All right. Thank you for everybody for joining us. We've got LegalZoom with us. Noel and Madeleine, thank you so much for taking the time to sit down with us today.
Happy to be here.
Thanks.
Well, I think the key question that everyone's asking across all of these conversations, specifically for LegalZoom, is just the AI environment and just how does LegalZoom fit into this? What are the threats to the business? I think the market's trying to figure out just who are the winners and losers in AI. I think that, you know, just hearing from you guys specifically, just how do you view the AI environment, and how does LegalZoom fit into that?
Yeah. Certainly, the question of the day for a lot of companies right now. You know, we view AI as an accelerator in our space. It's a TAM accelerator. It's making it easier for folks to research and giving them the confidence to start a business. Business formations have been healthy, and the demand environment's been strong. We think AI is an element to that, along with a number of other factors, right? It's very easy. We help businesses get started. It's easy for them to get operational with low cost of capital. Starting there, it's a TAM accelerator. It's increasingly becoming a place where folks start their research, right? AI is great for generating insights and summaries and documents.
It's a great place to start, but LegalZoom is the right place to finish. We're that last mile that provides the connection. Where it stops short is assuming any legal liability, right? It's extremely important to customers for them to get this right. They're adding a legal entity that's supposed to provide liability protection for them, so they need it done right, and that's where that human backstop, human judgment, nuance, being able to have licensed, insured individuals that support that process, is so vital. We also know that when someone's starting a business, they're not just doing a filing, right? It's much more than. You can come to LegalZoom and file your LLC formation for free. It's much more than that.
There's a broad set of services that we help them get compliant, stay compliant, and then run their business through other services like tax and bookkeeping and e-signature and virtual mail. For them to be able to address all of these needs in one place with one portal and one login and one phone number to call is super valuable to them at the same time. We're obviously leveraging AI throughout our business right now to help enable our experts to be more efficient, to operate more efficiently kind of across all of our functions. That's being leveraged in the business today as well. From a relationship standpoint, right, we wanna be that partner for all of these LLMs as they look to complete this last mile with different partners.
The reality is we're the 800 pound gorilla in our space. When they're looking to partner across verticals, LegalZoom, we hope, is the right place for them to start. You've seen some of that already with the collaborations that we've announced and the recent, you know, LegalZoom connector that we launched on Claude last week. Those partnerships are important. We're in the room having the right conversations.
Maybe taking a step back as you think about what are the structural assets that LegalZoom has, is it the brand? Is it the attorney network? That an AI startup company can't just come in and recreate what LegalZoom's done? What are those structural assets that really differentiate LegalZoom?
Yeah, I mean, you just named a couple of really important ones. Brand is vital. You know, what our brand stands for is experience, trust, execution. We've been building equity in that brand over the last 25- years. We've spent $100 of millions in marketing the brand, and then we've delivered for millions of businesses, which is the execution factor. We've developed that trust from customers over time, and that's very hard to replicate. The attorney network, same thing. It's taken years to build our attorney network. We have our own law firm as well, and you have to do that on a state-by-state basis, right? Our attorney network's over 1,000 attorneys. It's across all 50 states. You're dealing with state regulatory bodies.
You're dealing with exclusivity in terms of fostering those relationships. That's something that takes years to develop as well.
Yeah. you know, just-.
The other thing I'll add too is we have services that are have physical service elements. Some of our compliance offerings, registered agent, that is something where we're across all 50- states. It's something that AI cannot replicate. Same with virtual mail. A lot of our customers are doing a side hustle or they're working from home. They don't want their address to be public. We have a virtual mail offering where we act as their business address. We service all 50- states. It's another area where we have a human footprint that can't be replicated by AI and takes a lot of time to set up and scale.
No, that makes complete sense. Another key debate across just the entirety of the legal landscape is just AI's ability to maybe just, like, push down billing rates for attorneys. Just as there's increased competition, more things are streamlined across for, you know, attorney tasks. Why doesn't this eventually pressure LegalZoom's pricing? You know, you've made this push into more premium pricing. Like, why doesn't that trickle down into LegalZoom eventually?
Yeah, it's an important question. The reality is these tools are helpful. We're leveraging these tools today to make our agents or our experts more efficient, whether it is our care agents, our sales agents, or our attorney experts. On the attorney side, I mean, we are sort of the disruptor in that category. Like, the value prop on our Attorney Plan is crazy. It's, you know, you can have access as a small business, access to an attorney for $50 a month. Right? Part of the efficiencies that we generate and how we deliver our service enables us to be at that lower end of the market from a pricing standpoint and create a ton of value for our customers. That's realized in the feedback we get from our customers.
