LegalZoom.com, Inc. (Nasdaq: LZ) today announced results for its
second quarter ended June 30, 2023, including the following
highlights:
- Revenue was $168.9 million for
the quarter, up 4% year-over-year.
- Transaction revenue was
$60.5 million, down 7% year-over-year. The decline was
primarily driven by a 26% year-over-year reduction in average order
value driven by our nationwide roll-out of free LLC formations
beginning in the first quarter of 2023, partially offset by a 26%
increase in transaction volume.
- Subscription revenue was
$102.2 million, up 12% year-over-year. The increase was driven
by a 3% year-over-year increase in average revenue per subscription
unit and the addition of 159 thousand net new units added during
the trailing twelve months.
- Partner revenue was
$6.2 million, up 2% year-over-year.
- Gross margin was 62% for the
quarter, compared to 65% in the same period in 2022, primarily
driven by higher filing fees as a percentage of revenue due to an
increase in business formation volumes associated with our
nationwide roll-out of free LLC formations beginning in the first
quarter of 2023.
- Net income was $1.4 million for
the quarter, or 1% of revenue, compared to net loss of
$12.7 million or 8% of revenue, for the same period in
2022.
- Adjusted EBITDA was
$29.6 million for the quarter, or 18% of revenue, compared to
$18.1 million, or 11% of revenue, for the same period in
2022.
- Non-GAAP net income was
$19.0 million for the quarter, compared to $9.6 million
for the same period in 2022.
- Cash and cash equivalents were
$238.9 million as of June 30, 2023, compared to
$189.1 million as of December 31, 2022.
- Cash flow provided by operating
activities was $45.2 million for the three months ended
June 30, 2023 compared to $11.0 million for the same
period in 2022.
- Free cash flow was
$37.4 million for the three months ended June 30, 2023
compared to $5.6 million for the same period in 2022.
- Basic and diluted net income per
share was $0.01 for the quarter compared to a basic and diluted net
loss per share of $0.06 for the same period in 2022, and basic and
diluted Non-GAAP net income per share was $0.10 for the
quarter compared to basic and diluted Non-GAAP net income per share
of $0.05 for the same period in 2022.
- Subsequent to the end of the second quarter, LegalZoom
announced the launch of LZ Books, an online accounting solution
developed specifically for single member LLCs or sole proprietors.
LZ Books offerings include invoicing, payments and automated
expense categorization as well as seamless integration with
LegalZoom's LZ Tax product.
“The recent launch of LZ Books reaches across all our strategic
growth pillars while solving a large gap in the market. We are
setting ourselves apart as the sole online platform providing
solutions for small business needs required right at the time of
formation and beyond, all under one roof,” said Dan Wernikoff,
LegalZoom’s Chief Executive Officer.
Noel Watson, LegalZoom’s Chief Financial Officer added, “We are
pleased with our results for the second quarter, with record market
share gains and improving profitability helping to drive both
revenue and Adjusted EBITDA above the high end of our guidance
range.”
