LEGALZOOM.COM, INC. 10-K

Item 8. Financial Statements and Supplementary Data LEGALZOOM.COM, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 58 Audited Consolidated Financial Statements: Consolidated Balance Sheets 60 Consolidated Statements of Operations 61 Consolidated Statements of Comprehensive Income 62 Consolidated Statements of Stockholders’ Equity 63 Consolidated Statements of Cash Flows 64 Notes to Consolidated Financial Statements 66 57 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of LegalZoom.com, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of LegalZoom.com, Inc. 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). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. 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. 58 Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition As described in Note 2 to the consolidated financial statements, the Company’s total consolidated revenue was $756.0 million for the year ended December 31, 2025. The Company recognizes revenue when the performance obligation is satisfied by transferring the promised good or service to the customer. For transaction-based services, revenue is generally recognized at a point-in-time when the services are delivered to the customer. For subscription-based services, revenue is generally recognized on a straight-line basis over the subscription term. Revenue earned from leads generated to third-party providers is recognized at a point-in-time when the related performance-based criteria have been met. Services can generally either be purchased on a stand-alone basis or bundled together as part of a package of services. Accordingly, a significant number of the Company’s arrangements include multiple performance obligations. The transaction price is based on the contractual amounts and is allocated to each separate performance obligation based on the amount of consideration which management expects to be entitled in exchange for the services provided. The principal consideration for our determination that performing procedures relating to revenue recognition is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s revenue recognition. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. 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, 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 Los Angeles, California February 23, 2026 We have served as the Company’s auditor since 2006. 59 LegalZoom.com, Inc. Consolidated Balance Sheets (In thousands, except par values) December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 203,100 $ 142,064 Accounts receivable, net of allowances of $ 2,281 and $ 2,121 , respectively 20,589 8,511 Prepaid expenses and other current assets 18,234 17,926 Current assets held for sale — 22,722 Total current assets 241,923 191,223 Property and equipment, net 58,045 59,788 Goodwill 140,705 63,318 Intangible assets, net 18,152 8,653 Operating lease right-of-use assets 13,414 7,189 Deferred income taxes 31,884 34,696 Available-for-sale debt security (amortized cost of $ 0 and $ 848 ), respectively — 1,377 Other assets 7,399 7,639 Total assets $ 511,522 $ 373,883 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 27,167 $ 31,150 Accrued expenses and other current liabilities 83,361 57,928 Deferred revenue 203,653 174,643 Operating lease liabilities 4,338 1,861 Total current liabilities 318,519 265,582 Operating lease liabilities, non-current 10,025 6,018 Deferred revenue 277 381 Other liabilities 10,819 8,645 Total liabilities 339,640 280,626 Commitments and contingencies (Note 12) Stockholders’ equity: Preferred stock, $ 0.001 par value 100,000 shares authorized at December 31, 2025 and 2024, none issued or outstanding at December 31, 2025 and 2024 — — Common stock, $ 0.001 par value; 1,000,000 and 1,000,000 shares authorized; 177,624 and 173,619 shares issued and outstanding at December 31, 2025 and 2024, respectively 179 175 Additional paid-in capital 1,305,936 1,161,538 Accumulated deficit ( 1,134,414 ) ( 1,069,317 ) Accumulated other comprehensive income 181 861 Total stockholders’ equity 171,882 93,257 Total liabilities and stockholders’ equity $ 511,522 $ 373,883 The accompanying notes are an integral part of these consolidated financial statements 60 LegalZoom.com, Inc. Consolidated Statements of Operations (In thousands, except per share amounts) Year Ended December 31, 2025 2024 2023 Revenue $ 756,043 $ 681,881 $ 660,727 Cost of revenue 257,960 240,093 239,263 Gross profit 498,083 441,788 421,464 Operating expenses: Sales and marketing 261,745 207,684 210,872 Technology and development 81,941 89,584 83,181 General and administrative 143,758 108,939 106,352 Gain on sale of assets held for sale ( 14,337 ) — — Total operating expenses 473,107 406,207 400,405 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, net 1,187 98 1,621 Income before income taxes 32,438 43,083 31,494 Provision for income taxes 17,011 13,120 17,541 Net income $ 15,427 $ 29,963 $ 13,953 Net income — basic: $ 15,427 $ 29,963 $ 13,953 Net income — diluted: $ 15,427 $ 29,963 $ 13,953 Net income per share: Net income per share — basic: $ 0.09 $ 0.17 $ 0.07 Net income per share — diluted: $ 0.08 $ 0.16 $ 0.07 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 per share — diluted: 184,690 182,865 194,415 The accompanying notes are an integral part of these consolidated financial statements 61 LegalZoom.com, Inc. Consolidated Statements of Comprehensive Income (In thousands) Year Ended December 31, 2025 2024 2023 Net income $ 15,427 $ 29,963 $ 13,953 Other comprehensive (loss) income, net of tax: Change in foreign currency translation adjustments ( 283 ) 475 ( 1,370 ) Change in available-for-sale debt securities: Unrealized gains, net 89 154 105 Reclassification adjustment for net gain on available-for-sale debt securities included in net income ( 486 ) — — Total change in available-for-sale debt securities ( 397 ) 154 105 Total other comprehensive (loss) income ( 680 ) 629 ( 1,265 ) Total comprehensive income $ 14,747 $ 30,592 $ 12,688 The accompanying notes are an integral part of these consolidated financial statements 62 LegalZoom.com, Inc. Consolidated Statements of Stockholders’ Equity (In thousands) Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income Total Stockholders’ Equity Shares Amount Balance at December 31, 2022 190,822 $ 190 $ 1,032,550 $ ( 891,862 ) $ 1,497 $ 142,375 Issuance of common stock upon exercise of stock options and ESPP 976 1 8,444 — — 8,445 Issuance of common stock upon vesting of restricted stock unit awards 3,438 3 ( 3 ) — — 1 Shares surrendered for settlement of minimum statutory tax withholdings ( 829 ) — ( 9,587 ) — — ( 9,587 ) Stock-based compensation — — 70,071 — — 70,071 Repurchase and retirement of common stock ( 5,868 ) ( 6 ) — ( 54,867 ) — ( 54,873 ) 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 Issuance of common stock upon exercise of stock options and ESPP 651 1 2,413 — — 2,414 Issuance of common stock upon vesting of restricted stock unit awards 5,875 6 ( 6 ) — — — Shares surrendered for settlement of minimum statutory tax withholdings ( 2,217 ) ( 2 ) ( 19,820 ) — — ( 19,822 ) Stock-based compensation — — 77,477 — — 77,477 Repurchase and retirement of common stock ( 19,228 ) $ ( 19 ) $ — $ ( 164,972 ) $ — $ ( 164,991 ) Stock repurchase excise tax — — — ( 1,247 ) — ( 1,247 ) Other comprehensive income — — — — 629 629 Net income — — — 29,963 — 29,963 Balance at December 31, 2024 173,619 $ 175 $ 1,161,538 $ ( 1,069,317 ) $ 861 $ 93,257 Issuance of common stock upon exercise of stock options and ESPP 4,749 5 45,773 — — 45,778 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 ) Stock-based compensation — — 118,972 — — 118,972 Repurchase and retirement of common stock ( 8,290 ) ( 8 ) — ( 80,524 ) — ( 80,532 ) Other comprehensive loss — — — — ( 680 ) ( 680 ) Net income — — — 15,427 — 15,427 Balance at December 31, 2025 177,624 179 $ 1,305,936 $ ( 1,134,414 ) $ 181 $ 171,882 The accompanying notes are an integral part of these consolidated financial statements 63 LegalZoom.com, Inc. Consolidated Statements of Cash Flows (In thousands) Year Ended December 31, 2025 2024 2023 Cash flows from 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 Amortization of debt issuance costs 210 227 227 Amortization of right-of-use assets 3,287 2,132 2,692 Stock-based compensation 113,708 71,510 66,015 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 Change in fair value of contingent consideration — — ( 836 ) 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 combination: Accounts receivable ( 11,802 ) 3,227 1,441 Prepaid expenses and other current assets ( 252 ) ( 2,775 ) 1,557 Other assets 926 707 435 Accounts payable ( 3,657 ) ( 817 ) 5,025 Accrued expenses and other liabilities 7,147 ( 4,156 ) 4,119 Operating lease liabilities ( 2,647 ) ( 1,942 ) ( 2,319 ) Income tax payable 255 ( 44 ) ( 4 ) Deferred revenue 19,319 6,584 3,334 Net cash provided by operating activities 178,197 135,639 124,308 Cash flows from investing activities Acquisitions, net of cash acquired ( 48,468 ) — — 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 — — Other — — 38 Net cash used in investing activities ( 40,077 ) ( 35,696 ) ( 31,555 ) Cash flows from financing activities Repayment of finance lease obligations ( 2 ) ( 25 ) ( 35 ) 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 ) 64 LegalZoom.com, Inc. Consolidated Statements of Cash Flows (continued) (In thousands) Year Ended December 31, 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 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 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 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 12,729 — — The accompanying notes are an integral part of these consolidated financial statements 65 LegalZoom.com, Inc. Notes to Consolidated Financial Statements Note 1. 