Legalzoom.com, Inc. · NASDAQ:LZ
Legalzoom.com — Q1 2023 Earnings Presentation
27 slides from Legalzoom.com's earnings presentation, May 9, 2023
Slide 1: Q1 2023 Investor Presentation
Q1 2023 Investor Presentation May 9, 2023
Slide 2: LegalZoom.com, Inc. Disclaimer
LegalZoom.com, Inc. Disclaimer Forward-Looking Statements This presentation contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E
Slide 3: LegalZoom.com, Inc. Disclaimer (Continued)
LegalZoom.com, Inc. Disclaimer (Continued) About Non-GAAP Financial Measures This presentation includes certain non-GAAP financial measures including Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP net income (loss), non-GAAP net income (loss) margin, adjusted gross profit, adjusted gross profit m
Slide 4: Our mission is to unleash entrepreneurship
Our mission is to unleash entrepreneurship 4
Slide 5: We protect businesses, their ideas, and the families that create them
We protect businesses, their ideas, and the families that create them BUSINESS FORMATION | INTELLECTUAL PROPERTY | COMPLIANCE Key Pain Points Legal matters are difficult Expertise is expensive Remaining compliant is a to navigate on your own and difficult to find complex, evergreen problem 5
Slide 6: LegalZoom
LegalZoom The easiest way to form, protect, and keep your business compliant Formation Solutions 3.8M Businesses • Formation Package (LLC, INC, Non-Profit) formed since inception (2003) • DBAs and EINs • Annual Reports, Operating Agreement Compliance Solutions Active subscribers of $0 • Registered A
Slide 7: We have multiple ways to drive growth
We have multiple ways to drive growth Scale the Build the Integrate Business Ecosystem Experts Improve marketing Build core offerings Assisted tax services efficiency Reimagine current Expand partner Assisted legal offerings and launch channels services new products Enhance fulfillment Drive greater
Slide 8: Our management team is experienced in small business and consumer innovation at scale
Our management team is experienced in small business and consumer innovation at scale Dan Wernikoff Noel Watson Sheily Chhabria Panchal Rich Preece Chief Executive Officer Chief Financial Officer Chief Operating & Product Officer Chief People Officer Nicole Miller Shrisha Radhakrishna Kathy Tsitovic
Slide 9: Financial Update
Financial Update ZL, LEGALZOOM
Slide 10: Quarterly Q1 2023 Snapshot
Quarterly Q1 2023 Snapshot $166M $109M $22M total revenue adjusted gross profit(1) adjusted ebitda(1) +7% yoy 66% margin(1) 13% margin(1) 170K 308K 1,501K business formations transaction units subscription units +32% yoy +15% yoy +10% yoy (1) This is a non-GAAP financial measure. Refer to the Append
Slide 11: Key Metrics
Key Metrics Business Formations(1) GAAP Revenue Adjusted EBITDA(2) YoY Growth % YoY Growth % % of Revenue (2) 170K $166M $26M $163M 134K $22M $22M 129K 114K 117K 115K $155M 113K $155M $18M 103K $17M $150M $15M 34% 36% $148M $147M 32% 18% $142M 15% 12% 12% 13% 3% $7M 11% 11% 10% (2%) 16% 15% (10%) (1
Slide 12: Transaction Revenue Details
Transaction Revenue Details Transaction Revenue Transaction Units(1) AOV(2) $73M $67M 308K $65M $65M $62M $58M 260K 267K $57M $51M 229K 225K 226K 211K 211K $282 $291 $290 $267 $258 $245 $241 $202 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Year-ove
Slide 13: Subscription Revenue Details
Subscription Revenue Details Subscription Revenue Subscription Units(1) ARPU(2) 1,501K $97M 1,394K 1,415K 1,441K $91M $91M $91M 1,329K 1,362K $84M 1,215K 1,264K $81M $73M $69M $244 $252 $259 $258 $259 $230 $231 $236 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22
Slide 14: Non-GAAP Expenses
Non-GAAP Expenses(1) $M by Spend Category % of Revenue by Spend Category Cost of Revenue Technology & Development Sales & Marketing General & Administrative 99% $153M 95% $145M $144M 90% 9% 89% 89% 85% 87% 15 $138M 10% $133M $135M 7% 8% 8% 82% $128M 13 15 10% 9% 13 15 $120M 8% 8% 11 14 11 8% 7% 11%
Slide 15: Non-GAAP Sales & Marketing Detail
