LZ - Earnings call transcript Q4 2024

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Operator

And thank you for standing by. Welcome to LegalZoom's Fourth Quarter 2024 Earnings Call.Â [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Madeleine Crane, Head of Investor Relations. Please go ahead.

Madeleine Crane

Thank you, operator. Quarter Year Fourth Call. Earnings LegalZoom's to and XXXX Full Conference Welcome

and me our Watson, and Officer Stibel, is our Financial and Operating Joining Jeffrey Officer; Chairman today Chief Executive Chief Chief Officer. Noel

These required from guarantee such information and will us similar and uncertainties we statements. a referred to website with are in for expressions intend, directly uncertainties call investors.legalzoom.com. section forward-looking to upon isolation I Jeff. risks in future now measures results making publicly These over by the to forward-looking intended this date. measures provide Securities be comparable reminder, These are all a and of non-GAAP most should forward-looking most release discuss our expect, Factors or press non-GAAP relied we Form Risk to believe results.Â Such or forward-looking in and of non-GAAP statements Except plan, of substitute the we materially our measures as at will XX-Q are a quarterly section that Commission. the considered addition, be GAAP. will and can as today words measures As could plan otherwise.Â In information, statements use use we future and to not available GAAP our not results believe, financial these new we performance regarding financial statements helpful be be recent such of not information and We in in making are law, also any of statements subject certain management's of and filed on are whether non-GAAP measures business, not as call. as on update based of with Exchange the Relations do actual are forth to issued These any the assumptions to as revise Reconciliations risks will, result investors. also cause identified anticipate, expectations the today's measures. and or by differ prepared statements, report decisions a turn Investor set in accordance forward-looking on to the and as events, or to

Jeffrey Stibel

everyone. AI afternoon, key about X focus with to I'm progress have go-to-market excited subscription our to Good made our expertise. business, speak optimizing the deliver our and you leveraging reorienting areas: strategy, we in today

with and to to last solutions narrowing the our In solutions. XX over Zoom's legal how individuals. our individuals heritage line we to mission transform X are years, Legal system.Â Over legal entering with rooted XXXX compliance partner as We our history focus in businesses navigate of and and has are back million efforts, new legal a businesses LegalZoom delivered trusted the a

leading We attorneys, services ABS online nationwide services with through legal We a management legal, X,XXX attorneys approximately represents term. are platform the technology over for independent by Zoom in our an our strong owned supported our subscriptions at law network active legal of and larger of platform, a Legal business technology-augmented solutions. scale compliance, for attorney million even in-house opportunity small over X.X and XX believe long firm,

positioning set results. of as drive for months, is an LegalZoom Legal to legacies.Â Over guardian vision to the lives, Our we've strategy sustainable serve Zoom executable the X people's aspirations, last are and and

revenue we revenue customers. quarters Subscription delights XXXX. reaccelerating predictability year-over-year X the deceleration, can improve at core achieved profitability.Â Let's After turning sequential of will in. areas with our critical us. we increasing subscriptions. offer is the the high subscription for a jump fourth-quarter We'll revenue million, guidance. products growth that empowers in of growth continue $XXX can, to and our from point of This X% control. on toward others to end in driving our grew and expect ancillary best our marked products, focus QX we provide subscription strength compliance-related by We focus revenue we year, reaccelerate build business service of the who best-of-breed to Our and partner business

formations we As toward the higher-value customers, business our shifting continue U.S. faster in quarter. business LegalZoom than overall declined formations

subscriptions. goal during purchase, in compliance competencies customers, QX, packages share and sustainable business without and expect These this more to building will legal for emphasis subscriptions, subscription focus our removing one-on-one i.e., and durable solutions, focusing year-over-year. build XXXX that more include on an growth.Â We revenue execution businesses. certain offering, will core of high-intent on premium packages to offerings.Â Our free aim on We customers shifted achieve more share a management our customers deliberate performance. driving with concentrating us over consistent XX% We of who Pro on our focus of we know services and by their quality initial advice support quality sustainable and compliance spend In on our trials mix formation our with legal

awareness, weaving driving we for include expertise provide. greater our products, service, value will brand providing the actions best-in-class pricing through Our and

XX% delivered confident higher-margin year-over-year formations. are $XX million, quarter from cost enable fourth-quarter another of of performance. adjusted Adjusted us to outlook will a these efficiencies margin achieve XXXX of X% revenue margins ongoing growth.Â On measures shift bottom benefited line, representing and EBITDA EBITDA the We our strong we of to

