much. alternatively, It's But these on how

Dan Wernikoff

Thanks for the question, Elizabeth.

outside control really is can of a And goal, reductions think to -- be we it. that's will vast combination of of where around margin an back COGS reductions the and that also through non-media portion going and Just the spend, efficiencies it a it, which thinking also marketing area OpEx about I tech. majority

year. creative year. won't be We have back half in deploying this We probably of this it production great some the

to significant to a we there's like amount margin not to. required it's get that reduction So expect CAM get of the to actually next year

of say I and you it's at already what when demonstrated with funnel, And very I to So pricing. a the still important. that are LegalZoom, when think about this think we small drop is get would think really we've important, get the looked you the see we biggest having most number we But portion that areas probably that is is off testing to our And we through right if people offering. complete. of down them controllable start who

to And the so funnel it's really think that going segmenting completing more exactly our are. already orders by through opportunity that so they meets the share, it them when offerings, are the about drive we where

lifecycle. ecosystem you're as cost, you throughout monetize into time we will get possible low to as if and So our easily and them their started want over

for today, don't just If and front that. offer to center you're looking in an attorney, also those And capture want our we we lineup.

I plan our product it to make certain we're first is years innovating in that's a couple But at sort sure been gain. market. always drive point of make we So the that of the let's was of sure to is sort really share develop think,

Elizabeth Porter

product the or attaching solution, early, the product? pretty the solutions to on partner subscriptions, how And Great. understanding reads lineup be might free and then the of paid relative still sort on early it's on free but segmented any

Dan Wernikoff

going -- it's same Yes, a tests have And different great the at lot question. we of time.

see overcome work. way, the want it, without definitely to would to aggregate. customizing is these time, a we talking customers that it's it point we how just able customer. through so by to What We start that's significantly obviously exactly say think see your use in hard of it more the the And is, coming about subscriptions we want you're And they're bookings, driving a subscriptions. attach good rates, rates lower the number free the this, Over fact about reflect subscriptions. tax when in think to customers. because sort conversion we're answer. to overwhelming segments, specific you to to And how it's But where of would but as be the also to you any we higher maintain very of we'll I to give don't

So into really registered have subscription, lower coming you registered and agent lineup. you end subscription is would the off a targeted would premium have agent a who's

So thing is using this data, early versus off in starting at really and build encouraged. there's And we're innovate -- that's ingredients lot the interesting have it our we a data that to of and here is, looking specifically again, segments. we're the lineup out those

Elizabeth Porter

Thank it. Got you.

Dan Wernikoff

Thank you.

Operator

next question. our for moment One

Lu the from comes Mario of question next from line Our Barclays.

line is open. Your

Mario Lu

Great. taking the Thanks for question.

tougher your kind you. on $XXX sheet? in you first Thank to as view compared the advantage couple over a this plus of competitive mostly peers? you Do would the terms is you past strategy level describe How we of million would compare of an of landscape of more cash Or that in see allocation? the balance do your capital enter The environment. you how terms higher one as shifting quarters? macro And kind

Noel Watson

given We is I category our because our forming. keywords, And a from Yes, providers, the a also they more are aggressively. about XXXX into this year, both the marketing to think lot our was formations market e-commerce actually, at just And because they in spends that the what did of really spending I off. beginning take starting what's a little of mean, the but made in see players, directly actually like by into they were participation lot of to were spending fact bit businesses tougher, that pretty it's interesting even end were adjacencies. that's low -- starting think if you right,

competing short-term may that's and that to And and consolidating. exactly from positive, are anybody balance doing trade-off that about again success, offense standpoint, offering. something competitive little perspective. a which the and they but during mean, one marketing is which the a I So on the also freemium, sheet, it then we time $XXX be really bookings, lifetime bigger be do freemium competitive are only knowing say would to do one I but of The aggressive, almost at year that -- from this in we value. lifetime seen not And drive sort price, is flow bit haven't we're we're we're like And think made advantage. we're why measure can a more one also terribly anything we I cash say on a is a we think why innovative, a how doing looking playing things like value. million would is a there is may impact that that's

that very accelerate that has are awesome over but there there's desire to specifically are been team, talent difficult, of through our things hiring where So might But years couple to we an also in opportunities acquisition, product tech. I integrate be platform, do opportunities, that real it there. also think can just last roadmap both the into something our because

of are those opportunities both So us. for

Dan Wernikoff

or activity we there's opportunities be think to the heightened environment, probably this And going in on side. M&A

us so those way. come And our allows if be opportunities a strong do to sheet opportunistic, just balance having

Mario Lu

both. Great. Thank you,

Dan Wernikoff

Mario. Thanks,

Operator

for moment question. our next One

Thill next line Brent of Our question the from from comes Jefferies.

open. is line Your

John Byun

Brent Thank for Two is you. This questions. John Byun Thill. on

a guess, of the while what's actually, retention you the could trend of that? about drivers way information is expected kind But better a to So the been forward Thank talk a growth base to going or then to be dynamic AOVs if And how about positions? think second, more and on disaggregate relate now. on in the than you. I first going subs the, maybe the the conversion bit ARPU, to much the side, how between subscription kind for it's is of there versus from

Dan Wernikoff

Yes.

the to disaggregation. point before, to and So I retention there's of that's then compliance, I versus disaggregation, mentioned off up the tied been is breaking developed. and and an on the agent want entity little necessarily there's Mail. rate are Earth newer growth those phase moving they because in bit they're different untethered LZ those helpful registered piece. as the difference into core to components. tax get have subs that that And information I compliance think acquisition don't right And And we the you and now, if that subscription. question, maybe our know were being two which of Those rate stuff, I -- like more Class think formations things growth is sort and based they are But by dissolution. happen the early the that's growth the a the subscriptions between

into but seeing on quarters And so those seeing we dissolution what five describe means exactly the flat you're the core really in it. that what seeing reduced two. We're now And we're formations. of And -- is, growth both are strong or them, getting if you're is subscriptions a is what though, then we're kind from XX a how the of also stable, retention impacted relatively remained dissolution, we the there's hardening than the older churn rates, month have you just cohorts think expected. at The aggregate had underneath But by impact acquisition. is flat rate it where and better dynamic perspective.

AOV one. know don't you So that's want probably how answer hit if that. And I I'd the to Noel?

Noel Watson

Yes.

side, AOV say, and I and as remarks. would this the ARPU on relates it On to we touched our in AOV

on the we downward then And ARPU rollout on to puts half. to on AOV. -- year-over-year freemium we're and pressure that's as to would the that expect back continue that doing that and expect to And part freemium strength side, in SKU that our normalizes. down testing offering, in And ARPU. continue see expands free we with its be obviously the then due in We AOV

the ARPU. the through put tax, that -- will then of We on percentage expect ECM, durable upward LZ then some become offerings, continue And be provide that mix, to higher larger to extent are to that to a end and of continue pressure this year. which it the ARPU

Dan Wernikoff

to really it and the experience on tax. comes focusing LZ and Yes, down

a then to now, both those changes will the And are there. retention, improve that grow. again, And hasn't mix. we better of and do change integrate start we will right the acquisition being those opportunities to And So what ECM, yet of to begin we inflected. lot so have to we see again, made it, an number where know side

John Byun

Thank you.

Operator

participating. all we have today's today. for for you Q&A conference Thank concludes you. Thank the call. That's This time

Everyone You may a disconnect. now have great day.

LegalZoom.com (LZ) 12 Aug 222022 Q2 Earnings call transcript