Good day and welcome to the LegalZoom fourth quarter and full year 2023 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, you will need to press star one one on your telephone. You will then hear an audible message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Madeleine Crane, Head of Investor Relations. Please go ahead. Thank you, operator. Welcome to LegalZoom's fourth quarter and full year 2023 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. 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 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. 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 measures are set forth in the Investor Relations section of our website at investors.legalzoom.com. I will now turn the call over to Dan. Good afternoon, everyone, and thanks for joining our call. 2023 was a pivotal and productive year at LegalZoom. We deployed a new freemium lineup, built out multiple new subscription offerings, and created a unified post-formation experience. All of these accomplishments put us in a strong position as we enter 2024, and I'm excited to share the progress we continue to make against our strategy. But first, I'd like to recap the financial performance for the year, starting with Q4 results. In Q4, revenue came in at $159 million, up 8% year-over-year. Subscription revenue grew 17% and accounted for over 2/3 of the quarter's revenue. adjusted EBITDA for the period was $33 million, reaching a 21% margin. Formations, as measured by Census data, grew 9% in Q4. Largely as a result of terminating multiple partnerships and our decision to restructure our sales organization at the end of Q3, our total formations declined 2% year-over-year. LLC units sold directly, where our freemium lineup is in market, grew slightly faster than the macro. We have now substantially lapped the impact of the new lineup rollout. For the full year of 2023, we delivered the following business results. Revenue was $661 million, or a 7% increase year-over-year. Subscription revenue grew to $413 million, which represents growth of 15% for the year. Full-year adjusted EBITDA increased 86% to $119 million, reaching an 18% margin. The macro remained healthy throughout the year, with Census formations up 8% year-over-year. In 2023, our business formations grew 23%, driving 14% share growth for the year. LegalZoom branded LLC growth was 29% for the year, over three times faster than the macro. Taking an even longer view of this business from 2019 when I joined at the end of the year, we've seen the formations' macro grow at a 12% compounded annual growth rate, while we've had a CAGR for LegalZoom formations of 19%. During this time, the number of businesses that have formed with us annually has doubled to almost 600,000. Equally important, our mix of subscriptions has increased from 51% to 62% of total revenue. Even though we believe very much in the long-term strength of this macro, our goal is to grow independent of it. Shifting more revenue to subscriptions is the most critical strategy to achieve this dislocation. As a result of this shift and continued formations growth, we've been able to grow our subscription revenue by a 19% CAGR since 2019. We've been steadily recasting LegalZoom as a more modern software player in the legal, compliance, and now financial space. When I joined, we focused on bringing the right team. As we built out the broader organization, we invested heavily in infrastructure to enable more product velocity. Modernizing our infrastructure has allowed us to drive better order efficiency, which in turn enabled the launch of our freemium lineup. We committed to being more product-led and less dependent on marketing spend, and we clearly delivered against that objective, reducing our sales and marketing costs by 20% last year while still increasing our SMB product sessions by 25%. This focus is what helped us to achieve a dual goal: step function increases in both share and profitability in 2023. As we delivered this new core lineup and increased efficiencies, we also invested heavily in building out eSignature, Books, and business licenses into a completely redesigned MyLZ experience. We also released our AI-powered legal form summary tool, Doc Assist. We fully revamped our Legal Forms Library, and we set the foundation for a reimagined legal expert experience. We ended the year by launching a new compliance service, LegalZoom's Beneficial Ownership Information Report, or BOIR. This product helps customers satisfy the federally mandated reporting rules under the Corporate Transparency Act, which went into effect on January 1st of this year. This is a new federal compliance requirement by the Financial Crimes Enforcement Network, also known as FinCEN. This compliance requirement will impact roughly 90% of all business entities. Failure to comply with this new law can result in civil and criminal penalties. It's another example of how dynamic the compliance environment is in the U.S. We were one of the first to market with a solution, with presales of BOIR service launching in early December. To reinforce our position as a customer's trusted partner for legal and compliance matters, we've included the entitlement for existing Total Compliance subscribers. We're also marketing this service to our remaining customer base and net new customers engaged with LegalZoom for the first time as a result of this compliance requirement. We expect BOIR to be a contributor to our transaction units and revenue in 2024, but that contribution will be somewhat muted as we include