- Earnings call transcript Q3 2022

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Operator

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

Unidentified Company Representative

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

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

filed a as be cause we similar forward-looking subject most quarterly the differ results and uncertainties upon today referred from to of identified These we as statements. call. Factors plan, or do required information, not of be forward-looking statements forward-looking on the anticipate, future of events assumptions believe, expressions expect, Such use relied a be not Risk Exchange of new will, Form to section whether and and update As publically as by and Commission. are These such to will recent on statements issued and forward-looking and revise a as results. statements are or should guarantee uncertainties that to or statements management's are performance risks making any Except reminder, press and with plan to today's date reports as us intend, our we a not release on and in XX-Q in future law, based result are risk actual information and can by and could otherwise. expectations materially this the Securities words of any such available

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

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

call to over the will I Dan. turn Now,

Dan Wernikoff

Thanks path the In the QX, we increased already capturing Sarah a established everyone. over few through and last while we outlined leverages better that have leadership innovation. demand product forward years, good afternoon, brand the

As product say I'm progress XX% of But margin made share EBITDA against to to platform few these the XXXX. fruit. of happy making improvement been and and XX% is years very To more we result, beginning the in there, momentum output product to we've still past stated over the a our both should it's bear you our time. over be see and some committed investments importantly, transformation, to are early larger accelerate product innings clear, a we've goals. but for a continue

partnerships. revenue against Adjusted formations Transaction results. of business on third weakness quarter growing quarter, $XX.X a acquisition Before XX%. lineup into third quarter. year-over-year. progress through QX $XXX of brief US million, XX% was overview increased subscription at the EBITDA our offset the in both priorities, LegalZoom up the down more getting gain in X%. period, while was QX X% our freemium and down revenue give channel a of result is details were share in while The Census came revenue formations third I'll grew testing in increased X% million this in

intense, focus drive will taken; earned a force technology; continue the we realize year. To funnel, tax result fulfillment automating six costs. spending, to you, process, lower QX, in our to expense began formation and reductions our which over of to margin product and core of brand we the channels. And quick our variable the primarily down for restricting in and is reduce higher progress rotating the in remainder we've months, Given past while actions expect remind to multiple to improvements this

highlights. operational some to on Moving

the scaling We forming small more succeed an as business, affordable we're their experts QX, We've quite heading variations to and are compliance our and us accessible applying priorities continue to cost-sensitive accountants. tests into testing into In variants. number goal free incorporating building most ramping vectors; advisers we're integrated and learnings of the attorney into QX. translate lineup their and as our providing product needs businesses, accelerating way, different more in core we three and these the two growth more three experience. SMB access focus and will bit a a to core QX learned result, business to the on new a making progress And important of Those with and into solving against integrating efficient ecosystem, problems our an SMBs. enter of

more our important To addition a and reaching our distribution traffic It's new note at declines In to times our XX materially through intent of the bundle roughly never more begin focus also offerings to points, starts, month our reduction, be lower others. product website, expanded FinTech, identity year-over-year. among also And number of own include cost with partners brand hope per high formations month entry premium as We measured traffic site month. in our this their on will services, data. marketing we've given looking we being in we've by product of remains result traffic overall a to as purchases conversion formations given show partners. than to we partners, any and and product businesses how greater which Despite through our to businesses have solutions, a formed to that had clear, spend whole down are census distribution overall issue. the as bring through measure

our to an expand opportunities largest cost from been accelerating The our to pages, efforts. and distribution conversion brand, improving is we evolving offerings, finally, lower rates. conversion. automation driving to SMB product a we're those through biggest consumer high-intent of opportunities have And traffic as Our improve

to is core calls This of a to and speed automation Net speed delivery improvements customer improve continues leads to to Score win-win core our is that Promoter continue Our decline. deliver rates driver error lower COGS. a as our drive products formation and of

the our our to we designed get Earth of to integration and ramping ecosystem businesses soon continue SMB flow and keep began to the promising. QX, formation unique Class LZ ecosystem, both renamed operationally Mail Virtual into results to off ground into In Moving them Mail investments, and compliant. we be build buy early look

while October, reminder, resonating small virtual businesses online are is business Revv As majority our at a on we Revv. need your collaborations directly forms right service. two the and document product customers. expert the offered on of accelerate e-signature forms us in areas forms form ability managed closed them itself investment; of our solution. for home-based the the help will signature have acquisition of that critical the address stored library, through mail acquisition send providing This and declaring time and of these with updating to our In enabling out and

