LEGALZOOM.COM, INC.
For the period ended Jun 30, 2026. Filed Aug 5, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 5, 2026
LZ$5.24-12.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-06.
0001286139-26-000022
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-05.
0001286139-26-000031
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 158 previous paragraphs and 168 current paragraphs.
99 unchanged; 43 reworded; 22 added; 16 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 22 previous and 32 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Recent Developments
Current report
•In August 2026, we committed to a restructuring plan that will reduce the size of our workforce by approximately 13%. This restructuring plan was made as part of our ongoing organizational evolution towards becoming a more agile, AI-native company with a simpler operating structure. We expect to incur approximately $6.0 million in restructuring charges and related costs, which consist primarily of severance and termination benefits offered to the impacted employees. We expect substantially all of these charges to be cash expenditures and we expect to incur substantially all of these charges in the third quarter of 2026.
Current report
During the three months ended June 30, 2026, we experienced a 5% decrease in business formation transactions compared to the three months ended June 30, 2025 primarily due to the impact of changing customer acquisition dynamics partially offset by an increase in business formations driven by strategic partnerships.
Current report
We experienced a 1% increase in the number of transactions during the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to an increase in Annual Report filings within our compliance offerings as a result of filing automation, partially offset by the decrease in business formations.
Current report
Average order value decreased 2% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 primarily due to changes in the products comprising our bundled small business offerings, which resulted in an increased allocation of order value shifting to subscription products. This decrease was partially offset by an increase in higher value consumer and IP-related offerings.
Current report
Average order value increased 1% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily driven by an increase in higher value consumer and IP-related offerings. This increase was partially offset by changes in the products comprising our bundled small business offerings, which resulted in an increased allocation of order value shifting to subscription products.
Current report
On a sequential basis, the number of subscription units decreased 1% as of June 30, 2026 compared to March 31, 2026.
Current report
Other (expense) income, net
Current report
The increase in total revenue for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was driven by continued growth in subscription revenue. Subscription revenue represented 65% and 62% of total revenue for the three months ended June 30, 2026 and 2025, respectively. Transaction revenue represented 35% and 38% of total revenue for the three months ended June 30, 2026 and 2025, respectively.
Current report
Transaction revenue decreased 1% year-over-year for the three months ended June 30, 2026 due to a decrease in revenue from small business transactions, partially offset by higher consumer and IP-related revenue.
Current report
Other (expense) income, net
Current report
Provision (benefit) for income taxes
Current report
Comparison of the Six Months Ended June 30, 2026 and 2025
Current report
Revenue
Current report
Cost of revenue for the six months ended June 30, 2026 increased by $5.9 million mainly due to a $7.9 million increase in filing fees and a $1.7 million increase in credit card fees primarily due to a full six months of revenue from Formation Nation, which we acquired on February 10, 2025. These increases were partially offset by a $1.8 million decrease in depreciation and amortization expense, a $1.3 million decrease in third party fees for customer care which were replaced by tax and attorney services, and a $1.1 million decrease in payroll and related benefits due to a decrease in average headcount.
Current report
Gross profit
Current report
The increase in gross profit was driven by a $36.5 million increase in revenue partially offset by a $5.9 million increase in cost of revenue.
Current report
Sales and marketing expenses for the six months ended June 30, 2026 increased by $26.6 million primarily due to a $16.8 million increase in customer acquisition marketing spend. Customer acquisition marketing spend was $107.7 million and $90.9 million for the six months ended June 30, 2026 and 2025, respectively, reflecting increased spending due to diversification of investments in brand and partnerships. Sales and marketing expenses also increased as a result of a $5.6 million increase in payroll and related benefits due to an increase in average headcount and a $2.3 million increase in amortization and depreciation.
Current report
Technology and development expenses for the six months ended June 30, 2026 decreased by$3.3 million primarily due to a$6.7 million decrease in payroll and related benefits, largely driven by a reduction in technology and development headcount. These decreases were partially offset by a$4.2 million decrease in capitalized software development costs and a$0.9 million increase in technology licensing costs.