Reorienting mentioned ongoing what our see lineup It's growing focus outlook our to changes our As towards lifetime our our need business durable and legal current drive an results in double-digit succeed.Â As key Staying formation higher-intent with confirms EBITDA obligation. customers' customers. update to Noel with commitment to XXXX.Â Let's subscriptions margin an our business. discuss, adjusted beginning dollars now compliance value. will to and our turn positive growth to expansion subscription year-over-year also us is earlier, products in to margin optimizing is full-year continuing reflects requirements from our we're customers in attract from key areas, on I

term. value begun aligning goal the a products. end, registered with pricing the entry LegalZoom To that of on reprice customers also to $XXX In our certain product pricing from point to who our returned with agent with our provide grow attract services we the we've are long $XXX. will to September, retain high-value and over We focused

decrease, also rates.Â Looking this of to subscriptions. our campaign This price our recurring system.Â Since owner. BOR, see our Legal services XXXX. competitors on area, continue as forward, will federal key will to continue funnel stable an beneficial of reinforces to to a outlook relatively example our to compliance to to subscription to judicial shifting price and reorient filing and provide, XXXX later our to guidance.Â Let circular been the legal map the volatile a we overall Information into online shift emphasize changes efforts perfect offering. whether the and continued a This requirement the be this from our year, Ownership We me to compliance customers second increase of forward our challenges attach customers marketing are subject to our December, new we road be turn top and strategy. court accurately a positioning the addressed reorient new filing value out focus that emphasis our quarter, launching and compliance provider. reorientation and I customers complexities will premium or approach brand the reorienting subscription through a portfolio legal also introduce It helped test does ownership conservative our commitment in marketing with renewals Beneficial mission stand-alone in vision. our pricing to offerings.Â Last a a challenges diversify lean a roundabout towards or of our with across business for we filing beneficial spring our spend as to filing is from total go-to-market subscription driving reflects It a the recent us our This Report, deadline ownership Zoom looking not assume to remaining compliant of offerings a our We're our a many gave to towards requirement review.Â As result, has

the than made XXXX brand more includes spend in plan marketing increasing without investment marketing Our budget. Xx our overall in we

overall strong us Accountants X-XXX provide to building and customers.Â Separately, products our serving to offerings. we in of high-value This into premium to non-core tax our core continue customers our to with under improve our us to allows that attract our legal and and messaging reallocate resources awareness expect retains partner made investing full-service invest stop instead solutions. decision compliance time model to We accounting partnered bookkeeping and drive and the brand Legal we we allows and and the Zoom needs partnership economics returns ecosystem. for as December, resources a tax In

in to opting our are formation a So LegalZoom by cannot build we portfolio The from encouraging. and research more continue AI through priority, about expertise of expect to information our augment expert our replace AI curated services.Â You third as our attorney advice. provide human expertise. results offerings platform with strategic proprietary are should leveraging data, to an years platform.Â Turning X-XXX Generative majority XX-plus updates our out customers legal receive becoming of of partnership to channel access us our and far, to to customers alone early

with of our navigate provide help during services legal AI-powered of AI to and customers more to unlock We to the in-house the believe to AI value best launch our technology to began and efficiencies affordable network very our competitors journey. AI-powered customers. for plan customers. LegalZoom intend attorney attorney testing customers. estate we generator, network.Â Following legal personal the our attorney of powerful help and and business drive growth for network and access name We're promote power will independent advice For we business offer who protection greater We our established and can certain points customers, AI personal XX/X value launch AI high both assistant recently clear attorneys the can and an customers value a to an decisions, of from ensure excited apart essential to solutions friction an to platform this and our deliver them our remain to assistant. business an accessible stands in teams as tools

now still have turn of purchasing network.Â Finally, promote acquisition This Formation an customers aligns our let's and estate of engaged to attorney using preliminary early, includes of plan. attorney services AI who our Nation. the our behavior to plan an While with goal AI with Assistant

the Formation Headquarters our and distinct as NCH or authority provider. Corporate Nation has itself In formation brands. a formation and online complementary acquisition positively to expected to year, do-it-for-me provides the our the contribute the in space offer to unique formations. The free price provider is a value business EBITDA under service full-service and was in Nation first is small ecosystems. services two first formations to white-glove small best-in-class of do-it-yourself adjusted industry industry company in in formation Nevada established business as synergies business inclusive Formation due

Our and value. are to immediate already expect underway, well we integration efforts this drive

strengthen of to from our technology We customer subscription. base. expertise, Formation that expect expand our profile, benefit At experience AI fulfillment enable Nation shifting and Formation we customer offerings us a service our scaled time, Nation will broader and tenured portfolio to significantly same products marketing reach businesses augment transaction believe the strong platform, to and from

we Finally, to each from complementary our upselling benefit other's both expect products. portfolio cross-selling brands of and

the NCH We CFO, Marin, work family.Â Let to Rowley; their beyond. saying team, leadership of me Cort summarize team with along excited hard Inc. X the and LegalZoom quarters for last I Nation's how Trevor Raymond and welcome Authority XXXX senior Walker; are am Christie; over President, and by thrilled the to Dean including our are Formation experienced how teams grateful CEO, we and President, for

in I over discuss particular, Noel execute the Before goals to express XXXX. results ability to our call financial again meet our conviction for outlook, my want to Noel? and fourth strong our XXXX our I turn and to quarter in

