What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-02-23 compared with 2025-02-26 · 394 added, 331 removed, 1008 unchanged (42% of the section changed)

6 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

Consolidated Statements of Stockholders’ Equity

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We have audited the accompanying consolidated balance sheets of LegalZoom.com, Inc.

and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of operations, of comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements").

and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of operations, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the "consolidated financial statements").

We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Annual Report on Internal Control over Financial Reporting, management has excluded Formation Nation, Inc.

(“Formation Nation”) from its assessment of internal control over financial reporting as of December 31, 2025, because it was acquired by the Company in a purchase business combination during 2025.

We have also excluded Formation Nation from our audit of internal control over financial reporting.

Formation Nation is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent less than 1% and approximately 7%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2025.

Definition and Limitations of Internal Control over Financial Reporting

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These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the recording of revenue at the transaction price based on contractual amounts.

These procedures also included, among others (i) testing the revenue recognized for a sample of revenue transactions by obtaining and inspecting source documents, such as invoices, customer contracts, proof of fulfillment, and subsequent payment receipts and (ii) testing a sample of outstanding customer invoice balances as of December 31, 2024 by obtaining and inspecting source documents, such as invoices, customer contracts, and subsequent payment receipts.

These procedures also included, among others, testing the revenue recognized for a sample of revenue transactions by obtaining and inspecting source documents, such as invoices, customer contracts, proof of fulfillment, and subsequent payment receipts.

/s/ PricewaterhouseCoopers LLP

21 unchanged sentences

31,884 34,696

Available-for-sale debt security (amortized cost of $ 848 and $ 836 )

Available-for-sale debt security (amortized cost of $ 0 and $ 848 ), respectively

$ 511,522 $ 373,883

43 unchanged sentences

General and administrative 143,758 108,939 106,352

Impairment of long-lived assets — — 248

Gain on sale of assets held for sale ( 14,337 ) — —

Total operating expenses 473,107 406,207 400,405

Income (loss) from operations 35,581 21,059 ( 41,739 )

Income from operations 24,976 35,581 21,059

Interest expense ( 1,294 ) ( 446 ) ( 493 )

Interest income 7,569 7,850 9,307

Other income (expense), net

Other income, net

1,187 98 1,621

Impairment of other equity security — — ( 3,000 )

Income (loss) before income taxes 43,083 31,494 ( 47,673 )

Income before income taxes 32,438 43,083 31,494

Provision for income taxes 17,011 13,120 17,541

Net income (loss) $ 29,963 $ 13,953 $ ( 48,733 )

Net income (loss) — basic:

Net income $ 15,427 $ 29,963 $ 13,953

Net income — basic:

$ 15,427 $ 29,963 $ 13,953

Net income (loss) — diluted:

Net income — diluted:

$ 15,427 $ 29,963 $ 13,953

Net income (loss) per share:

Net income (loss) per share — basic:

Net income per share:

Net income per share — basic:

$ 0.09 $ 0.17 $ 0.07

Net income (loss) per share — diluted:

Net income per share — diluted:

$ 0.08 $ 0.16 $ 0.07

Weighted-average shares used to compute net income (loss) per share:

Weighted-average shares used to compute net income (loss) per share — basic:

Weighted-average shares used to compute net income per share:

Weighted-average shares used to compute net income per share — basic:

178,798 180,210 190,466

Weighted-average shares used to compute net income (loss) per share — diluted:

Weighted-average shares used to compute net income per share — diluted:

184,690 182,865 194,415

1 unchanged sentence

LegalZoom.com, Inc.

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

(In thousands)

1 unchanged sentence

2025 2024 2023

Net income (loss)

$ 15,427 $ 29,963 $ 13,953

Other comprehensive income (loss), net of tax:

Other comprehensive (loss) income, net of tax:

Change in foreign currency translation adjustments

1 unchanged sentence

Change in available-for-sale debt securities:

Unrealized gains (losses), net

154 105 ( 144 )

Unrealized gains, net

Reclassification adjustment for net gain on available-for-sale debt securities included in net income

Total change in available-for-sale debt securities

( 397 ) 154 105

Total other comprehensive income (loss)

Total other comprehensive (loss) income

( 680 ) 629 ( 1,265 )

Total comprehensive income (loss)

Total comprehensive income

$ 14,747 $ 30,592 $ 12,688

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Deficit Accumulated

Comprehensive

(loss) Income Total

Comprehensive Income Total

Stockholders’

6 unchanged sentences

Repurchase and retirement of common stock ( 5,868 ) ( 6 ) — ( 54,867 ) — ( 54,873 )

Other comprehensive income — — — — 3,292 3,292

Net loss — — — ( 48,733 ) — ( 48,733 )

Stock repurchase costs — — — ( 100 ) — ( 100 )

Stock repurchase excise tax — — — ( 185 ) — ( 185 )

Other comprehensive loss — — — — ( 1,265 ) ( 1,265 )

Net income — — — 13,953 — 13,953

Balance at December 31, 2023 188,538 $ 189 $ 1,101,474 $ ( 933,061 ) $ 232 $ 168,834

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Repurchase and retirement of common stock ( 19,228 ) $ ( 19 ) $ — $ ( 164,972 ) $ — $ ( 164,991 )

Stock repurchase costs — — — ( 100 ) — ( 100 )

Stock repurchase excise tax — — — ( 1,247 ) — ( 1,247 )

Other comprehensive loss — — — — ( 1,265 ) ( 1,265 )

Other comprehensive income — — — — 629 629

Net income — — — 29,963 — 29,963

2 unchanged sentences

Issuance of common stock upon vesting of restricted stock unit awards 9,443 9 ( 9 ) — — —

Issuance of common stock for acquisition 2,205 2 20,045 — — 20,047

Shares surrendered for settlement of minimum statutory tax withholdings ( 4,102 ) ( 4 ) ( 40,383 ) — — ( 40,387 )

1 unchanged sentence

Repurchase and retirement of common stock ( 8,290 ) ( 8 ) — ( 80,524 ) — ( 80,532 )

Stock repurchase excise tax — — — ( 1,247 ) — ( 1,247 )

Other comprehensive income — — — — 629 629

Other comprehensive loss — — — — ( 680 ) ( 680 )

Net income — — — 15,427 — 15,427

7 unchanged sentences

Cash flows from operating activities

Net income (loss) $ 29,963 $ 13,953 $ ( 48,733 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 15,427 $ 29,963 $ 13,953

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 44,123 34,927 25,383

2 unchanged sentences

Stock-based compensation 113,708 71,510 66,015

Impairment of long-lived assets — — 248

Impairment of other equity security — — 3,000

Gain on sale of assets held for sale ( 14,337 ) — —

Change in fair value of other equity security ( 302 ) — —

Gain on sale of available-for-sale debt security ( 758 ) — —

Deferred income taxes 6,634 ( 4,552 ) 4,712

1 unchanged sentence

Unrealized foreign exchange loss (gain) 75 648 ( 1,387 )

Non-cash interest expense 548 — —

Other 293 — ( 39 )

Changes in operating assets and liabilities, net of effects of business combinations, asset acquisition and disposal of business:

Changes in operating assets and liabilities, net of effects of business combination:

Accounts receivable ( 11,802 ) 3,227 1,441

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Acquisitions, net of cash acquired ( 48,468 ) — —

Asset acquisition, net of cash acquired — — ( 6,299 )

Proceeds from acquisition working capital adjustment — — 307

Purchase of property and equipment ( 30,277 ) ( 35,696 ) ( 31,593 )

Proceeds from sale of available-for-sale debt security 1,617 — —

Proceeds from sale of assets held for sale 37,051 — —

Net cash used in investing activities ( 40,077 ) ( 35,696 ) ( 31,555 )

1 unchanged sentence

Repayment of finance lease obligations ( 2 ) ( 25 ) ( 35 )

Payment of contingent consideration — — ( 600 )

Repurchase and retirement of shares ( 165,014 ) ( 54,873 ) ( 95,126 )

Payment of stock repurchase costs ( 169 ) ( 100 ) —

Shares surrendered for settlement of minimum statutory tax withholding ( 20,491 ) ( 9,587 ) ( 41 )

Proceeds from issuance of stock under employee stock plans 2,414 8,445 2,438

Payment of debt issuance costs ( 841 ) — —

Repurchase of common stock ( 80,532 ) ( 165,014 ) ( 54,873 )

Payment of share repurchase excise taxes and repurchase costs ( 1,264 ) ( 169 ) ( 100 )

LegalZoom.com, Inc.

3 unchanged sentences

2025 2024 2023

Shares surrendered for settlement of minimum statutory tax withholding ( 40,387 ) ( 20,491 ) ( 9,587 )

Proceeds from issuance of stock under employee stock plans 45,770 2,414 8,445

Net cash used in financing activities ( 77,256 ) ( 183,285 ) ( 56,150 )

Effect of exchange rate changes on cash and cash equivalents 172 ( 313 ) 34

Net (decrease) increase in cash and cash equivalents ( 83,655 ) 36,637 ( 50,215 )

Net increase (decrease) in cash and cash equivalents 61,036 ( 83,655 ) 36,637

Cash and cash equivalents, at beginning of the period 142,064 225,719 189,082

Cash and cash equivalents, at end of the period $ 203,100 $ 142,064 $ 225,719

Supplemental cash flow data

Cash paid during the year for:

Reconciliation of cash and cash equivalents in the consolidated balance sheets

Cash and cash equivalents

$ 203,100 $ 142,064 $ 225,719

Non-cash operating, investing, and financing activities:

Right of use assets obtained in exchange for new operating lease liabilities $ 803 $ 63 $ 7,528

Right of use assets obtained in exchange of operating lease liabilities (excluding right-of-use assets acquired as part of business acquisition) $ 5,627 $ 803 $ 63

Capitalized stock-based compensation 5,264 5,967 4,056

Purchase of property and equipment included in accounts payable and accrued expenses and other current liabilities 1,520 2,342 2,577

Issuance of common stock for acquisition consideration 20,047 — —

Accrued stock repurchase excise tax — 1,247 185

Acquisition related deferred consideration

The accompanying notes are an integral part of these consolidated financial statements

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Description of the Business

LegalZoom.com, Inc., was initially formed as a California corporation in 1999 and reincorporated as a Delaware corporation in 2007.

LegalZoom.com, Inc.

was initially formed as a California corporation in 1999 and reincorporated as a Delaware corporation in 2007.

LegalZoom.com, Inc., and its wholly owned subsidiaries, are referred to herein as the “Company”, “we,” “us,” or “our”.

We are a provider of services that meet the legal needs of small businesses and consumers.

Our position at business inception allows us to become a trusted business advisor, supporting the evolving needs of a new business across its lifecycle, and we have expanded our platform to include professional expertise and other products, both legal and non-legal, to better meet the needs of small businesses.

Along with business formation, our offerings include ongoing compliance, business licenses, accounting, virtual mailbox and e-signature solutions, trademark filings, and estate plans.

Additionally, we have insights into our customers and leverage our offerings as a channel to introduce small businesses to leading brands in our partner ecosystem, solving even more of their business needs.

LegalZoom.com, Inc.

is a leading online platform for legal services, transforming how individuals and small businesses navigate the legal system.

By combining intuitive technology with access to experienced attorneys—whether through our vast independent attorney network or our own law firm—we offer the tools and guidance people need to confidently manage everything from business formation and compliance to intellectual property protection and ongoing business management and legal support.

With over two decades of experience and millions of customers served, LegalZoom, Inc.

helps individuals and small businesses navigate legal needs with confidence.

On February 10, 2025, we acquired all of the outstanding equity interests of Formation Nation, a small business services company with a range of legal and business solutions, for a total consideration of $ 83.2 million consisting of cash, net working capital adjustments and equity consideration comprising 2,205,445 restricted shares of our common stock.

