Hello, welcome everyone. My name is John Byun. I'm on the Jefferies Software team, with Brent Thill. Today, we're very happy to have LegalZoom here. We have Dan Wernikoff, CEO. He's been CEO for 4.5 years, and Noel Watson, CFO, I think 3.5 years, right around the time of the IPO. We've known Dan for quite a long time, from his days at Intuit. Brought a lot of lessons from there as well here as replicating some of that. Noel's been also at TrueCar and Tripadvisor, so familiar names. We'll start off first with a high-level questions. And so I think for a lot of people that are new to the LZ story, you know, I think the initial perception is that, you know, most of what you do is business formations. And I think if you dig in, you can see that your portfolio has really expanded quite a bit, and it's very comprehensive. So if you could talk about, you know, the breadth of your product portfolio, you know, today, and maybe how it's evolved over the years. Yeah. So actually, LegalZoom, a 20-year-old company, so it has a very long heritage, and actually started primarily in the consumer space. Over the last 20 years, that's evolved pretty dramatically to being focused on small business, so it's about 90% of the business. And most of it really begins with the moment that a small business decides to form an entity. So if you think about the business model, we wanna be the destination where people get started as a business. And that's also the exact same time that they realize that if they're forming a business with the Secretary of State, or if they wanna go into operations in a different county, or if they wanna do business in the United States, all of a sudden, regulations start to happen to them, and compliance is a requirement. The business transaction itself, the formation, is a transactional model, and we've increasingly just been reducing the cost of it in order to drive more customers to our subscription and compliance solutions. Over time, though, that business becomes an operating business, and then there's two different ecosystems that they start to have needs in. One is financial, and that can mean that they start with just organizing their finances and separating them from their personal life, and that's bookkeeping. And then anybody who has revenue eventually has to file a tax return as well. And so we help solve both of those problems. And then we know episodically that customers eventually encounter the need for legal help. It could be either in the form of just general advice, and providing guidance of like, "Hey, I'm starting a business. What are the steps I need to be thinking about as I start to launch this business that'll protect me from any risk?" all the way through to actually helping with transactions. And that can mean, you know, "I've hired my first employee, and I need to create an employee manual or employee handbook," or, you know, "I have litigation that's happening to me," or, "I'm starting to think through some of the compliance requirements that are more complex as a business, and I want someone to help me with that." So we really kinda start with that formation, we help with the financials, and then we help with all the legal problems or legal protection that small businesses have. Okay. That's really helpful. But so it starts at the business formation, but your product portfolio also has things like estate planning, recently, prenup agreements, as you said, you know, accounting and tax, and all that. So when you think about your vision for the medium to long term, I mean, who is your target customer? I mean, who's your ideal person that you're trying to serve, and you know, how broad of a needs are you trying to fulfill for them? Yeah, yeah. I mean, we, we start with that formation, but you can almost think of that formation as, a cost of acquisition. Like, we, we wanna. Like, as a vision, we would almost wanna pay someone to form, like, pay their state fees, and, and think of that as just a cost of acquiring a customer into our ecosystem. Because we think the ecosystems around financial services and legal services are much larger. I mean, if you, if you step back and think about, you know, something like the business formation market and compliance, that's roughly a $10 billion TAM for us, or SAM. And then when you think about financials, and you think about more standard legal services, that's when it all of a sudden kinda clicks into, like, $30 billion-$40 billion of SAM in the matters that we know we can solve really well in our base. And so the goal is, again, bring as many people in and get them into these other areas. Now, the two areas that we're most focused on, when you think about financial services, it's about making financial services for our very specific customer base. These are the smallest solopreneurs out there, and what they look for are very horizontal solutions. They don't want best-in-breed and lots of different solutions. They want something that just is easy, and it works end to end. So bookkeeping is as simple as expenses, it's invoicing, it's auto-categorizing, it's doing all those things so that tax time is just a matter of, you know, flipping that book into a tax return. And so we're trying to create this very novel approach, where it's one single solution all the way across. And we think that's a very large opportunity and a pretty big gap in the market, and it fits with our channel very specifically. Because, you know, every year, we acquire 500,000-ish small businesses into a formation. That's the channel that feeds the financial ecosystem. On the legal side, we've always had an advisory service, which just provides generalized advice. Over the last four years, we've been building all the components so that we can create a platform that will allow for a customer to complete a financial or a legal matter, all through our ecosystem. And so that means, we would do the billing, we would actually have the initial consult scheduled for the right attorney for that customer. We would do all of the intake for that consult. We would manage that matter through our practice management solution, and then we would track