Current report
General and administrative expenses for the six months ended June 30, 2026 decreased by$14.6 million compared to thesix months ended June 30, 2025. The decrease was primarily due to a$13.0 million decrease in stock-based compensation expense driven by lower expense from PSUs, including awards with market conditions granted in prior periods, as well as a reduction in expense from RSUs. The decrease was also due to a $2.4 million reduction in consulting costs, primarily due to transaction-related costs incurred during the prior-year period.
Current report
The change in interest income was primarily due to lower average cash balances during the six months ended June 30, 2026.
Current report
Adjusted EBITDA increased from $76.0 million for the six months ended June 30, 2025 to $82.4 million for the six months ended June 30, 2026. The increase of $6.4 million was primarily driven by a $36.5 million increase in revenue, partially offset by a $22.3 million increase in operating expenses, excluding non-cash and non-recurring items, and a $7.7 million increase in cost of revenue, excluding non-cash items.
Removed paragraphs (16)
Previous report
•Macroeconomic factors. Adverse changes in, or uncertainty with respect to, general macroeconomic, political, regulatory and market conditions can negatively impact consumer spending patterns, the success of existing small businesses and the formation of new small businesses. While we continue to actively monitor the impacts of the evolving macroeconomic environment on all aspects of our business, future negative or decelerating impacts from factors such as inflation, tariffs, higher interest rates, regulatory obstacles or changes in laws and regulations remain uncertain.
Previous report
Furthermore, we believe our definition of the number of business formations is most closely aligned with U.S. Census reporting of new applications for Employer Identification Numbers (“EINs”), which we believe to be the most relevant source of publicly available U.S. market data.
Previous report
Average order value increased 5% for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. This increase was primarily driven by the impact of bundling changes within our business formation products and a decline in lower value beneficial ownership information report filings following a FinCEN ruling on March 21, 2025 that eliminated this filing requirement for U.S. companies. Average order value was partially offset by an increase in Annual Report filings, which carry lower average transaction values and represented a larger share of total transactions in the current period.
Previous report
Cost of revenue
Previous report
Sales and marketing
Previous report
Technology and development
Previous report
General and administrative
Previous report
Interest expense
Previous report
Interest income
Previous report
Cost of revenue
Previous report
Sales and marketing
Previous report
Technology and development
Previous report
General and administrative
Previous report
Interest expense
Previous report
Interest income
Previous report
Other income, net
Reworded paragraphs (43)
Previous wording
•Our share of small and medium-sized businesses (SMBs). In the three months ended March 31, 2026 and 2025, business formations represented the largest share of our total transaction orders. Business formations act as an entrance point for many customers to the LegalZoom ecosystem, where they then often purchase a mix of transaction and subscription offerings alongside and after the initial formation transaction. However, AI-driven search is reshaping customer acquisition dynamics and the ways in which customers find and engage with LegalZoom. As a result, we are diversifying our customer acquisition channels via strategic partnerships and collaborations, including with AI platforms, and expanding our go-to-market strategy to focus on both higher intent customers and emerging and established business. Over time, we expect partnerships to drive a greater share of high-value customer acquisition. As a result, our operating results depend on the continuation of new business formations in the U.S. and even more so, on our ability to attract new and existing businesses to our platform via various acquisition channels.
Current wording
•Our share of small and medium-sized businesses (SMBs). Business formations act as an entrance point for many customers to the LegalZoom ecosystem, where they then often purchase a mix of transaction and subscription offerings alongside and after the initial formation transaction. However, changes that Google is making, including changes in search algorithms and the prioritization of AI-generated summaries within the search experience, as well as the ways in which Google chooses to enforce its policy regarding the advertisement of federal filings, are reshaping how potential customers find and engage with LegalZoom. We have seen these changes result in a reduction in organic traffic and a higher emphasis on paid search, and we expect these customer acquisition dynamics to continue to evolve. In response, we are continuing to optimize our go-to-market and customer acquisition strategy, including by diversifying our marketing investments across media channels and increasing our level of brand marketing, which may result in an increase in our marketing costs. We are also expanding beyond traditional search through strategic partnerships and collaborations, including with AI platforms and other emerging channels. Over time, we expect partnership-driven and AI-platform channels to represent a greater share of customer acquisition, and we are investing accordingly. As a result, our operating results depend on the continuation of new business formations in the U.S. and even more so, on our ability to attract new and existing businesses to our platform via various acquisition channels.
