Legalzoom.com, Inc. · NASDAQ:LZ
Legalzoom.com — Q2 2023 Earnings Presentation
28 slides from Legalzoom.com's earnings presentation, Aug 8, 2023
Slide 1: Q2 2023 Investor Presentation
Q2 2023 Investor Presentation August 8, 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 21
Slide 3: Disclaimer (Continued): About Non-GAAP Financial Measures
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 | COMPLIANCE | INTELLECTUAL PROPERTY Key Pain Points Legal matters Expertise is Remaining compliant is are difficult to navigate expensive and difficult a complex, evergreen on your own to find problem 5
Slide 6: LegalZoom
LegalZoom The easiest way to form, protect and keep your business compliant Formation Solutions Compliance Solutions Intellectual Property • Formation Package (LLC, INC, Non-Profit) • Registered Agent / Virtual Mail • Trademarks • DBAs and EINs • Legal Expertise / Legal Forms & e-Signature • Copyrig
Slide 7: Strategic Pillars
Strategic Pillars Scale the Business Build the Ecosystem Integrate Experts • Improve marketing efficiency • Build core offerings • Assisted tax services • Reimagine current offerings and • Expand partner channels • Assisted legal services launch new products • Drive greater customer • Enhance servic
Slide 8: Recent Launch: LZ Books
Recent Launch: LZ Books Building the ecosystem of offerings to help small businesses succeed A simple accounting solution designed for solopreneurs. Capabilities include: • Customized proposals and invoices • Payments • Automated income and expense categorization • Seamless integration with LZ Tax R
Slide 9: Our management team
Our management team Our team is experienced in small business and consumer innovation at scale Dan Wernikoff Noel Watson Rich Preece Shrisha Radhakrishna Chief Executive Officer Chief Financial Officer Chief Operations & Product Officer Chief Technology Officer Nicole Miller Sheily Chhabria Panchal
Slide 10: Financial Update
Financial Update LEGAL7Z90mM
Slide 11: Quarterly Q2 2023 Snapshot
Quarterly Q2 2023 Snapshot $169M $109M $30M total revenue adjusted gross profit(1) adjusted ebitda(1) +4% yoy 65% margin(1) 18% margin(1) 161K 283K 1,553K business formations transaction units subscription units +42% yoy +26% yoy +11% yoy (1) This is a non-GAAP financial measure. Refer to the Append
Slide 12: Key Metrics
Key Metrics Business Formations(1) GAAP Revenue Adjusted EBITDA(2) YoY Growth % YoY Growth % % of Revenue(2) 170K 161K $169M $30M $166M $26M 129K $163M 114K 117K 115K 113K $155M $22M $155M 103K $18M 42% $17M $148M 32% $147M $15M $142M 18% 18% 12% 12% 3% 16% 15% 13% (2%) 11% (10%) 12% 10% $7M 11% (16
Slide 13: Transaction Revenue Details
Transaction Revenue Details Transaction Revenue Transaction Units(1) AOV(2) $67M 308K $65M $65M $62M 283K $60M 267K $58M $57M $51M 229K 225K 226K 211K 211K $291 $290 $267 $258 $245 $241 $202 $214 Year-over-year Growth % Year-over-year Growth % 5% 8% 6% (11%) (13%) (10%) (5%) (7%) Trx Units (10%) 8%
Slide 14: Subscription Revenue Details
Subscription Revenue Details Subscription Revenue Subscription Units(1) ARPU(2) $102M 1,553K $97M 1,501K $91M $91M $91M 1,415K 1,441K 1,362K 1,394K $84M 1,329K $81M 1,264K $73M $252 $259 $258 $259 $259 $231 $236 $244 Year-over-year Growth % Year-over-year Growth % 24% 29% 29% 32% 25% 13% 15% 12% Sub
Slide 15: 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% 90% 9% 89% 89% $145M $144M 10% 87% 15 $138M $139M $133M $135M 13 7% 8% 8% 10% 82% 82% 15 8% 9% 13 15 15 8% 11 14 11 $120M 7% 11%
Slide 16: Non-GAAP Sales & Marketing Detail
