2 Reasons to Like LZ and 1 to Stay Skeptical Anthony Lee Wed, October 7, 2026 at 10:08 AM EDT 3 min read ^GSPC -0.59% LZ +0.61% Trade LZ on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
LegalZoom has been treading water for the past six months, recording a small loss of 3.6% while holding steady at $5.78. The stock also fell short of the S&P 500's 17.5% gain during that period.
Founded by famous lawyer Robert Shapiro, LegalZoom (NASDAQ:LZ) offers online legal services and documentation assistance for individuals and businesses.
As an online marketplace, LegalZoom generates revenue growth by increasing both the number of users on its platform and the average order size in dollars.
Over the last two years, LegalZoom's subscription units, a key performance metric for the company, increased by 10.7% annually to 1.89 million in the latest quarter. This growth rate is strong for a consumer internet business and indicates people love using its offerings.
Average revenue per user (ARPU) is a critical metric to track because it measures how much the company earns in transaction fees from each user. ARPU also gives us unique insights into a user's average order size and LegalZoom's take rate, or "cut", on each order.
LegalZoom's ARPU growth has been exceptional over the last two years, averaging 17.2%. Its ability to increase monetization while growing its subscription units at an impressive rate reflects the strength of its platform, as its users are spending significantly more than last year.
A company's long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, LegalZoom's 7.6% annualized revenue growth over the last three years was tepid. This wasn't a great result compared to the rest of the consumer internet sector, but there are still things to like about LegalZoom.
LegalZoom has huge potential even though it has some open questions. With its shares trailing the market in recent months, the stock trades at 4.2× forward EV/EBITDA (or $5.78 per share). Is now a good time to initiate a position? See for yourself in our full research report, it's free.
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