XX% have e-signature an of SMBs shows for solution. paid research Our

their subscriptions their a the begin interact capabilities key where solutions and strategic this called integrate Revv opportunities are our new us are The myLZ, to integrate as experts, will talent or Next there potentially are experience. added capabilities also the establishes through also beachhead better capability commercialize into this being a to formations with for see in Insurance bundled experience. it ecosystem all the It's compliance Wix existing So, place and These partnerships, in product acquisition where of business standalone subscriptions. both the a Think product grow our we product experience and to integrated live as Bangalore, drive enabling single find as you destination application cohesive the organization. of a strategy into retention with to activities. our right to place we and SMBs now further

our our a In subscription. newly Tax, new priority, to experts. legal launched lineup with are solution free similar testing customers. integrating we Finally, remain This we continue critical to our evolve to advisory advisory-only for LZ third is revenue strategy. Experts a

of also this As an to we onboarding as deliver we expect tax first-use all season, to which support to with sizes improved intake experience a during and different we result, pricing, and season optimized better product built myLZ. tax and intend of enter businesses a stages, at streamlined have through clients year,

to early strong. but in continue bundles testing, line been the of hasn't our attorney We some include of read

concentrated new Stepping lower-cost alternatives, after of a quarter second very sequencing has introducing product for DIY deploy while a busy a a integration roadmap. become So more we quarter back lineup. second, attorneys Overall, the our or on deteriorating began adjusting to with year. significant made a progress in against was early it focus of our macro a we free deeper much this

natural to shifting in expense controlling made While we've and macro, changes efforts out the our which remain see view of the and course significant a vigilant we in we experience, funding focus ecosystem. of the in more The are towards yet anticipate platform reduce the the we deterioration many near-term future actions to driver growth. of as efforts be will our costs build our product to have

Formations products have lower environment we and accessible is again. including it's even why declined formations a for all year calendar year important businesses, more tougher more make this to for small expect lead which clearly It's decline businesses, to XXXX, our in with pricing.

that do that monetize the more Our be the we we've able with in through we actions can goal these profitability help will taken. businesses while already our to future. is to expectation now the of And today improving

are get in to we generation cost it through best the the in but over our benefit position, to position only our and set fixed With I'll it. Given go we past low long-term details. from that, improvements, competitive structure, leverage cash to the to storm, believe product the strong weather and not Noel from we turn the in expect

Noel Watson

last revenue above and X% compared came the to We to decline decline XX% quarter business year. other good the Transaction order sequentially and X% down period of $XX transactions, our transaction transactions. QX and down in in year planning revenue XXX,XXX QX, a in as from and our year-over-year million, the a resulting with total normalize. the in from million afternoon, units at today quarter at a was of up and the year-over-year. range. in Dan, consumer top down review up average year-over-year GAAP X% in XX% in completed were and by Average our property everyone. in discontinuation X% value. due the third our for XXX,XXX order was offset and the $XXX the formations Thanks, in with the QX, as value up remainder same a comparisons outlook and quarter, reduction decline guidance reduction intellectual units Total Transactional DIY the and increase third $XXX the of start year-over-year XX% formations end period in state from business XX% in in product a trademark I'll continued came performance second end in of a year-over-year

we expected to to in lower-priced in the team where fulfillment call, prior the provide impact testing well our of our of half headcount. year-over-year decline year also a the adjusted on quarter, due reduction rates. partner in channel as in as noted a growth mid-quarter As productivity as to wholesale we In AOV the second new we temporary our experienced line-up

we our freemium offering. expect in Looking by in channel AOV forward, as year-over-year we decline continued quarter partner the fourth again, driven a of growth saw and similar QX, in testing

the current XX% As previously cost revenue million. transaction expect at we free was market out share $XX price volume introduction of or we significant drive and Subscription a growth, SKU lower but and to revenue. year-over-year noted, a

