Good day, and thank you for standing by. Welcome to the LegalZoom's Q3 2022 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 one one on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sarah Bland, Securities Counsel. Please go ahead. Thank you, operator. Hello, and welcome to LegalZoom's Q3 2022 Earnings Conference Call. Joining me today is Dan Wernikoff, our Chief Executive Officer, and Noel Watson, our 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 and are 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 Factors section of our most recent quarterly report on Form 10-Q 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. Our CEO and CFO use these measures in making decisions regarding our business, and we believe these measures provide helpful information to investors. Reconciliations of all Non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at investors.legalzoom.com. The Non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Now I'll turn the call over to Dan. Thanks, Sarah, and good afternoon, everyone. In Q2, we outlined a path forward that leverages the brand leadership established over the last few years while better capturing the demand we already have through increased product innovation. As a result, we committed to a 15% EBITDA margin and a 15% share improvement in 2023. I'm happy to say we made progress against both of these stated goals. More importantly, some of the larger product and platform investments we've been making over the past few years are beginning to bear fruit. To be clear, it's still very early innings for our product transformation, but the momentum is there, and you should continue to see our product output accelerate over time. Before getting into more details on progress against priorities, I'll give a brief overview of our third quarter results. Q3 revenue came in at $154 million, up 4% year-over-year. Transaction revenue was down 14% in the period, while subscription revenue offset this weakness, growing 25%. LegalZoom business formations grew 3% in the Q3, while U.S. Census formations were down 2%. The share gain in Q3 is both a result of increased testing of our premium lineup and increased acquisition through channel partnerships. Adjusted EBITDA was $17.5 million in the Q3. Given the quick expense actions we've taken, we expect to realize improvements in margin for the remainder of the year. To remind you, this is a result of multiple reductions in force over the past six months while restricting hiring primarily to product and technology, progress automating our core formation and tax fulfillment process, which will continue to drive down variable costs. In Q3, we began to reduce our brand spending, rotating our focus to higher intent, lower funnel, and earned channels. Moving on to some operational highlights. We continue to focus on progress against our three growth vectors, scaling the core business, building an SMB ecosystem, and integrating experts into our core experience. Those three priorities will translate into us forming more businesses, solving more compliance problems in an integrated way, and providing efficient and affordable access to the two most important advisors a small business needs to succeed, their attorney and their accountant. In Q3 and heading into Q4, we're ramping lineup testing and incorporating different variations of free with the goal of making our product more accessible to cost-sensitive SMBs. We've learned quite a bit and are applying these learnings into new variants, and as a result, we're accelerating the number of tests as we enter Q4. In addition to reaching new businesses through lower cost entry points, we've also expanded our distribution through partners. We hope to add more partners looking to bundle our formations product with their own services, which include Fintech, website, and brand identity solutions, among others. It's important to note that as we bring our marketing spend down and begin to focus more on product conversion as a result of premium offerings and distribution through partners, overall traffic to our site will show declines year-over-year. Despite this reduction, our overall traffic per month remains at roughly 10x the number of businesses being formed in any given month as measured by Census data. Our product starts, how we measure high intent purchases, are also materially greater than the whole of formations in a given month. To be clear, we've never had a traffic issue. Our biggest opportunities have been evolving from a consumer to an SMB brand, driving high intent traffic to our product pages, and improving conversion rates. The largest of those opportunities is to improve conversion. Finally, as we expand distribution through lower cost offerings, we're accelerating our automation efforts. Our speed to deliver our core formation products continues to improve, and our error rates that drive customer calls continue to decline. This is a win-win, as speed of delivery is a core driver of net promoter score improvements and automation leads to lower costs. Moving to our ecosystem investments, we continue to both build and buy into a unique SMB ecosystem designed to get businesses off the ground and keep them operationally compliant. In Q3, we began ramping the integration of Earth Class Mail, soon to be renamed LZ Virtual Mail, into our formations flow, and