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., and its wholly owned subsidiaries, are referred to herein as the “Company”, “we,” “us,” or “our”. 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. Note 2. Summary of Significant Accounting Policies A summary of the significant accounting policies we follow in the preparation of the accompanying consolidated financial statements is set forth below. Basis of Presentation and Consolidation The accompanying consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America, or GAAP. All intercompany balances and transactions have been eliminated in consolidation. On occasion, we enter into relationships or investments with other entities that may be a variable interest entity, or VIE. We analyze our interests, including agreements, loans, guarantees, and equity investments on a periodic basis to determine if such interests are variable interests. If variable interests are identified, then the related entity is assessed to determine if it is a VIE. If we determine that the entity is a VIE, we then assess if we must consolidate the VIE as the primary beneficiary. Our determination of whether we are the primary beneficiary is based upon qualitative and quantitative analyses, which assess the purpose and design of the VIE, the nature of the VIE’s risks and the risks that we absorb, the power to direct activities that most significantly impact the economic performance of the VIE, and the obligation to absorb losses or the right to receive benefits that could be significant to the VIE. Use of Estimates 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 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. On an ongoing basis, we evaluate the estimates compared to historical experience and other factors including the current economic and regulatory environment, which form the basis for our judgments about the carrying value of assets and liabilities. Business Combinations The results of businesses acquired in a business combination are included in our consolidated financial statements from the date of the acquisition. Purchase accounting results in assets and liabilities of an acquired business being recorded at their estimated fair values on the acquisition date. Any excess purchase consideration over the fair value of assets acquired and liabilities assumed is recognized as goodwill. We perform valuations of assets acquired and liabilities assumed for an acquisition and allocate the purchase price to their respective net tangible and intangible assets. Determining the fair value of assets acquired and liabilities assumed requires management to use judgment and estimates, including the selection of valuation methodologies, estimates of cash flows, discount rates and selection of comparable companies. 66 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 consolidated statements of operations. Segment and Geographic 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 our one operating segment. Refer to Note 21 to our consolidated financial statements. Foreign Currency The British Pound Sterling is the functional currency for our foreign subsidiaries domiciled in the U.K. The financial statements of these foreign subsidiaries are translated to U.S. 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 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 Fair value is defined as the price that would be received from selling an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows: Level 1 — Quoted prices in active markets for identical assets and liabilities. Level 2 — Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly. Level 3 — 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, 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 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. Concentrations of Credit Risk We maintain accounts in the U.S. banks with funds insured by the Federal Deposit Insurance Corporation, or FDIC. Our bank accounts may, at times, exceed the FDIC insured limits. Financial instruments that potentially subject us to credit risk consist principally of cash and cash equivalents. Management believes that we are not exposed to any significant credit risk related to our cash or cash equivalents and have not experienced any losses in such accounts. 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, 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 Cash and cash equivalents consist of highly liquid investments with original maturities of ninety days or less at the date of purchase. At December 31, 2025 and 2024, our cash consisted of bank account deposits and our cash equivalents consisted of $ 180.8 million and $ 114.7 million, respectively, invested in money market funds. 67 Accounts Receivable and Allowance for Credit Losses Our accounts receivable balances, which are not collateralized and do not bear interest, primarily consist of amounts receivable from our credit and debit card merchant processors, customer receivables, and fees due from third parties for services purchased by our customers from such third parties. We reduce our accounts receivable for sales allowances and a reserve for potentially uncollectible receivables. We determine the amount of the allowances based on various factors, including historical collection experience, the age of the accounts receivable balances, credit quality of our customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect our ability to collect from customers. Account balances are charged off against the allowance when we determine that it is not probable we will collect the receivable. At December 31, 2025 and 2024, the allowance for credit losses was not material. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Repairs and maintenance are expensed as incurred whereas significant renewals and enhancements are capitalized. When assets are retired or otherwise disposed of, the cost and the related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is reflected in our results of operations. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets as follows: Useful Life (Years) Purchased and internally developed internal-use software 3 Building and building improvements 5 – 30 Land improvements 7 Furniture and office equipment 5 Computer hardware 3 Leasehold improvements Shorter of lease term or useful life Internal-use Software and Cloud Computing Arrangements Software development costs include costs to develop software to be used to meet internal needs and applications used to deliver our services. We capitalize development costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed and the software will be used to perform the function intended. We amortize internal-use software costs on a straight-line basis over their estimated useful life of three years commencing when the internal-use software is substantially complete and ready for its intended purpose. Costs related to development of internal-use software are included in the accompanying consolidated balance sheets in property and equipment, net. Costs related to implementation of cloud computing arrangements that do not include a software license are included in the accompanying consolidated balance sheets in prepaid expenses and other current and non-current assets and are amortized over the contractual term of the underlying service arrangement. Intangible Assets and Other Long-Lived Assets Intangible assets are stated at cost, net of accumulated amortization. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives, which approximates the pattern in which the economic benefits are consumed. We amortize our intangible assets over an estimated useful life of two to six years . We assess the impairment of long-lived assets, which consist primarily of property and equipment, right of use assets, acquired intangible assets, and capitalized internal-use software costs, whenever events or changes in circumstances indicate that such assets might be impaired and the carrying value may not be recoverable. Impairment testing is performed at an asset level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, or an asset group. If an asset group is considered impaired, an impairment loss equal to the excess of the asset group’s carrying value over their fair value is recorded. Fair value is determined based on the present value of estimated expected future cash flows using a discount rate commensurate with the risk involved, quoted market prices, or appraised values, depending on the nature of the assets. 