Previous wording
•Ability to enhance customer lifetime value. Our future performance depends on our ability to integrate new products and services into our LegalZoom ecosystem and to increase recurring revenue through subscription offerings. We are continuing to optimize our subscription business, including by testing various commercialization and pricing strategies for our offerings and introducing new, higher value, full-service do-it-for-me (“DIFM”) subscription offerings, including our concierge suite of offerings. As a result, we have experienced and we expect to continue to experience increased volatility across our key business metrics.
Current wording
•Ability to enhance customer lifetime value. Our future performance depends on our ability to integrate new products and services into our LegalZoom ecosystem and to increase recurring revenue through subscription offerings. We are continuing to optimize our subscription business, including by testing various commercialization and pricing strategies for our offerings and introducing new, higher value, full-service do-it-for-me (“DIFM”) subscription offerings, including our business manager (formerly concierge) suite of offerings. As a result, we have experienced and we expect to continue to experience increased volatility across our key business metrics.
Previous wording
•Ability to integrate augmented legal expertise. We believe that the future of legal and small business services involves a combination of AI and human expertise. We aim to utilize AI to drive efficiency and scale, while relying on our team of concierge managers and our independent network of attorneys to provide the judgment and trust that customers need. The extent to which we are able to combine AI with our human expertise in order to drive cost efficiencies and increase the consumption of our DIFM offerings will impact our future results of operations.
Current wording
•Ability to integrate augmented legal expertise. We believe that the future of legal and small business services involves a combination of scaling AI while strategically integrating our human-in-the-loop offerings to provide the judgment and trust that customers need. These offerings have two layers: experts (which includes our business managers and our independent network of attorneys) and service (which includes our virtual mail and registered agent providers). The extent to which we are able to combine AI with our human expertise in order to increase the consumption of our higher-value offerings will impact our future results of operations.
Previous wording
The below table sets forth the number of business formations for the three months ended March 31, 2026 and 2025:
Current wording
The below table sets forth the number of business formations for the three and six months ended June 30, 2026 and 2025:
Previous wording
We experienced an 8% increase in business formation transactions during the three months ended March 31, 2026 compared to thethree months ended March 31, 2025, primarily due to an increase in formations through our partnership channel as well as the inclusion of a full quarter of formations from Formation Nation.
Current wording
During the six months ended June 30, 2026, we experienced a 2% increase in business formation transactions compared to the six months ended June 30, 2025 primarily due to the inclusion of a full six months of business formations from Formation Nation, which we acquired on February 10, 2025, and an increase in business formations driven by strategic partnerships, partially offset by the impact of changing customer acquisition dynamics.
Previous wording
The below table sets forth the number of transactions for the three months ended March 31, 2026 and 2025:
Current wording
The below table sets forth the number of transactions for the three and six months ended June 30, 2026 and 2025:
Previous wording
We experienced a 10% increase in the number of transactions during the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to an increase in Annual Report filings within our compliance offerings as a result of filing automation and an increase in business formations. The increase was partially offset by a decline in beneficial ownership information report filings following a Financial Crimes Enforcement Network (“FinCEN”) ruling on March 21, 2025 that eliminated this filing requirement for U.S. companies.
Current wording
We experienced a 6% increase in the number of transactions during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to an increase in Annual Report filings within our compliance offerings as a result of filing automation and an increase in business formations, partially offset by a decrease in beneficial ownership information report filings following a Financial Crimes Enforcement Network (“FinCEN”) ruling on March 21, 2025 that eliminated this filing requirement for U.S. companies.
Previous wording
The below table sets forth the average order value for the three months ended March 31, 2026 and 2025:
Current wording
The below table sets forth the average order value for the three and six months ended June 30, 2026 and 2025:
Previous wording
Subscriptions typically range from 30 days to one year in duration and the vast majority of our new subscriptions originate from business formation orders and have an annual term. Our customers can have multiple subscriptions at the end of a period. For example, a popular combination for a new small business owner is attorney advice and registered agent subscriptions.