Summary of Significant Accounting Policies

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The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes.

Estimates are used for, however not limited to, revenue recognition, sales allowances and expected credit loss allowances, available-for-sale debt securities, other equity securities, recoverability of long-lived assets and goodwill, income taxes, commitments and contingencies, valuation of assets and liabilities acquired in business combinations, valuation of assets in asset acquisitions, and fair value of stock-based compensation.

Estimates are used for, however not limited to, revenue recognition, sales allowances and expected credit loss allowances, available-for-sale debt security, other equity security, recoverability of long-lived assets and goodwill, income taxes, commitments and contingencies, valuation of assets and liabilities acquired in business combinations, and fair value of stock-based compensation.

Actual results could differ materially from those estimates.

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We generally engage the assistance of a third-party valuation firm in determining fair values of assets acquired and liabilities assumed and contingent consideration, if any, in a business combination.

Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expenses in the accompanying consolidated statements of operations.

Asset Acquisitions

We evaluate acquisitions to determine whether the acquisition should be classified as either a business combination or an asset acquisition.

Acquisitions for which substantially all of the fair value of the gross assets acquired are concentrated in a single identifiable asset or a group of similar identifiable assets are accounted for as an asset acquisition.

If the gross assets are not concentrated in a single asset or group of similar assets, we then determine if the set of assets acquired represents a business.

A business is an integrated set of activities and assets capable of being conducted and managed for the purpose of providing a return.

Depending on the nature of the acquisition, judgment may be required to determine if the set of assets acquired is a business combination or not.

We allocate the purchase price on a relative fair value basis and capitalize direct acquisition related costs as part of the purchase price.

In making estimates of fair values for purposes of allocating the purchase price, we utilize an independent third-party to value the net tangible and identified intangible assets in connection with the acquisition.

Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expenses in the consolidated statements of operations.

Segment and Geographic Information

Our Chief Executive Officer, as the Chief Operating Decision Maker, organizes our company, manages resource allocations, and measures performance on the basis of one operating segment.

Our Chief Executive Officer, as the Chief Operating Decision Maker, or CODM, organizes our company, manages resource allocations, and measures performance on the basis of our one operating segment.

Refer to Note 21 to our consolidated financial statements.

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Dollars using period-end rates of exchange for assets and liabilities, historical rates of exchange for equity, and average rates of exchange for the period for revenue and expenses.

Translation gains and losses are recorded in accumulated other comprehensive income (loss) as a component of our consolidated statements of stockholders’ equity.

We recognized foreign currency transaction loss in the accompanying consolidated statement of operations of $ 0.6 million for 2024, a gain of $ 1.4 million for 2023, and a loss of $ 3.6 million for 2022.

Translation gains and losses are recorded in accumulated other comprehensive income as a component of our consolidated statements of stockholders’ equity.

We recognized foreign currency transaction loss in the consolidated statement of operations of $ 0.1 million for 2025, a loss of $ 0.6 million for 2024, and a gain of $ 1.4 million for 2023.

Fair Value Measurements

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Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

At December 31, 2024 and 2023, our financial assets recorded at fair value on a recurring basis consist of cash equivalents and available-for-sale debt securities.

At December 31, 2025, our financial assets recorded at fair value on a recurring basis consist of cash equivalents.

At December 31, 2024 our financial assets recorded at fair value on a recurring basis consist of cash equivalents and an available-for-sale debt security.

The cash equivalent consists of money market funds valued using quoted prices in active markets, which represents Level 1 inputs in the fair value hierarchy.

The available-for-sale debt securities are valued using a Monte Carlo simulation, which include inputs that represent Level 3 inputs in the fair value hierarchy.

The available-for-sale debt security is valued using a Monte Carlo simulation, which include inputs that represent Level 3 inputs in the fair value hierarchy.

The carrying amounts of accounts receivable, accounts payable and accrued expenses and other current liabilities approximate fair values because of the short-term nature of these items.

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Due to a large and diverse customer base, no individual customer represented more than 10% of total revenue in December 31, 2025, 2024 or 2023.

At December 31, 2024 and 2023, there were no customers with an outstanding balance of 10% or more of our accounts receivable balance.

At December 31, 2025, there was one partner with an outstanding balance of 10% or more of our total accounts receivable balance.

At December 31, 2024, there were no customers with an outstanding balance of 10% or more of our total accounts receivable balance.

Cash and Cash Equivalents

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Available-for-sale Debt Security

At December 31, 2024 and 2023, we held a long-term investment in a privately held company through the purchase of a convertible promissory note.

This investment is classified as an available-for-sale debt security.

We have historically held a long-term investment in a privately held company through the purchase of a convertible promissory note.

This investment was classified as an available-for-sale debt security.

For available-for-sale debt securities that have the estimated fair values below their amortized cost basis, we evaluate our intent to sell the security or whether we will more likely than not be required to sell the security before recovery of its amortized cost basis.

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If the assessment indicates a credit loss exists, the credit-related portion of the loss is recorded as allowance for credit loss with a corresponding credit loss expense, included in the consolidated statement of operations.

If the assessment indicates a credit loss does not exist, impairment is recognized in other comprehensive income (loss), net of applicable taxes.

Investments in Other Equity Securities

We hold investments in equity securities of certain privately held companies, which do not have readily determinable fair values.

We have elected to measure these non-marketable investments at cost, with remeasurements to fair value only upon the occurrence of observable price changes in orderly transactions for identical or similar securities of the same issuer, or in the event of any impairment.

If the assessment indicates a credit loss does not exist, impairment is recognized in other comprehensive (loss) income, net of applicable taxes.

Investment in Other Equity Security

We hold an investment in an equity security of a privately held company, which does not have readily determinable fair value.

We have elected to measure this non-marketable investment at cost, with remeasurements to fair value only upon the occurrence of observable price changes in orderly transactions for identical or similar securities of the same issuer, or in the event of any impairment.

This election is reassessed each reporting period to determine whether a non-marketable equity security has a readily determinable fair value, in which case they would no longer be eligible for this election.

We evaluate our non-marketable equity securities for impairment at each reporting period based on a qualitative assessment that considers various potential impairment indicators.

We evaluate our non-marketable equity security for impairment at each reporting period based on a qualitative assessment that considers various potential impairment indicators.

If an impairment exists, a loss is recognized in the consolidated statements of operations for the amount by which the carrying value exceeds the fair value of the investment.

We include investments in equity securities within other assets in the accompanying consolidated balance sheets.

Held for Sale

We classify long-lived assets or asset groups we plan to sell as held for sale on our consolidated balance sheets only after certain criteria have been met including:

management has the authority and commits to a plan to sell the asset, the asset is available for immediate sale in its present condition, an active program to locate a buyer and the plan to sell the asset have been initiated, the sale of the asset is probable within twelve months (subject to events and circumstances outside our control which may extend the period required to complete the sale beyond one year), the asset is being actively marketed at a reasonable sales price relative to its current fair value, and it is unlikely that the plan to sell will be withdrawn or that significant changes to the plan will be made.

We record assets or asset groups held for sale at the lower of

their carrying value or fair value less costs to sell.

Once classified as held for sale, depreciation and amortization is not recorded for any long-lived assets.

We include investment in other equity security within other assets in the accompanying consolidated balance sheets.

Assets Held for Sale

We classified long-lived assets or asset groups we planned to sell as held for sale on our consolidated balance sheets after certain criteria were met including:

management had the authority and committed to a plan to sell the asset, the asset was available for immediate sale in its present condition, an active program to locate a buyer and the plan to sell the asset was initiated, the sale of the asset was probable within twelve months (subject to events and circumstances outside our control which could have extended the period required to complete the sale beyond one year), the asset was being actively marketed at a reasonable sales price relative to its current fair value, and it was unlikely that the plan to sell will be withdrawn or that significant changes to the plan would be made.

We recorded assets or asset groups held for sale at the lower of their carrying value or fair value less costs to sell.

Once classified as held for sale, depreciation and amortization was not recorded for any long-lived assets.

We determine whether an arrangement is a lease, or contains a lease, at inception if we are able to identify an asset and can conclude we have the right to control the identified asset for a period of time.

Leases are included in operating lease right-of-use, or ROU, assets and operating lease liabilities in the accompanying consolidated balance sheets.

Leases with an initial term of twelve months or less are not recorded in our accompanying consolidated balance sheet.

We made accounting policy elections, including a short-term lease exception policy, permitting us to not apply the recognition requirements of this standard to short-term leases, which are leases with expected terms of twelve months or less, and an accounting policy to account for lease and certain non-lease components as a single component for certain classes of assets.

Leases with an initial term of twelve months or less are not recorded in our accompanying consolidated balance sheets.

components as a single component for certain classes of assets.

Additionally, we use the portfolio approach when applying the discount rate selected based on the dollar amount and term of the obligation.

ROU assets represent our right to control an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease.

ROU assets and operating lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

ROU assets and operating lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

As our leases do not provide an implicit rate, we use the incremental borrowing rate based on the information available at commencement date in determining the discount rate used to present value lease payments.

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Transaction revenue includes filing fees and is net of cancellations, promotional discounts, sales allowances and credit reserves.

Tax preparation services are recognized at the point in time when the customer’s tax return is filed and accepted by the applicable government authority.

We also earn fees from third-party providers from leads generated to such providers through our online legal platform.

Subscription revenue —Subscription revenue is generated primarily from subscriptions to our registered agent, compliance packages, attorney advice, legal forms, tax and accounting, virtual mail and e-signature services, and software-as-a-service, or SaaS, accounting solution subscriptions and SaaS subscriptions in the U.K.

We also earn fees from third-party providers in connection with lead generation activities, where referred customers purchased services that are transactional in nature.

We generally recognize revenue from our subscriptions ratably over the subscription term.

Subscription terms generally range from thirty days to one year.

Subscription revenue also includes amounts earned from third-party providers in connection with lead generation activities, where referred customers purchased services that are subscription in nature.

Subscription revenue includes the transaction price allocated to bundled free trials for our subscription services and is net of promotional discounts, cancellations, sales allowances and credit reserves and payments to third-party service providers.

For transaction and subscription revenue, we generally collect payments and fees at the time orders are placed and prior to services being rendered.

We record amounts collected for services that have not been performed as deferred revenue on our consolidated balance sheet.

We record amounts collected for services that have not been performed as deferred revenue on our consolidated balance sheets.

The transaction price that we record is generally based on the contractual amounts and is reduced for estimated sales allowances for price concessions, charge-backs, sales credits and refunds, which are accounted for as variable consideration when estimating the amount of revenue to recognize.

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and recognition of revenue when or as the performance obligations are satisfied.

Our customers generally pay for transactions in advance by credit or debit card except for certain services provided under installment plans where we allow customers to pay for their order in three equal payments.

The first installment due under the installment plans is charged to the customer’s debit or credit card on the date the order is placed, and the remaining installments are generally charged on a monthly basis thereafter.

We recognize revenue for the amount we expect to be entitled to for providing the services to our customers.

We recognize revenue for the amount we expect to be entitled to for providing the services to

our customers.

The total fees collected by us for our services include, as applicable, expedited services fees, government filing fees and shipping fees.

Subscription services are generally paid monthly or annually in advance of the subscription period except for SaaS services in the U.K.

and virtual mail subscriptions, which are invoiced monthly in arrears.

Subscription services are generally paid monthly or annually in advance of the subscription period except for virtual mail subscriptions, which are invoiced monthly in arrears.

Amounts collected in advance of revenue recognition are recorded in deferred revenue.

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The transaction price excludes sales taxes.