early results look promising. As a reminder, the majority of small businesses are home-based, and virtual mail offered right at the time of declaring your business address is resonating with our customers. In October, we closed on the acquisition of Revv. Revv is an online forms and e-signature service. This acquisition will help us accelerate two critical areas of product investment, updating our forms library while enabling expert collaborations directly on the form itself, and providing the ability to send these forms out for e-signature and have them stored and managed through our document solution. Our research shows 40% of SMBs have paid for an e-signature solution, so there are opportunities to commercialize this product as a standalone or potentially add it as a bundled capability to drive better retention in existing subscriptions. The acquisition of Revv also establishes a talent beachhead in Bangalore, further enabling us to grow our product organization. These capabilities are being integrated into our new application experience called MyLZ, where you will begin to see a cohesive product strategy to integrate our formations capabilities and ecosystem subscriptions into a single experience. Think of it as the place SMBs interact with their experts, find the right business solutions, and the key destination for all their compliance activities. It's also the place where we integrate strategic partnerships, and we are now live with both Wix and NEXT Insurance through this experience. Finally, we continue to evolve our third priority, integrating experts. Experts remain critical to our strategy. In LZ Tax, we're testing a new lineup with a newly launched advisory-only solution for pre-revenue customers. This is similar to our legal advisory subscription. As a result, as we enter tax season this year, we expect to have a product built to support businesses at different sizes and stages, better optimized pricing, and an improved first use experience with streamlined onboarding of clients and intake during tax season, all of which we also intend to deliver through MyLZ. We continue to include attorney bundles in some of our lineup testing, but the early read hasn't been strong, so our focus has become much more concentrated on introducing a free or lower-cost DIY alternative while sequencing a deeper integration of attorneys after we deploy a new lineup. Overall, it was a very busy quarter with significant progress made against our product roadmap. Stepping back for a second, we began adjusting to a deteriorating macro- early in the Q2 of this year. While we have yet to see a significant near-term deterioration in the macro, we remain vigilant in controlling expense actions and view many of the changes as natural in the course of shifting our focus more towards the product experience, which we anticipate will be the driver of future growth. The efforts we've made to reduce costs are funding our efforts to build out our platform and ecosystem. Formations have declined this year, and for calendar year 2023, we expect formations to decline again. It's clearly a tougher environment for all businesses, including small businesses, which is why it's even more important to make our product more accessible with lower lead-in pricing. Our goal is to help more of these businesses now with the expectation that we will be able to monetize in the future. We can do that while improving our profitability today through the actions we've already taken. Given our low fixed cost structure, strong cash position, and cash generation, and the leverage we expect to get from product improvements, we believe we are in the best position in our competitive set to not only weather the storm, but in the long term benefit from it. With that, I'll turn it over to Noel to go through the details. Thanks, Dan, and good afternoon, everyone. I'll start today with a review of our performance in the third quarter and end with our outlook for the remainder of the year. Total GAAP revenue in the period came in at $154 million, up 4% year-over-year, and above the top end of our guidance range. Transaction revenue was 14% year-over-year at $58 million, due to a 1% decline in total transaction units and a 12% reduction in average order value. We completed 117,000 business formations in Q3, up 3% compared to the same period last year and up from a 16% decline year-over-year in Q2 as comparisons normalize. Transaction units were 226,000 in Q3, down 1% year-over-year as the increase in business formations was offset by a decline in intellectual property transactions resulting from the discontinuation of our DIY trademark product and a continued reduction in estate planning and other consumer transactions. Average order value came in at $255 in the third quarter, down sequentially from the second quarter and down 12% year-over-year. As noted on our prior call, we expected year-over-year declines in AOV in the second half of the year due to testing of our new lower price lineup as well as growth in our partner channel where we provide wholesale rates. In the quarter, we also experienced a temporary impact to fulfillment productivity as the team adjusted to a mid-quarter reduction in headcount. Looking forward, we expect a similar year-over-year decline in AOV in the Q4 as we saw in Q3, again driven by partner channel growth and