Current wording
Subscriptions typically range from 30 days to one year in duration and the vast majority of our new subscriptions originate from business formation orders and have an annual term. Our customers can have multiple subscriptions at the end of a period.
Previous wording
The number of subscription units was flat from March 31, 2025 to March 31, 2026. This was primarily driven by a decrease in accounting, forms, e-Signature and registered agent subscriptions, partially offset by increases in compliance subscriptions, legal advisory subscriptions, subscriptions from our partnership channel and virtual mail subscriptions.
Current wording
We experienced a 3% decrease in subscription units from June 30, 2025 to June 30, 2026 due to a decrease in forms and eSignature subscriptions as well as accounting solutions and a decrease in registered agent subscriptions, partially offset by an increase in legal advisory subscriptions from the bundling of this subscription into certain business formation offerings, as well as increases in compliance subscriptions and virtual mail subscriptions.
Previous wording
ARPU increased 4% as of March 31, 2026 compared to March 31, 2025 benefiting from pricing initiatives on our registered agent subscriptions, partially offset by a shift in mix towards our lower priced subscription offerings, including Forms and eSignature and accounting solutions, due to the bundling of these products into certain business formation offerings.
Current wording
ARPU increased 5% as of June 30, 2026 compared to June 30, 2025 benefiting from pricing initiatives on our registered agent subscriptions, partially offset by a shift in mix towards our lower priced subscription offerings, including forms and eSignature and accounting solutions, due to the bundling of these products into certain business formation offerings.
Previous wording
On a sequential basis, ARPU as of March 31, 2026 decreased 1% compared to December 31, 2025.
Current wording
On a sequential basis, ARPU as of June 30, 2026 increased 3% compared to March 31, 2026.
Previous wording
We define annual small business retention rate as the percentage of small business subscription units active as of the last day of the quarter one year ago that were still active subscriptions 12 months later. Small business subscription units represent our subscriptions targeted at our small business customers and include subscriptions for our registered agent and compliance services, our tax solution, our virtual mail, forms and eSignature solutions and our small business legal advisory plan, and exclude subscriptions from our enterprise customers, our prior operations in the U.K., Formation Nation and our consumer legal advisory plan. Annual small business retention rate includes both monthly and annual subscription units and reflects all subscription unit attrition, including as a result of actual business failures of certain of our customers. Our annual small business retention rate as of March 31, 2026 was approximately 57% which was impacted by lower retaining annual forms and e-Signature subscriptions.
Current wording
We define annual small business retention rate as the percentage of small business subscription units active as of the last day of the quarter one year ago that were still active subscriptions 12 months later. Small business subscription units represent our subscriptions targeted at our small business customers and include subscriptions for our registered agent and compliance services, our tax solution, our virtual mail, forms and eSignature solutions and our small business legal advisory plan, and exclude subscriptions from our enterprise customers, our prior operations in the U.K., Formation Nation and our consumer legal advisory plan. Annual small business retention rate includes both monthly and annual subscription units and reflects all subscription unit attrition, including as a result of actual business failures of certain of our customers. Our annual small business retention rate as of June 30, 2026 was approximately 57% which was impacted by lower retaining subscriptions bundled into our formation offerings.
Previous wording
We expect interest expense to remain insignificant in the near term as we have no outstanding indebtedness. However, we would incur interest expense in the longer term should we draw down on our Amended Revolving Facility or incur other indebtedness.
Current wording
We expect interest expense to remain insignificant in the near term as we have no outstanding indebtedness. However, we would incur interest expense in the longer term should we borrow on our Amended Revolving Facility or incur other indebtedness.
Previous wording
Other income, net consists of realized and unrealized foreign currency gains and losses.
Current wording
Other (expense) income, net consists of realized and unrealized foreign currency gains and losses.
Previous wording
Our provision for income taxes consists of current and deferred federal, state and foreign income taxes.
Current wording
Our provision for (benefit from) income taxes consists of current and deferred federal, state and foreign income taxes.
