| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 33.87 | 281 |
| Intrinsic value (DCF) | 4.27 | -52 |
| Graham-Dodd Method | 1.00 | -89 |
| Graham Formula | 1.86 | -79 |
LegalZoom.com, Inc. (NASDAQ: LZ) is a pioneering online legal and compliance solutions provider, serving small businesses and individuals in the United States. Founded in 1999 and headquartered in Glendale, California, LegalZoom has revolutionized access to legal services through its digital platform, offering business formations, estate planning, intellectual property protection, tax preparation, and attorney consultations. Operating in the Specialty Business Services sector, the company leverages technology to democratize legal assistance, reducing costs and complexity for its customers. With a market capitalization of approximately $1.68 billion, LegalZoom continues to expand its suite of services, positioning itself as a leader in the growing legal tech industry. Its scalable platform and recurring revenue model make it a key player in the digital transformation of legal services.
LegalZoom presents a compelling investment opportunity due to its strong market position in the online legal services sector, recurring revenue streams, and scalable business model. The company reported $681.9 million in revenue and $29.96 million in net income for the latest fiscal year, with positive operating cash flow of $135.6 million. However, investors should consider risks such as competition from traditional law firms and emerging legal tech startups, regulatory challenges, and reliance on the U.S. market. The stock's beta of 1.147 indicates higher volatility compared to the broader market, which may appeal to growth-oriented investors but could deter those seeking stability.
LegalZoom's competitive advantage lies in its first-mover status, brand recognition, and extensive digital platform that simplifies legal processes for non-experts. The company benefits from network effects, as its growing user base attracts more independent attorneys and service providers to its platform, enhancing value for customers. LegalZoom's subscription-based model for ongoing compliance services provides predictable revenue, differentiating it from one-time service providers. However, the company faces competition from both traditional law firms adapting to digital solutions and newer legal tech entrants like Rocket Lawyer and Avvo. LegalZoom's ability to integrate additional services, such as tax preparation and bookkeeping, strengthens its value proposition but requires continuous innovation to maintain its leadership position. The company's focus on small businesses—a segment often underserved by traditional legal providers—gives it a niche advantage, though scalability beyond the U.S. remains a challenge.