Contracts with our customers may include options to purchase additional future services, and in the case of subscription services, options to auto-renew the subscription service.

Additional consideration attributable to either the option to purchase additional future services or the option to renew are excluded from the transaction price until such time that the option is exercised, unless these options provide a material right to the customer.

For arrangements that contain multiple performance obligations, such as our bundled arrangements, we allocate the transaction price to each performance obligation based on estimates of the standalone selling price of each performance obligation within the bundle.

For the services we sell on a standalone basis, we use the sales price of these services in the allocation of the transaction price in bundled arrangements.

do not sell the service on a standalone basis, we estimate the standalone selling price based on the adjusted market assessment approach or the expected cost plus a margin approach when market information is not observable.

Where we do not sell the service on a standalone basis, we estimate the standalone selling price based on the adjusted market assessment approach or the expected cost plus a margin approach when market information is not observable.

In these cases, the determination of the standalone selling price may require significant judgment.

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In arrangements in which we are the principal, we record as revenue the amounts we have billed to our customer, net of sales allowance, and we record the fee payable to the third-party as cost of revenue.

We are the principal in most of our legal document preparation and registered agent services, including legal entity formations and similar arrangements and formation in the U.K.

and since December 2021, tax advisory and preparation services through our fulfilled tax subscription, LZ Tax.

the principal in most of our legal document preparation, tax preparation and advisory services, and registered agent services, including legal entity formations and similar arrangements.

For these services, revenue includes filing and similar fees.

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For these arrangements, we recognize revenue on a net basis as an agent.

For other services provided by third parties, including deed transfer, accounting, business data protection, revenue is recognized net of fees payable to third parties.

For other services provided by third parties, including deed transfer, accounting, revenue is recognized net of fees payable to third parties.

For revenue earned from leads generated to third-party providers, we receive a fee for the referral of our customer to a third-party provider or we retain a portion of the fee paid by the customer and share the remainder with a third-party.

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At December 31, 2025 and 2024, there was $ 2.4 million and $ 1.7 million, respectively, in deferred cost of revenue included in prepaid expenses and other current assets in the accompanying consolidated balance sheets.

Filing fees of $ 83.3 million, $ 88.1 million and $ 74.1 million were

recorded in cost of revenue in the accompanying consolidated statements of operations for years ended December 31, 2024, 2023, and 2022, respectively.

Filing fees of $ 98.3 million, $ 83.3 million and $ 88.1 million were recorded in cost of revenue in the accompanying consolidated statements of operations for years ended December 31, 2025, 2024, and 2023, respectively.

Sales and Marketing Expenses

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The expected term of options granted is estimated based upon actual historical exercise and post-vesting cancellations, adjusted for expected future exercise behavior.

The expected term of restricted stock units is defined as the remaining term from the grant date to the end of the performance period.

The expected term of RSUs is defined as the remaining term from the grant date to the end of the performance period.

Because our common stock has limited publicly traded history, we estimate the expected volatility from the historical volatility of selected public companies with comparable characteristics to us, including similarity in size, lines of business, market capitalization and revenue and financial leverage.

We determine the expected volatility assumption using the frequency of daily historical prices of comparable public companies’ common stock for a period equal to the expected term of the options.

We periodically assess the comparable companies and other relevant factors used to measure expected volatility for future stock option and restricted stock units with market conditions grants.

We periodically assess the comparable companies and other relevant factors used to measure expected volatility for future stock options and RSUs with market conditions grants.

The risk-free interest rate assumption is based upon observed interest rates on the U.S.

government securities appropriate for the expected term of our stock options and restricted stock units with market conditions.

government securities appropriate for the expected term of our stock options and RSUs with market conditions.

The dividend yield assumption is based on our history and expectation of dividend payouts.

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The determination of stock-based compensation is inherently uncertain and subjective and involves the application of valuation models and assumptions requiring the use of judgment.

If we had made different assumptions, our stock-based compensation expense, and our net income (loss) for the years ended December 31, 2024, 2023, and 2022 may have been materially different.

If we had made different assumptions, our stock-based compensation expense, and our net income for the years ended December 31, 2025, 2024, and 2023 may have been materially different.

Loss Contingencies

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We disclose those contingencies that we believe are at least reasonably possible but not probable regardless of whether they are reasonably estimable.

The likelihood of a loss is determined using several factors including the nature of the matter, advice of our internal and external counsel, previous experience and historical and other relevant information available to us.

The likelihood of a

loss is determined using several factors including the nature of the matter, advice of our internal and external counsel, previous experience and historical and other relevant information available to us.

The determination of the likelihood of loss or the range of loss requires significant management judgment.

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We consider all available evidence, both positive and negative, including historical levels of income, expectations and risk associated with estimates of future taxable income in assessing the need for a valuation allowance.

If our assumptions and consequently our estimates, change in the future, the valuation allowance may be increased or decreased, resulting in an increase or decrease, which may be material, to our provision for income taxes and the related impact on our net income (loss).

We recognize tax benefits from an uncertain position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits.

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At December 31, 2025 and 2024, accrued penalties and interest related to uncertain tax positions were not material.

Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding, net of unvested restricted stock, if any, during the period.

We compute diluted net income (loss) per share by dividing net income (loss) by the weighted-average number of shares of common stock outstanding, including dilutive common shares outstanding during the period.

Dilutive shares outstanding include stock options, restricted stock units, and employee stock purchase plans, or ESPPs, computed using the treasury stock method.

Net Income Per Share

Basic net income per share is calculated by dividing net income by the weighted-average number of shares of common stock outstanding, net of unvested restricted stock, if any, during the period.

We compute diluted net income per share by dividing net income by the weighted-average number of shares of common stock outstanding, including dilutive common shares outstanding during the period.

Dilutive shares outstanding include stock options, RSUs, and employee stock purchase plans, or ESPPs, computed using the treasury stock method.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Standards Accounting Board, or FASB, issued Accounting Standards Update, or ASU, 2016-13, Financial Instruments—Credit losses:

Measurement of Credit Losses on Financial Instruments (Topic 326) , which revises the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, and which results in more timely recognition of losses on financial instruments, including, but not limited to, available-for-sale debt securities and accounts receivable.

We adopted ASU 2016-13 effective January 1, 2022.

The adoption of this accounting standard did not have a material impact on our consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity's Own Equity .

This standard eliminates the beneficial conversion and cash conversion accounting models for convertible instruments.

It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions.

In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted earnings per share computation.

We adopted ASU 2020-06 on January 1, 2022 and the adoption of this accounting standard did not have a material impact on our consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement—Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820) , or ASU 2022-03, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

In June 2022, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2022-03, Fair Value Measurement—Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820) , or ASU 2022-03, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

The amendments are effective for fiscal years beginning after December 15, 2023.

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In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842):

Common Control Arrangements, which amends certain provisions of ASC 842 related to the accounting for leasehold improvements in common-control arrangements.

Common Control Arrangements, which amends certain provisions of Accounting Standards Codification, or ASC, 842 related to the accounting for leasehold improvements in common-control arrangements.

ASU 2023-01 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

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Refer to Note 21 to our consolidated financial statements.

In March 2024, the FASB issued ASU 2024-01, which clarifies how an entity determines whether a profits interest or similar award is a share-based payment arrangement that is within the scope of ASC 718, Compensation - Stock Compensation.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires entities to disclose more detailed information in the reconciliation of their statutory tax rate to their effective tax rate.

This accounting standard is effective for fiscal years beginning after December 15, 2024.

ASU 2023-09 will be applied prospectively with an option for retroactive application to each period in the financial statements, and early adoption is permitted.

We adopted ASU 2023-09 for the year ended December 31, 2025 and applied the new disclosure requirements prospectively to the current annual period.

Prior period disclosures have not been adjusted.

Refer to Note 18 to our consolidated financial statements.

In March 2024, the FASB issued ASU 2024-01, Compensation—Stock Compensation (Topic 718):

Scope Application of Profits Interest and Similar Awards, which clarifies how an entity determines whether a profits interest or similar award is a share-based payment arrangement that is within the scope of ASC 718, Compensation - Stock Compensation .

This accounting standard is effective for fiscal years beginning after December 15, 2024, including interim periods within those years, and early adoption is permitted.

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The adoption of this accounting standard did not have a material impact on our consolidated financial statements.

In March 2024, the FASB issued ASU 2024-02, Codification Improvements to amend a variety of topics in the accounting codification by removing references to various FASB concepts statements.

In March 2024, the FASB issued ASU 2024-02, Codification Improvements — Amendments to Remove References to the Concepts Statements, to amend a variety of topics in the accounting codification by removing references to various FASB concepts statements.

This accounting standard is effective for fiscal years beginning after December 15, 2024, and early adoption is permitted.

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Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires entities to disclose more detailed information in the reconciliation of their statutory tax rate to their effective tax rate.

This accounting standard is effective for fiscal years beginning after December 15, 2024.

ASU 2023-09 will be applied prospectively with an option for retroactive application to each period in the financial statements, and early adoption is permitted.

We are currently evaluating the impact of the adoption on our consolidated financial statements.

In November 2024, FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

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Entities may apply the new guidance prospectively to settlements of convertible debt instruments that take place during annual reporting periods (and interim reporting periods within those annual reporting periods) beginning after the effective date of ASU 2024-04.

Retrospective application may be elected as of the beginning of the first comparative reporting period in which the entity has also applied ASU 2020-06.

Retrospective application may be elected as of the beginning of the first comparative

reporting period in which the entity has also applied ASU 2020-06.

We are currently evaluating the impact of the adoption on our consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets , which provides a practical expedient for calculating current expected credit losses for current accounts receivables and current contract assets by assuming that the current conditions as of the balance sheet date will not change for the remaining life of the asset.

The accounting standard is effective for interim and annual reporting periods beginning after December 15, 2025 and is to be applied on a prospective basis.

We are currently evaluating the impact of the adoption to our consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software , to remove all references to software development stages and to require capitalizing software costs when management has authorized and committed to funding a software project and it is probable that the project will be completed and that the software will be used to perform the function intended.

The accounting standard is effective for annual reporting periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods with early adoption permitted at the beginning of an annual reporting period.

The adoption of ASU 2025-06 can use a prospective, modified retrospective or retrospective transition.

We are currently evaluating the impact of the adoption to our consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements, to make targeted, narrow-scope improvements to the interim reporting guidance in Topic 270 to clarify application and improve consistency in practice.

The amendments create a comprehensive list of required interim disclosures and introduce a disclosure principle requiring entities to disclose, in interim periods, any event or change since the previous year-end that has a material effect on the entity.

The accounting standard is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 with early adoption is permitted.

The adoption of ASU 2025-06 can use a prospective or retrospective transition.

We are currently evaluating the impact of the adoption to our consolidated financial statements.

In December 2025, the FASB issued ASU No.

2025-12, Codification Improvements including various items that represent changes to clarify, correct, or make minor improvements to various codifications.

The accounting standard is effective for interim reporting periods within annual reporting periods beginning after December 15, 2026 with early adoption is permitted.

The adoption method of this ASU may vary, on an issue-by-issue basis.

We are currently evaluating the impact of the adoption to our consolidated financial statements.

Other Financial Statement Information

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Accrued sales, use and business taxes 10,409 6,984

Deferred consideration relating to business acquired

Other 4,419 2,809

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Deferred revenue as of December 31, 2025 and 2024 was $ 203.9 million and $ 175.0 million, respectively.

Revenue recognized in 2024, 2023 and 2022 that was included in deferred revenue at the beginning of the year

was $ 168.0 million, $ 163.4 million and $ 146.6 million, respectively.

Revenue recognized in 2025, 2024 and 2023 that was included in deferred revenue at the beginning of the year was $ 174.5 million, $ 168.0 million and $ 163.4 million, respectively.