Previous wording
Stock-based compensation expense decreased for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to lower expense from performance-based stock units (“PSUs”), including awards with market conditions, granted in prior periods, as well as a reduction in expense from time-based restricted stock units (“RSUs”). See Note 8 to our unaudited condensed consolidated financial statements and Note 14 to our consolidated financial statements included in our 2025 Annual Report on Form 10-K for additional information.
Current wording
Stock-based compensation expense decreased for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025, primarily due to lower expense from performance stock units (“PSUs”), including certain awards with market conditions granted in prior periods, as well as lower expense from time-based restricted stock units (“RSUs”). See Note 8 to our unaudited condensed consolidated financial statements and Note 14 to our consolidated financial statements included in our 2025 Annual Report on Form 10-K for additional information.
Previous wording
Subscription revenue increased 12% year-over-year for thethree months ended March 31, 2026 primarily due to a 17% increase in revenue from our registered agent subscriptions due to an increase in pricing of these subscriptions and a 25% increase in revenue from our legal advisory subscriptions from the bundling of this subscription into certain formation offerings. Subscription revenue growth was partially offset by our prior discontinuation of new customer acquisition for our tax offering.
Current wording
Subscription revenue increased 11% year-over-year for thethree months ended June 30, 2026 primarily due to a 39% increase in revenue from our legal advisory subscriptions due to the bundling of this subscription into certain business formation offerings, an 11% increase in revenue from our registered agent subscriptions due certain pricing initiatives for these subscriptions and an increase in revenue from our compliance offerings. Subscription revenue growth was partially offset by our prior discontinuation of new customer acquisition for our tax offering.
Previous wording
Cost of revenue for the three months ended March 31, 2026 increased by $8.0 million primarily due to an $8.7 million increase in filing fees driven by the acceleration in fulfillment for certain services and a $0.9 million increase in credit card fees. These increases were partially offset by an $0.8 million decrease in third party fees for customer fulfillment services and an $0.8 million decrease in depreciation and amortization expense.
Current wording
Cost of revenue for the three months ended June 30, 2026 decreased by $2.0 million primarily due to a $1.3 million decrease in payroll and related benefits, largely driven by a lower average headcount, a $1.0 million decrease in depreciation and amortization expense and an $0.8 million decrease in filing fees. These decreases were partially offset by a $0.7 million increase in credit card fees and a $0.6 million increase in sales and use tax expense.
Previous wording
Gross profit for the three months ended March 31, 2026 increased by $15.7 million compared to three months ended March 31, 2025 due to a $23.7 million increase in revenue and an $8.0 million increase in cost of revenue.
Current wording
Gross profit for the three months ended June 30, 2026 increased by $14.8 million compared to the three months ended June 30, 2025 due to a $12.8 million increase in revenue and a $2.0 million decrease in cost of revenue.
Previous wording
Sales and marketing expenses for thethree months ended March 31, 2026 increased by $17.3 million primarily due to a $10.8 million increase in customer acquisition marketing spend. Customer acquisition marketing spend was $55.1 million and $44.2 million for thethree months ended March 31, 2026 and 2025, respectively, primarily due to lower performance marketing spend during the three months ended March 31, 2025. Additionally, there was a $4.5 million increase in payroll and related benefits largely due to an increase in sales and marketing headcount, and a $1.5 million increase in depreciation and amortization.
Current wording
Sales and marketing expenses for thethree months ended June 30, 2026 increased by $9.3 million primarily due to a $5.9 million increase in customer acquisition marketing spend. Customer acquisition marketing spend was $52.6 million and $46.7 million for the three months ended June 30, 2026 and 2025, respectively, reflecting increased spending due to diversification of investments in brand and partnerships. Additionally, there was a $1.1 million increase in payroll and related benefits largely due to an increase in sales and marketing headcount, and a $0.8 million increase in depreciation and amortization.
Previous wording
Technology and development expenses for the three months ended March 31, 2026 decreased by $1.7 million primarily due to a$3.3 million decrease in payroll and related benefits driven by a reduction in technology and development headcount, partially offset by a$1.1 million increase in external consulting costs.
Current wording
Technology and development expenses for the three months ended June 30, 2026 decreased by$1.6 million primarily due to a$3.5 million decrease in payroll and related benefits driven by a reduction in technology and development headcount. These decreases were partially offset by a $1.8 million decrease in capitalized software development costs.