quarter, higher The to offering sequentially service $X.X SKU as aligned third the quarter our subscription ARPU the turn we million ARPU LZ in recent in new slight Tax year-over-year. and of strategic the a registered a materially down to longer unit subscription In XX% year-over-year grow impact subscription flows, at the macro driver with decline gross now and additions, the expect for formation Partnership lower-priced an a and expect the point. up we but flatten third primary the and was integrated our have revenue year-over-year, in quarter, $XXX with introduced slowing tax ECM advisory-only our lineup slowing within compliance-related continue in legacy revenue environment QX have the quarter offerings. of cloud, We our also which partnerships no lap year-over-year as lower is to in we in sequential was XXXX. volumes, in formations agent direction. which in price XX% into growth and third growth the number ARPU reduces fourth particularly is

fourth the partnerships. We be on partner any fully from remain revenue quarter absolute in moving expect revenue overall legacy steady forward we an to growth as basis now accretive to and have significant dollar to impacts lapped

million basis. margin of QX on slight margin approximately margins, decline A Gross a the Now, XX% the in this turning to year-over-year. also year. in QX, third down non-GAAP down our costs favor and continue year-over-year XX% in of costs capacity to response a revenue brand as all uncertain from at marketing further was we but following expect and acquisition fulfillment development XX% was funnel Customer were Earth largely $X and environment. given our to quarter, and $XX quarter XX% X% or where on spend acquisition of of up in Tax the guardrails seasonality, $XX last we metrics therefore, marketing significant came expanded and revenue, $XX down lower QX slightly of LZ macro Technology in in reduced Sales our million, million are and added QX last and reduction reduce Mail. in came due expenses flexibility year. sequential in media from support plan at in direct as in related to million conservatism to higher spend to Class expenses our tightened the our channels. growth We of costs marketing from

expect due professional our million up of to largely hiring to administrative expenses our QX, We addition of this headcount QX, well talented as $X fees. expense the $XX from million were on as in focus acquisition due and and engineers year-over-year in increase recent General higher headcount Revv. in an continued

share compared to of of at million the to million revenue In million expenses base increased $XXX for benefit top quarter prior $X shares in Through of the $X.XX we quarter, our an XXXX, We of a our of deferred $XX headcount which of approximately total at we $XX.X repurchase our shares million for repurchased, in average G&A continued a of to buybacks have repurchase fully reductions. EBITDA share commissions. million, common realized quarter, million Adjusted diluted guidance stock X.X expect repurchased year-end per end range sequentially third period. was of the X.X of third reduction a completed $XX for a We million total of share the recent million quarter on third and the authorization. as our in count. of with $XX QX the total decline our price we execute represents the including X%

in the to quarter. fourth continued have shares We repurchase

provide no the $XXX year had cash for full outstanding. cash fourth debt equivalents quarter As XXth, of we September XXXX, XXXX. and and of million and now I'll guidance

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

to lower the towards first decelerate impact We year and year slight a revenues of growth subscription volumes seasonality LZ the tax first as by revenues expect in Tax graded. the QX in half the formation from skewed tax are of revenue when driven half

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

X% adjusted at million let's increasing million We $XX of the now or EBITDA or at growth For And EBITDA. with of expect the revenue $XXX of and our $XXX total full the midpoint. million adjusted XXXX, XX% We are of year for for we revenue expect midpoint. guidance questions. that, open total call revenue now to both the

Operator

And question Andrew Instructions] Boone with Securities. our from JMP first [Operator comes

Your open. line is

Andrew Boone

Hi. you my much questions. Good Thank so taking afternoon. for

other then change much. talk product changing How what and now You of me. just talked the are seeing seeing quarter right with XXXX overall? are you over competitive do funding higher in talk about Thanks about assets from in dedicated feel traffic terms Can else? about testing. at competition XX% freemium? everything you just private, flowing so you're And excuse premium about secondly, so the last conversion of where traffic far and the from prior terms of And you in Can with then to you tests? being rates, any environment you