We expect to recognize substantially all of the deferred revenue as of December 31, 2025 as revenue in 2026.

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Assets Held for Sale

In September 2022, following an evaluation of our office space and business requirements, we commenced a plan to sell our operational headquarters in Austin, Texas, consisting of land, a building and building improvements, and determined that these assets met the held for sale criteria.

We ceased recording depreciation on these assets upon meeting the held for sale criteria.

At December 31, 2024, the total carrying value of the assets held for sale remains at $ 22.7 million as follows (in thousands):

December 31, 2024

Building and building improvements 16,322

Total assets held for sale $ 22,722

The estimated fair value less costs to sell the assets held for sale exceed their carrying values and hence no impairment was necessary as of December 31, 2024.

Revvsales, Inc.

In October 2022, we completed an asset acquisition of Revvsales Inc, or Revv, consisting substantially of acquired developed technology for their self-service document automation and electronic signature platform.

Revv’s proprietary technology enhanced our forms library and legal template offerings and has been leveraged to develop modern product experiences and services for small businesses.

A purchase price of $ 6.6 million, which was subject to customary adjustments, was paid at closing and funded by our available cash on hand.

The acquisition was accounted for as an asset acquisition because substantially all the value of the assets acquired were concentrated in the acquired technology.

Revv’s operations have been included in our consolidated financial statements commencing on the acquisition date.

We allocated the accumulated cost of the acquisition to the assets acquired based on their relative fair values.

The accumulated cost of the acquisition included direct acquisition-related costs and applicable taxes.

The estimated fair value of developed technology was $ 6.5 million and an assembled workforce of $ 0.1 million, which were determined by using a replacement cost approach.

The replacement cost approach consists of developing an estimate of the current cost of a similar new asset having the nearest equivalent utility to the asset being valued.

The developed technology rights and assembled workforce is amortized over a weighted-average period of three years by using the straight-line method.

Separate from the asset acquisition, up to $ 2.6 million was payable to certain of the sellers on the first and second anniversaries of the asset acquisition date as compensation for maintaining an assembled workforce.

During each of the years ended December 31, 2024 and 2023, payments of $ 1.3 million were made to these sellers pursuant to the foregoing compensation arrangement.

United Agency Services, Corp.

In August 2022, we acquired certain assets and liabilities of United Agency Services, Corp., or UA Services, a company providing registered agent services and corporate compliance solutions for $ 3.5 million, of which $ 2.6 million was paid in cash on the acquisition date and up to $ 1.0 million was payable in cash within twelve months from the acquisition date based upon the achievement of certain earnout metrics.

During the year ended December 31, 2023, we recorded a $ 0.8 million reduction in fair value of contingent consideration as a component of cost of revenue because the earnout metrics were not achieved.

Furthermore, an additional payment of up to $ 0.4 million to the seller of UA Services was contingent on certain service conditions being met.

This amount was excluded from the purchase consideration and was recorded as compensation expense in 2022.

The acquisition was completed in order to build a more durable registered agency platform and has been accounted for as a business combination.

The purchase price was allocated to the assets acquired and liabilities assumed.

Goodwill of $ 3.3 million arising from the acquisition consisted largely of the assembled

workforce and synergies expected from combining our operations.

The acquired goodwill was deductible for tax purposes.

There were no intangible assets acquired in connection with this acquisition.

In September 2022, following an evaluation of our office space and business requirements, we determined that our operational headquarters property at 9900 Spectrum Drive in Austin, Texas was no longer aligned with operational needs due to an increased shift to remote work.

As a result, we initiated plans to sell the property consisting of land, a building and building improvements, and classified these assets as held for sale.

On September 24, 2024, we entered into a binding purchase and sale agreement for this property with Round Rock Independent School District.

The sale was completed on March 31, 2025, and we received net cash proceeds of approximately $ 37.1 million after deducting selling costs such as brokerage commissions, title fees, and asset disposal costs.

Prior to completion of the sale, the property had a carrying value of $ 22.7 million.

As a result of the sale, we recognized a gain of $ 14.3 million.

This gain is recorded in gain on sale of assets held for sale on the accompanying consolidated statements of operations.

As of March 31, 2025, the property was fully derecognized from our accompanying consolidated balance sheets and no amounts remain to be classified as held for sale as of December 31, 2025.

Formation Nation, Inc.

On February 10, 2025, we acquired all of the outstanding equity interests of Formation Nation in exchange for a total consideration of $ 83.2 million consisting of cash, net working capital adjustments and equity consideration comprising 2,205,445 restricted shares of our common stock.

The shares are subject to a lock-up and voting agreement, and a portion of the cash consideration is subject to a one-year holdback and customary adjustments.

Upon closing of the transaction, Formation Nation and its subsidiaries – including Inc Authority and Nevada Corporate Headquarters, Inc.

– became wholly owned subsidiaries of LegalZoom.

Formation Nation is a Nevada-based small business services company with a range of legal and business solutions, from highly personalized offerings, to lower-cost value options.

The acquisition of Formation Nation, along with its subsidiaries, was completed in order to accelerate our strategy of attracting higher value customers by leveraging Formation Nation’s best-in-class customer service teams, expand our portfolio of offerings, and enable us to reach a broader customer base.

The acquisition meets the criteria to be accounted for as a business combination which requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date and that the difference between the fair value of the consideration paid for the acquired entity and the fair value of net assets acquired be recorded as goodwill, which is not amortized but is tested at least annually for impairment.

The fair value of consideration transferred is as follows (in thousands):

Cash paid at close $ 50,076

Net working capital adjustment 345

Equity consideration 20,047

Deferred cash consideration

Total consideration transferred $ 83,197

The fair value of equity issued to the selling shareholder was determined based on the closing price of our common stock immediately prior to acquisition.

Approximately $ 12.9 million of the preliminary consideration was deferred to satisfy any necessary adjustments, including without limitation, indemnification claims related to general representations and warranties, any net working capital adjustments and deferred change in control bonuses.

This deferred

consideration is expected to be settled in cash after a 12-month holdback period, net of any amounts necessary to satisfy all unsatisfied or disputed claims for indemnification and net working capital adjustments.

An additional $ 0.2 million in consideration is payable in two installments on the one- and two-year anniversary of the acquisition date.

Deferred cash consideration was adjusted from the preliminary deferred cash consideration through the measurement period primarily as a result of adjustments related to state, federal and sales tax filings related to Formation Nation’s pre-acquisition results.

The current portion of deferred consideration was included in accrued expenses and other current liabilities and the non-current portion was included in other liabilities on our consolidated balance sheet based on their respective due dates.

The identifiable assets acquired and liabilities assumed were recorded at their fair values as of the acquisition date and consolidated with those of the Company based on management's estimates and assumptions.

Assigning fair market values to the assets acquired and liabilities assumed at the date of an acquisition requires the use of significant judgments regarding estimates and assumptions that may change during the measurement period, which will not exceed one year from the acquisition date.

As of December 31, 2025, we have completed the allocation of fair market values to the assets acquired and liabilities assumed for the acquisition of Formation Nation.

The fair values of the customer relationships were calculated using income and cost approaches, including the multi-period excess earnings method.

The fair values of developed technology and in-process research & development were calculated using cost approaches, and the fair value of trade names was calculated using the relief from royalty method.

Goodwill represents the excess of the purchase price over the identifiable net assets acquired arising from the business combination.

The goodwill related to the acquisition was attributable largely to the assembled workforce and synergies expected from combining our operations, and is not deductible for tax purposes.

The following table summarizes the final allocation of the purchase consideration to the assets acquired and liabilities assumed (in thousands):

Preliminary Allocation of Purchase Consideration Measurement period adjustments, net (1)

Final Allocation of Purchase Consideration

Cash and cash equivalents $ 1,953 $ — $ 1,953

Accounts receivable 276 — 276

Prepaid expenses and other current assets 257 — 257

Operating lease right-of-use assets 3,884 — 3,884

Other assets 80 — 80

Intangible assets 17,300 — 17,300

Deferred tax assets — 1,890 1,890

Goodwill 77,813 ( 426 ) 77,387

Total assets acquired $ 101,563 $ 1,464 $ 103,027

Accounts payable $ 535 $ — $ 535

Accrued expenses and other current liabilities (2)

4,744 1,465 6,209

Operating lease liabilities, current and non-current 3,504 — 3,504

Deferred revenue 9,582 — 9,582

Other liabilities 16 ( 16 ) —

Net assets acquired $ 83,182 $ 15 $ 83,197

(1) Measurement period adjustments are primarily related to state, federal and sales tax adjustments related to Formation Nation’s pre-acquisition results.

The following table summarizes the valuation of acquired intangible assets and estimated useful lives as of the acquisition date (in thousands, except years):

Fair Value Estimated remaining useful life

Customer relationships $ 11,200 5

Developed technology 3,400 4

Trade names 2,500 5

In-process research & development 200 N/A

Total identifiable intangible assets $ 17,300

Acquisition costs related to this transaction of approximately $ 1.5 million were expensed as incurred and are included in general and administrative expenses in the accompanying consolidated statements of operations during the year ended December 31, 2025.

The revenue and earnings of the acquired business were included in our results of operations since the acquisition date and were not material to the consolidated financial results for the year ended December 31, 2022.

Pro forma revenues and results of operations for this acquisition are not presented as the impact on our consolidated financial statements for the year ended December 31, 2022 was immaterial.

Results of Formation Nation, inclusive of any synergy effects, cross-selling, or cross-marketing benefits, were included in our results of operations since February 10, 2025, the date of acquisition.

Revenue and net loss attributable to Formation Nation included within the consolidated statements of operations since the acquisition date were approximately $ 51.4 million and $ 4.9 million, respectively, for the year ended December 31, 2025.

Pro forma revenues and results of operations for this acquisition have not been presented as the impact on our consolidated financial statements would be immaterial.

Available-for-sale Debt Security

In 2019, we invested in Legal Vision Pty Ltd., or Legal Vision, an Australian proprietary limited company that provides online legal services to small and medium size businesses, through the purchase of a convertible promissory note for a total of Australian Dollar, or AUD, $ 1.0 million (USD $ 0.7 million).

The convertible promissory note has a maturity term of ten years , which is convertible into Legal Vision’s common stock.

The underlying conversion feature is automatically exercisable upon an exit event including an IPO, merger or sale, upon a new financing round, or at our election.

At December 31, 2024, we do not hold any equity interests or in-substance common stock in Legal Vision, and accordingly, we have classified the convertible promissory note as an investment in an available-for-sale debt security in the accompanying consolidated balance sheets.

The fair value of the convertible promissory note is based on unobservable inputs that are categorized as Level 3 in the fair value hierarchy.

We determined that the conversion option on the Legal Vision convertible promissory note will not have material value until Legal Vision executes on its business plans to drive growth, which consequently will drive the fair value of the associated conversion option in excess of the carrying value of the convertible promissory note.

Accordingly, the fair value of the convertible debt approximated its carrying value as of December 31, 2024 and 2023.

At December 31, 2024 and 2023, the fair value of our available-for-sale debt security in Legal Vision was AUD $ 2.2 million (USD $ 1.4 million) and AUD $ 1.7 million (USD $ 1.2 million), respectively, with the change due to fair value adjustments during the period.

In 2024, key assumptions used in the Monte Carlo simulation model to determine the fair value of the convertible promissory note in Legal Vision were:

expected term of 4.3 years, risk-free rate of 3.9 % and volatility of 55 %.

The increase in fair value was recognized in other comprehensive income for the year ended December 31, 2024.