Previous wording
General and administrative expenses for the three months ended March 31, 2026 decreased by$8.0 million compared to the three months ended March 31, 2025. The decrease was primarily due to a$7.5 million decrease in stock-based compensation expense driven by lower expense from PSUs, including awards with market conditions granted in prior periods, as well as a reduction in expense from time-based RSUs.
Current wording
General and administrative expenses for the three months ended June 30, 2026 decreased by$6.6 million compared to the three months ended June 30, 2025. The decrease was primarily due to a$5.4 million decrease in stock-based compensation expense driven by lower expense from PSUs, including awards with market conditions granted in prior periods, as well as a reduction in expense from RSUs.
Previous wording
The change in interest income was primarily due to interest income generated from our money market investments during the three months ended March 31, 2026.
Current wording
The change in interest income was primarily due to lower average interest-earning cash balances during the three months ended June 30, 2026.
Previous wording
The change in other income, net, between 2026 and 2025 was primarily due to unfavorable foreign exchange activity.
Current wording
The change in other (expense) income, net, was primarily due to unfavorable foreign exchange activity during the three months ended June 30, 2026.
Previous wording
There was a $2.8 million decrease in the provision for income taxes for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The change was primarily due to lower pre-tax income and decreased excess tax benefits from stock-based compensation for the three months ended March 31, 2026.
Current wording
There was a $7.2 million increase in the provision for income taxes for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The change was primarily due to higher pre-tax income and decreased excess tax benefits from stock-based compensation for the three months ended June 30, 2026.
Previous wording
The increase in total revenue for the three months ended March 31, 2026 was primarily driven by the increases in both subscription and transaction revenue. Subscription revenue was 63% of total revenue for the three months ended March 31, 2026 and 2025 and transaction revenue was 37% of total revenue for the three months ended March 31, 2026 and 2025.
Current wording
The increase in total revenue for the six months ended June 30, 2026 was primarily driven by an increase in subscription revenue. Subscription revenue was 64% and 63% of total revenue for the six months ended June 30, 2026 and 2025, respectively, and transaction revenue was 36% and 37% of total revenue for the six months ended June 30, 2026 and 2025, respectively.
Previous wording
Transaction revenue increased 15% year-over-year for the three months ended March 31, 2026 primarily due to a 150%, or $6.6 million, increase in revenue from Annual Report filings within our compliance offerings as a result of filing automation as well as an increase in revenue from other small business transactions and the inclusion of a full quarter of revenue from Formation Nation, partially offset by a decline in beneficial ownership information report revenue due to the FinCEN ruling on March 21, 2025 that eliminated this filing requirement for U.S. companies.
Current wording
Transaction revenue increased 6% year-over-year for the six months ended June 30, 2026 primarily due to a 61% increase in revenue from Annual Report filings within our compliance offerings as a result of filing automation, the inclusion of a full six months of revenue from Formation Nation, which we acquired on February 10, 2025, and an increase in IP-related revenue. The increase in transaction revenue was partially offset by a decrease in revenue from business formations and a decrease in revenue from beneficial ownership report filings following a FinCEN ruling on March 21, 2025 that eliminated this filing requirement for U.S. companies.
Previous wording
Gain on sale of assets held for sale for thethree months ended March 31, 2025 was$14.3 million due to the sale of our operational headquarters on March 31, 2025.
Current wording
Gain on sale of assets held for sale for thesix months ended June 30, 2025 was$14.3 million due to the sale of our operational headquarters on March 31, 2025.
Previous wording
We fund our operations and capital expenditures from cash flows from operating activities. Our primary requirements for liquidity and capital are to finance working capital, capital expenditures and general corporate purposes. At March 31, 2026, our principal sources of liquidity were cash and cash equivalents of $183.2 million, which consisted of cash on deposit with banks and money market funds, of which approximately $3.5 million related to our foreign subsidiaries. Our cash and cash equivalents decreased by $19.9 million from December 31, 2025 to March 31, 2026, primarily as a result of cash used in financing activities, including repurchases of common stock, shares surrendered for settlement of minimum statutory tax withholding as well as the payment of deferred consideration for the Formation Nation acquisition partially offset by cash provided by operating activities.