If you look at our attorney TNPS scores, it's in the 70s, and you compare that to offline attorneys, which is in that, you know, the 20s or low 30s, and that's because the pricing model is clear. When you deal with offline attorneys, it's often opaque. It's a number of hours times a billing rate. We don't exactly know, you know, how long it's gonna take us. I think that sort of law firm level, we'll see some disruption. We're already providing that at a super effective cost.
No, that makes sense. Maybe moving on to subscription, like this has been a clear shift in focus for the business, focusing on subscription growth. Q4 marked the fourth consecutive quarter of accelerating subscription growth. Can you just discuss specific products that are driving that momentum and what's contributing to the higher attach rate improved retention that you've talked about?
Yeah. I think the good thing there, which I always like to see is the strength is multifaceted, right? There's, there's a few different drivers. Importantly, one of them is our new Concierge suite of products, which is really, it's that hands-on human element where it's white glove service, we're doing it for you, and we've seen strong uptake there. We're excited about that. In our compliance subscriptions, we've actually seen really healthy retention. We've seen improving retention, especially in our younger cohorts, which to us is a signal that some of the value prop changes and the enhancements we've made in our services are really resonating with customers. That's alongside a, you know, a price increase that we did in registered agent last year. Formation Nation was obviously a driver of growth in 2025.
We expect that's gonna be continuing to drive growth for us. Virtual mail has performed really well. We've talked about our partner channel experiencing growth. I think two quarters ago we mentioned growth of that channel was over 25%. We've seen acceleration since. As our marketing team is looking to diversify from a channel standpoint, this is an area of clear focus for us, and we think is a growth driver moving forward. The good news is it's multifaceted, and a lot of those things are tailwinds that are gonna drive into 2026.
Yeah. If we look at the concierge products, can you maybe just level set for everybody exactly what they are? Then just talk about just what you're seeing in terms of adoption and monetization. I know it's still a little bit early, maybe we can hit on that. Just more broadly, we kinda hit it on already, just what are the key catalysts in 2026 as we think about this year? What are the key products that you're really focused on?
Yeah. Concierge, is a suite of products. It's primarily our compliance products, so we handle all of your compliance needs going forward. We also have reinstatement, dissolution, and conversion. There's probably five or six different products that we're addressing more complicated scenarios for customers. You know, we sell that through our formations funnel, but we've also been able to mine our base of customers. Existing customers, reaching out to customers who are two, three, four years old that have either grown in complexity and their compliance needs have evolved, and now they are at that point where they want somebody to handle it for them.
Or where we've really seen a positive reaction is when we're letting customers in our base know that, "Hey, you've actually fallen out of compliance, or you're at high risk of falling out of compliance." That awareness has them raise their hand and say, "Hey, can you help me get reinstated? They don't wanna lose that liability protection. I don't want my business to suddenly be dissolved. Help me get reinstated, and then can you manage that compliance for me?" Those learnings on, you know, what activates the base, what their needs are, how to best service them, and we're getting more efficient in how we're doing that with tools and technology today, is something that we think extrapolates to the broader SMB, 35 million SMBs that are out there operating today with similar profiles.
There's a lot that we'll be doing in terms of learning and testing how we go to market against those customers, through a direct channel, but also through our partner relationships as well, where a lot of our partners have, you know, large bases of customers that fit that same profile and have, you know, more complex needs.
And then-.
Like Noel said too, these are more established businesses. They're growing, their needs are changing. Something these concierge managers do is check in with them. We're really trying to drive engagement saying, you know, "Is there something in terms of your compliance that needs to change? Are you now operating in a new county where you might need a new business license?" checking in with the customers, seeing if there are more needs we can service, and cross-selling and upselling more of our offerings. If it gets into a legal question, you know, getting them to our attorney network to help them.
Got it.
Yeah. These are higher priced products, right? Driving up ARPU, more considered purchase. These businesses are more established, so, you know, able to sustain longer and then, you know, creates a healthier LTV opportunity for us.
No, totally. One thing you did last year when you acquired Formation Nation is you kind of bifurcated your between really LegalZoom being this premium legal you know, advisory service and then, you know, but still servicing that lower end of the market with Formation Nation. Can you just talk about how that's actually played out, that strategy, and just how you expect it to continue in 2026?