Since the Legal Vision convertible promissory note has a contractual maturity date that exceeds one year and we do not intend to liquidate in the next twelve months, we have classified the convertible promissory note as a noncurrent available-for-sale debt security in the accompanying consolidated balance sheets as of December 31, 2024 and 2023.

Investments in Other Equity Securities

In 2019, we invested in LegalVision Pty Ltd., or LegalVision, an Australian proprietary limited company that provides online legal services to small and medium-sized businesses, through the purchase of a convertible promissory note for a total of Australian Dollar, or AUD, $ 1.0 million (USD $ 0.7 million).

The convertible promissory note had a maturity term of ten years and was convertible into LegalVision’s common stock.

The underlying conversion feature was automatically exercisable upon the occurrence of certain exit events, including an IPO, merger or sale, a new financing round, or at our election.

At December 31, 2024, we did not hold any equity interests or in-substance common stock in LegalVision, and accordingly, we classified the convertible promissory note as an investment in an available-for-sale debt security in the accompanying consolidated balance sheets.

The fair value of the convertible promissory note was based on unobservable inputs that were categorized as Level 3 in the fair value hierarchy.

The fair value was estimated using a Monte Carlo simulation model.

Key assumptions used in the valuation as of December 31, 2024 included an expected term of 4.3 years, risk-free rate of 3.9 % and volatility of 55 %.

During the year ended December 31, 2025, we sold our available-for-sale debt security in LegalVision and received total proceeds of $ 1.6 million.

As a result of the sale, we recorded a net gain of $ 0.8 million in other income, net, in the accompanying consolidated statements of operations.

Investments in Other Equity Security

We hold an equity investment in LawPath, Pty Ltd, or LawPath, an Australian proprietary limited company that provides an online legal platform to individuals and small and medium size businesses.

In October 2021, we invested an additional AUD $ 1.5 million (USD $ 1.1 million).

The change in fair value, due to an orderly transaction, in our other equity securities was $ 1.8 million for the year ended December 31, 2021, which was recognized in other income (expense), net in our consolidated statements of operations.

At both December 31, 2024 and 2023 the carrying amount of our investment in LawPath was $ 4.4 million.

At December 31, 2025 and 2024 the carrying amount of our investment in LawPath was $ 4.7 million and $ 4.4 million, respectively.

The investment in LawPath does not have a readily determinable fair value.

In December 2018, we purchased shares of Class C nonvoting common units in Mylo, LLC, or Mylo, a digital insurance broker that services small and medium size businesses, for $ 3.0 million, resulting in a 4 % interest in Mylo.

In December 2022, we fully impaired our investment in Mylo and incurred a loss of $ 3.0 million as the fair value of our investment was determined to be zero based upon an observable sale of their common equity.

Therefore, we recognized an impairment of $ 3.0 million in our consolidated statements of operations during the year ended December 31, 2022.

There were no other impairments of our investments during the years ended December 31, 2024, 2023, and 2022.

The change in fair value, due to an orderly transaction, in our other equity security was $ 0.3 million for the year ended December 31, 2025, which was recognized in other income, net in our consolidated statements of operations.

There were no impairments of our investments during the years ended December 31, 2025, 2024, and 2023.

At December 31, 2025 and 2024, the carrying value of these investments is included in other assets in the accompanying consolidated balance sheets.

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In 2025, 2024 and 2023, we capitalized internal-use software development costs of $ 32.7 million, $ 40.4 million and $ 35.0 million respectively.

In 2025, we wrote off $ 12.0 million software development costs.

These software development costs represented fully depreciated assets that were no longer in service.

In 2025, 2024 and 2023, no software development costs were impaired.

We conduct operations from certain leased facilities in various locations.

At December 31, 2024, we had various non-cancelable operating leases for office space and equipment, which expire between June 2025, and February 2033, and which represent the non-cancelable periods of the leases and include extension options that we determined are reasonably certain to be exercised.

At December 31, 2025, we had various non-cancelable operating leases for office space and equipment, which expire between June 2026 and June 2033, and which represent the non-cancelable periods of the leases and include extension options that we determined are reasonably certain to be exercised.

We exclude extension options that are not reasonably certain to be exercised from our lease terms.

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Operating Operating lease liabilities, non-current 10,025 6,018

Finance Other liabilities — 2

Total lease liabilities

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The changes in goodwill for 2025 and 2024 were as follows (in thousands):

Balance as of December 31, 2022 $ 63,229

Foreign currency translation 89

Balance as of December 31, 2023 63,318

Balance as of December 31, 2023 and 2024

Acquisition of Formation Nation (1)

Balance as of December 31, 2025 $ 140,705

During the year ended December 31, 2024, there were no changes to the goodwill balance.

(1) Amounts relate to the acquisition of Formation Nation.

Refer to Note 5.

Acquisition to our consolidated financial statements.

Intangible Assets, net

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As of December 31, 2025

Remaining Weighted average useful life (in years) Gross

Remaining Weighted average useful life

Amount Accumulated

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Assembled workforce 0.0 125 125 —

In-process research and development

N/A 200 — 200

Total intangible assets

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Long-term Debt

On July 2, 2021, we entered into an amended and restated credit and guaranty agreement, or 2021 Revolving Facility, providing for revolving borrowings of up to $ 150.0 million with an availability period of five years .

On July 2, 2021, we entered into an amended and restated credit and guaranty agreement, or the Revolving Facility, providing for revolving borrowings of up to $ 150.0 million with an availability period of five years .

Under the Revolving Facility, we can use up to $ 20.0 million in letters of credit and up to $ 10.0 million in borrowings on same-day notice, referred to as swingline loans.

Additional debt issuance costs of $ 0.8 million were allocated to the 2021 Revolving Facility.

On May 5, 2023, we entered into an amendment to the Revolving Facility to replace the LIBOR interest rate benchmark with the Secured Overnight Financing Rate, or SOFR, benchmark, with a 0.10 % credit spread adjustment to the SOFR benchmark, or Adjusted Term SOFR, for all available interest periods, provided that if the Adjusted Term SOFR is less than zero, the Adjusted Term SOFR shall be deemed to be zero.

Other than the foregoing, the remaining terms of the Revolving Facility remained unchanged.

The interest rate applicable to the 2021 Revolving Facility is subject to a 1.0 % floor and is a rate equal to the greatest of (i) the administrative agent’s prime rate (ii) the federal funds effective rate plus 1/2 of 1.0% or (iii) Adjusted Term SOFR plus 1.0 %.

The interest rate margins under the 2021 Revolving Facility are subject to one reduction of 0.25 % and a further reduction of 0.25 % upon achieving total net first lien leverage ratios of 3.50 to 1.00 and 2.50 to 1.00, respectively.

We are required to pay a commitment fee in respect of unutilized commitments under the 2021 Revolving Facility.

On July 14, 2025, we entered into a second amendment to the Revolving Facility, or, as amended, the Amended Revolving Facility, which reduced the revolving loan commitment from $ 150.0 million to $ 100.0 million and extended the maturity date from July 2, 2026 to July 14, 2030.

The terms of available letters of credit and swingline loans remained unchanged.

In addition, the Amended Revolving Facility added additional reductions to the existing interest rate margins and the commitment fee upon achieving a total net lien leverage ratio of 1.00 to 1.00 and also removes the 0.10 % credit spread adjustment to the SOFR benchmark for all available interest periods.

As a result of the Amended Revolving Facility, we incurred $ 0.8 million of incremental deferred issuance costs.

Those costs were capitalized in other assets in the consolidated balance sheets and are amortized straight-line over the term of the Amended Revolving Facility.

In connection with the Amended Revolving Facility, we performed an extinguishment versus modification assessment on a lender-by-lender basis resulting in the write-off of an insignificant amount of unamortized debt issuance costs under the Revolving Facility, included in other income, net.

Borrowings under the Amended Revolving Facility bear interest at a rate per annum equal to either (a) the Term SOFR plus a margin ranging from 2.00 % to 1.25 % or (b) a margin ranging from 1.00 % to 0.25 % plus the highest of (i) the administrative agent’s prime rate, (ii) the Federal Funds rate plus 0.50 % or (iii) one-month Term SOFR plus 1 %.

The interest rate margins under the Amended Revolving Facility are subject to a reduction of 0.25 % upon achieving total net first lien leverage ratios of 3.50 to 1.00 and further reductions of 0.25 % each upon achieving total net first lien leverage ratios of 2.50 to 1.00 and 1.00 to 1.00, respectively.

We are required to pay a commitment fee in respect of unutilized commitments under the Amended Revolving Facility.

The commitment fee is, initially, 0.35 % per annum.

The commitment fee is subject to one reduction of 0.10 % if the total net first lien leverage ratio does not exceed 3.50 to 1.00.

The commitment fee is subject to a reduction of 0.10 % if the total net first lien leverage ratio does not exceed 3.50 to 1.00 and an additional 0.05 % reduction upon achieving a total net first lien leverage ratio of 1.00 to 1.00.

We are also required to pay customary letter of credit fees and agency fees.

We have the option to voluntarily repay outstanding loans under the 2021 Revolving Facility at any time without premium or penalty, other than customary “breakage” costs with respect to SOFR loans.

There is no scheduled amortization under the 2021 Revolving Facility.

Any principal amount outstanding is due and payable in full at maturity, five years from the closing date of the 2021 Revolving Facility.

Obligations under the 2021 Revolving Facility are guaranteed by our existing and future direct and indirect material wholly-owned domestic subsidiaries, subject to certain exceptions.

The 2021 Revolving Facility is secured by a first-priority security interest in substantially all of our assets, subject to certain exceptions.

The 2021 Revolving Facility contains a number of covenants that, among other things, subject to certain exceptions, restrict our ability and the ability of our restricted subsidiaries to incur additional indebtedness and guarantee indebtedness;

We have the option to voluntarily repay outstanding loans under the Amended Revolving Facility at any time without premium or penalty, other than customary “breakage” costs with respect to SOFR loans.

There is no scheduled amortization under the Amended Revolving Facility.

Any principal amount outstanding is due and payable in full at maturity on July 14, 2030.

Obligations under the Amended Revolving Facility are guaranteed by our existing and future direct and indirect material wholly-owned domestic subsidiaries, subject to certain exceptions.

The Amended Revolving Facility is secured by a first-priority security interest in substantially all of our assets, subject to certain exceptions.

The Amended Revolving Facility contains a number of covenants that, among other things, subject to certain exceptions, restrict our ability and the ability of our restricted subsidiaries to incur additional indebtedness and guarantee indebtedness;

create or incur liens;

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and enter into certain transactions with affiliates.

The 2021 Revolving Facility requires compliance with a total net first lien leverage ratio not to exceed 4.50 to 1.00, or the Financial Covenant.

The Financial Covenant will be tested at quarter-end only if the total principal amount of all revolving loans, swingline loans and drawn letters of credit that have not been reimbursed exceeds 35 % of the total commitments under the 2021 Revolving Facility on the last day of such fiscal quarter.

At December 31, 2024 and 2023, we had no amounts outstanding under our 2021 Revolving Facility or any outstanding letters of credit.

We were in compliance with all financial covenants as of December 31, 2024 and 2023 .

The Amended Revolving Facility requires compliance with a total net first lien leverage ratio not to exceed 4.50 to 1.00, or the Financial Covenant.

The Financial Covenant will be tested at quarter-end only if the total

principal amount of all revolving loans, swingline loans and drawn letters of credit that have not been reimbursed exceeds 35 % of the total commitments under the Amended Revolving Facility on the last day of such fiscal quarter.

At December 31, 2025 and 2024, we had no amounts outstanding under our Amended Revolving Facility or Revolving Facility, respectively, or any outstanding letters of credit, and we were in compliance with all financial covenants .