it for free with our most highly engaged subscribers. As we look forward to 2024, as we've done each year since going public, we're establishing an additional area of focus for the new year. While we're still laser-focused on gaining share, in 2024, we're putting more emphasis on growing the lifetime value across our base of active customers. We now have all the tools to enable better commercialization of our formation-adjacent offerings and to better monetize our existing base post-formation. While we do expect to rebuild share as we lap our partner exits in the back half of 2024, our plan is to balance share gains with stronger revenue per customer. Let's now turn to an update on progress against our strategy, beginning with the first strategic pillar, scale the business. At the core of what we do, efficiently processing government filings is our most critical priority. Our investments in automation allowed us to process a material number of SMB orders in 2023 without any agent interaction. The main beneficiary is our customers, as their orders are fulfilled quicker. In parallel, we continue to introduce integrated support through chat. The combination of both of these investments has meant that in 2023, we had a nearly 40% year-over-year decrease in voice contacts per order while increasing our customer care Net Promoter Score. Put another way, our variable costs per SMB order dropped by over 20% in the year. We're still mid-course in our investment in the fulfillment experience and have expectations for higher efficiencies in 2024. Separately, we continue to actively test our lineup. Over 60% of our base is now choosing the free formation package as part of their initial purchase. This has led to a 14% share growth in 2023, slightly below our goal for the year but a significant improvement. While we're pleased with this step function improvement, our share growth was impacted by the previously communicated partnership exits in the back half of 2023, a headwind that will continue in the first half of 2024. As a result, we expect full-year market share in 2024 to be slightly lower than full-year 2023, with the back half of the year returning to year-over-year growth. We still have opportunities to improve our formations lineup, the adjacent services we market, and the mobile experience for our free customers. You should expect to see the free lineup deviate from our premium SKUs over the next couple of quarters, along with a more significant mobile experience improvement that will benefit all our customers, but disproportionately free traffic as free prospects skew more mobile. We have one additional priority under the strategy of scaling the core. Since 2021 and post the COVID spike, our estate planning business has declined approximately 20%, which has been a background headwind to our overall growth. The consumer space hasn't been an area of focus given limited resources and significant investment opportunities in small business. But as we continue to build out our team and increase our infrastructure investments, we now have resources to invest in our consumer business. Many of the investments in fulfillment and modernizing our questionnaire technology are directly applicable to reimagining our consumer products. While we haven't talked a lot about it over the past years, we remain a leading player in the consumer legal space, with the tip of the spear being estate planning. There will be more to talk about here in the coming quarters and also as I unpack our expert strategy in a few minutes. We're excited about the opportunities for growth in both business formations and estate planning, with the combination of these markets representing a refreshed serviceable addressable market of approximately $13 billion. Turning to our second key pillar, build the ecosystem, where our serviceable addressable market is approximately $15 billion. Today, our registered agent and compliance offerings represent approximately 2/3 of our subscription revenue. Registered agents and compliance are core needs for our customers when they form, and we continue to experience healthy attach and stable retention rates. We're focused on providing superior compliance products and experiences for our customers in order to drive further growth and retention. Roughly four months after including LZ Books in our LLC formations flow, we have over 7,500 paid subscribers. As our channel is proving to be healthy, our team is focusing on driving active use as soon as our customers become operational. Most importantly, we continue to innovate in LZ Books. In the quarter, we focused on tools to promote the benefit of combining LZ Books with LZ Tax. In January, we added a Tax Center in LZ Books to promote our tax expertise. The LZ Books Tax Center includes estimated tax calculations, an easy-to-digest view of Schedule C deductions, and a tax savings widget that allows our customers to see the value LZ Books has provided. In addition, LZ Books customers who are subscribed to LZ Tax are provided a seamless one-click experience to share their data with their LZ Tax expert. We've seen overall engagement with LZ Books increase following the rollout of our tax prep campaign, with active subscriber engagement growing 17% from October to January. Even though we just launched Books in our LLC formations flow at the end of 2023, of the Tax customers that have begun the filing process this season, over 10% are using our Books product. This past year, we launched a lot of new products, and we now have the ability to grow with our customers. We