LegalZoom.com, Inc. reported a total revenue of $681.9 million for the fiscal year ending December 31, 2024, reflecting a 3% increase from $660.7 million in 2023. The growth was primarily driven by a 6% rise in subscription revenue, which accounted for 64% of total revenue, while transaction revenue saw a slight decline of 1%. The company achieved a net income of $30.0 million, a significant increase from $14.0 million in the previous year, marking a notable improvement in profitability.
The company experienced a 17% decrease in business formation transactions, which are critical as they often serve as the entry point for customers into the LegalZoom ecosystem. This decline was attributed to a challenging macroeconomic environment and the exit of certain partner channel relationships. Despite this, the total number of transactions increased by 8%, driven by the introduction of new services such as the beneficial ownership information report. Additionally, the number of subscription units rose by 14%, indicating a successful strategy in enhancing customer lifetime value through deeper engagement with existing customers.
Strategically, LegalZoom made significant moves in 2024, including the acquisition of Formation Nation, Inc. for $64.8 million in cash and stock. This acquisition is expected to enhance cross-selling opportunities and attract higher-value customers. The company also entered a three-year strategic partnership with 1-800Accountant, which is anticipated to create a revenue headwind in 2025 as it shifts its tax offerings. Furthermore, LegalZoom is focusing on integrating generative artificial intelligence into its services, which may improve customer experience and operational efficiency.
Operationally, LegalZoom maintained a workforce of 964 employees as of December 31, 2024, with an additional 600 contractors. The company reported a gross profit of $441.8 million, resulting in a gross margin of approximately 65%. The increase in gross profit was attributed to higher revenue, despite a slight rise in the cost of revenue. The company also reported a free cash flow of $99.9 million, up from $92.7 million in 2023, indicating strong cash generation capabilities.
Looking ahead, LegalZoom anticipates continued growth in subscription revenue and plans to optimize its product offerings. However, the company acknowledges potential challenges, including macroeconomic factors that could impact consumer spending and business formations. The ongoing integration of Formation Nation and the effectiveness of its marketing strategies will be critical in navigating these challenges and achieving its long-term objectives.
About LEGALZOOM.COM, INC.
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