continued testing of our freemium offering. As we previously noted, we expect the introduction of a lower price or free SKU to drive significant volume and market share growth, but at a cost to our current transaction revenue. Subscription revenue was 25% year-over-year at $91 million. We expect a slight sequential decline in subscription revenue in Q4, with the year-over-year growth slowing materially in the third quarter and into 2023. The primary driver is the impact of a slowing macro environment on recent formation volumes, which in turn reduces the number of gross subscription unit additions, particularly within our registered agent and compliance-related subscription offerings. ARPU was $259 in the Q3, up 12% year-over-year. In the fourth quarter, we expect ARPU to grow year-over-year, but flatten sequentially as growth in our higher ARPU LZ Tax service slows, and we have introduced a new tax lineup with a lower price advisory-only SKU, and now have an integrated ECM offering in our formations flow, which is also at a lower price point. Partnership revenue was down 29% year-over-year in the third quarter to $5.5 million as we continue to lap legacy partnerships no longer aligned with our strategic direction. We expect partner revenue to remain steady on an absolute dollar basis in the Q4 and to be accretive to overall revenue growth moving forward as we now have fully lapped any significant impacts from legacy partnerships. Now turning to expenses and margins, where all of the following metrics are on a Non-GAAP basis. Gross margin came in at approximately 69% of revenue in the Q3, down slightly from 70% in Q3 of last year. The slight decline in margin was largely due to higher fulfillment costs related to our expanded capacity to support growth in LZ Tax and added costs from our acquisition of Earth Class Mail. Sales and marketing costs were $61 million in the quarter, or 40% of revenue, down 5% from Q3 of last year. Customer acquisition marketing came in at $44 million, down 12% year-over-year as we reduced our brand media spend and tightened the guardrails on our lower-funnel direct response channels. We plan to further reduce our marketing spend in Q4 and therefore expect a significant sequential reduction given seasonality, but also as we continue to favor conservatism and flexibility in this uncertain macro environment. Technology and development expenses were $13 million in Q3, up $1 million year-over-year. We expect an increase in this expense in Q4, largely due to our continued focus on hiring talented engineers as well as the addition of headcount from our recent acquisition of Revv. General and administrative expenses were $15 million in Q3, up $4 million year-over-year due to higher headcount and professional fees. We expect G&A expenses to decline sequentially in Q4 as we realize the benefit of recent headcount reductions. Adjusted EBITDA was at the top end of our guidance range at $17.5 million for the quarter, compared to $15 million for the third quarter of 2021, and our base deferred revenue increased $5 million in the period. In the third quarter, we continued to execute on our $150 million share repurchase authorization. We repurchased a total of 2.6 million shares of our common stock at an average price per share of $9.48 for a total repurchase of $25 million, including commissions. Through the third quarter, we have completed $64 million in buybacks with a total of 5.7 million shares repurchased, which represents a reduction of approximately 3% of our prior year-end fully diluted- share count. We have continued to repurchase shares in the Q4. As of September 30, 2022, we had cash and cash equivalents of $212 million and no debt outstanding. I'll now provide guidance for the Q4 and full year of 2022. For the fourth quarter of 2022, we expect total revenue of $145-$147 million, or 3% year-over-year growth at the midpoint. We expect subscription revenue growth to decelerate in Q4, driven by lower formation volumes in the first half of the year and a slight impact from LZ Tax seasonality as tax revenues skew toward the first half of the year when tax prep needs are greatest. We expect adjusted EBITDA of $23 million or 16% of revenue at the midpoint. For the full year of 2022, we are increasing our guidance for both total revenue and adjusted EBITDA. We now expect total revenue of $617 million-$619 million, or 7% growth at the midpoint. We now expect adjusted EBITDA of $60 million or 10% of revenue at the midpoint. With that, let's open the call for questions. As a reminder, to ask a question, you will need to press star one one on your telephone. Please stand by while we compile the Q&A roster. Our first question comes from Andrew Boone with JMP Securities. Your line is open. Hi, good afternoon. Thanks so much for taking my questions. You talked last quarter about 20% of traffic being dedicated to premium testing. Can you just talk about where you're at right now in terms of flowing traffic over freemium? And then what are you seeing so far from tests? How do you feel about the product and conversion and everything else? And then secondly, with the funding environment changing in 2022 with higher rates, are you seeing any change in terms of the competitive set from other privates? Can you just talk about competition overall? Thanks so much. Yeah, thanks for the