know that many of our customers form before they're operational, and their needs continue to evolve with time. Historically, we've had to introduce all of our services in the formation flow because there wasn't a post-formation experience. This year, we'll be focusing on post-formation engagement, commercialization, and monetization opportunities with the goal of expanding the lifetime value of our customers. Today, an immaterial amount of revenue comes from products that are attached after the formation. We're seeing continued growth in MyLZ engagement as we direct more of our activities to the platform. Since the beginning of 2023, we've seen a 40% increase in returning users, with over 75% of active users continuing to visit the site 30 days after their initial formation. Over the past year, we've built the infrastructure that enables a business profile. This profile is the foundation of better segmentation, more effective targeting, and faster questionnaire completion. It's also a key component of an omnichannel marketing strategy with higher value opportunities addressed through sales and lower value solutions targeted through self-directed channels like MyLZ. Finally, a key focus for us in the coming year will be setting the foundation for the cross-sell of our expert services. While it's still very early, we believe many of our existing products like LZ Books, Doc Assist, and our Legal Forms Library are natural entry points to discover our higher value tax and expert services. Which brings us to our final strategic pillar, integrate experts. Today, we are well into the third season of our LZ Tax offering, and while we are mid-course in adjusting our go-to-market strategy, we're excited about where this product and business is headed. As a reminder, late last summer, we announced a reset of our LZ Tax strategy in order to better target and retain Tax customers. While we expect these changes will result in a four-point headwind to subscription revenue growth in fiscal year 2024, we believe it was the best course of action for the long-term trajectory of this business. We expect Tax to be accretive to our overall subscription growth in 2025. Since adjusting our attached strategy in Tax, we've realigned our sales effort and made significant product and service enhancements based on our learnings from prior seasons. Our new tax experience includes a simplified tax prep process, clear progress tracking, matching to a dedicated tax preparer and reviewer, and the ability to communicate with these experts quickly and directly via chat within MyLZ. While we plan to provide more details in our LZ Tax season during our Q1 earnings call, initial feedback from our customers has been very positive. Our CPAs are also very happy with the changes as we now have the complete process from onboarding up to filing on our own platform. While this practice management platform is currently being used by our tax experts, it is also designed and built with our legal experts in mind. Over time, this platform will be used by our attorney network to efficiently and seamlessly collaborate with our legal plan customers. Importantly, we believe this can also help us extend beyond the existing services we offer today. We continue to build a strong network of attorneys, invest in our own law firm in Arizona, build and evolve our AI tools, and make critical platform infrastructure improvements. The combination will enable us to surface important legal insights and link our customers to experts. Through this new platform, attorneys will become increasingly efficient in performing their work, with the goal being to bring down the expert costs and begin to standardize the experience of working with an attorney. Equally important, all the capabilities we built will also allow us to expand into other legal matters. The expert opportunity is our largest, representing a $23 billion serviceable addressable market, and we look to make meaningful progress against it in 2024. Democratizing law is a cornerstone of LegalZoom's foundation in history, and we look forward to continuing to innovate on affordable, tech-enabled legal services. I'm excited about the progress we continue to make across each of our strategic pillars and the opportunities ahead of us that will drive growth in every area of our business. The great strides we are taking in our business are powered by the hard work, creativity, and innovation throughout our entire organization. I'd like to thank all of our LegalZoom employees for our successful 2023. I'd also like to specifically thank Rich Preece, our Chief Operating Officer, for his leadership and his significant contributions to LegalZoom since joining the company with me in 2019. As you may have seen in the 8-K filed earlier this afternoon, Rich is transitioning from LegalZoom at the end of March. We wish Rich the best in his future pursuits. With that, let me turn the call over to Noel. Thanks, Dan, and good afternoon, everyone. We had a strong fourth quarter with both revenue and adjusted EBITDA exceeding our expectations. Before I share details on the quarter, as well as guidance for Q1 in the full year 2024, I'd like to reflect on the strong execution of our team. The investments in our infrastructure are paying off as we experience ongoing efficiency improvements in many areas of our business. Today, we are only halfway through our roadmap of investments in technology and automation, which we expect will support continued margin enhancement in the years ahead. Next, our product delivery. We rolled out a record