Key Business Metrics
and Non-GAAP Financial
Measures
(unaudited, in thousands except AOV, ARPU and percentages)
|
Three Months Ended |
|
% Growth |
|
Six Months Ended |
|
% Growth |
|
June 30, |
|
(Decline) |
|
June 30, |
|
(Decline) |
|
|
2023 |
|
|
|
2022 |
|
|
YOY |
|
|
2023 |
|
|
|
2022 |
|
|
YOY |
Revenue |
$ |
168,854 |
|
|
$ |
162,649 |
|
|
4 |
% |
|
$ |
334,790 |
|
|
$ |
318,076 |
|
|
5 |
% |
Business formations |
|
161 |
|
|
|
113 |
|
|
42 |
% |
|
|
331 |
|
|
|
242 |
|
|
37 |
% |
Transaction units |
|
283 |
|
|
|
225 |
|
|
26 |
% |
|
|
591 |
|
|
|
492 |
|
|
20 |
% |
Average order value (AOV) |
$ |
214 |
|
|
$ |
290 |
|
|
(26) |
% |
|
$ |
207 |
|
|
$ |
266 |
|
|
(22) |
% |
Subscription units at period end |
|
1,553 |
|
|
|
1,394 |
|
|
11 |
% |
|
|
1,553 |
|
|
|
1,394 |
|
|
11 |
% |
Average revenue per subscription unit (ARPU) at period end |
$ |
259 |
|
|
$ |
252 |
|
|
3 |
% |
|
$ |
259 |
|
|
$ |
252 |
|
|
3 |
% |
Net income (loss) |
$ |
1,395 |
|
|
$ |
(12,743 |
) |
|
111 |
% |
|
$ |
(963 |
) |
|
$ |
(38,496 |
) |
|
97 |
% |
Adjusted EBITDA |
$ |
29,645 |
|
|
$ |
18,080 |
|
|
64 |
% |
|
$ |
51,513 |
|
|
$ |
20,333 |
|
|
153 |
% |
Net income (loss) margin |
|
1 |
% |
|
|
(8) |
% |
|
111 |
% |
|
|
— |
% |
|
|
(12) |
% |
|
98 |
% |
Adjusted EBITDA margin |
|
18 |
% |
|
|
11 |
% |
|
57 |
% |
|
|
15 |
% |
|
|
6 |
% |
|
141 |
% |
Net cash provided by operating activities |
$ |
45,165 |
|
|
$ |
11,020 |
|
|
310 |
% |
|
$ |
74,373 |
|
|
$ |
24,757 |
|
|
200 |
% |
Free cash flow |
$ |
37,366 |
|
|
$ |
5,552 |
|
|
573 |
% |
|
$ |
59,146 |
|
|
$ |
14,378 |
|
|
311 |
% |
Certain percentages may not recalculate due to rounding. |
|
Financial Guidance and
Outlook
Our guidance for the third quarter ending September 30, 2023 is
as follows:
- Revenue is expected
to be in the range of $159 million to $161 million
- Adjusted EBITDA is
expected to be $26 million to $28 million
Our guidance for the full year ending December 31, 2023 is
updated as follows:
- Revenue is now
expected to be in the range of $642 million to $652 million
- Adjusted EBITDA is
now expected to be $105 million to $110 million
Webcast and Conference Call Information
A conference call to discuss LegalZoom’s second quarter 2023
results is scheduled for today, August 8, 2023, at 4:30 p.m.
Eastern time/1:30 p.m. Pacific time. Those interested in
participating in the conference call are invited to register
Here.
A live audio webcast of the event will be available on the
LegalZoom Investor Relations website,
https://investors.legalzoom.com. An archived replay of the webcast
also will be available shortly after the live event.
Forward-Looking Statements
This press release 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 of the
Securities Exchange Act of 1934. All statements other than
statements of historical facts contained in this press release may
be forward-looking statements. In some cases, you can identify
forward-looking statements by terms such as “may,” “will,”
“should,” “expects,” “plans,” “anticipates,” “could,” “intends,”
“targets,” “projects,” “contemplates,” “believes,” “estimates,”
“forecasts,” “predicts,” “potential” or “continue” or the negative
of these terms or other similar expressions. Forward-looking
statements contained in this press release include, but are not
limited to, statements regarding our quarterly and annual
guidance.
The forward-looking statements in this press release are only
predictions. We have based these forward-looking statements largely
on our current expectations and projections about future events and
financial trends that we believe may affect our business, financial
condition and results of operations. Forward-looking statements
involve known and unknown risks, uncertainties and other important
factors that may cause our actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements, including but not limited to the
following: the risk that our recent growth may not be indicative of
our future growth; our dependence on business formations and
fluctuations or declines in the number of business formations; the
impact of macroeconomic challenges on our business, including as a
result of inflation, global conflict, supply chain issues and
recessionary fears; our ability to provide high-quality services,
customer care and customer experience; our ability to sustain our
revenue growth rate and remain profitable in the future; our
ability to continue to innovate and provide a platform that is
useful to our customers and that meets our customers’ expectations;
our ability to attract and retain customers and, specifically, our
ability to convert our transactional customers to subscribers; our
ability to drive additional purchases and cross-sell to paying
customers; our ability to maintain and expand strategic
relationships with third parties; our anticipation of increasing
expenses in the future; the competitive legal solutions market; our
ability to hire and retain top talent and motivate our employees;
risks and costs associated with complex and evolving laws and
regulations; the risk that the recent restatement of certain of our
unaudited condensed consolidated financial statements may affect
investor confidence and raise reputational issues and may subject
us to additional risks and uncertainties; our ability to remediate
material weaknesses in our internal control over financial
reporting; and other factors discussed in the section titled “Risk
Factors” included in our Quarterly Report on Form 10-Q for the
three months ended March 31, 2023 filed with the Securities and
Exchange Commission, or SEC, on May 9, 2023, as well as those in
our subsequent filings with the SEC. The forward-looking statements
in this press release are based upon information available to us as
of the date of this press release, and while we believe such
information forms a reasonable basis for such statements, such
information may be limited or incomplete, and our statements should
not be read to indicate that we have conducted an exhaustive
inquiry into, or review of, all potentially available relevant
information. These statements are inherently uncertain and
investors are cautioned not to unduly rely upon these
statements.
