Key Highlights

  • Third-quarter Revenue reached USD 195.1 million from USD 190.2 million, and Net Income rose to USD 8.1 million, or USD 0.05 a diluted share, versus USD 4.5 million, or USD 0.02.
  • Subscription income expanded to USD 139.7 million from USD 125.4 million, whereas transaction income retreated to USD 55.5 million from USD 64.8 million.
  • Adjusted EBITDA, a non-GAAP metric, grew to USD 50.0 million from USD 46.3 million, which moved the Margin to 26% from 24%.
  • Sales and Marketing spending climbed to USD 76.9 million from USD 67.8 million, while nine-month free Cash Flow eased to USD 108.8 million from USD 119.9 million.

Subscription Growth Outweighs a Transaction Slump

LegalZoom (NASDAQ:LZ) submitted its Quarterly Report on November 4, 2026, for the period through September 30. Total revenue grew roughly 2.6% (calculated) to USD 195.1 million. Subscription revenue advanced about 11% (calculated) to USD 139.7 million, while transaction revenue declined around 14% (calculated) to USD 55.5 million. The platform sells Business formation, compliance, intellectual property, virtual mail, bookkeeping and estate planning tools to individuals and small businesses online. Gross Profit rose to USD 138.1 million from USD 127.9 million, as cost of revenue fell to USD 57.1 million from USD 62.3 million.

Operating Income Doubles Despite Heavier Marketing Outlays

Income from operations reached USD 13.5 million against USD 6.5 million, slightly more than double. Sales and marketing climbed roughly USD 9.1 million (calculated), with customer Acquisition marketing at USD 51.1 million versus USD 44.2 million. Technology and development expense fell to USD 14.3 million from USD 19.5 million, and general and administrative costs eased to USD 33.3 million. The income tax provision came to USD 6.8 million, about 46% of pretax income (calculated), close to the prior year. Interest income slipped to USD 1.4 million from USD 2.1 million. A smaller diluted share count, down to 168.9 million from 186.7 million, supported per-share results. Nine-month net income rose to USD 14.3 million from USD 9.4 million on revenue of USD 607.2 million versus USD 565.8 million. Nine-month adjusted EBITDA hit USD 132.4 million against USD 122.3 million, although the prior-year period included a USD 14.3 million gain on the sale of Assets held for sale.

Search Algorithm Changes, Buybacks and the Amended 1-800Accountant Pact

The company's filing says search engine algorithm changes and AI-generated summaries are reducing organic traffic, pushing it toward paid search and Brand marketing, which may keep spending elevated. It is widening partnerships, including with AI platforms. In September 2026 the company amended its agreement with 1-800Accountant, extending the initial term to December 31, 2030. Cash stood at USD 181.7 million on September 30, against USD 203.1 million at year-end. The buyback authorization totals USD 415.0 million, and 15.1 million shares were repurchased during the nine months. Free cash flow, a non-GAAP measure, declined over nine months, and management plans to keep investing in Partnership channels.

Where Things Stand

Subscriptions, lower cost of revenue and fewer shares. LegalZoom (NASDAQ:LZ) lifted net income to USD 8.1 million on only modest revenue growth, and adjusted EBITDA margin rose two points to 26%. Those gains outweighed weaker one-time transactions, while heavier marketing and a shifting customer acquisition path are the offset. The extract reviewed gave no guidance figures. Watch whether transaction revenue stabilizes, how marketing costs trend and how buybacks and cash balances evolve.