questions, Andrew. Yeah, on the traffic side, you know, it's hard at any given time to say what the specific traffic level we have is because there's lots of different tests that we have going, and we turn them on and off at different times based off of what we're reading into the tests themselves. At this point, you'll see us pretty consistently in Q4 be above that 20% level. We're really just beginning to ramp up lots of the different variants where, you know, in the past, we were testing very broad concepts. We'll start to test a narrower set of concepts that have been refined, and we'll do many variations of those with different pricing options. That's a pretty dynamic environment. It's hard to say, like, specifically what the traffic will be because it kind of depends on what's happening with the tests themselves. As it relates to the dynamics with competition and kinda what's been happening with the macro, I mean, I think what I would say is that, you know, first off, we just wanna focus on what we need to do in this environment, as a starting point, which is get to the right cost structure. You've seen us kind of bringing our costs down, whether it relates to automating fulfillment or, you know, rightsizing some of the OPEX and headcount, and even thinking about some of that last dollar spent on the marketing side. That's enabling us to go after share while still increasing profitability. That's really important. When we're in a bad environment, you know, this is a chance to really consolidate and go after more customer growth, knowing that you can be confident later to monetize those customers, you know, down the road. That's what we're really focused on our side. Now, in parallel, we also have a really strong balance sheet. You know, we're still cash generative, and we have a brand that's really well known, and you know, we have the ability to sorta draft off of that knowledge of our brand. I do think it puts us in a better position than anybody that was, you know, spending into negative profitability, because they at some point would have to go out and go get funding, and this obviously isn't the best environment for funding. Again, it's really more about what we're trying to do, which is we wanna be aggressive during a time like this. We feel like this is when people win, and really set them self up for long-term growth. That's what our strategy is. Thanks, Dan Wernikoff. Thanks, Andrew. Thank you. One moment for our next question. Our next question comes from Mario Lu with Barclays. Your line is open. Great. Thanks for taking the question. First one's on your comment in terms of expecting formations decline again next year. I'm just curious if you could share, you know, any data points that led to this estimate. You know, obviously, the macros are very soft right now. I remember last quarter you guys talked about dissolution trends in your data. I was curious if that was one of the factors. Yeah. Thanks for the question, Mario. Actually, dissolutions have started to recover, and we're seeing them back to a normalized path, which, you know, is a pretty good thing. But I think that's also just related to there was an over-inflation of businesses being formed and no businesses failing when there was stimulus, you know, still being handed out in 2021. There was sort of a natural almost like an inverse action that happened post-pandemic, where we saw higher dissolutions. Now it has stabilized a bit. That feels like that's getting more back to where we've seen historically. If you start to think about, you know, formations next year, I mean, we're just cautious. If you look at the current trend in Q4, and if you think about Q3, you know, we think of the macro as being relatively flat. Just looking on the horizon, it's clear the macro conditions are getting worse. We expect that there'll be a decline in 2023. We're not ready to say at what level we see that decline, but it's just something that we anticipate. Great. Makes sense. In your acquisition of Revv, I was just wondering if you could highlight, you know, the main factors that led to this acquisition. Any other areas in particular that you're targeting to build out your capabilities? Yeah. Really, really excited about Revv. I mean, if you think about what LegalZoom was founded on, it was really, you know, democratizing legal forms online. Over the last, you know, 10, 15 years, those forms have been less modern than we'd wanted them to be. We were, you know, kicking off a pretty significant investment in, you know, making our forms collaborative, making them, you know, travel to customers, thinking about how we house them, and we started to look at some of the external environment, and Revv was just a perfect fit. They bring with them, you know, a pretty strong library of forms. We obviously can keep augmenting it because it's a pretty flexible platform as well. It's a WYSIWYG-type design, so, you know, small businesses will find it very easy to adjust those forms and customize them, which is really important for them. They're highly collaborative, which for us is incredibly important because we want attorneys to collaborate through the form with their clients. Then we now have e-signature capabilities, which, you know, is so important when you're, you know, creating a form, you need to get that document signed, and you need to