LegalZoom.com, Inc.

Good day and thank you for standing by. Welcome to LegalZoom's second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the call over to your first speaker today, Madeleine Crane, Head of Investor Relations. Please go ahead.

Thank you, operator. Welcome to LegalZoom's second quarter 2026 earnings conference call. Joining me today is Jess Geibel, our Chairman and Chief Executive Officer, and Noel Watson, our Chief Operating Officer and Chief Financial Officer. As a reminder, We will be making forward-looking statements on this call. These forward-looking statements can be identified by the use of words such as believe, expect, plan, anticipate, will, intend, and similar expressions, and are not and should not be relied upon as a guarantee of future performance or results. Such forward-looking statements are based on management's assumptions and expectations and information available to us as of today's date. These forward-looking statements are also subject to risks and uncertainties that could cause actual results to differ materially from such statements. These risks and uncertainties are referred to in the press release we issued today and in the risk factor section of our most recent quarterly report on Form 10Q filed with the Securities and Exchange Commission. Except as required by law, we do not plan to publicly update or revise any forward-looking statements, whether as a result of any new information, future events, or otherwise. In addition, we will also discuss certain non-GAAP financial measures. We use non-GAAP measures in making decisions regarding our business, and we believe these measures provide helpful information to investors. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measure are set forth in our investor presentation, which can be found on the investor relations section of our website, at investors.legalzoom.com. I will now turn the call over to Jeff.

Thank you, Madeleine, and thank you all for joining our call. LegalZoom continues to execute against our strategy of building the leading services and expertise platform for small businesses, combining AI with trusted human expertise. We delivered second quarter revenue of $205 million, up 7% year over year, and in line with our guidance. Adjusted EBITDA of $46 million, increased 18% year over year, well ahead of the high end of our guidance. Q2 also marked our fifth consecutive quarter of double-digit subscription growth. Since late 2024, we've steadily increased the mix of recurring subscription revenue in our business, by acquiring customers who find ongoing value in our platform. These results reflect the momentum of the growth levers we've been building for the last year, expanding our portfolio of expert and service offerings, accelerating the use of AI across the business, and intentionally diversifying how we acquire customers, making our go-to-market model more resilient and less dependent on any single channel. Those investments in diversification were built for exactly this moment. During the quarter, Google accelerated their shift to AI-powered search, with AI-generated answers increasingly replacing traditional clicks. This is affecting top of funnel traffic across our industry. And I want to be specific about what it means for us, because there are two very different currents underneath it. The first is the pressure in our updated outlook, and it is concentrated in one place. The majority of our traditional search traffic, both organic and paid, has historically run through Google. As AI-generated answers replace clicks on informational queries, fewer of those visits reach us, and paid inventory has become more expensive. That pressure is real, and we are feeling it now. To be clear, This is the repricing of a single legacy channel. It is significant, but bounded. The second current runs the other way. Across the AI platforms where discovery is moving, we start from essentially zero. So every visit is incremental. That traffic grew more than 250% quarter over quarter.