Noel Watson

Thanks, and everyone. afternoon, Jeff, good

key the execution reflects our focus areas and XXXX in priorities. performance financial Our in shift

over the on As Jeff have we the to to a revenue emphasis revenue. X return reaccelerating noted, groundwork powered worked by subscription predictable our lay for last quarters, hard performance,

of commitment generate which This highlights the in XXXX our XXXX, top we quarter expansion.Â For and executed best reduced efficiencies execution operations XXXX full points margin year, hiring resolve underscored year-over-year. year-over-year. our our narrowed automation front, almost builds Unless will an XXX bottom profile. On well our on up This drive focus as revenue basis.Â Total adjusted for impact plans. stated, last to basis ongoing our full adjusted line of year third line XX% as This XX% grew shift improvement on delivering performance. EBITDA all I'll quarter year-over-year focus margin be on EBITDA growth to of of EBITDA grew demonstrates we the while restructuring $XXX efforts of restructuring, in strong and was basis our focus that million XXX fourth to improvement year a margins was and performance control, by points areas margin the otherwise adjusted to in year-over-year now turn a comparisons $XXX our XXXX. As headcount quarter, million our ongoing financial versus X%. the to the drive can our

tax in expenses our more XX,XXX were period We force units. We the EBITDA margin. savings XXX,XXX revenue business-related costs primarily of $XX of quarter. a million, XX%. offset same $XX decrease our were lower EBITDA $XX compliance of reduction recorded as that This XXXX. primarily in detail, increase our costs the virtual a with to offering, and continued quarter as ARPU Census Looking forms driven to increase for year-over-year in up was primarily the into from recorded delivery development lower-priced down as transaction This decrease million million, were ongoing expenses cost primarily Margins and offset formations year. in X%. a primarily driven an XX% service the was of increase content due X% formation in technology formation CAM and X.X and costs basis. were by XX%, units to and due due quarter acquisition for expenses drove quarter was on increase a was filing last down bookkeeping non-GAAP headcount up mix our of The metrics well compared in compliance-related $XXX million applications higher X% the annual sales rise by adjusted operations. Sales ended to in automation our as $X was and a decline and as year.Â Our administrative in by a X%, spend. performance of higher third lower of value $XX in XX% the subscriptions including costs.Technology as gross up due X%. also stronger was an customer attracting at was mail BOIR tax softer X% XX% XX% macro or customers.Â Average brand with business million million, high-value expense for in margin of percentage business growth or The to a to was personnel from in decision lower new by lower associated marketing subscriptions. to subscriptions Both a QX these or million down focus G&A in last the reports increase our The the compared $XX by where Non such the to subscriptions. pause offering an prior an XX% falling XX%. formation occurred and of a non-formation combination partially $XXX Subscription acquisition. We subscriber to base.Â Turning of well of following as and improvements marketing within transaction fees Fourth quarter, are XX% million products a and was development expenses a due the revenue due due supported quarter, year-over-year production primarily and year. marketing process $X transaction products, our to volumes. adjusted to of formations business approximately order year-over-year XX% increased and revenue or $X revenue units, increase was corporate packages or all marketing bundling our EIN our XX% General volume a driven on changes mix quarter, revenue, and execution $XXX were the dissolutions. pricing in represents fourth was transactions, revenue This X% BOIR, million a decline. certain decline margins, a by eSignature compliance-related from lower shift and down $XX to million, improvement million subscription with from from Customer offering

line half a reminder, that adjusted from to expectations XXXX. QX, our was our period in business' million due $XX compared flow higher year which of the to cash and was margins the are back lower revenue same with Deferred million typical align with the generally of EBITDA in seasonality our levels CAM business. As in decreased spend $XX the seasonality. Free million $XX for by

in in improvement million.Â We facility. of changes. quarter free QX, we the of equivalents to remain to We Our used our cash $XXX million $XXX timing and our debt-free the due Subsequent working the quarter, cash EBITDA $XX an million of expectations, exceeded credit to with on as adjusted with Formation cash approximately primarily no related of ended outstanding increase and revolving performance well of as borrowings cash acquisition the capital end in Nation. the under hand the flow

repurchased $X During our X.X fourth approximately quarter, million shares stock of we for the common million.

committed XX, areas to capital the XX.X $XXX repurchase share lowering per to $X.XX in against our program.Â Turning share $XXX through XX%.Â As approximately our December share X million of remaining shares repurchases, average of count stock executing approximately year, returned million allocation million we our to For million drive our XXXX. full had key shareholders $XX by to of under priorities approximately our at We XXXX, share, an growth. remain focus repurchasing price common we

business, organic year value. making cash customer very services on improve the begin and right balance our our many to and legal focused of utilize we drive growth. XXXX, acquisition strategy.Â In in remain organic Formation our compliance technology experiences generation the growth the and our shareholder healthy namely of pleased which strong will investments Nation, accelerates will to and sheet areas We to We're with drive

will bolster synergistic We deploy for to that can M&A continue capital share and our also accelerate to will continue plans our market growth also opportunities opportunistically evaluate we leadership.Â Last, strategic repurchases.