Commitments and Contingencies

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The secondary offering of 16,100,000 shares of our common stock by a selling stockholder was completed at a price to the public of $ 10.00 per share before underwriting discounts and commissions.

All direct and incremental costs incurred in

connection with the secondary offering were expensed because we did not receive any proceeds from the sale of shares of common stock in the secondary offering.

In November 2023, a selling stockholder, who was a related party due to the selling stockholder’s then-ownership in our common stock, sold 15,099,993 shares of our common stock in an underwritten public offering.

We did not offer any shares of common stock in this secondary offering and did not receive any proceeds from the sale of shares of common stock by the selling stockholder.

All direct and incremental costs incurred in connection with the secondary offering were expensed because we did not receive any proceeds from the sale of shares of common stock in the secondary offering.

In October 2023, our board of directors approved a new stock repurchase program, or 2023 stock repurchase program, authorizing repurchases of up to $ 100.0 million of our common stock, with no fixed expiration.

In May 2024, our board of directors approved a $ 75.0 million increase in the 2023 stock repurchase program, bringing the aggregate amount authorized to $ 175.0 million.

In November 2024, our board of directors approved an additional $ 40.0 million increase in the stock repurchase program, bringing the aggregate amount authorized to $ 215.0 million.

Both the 2023 stock repurchase program and the 2022 stock repurchase program authorized us to repurchase our common stock through any manner, including open market transactions, accelerated stock repurchase agreements, or in privately negotiated transactions with third parties, and in such amounts as management deems appropriate.

In October 2023, our board of directors approved a new stock repurchase program authorizing repurchases of up to $ 100.0 million of our common stock, with no fixed expiration.

During 2024, our board of directors approved a $ 115.0 million increase in the 2023 stock repurchase program.

In May 2025, our board of directors approved an additional $ 100.0 million increase in the 2023 stock repurchase program, bringing the aggregate amount authorized to $ 315.0 million.

The 2023 stock repurchase program authorizes us to repurchase our common stock through any manner, including open market transactions, accelerated stock repurchase agreements, or in privately negotiated transactions with third parties, and in such amounts as management deems appropriate.

Open market repurchases may be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

We also, from time to time, entered and may enter into Rule 10b5-1 plans to facilitate repurchases of our shares of common stock under this authorization.

Neither the 2023 stock repurchase program nor the 2022 stock repurchase program obligated us to acquire any particular amount of common stock and each could be modified, suspended or terminated at any time at the discretion of our board of directors.

During the year ended December 31, 2024, we repurchased a total of 19,228,082 shares of our common stock through open market purchases using Rule 10b5-1 plans at an average per share price of $ 8.58 for a total repurchase of $ 165.0 million including broker commission.

During the year ended December 31, 2023, we repurchased a total of 5,867,835 shares of our common stock through open market purchases and in the above private, non-underwritten transaction, at an average per share price of $ 9.35 for a total repurchase of $ 54.9 million including broker commission.

The 2023 stock repurchase program does not obligate us to acquire any particular amount of common stock and can be modified, suspended or terminated at any time at the discretion of our board of directors.

During the year ended December 31, 2025, we repurchased a total of 8,289,849 shares of our common stock through open market purchases using Rule 10b5-1 plans at an average per share price of $ 9.71 for a total repurchase of $ 80.5 million including broker commissions.

The repurchases were recorded as a reduction to our accumulated deficit in the accompanying consolidated statements of stockholders’ equity.

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Consequently, this excise tax is applicable to our stock repurchase program beginning in 2023 and represents a cost of the repurchases of our common stock.

Due to the fair market value of stock repurchases exceeding the fair market value of stock issuances during the years ended December 31, 2024, and 2023, we recognized excise tax liability of $ 1.2 million, and $ 0.2 million, respectively.

We have not recognized an excise tax liability as of December 31, 2025 because the fair market value of the stock issuances exceeded the fair market value of the stock repurchases during the twelve months ended December 31, 2025.

Due to the fair market value of stock repurchases exceeding the fair market value of stock issuances during the year ended December 31, 2024, we recognized excise tax liability of $ 1.2 million.

We did not offer any shares of common stock in this secondary offering and all direct and incremental costs incurred in connection with the secondary offering were expensed because we did not receive any proceeds from the sale of shares of common stock in the secondary offering.

Stock-based Compensation

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All equity-based awards going forward are granted under the 2021 Plan.

An aggregate of 18,946,871 shares of our common stock were reserved for issuance under our 2021 Plan, as well as any future automatic annual increases in the number of shares of common stock reserved for issuance under our 2021 Plan.

An aggregate of 18,946,871 shares of our common stock were reserved for issuance under our 2021 Plan, as well as automatic annual increases in the number of shares of common stock reserved for issuance under our 2021 Plan.

Under the terms of the 2021 Plan, both incentive and nonqualified stock options could be granted with exercise prices not less than the fair market value of our common stock on the date of grant.

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Shares withheld under a stock option award to satisfy the exercise, strike or purchase price of such award or to satisfy a tax withholding obligation will not reduce the number of shares available for issuance under our 2021 Plan.

Under the 2021 Plan, RSU awards are granted under RSU award agreements approved by the administrator.

RSU awards may be granted for any form of legal consideration that may be acceptable to our board of directors and permissible under applicable law.

An RSU award may be settled by cash, delivery of stock, a combination of cash and stock as deemed appropriate by the administrator, or in any other form of consideration set forth in the RSU award agreement.

Additionally, dividend equivalents may be credited in respect of shares covered by a RSU award.

Except as otherwise provided in the applicable award agreement, or other written agreement between us and the recipient, RSU awards that have not vested will be forfeited once the participant’s continuous service ends for any reason.

Under the 2021 Plan, RSUs are granted under RSU award agreements approved by the administrator.

RSUs may be granted for any form of legal consideration that may be acceptable to our board of directors and permissible under applicable law.

An RSU may be settled by cash, delivery of stock, a combination of cash and stock as deemed appropriate by the administrator, or in any other form of consideration set forth in the RSU award agreement.

Additionally, dividend equivalents may be credited in respect of shares covered by RSUs.

Except as otherwise provided in the applicable award agreement, or other written agreement between us and the recipient, RSUs that have not vested will be forfeited once the participant’s continuous service ends for any reason.

2021 Employee Stock Purchase Plan

In June 2021, our board of directors adopted our 2021 Employee Stock Purchase Plan, or 2021 ESPP.

We authorized the issuance of 3,552,538 shares of common stock under the 2021 ESPP, as well as any future automatic annual increases in the number of shares of common stock reserved for issuance under our 2021 Employee Stock Purchase Plan.

Our 2021 ESPP is implemented through a series of offerings under which eligible employees are granted rights to purchase shares of our common stock on specified dates during such offerings at a discounted price per share.

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At December 31, 2025, total remaining stock-based compensation expense for unvested stock options was $ 2.2 million, which is expected to be recognized over a weighted-average period of 1.1 years.

The weighted-average grant-date fair value per share of options granted using the Black-Scholes option pricing model for 2023 and 2022 was $ 4.40 and $ 6.61 , respectively.

We did not grant any stock options in 2024.

The weighted-average grant-date fair value per share of options granted using the Black-Scholes option pricing model for 2023 was $ 4.40 .

We did not grant any stock options in 2025 and 2024.

There was a $ 1.6 million tax benefit for tax deductions from stock options exercised in 2025.

There was no tax benefit for 2023, and a realized tax benefit of $ 2.6 million for tax deductions from stock options exercised in 2022.

There was $ 3.1 million tax benefit for tax deductions from stock options exercised in 2024 and there was no tax benefit for 2023.

All tax effects related to stock-based compensation have been recorded in our provision for income taxes in the accompanying consolidated statements of operations.

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Restricted Stock Units and Performance Stock Units

A summary of RSUs and performance stock units, or PSUs, activity for the year ended December 31, 2024 is as follows (in thousands, except weighted-average grant-date fair value):

A summary of RSUs, or awards with time-based vesting conditions, and performance stock units, or PSUs, or awards with performance and/or market-based conditions, activity for the year ended December 31, 2025 is as follows (in thousands, except weighted-average grant-date fair value):

Number of Units Weighted-

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24,397 $ 7.21

(1) Granted shares include RSU awards with a market vesting condition granted in July 2024 and reflected at 200 % of target, and RSU awards with market vesting condition granted in November 2024 reflected at 400 % of target.

The fair value of vested RSUs in 2024, 2023 and 2022, was $ 52.1 million, $ 36.6 million and $ 18.5 million, respectively.

(1) Granted shares include PSUs granted in April 2025 subject to vesting during the performance period which may equal zero percent ( — %) to four hundred percent ( 400 %) of the target award.

These awards were forfeited during the year-ended December 31, 2025.

The fair value of vested RSUs during the years ended December 31, 2025, 2024 and 2023, was $ 92.9 million, $ 52.1 million and $ 36.6 million, respectively.

Our RSUs consist of time-based RSUs, RSUs with performance and/or market conditions, and RSUs with market conditions.

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At December 31, 2025, total remaining stock-based compensation expense for unvested RSU awards was $ 117.4 million, which is expected to be recognized over a weighted-average period of 2.2 years.

There was no tax benefit for 2024, 2023 and 2022.

During the year ended December 31, 2024, we granted 2.5 million RSUs with performance and market conditions, or PSUs, to members of our senior leadership team.

There was a tax benefit of $ 0.4 million for 2025 and no tax benefit for 2024 and 2023.

During the year ended December 31, 2024, we granted 2.5 million PSUs to members of our senior leadership team.

The grant date fair value of the PSUs at 100 % of the target was $ 29.8 million.

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The number of PSUs subject to vesting was determined at the end of the performance period and could equal zero percent ( 0 %) to two hundred percent ( 200 %) of the target award.

If the performance criteria was achieved, one third of the PSUs would vest on the date the compensation committee of the board of directors certifies achievement of the performance criteria, and the remaining awards would vest quarterly thereafter through February 2027.

These PSU awards also included a modifier to the total number of shares earned based on the Company’s total shareholder return, or TSR, compared to the TSR of the Nasdaq Composite Index during the performance period.

The total number of shares issued pursuant to the PSU award could be increased, decreased, or remain unchanged based on the TSR modifier.

If the performance criteria was achieved, one third of the PSUs would vest on the date the compensation committee of the board of directors certified achievement of the performance criteria, and the remaining awards would vest quarterly thereafter through February 2027.

These PSUs also included a modifier to the total number of shares earned based on the Company’s total shareholder return, or TSR, compared to the TSR of the Nasdaq Composite Index during the performance period.

The total number of shares issued pursuant to the PSUs could be increased, decreased, or remain unchanged based on the TSR modifier.

The TSR modifier applicable to the PSUs was considered a market condition and therefore is reflected in the respective grant-date fair values of the awards.

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Expense related to the PSUs is recognized over the employee’s requisite service period using graded vesting attribution method to the extent it is probable that the performance conditions will be achieved.

We recognized $ 9.2 million in stock-based compensation expense during the year ended December 31, 2024 related to these awards.

At December 31, 2024, the remaining stock-based compensation expense for

unvested PSUs is $ 7.8 million which is expected to be recognized over a weighted-average requisite service period of approximately 1.2 years.

We recognized $ 6.0 million and $ 9.2 million in stock-based compensation expense during the years ended December 31, 2025 and 2024, respectively, related to these awards.

At December 31, 2025, the remaining stock-based compensation expense for unvested PSUs is $ 1.8

million which is expected to be recognized over a weighted-average requisite service period of approximately 0.8 years.

The assumptions that were used to calculate the grant-date fair value of our PSU grants using a Monte Carlo simulation model were as follows:

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Upon the achievement of a stock price target during the performance period, one-half of the eligible RSUs will vest on the date the compensation committee of the board of directors certifies achievement of the stock price target and the other half will vest one year from such date, subject to the recipient’s continued employment through the vesting date.