You should read this press release with the understanding that
our actual future results, levels of activity, performance and
achievements may be materially different from what we expect. We
qualify all of our forward-looking statements by these cautionary
statements. Except as required by applicable law, we do not plan to
publicly update or revise any forward-looking statements contained
in this press release, whether as a result of any new information,
future events or otherwise.
About Non-GAAP Financial Measures
This press release includes non-GAAP financial
measures including Adjusted EBITDA, Adjusted EBITDA
margin, Non-GAAP net income, Non-GAAP net income margin,
Non-GAAP net income per share and Free cash flow. To supplement our
unaudited condensed consolidated financial statements, which are
prepared and presented in accordance with U.S. generally accepted
accounting principles, or GAAP, we use
certain non-GAAP financial measures, as described below,
to understand and evaluate our core operating performance.
These non-GAAP financial measures, which may be different
from similarly titled measures used by other companies, are
presented to enhance investors’ overall understanding of our
financial performance and liquidity and should not be considered a
substitute for, or superior to, the financial information prepared
and presented in accordance with GAAP. We believe that
these non-GAAP financial measures provide useful
information about our financial performance and liquidity, enhance
the overall understanding of our past performance and future
prospects and allow for greater transparency with respect to
important measures used by our management for financial and
operational decision-making. We are presenting
these non-GAAP measures to assist investors in seeing our
financial performance using a management view and because we
believe that these measures provide an additional tool for
investors to use in comparing our core financial performance over
multiple periods with other companies in our industry.
We define Adjusted EBITDA as Net income (loss) adjusted to
exclude interest income (expense), net, provision for (benefit
from) income taxes, depreciation and amortization, other expense
(income), net, stock-based compensation, impairments of other
securities, loss on debt extinguishment, impairment of goodwill,
long-lived and other assets, losses from impairment of
available-for-sale debt securities, legal expenses, restructuring
expenses, transaction-related expenses and certain other
non-recurring expenses. Our Adjusted EBITDA financial measure
differs from GAAP in that it excludes certain items of income and
expense. We define Adjusted EBITDA margin as Adjusted EBITDA as a
percentage of revenue.
Adjusted EBITDA is one of the primary performance measures used
by our management and our board of directors to understand and
evaluate our financial performance and operating trends, including
period-to-period comparisons, prepare and approve our annual
budget, develop short- and long-term operational plans and
determine appropriate compensation plans for our employees.
Accordingly, we believe that Adjusted EBITDA provides useful
information to investors and others in understanding and evaluating
our results of operations in the same manner as our management team
and board of directors. In assessing our performance, we exclude
certain expenses that we believe are not comparable period over
period. Adjusted EBITDA should not be considered in isolation of,
or as an alternative to, measures prepared and presented in
accordance with GAAP. There are a number of limitations related to
the use of Adjusted EBITDA rather than Net income (loss), which is
the nearest GAAP equivalent of Adjusted EBITDA, and it may be
calculated differently by other companies in our industry, limiting
its usefulness as a comparative measure. Some of these limitations
include that the non-GAAP financial measure:
- does not reflect interest income (expense), net, or the cash
requirements necessary to service interest or principal payments,
which reduces cash available to us;
- does not reflect provision for (benefit from) income taxes that
may result in payments that reduce cash available to us;
- excludes depreciation and amortization and, although these are
non-cash expenses, the assets being depreciated may be replaced in
the future;
- does not reflect foreign currency exchange or other gains or
losses, which are included in other (income) expense, net;
- excludes stock-based compensation expense, which has been, and
will continue to be, a significant recurring expense for our
business and an important part of our compensation strategy;
- excludes losses from impairments of goodwill, long-lived and
other assets and available-for-sale debt securities;
- excludes legal expenses, which reduce cash available to
us;
- excludes restructuring expenses, which reduce cash available to
us;
- excludes transaction-related expenses that are not considered
representative of our underlying performance, which reduce cash
available to us; and
- does not reflect certain other non-recurring expenses that are
not considered representative of our underlying performance, which
reduce cash available to us.