Finally, turning February year provide guidance now X% including midpoint. year-over-year the revenue in from million range the first $XXX the Nation of to expect I we million outlook. Formation the to acquisition growth our on the impacts at and first XX, full XXXX, our will for quarter $XXX XXXX.Â For recent quarter, or

increase injunction revenue first-quarter ownership the revenue to in impact a a We year-over-year by the a business core tax our offering. decline offset and transaction year-over-year of due our partially new expect subscriptions, to to filing by revenue related of subscription part performance driven the of commercialization headwind reflect beneficial in discontinuation in customer acquisition from

For the X%. with full revenue subscription XXXX to revenue exit year.Â We reaccelerate subscription in to revenue. This year, double-digit we growth growth the reflects final approximately goal expect quarter throughout growth year-over-year of of our expect the

new Tax of beneficial points LZ filing commercialization the expect headwind Tax represent estimate assumptions Our that for changes year changes growth macro strategy. for combination basis Tax shifting voluntary and over X final of a of It assumption LZ to includes from of It ownership formations the our based as includes reporting revenue rulings. be the to a census customers.Â We of assumption applications. the reflects revenue of our the flat the on guidance XXXX given our federal XXXX. we impact product LZ in business to be performance seen will requirement filing have also our our beneficial our in of an commercialization to headwind EIN We on rapid ownership

by partially our be revenue generated will from headwinds adjusted offset new EBITDA. Tax to accountant LZ partnership.Â Turning X-XXX the However,

which midpoint. $XX achieve million margin in a first the the the to reflects XX.X% quarter, at adjusted of million expect in to range $XX We EBITDA

quarter marketing assuming like I'd contributions operational Nation's of year, following following we and subscription XX%. our approximately by entire executed adjusted million skilled sales the and Nation stable LegalZoom OpEx Formation Formation For approximately this service welcome driven force QX and hiring align to reduction of LegalZoom. gross of the acquisition XXXX, team expenses with an of $XX in and for other Annualized higher an margin CAM This efficiencies. we closing, reflects higher small the in level investment, mix our savings increase the experts.Â In full a expect reduced in EBITDA of their margins to assumption business and conditions thank macro plan

back performance performance. XXXX building core turn and toward focus and as Our outlook operating outlook achieve our continued QX Legal strong to revenue remarks. in our margins.Â Now subscription on progress XXXX our feel We the for we reflect growth, and efficiencies, Jeff our reaccelerating improving I'll sustainable of confident maintain ability Compliance our call business and driving performance delivering closing to the

Jeffrey Stibel

ability drive will you, key Thank the our to reiterate positioning the confidence success our I revenue. of recurring, focus of and our strong X reflect Noel. the outlook. LegalZoom subscription in XXXX meet to we predictable Achievement want have to areas prioritization

areas the on focused can we are business We of our control.

against been quarters.Â With And that team our forward open welcome business our the our of let's to I'm against coming legal approach are I improve will we on the but changes durable compliance thank expect building on and We diligently areas. premium This lifetime call subscription customer in acquisition We Formation a provider, LegalZoom. our will follow.Â I'd look emphasis compounding take now quality in once on execute value, am deep again new who a our a a returns and providing an as and these that and executing it competencies core are longer over ongoing emphasis believe economics. measured that, have to employees narrowed and like service and progress is customer to drive with focus up focus execute, position questions. years term. to updates LegalZoom our retention we will the you the all and to stronger, working confident growth thrilled predictability for LegalZoom on market more to in the continued drive Nation to a solidify time

Operator

Smith JPMC. from of Our line with [Operator Instructions] the first question Ella comes

Eleanor Smith

Jeff, So first you. for maybe

raising price. the registered mentioned agent You

product if and Zoom from was versus it wondering think $XXX. maybe to that's was going competitors. how I can on update I that how differentiates $XXX your you Legal us

Jeffrey Stibel

Sure.

are our think for is we that work of off, doing part and alone that The needs context, long. speaks stronger the And having of years that instead the than been behind this registration first in that because many competitors, to products of it. something philosophically, RA's almost in a historical you copycat for when need entirety volumes. much having LegalZoom case of XX our agent product competitor So

why product. changes one to our is synonymous. speak to what are.Â The will trying our on we of with are what lot leverage trying equate move and see piece that we're product we're to align that to build registered pricing second agent historically, we better companies, remind that but So it we're than the different, plus of is what people with what to a offerings not to that's trying we does side others. I of much function service. technology technology, to you And means And are and product that some a product customers. in Product so doing And not they're upmarket, is to value offer real herein, think

a have that really to that is registered with that agent it a customers. By anyone those mind. we your question, part result, we believe we're some way, have technology pleased We that XX/X now as we example actually element that, did offering of And And think at an who helps service as unlimited And the did we're We helps realignment our a of support price was for price. it something the periods. it price customers in strong actually don't prior positive And we change having Ella, for quietly. We on space scale. with else impact.Â Specific change. that were with a then peace back where this, to need people in offers. a we're give

were market So rest inflating, and a we the actually while in race the of world was bottom. the to

actually we returned back were our historically. we pricing only So where to

can above So as customers well there value that looking more and inelasticity might expect value. we even as make we ultimately do measured a to we're retention drive that and beyond be We're as would ahead. our approach that this, think sure so what we that increase at long-term offering

Eleanor Smith

Noel, And you. for maybe

Your XQ flow strong. cash 'XX was free exceptionally

happened any guidance about top end by flow And conversion maybe thoughts what or about to moving have think maybe cash I forward? quarter? exceeded comments any it your you million Do the of the so. $XX EBITDA in free

Noel Watson

the out. really in Yes. there thank I for that with free our few our pointing We're factors. is the at Ella, you adjusted cash cash in saw well top our factors for into expectations. EBITDA are QX. adjusted of think flow number and year. that happy we We flow. EBITDA converting QX, a think We're free the was particular, One, end Thanks for question, performance with happy our a of or performance the

sort that So of expectations exceeded our a bit.