Dan Wernikoff

Yes. Thanks Yes. questions, Andrew. for the

on say On different and into we're turn of lots any reading what at based see and traffic them off different the point, hard to is specific at have level just we broad level. test were it's the because that start side, what there's going, different us concepts. at above you'll off But we this traffic given test have refined of that the tests themselves. of we'll time times options. and a to of variations in be we're those XX% up many of pricing different where QX in that past have to concepts set We'll the consistently narrower ramp the And pretty we variants, lots do very really beginning been testing we with

pretty environment. that's So a dynamic

it like be to what's depends say And will so on because the of traffic happening themselves. hard the it's what with test kind specifically

mean, that, As I environment just this with do I what's the it to in what is to of cost we relates what which think dynamics kind with the want point, off, get been would is macro, I happening need starting competition we on and focus the structure. to right as first a to say

seen spent our it you've to thinking while still relates bringing marketing after automating fulfillment enabling rightsizing profitability. some on and of the dollar cost last even so some And about that and go OpEx or us that's headcount side, the increasing kind share to of of down, us whether

really so really you a a can go And to down those the important. be knowing road. customers more that's is customer consolidate we're confident chance environment, When in that monetize to this later and after growth, bad

we're focused what our that's on So really side. on,

of strong of a known. brand balance Now in we sheet. our draft ability that's of off brand. knowledge parallel, we the And also we have have sort cash well We're really generative. And that a really still have to

this what environment We and is like negative get that a feel win themselves it spending want some set have really position and think obviously isn't be best anybody when to would is we up which it's point, into go because people growth. more at I do, about like time better So again, to for we're this. puts long-term But this was to they, really aggressive for do funding. a during out funding and than the us profitability in trying

so And that's what strategy our is.

Andrew Boone

Thanks.

Dan Wernikoff

Andrew. Thanks,

Operator

Thank our next One moment for you. question.

next Our comes question Lu from with Barclays. Mario

is line open. Your

Mario Lu

Great. Thanks the question. taking for

if year. again is that last those macros to Obviously, comment terms you estimate. solution one first now. are points data. your I factors. I expecting curious declined if that soft of could your in next right about quarter, I'm on the led you formations was this the very The data any remember one in talked curious was of guys share trends just

Dan Wernikoff

for them recover, back started Actually, pretty normalized Mario. in also a being out a there and -- seeing of stimulus to Thanks which But to handed over and just the thing. inflation dissolutions Yes. to when think related was an we're good have businesses businesses failing was no formed question, that's path, is I being still there XXXX.

stabilized was happened a action bit. post-pandemic sort like natural -- dissolutions. inverse saw almost, where of there really it's we a now an that it higher has -- And So

back So that that's like we've feels to getting historically. more seen where

next start think I you we're formations about to If mean, cautious. year, just

look you on relatively of just as think think at you we that QX, But flat. being it's looking the trend if clear the If the getting worse. horizon, about in and current conditions QX macro are macro

a level see we something say We're it's that we to not at XXXX. we what so that decline, And be that anticipate. but in expect decline there'll ready just

Mario Lu

acquisition acquisition. in targeting to then Any sense. this factors wondering that to capabilities? of build Revv, just I led particular if you other could areas in out that highlight your your you're the Makes Great. main And

Dan Wernikoff

have you forms mean LegalZoom to last Revv. years, think XX about I what than the -- modern are legal about really we those if was democratizing But Yes. was over on, wanted XX, Really, less it forms be. online. founded them really excited

about forms just to kicking collaborative, off some perfect And house we external in thinking and them. were them fit. of at a we we look a significant so pretty how our environment customers, investment was to making started travel the And making Revv

pretty So It's platform whizzy forms, augmenting with because library can as well. flexible design. they bring keep a of it's them obviously pretty a it we a strong and

attorneys us those And small collaborative and easily now So you're need document and for with so clients. They're forms because forum to their which to which important is for we to to signed that somewhere can want creating e-signature incredibly adjust capabilities then you important when really find need collaborate it. access very through customize get highly you which have is businesses where you that it it is a we easy the will them. then store important them, form,

there's that really, is our can this indicative as great as ecosystem. about out boxes do when capabilities acquisition a and of a mean strong we're talk forums. I is well coming I be it very, very really all API-driven it's the differently, that's so think, So something solution, an in of to we SEO trying distributed

to started the help and be also manage just businesses and ecosystem business mean, we compliant. So do then want refresh on to the side, stay what their to I is help get them place small

other so multiple participate. there's areas like we can participate. we other should feel think multiple And areas where we where There's a partner

