Legalzoom.com, Inc. · NASDAQ:LZ
Legalzoom.com — Q4 2022 Earnings Presentation
28 slides from Legalzoom.com's earnings presentation, Feb 23, 2023
Slide 1: Q4 2022 Investor Presentation
Q4 2022 Investor Presentation February 23, 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: Disclaimer (Continued): 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 democratize law
Our mission is to democratize law 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 3.7M Businesses • Formation Package (LLC, INC, Non-Profit) formed since inception (2003) • DBAs and EINs • Annual Reports, Operating Agreement Compliance Solutions Active subscribers of • Registered Agen
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 Q4 2022 Snapshot
Quarterly Q4 2022 Snapshot $147M $102M $26M total revenue adjusted gross profit(1) adjusted ebitda(1) +3% yoy 70% margin(1) 18% margin(1) 115K 211K 1,441K business formations transaction units subscription units +12% yoy flat yoy +8% yoy (1) This is a non-GAAP financial measure. Refer to the Appendi
Slide 11: Full Year 2022 Snapshot
Full Year 2022 Snapshot $620M $420M $64M total revenue adjusted gross profit(1) adjusted ebitda(1) +8% yoy 68% margin(1) 10% margin(1) 474K 929K 1,441K business formations transaction units subscription units (2%) yoy (5%) yoy +8% yoy (1) This is a non-GAAP financial measure. Refer to the Appendix f
Slide 12: Key Metrics
Key Metrics Business Formations(1) GAAP Revenue Adjusted EBITDA(2) YoY Growth % YoY Growth % % of Revenue (2) $163M $26M $155M $155M 132K 134K $150M$148M $147M 129K $142M 117K 115K $135M 114K 113K $22M 36% 103K $18M 59% $17M 27% $15M 34% 18% 15% 12% 12% 16% 15% 3% $7M 11% 11% 12% 10% (2%) (10%) (16%
Slide 13: Transaction Revenue Details
Transaction Revenue Details Transaction Revenue Transaction Units(1) AOV(2) $73M 276K 260K 267K $67M $65M $65M $61M 229K $58M 225K 226K $57M 211K 211K $51M $282 $291 $290 $267 $258 $245 $241 $223 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Year-ove
Slide 14: Subscription Revenue Details
Subscription Revenue Details Subscription Revenue Subscription Units(1) ARPU(2) $91M $91M $91M 1,441K $84M 1,362K 1,394K 1,415K $81M 1,329K 1,264K $73M 1,215K $69M 1,146K $65M $244 $252 $259 $258 $226 $230 $231 $236 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22
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 97% 99% $153M 95% $145M 90% 9% 89% 89% 7% 85% 15 $138M 10% $131M $128M $133M $135M 13 7% 7% 8% 8% 10% 82% 13 15 $120M 8% 8% 10 11 14 11 8% 7% 1
Slide 16: 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 $70M 79% $65M $66M 73% $64M $62M $59M 61% 53% 46% 46% 46% $46M 35% 33% 54 44 54 50 47 45 44 16% 13% 32 0% (1%) (10%) (16%) 22 16 14 15 17 18 17 (33%) 14 Q1'21 Q2
Slide 17: Profitability Metrics
Profitability Metrics Adjusted EBITDA(1) Free Cash Flow(1) % of Revenue (1) % of Revenue (1) $26M $29M $22M $21M $17M $16M $18M $17M $15M 21% $9M $6M $6M 14% 11% 11% 4% 6% 3% $7M 18% 15% -7% $4M 10% 11% 11% $2M 5% ($9M) 3% 1% Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'21 Q2'21 Q3'21 Q4'21 Q1
Slide 18: Q1 and FY23 Guidance Commentary
Q1 and FY23 Guidance Commentary Q1 2023 Commentary Total Revenue $153M - $157M • We continue to navigate a challenging and fluid macro environment, which we expect to decline by mid-single- digits and weigh on our revenue growth rates in FY 2023 Adj. EBITDA(1) $17M • We remain confident in our targe
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 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 20: Appendix
Appendix
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 Q1’21 Q2'21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Cost of revenue $154,563 $189,364 $211,095 $43,960 $49,859 $47,267 $48,278 $56,182 $57,151 $50,314 $47,448 Stock-based compensation(1) 108 1,662 2,931 28 707 779 148 277
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 Q1’21 Q2'21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Cost of revenue 33% 33% 34% 33% 33% 32% 34% 36% 35% 32% 32% Stock-based compensation(1) 0% 0% 0% 0% 0% 1% 0% 0% 1% 0% 0% 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 Q1’21 Q2'21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Cost of revenue 13% 23% 11% 25% 39% 8% 21% 28% 15% 6% (2%) Stock-based compensation(1) (7%) 1,439% 76% 22% 2,519% 2,497% 429% 889% 88% (23%)
Slide 24: 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 Q1’21 Q2'21 Q3'21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Gross profit $316,073 $385,716 $408,884 $90,672 $100,573 $100,612 $93,859 $99,245 $105,498 $104,963 $ 99,178 Cost of revenue stock-based 108 1,662 2,931 28 707 779 14
Slide 25: Reconciliation from Net Income (Loss) to Adjusted EBITDA
Reconciliation from Net Income (Loss) to Adjusted EBITDA FYE Dec 31, $K 2020 2021 2022 Q1’21 Q2'21 Q3'21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Net income (loss) $9,896 ($108,664) ($48,733) ($9,823) ($38,395) ($39,675) ($20,771) ($25,753) ($12,743) ($11,981) $1,744 Interest expense (income), net 35,504 27,98
Slide 26: 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 Q1’21 Q2'21 Q3'21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Net income (loss) $9,896 ($108,664) ($48,733) ($9,823) ($38,395) ($39,675) ($20,771) ($25,753) ($12,743) ($11,981) $1,744 Amortization of acquired intangibl
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 Q1’21 Q2'21 Q3'21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Net cash provided by (used in) $93,049 $54,152 $73,837 $31,415 $9,281 $19,460 ($6,004) $13,737 $11,020 $27,258 $21,822 operating activ
Slide 28: LegalZoom
Z LEGALZOOM