LegalZoom.com, Inc. reported its financial results for the third quarter and the nine months ended September 30, 2024, showing notable changes in revenue, profitability, and strategic initiatives compared to the previous fiscal period.
For the three months ended September 30, 2024, LegalZoom generated total revenue of $168.6 million, a slight increase of 1% from $167.3 million in the same period of 2023. Subscription revenue rose by 5% to $110.7 million, constituting 66% of total revenue, while transaction revenue decreased by 7% to $57.9 million, reflecting an 18% decline in business formations. For the nine months ended September 30, 2024, total revenue reached $520.2 million, up 4% from $502.1 million in 2023, driven by a 7% increase in subscription revenue.
Gross profit for the third quarter was $113.9 million, up 5% from $108.1 million in the prior year, attributed to a reduction in cost of revenue. The company reported income from operations of $16.3 million for Q3 2024, compared to $10.3 million in Q3 2023. Net income for the third quarter was $11.1 million, an increase from $7.5 million in the same period last year, resulting in a net income margin of 7%. For the nine months, net income surged to $17.1 million from $6.6 million in 2023.
LegalZoom's total current assets decreased to $167.2 million as of September 30, 2024, down from $275.3 million at the end of 2023. Total assets also fell to $348.8 million from $447.8 million. Current liabilities increased to $272.6 million, while stockholders’ equity dropped significantly to $60.1 million from $168.8 million.
Strategically, the company has focused on optimizing its subscription business and enhancing customer acquisition strategies. In August 2024, LegalZoom announced a restructuring plan that resulted in a 15% reduction in workforce, incurring $5.2 million in severance costs. The company has also been investing in artificial intelligence to improve its service offerings.
LegalZoom's stock repurchase program has been expanded to a total of $215 million as of November 2024, with $12.3 million remaining for future repurchases. The company faced challenges in cash flow, reporting a net decrease in cash and cash equivalents of $113.2 million for the nine months ended September 30, 2024, primarily due to stock repurchases.
Overall, while LegalZoom has seen growth in subscription revenue and profitability, it continues to navigate challenges related to business formations and macroeconomic conditions impacting consumer spending.
About LEGALZOOM.COM, INC.
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