the quality of that transaction all the way through, so that it's a standardized experience for a legal matter. To do that, you need to also have a large affiliate network of attorneys, which we do. We have close to 2,000. And then you also have to own a law firm, so that you can participate in the economics of another attorney's matter, and that's called a co-counsel model. So all those pieces we've been building over the last 3-4 years have just launched into something which is an MVP-type offering for prenuptial agreements, which we plan to sort of test, learn, harden the platform, and then start to multiply the number of matters and jurisdictions that we go into. So I think, out of that, actually, two questions that comes to mind. Well, first, I mean, the breadth of your portfolio looks like, you know, you could have, have an opportunity, as you said, it's a platform, like one place where, your ideal solopreneur could come to, and maybe try out all those, or attach many of those, or, and one place to come to, and I guess it might be MyLZ. But just wanted to see, how your vision is in kind of making that happen and how early or how far along in having, Yeah That central portal or central platform. Yeah, I mean, to, in order to participate in this type of model, you need customers that are engaging with you on a regular basis. Like, you wanna find the place or the destination where your customers interact with you. And so we created a property called MyLZ. It's our post-login experience, and really, that's the place, as soon as you make an order for an LLC, we help you understand the status of that order. Because you're communicating with the Secretary of State, things can happen. And then we help you understand the next steps as a small business as you get started. So you may have started a business, and you created the entity, and maybe you've signed up for our compliance solution, but you also discover that you now need to do a filing for BOIR, which is, you know, FinCEN's requirement. You may realize that you're the type of company that has the need for complex licensing, and so we can help you get all the business licenses that you need. You may have employees, and so it's required that you have workers' compensation. We will help find the right insurance for you. You may be thinking about an e-commerce business. We'll find the right partner for you. And so all of that's happening in this, in this ecosystem around MyLZ, with the goal of then when you have a larger or more complex transaction, you're already familiar with the property and you're visiting us on a regular basis, and so you're willing to do your taxes with us, or you're willing to do a legal matter with us. And so that, that's been a bit of a journey. When I joined, there was no post-formation experience. There wasn't really an ecosystem around financial solutions. There really wasn't the concept of, of legal matters. And so now we have all those ingredients in place, it's much more about execution, and we know we have to show the proof points. We have to have real green shoots that we can, you know, communicate to people clearly of, like, what we're trying to accomplish within each of those ecosystems. Great. So it sounds like you have a lot of pieces in place, so you could do a cross-sell, up-sell attach, maybe bundling, and so on. Yeah, and by the way, that's, like, a real opportunity because one of the challenges we've had in terms of commercializing our product is, because we only talk to our customers during the formation, historically, we tried to sell too much. And the more you sell in the formations flow, the more confusion you create with customers around, "Oh, I need all these things? I didn't think I needed all these things. This is looking too complex," and so they drop out. So the things have a relationship of we wanna move as many things to post-formation, where we can cross-sell them, because that'll increase conversion, the initial conversion upfront in the formation transaction itself. So the, the, This has been a very deliberate, and really, it's taken multiple years to get to the place where we have all the ingredients, we have a post-formation experience, and now we're starting to just simplify that formations process. Great. Great. So in your early answer, I think you mentioned a law firm in Arizona. It's very interesting that you actually have your own law firm. So we're wondering, you know, what does that actually enable you to do, and is there potential to maybe expand it to other states? And how does that coexist with your network of, you know, third-party attorneys that work with you? Yeah. I've worked before in creating a tech-enabled platform for accountants, and I will say that that was a much simpler thing to build, because there were less regulatory concerns, or there wasn't such a thing as, like, ethical guidelines of the Bar Association. The Bar Association, you know, it makes specific rules that I would almost call anti-competitive, in that they restrict other participants in participating, in legal matters. And the way they do it is they say that a law firm can only be owned by an attorney. And then they say that there is no such thing as corporate ownership of a law firm, and then revenue can only be shared between attorneys. And so this has, in a lot of ways, kept innovation away from the legal space, and, and it just protected the space of the existing attorneys. Over the last couple of years, a couple of the states have recognized that and said, "This has made it less accessible to get legal services." And so what they're starting to do is say, "We are going to allow a corporation to own a law firm, and we're gonna watch the performance and see if prices come down." We were one of the first people to actually apply for the law firm in Arizona and be approved. And what that allows us to do is almost participate as if we're an attorney in the ecosystem. Which means now we can do all of the work to bring a customer on board, we can create the experience on our side, but participate with another attorney who's in a different jurisdiction and has real