We define Non-GAAP net income as net income (loss) adjusted to
exclude amortization of acquired intangible assets, stock-based
compensation expense, certain transaction-related expenses, and
certain other non-recurring expenses, net of related income tax
impacts. Our Non-GAAP net income financial measure differs from
GAAP in that it excludes certain items of income and expense. We
define Net income (loss) margin as net loss as a percentage of
revenue. We define Non-GAAP net income (loss) margin as Non-GAAP
net income (loss) as a percentage of revenue. We define Non-GAAP
net income (loss) per share attributable to common stockholders as
Non-GAAP net income (loss) divided by basic and diluted
weighted-average common stock. We believe Non-GAAP net income
(loss) and Non-GAAP net income (loss) per share attributable to
common stockholders are operating performance measures that provide
investors and analysts with useful supplemental information about
the financial performance of our business.
Free cash flow is a liquidity measure used by management in
evaluating the cash generated by our operations after purchases of
property and equipment including
capitalized internal-use software. We consider Free cash
flow to be an important measure because it provides useful
information to management and investors about the amount of cash
generated by our business that can be used for strategic
opportunities, including investing in our business and
strengthening our balance sheet. Once our business needs and
obligations are met, cash can be used to maintain a strong balance
sheet and invest in future growth. The usefulness of Free cash flow
as an analytical tool has limitations because it excludes certain
items that are settled in cash, does not represent residual cash
flow available for discretionary expenses, does not reflect our
future contractual commitments, and may be calculated differently
by other companies in our industry. Accordingly, it should not be
considered in isolation or as a substitute for analysis of other
GAAP financial measures, such as net cash used in or provided by
operating activities.
We are not providing a reconciliation for our
non-GAAP outlook on a forward-looking basis (including the
information under “Financial Guidance and Outlook” above), as we
are unable to provide a meaningful calculation or estimation of
reconciling items and the information is not available without
unreasonable effort. This is due to the inherent difficulty of
forecasting the timing or amount of various items that would impact
the most directly comparable forward-looking GAAP financial measure
that have not yet occurred, are out of LegalZoom’s control and/or
cannot be reasonably predicted.
Forward-looking non-GAAP financial measures provided
without the most directly comparable GAAP financial measures may
vary materially from the corresponding GAAP financial measures.
The tables in this press release contain more details on the
GAAP financial measures that are most directly comparable
to non-GAAP financial measures and the related
reconciliations between these financial measures.
LegalZoom
LegalZoom is the leading online platform for business formation
in the United States. Driven by a mission to unleash
entrepreneurship, LegalZoom delivers comprehensive legal, tax and
compliance products and expertise for small business owners through
easy-to-use technology. From free business formations to business
management solutions and professional advisory services, LegalZoom
supports millions of small business owners and their families
throughout the entrepreneurial journey. Founded on the belief that
everyone should have affordable access to legal and financial
expertise, LegalZoom empowers entrepreneurs to make their dream a
reality. To learn more about LegalZoom, visit
www.legalzoom.com.