number of products and services in 2023, providing many new opportunities for commercialization. Finally, we successfully executed a new business strategy and have experienced stable customer retention during this transition. The results of these efforts are evident in our latest financial performance and support our expectations to deliver both revenue growth and increased profitability in 2024. I'll now shift to provide additional details on our results for the quarter. Please know all comparisons will be on a year-over-year basis unless otherwise stated. As announced last quarter, we are no longer reporting partnership revenue as a standalone item. Beginning this quarter, partnership revenue has been incorporated into our transaction and subscription revenue line items. All prior period comparisons in my remarks today also reflect this change. Please refer to the supplemental presentation posted on our investor relations website for more details. Total revenue was $159 million for the quarter, or up 8%. We completed 113,000 business formations in Q4, down 2%. Our market share of business formations was 9.7%, down sequentially and year-over-year. While we continue to see growth in our LLC formation product, headwinds from exiting certain partner channel relationships and the impact from our sales reorganization drove the formation and market share declines. Transaction revenue was $52 million, down 6%, driven by an 8% decline in average order value, partially offset by a 2% increase in transaction units. We recorded 215,000 transaction units in the quarter. The 2% increase was a result of strength in LLC formations and other SMB products such as annual reports, offset by lower consumer transactions and the impact from partnership exits. Average order value was $242 for the quarter, down 8%, due to our lower price lineup and an increasing mix of our lower price formation and non-formation business transaction products. We expect AOV to decline in the mid-single digits in Q1 2024, with some choppiness in AOV trends in the following quarters as we lap the impact of partnership exits and BOIR timing, where we expect to see higher order volumes in Q1 and even more so in Q4. For the full year, we expect this will translate into a low single-digit decline in AOV compared to the full year 2023. Subscription revenue was $107 million in the fourth quarter, up 17% due to continued growth in our subscription unit base and ARPU expansion. Subscription revenue outperformed our expectations, driven primarily by retention improvements in our compliance subscriptions. We ended the quarter with over 1.5 million subscription units, up 7%, and continued strength in core compliance, where growth was partially offset by the impact from the exit of legacy partner relationships. We also saw strength in our Virtual Mail and Forms and eSignature subscriptions. Excluding the contribution from partner channel units, our subscription units increased 14% year-over-year in Q4. Our 2024 subscription units will be impacted by the continued rolloff of approximately 100,000 units from our partner channel exits, which will result in low single-digit year-over-year growth in subscription units in the first half of the year. We expect sequential improvement in subscription unit growth in the back half of the year. ARPU came in at $277 for the quarter, up 7%, driven by the transition of lower-priced partner channel subscriptions. Turning to expenses and margins, where all of the following metrics are on a non-GAAP basis. Fourth quarter gross margin was 68% compared to 70% in Q4 2022. The year-over-year decrease was driven by higher filing fees as a percentage of revenue, as California reinstated filing fees in the third quarter of last year following a 12-month pause. Looking ahead in Q1 2024, we expect to see a similar year-over-year decline in gross margins due to the aforementioned impact of reinstated California filing fees. For the full year, we expect our gross margin to be relatively stable versus 2023, with margin improvements in our core business continuing to be offset by lower gross margin services such as Virtual Mail and LZ Tax. Sales and marketing costs were $43 million in the quarter, or 27% of revenue, down 4 percentage points from last year. Customer acquisition marketing costs were down sequentially due to seasonality, but up by $1 million or 4% from the same time last year. Non-CAM sales and marketing expense was down $4 million, or 27%, as a result of ongoing efficiencies we have implemented in our marketing strategy, as well as the impact from the reorganization of our sales team. We expect total sales and marketing costs to remain relatively flat in 2024, as we fully realize the benefits from the sales reorganization, which translates to approximately $8 million of savings for the year. These savings will be more than offset by an increase in CAM, including higher levels of brand spend as we look to optimize our mix of brand and performance spend. Technology and development costs were $16 million, up $2 million or 14%, as we invest in product and engineering talent. Looking ahead, we expect full-year technology and development expenses to grow at a slightly accelerated rate versus 2023, as we shift further into a product-led growth organization. General and administrative expenses were $15 million, or down 5%. We expect a modest increase in G&A expenses in 2024 as we remain committed to expense discipline. Our strong performance in the fourth quarter resulted in $33 million of adjusted EBITDA, or a 21% margin, compared