68 Goodwill Goodwill represents the excess of the aggregate fair value of the consideration transferred in a business combination over the fair value of the assets acquired, net of liabilities assumed. Goodwill is not amortized, however, it is subject to impairment testing at the reporting unit level annually during the fourth quarter of our fiscal year or more frequently if events or changes in circumstances indicate that goodwill may be impaired. In assessing impairment, we have the option to first assess qualitative factors to determine whether or not a reporting unit is impaired. Alternatively, we may perform a quantitative impairment assessment, or if the qualitative assessment indicates that it is more-likely-than-not that the reporting unit’s fair value is less than its carrying amount, a quantitative analysis is required. The quantitative analysis compares the estimated fair value of the reporting unit with its respective carrying amount, including goodwill. If the estimated fair value of the reporting unit exceeds its carrying amount including goodwill, goodwill is considered not to be impaired. If the fair value is less than the carrying amount including goodwill, then a goodwill impairment charge is recorded by the amount that the carrying value exceeds the fair value, up to the carrying amount of goodwill. 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. If either of these criteria are met, the security’s amortized cost basis is written down to its fair value through earnings. If these criteria are not met, we evaluate whether the decline in fair value has resulted from credit loss or other factors. 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 (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 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 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. Leases 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 sheets. 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 69 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 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. The incremental borrowing rate used is estimated based on what we would be required to pay for a collateralized loan over a similar term. Our leases typically do not include any residual value guarantees, bargain purchase options, or asset retirement obligations. Our lease terms are only for periods in which we have enforceable rights. A lease is no longer enforceable when both the lessee and the lessor each have the right to terminate the lease without permission from the other party with no more than an insignificant penalty. Our lease terms are impacted by options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We generally use the base, non-cancelable lease term when determining the lease assets and liabilities. Our agreements may contain variable lease payments. We include variable lease payments that depend on an index or a rate and exclude those which depend on facts or circumstances occurring after the commencement date, other than the passage of time. Revenue Recognition We derive our revenue from the following sources: Transaction revenue —Transaction revenue is primarily generated from our customized legal document services upon fulfillment of these services. Transaction revenue includes filing fees and is net of cancellations, promotional discounts, sales allowances and credit reserves. We also earn fees from third-party providers in connection with lead generation activities, where referred customers purchased services that are transactional in nature. Subscription revenue —Subscription revenue is generated primarily from subscriptions to our registered agent, compliance packages, attorney advice, legal forms, tax and accounting, virtual mail, eSignature services, and SaaS subscriptions. 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 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. Our transaction and subscription revenue is as follows (in thousands): Year Ended December 31, 2025 2024 2023 Transaction $ 263,582 $ 245,692 $ 247,780 Subscription 492,461 436,189 412,947 Total revenue $ 756,043 $ 681,881 $ 660,727 We determine revenue recognition through the following five steps: identification of a contract with a customer; identification of the performance obligations in the contract; determination of the transaction price; allocation of the transaction price to the performance obligations in the contract; 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 or twelve 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 70 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 virtual mail subscriptions, which are invoiced monthly in arrears. Amounts collected in advance of revenue recognition are recorded in deferred revenue. Customers may pay for services, however, may not provide the necessary information to complete a transaction. We attempt to contact the customer to complete the abandoned order. We recognize revenue on abandoned services, or breakage, when it is likely to occur and the amount can be recognized without significant risk of reversal. We recognize breakage in proportion to the pattern of rights exercised by the customer. Judgment is required to determine the amount of breakage and when breakage is likely to occur, which we estimate based on historical data of breakage for similar services. Services we offer can generally either be purchased on a stand-alone basis or bundled together as part of a package of services. Accordingly, a significant number of our arrangements include multiple performance obligations, such as the preparation of legal documents combined with related document revision, registered agent services, and free trial periods of our subscriptions. At contract inception, we assess the services promised in our contracts with customers and identify performance obligations for each promise to transfer to the customer a service or bundle of services that is distinct. The identification of distinct performance obligations within our packages may require significant judgment. The transaction price allocated to each separate performance obligation represents the amount of consideration to which we expect to be entitled in exchange for the services we provide. The transaction price is based on the contractual amounts in our contracts 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. We only include variable consideration in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. We estimate sales allowances using the expected value method. We recognize a liability or a reduction of accounts receivable, and a reduction to revenue based on the estimated amount of sales allowances. We record sales allowances as a reduction of accounts receivable where we expect not to collect the full amount of the outstanding accounts receivable and we record sales allowances as a liability for estimated refunds or credits where we have collected the amounts due from the customer. We have established a sufficient history of estimating sales allowances given the large number of homogeneous transactions. The majority of our allowances and reserves are known within a relatively short period of time following our balance sheet date. The estimated provision for sales allowances has varied from actual results within ranges consistent with management’s expectations. The transaction price excludes sales taxes. 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. 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. We recognize revenue when we satisfy the performance obligation by transferring the promised good or service to the customer. For our transaction-based services, we generally recognize revenue at a point-in-time when the services are delivered to the customer. For our subscription-based services, we generally recognize revenue on a straight-line basis over the subscription term. Revenue earned from leads generated to third-party providers is recognized at a point-in-time when the related performance-based criteria have been met. We assess whether performance criteria have been met on a cost-per-click or cost-per-action basis. We have elected the practical expedient not to adjust the promised amount of consideration for the effects of a significant financing component if the period between revenue recognition and when the customer pays for the product or service will be one year or less. Principal Agent Considerations In certain of our arrangements, another party may be involved in providing services to our customer. We evaluate whether we can recognize revenue gross as a principal or net as an agent. We record revenue on a gross basis when we are the principal in the arrangement. To determine whether we are a principal or an agent, we identify the specified good or service to be provided to the customer and assess whether we control the specified good or service before that good or service is transferred to the customer. We evaluate a number of indicators of whether we control the good or service before it is transferred to the customer, including whether we have primary fulfillment responsibility and obligation to perform the services being sold to the customer; we have latitude in establishing the sales price; and we have inventory risk. 