a We natural a of also capital. benefit quarter working benefited was somewhat exceeded outcome that And some forward.Â And bit timing changes, just our working deferred with the well. us it improvements expectations in as then revenue capital just of structural saw then the and will us moving

forward the you think looking conversion what relates it flow.Â As expect in see I in about flow, probably, for how were we'll continue to to bit QX. adjusted to that I from better ebb we better into quarter, think overall, that converting bit of free same able see a would it a than well strong QX.Â That quarter I cash XXXX. would to slightly deliver free cash little we But to level from little will XXXX, flow So headwind say, EBITDA or a and at it speaks we're how in create

Operator

Our next from Young Trevor of the line comes Barclays. with question

Trevor Young

That's from is fiscal that any in and revenues? acquisition, modeling my Nation across much synergies? the revenue about specifically quantify baked can we how of subscription you a Formation for in First, 'XX perspective the think and layering transaction And before on EBITDA first then question. should how

Noel Watson

Noel. is you this question. Thank for Trevor, the

I employee base. highly welcome a a reiterate It's and to first, want happy acquisition. to dedicated We're about team. the capable It's think just excitement team. the and our executive accomplished seasoned I

happy family. we're have of part I the impact guidance Nation. year LegalZoom to our them Formation the So say as of would and includes full QX

an quickly them, of Our sort with already plan. we're to working implement integration plan

this same really of businesses. I say cross-sell to performance to in. their get impact know been and so moving our some We subscription, journey the kind identify have.Â And to things. both We're going them X team some And point to some to of to impact because that we've we're businesses available with products that performance going us and opportunities are going synergies want sales we on We're to at take to nature because complementary blended disrupt the looking Legal it's We them We're an the exploring the at of products. shift there's that we're the jumping going will of of to towards fast going on transactional. largely there sides. is with That's Zoom. action business be going we're the on the so X year. really, messy

we've expectation and get some flexibility included deep on that that, of of we we're transitions to sort to for gives and manage that so the us outcome those the it how and And within guidance. the aggressive integrations and how constraint setting

Jeffrey Stibel

with glove.Â We keep point, look question largely approach can at we've Expanding and well struggled do good the brand business, on a we're have something leverage either of value go had deeply the integrating not we ourselves or any And end this and effectively do-it-for-me is this such We really asking, number a things. an acquired of either our to some to be how integrating high-touch sort are because brand, leveraging as that to market can down-market we what call products been the an as brought have the right as into same integrating and of do brand. example, can well things, one in into it's and how already so we combine vice as upsell number think they unite about a approach, and a we lower And at to those. white this where really compete of to versa.Â And is tight to our importantly, we which sell Trevor, to and that of by time Noel integration base. that opposite upmarket, key more that But as free a cross-sell somewhat we've product, marketing, They well. they opportunity that start of ours doing thinking We a it dilute take lean separate but we middle. we is exact low-oriented theirs. we now can can a had as two, their on formations, business we technology, on which full the to subscription, segmented aggressively. is positioning, true is We've don't deep quickly and into separate very brand. right them from either advantage the or finally, the in can base so aggressive as pivoting as them, one up to then our of but our transactional sell point business, not only can after which were approach

a able being than been we what of As with a we've to do of to significantly.Â So on going the we services in that some we've looking force a think orders basis. higher basis expert about is higher-end leveraging benefit on by go-forward that these of at that service approach these companies offer, magnitude us combined priced products success and taken testing market are their

Trevor Young

some maybe subscription in, to X% terms pricing, as How full that back in guide? with baked full-year How just push more pricing of mix. growth the for of do year? also is we decreases on potential some in towards the revenue your overall much that you but lift increases, Jeff, bridge that comments

Jeffrey Stibel

as that make that sure way to saw have approached that we numbers. of brought confidence that Noel the team, elements we've there up number you And So the price, guide things a is a we control. in this it the potential And be the comes same when true as we're focusing there that an in, but layered can on well. to approach is upside, could taking on where we,

the While going inelasticity there sight have in actually on gives term that previously. we run. deliver customers And we long with first is we're us real is to to and to That's into new what expresses double-digit had the that over lose and conservatism we're immediate going which than predictable base, model, on, the existing and back, it what's we think focused believe the earned which that confidence the and way. the lost more in consistent we're that long not both And foremost, early of focused we and some now in term, and first that.Â So right subscription pricing is future toward periods, a have driving growth. us something foremost, our

So I a is there lot think that of opportunity.

We on on either. have we we pricing aggressive think priced don't is think reasonable being pricing. into that But our do guide what we're to

the need the in levers us business to that gives leverage extent we it it. and So

Operator

of with question line Boone next from comes Andrew Our the Citizens.