expertise on a specific matter, in order to fulfill an order for our customer. So that's called a co-counsel model, and it's something that exists and happens all the time in the legal industry. But again, you can't do that unless you actually are a law firm. So that's a very complex process and, in answer to the question, but this is a whole new business model that we think is probably gonna become much more prevalent. But again, you have to have all the raw ingredients of, like, a strong network of attorney, attorneys that are in your network, along with your own law firm, and a platform to actually standardize the experience on. Okay. It sounds like you, you'll be able to use the Arizona firm to work with attorneys that are outside Arizona- Yeah that are already in your network also. Yeah. It will amplify. It allows having the law firm there allows us to both practice all law in Arizona. It allows us to do some federal matters from Arizona, which we do today, for instance, like trademark. It's USPTO, so we do those matters through our own law firm. But then it allows you to partner in pretty much any jurisdiction across the country. Great. Great. Maybe switching to a little bit on the financial side. So subscription revenue used to be, as you said, you know, information is a transaction type of activity, but you, your mix of revenue from subscription has increased over the years from 50% or less a few years ago to over 60% last year. Where do you think that can go over time? I mean, would you like that to become substantial majority of your revenue model? And what are some of the drivers that can enable that? I feel like I'm hogging the stage. I'm gonna let Noel answer. Yeah, sure. So, as you mentioned, I think, you know, transaction just a few years ago, was about 60% of the revenue, and now it's flipped, and it's about 40%, and subscriptions over 60%. I think generally our focus is to continue to shift our revenue towards subscription. You heard Dan talk earlier about making that transaction flow as seamless and easy and as accessible from a cost perspective as possible, and it's tethering that to the build-out of this ecosystem. One of the good things about the ecosystem and all of these different services we've added, for the most part, they are subscription-oriented, right? So it allows us to, you know, help the customer and be part of their journey as they grow and evolve, and allows us to monetize over a longer period of time. And we can do that in a increasingly efficient way as some of our more nascent products start to mature. And so you can see us continuing to focus on trying to make it really easy to form with us, get them into our ecosystem. Post formation's an important part of that, as Dan spoke to as well, right? To the point where we can streamline that upfront, sell, you know, cross-sell through our LegalZoom platform when the customer's ready for the product, and then expand that relationship. So we would expect to be able to grow and increase the mix of subscription over time. Now, there'll be points in time. We continually test different commercialization in our lineup, so there'll be. We're always focused on solving for LTV, so there may be certain tests where there's a bit of a step backward on that journey, but over the long term, we expect to increase the mix. Maybe the only thing that could change that is if we, you know, start to really see growth in the legal matters, because those would be transactions, but they would be pretty high-margin transactions because it's leveraging a platform and an affiliate attorney to fulfill it. So if that became wildly successful, you'd see more transactional revenue growth. When you say legal matters, what are some of the, you know, biggest examples or transaction types that could? That's something that we're gonna be actively testing into. Because what we wanna see is the association with our brand and some of our content that we already have, with the likelihood of a customer to work through us to provide that legal matter. So that's part of a testing plan that we have. I mean, we chose prenuptial agreements not because we were fascinated with prenuptial agreements, but it's actually a lower complexity legal matter, where a lot of the jurisdictional complexity is removed because there's national standards, which made it quick for us to jump into that market. But what we're really gonna let happen is our customers tell us. And we have some really cool tools to make that possible. So I'll give you an example of one. We launched a product called Doc Assist, which is a Gen AI platform, which allows a customer to upload a document and get a quick summary. We're building a corpus of data, and we're starting to understand, like, what's anomaly detection within these documents that would help a customer understand when they should talk to an attorney. We can see what our customers are receiving. They're uploading their documents with partners that they get, lease agreements, NDAs, employment letters. We're seeing all types of interesting things, and that's just demand that exists in our platform. platform. The other thing is, as most of you probably know, a registered agent requirement is that you receive service of process from the court system. Service of process is you're being sued. You need a litigation attorney. Historically, what we've done is we've said, "You're being sued." Now we'll be able to say, "You're being sued. This is what you're being sued for." We can actually upload those documents into Doc Assist, and we can see what the specific suit is quickly. And by the way, we have three or four attorneys in that jurisdiction who handle that very specific matter. So part of this is just recognizing that all these transactions happen today in our base, but we've never been able to capture them because we haven't had a platform to contain them within. Yeah, and it does seem like a big opportunity given how much fear legal matters could cost someone. I mean, much more than, I think, tax fears from the IRS, I think. Yeah. Well, they're small businesses are afraid of both. If there's two things they're