Non-GAAP Sales & Marketing Detail (1) $M by Spend Category % YoY Growth by Spend Category Customer Acquisition Media “CAM” Other Sales & Marketing $72M 73% $65M $66M $64M $62M $57M 53% 46% 46% $51M $46M 33% 54 44 50 47 45 41 16% 13% 36 32 0% (1%) (10%) (8%) (16%) (18%) 22 (24%) 15 17 18 17 17 14 15
Slide 17: Profitability Metrics
Profitability Metrics Adjusted EBITDA(1) Free Cash Flow(1) % of Revenue(1) % of Revenue(1) $37M $30M $26M $21M $22M $22M $17M $16M $18M 22% $17M $15M $9M 14% 13% 11% 11% $6M 6% 3% 18% 18% $7M 13% (7%) 10% 11% 11% 5% $2M ($9M) 1% (1) These are non-GAAP financial measures. Refer to the Appendix for a
Slide 18: Q3 and FY23 Guidance Commentary
Q3 and FY23 Guidance Commentary Q3 2023 Commentary Total Revenue $159M - $161M • Remain confident in growing market share by 15% in FY 2023 Adj. EBITDA(1) $26M - $28M • Continued improvement in FY 2023 Adjusted EBITDA margin to 17% at the midpoint (vs. 16% previously) FY 2023 Total Revenue $642M - $
Slide 19: 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 Targets(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 (exc. CAM)(1) 25% 26% 29% 21-23% Adj. EBITDA Margin(1) 19% 8%
Slide 20: Appendix
Appendix LEGAL7Z90mM
Slide 21: Reconciliation of GAAP Expenses to Non-GAAP Expenses
Reconciliation of GAAP Expenses to Non-GAAP Expenses FYE Dec 31, $K 2020 2021 2022 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Cost of revenue $154,563 $189,364 $211,095 $47,267 $48,278 $56,182 $57,151 $50,314 $47,448 $60,395 $63,749 Stock-based compensation(1) 108 1,662 2,931 779 148 277 1,331
Slide 22: 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 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Cost of revenue 33% 33% 34% 32% 34% 36% 35% 32% 32% 36% 38% Stock-based compensation(1) 0% 0% 0% 1% 0% 0% 1% 0% 0% 1% 1% Depreciation and amortiz
Slide 23: 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 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Cost of revenue 13% 23% 11% 8% 21% 28% 15% 6% (2%) 7% 12% Stock-based compensation(1) (7%) 1,439% 76% 2,497% 429% 889% 88% (23%) 391% 216% (1
Slide 24: Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit
Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit FYE Dec 31, $K 2020 2021 2022 Q3'21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Gross profit $316,073 $385,716 $408,884 $100,612 $93,859 $99,245 $105,498 $104,963 $ 99,178 $105,541 $105,106 Cost of revenue stock-based compensation(1) 108 1,6
Slide 25: Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA
Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA FYE Dec 31, $K 2020 2021 2022 Q3'21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Net income (loss) $9,896 ($108,664) ($48,733) ($39,675) ($20,771) ($25,753) ($12,743) ($11,981) $1,744 ($2,358) $1,395 Interest expense (income), net 35,504 27,98
Slide 26: Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss)
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (Loss) FYE Dec 31, $K 2020 2021 2022 Q3'21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Net income (loss) $9,896 ($108,664) ($48,733) ($39,675) ($20,771) ($25,753) ($12,743) ($11,981) $1,744 ($2,358) $1,395 Amortization of acquired intangi
Slide 27: 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 Q3'21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Net cash provided by (used in) $93,049 $54,152 $73,837 $19,460 ($6,004) $13,737 $11,020 $27,258 $21,822 $29,208 $45,165 operating acti
Slide 28: LegalZoom
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