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 71 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. Our alternative business structure, or ABS, offers legal advisory services that are marketed through our websites. Our ABS provides independent legal advice to our customers and is directly responsible for, and control the fulfillment of, the legal services. Accordingly, for services provided by our ABS, we recognize revenue as the principal. In arrangements in which we are not the principal, we record revenue on a net basis, which is equal to the amount billed to our customer, net of sales allowances and the fee payable to the third party or partner that is primarily responsible for performing the services for the customer. Except for our ABS, we are not a law firm in the U.S. and cannot provide legal advice through our U.S. entities. Therefore, the participating independent law firms in our legal plans control the service to the customer and have the primary service obligation to provide attorney consultations to our customers, for which we pay the law firms a monthly fee. For these arrangements, we recognize revenue on a net basis as an agent. 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. The third-party providers control the service to the customer and are responsible for fulfilling the referred service to the customer; accordingly, we recognize revenue for these arrangements on a net basis. Revenue includes shipping and handling fees charged to customers. Cost of Revenue Cost of revenue includes all costs of providing and fulfilling our services. Cost of revenue primarily includes government filing fees, costs of fulfillment, customer care, including the cost of credentialed professionals for tax, and payroll services, and related benefits, including stock-based compensation, and costs of independent contractors for document preparation, telecommunications and data center costs, amortization of acquired developed technology, depreciation and amortization of network computers, equipment and internal-use software, printing, shipping and handling charges, credit and debit card fees, allocated overhead, legal document kit expenses, and sales and use taxes. We defer direct and incremental costs primarily related to government filing fees incurred prior to the associated service meeting the criteria for revenue recognition. These contract assets are recognized as cost of revenue in the same period the related revenue is recognized. 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 $ 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 Sales and marketing expenses consist of customer acquisition media costs, compensation and related benefits, including stock-based compensation for marketing and sales personnel, media production, public relations and other promotional activities, general business development activities, an allocation of depreciation and amortization and allocated overhead. Customer acquisition media costs consist primarily of search engine marketing, television and social media costs. Marketing and advertising costs to promote our services are expensed in the period incurred. Media production costs are expensed the first time the advertisement is aired. Advertising expenses, consisting of customer acquisition media costs, were $ 175.6 million, $ 157.6 million and $ 145.3 million for the years ended December 31, 2025, 2024, and 2023, respectively. Technology and Development Expenses Technology and development expenses consist primarily of personnel costs and related benefits, including stock-based compensation for technology and development personnel, expenses for outside consultants, an allocation of depreciation and amortization and allocated overhead. These expenses include costs incurred in the development and implementation of our products, websites, mobile applications, online legal platform, research and development and related infrastructure. Technology and development expenses are expensed as incurred, except to the extent that such costs are associated with internal-use software costs that qualify for capitalization as previously described under Internal-use Software and Cloud Computing Arrangements . 72 General and Administrative Expenses Our general and administrative expenses relate primarily to compensation and related benefits, including stock-based compensation, for executive and corporate personnel, professional and consulting fees, an allocation of depreciation and amortization, allocated overhead and legal costs. Stock-based Compensation We estimate the fair value of employee stock-based payment awards on the grant-date and recognize the resulting fair value, net of estimated forfeitures, over the requisite service period. We use the Black-Scholes option pricing model for estimating the fair value of options granted under our stock option plans that vest based on service and performance conditions. The fair value of restricted stock units, or RSUs, that vest based on service and performance conditions is determined based on the value of the underlying common stock at the date of grant. For awards that contain market conditions, we estimate the fair value using a Monte Carlo simulation model. We record expense for awards that contain performance conditions only to the extent that we determine it is probable that the performance condition will be achieved. Expense for awards containing market conditions is not reversed even if the market condition is not achieved. We have elected to treat stock-based payment awards with graded vesting schedules and time-based service conditions as a single award and recognize stock-based compensation on a straight-line basis, net of estimated forfeitures, over the requisite service period. Awards with performance or market conditions are recognized using graded vesting. The Black-Scholes option pricing model and the Monte Carlo simulation model requires us to make certain assumptions including the fair value of the underlying common stock, the expected term, the expected stock price volatility, the risk-free interest rates and the dividend yield. The fair value of the shares of common stock underlying stock options and RSUs is based upon our publicly listed share price on the date of grant. The expected term of employee stock options represents the weighted-average period that the stock options are expected to remain outstanding. 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 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 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 RSUs with market conditions. The dividend yield assumption is based on our history and expectation of dividend payouts. We have not declared or paid any cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future. Stock-based compensation expense is recognized based on awards that are ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures are estimated based on our historical experience and future expectations. 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 for the years ended December 31, 2025, 2024, and 2023 may have been materially different. Loss Contingencies On occasion we are involved in legal proceedings, claims, and regulatory, indirect tax examinations or government inquiries and investigations that may arise in the ordinary course of business. We record loss contingencies in our consolidated financial statements in the period when they are probable and reasonably estimable. If the amount is probable and we are able to reasonably estimate a range of loss, we accrue the amount that is the best estimate within that range, and if no amount is better than any other in the range, we record the amount at the low end in the range. 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 73 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. Legal fees and other costs associated with such actions are expensed as incurred. Income Taxes We account for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our consolidated financial statements. Deferred income tax assets and liabilities are measured using enacted tax rates anticipated to be in effect when those tax assets and liabilities are expected to be realized or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the consolidated statements of operations in the period that includes the enactment date. We make judgments in evaluating whether deferred tax assets will be recovered from future taxable income. A valuation allowance is established if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. 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. 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. If this threshold is met, we measure the tax benefit as the largest amount of the benefit that is greater than fifty percent likely to be realized upon ultimate settlement. We recognize penalties and interest accrued with respect to uncertain tax positions as a component of the income tax provision. At December 31, 2025 and 2024, accrued penalties and interest related to uncertain tax positions were not material. 