Legalzoom Revenue 2019

In terms of financial results, total revenue increased by 15% year-on-year, above the upper limit of the range of previous forecasts. Operationally, LegalZoom has consolidated its revenue streams into three distinct categories. The most important of them are classified as subscriptions at the time of writing. This part of the business includes ongoing subscription services to help the company generate high-margin recurring revenue. In short, it all revolves around topics like compliance and taxes instead of one-off offerings that the company sells. In fiscal 2020, the company had 1.09 million subscribers, up from 921,000 the year before. And the average revenue per subscriber per year was $223. That`s up from $221 a year earlier. In the Company`s 2020 fiscal year, revenues from these activities represented 48.8% of the Company`s total revenue. Much of this growth comes from the increase in the number of underwriting units for the company, which reached 1.26 million at the end of the last full quarter for which data is available.

This corresponds to an increase of 21.2% compared to the previous year and an increase of 16.5% compared to the end of the 2020 financial year. It`s also worth noting that the company enjoyed a 4.5% increase in average revenue per subscription unit during that period, with revenue rising from $221 to $231. This is not to say that the company has not benefited from other improvements. In the first nine months of last year, the company recorded 765,000 completed transactions. This is an increase from the 696,000 reported a year earlier. This is due, among other things, to an increase in the number of start-ups from 290,000 to 351,000. Also during this period, the average order value per transaction increased 15.9%, from $227.00 to $263. The company also makes money from affiliate revenue, which consists primarily of one-time or recurring fees from third-party leads generated by its platform. “The majority of our transaction revenue is generated through the provision of incorporation services to guide our clients through the transition of future business owners to the actual start-up of their business. We provide business formation services for LLCs, corporations, and “non-profit organizations,” the company wrote. Small businesses are often seen as America`s lifeblood, and for good reason: According to a 2019 report from the Small Business Administration, small businesses create two-thirds of net new jobs and account for nearly 44 percent of U.S.

GDP. While the company is not a pure Software-as-a-Service (SaaS) company, the Rule of 40 is a software industry rule of thumb that states that the company is on an acceptable growth/EBITDA trajectory as long as the combined revenue growth rate and percentage EBITDA rate reach or exceed 40%. The main risk to the company`s outlook is a possible macroeconomic slowdown or recession, which could slow sales cycles and reduce revenue growth estimates. One thing LegalZoom has suffered from is low profitability over the years. In 2019, the company generated a profit of just $5.5 million. In comparison, it generated $7.3 million in 2020. In the first nine months of 2021, profits were particularly hard hit, with the company posting a loss of $87.9 million. In comparison, it made a profit of $0.48 million during the same period a year earlier.

However, it should be noted that this is a small, fast-growing business. Management devotes a lot of capital to growth. Consider, for example, that an increase in expenses, which are largely voluntary, increased sales and marketing expenses from 37.5% of revenues to 48.4% and administrative overhead expenses from 10.2% to 17.4%. A significant increase in costs for the company was non-cash stock-based compensation. In the first nine months of 2020, it was only $10.62 million. At the same time, a year later, it stood at $86.96 million. Little data is provided via LegalZoom in the sense that the financial data is only from 2019. But the data we have is shown by a company growing up in a beautiful clip. In that year, revenues were $408.4 million. In 2020, it increased 15.2% to $470.6 million.

Growth continued for most of fiscal 2021, with revenues for the first nine months of the fiscal year being $432.9 million. This represents an increase from the $348.4 million generated by the company at 24.3% in the first three quarters of 2020. All this makes it really difficult to analyze the company. Because if you decide to evaluate it based on metrics that can be changed to drive stronger long-term growth, you`re essentially penalizing the company for management`s decision to invest in these growth initiatives. Nevertheless, I have evaluated the company and the data does not seem so good at first glance. For example, the company`s operating cash flow price is 44.4 when we extrapolate earnings for the remainder of fiscal 2021. Using a management guidance of approximately $46 million for EBITDA on revenues between $575 million and $579 million, we arrive at a multiple of electric vehicle EBITDA of 59.1. These figures would be significantly lower than 32.6 and 30.9.

Instead, if we applied the same 2020 margins to fiscal 2021 results, those multiples would be 26.6 and 25.2, respectively. For a company that is expected to increase revenue by 22.7% for 2021 while running out of debt and $310.70 million in cash, this price doesn`t seem too bad. While the company offers consumer-facing products such as living wills, estate trust planning, divorce, wills and property transfers, its main clients are small business owners and the company divides its income into three categories. The biggest source of revenue for LegalZoom is its subscription revenue, which accumulates when its clients pay for subscriptions to compliance packages, legal advice, and legal forms, in addition to its software-as-a-service subscriptions in the UK. In the fourth quarter of 2020, the company also began providing tax, accounting and payroll subscriptions. The company derives the majority of its revenue from software fees Total revenue per quarter has increased in recent quarters, albeit unevenly: The second largest stream for LegalZoom is transaction revenue from our customized legal document services, including corporate filings, as well as related services for small business owners and their families. such as business start-ups, annual compliance filings, intellectual property, estate planning documents, forms and agreements. In its most recent conference call (Source – Seeking Alpha), which focuses on Q1 2022 results, management highlighted 29% year-over-year subscription revenue growth and generated $84 million (55% of total revenue) from the LZ tax system during the busy quarter of the U.S. tax season. The Company is expected to report in Q2 following the close on August 11. The share of sales and general and administrative expenses in total revenue per quarter has generally increased in recent quarters: however, business start-ups decreased by 2% in the quarter, impacting related services revenues.

LegalZoom`s revenue reached $470.6 million last year, up 15% from $408.4 million in revenue in 2019. This year, the company invested money in its marketing budget and revenue increased 27% in the first quarter compared to the same period last year. Sales and marketing expenses accounted for 47% of sales, which remained essentially unchanged, as I can see from management`s comments. Leadership will be led by CEO Dan Wernikoff, who joined the company in October 2019 and was previously Executive Vice President and General Manager of Intuit`s Consumer Tax Group. The company says startups account for the majority of its total transaction orders and that it has increased its share of total U.S. business creations from 8.7 percent in 2019 to 10.0 percent in 2020, an increase of 15 percent. Then we have transactional activity. This mainly focuses on one-off activities such as business creation. In fiscal 2020, the company completed 829,000 transactions, including 378,000 start-ups. This is an increase from the 691,000 transactions and 292,000 start-ups worked in 2019.

Average revenue per transaction also increased from $230 to $236. It should be noted that this particular part of the business generated 45.1% of total revenue for the 2020 financial year. And finally, we come to partner sales.