We recognized $ 4.9 million in stock-based compensation expense during the year ended December 31, 2024 related to these awards.

We recognized $ 9.8 million and $ 4.9 million in stock-based compensation expense during the years ended December 31, 2025 and 2024, respectively, related to these awards.

At December 31, 2025, the remaining stock-based compensation expense for unvested RSUs is $ 11.4 million, which is expected to be recognized over a weighted-average requisite service period of approximately 1.7 years.

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If the compensation committee of the board of directors certifies achievement of a stock price target on or subsequent to November 15, 2025, 100 % of the eligible shares will vest and become non-forfeitable immediately on the date of certification by the compensation committee of the board of directors.

We recognized $ 5.6 million in stock-based compensation expense during the year ended December 31, 2024 related to these awards.

At December 31, 2024, the

remaining stock-based compensation expense for unvested RSUs is $ 44.8 million which is expected to be recognized over a weighted-average requisite service period of approximately 1.1 years.

We recognized $ 39.7 million and $ 5.6 million in stock-based compensation expense during the years ended December 31, 2025 and 2024, respectively, related to

these awards.

At December 31, 2025, the remaining stock-based compensation expense for unvested RSUs is $ 5.2 million which is expected to be recognized over a weighted-average requisite service period of approximately 0.4 years.

The assumptions that were used to calculate the grant-date fair value of the RSUs with a market vesting condition using a Monte Carlo simulation model were as follows:

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Vesting of the PSUs was contingent upon the recipient’s continuous employment over the requisite service period and was subject to fulfillment by the Company of predefined performance criteria which were not achieved.

Consequently, no stock-based compensation expense related to these PSU awards was recognized during the year ended December 31, 2024.

In November 2022, we granted 211,864 PSUs with a grant date fair value of $ 2.0 million to certain employees where 25 % and 50 % of the PSUs vest upon the first and second anniversaries, respectively, from the Revv asset acquisition date should certain headcount thresholds be maintained, and 25 % will vest upon the third anniversary from the Revv asset acquisition date.

For the years ended December 31, 2024, 2023 and 2022, stock-based compensation expense for these PSUs was $ 0.7 million, $ 0.8 million and $ 0.1 million, respectively, and was recognized on a graded vesting basis.

At December 31, 2024, the remaining stock-based compensation expense for unvested PSUs was $ 0.2 million, which is expected to be recognized over a weighted-average requisite service period of approximately 0.9 years.

Consequently, no stock-based compensation expense related to these PSU awards was recognized during the years ended December 31, 2025, 2024 and 2023.

Modification of Stock-Based Compensation Awards

In May 2023, the compensation committee of the board of directors approved amendments to the terms of the stock option and RSU awards granted to members of our senior leadership team during the year ended December 31, 2022, whereby the vesting of such stock options and RSUs will be accelerated upon (i) a qualifying termination that occurs during the CIC period or (ii) the individual’s termination as a result of his or her death or disability (as each such term is defined in the employment agreement between the Company and applicable individual).

In May 2023, the compensation committee of the board of directors approved amendments to the terms of the stock option and RSU awards granted to members of our senior leadership team during the year ended December 31, 2022, whereby the vesting of such stock options and RSUs will be accelerated upon (i) a qualifying termination that occurs during a defined change in control period or (ii) the individual’s termination as a result of his or her death or disability (as each such term is defined in the employment agreement between the Company and applicable individual).

Further, the amendments provide that such stock options, to the extent vested and outstanding on the date of the individual’s qualifying termination or the termination of the individual’s employment in the event of his or her death or disability, as applicable and after giving effect to the vesting acceleration, shall remain outstanding and exercisable until the earlier of:

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The modification to add the foregoing provisions did not result in an incremental fair value of the impacted awards because the original vesting conditions were expected to be satisfied as of the modification date and the termination of the individual’s employment in the event of change-in-control or as a result of his or her death or disability was not probable as of the date of this filing.

Net Income (Loss) Per Share

The following table shows the computation of basic and diluted net income (loss) per share (in thousands, except per share amounts):

Net Income Per Share

The following table shows the computation of basic and diluted net income per share (in thousands, except per share amounts):

Year Ended December 31,

2025 2024 2023

Net income (loss)

$ 15,427 $ 29,963 $ 13,953

Net income (loss) — basic and diluted

Net income — basic and diluted

$ 15,427 $ 29,963 $ 13,953

Weighted-average shares used in computing net income (loss) per share — basic

Weighted-average common stock used in computing net income per share — basic

178,798 180,210 190,466

Effect of potentially dilutive securities

Stock options

Restricted stock units

Options to purchase common stock

5,808 1,893 2,558

Employee stock purchase plan

Weighted-average shares used in computing net income (loss) per share — diluted

Weighted-average common stock used in computing net income per share — diluted

184,690 182,865 194,415

Net income (loss) per share — basic

Net income per share — basic

$ 0.09 $ 0.17 $ 0.07

Net income (loss) per share — diluted

Net income per share — diluted

$ 0.08 $ 0.16 $ 0.07

The following table presents the number of stock options, RSUs, and PSUs excluded from the calculation of diluted net income (loss) per share because they are anti-dilutive (in thousands):

The following table presents the number of stock options, RSUs, and PSUs, excluded from the calculation of diluted net income per share because they are anti-dilutive (in thousands):

As of December 31,

2025 2024 2023

Stock options

Options to purchase common stock

4,992 11,512 10,714

Restricted stock units

17,347 13,932 7,426

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22,372 25,508 18,183

(1) For the year ended December 31, 2025, anti-dilutive RSUs include RSU awards with a market vesting condition granted in July 2024 and reflected at 200 % of target and RSU awards with a market vesting condition granted in November 2024 and reflected at 275 % of target.

RSU awards with a market vesting condition granted in April 2025 that were previously reflected as anti-dilutive at 400 % of target were forfeited as of September 30, 2025.

Fair Value Measurements

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Level 1 Level 2 Level 3

Available-for-sale debt securities $ — $ — $ 1,377

Money market funds

$ 180,778 $ — $ —

Total assets $ 180,778 $ — $ —

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Level 1 Level 2 Level 3

Available-for-sale debt securities

Available-for-sale debt security

$ — $ — $ 1,377

Money market fund

Money market funds

$ 114,690 $ — $ 1,377

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From time to time, we initiate cost reduction activities to integrate acquired businesses, to align our workforce with strategic business activities, or to improve efficiencies in our operations.

In August 2024, we

committed to a restructuring plan resulting in a reduction of our global workforce.

In 2025, we incurred $ 0.9 million in severance and related termination benefits costs related to a reduction in headcount in our U.S.

In August 2024, we committed to a restructuring plan resulting in a reduction of our global workforce.

This restructuring plan was substantially completed by September 30, 2024.

During the year ended December 31, 2024, we recognized $ 4.8 million in severance and other termination benefits in conjunction with the foregoing restructuring plan.

In 2023 and 2022, we incurred $ 3.7 million and $ 1.9 million, respectively, in severance and related termination benefits costs related to a reduction in headcount in our U.S.

In 2023, we also incurred $ 1.0 million in severance and related termination benefits costs related to the reduction of our U.K.

In 2023, we incurred $ 4.7 million in severance and related termination benefits costs related to a reduction in headcount in our U.S.

The 2023 reduction in the U.S.

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Foreign 7,072 14,405 ( 3,024 )

Total income (loss) before income taxes $ 43,083 $ 31,494 $ ( 47,673 )

Total income before income taxes $ 32,438 $ 43,083 $ 31,494

The details for the provision for income taxes by jurisdiction are as follows (in thousands):

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State 2,147 ( 736 ) ( 769 )

Total deferred (benefit from) provision for income taxes ( 4,552 ) 4,712 ( 793 )

( 122 ) ( 75 ) —

Total deferred provision for (benefit from) income taxes 6,634 ( 4,552 ) 4,712

Total provision for income tax $ 17,011 $ 13,120 $ 17,541

In August 2022, the Inflation Reduction Act of 2022, or IRA, was enacted.

The IRA introduced a 15% alternative minimum tax based on the financial statement income of certain large corporations, effective for tax years beginning after December 31, 2022.

The Company considered the applicable tax law changes concluding there is no impact to the Company’s tax provision for the twelve months ended December 31, 2024 and 2023.

The provision for (benefit from) income taxes for December 31, 2024, 2023, and 2022, differed from the amounts computed by applying the U.S.

Federal income tax rate of 21% to income (loss) before income taxes as a result of the following (in thousands):

On July 4, 2025, H.R.1, the One Big Beautiful Act, or OBBBA, was enacted.

The OBBBA includes numerous business tax provisions including 100% bonus depreciation, provisions related to expensing domestic research and development expenses as well as modifications to the business interest expense limitation calculation.

As a result of incorporating the changes under the OBBBA we recorded a decrease to deferred tax assets for capitalized research and development costs resulting in a current tax benefit offset by deferred tax expense.

A reconciliation of the provision for income taxes to the amount computed by applying the U.S.

federal income tax rate of 21% to income before taxes after the adoption of ASU 2023-09 is as follows (in thousands):

Year Ended December 31,

2024 2023 2022

Provision for (benefit from) income taxes at statutory rate $ 9,047 $ 6,614 $ ( 10,012 )

statutory rate $ 6,812 21.0 %

State and local income taxes (1)

Foreign tax effects

United Kingdom ( 1,394 ) ( 4.3 ) %

Other foreign jurisdictions 152 0.5 %

Research and development credits ( 3,817 ) ( 11.8 ) %

Nontaxable and nondeductible Items

Share-based payment awards 10,719 33.0 %

Internal reorganization costs 1,689 5.2 %

Acquisition costs 359 1.1 %

Other 308 1.0 %

Changes in unrecognized tax benefits 2,844 8.8 %

Other adjustments

Loss on subsidiary stock ( 3,522 ) ( 10.9 ) %

Other ( 465 ) ( 1.4 ) %

Effective tax rate $ 17,011 52.5 %

(1) The states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include Delaware, New York, Pennsylvania and Texas.

The provision for income taxes for December 31, 2024, and 2023, differed from the amounts computed by applying the U.S.

Federal income tax rate of 21% to income before income taxes prior to the adoption of ASU 2023-09 as a result of the following (in thousands):

Year Ended December 31,

Provision for income taxes at statutory rate $ 9,047 $ 6,614

State income taxes, net of federal benefit 2,186 1,796

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Total provision for income taxes $ 13,120 $ 17,541

Cash paid for income taxes, net of refunds received, after the adoption of ASU 2023-09, for the year ended December 31, 2025 is as follows (in thousands):

Federal $ 5,404

State and local

California 466

Cash paid for income taxes, net of refunds received $ 8,914

Cash paid for income taxes for the years ended December 31, 2024 and 2023 was $ 26.2 million and $ 6.6 million, respectively.

The tax effects of temporary differences that give rise to significant portions of our deferred tax assets and liabilities consisted of the following as of December 31, 2025 and 2024, (in thousands):

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Stock-based compensation 6,606 4,070

Impairment on investment — 1,445

Net operating loss carryforwards 17,157 14,918

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Net deferred tax assets and liabilities $ 31,884 $ 34,696

We evaluated the realizability of net deferred tax assets and determined it is more likely than not that separate state net operating losses, state net operating losses from the acquisition of LegalInc, the deferred tax assets for Pulse IP, LLC and Pulse Business, LLC, and foreign deferred tax assets, excluding Poland, will not

be realized based on the available objective evidence and have recorded a valuation allowance on such deferred tax assets.