to $27 million of adjusted EBITDA and a margin of 18% the same time last year. Deferred revenue decreased by $9 million in the quarter. As of December 31st, 2023, our cash and cash equivalents were $226 million. We had no debt outstanding and no outstanding borrowings under our $150 million revolving credit facility. We did not repurchase any shares in the fourth quarter under our existing $100 million share repurchase program. For the full year 2023, we repurchased approximately 5.9 million shares for a total of $55 million, or an average cost of $9.35 per share, which represents a reduction of approximately 3% of our prior year fully diluted share count. Subsequent to year-end, we have been active in our share repurchase program, and we plan to continue to opportunistically repurchase shares of our common stock as part of our balanced approach to capital allocation. Our 2024 capital allocation priorities remain consistent. We will first prioritize organic investments in the business, followed by strategic acquisitions, and lastly, stockholder returns via repurchases of our common stock. Our strong cash position enables us the flexibility to execute against all three of these priorities simultaneously. I will now provide guidance for the first quarter and full year of 2024. For the first quarter of 2024, we expect total revenue of $172 million-$176 million, or 5% year-over-year growth at the midpoint. We expect first quarter adjusted EBITDA of $25 million-$27 million, or a 15% margin at the midpoint. For the full year 2024, we expect total revenue of $700 million-$720 million, or 7% year-over-year growth at the midpoint. This includes the following drivers: a four-point headwind to subscription revenue growth from the shift in our LZ Tax strategy, which is more pronounced in the first half of the year. The rolloff of approximately 100,000 subscription units from the wind-down of certain partner channel relationships, which will also be more pronounced in the first half of the year. We expect the rolloff to be fully completed by the end of 2024. We are also projecting a slower macro Census EIN growth relative to the 8% growth we experienced in 2023. Our guidance philosophy continues to incorporate current quarter trends and conservatism in the following quarters. Based on the trends we are seeing today, we expect low single-digit growth in formations macro in Q1. For the full year, we currently expect flat to low single-digit growth in the formations macro, which translates into some deterioration versus Q1 levels for the remainder of the year. As a reminder, the macro showed strong acceleration in the back half of 2023, creating a more challenging comparison. We expect full-year adjusted EBITDA of $135 million-$145 million, or a 20% margin at the midpoint. With that, let's please open up the call for questions. Thank you. At this time, we'll conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment for our first question. Our first question comes from Ron Josey with Citi. Your line is open. Hey, guys. This is Jake o n for Ron. Thanks for taking the question. I wanted to ask about the bundling, test-and-iterate approach that you guys took in 4Q. What were your top learnings regarding your pricing lineup? Any plans there to make pricing or bundling changes more permanent? And then second was really more on mobile app optimization. I wanted to just get a sense for any progress you've made optimizing mobile for the freemium approach and the opportunity there. Thanks so much. Great. Thanks for the question, Jake. Yeah, on the first point on testing, we've been pretty clear that that's an ongoing effort that we'll have. And really, if you think about what's happened over the last year, a portion of our customers and the majority of our customers are coming in through our free SKUs, which changes some of the behavior around some of the subscriptions that we also market within the formations flow. And so we've done lots of different tests. Just to remind you, the goals of those tests, we kind of look at it as a one-year bookings or a one-year return. We always lean towards the mix of subscriptions if all other things are neutral. We also prefer to have more customers coming into our ecosystem because we feel confident that over time, we're going to get better and better at post-formation monetization. If you step back, it's sort of the rubric we have is that we want the transactional costs upfront to be as low as possible to get that mixed to subscription. The more we have success in the post-formation monetization side, the more it just feeds that flywheel and allows us to take less upfront pricing from our customers. So most of the testing that we do is sort of aligned with that strategy. We learn something every single time we do one of these tests, and we'll continue to do it. But there's nothing to announce about what we're changing. And we also are in a competitive environment, so we don't like to flag exactly what we're going to change in the upcoming quarters. Mobile is a huge focus for us. Roughly half of our sessions today that come in, the traffic with prospects, is through mobile. It converts about 1/3 of what our desktop does. So right off the bat, you know that there's an opportunity there. That's also a place where, as you continue to increase the free messaging, you see the mix increase as well in terms of the prospects that come in through mobile. And so that's a place where you will see us doing multiple things starting in the next quarter, where I think you'll see a new experience