And investment be area us. going continue a so that's for huge to to

Noel Watson

piece on bit is a the thing, location help foothold overall that team to Yes. continue with on well us I'd leadership gets our there a gives comes that it engineers engineering down Revv talent to there blend a build The that the us structure side. and talented really engineers, cost to of out excited add there strong of and quality from in one it add really and as is with transaction

aspect of another that gets excited. really the that's us So deal

Mario Lu

you, Thank Great. both.

Dan Wernikoff

Thanks, Mario.

Operator

for Ron moment next And One with you. comes Thank Josey question. from Citi. question our our next

open. is line Your

Ron Josey

past back about understand to returning understand the trends go more seasonality And -- want broader to fluid your here. XXXX. outlook least want and on I the to maybe trends comment we've or at But guys. around environment stabilizing Thanks, I for I freemium. maybe being macro talked in and I just macro think Great. the just

is current the And freemium, to I stabilization? Clearly, the environment it trends been more question around what in they've that to improving interesting. stable? surprised operating on so, open then on the be And test. Any And insights just it us seeing guys. if wanted about just so that's you're you? what environment I'm talk helpful? I up more in if things you're you positive macro I know the be Thanks, second as seeing given think see just if what's just would traffic. curious so worked, early to might conversion

Dan Wernikoff

about Ron. Yes, and question, the just macro, numbers we X% it for the for X% down and was printed QX, it October the Thanks increase. saw a

So that it's not deterioration. are patterns. we're that seasonal seeing And a we seeing following it's significant

So that. what than this not little based whenever sense we XXXX, anything how we're we the macro talk we're specific out get of economy. forward, to want of we're looking our be to projecting probably more that off really a we'll a talk in when that's And expectations will about have the we for seeing what anticipate better more detailed. to at bit we And there's point, -- maybe guiding about

that reasons we As for relates lot from lot the share test share and feel that of -- but obviously I to of to expect really say we in there's provide would a starting a year. for not they're themselves testing, want XX% And see standpoint, in to we confident competitive process, a detail don't increase to the insights, it impact. the because extremely into you're next

deploying traffic to are and the also variants test thinking we end-to-end as which see how on want By in many just our and don't implications fully today you increase think knowing X.X% of We a in QX. start a limitations deploy way, was the it. we in of that from through this where portion saw and So, share, traffic. the to we QX, we'll

this quality, experience end-to-end and We we are want lineup. focusing to make primarily sure to premium back actually ties on the

where this it's So, we gets but it likely feel deployed confident at are different that point. pretty in we phases,

Ron Josey

Dan. you, Thank

Operator

Porter our with from you. Thank Stanley. next And Elizabeth question comes Morgan

open. is line Your

Elizabeth Porter

I so much. motoring. the be of may just like wondering impact slower came between versus kind on the the Thank had It a question churn. subscription new felt attach again formations headwind if you business adds out and and help Net this associated dissolution could parse I units. Great. overall you the was down

we insight think helpful? into forward how should So, subscription any would of about net be sort going Thank adds you. very

Dan Wernikoff

Yes, pointed down impact and Yes. relationship is point years of stabilized. this multiple getting stabilizing normalized channel subscription rates for the ago. or our exactly for we churn which I'd which main to level and agent the significant that Again, on probably macro of actually business registered of subscription couple of most you lap been you either are even to have now question, Elizabeth. at Thanks our our compliance growth, flat What the retention dissolutions that years the is XX-month between it's also our say a a out, subscription. is has is more what start subscriptions, our are

But And were so do we a that's XXXX. talked. standpoint it's from that's go effect, retention the just last much the compounding than headwind subscriptions again, they to better be we going continue think we to doing into a as and core we of a bit that have are

Elizabeth Porter

bit X% looking out we probably ahead, see as about is I Street of exiting X% it's And too then potential QX could at And about the know growth the revenue suggests headwinds accelerators And for relative some to fiscal Great. any year. XXXX. for of forecast? guidance but we little early put what a about color growth as looking could would or revenue to that think helpful be on guidance, Thanks. on sort you XXXX a