Andrew Boone

half subscription X historically. than to you kind just think one attach very formations seen been about drivers and guys I you you both the higher adds back strategically, unit does you rate, the strategic. terms as resources has drivers think that seen in years? touch then net about And to just if Jeff, a on of new 'XX? the of of compared that services kind then tactical touching strong go X partnership XXXX? as next And of does bringing we've kind One strategy? Can how about little we've that the platform? the new well that? for about over that do then more can talk of more Can the help the of Where and in that business more The of unlock internally we partners What talk bit on much

Noel Watson

I'll to pass take I'll it then and Noel. one, is first This the Jeff. Andrew. you, Thanks,

a first The sub it's the adds on I of net things. think combination one

into SKUs higher and certain premium our the to and SKUs higher-value customers. quality, differentiate First, we out subscriptions seek Pro to higher-end as started we bundling continue look

SKUs. And e-signature those included including also our subsequently, then our subscription. and started we in subscription forms So bookkeeping we

those driving is those a level compliance and getting ensure as so so that We're that's can are BOIR packages, point learn complex, with activation, customers, in really rather related an keep focused those compliant subscriptions, folks additions compliance they're help half engagement the buying And is them automatically ads. the year, offering But into creating and unit creating and into on creating can we subscriptions, had of last year about that to that thing retention really a done I'll the renewal better standpoint. that we've we our the lot single environment job. talked just have transaction more other meaningful those from our of across leveraging out the getting impact that point subscriptions.Â The than some ensure We we're back subscription the started BOIR also a of they the to as BOIR. board addressing we the that

the bookkeeping factors. those we'll additional in inclusion these to then start the the start And by are of the lapping inclusion. obviously those quarter, packages. We of forms We'll eSignature. So think the lapping subscriptions lap started I just this of QX, end

Jeffrey Stibel

of BOIR. to a the and only those our of units, products thing there, we terms with lawsuits better of made all cross-sell And is than we which upsell increases strategy BOIR, price then BOIR and first drive this compliance I'll funnel right conscious people in came Andrew, pushing and test-and-learn is spirit total the increase to to value sometimes.Â with from add And services. up subscription and lucky the and how in effort our to be before the a package ability of

amount unwind. deadline some inÂ BOIRÂ before up the ended to So creating started friction of we

our product we've on some compliance because and to product the I not have a is So some as be. we of suspect if used what engagement competitors of full-service to these it is some you agencies needs we these educate had tell suite customers endures see have done didn't tools as of yo-yo why that quite have need that going we over where other government our help that time.Â I'm they to feel full transactions

the and get very can important. ultimately add that value increase time, there, good helps a I that over be, and to price. people these can it much Switching your just into subscriptions but move think, very, we and question, I over product one happens on side think which to shows better retain we partnership higher offering strategically

upselling.Â And It's you we go-to-market and the the at glad formations and partnership on put before. the offering the and is lower was is it then funnel from less exclusively making formations funnel products. strategy that we're in I'm effectively, bring so then cross-selling insulating costs of my and focused So free had cost We concentration SMB ourselves -- risks specifically. answer of It about people upselling them marketing the people goal top sure about in other by for into bringing through that that very camp. were more

category, of will this order And best legal continue whether by We with do services sense channels, that we at believe even affiliates, do what we that saw after top side, M&A have strategy addressable makes will now case, people and on X-XXX. bring insulation.Â So and we need being that us saw to well, do, better. ancillary the opportunistically. we Nation you the it products our provide space, across Formation to funnel, larger look shifted going to And where different that in in able and then the to that the in in to partners, we then doing with that's that best get core in we market have and those partner as

I to an thing do partnership and core like And more taxes you a becoming I is form going do know credit? partnership presence? that to something build is that my be be more, my and going next things which secondly, our and year think can on on we valuable I to our leaning to because going customers we business. but a with to then partners our into what be not a them higher -- beyond core customers is teams. personally?Â And to How The business earlier get will Where then question do the that continue and driving to something haven't customer and doing historically, a drive having that do bringing us in incorporate Wix, next. agent. see vis-a-vis that business partners really, from lean significant credit to because And the that product a career. manner technology ultimately, website ecosystem early my it wants where to us I is web into Our opportunity really versus of side, more this and my really will Andrew. sure to we We done customer question, us from partnership I customer, ecosystem.Â Great ecosystem saw be compliant. I with a they're base get important, credit, the this we registered in can You way -- I'm that in that equally account? as Wix. we How think we value do channel without opportunities where our get where world consumer to We what in make how it's ecosystem a start well on with bank if we're personal a is tax my And I business there do get most pay lean something SMB advantageous

Operator

is with Patrick Mcllwee question Our William next Blair. from

Patrick Mcllwee

to if quarter, certain So volumes? further, down of by ask your point. customer And or Nation of should in share think But formations you you're mass we critical and level this is stepped forward? about I to your terms market implied Formation going a and focused how material on maintain more hope there's this how market quality another wanted point at so I share just share know versus

Jeffrey Stibel

Sure.