Current wording
We fund our operations and capital expenditures from cash flows from operating activities. Our primary requirements for liquidity and capital are to finance working capital, capital expenditures and general corporate purposes. As of June 30, 2026, our principal sources of liquidity were cash and cash equivalents of $167.2 million, which consisted of cash on deposit with banks and money market funds, of which approximately $4.2 million related to our foreign subsidiaries. Our cash and cash equivalents decreased by $35.9 million from December 31, 2025 to June 30, 2026, primarily as a result of cash used in financing activities, including repurchases of common stock, shares surrendered for settlement of minimum statutory tax withholding as well as the payment of deferred consideration for the Formation Nation acquisition partially offset by cash provided by operating activities.
Previous wording
In October 2023, our board of directors approved a stock repurchase program authorizing repurchases of our common stock with no fixed expiration. In February 2026, our board of directors approved a $100.0 million increase in our stock repurchase program, bringing the aggregate amount authorized to $415.0 million. Approximately$126.0 million remained available for future repurchases under the stock repurchase program as of March 31, 2026. For additional information regarding our stock repurchase program, refer to Note 7 to our unaudited condensed consolidated financial statements.
Current wording
In October 2023, our board of directors approved a stock repurchase program authorizing repurchases of our common stock with no fixed expiration. In February 2026, our board of directors approved a $100.0 million increase in our stock repurchase program, bringing the aggregate amount authorized to $415.0 million. Approximately$80.4 million remained available for future repurchases under the stock repurchase program as of June 30, 2026. For additional information regarding our stock repurchase program, refer to Note 7 to our unaudited condensed consolidated financial statements.
Previous wording
In the three months ended March 31, 2026, cash provided by operating activities was $47.3 million resulting from net income of $1.1 million, adjusted for stock-based compensation and other non-cash expenses of $36.0 million and net cash flows provided by changes in operating assets and liabilities of $10.1 million. The $36.0 million of stock-based compensation and other non-cash expenses resulted primarily from $21.3 million in stock-based compensation expense, $11.1 million in depreciation and amortization expense, and $1.0 million in amortization of right-of-use assets. The $10.1 million of net cash flows provided by changes in operating assets and liabilities resulted primarily from a $19.6 million increase in deferred revenue related to the growth of our subscription units which are predominantly billed in advance of our revenue recognition, and an $11.2 million increase in accounts payable, partially offset by a $4.0 million increase in accounts receivable, a $2.3 million increase in prepaid expenses and other current assets, and a $13.9 million decrease in accrued expenses and other liabilities.
Current wording
In the six months ended June 30, 2026, cash provided by operating activities was $86.8 million resulting from net income of $6.3 million, adjusted for stock-based compensation and other non-cash expenses of $77.4 million and net cash flows provided by changes in operating assets and liabilities of $3.2 million. The $77.4 million of stock-based compensation and other non-cash expenses resulted primarily from $44.9 million in stock-based compensation expense, $22.4 million in depreciation and amortization expense, and $1.9 million in amortization of right-of-use assets. The $3.2 million of net cash flows provided by changes in operating assets and liabilities resulted primarily from a $17.5 million increase in deferred revenue resulting from advance billings for subscription services, which are predominantly billed in advance of our revenue recognition, and an $8.7 million increase in accounts payable, partially offset by a $15.6 million decrease in accrued expenses and other liabilities, and a $7.0 million increase in prepaid expenses and other current assets.
Previous wording
In the three months ended March 31, 2026, net cash used in investing activities was $6.3 million comprised of purchases of property and equipment, including capitalization of internal-use software.
Current wording
In the six months ended June 30, 2026, net cash used in investing activities was $12.2 million comprised of purchases of property and equipment, including capitalization of internal-use software.
Previous wording
In the three months ended March 31, 2026, net cash used in financing activities was $60.9 million, primarily resulting from $43.5 million in repurchases of common stock pursuant to our stock repurchase program, $12.5 million for the deferred consideration paid relating to the Formation Nation acquisition, and $4.9 million for settlement of minimum statutory tax withholding obligations related to equity awards.