Dan Wernikoff

Anything out can our expenses we're customer that Yes. really, growth. come our how manage sure. you'd accelerate Noel? not we make think I with guidance ready again, year. in quarter add We'll this for we're to next any ready sure we at point, And on revenue Thank to and do do how be we focused you. next Well, for the

Noel Watson

think I our that's planning in -- we're process. think still No, I -- it's

a new bring Dan now Mail capabilities that the into about learn that around the big Revv talked the in. lot the have initiatives Class macro is just formations a free lot Obviously, some a there's transaction of will we coming in some that need the flow. think focus. here I and we in place our talked about We've still itself. integrated months of Earth we've to

on any guidance too that working year, will XXXX. into growth So, really for that there's of we're lots be of to us it's around get different next specific initiatives early but drivers

Elizabeth Porter

you. it. Thank Got

Dan Wernikoff

Elizabeth. Thanks

Operator

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

Your line is open.

Matt Pfau

taking my guys. of I to LZ unit. on Wanted that else call lot in ask out? questions increase for assume anything Tax, the that's thanks but What to specifically? Hey per drove a revenue subscription

Noel Watson

Thanks is Noel. Yes. question, This the for Matt.

been just revenue that consistent lot Also, equation number and that for on a growing in the share. average and we've it both having now about some is overall that and bringing per growth at Tax we've with pretty kind quarters So, formation of seeing the into in SKU of path there, LZ its ARPU. higher well. flow been of as ECM now A it the terms our of talking organically overall

the we sort integration a lower from our view for So, in LZ to to We drivers. absolute formations It's currently note LZ a at those lineup. Earth QX recognition a did well. Tax big And point have that's And bit expect a we flow ARPU one in of Class dollar also standpoint price now remarks revenue in lower an of that but quarter sequentially. in continue is That's out our standpoint. the Tax as and live. of to QX, grow our is are really -- flatten from a quieter Mail price

we the expect absolute to ARPU do dollar of flatten terms in of value. kind So, growth but sequentially

Dan Wernikoff

season, something Tax product we where LZ Just call, customers. not did good on about last is the for have to last on build pre-revenue piece talked that, a we the

to right much forward. an we've and subscription customers It's right versus the is a we're retention making what SKU. them our that product more going pre-revenue those here going solution getting forward. advisory for of longer ARPU objective deployed higher more price But much and lower the retaining so the sure And is around customers

Matt Pfau

to want gains follow-up I share Great. business formation. on the and

So, that is your a the share Anything to helped on premium out yet, the the out in you product you to out not quarter? gains you'd I majority that contributed but somewhat assume that gains. share of call the traffic else saw

Dan Wernikoff

Yes. Yes.

different was because and SKUs continue that to think free we I big component test variants. a

them well. of some And do very

there's of obviously Some that types of all all different and them do points. don't price well

we through works their leverage of the couple distributing a I'd actually partners say And a we're our some formation this newer which that we quite point, see of with. that really can bit our uptick a subscription. small the with our or we little product, more their a a the API product and mode road tailwind. bundle own at way us their own as are service partner down our offer partners gave well, we're bundled channel Also, any either business testing large an solutions. potential could brand where as in we and through that happy essentially service that's with that brand their API solution of aggregate channel, the way our with have So, And with and seeing core any but that or very a is have are the provider some in enabler

are those two So, probably the biggest factors.

Matt Pfau

you. Thank Perfect.

Dan Wernikoff

Thanks.

Operator

question Thank Jefferies. our is with from next John Byun you. And

line Your is open.

John Byun

the this but previous be to the Hi, might on you. wanted wondering John related Brent live, started how It of went when more have in you said could like discuss partnership. update Revv I whether questions. I in products, that's to terms you up show distinct this and don't it just bundled how SKUs. is Thill. one, the going? And but in Wix they terms it's then Two of looks an get might you Maybe could Thank on or if know acquisition, second, for

what If Thank on you in more could remarks. give the color was prepared you.

