LegalZoom.com Inc. widened its net loss for the first quarter while increasing revenue.
The Glendale online legal document provider reported on Thursday an adjusted net loss of $9.5 million (-5 cents a share) for the quarter ending March 31, compared to an adjusted net loss of $6.4 million (-5 cents) in the same period a year earlier. Revenue increased by 15 percent from the previous year to $154 million.
Chief Executive Dan Wernikoff called the first quarter “a strong start to the year” in a conference call with analysts to discuss the financial results.
The company has been investing in all areas of the business but most significantly in sales and marketing, which grew from 27 percent of revenue in 2019 to 45 percent of revenue in 2021, Wernikoff said.
“I make this comment because it points to the inherent flexibility in our operating model. Less than a third of our operating spend is fixed,” he added during the call. “The vast majority is variable and can be flexed up or down dynamically as market conditions warrant.”
LegalZoom is an asset-light business with capital expenditures coming in at just 2 percent of revenue in 2021, Wertikoff continued, adding that the company continues to create positive cash flow and have just less than $250 million in cash and no debt on its balance sheet.
“We feel we are in a very strong financial position to weather a potential economic contraction while still maintaining a healthy level of investment to drive durable long-term top line growth,” Wernikoff said in the call.
The first quarter results were announced on Thursday. On Friday, shares of LegalZoom (LZ) closed up 67 cents, or almost 6 percent, to $11.95 on the Nasdaq, on a day when that market closed up 3.8 percent.