Contact
Investor Relations
investor@legalzoom.com
LegalZoom.com,
Inc.Unaudited Condensed Consolidated Balance
Sheets(In thousands, except par values)
|
June 30, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
238,937 |
|
|
$ |
189,082 |
|
Accounts receivable, net |
|
13,495 |
|
|
|
13,177 |
|
Prepaid expenses and other current assets |
|
13,308 |
|
|
|
16,699 |
|
Current assets held for sale |
|
22,722 |
|
|
|
22,722 |
|
Total current assets |
|
288,462 |
|
|
|
241,680 |
|
Property and equipment,
net |
|
38,894 |
|
|
|
30,823 |
|
Goodwill |
|
63,265 |
|
|
|
63,229 |
|
Intangible assets, net |
|
16,317 |
|
|
|
18,900 |
|
Operating lease right-of-use
assets |
|
9,875 |
|
|
|
11,148 |
|
Deferred income taxes |
|
21,831 |
|
|
|
29,380 |
|
Available-for-sale debt
securities |
|
1,004 |
|
|
|
995 |
|
Other assets |
|
8,989 |
|
|
|
9,240 |
|
Total assets |
$ |
448,637 |
|
|
$ |
405,395 |
|
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
33,307 |
|
|
$ |
25,312 |
|
Accrued expenses and other current liabilities |
|
52,349 |
|
|
|
57,373 |
|
Deferred revenue |
|
179,432 |
|
|
|
164,200 |
|
Operating lease liabilities |
|
2,405 |
|
|
|
2,317 |
|
Total current liabilities |
|
267,493 |
|
|
|
249,202 |
|
Operating lease liabilities,
non-current |
|
7,800 |
|
|
|
8,958 |
|
Deferred revenue |
|
711 |
|
|
|
892 |
|
Other liabilities |
|
4,284 |
|
|
|
3,968 |
|
Total liabilities |
|
280,288 |
|
|
|
263,020 |
|
Commitments and
contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.001 par value; 100,000 shares authorized at
June 30, 2023 and December 31, 2022, none issued or
outstanding at June 30, 2023 and December 31, 2022 |
|
— |
|
|
|
— |
|
Common stock, $0.001 par value; 1,000,000 shares authorized;
191,657 shares and 190,822 shares issued and outstanding at
June 30, 2023 and December 31, 2022, respectively |
|
191 |
|
|
|
190 |
|
Additional paid-in capital |
|
1,070,461 |
|
|
|
1,032,550 |
|
Accumulated deficit |
|
(902,633 |
) |
|
|
(891,862 |
) |
Accumulated other comprehensive income |
|
330 |
|
|
|
1,497 |
|
Total stockholders’ equity |
|
168,349 |
|
|
|
142,375 |
|
Total liabilities and
stockholders’ equity |
$ |
448,637 |
|
|
$ |
405,395 |
|
LegalZoom.com,
Inc.Unaudited Condensed Consolidated Statements of
Operations(In thousands, except per share amounts)
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
(Restated) |
|
|
|
(Restated) |
Revenue |
|
$ |
168,854 |
|
$ |
162,649 |
|
|
$ |
334,790 |
|
|
$ |
318,076 |
|
Cost of revenue |
|
|
63,748 |
|
|
57,151 |
|
|
|
124,143 |
|
|
|
113,333 |
|
Gross profit |
|
|
105,106 |
|
|
105,498 |
|
|
|
210,647 |
|
|
|
204,743 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
53,525 |
|
|
71,721 |
|
|
|
113,675 |
|
|
|
148,595 |
|
Technology and development |
|
|
19,900 |
|
|
16,197 |
|
|
|
39,583 |
|
|
|
34,156 |
|
General and administrative |
|
|
26,936 |
|
|
28,969 |
|
|
|
53,440 |
|
|
|
58,457 |
|
Total operating expenses |
|
|
100,361 |
|
|
116,887 |
|
|
|
206,698 |
|
|
|
241,208 |
|
Income (loss) from
operations |
|
|
4,745 |
|
|
(11,389 |
) |
|
|
3,949 |
|
|
|
(36,465 |
) |
Interest income (expense), net |
|
|
2,153 |
|
|
29 |
|
|
|
3,734 |
|
|
|
(24 |
) |
Other income (expense), net |
|
|
624 |
|
|
(2,022 |
) |
|
|
1,318 |
|
|
|
(3,566 |
) |
Income (loss) before income
taxes |
|
|
7,522 |
|
|
(13,382 |
) |
|
|
9,001 |
|
|
|
(40,055 |
) |
Provision for (benefit from) income taxes |