around mobile from us that is really addressing some of the concerns we have around conversion. One moment for our next question. Our next question comes from Andrew Boone with JMP Securities. Your line is open. Thanks so much for taking my questions. I wanted to go back to business formations and your guys' thoughts on 2024. It's a little bit hard to parse thinking about share gains. Understood, branded LZ is taking share. But how do we think about share gains for 2024 and how you guys are thinking about that? And then the Beneficial Ownership Report seems like a significant opportunity. I think you guys said 90% plus of U.S. businesses are available now for this report. Can you just help us understand the size of this opportunity and how you guys are approaching it in 2024 and when exactly this should start to hit the model? Is it more of a 4Q thing, or should it roll through the year? Thanks so much. Yeah, thanks for the questions, Andrew. Yeah, on the market share side, there are a lot of moving parts here. Just to say it one more time, the partnership exits are really making that a little bit more cloudy, as well as us making structural changes in our sales organization. In the near term, as we think about the first half of next year, we expect the overall number to be lower than it was in the prior year. What we start to see at the end of the year, though, is we'll start to see a rebuilding of the share gains as more of the mix and the compares are right against our direct business. So that's something that I think, over time, it's going to right itself. We expect to exit the year from a standpoint of our direct channel up year-over-year on share, albeit slightly. I think the thing that we continue to do, though, is we balance monetization. I mean, if you were to go back thematically and think about last year, we specifically provided share goals partially because we were also providing profitability goals. We wanted people to understand that this was not just about profitability, but it was about customer growth. Now that we've got a much larger base of customers, we're starting to think more and more about monetization and also just deviating the base of customers into free customers who are highly price-sensitive. But we still have a lot of premium customers as well. So we want to focus our energy there as well. So there's a lot of things to consider here, especially as that customer count gets larger over time. It compounds when we think about new products, which also dovetails with your question maybe on BOIR. So BOIR is a really interesting opportunity. We very purposely included entitlement to this offering with our existing compliance customers. We felt like if you have a subscription called Total Compliance and someone's previously bought it, that it should include entitlement to new compliance requirements that are coming out. And so that is something that actually mutes the opportunity a little bit. But we also feel like it's an opportunity to acquire new customers into our franchise. And we still have other customers who don't subscribe to the compliance bundle. So this gives us an opportunity to either upsell them into that bundle or help them just specifically with this one compliance requirement. Now, the interesting thing here is this is a brand new requirement, and the rollout is going relatively slow with intent. I think at this point, they've said that they've got about 500,000 customers who have complied with the requirement. Our expectation is that it'll be heavily backloaded, that it's most likely that most of these customers come in at the fourth quarter when you start to see the requirement probably being messaged more aggressively by FinCEN. And again, we're trying to get as many of our customers compliant as soon as possible. The requirement also for new formations is 90 days post-formation for those that have formed in 2024. So you'll see it integrated into our lineup as well. So there's a lot of moving parts there. I will say that we have a pretty modest expectation for this year because of all those moving parts. But that could be a place where we surprise ourselves a little bit. Thank you. One moment for our next question. Our next question comes from Matt Pfau with William Blair. Your line is open. Hey, great. Wanted to perhaps follow up on that last question a little bit. Maybe just help us understand why it's a trade-off between focusing on LTV and then market share gains. Does it have to do with how you allocate marketing dollars, or what's sort of behind that? It's really customer behavior. I mean, what we see from our customers, especially in their initial purchase, that the more we bundle into the initial purchase, the lower the conversion rate. So it's not that people start to drop things out of the cart, but they actually leave the cart entirely and probably start to consider other alternatives. Because what you have to remember is most people who are forming a business don't fully understand what the suite of products and services they need to stay compliant as an entity are. And through that discovery process, you see some businesses fall off. So the concern is primarily just on that initial cart purchase. The opportunity is if we can get that cart size down and bring our customer base up and increase the size of the customer base, we can actually monetize them post-formation. So a lot of our investment over the last couple of years, both in terms of creating new subscriptions but also creating this cohesive experience in MyLZ, it's all centered on