Non-GAAP Sales & Marketing Detail(1) $M by Category % YoY Growth by Category Customer Acquisition Media “CAM” Other Sales & Marketing $72M $65M $66M 73% $64M $62M $59M $57M 61% 53% 46% 46% $46M 35% 33% 54 44 50 47 45 44 41 16% 13% 32 0% (1%) (10%) (8%) (16%) 22 (24%) 14 15 17 18 17 17 (33%) 14 Q2'21
Slide 16: Profitability Metrics
Profitability Metrics Adjusted EBITDA(1) Free Cash Flow(1) % of Revenue (1) % of Revenue (1) $21M $22M $26M $17M $16M $22M $22M $18M $9M $17M $6M $6M $15M 14% 13% 11% 11% 4% 6% 3% $7M 18% 15% 13% -7% 10% 11% 11% $2M 5% ($9M) 1% Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'21 Q3'21 Q4'21 Q1'22
Slide 17: Q2 and FY23 Guidance Commentary
Q2 and FY23 Guidance Commentary Q2 2023 Commentary Total Revenue $166M - $168M • We continue to navigate a fluid macro environment and have increased our Q2 macro assumption while maintaining a mid-single-digit decline expectation in the Adj. EBITDA(1) $27M - $29M second half of FY 2023 • We remain
Slide 18: GAAP and Non-GAAP Long-term Financial Goals
GAAP and Non-GAAP Long-term Financial Goals Long-Term GAAP and Non-GAAP Measures ’20A ’21A ’22A Target(2) Revenue Growth 15% 22% 8% 24% + Gross Margin (GAAP) 67% 67% 66% 71-73% Customer Acquisition Marketing 25% 34% 28% 18-22% “CAM” OpEx (excl. CAM)(1) 25% 26% 29% 21-23% Adj. EBITDA Margin(1) 19% 8%
Slide 19: Appendix
Appendix
Slide 20: Reconciliation of GAAP Expenses to Non-GAAP Expenses
Reconciliation of GAAP Expenses to Non-GAAP Expenses FYE Dec 31, $K 2020 2021 2022 Q2'21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Cost of revenue $154,563 $189,364 $211,095 $49,859 $47,267 $48,278 $56,182 $57,151 $50,314 $47,448 $60,395 Stock-based compensation(1) 108 1,662 2,931 707 779 148 277 1,
Slide 21: Reconciliation of GAAP Expenses to Non-GAAP Expenses on a % of Revenue Basis
Reconciliation of GAAP Expenses to Non-GAAP Expenses on a % of Revenue Basis FYE Dec 31, $K 2020 2021 2022 Q2'21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Cost of revenue 33% 33% 34% 33% 32% 34% 36% 35% 32% 32% 36% Stock-based compensation(1) 0% 0% 0% 0% 1% 0% 0% 1% 0% 0% 1% Depreciation and amortiz
Slide 22: Reconciliation of GAAP Expenses to Non-GAAP Expenses on a Year-over-Year % Basis
Reconciliation of GAAP Expenses to Non-GAAP Expenses on a Year-over-Year % Basis FYE Dec 31, $K 2020 2021 2022 Q2'21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Cost of revenue 13% 23% 11% 39% 8% 21% 28% 15% 6% (2%) 7% Stock-based compensation(1) (7%) 1,439% 76% 2,519% 2,497% 429% 889% 88% (23%) 391%
Slide 23: Reconciliation of Gross Profit to Non-GAAP Gross Profit
Reconciliation of Gross Profit to Non-GAAP Gross Profit FYE Dec 31, $K 2020 2021 2022 Q2'21 Q3'21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Gross profit $316,073 $385,716 $408,884 $100,573 $100,612 $93,859 $99,245 $105,498 $104,963 $ 99,178 $105,541 Cost of revenue stock-based 108 1,662 2,931 707 779 148
Slide 24: Reconciliation from Net Income (Loss) to Adjusted EBITDA
Reconciliation from Net Income (Loss) to Adjusted EBITDA FYE Dec 31, $K 2020 2021 2022 Q2'21 Q3'21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Net income (loss) $9,896 ($108,664) ($48,733) ($38,395) ($39,675) ($20,771) ($25,753) ($12,743) ($11,981) $1,744 ($2,358) Interest expense (income), net 35,504 27,98
Slide 25: Reconciliation of Net Income (Loss) to Non-GAAP Net Income (Loss)
Reconciliation of Net Income (Loss) to Non-GAAP Net Income (Loss) FYE Dec 31, $K 2020 2021 2022 Q2'21 Q3'21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Net income (loss) $9,896 ($108,664) ($48,733) ($38,395) ($39,675) ($20,771) ($25,753) ($12,743) ($11,981) $1,744 ($2,358) Amortization of acquired intangibl
Slide 26: Reconciliation of Net Cash from Operating Activities to Free Cash Flow
Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow FYE Dec 31, $K 2020 2021 2022 Q2'21 Q3'21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Net cash provided by (used in) $93,049 $54,152 $73,837 $9,281 $19,460 ($6,004) $13,737 $11,020 $27,258 $21,822 $29,208 operating activ
Slide 27: LegalZoom
Z LEGALZOOM