|
|
6,127 |
|
|
(639 |
) |
|
|
9,964 |
|
|
|
(1,559 |
) |
Net income (loss) |
|
$ |
1,395 |
|
$ |
(12,743 |
) |
|
$ |
(963 |
) |
|
$ |
(38,496 |
) |
Net income (loss) per share
attributable to common stockholders—basic |
|
$ |
0.01 |
|
$ |
(0.06 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.19 |
) |
Net income (loss) per share
attributable to common stockholders—diluted: |
|
$ |
0.01 |
|
$ |
(0.06 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.19 |
) |
Weighted-average shares used
to compute net income (loss) per share attributable to common
stockholders - basic |
|
|
191,342 |
|
|
197,819 |
|
|
|
191,318 |
|
|
|
198,040 |
|
Weighted-average shares used
to compute net income (loss) per share attributable to common
stockholders - diluted |
|
|
194,826 |
|
|
197,819 |
|
|
|
191,318 |
|
|
|
198,040 |
|
LegalZoom.com,
Inc.Unaudited Condensed Consolidated Statements of
Cash Flows(In thousands)
|
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
(Restated) |
Cash flows from
operating activities |
|
|
|
|
Net loss |
|
$ |
(963 |
) |
|
$ |
(38,496 |
) |
Adjustments to reconcile net
loss to net cash provided by operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
11,406 |
|
|
|
10,933 |
|
Amortization of right-of-use assets |
|
|
1,336 |
|
|
|
852 |
|
Amortization of debt issuance costs |
|
|
112 |
|
|
|
112 |
|
Impairment of other equity security |
|
|
— |
|
|
|
170 |
|
Stock-based compensation |
|
|
35,423 |
|
|
|
44,712 |
|
Deferred income taxes |
|
|
7,614 |
|
|
|
(2,109 |
) |
Change in fair value of contingent consideration |
|
|
(695 |
) |
|
|
(150 |
) |
Unrealized foreign exchange (gain) loss |
|
|
(1,104 |
) |
|
|
3,405 |
|
Other |
|
|
(1 |
) |
|
|
(1 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
(316 |
) |
|
|
(2,357 |
) |
Prepaid expenses and other current assets |
|
|
3,407 |
|
|
|
(417 |
) |
Other assets |
|
|
4 |
|
|
|
(338 |
) |
Accounts payable |
|
|
8,319 |
|
|
|
(13,553 |
) |
Accrued expenses and other liabilities |
|
|
(4,082 |
) |
|
|
6,921 |
|
Operating lease liabilities |
|
|
(1,132 |
) |
|
|
(1,642 |
) |
Income tax payable |
|
|
8 |
|
|
|
15 |
|
Deferred revenue |
|
|
15,037 |
|
|
|
16,700 |
|
Net cash provided by operating activities |
|
|
74,373 |
|
|
|
24,757 |
|
Cash flows from
investing activities |
|
|
|
|
Proceeds from acquisition
working capital adjustment |
|
|
— |
|
|
|
307 |
|
Purchase of property and
equipment |
|
|
(15,227 |
) |
|
|
(10,379 |
) |
Net cash used in investing activities |
|
|
(15,227 |
) |
|
|
(10,072 |
) |
Cash flows from
financing activities |
|
|
|
|
Repayment of capital lease
obligations |
|
|
(18 |
) |
|
|
— |
|
Payment of contingent
consideration |
|
|
— |
|
|
|
(600 |
) |
Repurchase of common
stock |
|
|
(9,809 |
) |
|
|
(39,155 |
) |
Shares surrendered for
settlement of minimum statutory tax withholding |
|
|
(2,469 |
) |
|
|
(30 |
) |
Proceeds from issuance of
stock under employee stock plans |
|
|
2,973 |
|
|
|
1,487 |
|
Net cash used in financing activities |
|
|
(9,323 |
) |
|
|
(38,298 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
|
32 |
|
|
|
(147 |
) |
Net increase (decrease) in
cash and cash equivalents |
|
|
49,855 |
|
|
|
(23,760 |
) |
Cash and cash equivalents, at
beginning of the period |
|
|
189,082 |
|
|
|
239,297 |
|
Cash and cash equivalents, at
end of the period |
|
$ |
238,937 |
|
|
$ |
215,537 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA and Adjusted EBITDA Margin