then, you know, store it somewhere where you can easily access it. All of that is really coming out of the boxes as well as, you know, it's an API-driven solution, so it can be distributed differently. There's great SEO capabilities when we talk about forms. I mean, this is a really, I think a very strong acquisition and something that's indicative of what we're trying to do in our ecosystem. Just to refresh on the ecosystem side, I mean, what we want to do is be the place to help small businesses get started and then also help them manage their business and stay compliant. There's multiple other areas where we feel like, you know, we can participate. There's multiple other areas where we think a partner should participate, and so that's gonna continue to be a huge investment area for us. Yeah, the one thing I'd add there as well is on the Revv transaction that gets us excited is, you know, it comes with a really strong leadership team there, some really talented engineers, and it gives us a bit of a foothold in that location to continue to build out from that base of engineers and add quality talent there and help to overall blend down our cost structure on the engineering side. That's another aspect of the deal that gets us really excited. Great. Thank you both. Thanks, Mario. Thank you. One moment for our next question. Our next question comes from Ron Josey with Citi. Your line is open. Great. Thanks, guys. I wanted to go back maybe on macro- trends and freemium, and I just wanna understand, just I understand your comment around the broader macro- environment being more fluid and the outlook for 2023. I think we've talked in the past about trends maybe returning to seasonality or at least stabilizing here. I just wanted to see if you're seeing that in the current environment around just macro- stabilization. If so, if that's improving the operating environment given things might be more stable. Then the second question just on freemium, 'cause I think it is so interesting. I know, you know, just talk to us about what you're seeing in the early tests. Clearly, they've been positive as you open up to more traffic. I'm curious what's worked, what surprised you. Any insights on conversion trends would be helpful. Thanks, guys. Thanks for the question, Ron. Yeah, well, you know, for the macro, Q3 we saw it down about 2% and we, you know, the October numbers just printed and it was a 1% increase. It's not that we're seeing a significant deterioration, and we are seeing that it's following seasonal patterns. Whenever we talk about looking forward, we're really projecting out what we anticipate based off of what we're seeing in the economy. And there's, you know, at this point, we're not guiding to anything, you know, that's more specific than that. When we get to 2023, we'll probably have a better sense of how we wanna talk about our expectations for the macro that will be maybe a little bit more detailed. As it relates to testing, we really don't want to provide a lot of detail into the tests themselves because they're in process and there's obviously a lot of reasons from a competitive standpoint not to share the insights. We feel extremely confident in the 15% share increase that we expect for next year. I would say you're starting to see that impact. In Q3, you saw a 4.5% increase in share, which was from a portion of that traffic. We don't think we'll fully deploy this in Q4, by the way, as we start to see where we are today and just knowing how many variants we wanna test and the limitations on our traffic, and also thinking through the end-to-end implications of deploying it. We are focusing primarily on quality, and we wanna make sure the end-to-end experience actually ties back to this freemium lineup. It's likely that it gets deployed in different phases, but we feel pretty confident where we are at this point. Thank you, Dan. Thank you. One moment for our next question. Our next question comes from Elizabeth Porter with Morgan Stanley. Your line is open. Great. Thank you so much. I had a question on the subscription units. Net adds kinda came down again. I was wondering if you could help parse out the impacts between just this overall slower new business formations and the associated attach versus churn. It sounds like the dissolution headwind may be moderating, so any sort of insight into how we should think about net subscription adds going forward would be very helpful. Thank you. Yeah. Thanks for the question, Elizabeth. Yeah, 13-month retention at this point has actually stabilized. Again, it's the relationship between dissolutions that we've now also seen stabilizing, and our churn rates are probably getting to our normalized level of even a couple years ago. What I'd say is more of the impact on our subscription business is exactly what you pointed out, which is you start to lap multiple years of either flat or down macro growth. That is the main channel for our most significant subscriptions, which are a registered agent subscription or a compliance subscription. That's just a compounding effect, and we do think that's gonna continue to be a bit of a headwind as we go into 2023. Again, it's the core subscriptions that we have are doing much better from a retention standpoint than they were last we talked. Great. Looking out ahead, Q4 guidance suggests about a 3% revenue growth