our I'll level, to So and one line. into that significantly the to form think market system, bunch is fraud, have number valuable between of share to was are that's couple we it are that's think And bulk, that free to to in higher-end on on don't I think if wrong, been of from high our this that's we're were premium our quarters share, pro market quality plenty on coming and one organically we formation Don't focus distinction that number.Â And of out in of said we jump that even through higher-value customers from by a real market feel flow. details. in I large looking a of the This this I able doing education. noise market and really, share. think take I buy our too the really reorient companies customers whether we're fell important funnel. share a because the Noel, of XX% me impacting share funnel, quarter, share or fell others were or a upsell, high-intent out high down perceived incorporations space. that something to aren't who of high at and is that there with And But the whether much to the the whether to going versus last you we, EINs, formations, have they formations.Â And is our in define proved I share of at that pivot volume, we're we end had least the ones means what don't cross-sell driving with quality share way what propensity share done us. over cost or market some a for to extent, focused get over going is for think being market to at the or Because the proxy way measure market up really formations of customers free

be think So perceived is might with work we're market impacting market don't said, a back over to take tick going this tack EIN stabilize time. much we versus as for and and quarters then -- we'll right, as numbers. share doing again, get That of we're probably that share quality to on pleased is because, actual now will us share impacting to it market share. it the This our those couple to for the

Noel Watson

Yes.

hit stabilization you was the at to bring I point on up the point. I some going think that

in But So exactly it. want we to where this The is that as business customer will will But of as work see stabilize. identifying of the closer done. additive we is working profile fully attracting, our sort and market obviously, point. share. at which we're to be not be extent Jeff Nation market to we the Formation count get said, to terms And we're at formation share through unclear

we're it totality. so in again looking at And

Jeffrey Stibel

think Authority with originated, frankly, Formation we at understanding, them. from model. stealing Inc in them. one brand. that our urgency And I'll own may the behind done we ball And it. to free some copy thunder. the We up, getting I to my The formation our I'm to damage catch add say were the now is that good try Nation I thing on we have Noel's to And can

a so will won't lower with think acquisition free-to-pay shore two, AuthorityÂ as it are in us of the leverageÂ Inc brand. will Nation So manner market we LegalZoom the two that side And number devalue I help this other the in the brand. it equation will And quality Number the end one, still Formation that this now that customers. up of that can is do ways.

Patrick Mcllwee

Right.

more, your And if your the with if may. talked one on bit AI in you've power more you've documents quarters, leveraging Jeff, your about capabilities little Just a library strategy platform. I recent of you to with couple a vision touch but what products could look like launched your other of wanted I quickly products longer-term that on capabilities or new recently, ask technology. to for could just

Jeffrey Stibel

augment prowess. sets, we I the on say a term, that And is AI leverage. service our long but they Yes. XXX-plus, experts are that is would because can't Great Nation one Formation the component technology lawyers what question. expertise. is XXX-plus strategy critical lack adept, leverage have expertise, they the have and very And goal who great two hand, can you competitive When to again, to here scale because mom-and-pop look have you at

the to replace space lawyers, in on largely And that designed side. these deep legal you've great are online and the and formation service in we're other, in sense the --services. technology, the we the paralegals, expertise.Â We network form technology the and is They companies leader of the On that got technology unique experts. have now expertise have

scale. is more us, Street will that, for take and I and our our easier more that agents, and for idea intelligence Main pull to a simpler for our for experts platform. key customers our online customers and differentiator, the at intelligence and artificial to is customers, make help things here think artificial of that lawyers to So particularly And generative and off our for

Noel Watson

more and opportunity developers, attorneys but a we a many our leverage Yes. fulfillment also operational product meaningful broad still set sales manual really AI teams of that and well. And efficient. our fulfillment I that, to think on there's make the of long-tail still about augmenting have the on just of on require an -- talk think our much us that side there's and and side our steps to We as our build and to efficiency which process, help in business, we equation

Operator

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

Elizabeth Elliott

the was to spend. little out marketing unpack wanted more. I about a strategy I you the building just could bit piece more around increasing ask education the hoping of and brand

I think said marketing you Xx increasing without the budget.

what you are the after just where doing the to offsets? messaging on now the or And compared some So you when IPO? leaning terms were the are last of in marketing in first, channels secondly, differently of

Jeffrey Stibel

bet. jump the You take if level at it I'll on question. numbers. Noel, Good some to want of you high in, a

is but market, the your competing the product, win high-end go-to-market has in search been you're you're Our from it brand the has you're marketing leveraging been you a the people brand who ones is bottom. extreme. And search probably and free too that when and effectively substitutes. offering buying are unfortunately, And is a then like the strategy because race historically to pretty uniform, to against point leveraging only

value-oriented talked Authority. we a how about multi-brand products lower will move think offer we Ink you that strategy a and will that as brand, allow take case, the forward, have and this are earlier, different thing, in this I've So our first priced that about to us using is

brands that further And our will being more meaning ancillary much further bifurcate in affiliates and other partnership those services, that brand both marketing in of having premium move such targeting to Our model as spend marketing using LegalZoom, and core terms and and vehicles the way and us two upmarket. channels. those our done we've actually allow do

amount augmented way the we we did brand actually marketing. about It effective. we SMB just a Secondly, wasn't going early because money on wasn't message, on on a we that, of brand, our we and after effective. We that went we were that brand and spend provider. were focused diluting claim on a just were technology the since significant market marketing player. were IPO-ed, legal services Not of it an And being and with

stopped that I in part, 'XX doing really late come large haven't in we, back. spend, So believe, and

marketing education be risk what educate that because focused you leverage leader it in properly I that they the to we being going of know how over the the industry again. we're going come LegalZoom inevitably think of messages, focus with and our now we're as space, to our allows a be with what to subpar around over really back that know going to they're and provider, if they we brand customers will our are is to we're pivot Elizabeth. on core doing market us and getting And messaging