Yeah, absolutely. That was an important part of the thesis as we went into the acquisition because we were trying to be too many things to all the customer segments, as LegalZoom and really, you know, had come down market. The acquisition of Formation Nation allowed us to separate the brands, have a very value-oriented brand, and allow LegalZoom to reestablish its premium positioning, start to move into, you know, our concierge services, make changes in the value prop within each of our bundles to move people up into our higher SKUs. It's played out exactly as we had hoped. The, you know, Inc Authority, which is the value brand within Formation Nation, they're more of a sales-driven organization. Folks start with free, then through sales, they work to cross-sell and upsell.
We're more web-oriented, there's lots of learnings that we were able to share with them, and they were able to share with us on the sales side as we integrated. It's lifted, you know, both businesses, and, you know, outperformed our expectation. I think part of the thesis was also on the different cross-sells, right? You know, LegalZoom has a broader ecosystem of products and, you know, how can we bring some of those products to bear to the Formation Nation customers, as they form or to their base. We see that as an opportunity that still sits out there. You know, we've made a little bit of progress there, but I think you'll see more impactful progress late this year and into 2027.
Got it. Just on the competitive environment, several years ago, the big thing was everyone is shifting to the free business formations. You've made this push upmarket. Can you just talk about what you're seeing as far as just the broader competitive environment, but also new entrants into the market? Is there anything that's changed here in the past couple years?
I would say the competitive environment has been largely consistent. You know, we always see a lot of the we call them ankle biters. You know, the smaller competitors in the space kinda follow our lead. We've seen some that are, you know, increasing prices, you know, as we've kind of made changes to our pricing. But overall, the landscape hasn't changed materially. We aren't seeing any sort of new AI, quote-unquote, entrants come in that are materially impacting the dynamics. That's been pretty consistent. We continue to just focus on our own execution and try to deliver on results and continue to grow from some of the vectors that we talked about earlier.
On CAM spend. I mean, there was some shift in spend that you're expecting this year, obviously more oriented towards the business formation environment. I think there's still you're expecting a modesty leverage in CAM spend this year. Just what is giving you the confidence to further lean into just consumer marketing spend?
Yeah. I think there's a combination of things. One is our marketing team is very focused on diversification, especially now given all the changes that are happening in the, you know, the acquisition landscape with changes Google's making every day, with the rise of some of these, the LLMs as an initial place to search. We've been making more investment in our brand. We talked about that a lot throughout the year, and we're seeing a really healthy return even as we, you know, make some of that mix shift. We're leaning further into that this year. You're also seeing some timing changes where we think we're more optimally timed to match the seasonal, the seasonality and demand in our business. Then we're, you know, we're always testing as we wanna further diversify into new channels.
Partner is an partner channel I mentioned earlier is an area that we're leaning into. Also as we explore this existing business opportunity outside of the LegalZoom ecosystem, you know, that's gonna take a different go-to-market approach, more integrated, where it's direct mail and outbound calls as well as emails and online performance marketing. That combination, we're gonna be learning and testing into this year as well.
I think we kinda hit it on a little bit earlier, but just on the targeting existing businesses.
Mm-hmm.
Moving even further into that, are there any changes that need to happen within the go-to-market strategy as you go after those existing businesses?
Yeah, I think so. I think, again, it's a higher price point. These are more established businesses, more considered purchase. Some of the messaging would change, really leaning into, you know, the trust side of the equation and on that brand that we talked about earlier. Then it'll be integrated. It'll be you have to combine a, you know, direct mail with outbound calling, with email, with online performance and kind of that holistic messaging. Then partner channel is gonna be really important. Again, a lot of our partners have really big bases of customers. You think of Wix and their customer base, you know, Bank of America and their customer base.
You know, you know that if a customer, you know, a small business customer is looking for a loan and they don't have a certificate of good standing, that can interrupt their ability to get a loan. If there's a partner that banks can work with to help them ensure that their customers stay compliant or get back into compliance very quickly, then that's valuable to the bank as well.
Totally. One thing I wanna go back to that I think we talked about a little bit earlier was just the partnership you have with Anthropic. Maybe we can take a step back and talk about just the partnerships that you're looking to land with all these different LLMs and then potentially this is maybe where people are going increasingly start their consumer journeys.
Mm-hmm.
Can you just talk about how would you expect just the broader landscape or maybe the customer acquisition funnel, but just how does LegalZoom fit into that new narrative of, like, this is where people are gonna go to start their businesses? We talked about the human in the loop, but how is LegalZoom positioning themselves to really still acquire those customers and be a value-added partner with these LLM providers?