exiting the year, and Street is looking at about 8% growth for fiscal 2023. I know it's probably a little bit too early for guidance, but any sort of color you could put on what we could see as potential acceleratives to revenue or some of the headwinds as we think about in 2023 would be helpful relative to that forecast. Thanks. Yeah. Thank you. Well, I think at this point we're not ready to come out with any revenue guidance for next year, and we're really, again, focused on how do we make sure we manage our expenses and how can we accelerate our customer growth. We'll be ready to do that in the next quarter for sure. Anything you'd add, Noel? No, I think we're still in our planning process. I think there's a lot that we still need to learn in the coming months here around the macro itself. Obviously, we've talked a lot about some of the initiatives that we have in place, and, you know, freemium is a big focus. Dan just talked about some of the new capabilities that the Revv transaction will bring in. We've now integrated Earth Class Mail into our formations flow. There's lots of different initiatives that we're working on that will be drivers of growth next year, but it's too early for us to really get into any specific guidance around 2023. Got it. Thank you. Thanks, Elizabeth. Thank you. One moment for our next question. Our next question comes from Matt Pfau with William Blair. Your line is open. Hey, thanks for taking my questions, guys. Wanted to ask on the increase in average subscription revenue per subscription unit, what drove that specifically? I assume a lot of that's LZ Tax, but anything else to call out? Yeah, thanks for the question, Matt. This is Noel. We've been pretty consistent for a number of quarters now, just talking about the path that we've been on with ARPU. A lot of it is LZ Tax. That's the higher average revenue per SKU, and that growing in terms of its overall share. Also, ECM kind of bringing that into the overall equation and seeing some growth there, both organically and now having it in our formations flow as well. Those are the big drivers. We did note in our remarks that we expect ARPU to continue to grow in Q4, but to sort of flatten out from an absolute dollar stand-point, sequentially. That's really one. We now have a lower price SKU in our LZ Tax lineup, that's live. It's also a bit of a quieter quarter in Q4 for LZ Tax from a revenue recognition standpoint. The integration of Earth Class Mail in our formations flow is currently at a lower price point as well. We do expect, you know, ARPU growth, but to kind of flatten sequentially in terms of the absolute dollar value. Yeah, just to build on that, the LZ Tax piece is something we talked about on the last call, where last season we did not have a good product for pre-revenue customers. We've deployed what is more of an advisory subscription for those pre-revenue customers going forward. It's a much lower price SKU, but our objective here is much more around retention and making sure that we're, you know, getting the right solution to the right customers and retaining them longer versus the higher ARPU product going forward. Great. Wanted to follow up on the share gains in business formation. You know, the premium product is not out to a majority of your traffic yet, but I assume that contributed somewhat to the share gains. Anything else you'd call out that helped you out on the share gains that you saw in the quarter? Yeah. I think that's that was a big component because we continue to test free SKUs and different variants, and some of them do very well, some of them obviously don't do all that well, and there's all different types of price points. You know, the aggregate of that gave us a little bit of a tailwind. Also our partner channel, we have some newer partners that are distributing the product through their own solutions. You know, the way that works is we have an API and any service provider can actually leverage our API and bundle a formation with their own service or product. We're seeing some uptick with that with a couple of our partners as well, which we are really quite happy with. I'd say we're more in the testing mode at this point, but we see that as a potential very large channel down the road, where any small business enabler could essentially offer our solution either through their brand or our brand in a way that's bundled with their core subscription. Those are probably the two biggest factors. Perfect. Thank you. Thanks. Thank you. One moment for our next question. Our next question is from John Byun with Jefferies. Your line is open. Hi. This is John Byun from Brent Thill. Thank you. Two questions. Maybe this might be related to the previous one, but just wanted to get an update on the Wix partnership. It looks like you said you went live, but wondering, you know, when they might have started and how that's going. Then second, on the Revv acquisition, I don't know if you could discuss more in terms of, you know, how it could show up in terms of products, whether it's bundles or distinct SKUs. If you could give more color beyond what was in the prepared remarks. Thank you. Yeah. On the Wix piece, we've been in market for about a quarter. You can actually see it within our MyLZ offering, which is where we primarily market it. The goals there are again, you know, sort of