At the end of the first quarter, the company had $141.2 million in cash and equivalents but $514.6 million of debt. While LegalZoom has reported strong results, its balance sheet is far from ideal. The company expects gross margin to continue increasing over time as it introduces greater automation into its online platform, and its share of subscription revenue expands. Its first-quarter revenue increased 27.3% year over year to $134.6 million.įree cash flow also rose 43.2% to $28.5 million during the quarter, while gross margin expanded half a percentage point to 67.3%. The company intends to expand its services into several areas important to small businesses, such as payroll, accounting, and even web hosting through partnerships.
From there, it encourages these new customers to adopt a subscription plan or pay for other services, such as a tax advisor (launched last year). It markets to small businesses to acquire new customers and to keep its business-formation numbers up. LegalZoom's growth strategy is straightforward. Business formations accounted for over 40% of transaction volume last year. The company had 378,000 business formation orders placed last year, up from 292,000 in 2019. The importance of its small-business customers means LegalZoom's number of business formations is a key metric. Partner revenue declined last year as the company decided to stop some partner arrangements that didn't align with its strategies.
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