The following table presents a reconciliation of net income
(loss) to Adjusted EBITDA for each of the periods indicated
(unaudited):
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
(Restated) |
|
|
|
(Restated) |
|
|
(in thousands, except percentages) |
Reconciliation of net
income (loss) to Adjusted EBITDA |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
1,395 |
|
|
$ |
(12,743 |
) |
|
$ |
(963 |
) |
|
$ |
(38,496 |
) |
Interest (income) expense,
net |
|
|
(2,153 |
) |
|
|
(29 |
) |
|
|
(3,734 |
) |
|
|
24 |
|
Provision for (benefit from)
income taxes |
|
|
6,127 |
|
|
|
(639 |
) |
|
|
9,964 |
|
|
|
(1,559 |
) |
Depreciation and
amortization |
|
|
5,837 |
|
|
|
5,539 |
|
|
|
11,406 |
|
|
|
10,933 |
|
Other (income) expense,
net |
|
|
(624 |
) |
|
|
2,022 |
|
|
|
(1,318 |
) |
|
|
3,566 |
|
Stock-based compensation |
|
|
18,956 |
|
|
|
22,847 |
|
|
|
35,423 |
|
|
|
44,712 |
|
Transaction-related
expenses |
|
|
— |
|
|
|
92 |
|
|
|
— |
|
|
|
122 |
|
Restructuring costs(1) |
|
|
107 |
|
|
|
991 |
|
|
|
735 |
|
|
|
991 |
|
Legal expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
40 |
|
Adjusted EBITDA |
|
$ |
29,645 |
|
|
$ |
18,080 |
|
|
$ |
51,513 |
|
|
$ |
20,333 |
|
Net income (loss) margin |
|
|
1 |
% |
|
|
(8 |
%) |
|
|
— |
% |
|
|
(12 |
%) |
Adjusted EBITDA margin |
|
|
18 |
% |
|
|
11 |
% |
|
|
15 |
% |
|
|
6 |
% |
(1) |
For 2023,
restructuring expenses related to the reduction of our U.K.
headcount, which is expected to be substantially complete by
December 31, 2023. During the quarter ended June 30, 2022,
restructuring expenses related to a one-time severance event to
reduce the U.S. headcount. Restructuring expenses include salary
and benefits for the impacted employees and are included in general
and administrative expenses in the accompanying unaudited condensed
consolidated statements of operations. |
|
|
Non-GAAP Net Income, Non-GAAP Net Income
Margin and diluted Non-GAAP Net Income Per
Share
The following table presents a reconciliation of net income
(loss) to Non-GAAP net income for each of the periods
indicated (unaudited):
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
(Restated) |
|
|
|
(Restated) |
|
|
(in thousands, except per share amounts) |
Reconciliation of Net
income (loss) to Non-GAAP net income |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
1,395 |
|
|
$ |
(12,743 |
) |
|
$ |
(963 |
) |
|
$ |
(38,496 |
) |
Amortization of acquired
intangible assets |
|
|
1,291 |
|
|
|
790 |
|
|
|
2,582 |
|
|
|
1,460 |
|
Stock-based compensation |
|
|
18,956 |
|
|
|
22,847 |
|
|
|
35,423 |
|
|
|
44,712 |
|
Transaction-related
expenses |
|
|
— |
|
|
|
92 |
|
|
|
— |
|
|
|
122 |
|
Restructuring expenses |
|
|
107 |
|
|
|
991 |
|
|
|
735 |
|
|
|
991 |
|
Legal expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
40 |
|
Income tax effects(1) |
|
|
(2,714 |
) |
|
|
(2,406 |
) |
|
|
(4,744 |
) |
|
|
(4,683 |
) |
Non-GAAP net income |
|
$ |
19,035 |
|
|
$ |
9,571 |
|
|
$ |
33,033 |
|
|
$ |
4,146 |
|
Net income (loss) margin |
|
|
1 |
% |
|
|
(8 |
%) |
|
|
— |
% |
|
|
(12) |
% |
Non-GAAP net income margin |
|
|
11 |
% |
|
|
6 |
% |
|
|
10 |
% |
|
|
1 |
% |
Net income (loss) per share attributable to common
stockholders—basic |
|
$ |
0.01 |
|
|
$ |
(0.06 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.19 |
) |
Net income (loss) per share attributable to common