integrating as tightly as possible and leveraging as much of our data as possible to make the first use experience really strong with Wix. It's done as well as we would have expected at this point. You know, we're still in the first quarter of releasing it. We're a little bit ahead of schedule in terms of, you know, getting all the learnings that we wanted to and then starting to really scale it up, which you'll start to see in the next quarter or so. again, I think it's just indicative of a strategy that's broader, which is, you know, what are the partner solutions that our customers need right when they're forming? You know, one of the other partners that we added this quarter was NEXT Insurance, which is a great solution for helping small businesses get the insurance they need right when they start. They typically don't know exactly what type of insurance they need. Some people don't even know that they need insurance at the time of formation. This is another good example of helping them through our ecosystem and through MyLZ specifically. On the rev side, you know, how that shows up in our product is gonna be, you know, probably tested a little bit because there's a piece that's core that we already do today, which we've always had a forms library, and so this will replace and modernize it. But you'll now start to probably see it integrated with our legal subscriptions as well. Any time that we're providing any type of legal interaction with the customers, it can be an interaction that's happening through a form. That's a piece that, you know, will be integrated with the next versions of our assisted solutions. Then, you know, the final piece is eSignature. eSignature, there's multiple ways we can approach that. I mean, we can have that be a standalone subscription. You see, you know, companies like DocuSign will charge up to $15 a month for small business. We could consider that a bundled offering in some of our core subscriptions, and it could help with retention. We'll be testing lots of different ways to go to market with it, and I don't think we're ready yet to declare exactly which one is gonna win. Thank you. Thank you. Thank you. One moment for our next question. Our next question is from Stephen Ju with Credit Suisse. Your line is open. All right. Thank you. Dan, I guess to ask the freemium and the marketing spend question in another way, do you feel like with the current conversion funnel that you have in place, maybe it makes sense to lay- off paid acquisition channels, and as you refine, iterate, and hopefully and inevitably improve conversion rates, then maybe you can think about playing a greater level of offense. I guess, do you think this is an appropriate strategy for all of your legal products or only a sub-set? Thanks. Okay. Yeah. On the first one, I think you're right over the target of what we're trying to do. I mean, we know that we've had an over-reliance on marketing, you know, as we caught all this COVID traffic and there was so much demand, and yet our product wasn't necessarily ready for that demand. You know, now that we've done the infrastructure work, we've automated a lot of the orders, and we have the ability to go out to market with a lower cost product, we think of that almost as a trade-off to the marketing spend that we used to have. I anticipate this will bring down the marketing spend considerably. I think what we're trying to do is show a conversion improvement that even can offset, you know, the AOV. Like, we're trying to get this to be a model that's, you know, highly optimized, more product-driven and less dependent on our marketing spend. On the second question, when you're asking can it apply to the new lineup and other formations and products, are you saying the freemium model? Yes. Okay. Yeah. I mean, I think free plays a role in almost every product and, you know, most business models do have like some offering, which, you know, is a sort of a lower cost entry point offering. When we start to think about things like, you know, getting access to an attorney or an accountant as an example, there are ways to consider that being a benefit to conversion and then building a relationship and then over time, you know, augmenting that relationship with more of a paid one or transactional if it's a return or if it's, you know, some transaction you're doing that's from a legal perspective. The first step, though, is proving it out on our core product. I mean, we're really, you know, singularly focused on making, you know, the changes that we are to our formations lineup. There's no reason that it couldn't be expanded into other parts of our product portfolio. Gotcha. As a follow-up then, I mean, your top of funnel should significantly expand with a free version of a product out there, and that will be. That's right. The gateway drug for lack of a better term for it. Yeah. Well, I think the key thing too is all of our freemium testing to date has been sort of in our product experience. It has not been, you know, aggressively testing the top of the funnel messaging. You know, the moment that we, you know, get the lineup optimized for free is the moment that you'll start to see us really focus on making this more ubiquitous, and starting to, you know, help people understand that this is a great alternative to both the Secretary of State directly or to