Dan Wernikoff

Yes.

we've the market in Wix for on quarter. So piece, been a about

We're great next is customers It's and when think a it are our Wix. we it of quarter would which which is as experience the need to offering, in done just solutions really as to the little first other they this to really as They expected partners use sort and they our up, businesses a need we small in terms one that start. insurance at Next that see make of strategy Insurance, actually goals starting solution again, possible for partners of possible forming? market see the data is they're a exactly which And right insurance as we typically within it. quarter added when which learnings don't leveraging the they I And ahead that's And tightly right what what of where all this point. to the have -- or so. integrating the that you'll helping in then the know with it's can indicative again, scale broader, was start are, first much our type well of get of schedule as myLZ You early quarter And of as we're getting still of releasing it. there primarily strong wanted the bit we the need.

of don't people the they even formation. time insurance Some that need at know

is specifically. another this them helping our myLZ through example of and through ecosystem so And good

to there's forms that's On the we piece which shows probably a be going because -- how that our in already Revv always we've library. tested little side, a today, a up do core product that is that had bit

integrated any And legal interaction it to start we're so And an type with can form. that see well. with interaction a -- subscriptions through customers, but you'll and this it will the modernize replace probably our any providing be as legal that's now it time happening of

So, that our can integrated Then will assisted the of can the mean a there's that. signature. multiple that the with subscription. And I we e-signature, that's final approach ways a we then be versions next be piece have is stand-alone solutions. piece

core DocuSign help it could for ready it. declare we're of we'll And to month like which with could some to be to yet retention. one don't see And go You to different of win. offering charge ways with to and subscriptions, lots I is testing we market up companies think exactly or going a a that business bundled $XX in our small will consider

John Byun

you. Thank

Dan Wernikoff

you. Thank

Operator

next our is with you. Credit Thank Suisse. Stephen And question from Ju

Your line is open.

Stephen Ju

thank you. Hi,

spend the freemium off can And in you greater to as rates, you with way, do that level feel channel, conversion hopefully So legal Dan, of I acquisition you you all the then refine, offense. then and sense another funnel your Thanks. products an ask this lay paid makes subset? guess to improve you playing place, the a only iterate do or guess, conversion inevitably a think I and think like for it current about of marketing maybe is question have an strategy appropriate maybe in

Dan Wernikoff

Okay. Yes.

what marketing ready first COVID to all we've target as demand On the do. of that there over this product that necessarily much had and we're one, so trying know right traffic I an we mean I for on the think we wasn't overreliance was you're demand. caught our and yet

lower-cost think now the used to and we almost automated spend a that that market with orders, to go as out of that done And product, the we've to infrastructure work, of have have. ability a the we so lot to a trade-off marketing we the we've

we're the that So, I anticipate I considerably. think this offset even conversion do the And spend what is trying improvement show a will AOV. down to bring marketing can

to our we're optimized, product-driven get like more that's marketing spend. trying and model be So, highly dependent a to this less on

question, you're the the lineup are second kind freemium the when of saying you On to new products, other asking formations and and model? apply

Stephen Ju

Yes.

Dan Wernikoff

point lower role entry Okay. free sort of a mean some think almost do models business is I product a Yes. I like offering. have plays cost which and in most a every offering,

to or consider things And so then being an example, a an to like conversion as paid an and a there building it's doing legal when relationship a over ways return of think to then are transactional transaction a perspective. some we it's a and that getting to that attorney if or from one augmenting time, accountant, or benefit with more about start access you're if relationship

it changes our the product. to So, out formations focused But the we our product our on first I really step though of core parts extended that couldn't no singularly making on be there's reason mean, lineup. that portfolio. are other it we're into is proving

Stephen Ju

you. Got

free out as funnel that-- a and then. mean, then with I follow-up significantly product your version there So, a of expand top should of a

Dan Wernikoff

I right. mean-- That's

Stephen Ju

term. a drug lack the gateway for better -- of

Dan Wernikoff

Yes. think our is all freemium key product experience. Well, been too of aggressively testing It top-of-the-funnel has thing sort testing the has been our the not of in to-date I messaging.