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 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. We early adopted ASU 2022-03 during the three months ended June 30, 2023. The adoption of this accounting standard did not have a material impact on our consolidated financial statements. In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations , which requires that a buyer in a supplier finance program disclose qualitative and quantitative information about its supplier finance programs. We adopted ASU 2022-04 effective January 1, 2023. The adoption of this accounting standard did not have a material impact on our consolidated financial statements. In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842): 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. We early adopted ASU 2023-01 effective January 1, 2023. The adoption of this accounting standard did not have a material impact on our consolidated financial statements. In March 2023, the FASB issued ASU 2023-02, Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, which allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. ASU 2023-02 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. We early adopted ASU 2023-02 effective January 1, 2023. 74 The adoption of this accounting standard did not have a material impact on our consolidated financial statements. In July 2023, the FASB issued ASU 2023-03 to amend various paragraphs in the ASC to align with the previously issued SEC guidance. ASU 2023-03 did not provide any new guidance, and there is no transition or effective date associated with it resulting in the ASU 2023-03 being effective upon issuance. Consequently, the adoption of this accounting standard did not have a material impact on our consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires public entities to disclose information about their reportable segments’ significant expenses on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We adopted ASU 2023-07 in 2024. Refer to Note 21 to our consolidated financial statements. 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. ASU 2024-01 can be applied retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date at which the entity first applies this accounting standard. We early adopted ASU 2024-01 effective January 1, 2024 and will apply the amendments prospectively to profits interest and similar awards granted or modified on or after January 1, 2024. 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 — 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. ASU 2024-02 can be applied retrospectively to the beginning of the earliest comparative period presented in which the amendments were first applied or prospectively to all new transactions recognized on or after the date that the entity first applies the amendments. We early adopted ASU 2024-02 effective January 1, 2024 and will apply the amendments prospectively to all new transactions recognized on or after January 1, 2024. The adoption of this accounting standard did not have a material impact on our consolidated financial statements. Accounting Pronouncements Not Yet Adopted In November 2024, FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which requires public business entities to disaggregate certain expense captions into specific categories in disclosures within the notes to the financial statements. As further clarified by ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), issued by FASB in January 2025, this accounting standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The amendments in ASU 2024-03 should be applied either prospectively or retrospectively to any or all prior periods presented 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 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments , which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU 2024-04 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of a reporting period if the entity has also adopted ASU 2020-06 for that period. 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 75 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. Note 3. Other Financial Statement Information Accounts Receivable Changes in the allowances consisted of the following (in thousands): Year Ended December 31, 2025 2024 2023 Beginning balance $ 2,121 $ 4,906 $ 4,730 Add: amounts recognized as a reduction of revenue 3,413 6,594 8,220 Add (Less): allowance for credit losses recognized in general and administrative expense 393 ( 37 ) 1,144 Less: write-offs, net of recoveries ( 3,646 ) ( 9,342 ) ( 9,188 ) Ending balance $ 2,281 $ 2,121 $ 4,906 The allowance recognized as a reduction of revenue primarily relates to our installment plan receivables for which we expect we will not be entitled to a portion of the transaction price based on our historical experience with similar transactions. The allowance recognized against general and administrative expense represents an allowance relating to receivables from partners that are no longer considered collectible. 76 Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): As of December 31, 2025 2024 Prepaid expenses $ 10,165 $ 9,129 Deferred cost of revenue 2,415 1,670 Capitalized cloud computing development costs 1,449 1,599 Income tax receivable 3,251 3,701 Other current assets 954 1,827 Total prepaid expenses and other current assets $ 18,234 $ 17,926 Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): As December 31, 2025 2024 Accrued payroll and related expenses $ 32,785 $ 27,518 Accrued vendor payables 17,444 15,895 Accrued advertising 2,551 1,636 Sales allowances 3,126 3,086 Accrued sales, use and business taxes 10,409 6,984 Deferred consideration relating to business acquired 12,627 — Other 4,419 2,809 Total accrued expenses and other current liabilities $ 83,361 $ 57,928 Changes in sales allowances relating to charge-backs, sales credits and refunds consisted of the following (in thousands): Year Ended December 31, 2025 2024 2023 Beginning balance $ 3,086 $ 3,412 $ 4,426 Add: increase in sales allowances 6,029 4,327 6,635 Less: utilization of reserves ( 5,989 ) ( 4,653 ) ( 7,649 ) Ending balance $ 3,126 $ 3,086 $ 3,412 Depreciation and Amortization Depreciation and amortization expense of our property and equipment, including capitalized internal-use software, and intangible assets consisted of the following (in thousands): Year Ended December 31, 2025 2024 2023 Cost of revenue $ 20,687 $ 18,902 $ 12,772 Sales and marketing 9,261 3,736 5,286 Technology and development 8,516 7,688 4,184 General and administrative 5,659 4,601 3,141 Total depreciation and amortization expense $ 44,123 $ 34,927 $ 25,383 77 Deferred Revenue Deferred revenue as of December 31, 2025 and 2024 was $ 203.9 million and $ 175.0 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. We have omitted disclosure on the transaction price allocated to remaining performance obligations and estimated timing of revenue recognition as our contracts with customers that have a duration of more than one year are immaterial. Note 4. Assets Held for Sale 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. Note 5. Acquisitions 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 12,729 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 78 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. 79 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. 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. 80 Note 6. Investments Available-for-sale Debt Security 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. 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. 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. Note 7. Property and Equipment Property and equipment, net, consisted of the following (in thousands): As of December 31, 2025 2024 Internal-use software $ 145,294 $ 124,628 Purchased software 214 214 Furniture and office equipment 629 1,654 Computer hardware 5,742 6,541 Leasehold improvements 1,598 1,258 Total cost of property and equipment 153,477 134,295 Less: accumulated depreciation and amortization ( 95,432 ) ( 74,507 ) Property and equipment, net $ 58,045 $ 59,788 Depreciation and amortization expense related to property and equipment was $ 36.3 million, $ 29.8 million and $ 20.2 million for 2025, 2024 and 2023, respectively. At December 31, 2025 and 2024 accumulated amortization in connection with internal-use software costs was $ 77.2 million and $ 68.0 million, respectively. In 2025, 2024 and 2023, we recorded amortization expense of $ 34.5 million, $ 27.6 million and $ 17.6 million, respectively, in connection with these costs. 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. 81 Note 8. Leases We conduct operations from certain leased facilities in various locations. 