afraid of, it's the IRS and lawyers. So the way that they typically address it is by avoiding it. And not the IRS, it's harder to avoid the IRS, but what we've seen is customers will say: "You know, I've signed 5 NDAs," and they've said, "I've never even really understood, like, an MNDA." But they think because the partner is a bigger company, that they understand what they're doing. And the challenge is actually, yes, that bigger company knows exactly what it's doing. You, as a counterparty, don't really have any ability to react to that and make very logical counter proposals back. So, like, one big thing that happens today is people in our existing subscription for legal advice they do a contract redline with, with attorneys, as an additional fee service, not on our platform. It's a benefit for our attorneys. So we see all of the different contracts that people typically would have signed without a review, and it's kinda scary. Like, this is a real problem for small businesses. So we're almost 20 minutes, actually, more than 20 minutes into it, and we haven't talked about AI. So now that you brought up Doc Assist, I mean, if you could talk a little bit about what's your AI strategy? You know, as it comes to Doc Assist, what's been the traction and usage and any other areas that you might be exploring? Yeah, Doc Assist, Well, Gen AI, in general, I should talk about the core business because I do feel people get confused in saying you have the word "legal" in your company name, and so somehow you're being disrupted by AI. The core business itself is primarily compliance, and compliance is, you know, interacting with Secretary of State sites on a regular basis, as well as receiving physical notices in physical addresses that are required to be received by a human being. So a lot of the core business is pretty inoculated from Gen AI at a high level. And the big opportunity is when you get into thinking about drafting and document summary. And that's a part of our business that's more nascent. You know, what we're trying to do is create an ecosystem where a customer can upload a document, they can get a summary of that document, they can understand what is not a typical term or clause, and get a counterproposal of a clause through an attorney. That attorney would be the place where we would create a co-pilot solution, so that the attorneys are doing minimal work, and they're just more doing legal review of the documents. This is all about trying to drive down the cost for the consumers and actually save the time for the attorneys. Most attorneys only bill a couple hours a day in a full work day. The rest of the day is all administrative work, it's trying to acquire customers, it's billing, it's all these different things. So their effective rate is less than $100 an hour. These are the smaller attorneys. Again, most of the practices are less than 10 attorneys. And what we're trying to do is create economics that are as good or better than that, by taking all of the burden away from them, and then passing that, that cost reduction down to the small business or the consumer. So there's a pretty big arbitrage opportunity that's most of it driven by a combination of technology that's just basic platform technology, but also AI. Definitely could play a role in maybe democratizing access to legal service. We have only a couple of minutes left, so I'm gonna try to hit on a couple of maybe more big financial topics. So the first one is on guidance. So Q2 guidance for revenue is about flat with Q1, which would imply that, you know, with the fiscal 2024 being reiterated, that you'd see some acceleration in the second half. And so, you know, if you could go through what would cause that acceleration, whether it's just easy comps or other factors. And then the other one that there was a big topic was BOIR, you know, Beneficial Ownership Information Reporting, which is a new regulation. I think there was some initial excitement that could potentially drive a lot of revenue, and I think you toned it down maybe a little bit in Q4, but in Q1, again, it actually came through fairly well, I think, maybe better than expected. So if you could talk about maybe the ramp of what the contribution could be, as a driver. Thank you. Yeah, I can start with the first one, and so as it relates to the acceleration in the back half of the year, I think you kinda touched on it. It's, you know, a big part of that is easing comps. We talked about LZ Tax being a headwind, from a revenue perspective for the full year 2024, but that headwind being heavily concentrated in the first half of the year and particularly in Q2. So we'll start to lap that. We're also lapping the exit of partnerships. And then importantly, we're in the process of rebuilding our sales force, and we expect that team to be fully ramped up, coming into the back half of the year, so early Q3. We had transitioned that team at the beginning of Q4 last year, so there's some easing comps there. We're also reintroducing brand spend. We talked about higher marketing spend starting in Q2, and really the amortization of that benefit impacting the back half of the year as well. So there's a few different levers, including easing comps. Yeah, on the BOIR front, you know, we were pretty conservative in how we went into the year guiding because we wanted to see what the take rate was on BOIR. And, you know, we've been pleasantly surprised. We did have some benefit in Q1 of pre-2024 businesses that were doing what's essentially like a catch-up filing. But as we go forward, it's not- we're not expecting much from that group. We feel like we've harvested that pretty well, and what we're starting to do is really focus on the new businesses that are forming, making it a core part of the flow and the motion around attach at formation. And so we expect to see that for the rest of the year, which has been part of the benefit of offsetting some of the macro weakness. It's been sort of like a, almost like a one-in, one-out type of opportunity. Great. Thanks so much for coming. Thanks, Dan and Noel, and, thanks, everyone. Thank you, guys. Thank you, John.