LegalZoom Reports 9% Revenue Growth to $192.5 Million in Q2 2025

LegalZoom.com, Inc. reported its financial results for the second quarter of 2025, revealing a revenue increase of 9% to $192.5 million compared to $177.4 million in the same period last year. For the first half of 2025, total revenue reached $375.6 million, up from $351.6 million in the prior year. The growth was primarily driven by a 10% increase in subscription revenue, which accounted for 62% of total revenue, and a 6% rise in transaction revenue. However, the company recorded a net loss of $266,000 for the quarter, a decline from a net income of $1.3 million in Q2 2024, reflecting increased operating expenses and a significant rise in stock-based compensation.

The company's operating expenses rose to $128.2 million in the second quarter, up from $112.6 million a year earlier. This increase was largely attributed to higher sales and marketing costs, which grew by 16% to $69.6 million, driven by an expanded workforce following the acquisition of Formation Nation, Inc. Additionally, general and administrative expenses surged by 39% to $37.0 million, primarily due to increased stock-based compensation. The company also reported a gross profit of $125.1 million, representing a gross margin of 65%, slightly improved from 64% in the previous year.

LegalZoom's acquisition of Formation Nation, completed in February 2025 for approximately $83.5 million, contributed approximately $8.4 million to transaction revenue in the second quarter. The acquisition is expected to enhance LegalZoom's service offerings and customer base, aligning with its strategy to attract higher-value customers. The company also reported a 22% increase in subscription units year-over-year, reaching 1.96 million, driven by the bundling of new products into business formation offerings.

Operationally, the number of business formations decreased by 2% in Q2 2025 compared to the previous year, attributed to a decline in direct channel business formations. However, the overall U.S. business formations grew by 7% during the same period, indicating a potential market share challenge for LegalZoom. The company’s cash and cash equivalents increased significantly to $217.0 million as of June 30, 2025, up from $142.1 million at the end of 2024, bolstered by proceeds from stock option exercises and the sale of its operational headquarters.

Looking ahead, LegalZoom anticipates continued growth in subscription revenue and customer engagement, despite potential macroeconomic challenges. The company plans to leverage its recent acquisition to enhance its service offerings and improve customer lifetime value. LegalZoom remains focused on optimizing its product lineup and expanding its market presence, while also managing operational costs to improve profitability in the coming quarters.