the idea that you don't need to buy all these things the moment that you're forming your entity. Historically, we have done that because that's been the place where we've had their attention. But now we're starting to shift that into the post-formation experience, which is really a very large opportunity for us over the long term. Something that we're still really early stages into, and we have a fair amount of resources invested and dedicated to enhancing that experience, which is an important opportunity for us. Some in this year, but even more meaningful as we look into 2025 and beyond. Got it. It makes sense. And then, Noel, can you give us any directional guidance for how to think about the split between transaction and subscription revenue growth for 2024? Yeah, I would say that we continue to focus on where we can, driving, as Dan was speaking to, the shift from transaction into subscription. I think on the subscription side, obviously, as we've indicated the last couple of quarters, LZ Tax is going to be a headwind for us in 2024, particularly in the first half of the year. So we'll see some of that headwind. And we gave you in the prepared remarks some specifics around it's a four-point headwind on subscription growth alone. So we'll see some moderation there. And then the transaction side is going to be largely a function of our combination of the macro, our ability to take share, and all of the commercialization testing that we're doing, incorporating new products into the lineup, testing cart size, and balancing conversion with pushing customers into subscription. Got it. Thank you. Appreciate it. One moment for our next question. Our next question comes from Brent Thill with Jefferies. Your line is open. Hi, thank you. This is John Byun for Brent Thill. I have two questions. One on macro, not really referring to formations, but just in SMB health and behavior. I wanted to see what you're seeing from your base. And then second, you've launched a lot of new products in 2023. Just wanted to see, how would you say the early response is among the most meaningful ones? And which one is the most exciting of those products for 2024? Thank you. Yeah, thanks for the questions, John. The macro, it's interesting. Coming out of last year where we saw the macro grow 8%, we're entering this year a little bit more cautiously. Year to date, we're sort of looking at very low single digits right now in terms of growth. But one of the interesting things that we always see is when the calendar flips, there's some volatility. And so we're not necessarily calling a weak macro, but we're just always planning for a weaker macro because we feel like that's the right way to approach resource allocation and just thinking through how we can be responsive depending on what's happening in the environment. In Q4, we were a little bit surprised by the strength and retention across a lot of our subscriptions, which would point to some nice health in small business. And then it was also interesting because we saw elevated dissolution as well. So I'd say it's a pretty muddled market and macro at this point. But we're ready for whatever direction it turns. And we don't have significant expectations around the macro for this year in terms of our guide. On your second question on how new product launches are going, what are we excited about? I mean, I'd call it a couple different things here. I mean, obviously, Books and Tax is sort of a I think of it as peanut butter and jelly. I mean, we were out with Tax before. But the reality is most of the customers who come into our ecosystem, they actually want to get tax insights first. And oftentimes, they have that need well before they have the actual tax filing requirement. Books is really that product that helps give them a sense of how they're doing from a tax perspective as a brand new business and helps them get organized and think about managing their business appropriately as a brand new small business. I'd say business licenses is just core to what we're doing as a sort of a compliance-related ecosystem. That one, you'll see some new releases coming out probably in the next quarter that I think will provide a little bit more clarity about how we're approaching that from a go-to-market standpoint. Probably the biggest opportunity that we don't talk a lot about is the consumer space and also becoming a platform for people to interact with attorneys. And so a lot of the things that we've done on the small business side are absolutely analogous to what we need to do on the consumer side, as well as what we need to do from a platform perspective to provide experts to our small businesses in a really low-cost, efficient way. And so you'll start to see some of those things coming out in the next couple of quarters as well. So we have a lot on the docket. One of the exciting things is the velocity that we had at the back half of last year is continuing through the beginning of this year. Great. Thanks very much. One moment for our next question. Our next question comes from Elizabeth Porter with Morgan Stanley. Your line is open. Great. Thank you very much. I just wanted to ask on the investment that you're making in additional channels after cutting back on some of the direct sales heads. You noticed some increased CAM into 2024. So I just wanted to double-click on kind of a strategy there where you're looking to make other investments in customer acquisition and where you see the biggest opportunity. Thank you. Yeah, thanks for the question, Elizabeth. We've been a little bit