going to an attorney or even going to an accountant when we start talking about things like, you know, tax advice and having advisory services and making that lower cost as a starting point into the eco-system. You know, free is a really important strategy. We feel like it can be ubiquitous. We feel like it's just another cost of acquisition, but probably a more effective one. You know, we're thinking about how do we trade that off from our TAM spend. One last thing I'll say, too, is, you know, the way this all comes together too is through MyLZ. And again, you'll start to see a pretty significant acceleration in development in MyLZ. The more services that we offer and the more that we help customers understand that that's where they go to understand, you know, their formation process, the more touches we have with the customer, the more likely we are to continue to build the relationship and extend it. That's a part of the product experience that never existed before. You know, now we're starting to really make momentum. Things like LZ Tax is gonna be provided through that experience. You know, you can schedule an attorney appointment through that experience. You can see your virtual mail. You can get your documents. You can do e-signature and know that someone's read that document and is signing it. All of that kinda comes back to this ongoing engagement that we're trying to drive, which should help all of the subscriptions with retention over time. Thank you. Thank you, Stephen. Thank you. One moment for our next question. Our question comes from Jackson Ader with MoffettNathanson. Your line is open. Great. Thanks for taking my questions, guys. The first one is on the if you think about share gains and the macro environment, is there any kind of macro- environment in 2023 where, you know, you feel like LegalZoom would be licking its chops in terms of share gains, where if things actually get worse, you would expect LegalZoom to really do better or vice versa that we should be thinking about? Thanks for the question, Jackson. I do think the worse the macro gets, probably the better we're doing relative to our competition. You know, that doesn't necessarily mean it would translate into better performance in an absolute basis. I do think there is that relationship because you know, starting with a really strong balance sheet, being cash flow generative, you know, having the brand that we you know is already well understood and known, where we don't have to pay for that awareness, I think is a real differentiator, especially with our competitive set that's a little bit has almost no brand awareness. A lot of it is VC-funded, you know, and I think the environment is changing pretty dramatically for those types of alternatives. In a really strong environment, though, I think we, you know, still have really strong share gains, especially if we're able to deploy, you know, a competitive offering on the free side, where our competition doesn't have the ecosystem that they can offer along it. We can still pay to acquire customers in a free solution because we have LZ Tax, you know, because we have a legal service that we can attach, because we have e-signature now, because we have Virtual Mail. I mean, there's lots of different products that we own directly, whereas most of our competitive set, you know, they sort of partner for those different things and get more bumpy relationships. I think in either environment, we look pretty good. It's just on an absolute basis, you know, we're gonna look a lot better in a healthy macro. In a negative macro, we'll probably get more and more share. Okay. All right. That makes sense. A quick follow-up on the LZ Tax side. The shift in SKUs going a little bit down in price, you know, is any of that in either a response to increased competition in the space, or does it signal something about how, you know, you guys are thinking about differentiating yourselves in that kind of increased competitive market? Not really. I mean, this is more about the uniqueness of our channel. We're getting businesses before they have revenue, and they have no tax filing need. In our prior lineup, they would've had to have bought a tax filing SKU that came with tax advisory. What we discovered is we had a high degree of people attrite within the first 60 days, which is a refund period, because they got the advice they wanted, and they didn't really expect to file. This is more of a reaction to what we observed and learned from our customers and tuning very specific to what I think is an incredible channel, by the way. You know, if you think about most tax providers, they have a sprint where they're trying to acquire a customer in a very narrow window of dates. In our case, like, we are building a relationship the moment that a business forms by providing them the tax advice that's gonna help them set up their company properly, which then gives us an entry into a longer relationship over time. Really not a competitive response type thing. We believe we're also lower priced than where most people go, which is their neighborhood accountant. You know, in some ways, it's still very disruptive. Okay. Makes a ton of sense. Thank you. Thanks, Jackson. I'm showing no further questions at this time. This concludes today's conference call. Thank you all for participating. You may now disconnect.