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. Our lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease terms. We often receive customary incentives from our landlords, such as reimbursements for tenant improvements and rent abatement periods, which effectively reduce the total lease payments owed for these leases. Operating lease liabilities on our consolidated balance sheets represent the present value of our remaining lease payments over the remaining lease terms. We do not allocate lease payments to non-lease components. We use our incremental borrowing rate to calculate the present value of our lease payments, as the implicit rates in our leases are not readily determinable. Leases consist of the following (in thousands): As of December 31, Assets Classification 2025 2024 Operating Operating lease right-of-use assets $ 13,414 $ 7,189 Finance Property and equipment, net — 2 Total leases $ 13,414 $ 7,191 Liabilities Current Operating Operating lease liabilities $ 4,338 $ 1,861 Finance Accrued expenses and other current liabilities 1 3 Non Current Operating Operating lease liabilities, non-current 10,025 6,018 Total lease liabilities $ 14,364 $ 7,882 At December 31, 2025, the maturities of our remaining operating lease were as follows (in thousands, except years and percentages): Operating leases 2026 $ 4,456 2027 4,382 2028 3,247 2029 2,252 2030 847 Thereafter 1,077 Total minimum lease payments 16,261 Less: Effects of discounting 1,898 Present value of lease liabilities $ 14,363 Less: current portion $ 4,338 Long-term lease liabilities $ 10,025 Weighted-average remaining lease term as of December 31, 2025 (in years) 4.1 Weighted-average incremental borrowing rate as of December 31, 2025 6.18 % Weighted-average remaining lease term as of December 31, 2024 (in years) 4.7 Weighted-average incremental borrowing rate as of December 31, 2024 4.82 % 82 The component of our lease costs included in our consolidated statements of operations were as follows (in thousands): Year Ended December 31, 2025 2024 2023 Lease cost Operating lease cost $ 4,077 $ 2,696 3,127 Other variable cost 1,009 318 276 Finance lease cost 2 26 38 Net lease cost $ 5,088 $ 3,040 3,441 Note 9. Goodwill The changes in goodwill for 2025 and 2024 were as follows (in thousands): Amount Balance as of December 31, 2023 and 2024 $ 63,318 Acquisition of Formation Nation (1) 77,387 Balance as of December 31, 2025 $ 140,705 (1) Amounts relate to the acquisition of Formation Nation. Refer to Note 5. Acquisition to our consolidated financial statements. Note 10. Intangible Assets, net Intangible assets, net, consisted of the following (in thousands): As of December 31, 2025 Remaining Weighted average useful life (in years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships 5.9 $ 23,288 $ 10,902 $ 12,386 Developed technology 4.0 17,681 14,157 3,524 Trade names 4.1 2,679 637 2,042 Assembled workforce 0.0 125 125 — In-process research and development N/A 200 — 200 Total intangible assets $ 43,973 $ 25,821 $ 18,152 As of December 31, 2024 Remaining Weighted average useful life (in years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships 2.8 $ 12,088 $ 7,081 $ 5,007 Developed technology 1.3 14,281 10,666 3,615 Trade names 0.0 179 179 — Assembled workforce 0.8 125 94 31 Total intangible assets $ 26,673 $ 18,020 $ 8,653 In 2025, 2024 and 2023, we recorded amortization expense of $ 7.8 million, $ 5.1 million and $ 5.2 million, respectively. 83 At December 31, 2025, estimated future intangible assets amortization expense was as follows (in thousands): For Years Ending December 31, 2026 $ 6,260 2027 5,063 2028 3,590 2029 2,811 2030 228 Total future amortization expense $ 17,952 Note 11. Long-term Debt 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. 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. 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 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 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; pay dividends and distributions or repurchase capital stock; merge, liquidate and make asset sales; change lines of business; change our fiscal year; incur restrictions on our subsidiaries’ ability to make distributions and create liens; modify our organizational documents; make investments, loans and advances; and enter into certain transactions with affiliates. 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 84 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 . Note 12. Commitments and Contingencies Legal Proceedings From time to time, we may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. We are not currently a party to any material legal proceedings, nor are we aware of any pending or threatened litigation that could have a material adverse effect on our results of operations, cash flows, and financial condition, should such litigation be resolved unfavorably. Indemnification Indemnification provisions in our third-party service provider agreements provide that we will indemnify, hold harmless, and reimburse the indemnified parties on a case-by-case basis for losses suffered or incurred by the indemnified parties in connection with any claim by any third-party as a result of our website, advertising, marketing, payment processing, collection or customer service activities. The maximum potential amount of future payments we could be required to make under these indemnification provisions is indeterminable. No amounts have been accrued or have been paid during any period presented as we believe the fair value of these indemnification obligations is immaterial. Note 13. Stockholders’ Equity Stock Repurchase Program . On March 1, 2022, our board of directors approved a stock repurchase program, or 2022 stock repurchase program, authorizing us to repurchase up to $ 150.0 million of our common stock, with no fixed expiration. In September 2023, we repurchased a total of 4,718,755 shares of our common stock for a total repurchase of $ 45.1 million directly from a selling stockholder, who was a related party due to the selling stockholder’s then-ownership of our common stock, in a private, non-underwritten transaction at a price of $ 9.55 per share, which was equal to the price paid by the underwriters to the selling stockholder in a concurrent secondary public offering. The repurchase was recorded as a reduction to stockholders' equity. Upon this repurchase, no further repurchases were available under our 2022 stock repurchase program. 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 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. 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. 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 85 commissions. The repurchases were recorded as a reduction to our accumulated deficit in the accompanying consolidated statements of stockholders’ equity. The Inflation Reduction Act of 2022, enacted in August 2022, imposed a 1% non-deductible excise tax on net repurchases of shares by domestic corporations whose stock is traded on an established securities market. 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. 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. 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 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. 86 Note 14. Stock-based Compensation 2021 Equity Incentive Plan In June 2021, our board of directors adopted our 2021 Equity Incentive Plan, or 2021 Plan. 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 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. Options granted pursuant to the 2021 Plan will vest at the rate specified in the stock option agreement. Under the 2021 Plan, if an option holder’s service relationship with us or any of our affiliates ceases for any reason other than disability, death, or cause, the option holder may generally exercise any vested options for a period of three months following the cessation of service. If under our 2021 Plan, shares subject to stock option awards expire or terminate without being exercised in full or are paid out in cash rather than in shares, such stock options will not reduce the number of shares available for issuance under our 2021 Plan. Our policy is to issue new common stock upon the exercise of stock options. 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, 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 ESPP. 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. Under the 2021 ESPP, our employees may purchase common stock through payroll deductions at a price equal to 85 % of the lower of the fair market value of the stock at the beginning of the offering period or at the end of each applicable purchase period. The 2021 ESPP generally provides for offering periods of six months in duration with purchase periods ending on either May 15 or November 15. Contributions under the 2021 ESPP are limited to a maximum of 15 % of an employee’s eligible compensation. Purchases under the 2021 ESPP are settled with common stock from the 2021 ESPP’s previously-authorized and available pool of shares. The stock-based compensation expense incurred in connection with the 2021 ESPP in 2025, 2024 and 2023 was $ 0.8 million, $ 0.4 million and $ 0.7 million, respectively. 2016 Stock Option Plan Prior to the adoption of the 2021 Plan, we granted stock options under our 2016 Stock Incentive Plan, or 2016 Plan. Under the terms of the 2016 Plan, both incentive and nonqualified stock options were granted with exercise prices not less than the fair value of the underlying common stock on the date of grant. Options granted pursuant to the 2016 Plan vest over periods of up to five years and expire ten years from the grant date. If a 2016 Plan option expires and is not exercised, such as if an employee does not exercise vested 2016 Plan options within thirty days of termination, then these options would revert back to the 2016 Plan’s option pool. The exercise price of all options granted was based on the estimated fair market value of our common stock as determined by the board of directors at the date of grant or date of modification. 