The following table summarizes the valuation allowance:

We evaluated the realizability of net deferred tax assets and determined it is more likely than not that separate state net operating losses, the deferred tax assets for Pulse IP, LLC and Pulse Business, LLC, and

foreign deferred tax assets, excluding Poland, will not be realized based on the available objective evidence and have recorded a valuation allowance on such deferred tax assets.

The following table summarizes the valuation allowance (in thousands):

Year Ended December 31,

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Net (decrease) increase in current year ( 481 ) ( 654 ) 799

Net increase in valuation prior period 1,210 877 383

Net (decrease) increase in valuation prior period ( 454 ) 1,210 877

Ending balance

$ 15,941 $ 16,876 $ 16,320

Net changes in the valuation allowance in the years ended December 31, 2024, 2023, and 2022 include changes recorded through earnings relating to losses primarily from foreign operations and the current year release of the valuation allowance on the capital loss carryover from the acquisition of Earth Class Mail, Inc.

Net changes in the valuation allowance in the years ended December 31, 2025, 2024, and 2023 include changes recorded through earnings relating to losses primarily from foreign operations and the release in 2024 of the valuation allowance on the capital loss carryover from the acquisition of Earth Class Mail, Inc.

and the release of the valuation allowance on one of the foreign entities.

At December 31, 2024 and 2023, we had federal net operating loss, or NOL, carryforwards of $ 16.6 million and $ 17.2 million, respectively, which will begin to expire in 2036.

At December 31, 2024, and 2023, we had state NOL carryforwards of $ 28.8 million and $ 38.2 million, respectively, which will begin to expire in 2025.

At December 31, 2024 and 2023, we had foreign NOL carryforwards of $ 35.1 million and $ 30.3 million, respectively, which can be carried forward indefinitely and are not subject to expiration.

At December 31, 2025 and 2024, we had federal net operating loss, or NOL, carryforwards of $ 27.5 million and $ 16.6 million, respectively, which will begin to expire in 2036 on a tax return basis.

At December 31, 2025, and 2024, we had state NOL carryforwards of $ 41.3 million and $ 28.8 million on a tax return basis, respectively, which will begin to expire in 2026.

At December 31, 2025 and 2024, we had foreign NOL carryforwards of $ 32.8 million and $ 35.1 million on a tax return basis, respectively, which can be carried forward indefinitely and are not subject to expiration.

At December 31, 2025,and 2024, our federal tax credit carryforwards were immaterial.

At December 31, 2024 and 2023, we had state tax credit carryforwards of $ 13.9 million and $ 12.6 million, respectively, which carry forward indefinitely.

At December 31, 2025 and 2024, we had state tax credit carryforwards of $ 14.0 million and $ 13.9 million on a tax return basis, respectively, which carry forward indefinitely.

Our domestic entities may be subject to an annual limitation on the utilization of NOL and credit carryforwards based on changes in ownership as defined by Section 382 of the Internal Revenue Code of 1986 .

In 2022 we acquired Revvsales Inc.

as a stock acquisition, since there was a change in ownership, the acquired NOL carryforwards are subject to an annual Section 382 limitation on the utilization of the NOL carryforwards.

In 2022 and 2025, we acquired Revvsales Inc.

and Formation Nation, respectively, as stock acquisitions, and since there was a change in ownership, the acquired NOL carryforwards are subject to an annual Section 382 limitation on the utilization of the NOL carryforwards.

We have had foreign operations since 2013.

10 unchanged sentences

Additions for tax positions related to the current year 2,854

Additions for tax positions related to prior years 418

Reductions for tax positions related to prior years ( 966 )

Balance at December 31, 2024 $ 13,407

Additions for tax positions related to the current year 1,965

Reductions for tax positions related to prior years ( 966 )

Additions for tax positions related to prior years 1,416

Balance at December 31, 2025 $ 16,788

1 unchanged sentence

Due to the uncertain and complex application of tax laws and regulations, it is possible that the ultimate resolution of uncertain positions may result in liabilities that could be materially different from these estimates.

In such an event, we will record additional tax expense or benefit in the period in which resolution occurs.

In such an event, we will record additional tax expense or benefit in the period

in which resolution occurs.

Our policy is to recognize interest and penalties related to income tax matters in income tax expense.

At December 31, 2024 and 2023, accrued interest and penalties related to income tax

positions were not material to our consolidated financial statements.

We do not anticipate that unrecognized tax benefits will materially change within the next twelve months.

At December 31, 2025 and 2024, accrued interest and penalties related to income tax positions were not material to our consolidated financial statements.

We are subject to taxation and file income tax returns in the U.S.

7 unchanged sentences

We contributed $ 3.8 million, $ 4.0 million, and $ 4.0 million to the 401(k) plan in 2025, 2024, and 2023, respectively.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) consisted of the following:

Accumulated Other Comprehensive Income

Changes in accumulated other comprehensive income consisted of the following:

Year Ended December 31, 2025

5 unchanged sentences

Ending balance $ 180 $ — $ 180

Available-for-sale debt securities:

Available-for-sale debt security:

Beginning balance $ 530 $ ( 132 ) $ 398

Unrealized gains 119 ( 30 ) 89

Reclassification adjustment for gain included in net income ( 648 ) 162 ( 486 )

Ending balance $ 1 $ — $ 1

1 unchanged sentence

Beginning balance $ 993 $ ( 132 ) $ 861

Other comprehensive income 681 ( 52 ) 629

Other comprehensive loss ( 812 ) 132 ( 680 )

Ending balance $ 181 $ — $ 181

6 unchanged sentences

Ending balance $ 463 $ — $ 463

Available-for-sale debt securities:

Available-for-sale debt security:

Beginning balance $ 324 $ ( 80 ) $ 244

1 unchanged sentence

Ending balance $ 530 $ ( 132 ) $ 398

Accumulated other comprehensive loss:

Accumulated other comprehensive income:

Beginning balance $ 312 $ ( 80 ) $ 232

Other comprehensive loss ( 1,230 ) ( 35 ) ( 1,265 )

Other comprehensive income 681 ( 52 ) 629

Ending balance $ 993 $ ( 132 ) $ 861

6 unchanged sentences

Ending balance $ ( 12 ) $ — $ ( 12 )

Available-for-sale debt securities:

Available-for-sale debt security:

Beginning balance $ 184 $ ( 45 ) $ 139

Unrealized loss ( 147 ) 3 ( 144 )

Unrealized gains 140 ( 35 ) 105

Ending balance $ 324 $ ( 80 ) $ 244

Accumulated other comprehensive loss:

Accumulated other comprehensive income:

Beginning balance $ 1,542 $ ( 45 ) $ 1,497

Other comprehensive income 3,289 3 3,292

Other comprehensive loss ( 1,230 ) ( 35 ) ( 1,265 )

Ending balance $ 312 $ ( 80 ) $ 232

Segment Information

Our Chief Executive Officer, as the Chief Operating Decision Maker, or CODM, organizes our company, manages resource allocations, and measures performance on the basis of one operating segment on a consolidated basis.

Our Chief Executive Officer, as the CODM, organizes our company, manages resource allocations, and measures performance on the basis of one operating segment on a consolidated basis.

The accounting policies of our operating segment are the same as those described in Note 2, Summary of Significant Accounting Policies .

The CODM assesses performance for the segment and decides how to allocate resources based on net income (loss) that also is reported on the accompanying consolidated statements of operations as consolidated net income (loss).

The CODM assesses performance for the segment and decides how to allocate resources based on net income that also is reported on the accompanying consolidated statements of operations as consolidated net income.

The measure of segment assets is reported on the accompanying consolidated balance sheets as total assets.

The CODM uses net income (loss) to evaluate income generated from segment assets in making key operating and segment resource allocation decisions, such as investments in new product development.

Net income (loss) is also used to monitor budget versus actual results and to establish management’s compensation.

The Company has one reportable segment which provides online platform for business formation in the United States, or U.S., and, as described in Note 2, Summary of Significant Accounting Policies, generates revenue from customized legal document services and subscriptions offered to our customers.

The CODM uses net income to evaluate income generated from segment assets in making key operating and segment resource allocation decisions, such as investments in new product development.

Net income is also used to monitor budget versus actual results.

Our one reportable segment provides an online platform for business formation in the United States, or U.S., and, as described in Note 2, Summary of Significant Accounting Policies, generates revenue from customized legal document services and subscriptions offered to our customers.

Revenue outside of the U.S., based on the location of the customer, represented less than 1 % of our revenue for the years ended December 31, 2025, 2024 and 2023.

Our property and equipment and right-of-use, or ROU, assets located outside of the U.S.

Our property and equipment located outside of the U.S.

were immaterial as of December 31, 2025 and 2024.

9 unchanged sentences

Other sales and marketing, excluding depreciation, amortization and stock-based compensation $ 60,060 $ 38,293 $ 54,152

Technology and development, excluding depreciation, amortization and stock-based compensation $ 58,328 $ 62,323 $ 60,098

Year Ended December 31,

2025 2024 2023

Technology and development, excluding depreciation, amortization and stock-based compensation $ 62,323 $ 60,098 $ 51,026

General and administrative, excluding depreciation, amortization, stock-based compensation, and restructuring $ 60,982 $ 60,215 $ 61,843

8 unchanged sentences

Provision for income taxes $ 17,011 $ 13,120 $ 17,541

Impairment of long-lived assets $ — $ — $ 248

Impairment of other equity security $ — $ — $ 3,000

Segment net income (loss) $ 29,963 $ 13,953 $ ( 48,733 )

Gain on sale of assets held for sale $ ( 14,337 ) $ — $ —

Segment net income $ 15,427 $ 29,963 $ 13,953

Reconciliation of profit or loss

Adjustments and reconciling items $ — $ — $ —

Consolidated net income (loss) $ 29,963 $ 13,953 $ ( 48,733 )

(1) For 2024, restructuring costs related to the reduction of our global workforce.

For 2023, restructuring costs related to the reduction of our U.S.

For 2022, restructuring expenses related to a phased severance event to reduce the U.S.

headcount in June and August 2022.

Consolidated net income $ 15,427 $ 29,963 $ 13,953

(1) For 2025, 2024 and 2023 restructuring costs related to the reduction of our global workforce.

Restructuring expenses include salary and benefits for the impacted employees and are included in general and administrative expenses in the consolidated statements of operations.

(2) Other segment items included in segment net income (loss) primarily consist of foreign currency gains or losses related to our intercompany loans which were denominated in British Pound Sterling, or GBP, and included in other income (expense), net on the consolidated statements of operations.

(2) In 2024 and 2023, other segment items included in segment net income primarily consist of foreign currency gains or losses related to our intercompany loans which were denominated in British Pound Sterling, or GBP, and were written down in 2024.

Other segment items included in segment net income for 2025 primarily consist of gain on sale of available-for-sale debt security and change in fair value of other equity security partially offset by the loss on debt extinguishment related to our Amended Revolving Facility and are included in other income, net on the consolidated statements of operations.

Subsequent Events

On February 10, 2025, we acquired all of the outstanding equity interests of Formation Nation, Inc., or Formation Nation, a small business service company that provides business formation and compliance services, for total cash consideration of $ 64.8 million and 2,205,445 restricted shares of our common stock.

The shares are subject to a lock-up and voting agreement, and a portion of the cash consideration is subject to a one year holdback and customary adjustments.

This acquisition is intended to accelerate our strategy of attracting higher value customers by leveraging Formation Nation’s established customer service teams.

We are currently in the process of finalizing the accounting for this transaction and expect to complete our preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed by the end of the first quarter of 2025.

In February 2026, the board of directors approved a $ 100.0 million increase in our 2023 stock repurchase program, bringing the aggregate amount authorized to $ 415.0 million.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data