Current wording
In the six months ended June 30, 2026, net cash used in financing activities was $110.5 million, primarily resulting from $89.0 million in repurchases of common stock pursuant to our stock repurchase program, $12.5 million for the deferred consideration paid relating to the Formation Nation acquisition, and $9.5 million for settlement of minimum statutory tax withholding obligations related to equity awards.
Previous wording
We have non-cancelable agreements with various vendors, which require us to pay $57.3 million over a three-year period, of which $40.7 million remains to be paid as of March 31, 2026.
Current wording
We have non-cancelable agreements with various vendors, which require us to pay $58.5 million over a three-year period, of which $37.2 million remains to be paid as of June 30, 2026.
Previous wording
At March 31, 2026, we had various non-cancelable operating leases for office space, which expire between June 2026 and June 2033. As of March 31, 2026, we had total minimum operating lease maturities of $16.9 million, $3.3 million of which mature within nine months. See Note 8 of our consolidated financial statements included in our 2025 Annual Report on Form 10-K for additional information regarding our future operating lease payments.
Current wording
At June 30, 2026, we had various non-cancelable operating leases for office space, which expire between May 2027 and June 2033. As of June 30, 2026, we had total minimum operating lease maturities of $16.6 million, $2.1 million of which mature within six months. See Note 8 of our consolidated financial statements included in our 2025 Annual Report on Form 10-K for additional information regarding our future operating lease payments.
Previous wording
We define Adjusted EBITDA as net income adjusted to exclude interest expense, interest income, (benefit from) provision for income taxes, depreciation and amortization, other expense (income), net, stock-based compensation and certain non-recurring income and expenses from time to time. We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of revenue. We define net income margin as net income as a percentage of revenue based on our unaudited condensed consolidated financial statements.
Current wording
We define Adjusted EBITDA as net income (loss) adjusted to exclude interest expense, interest income, (benefit from) provision for income taxes, depreciation and amortization, other expense (income), net, stock-based compensation and certain non-recurring income and expenses from time to time. We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of revenue. We define net income (loss) margin as net income (loss) as a percentage of revenue based on our unaudited condensed consolidated financial statements.
Previous wording
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, preparing and approving our annual budget and operational performance. In assessing our performance, we exclude certain expenses that we believe are not comparable period over period or that we believe are not indicative of our underlying operating performance. There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which include that Adjusted EBITDA:
Current wording
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, preparing and approving our annual budget and operational performance. In assessing our performance, we exclude certain expenses that we believe are not comparable period over period or that we believe are not indicative of our underlying operating performance. There are a number of limitations related to the use of Adjusted EBITDA rather than net income (loss), which include that Adjusted EBITDA:
Previous wording
The following table presents a reconciliation of net income to Adjusted EBITDA for each of the periods indicated:
Current wording
The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for each of the periods indicated:
Previous wording
(2) For 2026 and 2025, restructuring costs are related to the reduction of our U.S. headcount.
Current wording
(2) For 2026 and 2025, restructuring costs are related to the reduction of our global headcount.
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Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Subscription revenue increased 12% year-over-year for the six months ended June 30, 2026 primarily due to a 37% increase in revenue from our legal advisory subscriptions from the bundling of this subscription into certain business formations, a 14% increase in revenue from our registered agent subscriptions due to pricing initiativesfor these subscriptionsand an increase in revenue from our compliance offerings. The increase in subscription revenue was partially offset by our prior discontinuation of new customer acquisition for our tax offering.
Current report — wording carried from elsewhere
Interest expense consists primarily of interest incurred on the deferred cash consideration associated with the acquisition of Formation Nation as well as amortization of debt issuance costs related to our Revolving Facility as well as our Amended Revolving Facility.
Current report — wording carried from elsewhere
The change in other income, net, between 2026 and 2025 was primarily due to unfavorable foreign currency exchange activity related to our intercompany loans denominated in British Pound Sterling.
Current report — wording carried from elsewhere
There was a $4.5 million increase in the provision for income taxes for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The change was primarily due to higher pre-tax income and decreased excess tax benefits from stock-based compensation for the six months ended June 30, 2026.