87 Stock-based Compensation Expense We recorded stock-based compensation expense in the following categories in the accompanying consolidated statements of operations and balance sheets (in thousands): Year Ended December 31, 2025 2024 2023 Cost of revenue $ 5,538 $ 5,833 $ 4,318 Sales and marketing 16,810 8,077 6,096 Technology and development 15,097 19,573 18,899 General and administrative 76,263 38,027 36,702 Total stock-based compensation expense 113,708 71,510 66,015 Amount capitalized to internal-use software 5,264 5,967 4,056 Total stock-based compensation $ 118,972 $ 77,477 $ 70,071 Stock Options Stock option activity for the year ended December 31, 2025 is as follows (in thousands, except weighted-average exercise price and remaining contract life): Number of Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life (in Years) Aggregate Intrinsic Value Outstanding at December 31, 2024 15,194 $ 10.51 2.6 $ 442 Granted — — Exercised ( 4,496 ) 9.69 Cancelled ( 5,660 ) 10.36 Forfeited — — Outstanding at December 31, 2025 5,038 $ 11.41 5.8 $ 2,625 Vested and expected to vest at December 31, 2025 558 $ 9.44 5.7 $ 1,999 Exercisable at December 31, 2025 4,479 $ 11.65 7.1 $ 626 The aggregate intrinsic values in the table above represents the difference, if any, between the fair value per share of our common stock and the option exercise prices multiplied by the number of options at the respective balance sheet dates. The total intrinsic value of stock options exercised in 2025, 2024 and 2023 was $ 2.2 million, $ 3.5 million and $ 2.2 million, respectively. During the years ended December 31, 2025, 2024, and 2023, the Company recorded stock-based compensation expense related to stock option awards of $ 3.4 million, $ 5.4 million, and $ 22.0 million, respectively. 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 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 $ 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. Vesting of the options granted to the members of our senior leadership team will be accelerated upon a qualifying termination that occurs during the change-in-control period, as defined in the option grant agreement, or immediately prior to the effective time of a change-in-control if the option award is not assumed, continued or substituted by the surviving or acquiring entity (or its parent) in connection with such change-in-control. 88 The weighted-average assumptions that were used to calculate the grant-date fair value of our stock option grants using the Black-Scholes option pricing model were as follows: Year Ended December 31, 2023 Expected life (years) 5.9 Risk-free interest rate 3.4 %- 3.8 % Expected volatility 50.4 %- 50.7 % Expected dividend yield — Restricted Stock Units and Performance Stock Units 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- Average Grant- Date Fair Value Unvested at December 31, 2024 29,722 $ 7.49 Granted (1) 7,381 9.47 Cancelled/forfeited ( 3,263 ) 9.32 Vested ( 9,443 ) 9.12 Unvested at December 31, 2025 24,397 $ 7.21 (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. For the years ended December 31, 2025, 2024 and 2023, total stock-based compensation expense related to RSUs was $ 113.9 million, $ 71.4 million and $ 47.3 million, respectively. 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 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. The weighted-average grant-date fair value per share of the PSUs granted was $ 12.05 . The fair value of these PSUs was estimated using the Monte Carlo simulation model on the dates of the grant based on the assumptions shown in the table below. Vesting of the PSUs is contingent upon the recipients’ continuous employment over the requisite service period and was subject to fulfillment by the Company of a predefined profitability target during the performance period. 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 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. A Monte Carlo simulation was used to account for this market condition in the grant-date fair value of the awards. 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 $ 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 89 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: Year Ended December 31, 2024 Expected life (years) 0.4 - 0.8 Risk-free interest rate 5.2 %- 5.4 % Expected volatility 47.4 %- 66.1 % Expected dividend yield — In July 2024, we also granted 2.7 million RSUs with a market vesting condition to a member of our senior leadership team. The grant date fair value of these RSUs at 100 % of the target was $ 13.1 million. The weighted-average grant-date fair value per share of the RSUs granted was $ 4.89 . The fair value of the RSUs was estimated on the date of grant using the Monte Carlo simulation model, based on the assumptions shown in the table below. Vesting of this award is contingent upon the recipient’s continuous employment over the requisite service period and is subject to achievement of predetermined stock price targets during a five-year performance period. Achievement of the predetermined stock price targets is measured based on a 45 -trading day volume weighted-average closing price of our common stock, subject to a 44 -day extension in certain circumstances. The number of RSUs subject to vesting during the performance period may equal zero percent ( 0 %) to two hundred percent ( 200 %) of the target award. 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 $ 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. 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: Year Ended December 31, 2024 Expected life (years) 5 Risk-free interest rate 4.2 % Expected volatility 59.4 % Expected dividend yield — In November 2024, we also granted 2.4 million RSUs with a market vesting condition to members of our senior leadership team. The grant date fair value of these RSUs at 100 % of the target was $ 12.6 million. The weighted-average grant-date fair value per share of the RSUs granted was $ 5.30 . The fair value of the RSUs was estimated using the Monte Carlo simulation model on the date of the grant based on the assumptions shown in the table below. Vesting of this award is contingent upon the recipient’s continuous employment over the requisite service period and is subject to achievement of predetermined stock price targets during a three-year performance period, subject to certification by the compensation committee of the board of directors. Achievement of the predetermined stock price targets is measured based on the trailing 30 -trading day volume weighted average closing stock price of our common stock subject to a 29 -day extension in certain circumstances. The number of RSUs subject to vesting during the performance period may equal zero percent ( 0 %) to four hundred percent ( 400 %) of the target award. If the compensation committee of the board of directors certifies achievement of a stock price target prior to November 15, 2025, the eligible shares will vest in full and become non-forfeitable on November 15, 2025. 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 $ 39.7 million and $ 5.6 million in stock-based compensation expense during the years ended December 31, 2025 and 2024, respectively, related to 90 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: Year Ended December 31, 2024 Expected life (years) 3 Risk-free interest rate 4.2 % Expected volatility 60.9 % Expected dividend yield — During the year ended December 31, 2023, we also granted 1.3 million PSUs to members of our senior leadership team. 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 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 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: (x) the original expiration date of the stock options, (y) the one-year anniversary of the date of the individual’s termination of employment with the Company, and (z) immediately prior to the effective time of a change in control if such stock option is not assumed, continued or substituted by the surviving or acquiring entity (or its parent) in connection with such change in control. 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. 91 Note 15. 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 Numerator: Net income $ 15,427 $ 29,963 $ 13,953 Net income — basic and diluted $ 15,427 $ 29,963 $ 13,953 Denominator: Weighted-average common stock used in computing net income per share — basic 178,798 180,210 190,466 Effect of potentially dilutive securities Options to purchase common stock 53 754 1,380 RSUs 5,808 1,893 2,558 Employee stock purchase plan 31 8 11 Weighted-average common stock used in computing net income per share — diluted 184,690 182,865 194,415 Net income per share — basic $ 0.09 $ 0.17 $ 0.07 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 per share because they are anti-dilutive (in thousands): As of December 31, 2025 2024 2023 Options to purchase common stock 4,992 11,512 10,714 RSUs (1) 17,347 13,932 7,426 Employee stock purchase plan 33 64 43 Total 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. Note 16. Fair Value Measurements The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy (in thousands): As of December 31, 2025 Level 1 Level 2 Level 3 Money market funds $ 180,778 $ — $ — Total assets $ 180,778 $ — $ — As of December 31, 2024 Level 1 Level 2 Level 3 Available-for-sale debt security $ — $ — $ 1,377 Money market funds 114,690 — — Total assets $ 114,690 $ — $ 1,377 92 Note 17. Restructuring 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 2025, we incurred $ 0.9 million in severance and related termination benefits costs related to a reduction in headcount in our U.S. workforce. 