Yeah. I think it's multifaceted. I think it's evolving very quickly. I don't think anybody knows exactly where it's gonna go. Importantly, we're having the right conversations to make sure we're there wherever it evolves. You know, what we have live today, that I'll go maybe a little bit deeper on the Claude connector that we just launched last week. You know, a customer adds the LegalZoom connector, as you're chatting with Claude and, you know, asking legal questions or having it review a legal document, it'll review and provide some red lines and say, "Here are three areas, you know, that you really need to look at. You probably want to consult an attorney. You probably want to consult your LegalZoom attorney.
Here's, you know, a scheduler." You can go in, and that's automatically connected to us, so you can schedule a consultation. Then that information is packaged up and sent to the attorney. Now they have the document that's already been reviewed. They have a summarization of the conversation, so they can service that client in a really efficient way. That's an example of a last mile connection. We see that being replicated in a bunch of different use cases, in scenarios. We could see something where on a formation side, someone's chatting, getting ready to do a formation, and we're that last mile connection through an API where data is sent across so that most of the work is already done. Then on our side, we can complete the transaction.
We have the care and human backstop for it, as well as, you know, the cross-sells and up-sells and, you know, could pay a rev share back.
Yeah.
There's a bunch of different directions it could go. You know, we're prepared for taking it wherever, following the path wherever it goes.
Yeah. No, definitely. Yeah, I mean, maybe just like, on the Claude code point, maybe it's too early to really see anything today, but have you seen increased traffic from these LLMs today? Is it material at all or is it still just too early to tell?
It's still small, relatively small and very early. You can't measure it all, right? Because sometimes people are starting there and then coming direct.
Yeah.
You know, we totally, we fully expect it's gonna be a growing, you know, source. That's part of why the brand spend's important because you want in some of the natural generative results for LegalZoom to be featured, and recommended.
The traffic we are seeing, they're higher intent customers because they've done some of the research on these LLMs and discovered, hey, there are a lot of steps to forming. It's more than just that one-time formation. They're coming to LegalZoom with a higher intent to attach our products.
No, that makes. Yeah, that's. We've heard that across multiple companies as well. You know, we talked about earlier on CAM spend, the little bit of deleverage in 2026. We still expect EBITDA margins to expand.
Mm.
Can we maybe just take a step back and just talk about your framework as far as investing further in growth and balancing that with expanding margins and profitability?
Yeah, great question. You know, we've, for quite some time, taken a very balanced approach to looking at revenue growth and profitability. We've been on a several year march in terms of our improvement in profitability and margin. This year, in our guidance is a re-acceleration of organic growth as well as, you know, double digit improvement in adjusted EBITDA growth, and, you know, equates to margin expansion. You know, our business right now, I think we're still in the early, you know, early innings in terms of how efficient we can be. We're realizing benefits today. We actually, you know, did a small reduction in the first quarter to sort of map our resourcing to some of the, you know, efficiencies that we've driven in the business.
We think there's a long way to go to continue to enable our team to service our customers at a greater scale. We're taking some of those efficiencies that we're baking and putting it back into the business to continue to reinvest in that and reinvest in our human in the loop offerings. Then some we're taking to the bottom line. It's a, you know, it's definitely a balanced approach. We definitely see ourselves steadily focused on improving margins for some time to come.
You just announced a new and $100 million share repurchase program. You know, maybe you can just talk about just what is the capital allocation strategy? What are the priorities? You know, should we expect any more M&A, or is it gonna be smaller M&A? Just how do you balance that with share repurchases and reinvestment in the business?
Yeah. It's remained relatively consistent, right? We're still in a similar place where we have a very strong balance sheet. We had, you know, $200 million or so on the balance sheet, no debt. We've done share repurchases pretty consistently. At the same time have been very clear that we wanna maintain flexibility in terms of if there is an opportunity on the M&A side, we wanna be able to take advantage of it. Our framework on the M&A side, you know, hasn't really changed. We're looking at opportunities that are either strong adjacencies that help augment the suite of offerings that we have.
It may be something in our space like a Formation Nation that's valuable from a brand or a customer segmentation standpoint, or just acquiring customers efficiently relative to going out and acquiring them from Google or somewhere else. That hasn't changed. We're having conversations and, you know, while we don't need to do anything in order to deliver on our plan, you know, we wanna be opportunistic.
Well, thank you so much, Noel, and thank you so much, Madeleine. It was great talking to you.
Yeah. Thank you, Matt.
Thank you.
Appreciate it.
Thanks a lot.
Thanks a lot.