Noel Watson

little suite I reducing a not to our and probably the guess reiterate encapsulate bit brand again, now message services of SMBs. to -- Yes. full the just what you I'll say and encompasses a broader But said. while offering relevancy better it

broader us we therefore, spend. year-over-year efficiently. that's of how more of capture And audience get portions can efficiency And lowest allows do relatively spend our some it and message with holding So performance brand kind replace we to our flat to of it basis. on a the a

Jeffrey Stibel

our couldn't a launched case from number LegalZoom product you our ago, give specific LZ to we we And sell tax here. tangible effectively years of LegalZoom because we're Tax. changed When study, so I'll a we brand name

have So been counterproductive to marketing the brand. an that And as an And a is which were and acronym we in ineffectual, it to way not actually was might going entirely we acronym. started market.

and spent our XX it money an amount guardian makes last as much the that years we so now owning are over for this because embracing of it brand. customers, the company building inordinate So easier LegalZoom has that

think, that, draft to we're quite off of effectively. able I So

Elizabeth Elliott

the moving Great. dig XXXX. else help fact demand No, pieces. are a the that to follow-up, the there. there's to of from just as in could just revenue in context. XXXX I QX super have year-over-year exiting comps X% How core. materially But Nation, lot I better in subscription double you much you then driven accountant, contribution Formation changes helpful that's just digits on kind in And just understand of from the a XXXX is price guidance. bridge know wanted of easing by us the

or a there's any know but of helpful like couple moving I would us. of be for factors So ranking sort pieces, super

Noel Watson

factors, of all mean contributing on and I reacceleration. there's number Yes. view called handful a out a obviously sort I to of our think them, of you've the

customers attaching longer, retain will attract central starting a couple of products of then One job SKUs our that value and the to and more think driving ones. are we've I in is the across higher-quality higher that thus LTV. shifting terms done

well So changes, end Jeff some we'll ago, of the come quarters we started as see Also, to that as the folks front some renewals, on a couple benefit earlier of start changing pricing that builds on you're price that momentum -- about in the as changes some the year funnel provide well. reacceleration. as the renewals as talked and of pricing throughout cohort through And year. changes on in terms pricing subscriptions and that this the of thus growth

Jeffrey Stibel

that a to key we it the and our deferred watching speaks metric, you this can revenue add, see going subscription or were is in That's And thereof. now Yes. change. I'll and numbers, lack decline, thing and growth to forward-looking

something the that's periods because on last to ultimately, So drives we allows stability your intently we're something to what the and on at for months been into of wind back that to going it's have six go continue focused you future focus and instead with headwind.

Operator

next with Our Josh line of James. Raymond from comes question Beck Instructions] [Operator the

Josh Beck

picture you, bigger a Jeff. just Maybe for

cohort more strategic going the formation place? be bringing in you've will year you're like really much it the seems it point, largely seat. And you feel then number think will been in itself, this I the of on. this that discussion Do around So about the since customers it's have like summer that CEO the by been update to a value on

that business number does time, hear love over and your share less? just there. you print Just the market would So mean maybe actual formation to thoughts

Jeffrey Stibel

Yes. almost It's your I high directly mean, got on And a relatively that point. good confidence I've question. to

business. like how that we've to the flexibility within revenue into It's freedom to head we're number we got such more we tack it's operate more on going look revenue that recurring this so going good summer, business. And a to and really a As recurring going to shifts weeks, that have get recently. or see for because small way we're macro two week, massively of to not not as do change a we've seen a government an next turned or running the turn we the risk the example, off EINs decides BOIR business in wrong like or handle starts

business these All a of once bad, that's business And can things are a good be predictable. it's that, you have manageable. and but necessarily And should you that's have or not managed. be that

carving things a build and And for of lot in So do what control. focusing that, and designing what the to in and towards that minimizing our we to going our it. to going the success, do ultimately, that we're out by path is, And lay we're start of on business. strategically once is doing me, we're first control finally, build predictability through foremost, and and we

Operator

Our the comes from Ju line next Stephen question of with UBS.

Vanessa

This for is Vanessa Stephen. on

has last two the that of top So with acquisition got the steady through now But over quarters. Presumably, door. Formation your Nation the spend remained funnel. helps you've fairly customer

through meaningful So any to expecting XXXX? your be should we spend marketing changes

Noel Watson

No.

As marketing our earlier, be expect flat year-over-year. I spend we relatively mentioned to

So of Formation that's inclusive Nation.

Jeffrey Stibel

your sure they for Yes. marketing some from spending Nation well. also to And get but on going as Formation were remember, to point, benefits we're

that pretty basis, look think meaningful on improvement. you when a combined I So being at is flat

Noel Watson

other just next is macro one guide plan around flat I'll mention a for our is our and assumption Yes. that The thing our in year.

is reacts dynamic to marketing and And so market spend very changes quickly. our

spending if we and So really if see see a more to versa we softness. healthy would we be strong some and macro, expect vice

Operator

further in There time. this are you does participation the program. Thank questions today's no at This for conclude conference. your

disconnect. now may You

LegalZoom.com (LZ) 26 Feb 252024 Q4 Earnings call transcript