things that So, this help the you'll people great lower an cost to talking optimized us more directly both start we moment for even advice start this about the and that when secretary the is starting services see advisory a on focus get the ecosystem. a into to we that going free or understand accountant an lineup that making moment state alternative attorney tax starting to to really going ubiquitous point as and like or to the making is having to and

effective feel but important like strategy. really We feel another ubiquitous. We one. a is of free it's like just So, be it more cost a can acquisition, probably

too, formation it. the that we customer, help offer the start how I'll more off development to relationship and last we the One is more to to CAM and touches that's we're where trade about understand we likely the say, a go and do this that, is we all build thing that understand the miles. together, services the in extend in you'll have we through more the pretty too, myLZ are see acceleration customers But to spend. way comes thinking again, more their they so our process, with And that from significant continue

of be going experience. make product like Tax really we're to to the part that momentum. And so a is provided that's Things experience through before. now that starting never existed And LZ

experience. attorney schedule You through an that can appointment

You your can see virtual mail.

document documents, You signing you that your read do e-signature is someone's that can can and get know it.

over back engagement to of comes that all trying kind help which so And all should drive, that of this we're the to time. of retention subscriptions ongoing with

Stephen Ju

Thank you.

Dan Wernikoff

Stephen. you, Thank

Operator

And Jackson our from you. MoffettNathanson. question Thank Ader with comes

line is Your open.

Jackson Ader

Great. Thanks my for question guys. taking

to should thinking do better things the if is in LegalZoom one there macro shops gains would we if expect worse, or where LegalZoom share you first would of environment, at any in the be you The feel looking be get kind really share XXXX versa about? environment on actually like vice terms gains about -- is where of think that and macro you

Dan Wernikoff

mean our into question, to doing performance the for Jackson. I translate think gets absolute would necessarily that probably it do competition, Thanks better basis. relative an the the we're worse doesn't the better macro but in

we with having our little have especially is think, think the competitive strong the with still have -- brand awareness. types think those to where environment can have for a a pretty bit cash it. gains, has I but a -- VC-funded. dramatically where strong differentiator, that is pay that the A free known offer I along flow being our is already a especially that that really awareness, for think to environment sheet, there really we're it deploy the starting In do because competition relationship lot doesn't they well set, strong on is almost a of no balance brand So offering competitive real understood is generative we and I I -- of though, we if share that's side, And really changing alternatives. able ecosystem don't

now, for because to still because legal we that we service So, have free lots of virtual different Tax, products that different whereas more I LZ bouncy sort relationships. we solution most acquire a competitive directly, in have mean because mail. attach, of e-signature our we partner and can there's we we those own things have because set, of customers they pay a we have can get

better in basis, either So, we're in we'll look healthy going I environment, pretty look we more more get a think and absolute to just on in a negative macro It's an macro, share. lot probably good. a

Jackson Ader

shift you follow-up SKUs kind about bit it a any competitive a Is And guys LZ how a about of yourselves of the in are little increased competition going in price. That signal either All side. the quick response Or in down in on in differentiating space? Tax right. thinking makes that the to something market? The then Okay. increased sense. does

Dan Wernikoff

the mean, Not I of our about is this channel. uniqueness more really.

tax businesses have file. In need. and prior to have came no refund they before attrite because had the getting they didn't people And we have of high filing they a they we're advisory. So, XX had that tax which the lineup, we have they revenue, SKU within what wanted got our with and tax period days, would bought filing expect really discovered advice degree they is is a first to a

and an specific to a we customers our channel, from tuning learned and of observed reaction I is what this is the So, think more way. incredible to what very by

into customer which a about they gives that to moment acquire are we where an a sprint building help the to trying providers, their the window set going them them that's they're longer in tax a advice case, company a our business narrow properly, dates. of a then relationship, And If time. us think over a you relationship have forms in by providing most very tax entrée like up

believe type response we still thing. which competitive also than accountants. a lower not people is -- most priced go, We really their neighborhood where we're So,

And so disruptive. very in some ways, still it's

Jackson Ader

you. Thank ton Okay. Makes of a sense.

Dan Wernikoff

Thanks Jackson.

Operator

at now you all showing time. further for conference would Thank I'm -- no I questions this like to concludes participating. today's call. this

You may now disconnect.

LegalZoom.com (LZ) 11 Nov 222022 Q3 Earnings call transcript