stockholders—diluted |
|
$ |
0.01 |
|
|
$ |
(0.06 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.19 |
) |
Non-GAAP net income per
share—basic |
|
$ |
0.10 |
|
|
$ |
0.05 |
|
|
$ |
0.17 |
|
|
$ |
0.02 |
|
Non-GAAP net income per
share—diluted |
|
$ |
0.10 |
|
|
$ |
0.05 |
|
|
$ |
0.17 |
|
|
$ |
0.02 |
|
Weighted-average shares used
to compute net income (loss) per share attributable to common
stockholders—basic |
|
|
191,342 |
|
|
|
197,819 |
|
|
|
191,318 |
|
|
|
198,040 |
|
Weighted-average shares used
to compute net income (loss) per share attributable to common
stockholders—diluted |
|
|
194,826 |
|
|
|
197,819 |
|
|
|
191,318 |
|
|
|
198,040 |
|
Weighted-average shares used
to compute Non-GAAP net income per share attributable to common
stockholders—basic |
|
|
191,342 |
|
|
|
197,819 |
|
|
|
191,318 |
|
|
|
198,040 |
|
Weighted-average shares used
to compute Non-GAAP net income per share attributable to
common stockholders—diluted |
|
|
194,826 |
|
|
|
200,266 |
|
|
|
193,703 |
|
|
|
200,957 |
|
(1) |
The estimated
income tax effect of
the non-GAAP pre-tax adjustments is determined by
applying the statutory rate of the originating jurisdiction, if
applicable. |
|
|
The following table shows the computation of basic and diluted
Non-GAAP net income per share attributable to common stockholders
(unaudited):
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
(Restated) |
|
|
|
(Restated) |
|
|
(in thousands, except per share amounts) |
Non-GAAP net income and Non-GAAP net income per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
Non-GAAP net income |
|
$ |
19,035 |
|
$ |
9,571 |
|
$ |
33,033 |
|
$ |
4,146 |
Reconciliation of denominator for net income (loss) per
share attributable to common stockholders to Non-GAAP net income
per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
Weighted-average shares used to compute Non-GAAP net income per
share attributable to common stockholders—basic: |
|
|
191,342 |
|
|
197,819 |
|
|
191,318 |
|
|
198,040 |
Effect of potentially dilutive securities: |
|
|
|
|
|
|
|
|
Stock options |
|
|
884 |
|
|
1,904 |
|
|
671 |
|
|
2,317 |
Restricted stock units |
|
|
2,583 |
|
|
527 |
|
|
1,706 |
|
|
584 |
Employee stock purchase plan |
|
|
17 |
|
|
16 |
|
|
8 |
|
|
16 |
Weighted-average common stock used in
computing Non-GAAP net income per share attributable to
common stockholders—diluted |
|
|
194,826 |
|
|
200,266 |
|
|
193,703 |
|
|
200,957 |
Non-GAAP net income per share attributable to common
stockholders—basic |
|
$ |
0.10 |
|
$ |
0.05 |
|
$ |
0.17 |
|
$ |
0.02 |
Non-GAAP net income per share attributable to common
stockholders—diluted |
|
$ |
0.10 |
|
$ |
0.05 |
|
$ |
0.17 |
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
The following table presents a reconciliation of net cash
provided by operating activities to free cash flow (unaudited):
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
(Restated) |
|
|
|
(Restated) |
|
|
(in thousands) |
Reconciliation of Net Cash Provided by Operating Activities
to Free Cash Flow |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
45,165 |
|
|
$ |
11,020 |
|
|
$ |
74,373 |
|
|
$ |
24,757 |
|
Purchase of property and equipment |
|
|
(7,799 |
) |
|
|
(5,468 |
) |
|
|
(15,227 |
) |
|
|
(10,379 |
) |
Free cash flow |
|
$ |
37,366 |
|
|
$ |
5,552 |
|
|
$ |
59,146 |
|
|
$ |
14,378 |
|
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