centered on performance marketing over the last year. Coming out of 2021 and 2022 where we had heavy brand investments, at this point, we now have our model pretty well-tuned against premium. I think we're starting to branch out into channels like social and video. But also, we'll do a lighter brand investment as well. The brand investment this time will be much more actionable because, again, the model to convert is kind of tuned against those different customers that we're trying to reach. I'd also say I just want to call out, while we restructured the sales team, we also believe that that's going to be an opportunity as we start to go through the year because this is where we now have a better view of our customers and segmentation. We're building propensity models. We have a multi-channel approach, including MyLZ, which can now do dynamic targeting for our customers, but also the high-value customers moving more towards just specifically in sales so we can do it a little bit more efficiently than we've done historically. I'd say we're moving much more into an omnichannel strategy but still heavily reflexive and being able to respond quickly with performance marketing as well at the core. Great. And then just as a follow-up, I believe initially, you expected subscription revenue growth to slow in Q4 due to the change in commercial strategy with LZ Tax. But we actually got a nice acceleration in growth in that segment. So what surprised you in the quarter? I know you mentioned good retention. But was there anything else to call out there? Thanks. Yeah. So we were really happy with our revenue performance in the quarter, in particular on the subscription side. And we saw the strength across multiple products in the quarter, really, Elizabeth, and Virtual Mail, LZ Tax a bit as well, but primarily in our core compliance subscriptions where we saw really improved retention that exceeded our expectations for the quarter and allowed us to outperform the guide that we had set for Q4. Great. Thank you. One moment for our next question. Our next question comes from Ella Smith with JPMC. Your line is open. Hi. Thank you so much for taking my question. My first question is, I think you called out 7,500 LZ Books subscribers. I was hoping you could either qualitatively or quantitatively profile those subscribers. For example, had most of them used LZ before? And are they cross-attaching any other products? Thanks. Yeah. So the data point there is the 7,500 subscribers for LZ Books. And they're all coming from our ecosystem. So we really didn't deploy initially, we deployed this just through MyLZ. And so it was cross-sold post-formation. And then as we proved out the experience and started to get customer feedback, we decided to put it also into our formation flow, which we really did right at the end of October. And we've seen strong attach. I think the things that we're looking for right now is good activation. Our customers oftentimes come in before they're operational and purchase things. And then they need to sort of have the income or the expenses before they start to use the products. And so we have a lot of activities decked against that. And we're also really watching the upsell motion into Tax, especially with tax season right now going on. So that's where I think we get really excited. As you are going through your taxes, if you use LZ Tax, I mean, it's a single click to upload all your data directly in it. And then also, as you finish taxes, if you didn't have a way to organize your books, it's a very simple cross-sell back the other direction to introduce you to LZ Books. And so it's really custom-built as a single platform that works all the way across from just managing your expenses and connecting your banks and sending invoices all the way through to filing. Got it. That's very helpful. Thank you. For a quick follow-up, I am curious. When thinking about the restructuring changes in your sales operations, which you've enacted in the past few years, what are the biggest key changes now and moving forward versus what we've seen at LegalZoom in the past? Yeah. I mean, historically, because we didn't have a great view of our customer, we contacted just about all of our customers through sales. And it'd start in we would do an abandoner program. We would do onboarding. And then we would do continuous cross-sell depending on sometimes seasonal needs like Tax. And it's a pretty inefficient motion, right? If you think about that, that's indiscriminate. So we're marketing to you in the formations flow. We're marketing to you in email. And we're calling you as well, which there are a segment of our customers that are extremely high value that we can identify now. And we have propensity models that we're building so that we're only targeting those customers with a very consultative sales experience that's much more tailor-made to them and then driving the other customers towards our lower-cost self-directed channels like email and My LZ. So I would say that we're moving from more blunt force into a much more scientific approach to how we market to our customers. One thing just to reiterate, I think Dan said it earlier, but we're actively managing our reinvestment in sales headcount. We have a targeted ROI. If we are able to exceed that ROI, then we will continue to invest in that organization. That would have an impact on our top line versus our plan as well. Great. Thank you so much. Thanks, Ella. Thank you. There are no further questions at this time. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.