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, we incurred $ 4.7 million in severance and related termination benefits costs related to a reduction in headcount in our U.S. and U.K. headcount. The 2023 reduction in the U.S. and U.K. headcount was substantially complete by December 31, 2023. Restructuring expenses include salary and benefits for the impacted employees and are included in general and administrative expenses in the accompanying consolidated statements of operations. Note 18. Income Taxes The following are the domestic and foreign components of our income (loss) before income taxes (in thousands): Year Ended December 31, 2025 2024 2023 Domestic $ 25,366 $ 28,678 $ 34,518 Foreign 7,072 14,405 ( 3,024 ) 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): Year Ended December 31, 2025 2024 2023 Current Federal $ 7,117 $ 13,258 $ 8,984 State 2,909 4,019 3,621 Foreign 351 395 224 Total current provision 10,377 17,672 12,829 Deferred Federal 4,609 ( 3,741 ) 5,481 State 2,147 ( 736 ) ( 769 ) Foreign ( 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 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. 93 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, 2025 Tax at U.S. statutory rate $ 6,812 21.0 % State and local income taxes (1) 3,326 10.3 % Foreign tax effects United Kingdom ( 1,394 ) ( 4.3 ) % Other foreign jurisdictions 152 0.5 % Tax credits 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, 2024 2023 Provision for income taxes at statutory rate $ 9,047 $ 6,614 State income taxes, net of federal benefit 2,186 1,796 Rate differential on foreign earnings ( 2,670 ) ( 130 ) Research and development credits ( 5,152 ) ( 4,894 ) Change in valuation allowance ( 413 ) 814 Stock-based compensation 2,698 4,538 Nondeductible stock-based compensation 5,757 6,053 Unrecognized tax benefits 1,699 2,498 Non-deductible expenses 298 350 Other ( 330 ) ( 98 ) Total provision for income taxes $ 13,120 $ 17,541 94 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): Year Ended December 31, 2025 Federal $ 5,404 State and local California 466 Other 2,739 Foreign 305 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): As of December 31, 2025 2024 Deferred tax assets Deferred revenue $ 123 $ 153 Accrued expenses 9,687 7,088 Stock-based compensation 6,606 4,070 Net operating loss carryforwards 17,157 14,918 Tax credit carryforwards 9,360 10,264 Lease liabilities 3,777 1,957 Interest expense carryforwards 1,844 2,782 Capital loss carryforwards — 453 Capitalized research expenses 18,665 34,957 Total deferred tax assets 67,219 76,642 Valuation allowance ( 15,941 ) ( 16,876 ) Net deferred tax assets 51,278 59,766 Deferred tax liabilities Depreciation and amortization ( 12,078 ) ( 19,340 ) Right of use asset ( 3,523 ) ( 1,780 ) State taxes ( 3,793 ) ( 3,950 ) Net deferred tax liabilities ( 19,394 ) ( 25,070 ) 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, the deferred tax assets for Pulse IP, LLC and Pulse Business, LLC, and 95 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, 2025 2024 2023 Beginning balance $ 16,876 $ 16,320 $ 14,644 Net (decrease) increase in current year ( 481 ) ( 654 ) 799 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, 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, 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, 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 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. We have not provided for U.S. income taxes on the undistributed earnings and other outside temporary differences of foreign subsidiaries as they are considered indefinitely reinvested outside the U.S. At December 31, 2025, 2024, and 2023, the amount of temporary differences related to undistributed earnings and other outside temporary differences upon which U.S. income taxes are not material to our consolidated financial statements. The following table summarizes the changes in unrecognized tax benefits for the years ended December 31, 2025, 2024, and 2023 (in thousands): Gross Unrealized Tax Benefits Balance at December 31, 2022 $ 8,920 Additions for tax positions related to the current year 2,181 Additions for tax positions related to prior years 418 Balance at December 31, 2023 $ 11,519 Additions for tax positions related to the current year 2,854 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 Additions for tax positions related to prior years 1,416 Balance at December 31, 2025 $ 16,788 If recognized, $ 16.8 million of unrecognized tax benefits, excluding interest and penalties, would reduce our annual effective tax rate. 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 96 in which resolution occurs. Our policy is to recognize interest and penalties related to income tax matters in income tax expense. 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. federal, state, and foreign jurisdictions. The federal income tax returns for the years 2022 and forward and state income tax returns for the tax years 2008 and forward remain open to examination. We are under examination in two states which are not expected to have an impact on our results of operations, cash flows and financial condition. Note 19. 401(k) Savings Plan We have a defined contribution savings plan under Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Under the 401(k) plan, matching contributions are based upon the amount of the employees’ contributions subject to certain limitations. We contributed $ 3.8 million, $ 4.0 million, and $ 4.0 million to the 401(k) plan in 2025, 2024, and 2023, respectively. Note 20. Accumulated Other Comprehensive Income Changes in accumulated other comprehensive income consisted of the following: Year Ended December 31, 2025 (in thousands) Before Tax Amount Tax Effect Net of Tax Amount Foreign currency translation adjustments: Beginning balance $ 463 $ — $ 463 Change during period ( 283 ) — ( 283 ) Ending balance $ 180 $ — $ 180 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 Accumulated other comprehensive income: Beginning balance $ 993 $ ( 132 ) $ 861 Other comprehensive loss ( 812 ) 132 ( 680 ) Ending balance $ 181 $ — $ 181 Year Ended December 31, 2024 (in thousands) Before Tax Amount Tax Effect Net of Tax Amount Foreign currency translation adjustments: Beginning balance $ ( 12 ) $ — $ ( 12 ) Change during period 475 — 475 Ending balance $ 463 $ — $ 463 Available-for-sale debt security: Beginning balance $ 324 $ ( 80 ) $ 244 Unrealized gains 206 ( 52 ) 154 Ending balance $ 530 $ ( 132 ) $ 398 Accumulated other comprehensive income: Beginning balance $ 312 $ ( 80 ) $ 232 Other comprehensive income 681 ( 52 ) 629 Ending balance $ 993 $ ( 132 ) $ 861 97 Year Ended December 31, 2023 (in thousands) Before Tax Amount Tax Effect Net of Tax Amount Foreign currency translation adjustments: Beginning balance $ 1,358 $ — $ 1,358 Change during period ( 1,370 ) — ( 1,370 ) Ending balance $ ( 12 ) $ — $ ( 12 ) Available-for-sale debt security: Beginning balance $ 184 $ ( 45 ) $ 139 Unrealized gains 140 ( 35 ) 105 Ending balance $ 324 $ ( 80 ) $ 244 Accumulated other comprehensive income: Beginning balance $ 1,542 $ ( 45 ) $ 1,497 Other comprehensive loss ( 1,230 ) ( 35 ) ( 1,265 ) Ending balance $ 312 $ ( 80 ) $ 232 Note 21. Segment Information 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 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 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 located outside of the U.S. were immaterial as of December 31, 2025 and 2024. The following table summarizes financial information by reportable segment regularly provided to the CODM (in thousands): Year Ended December 31, 2025 2024 2023 Transaction Revenue $ 263,582 $ 245,692 $ 247,780 Subscription Revenue $ 492,461 $ 436,189 $ 412,947 Total revenue $ 756,043 $ 681,881 $ 660,727 Less: Filings fees $ 98,292 $ 83,269 $ 88,103 Other cost of revenue, excluding depreciation, amortization and stock-based compensation $ 133,443 $ 132,089 $ 134,070 Customer acquisition marketing $ 175,614 $ 157,578 $ 145,338 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 98 Year Ended December 31, 2025 2024 2023 General and administrative, excluding depreciation, amortization, stock-based compensation, and restructuring $ 60,982 $ 60,215 $ 61,843 Stock-based compensation $ 113,708 $ 71,510 $ 66,015 Depreciation and amortization $ 44,123 $ 34,927 $ 25,383 Interest income $ ( 7,569 ) $ ( 7,850 ) $ ( 9,307 ) Interest expense $ 1,294 $ 446 $ 493 Restructuring (1) $ 854 $ 6,096 $ 4,666 Other segment items (2) $ ( 1,187 ) $ ( 98 ) $ ( 1,621 ) Provision for income taxes $ 17,011 $ 13,120 $ 17,541 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 $ 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) 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. Note 22. Subsequent Events 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. 99 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures None