LegalZoom Stock Sinks 30% After Revenue Guidance Cuts

LegalZoom's stock plummeted by 30% after releasing its second-quarter earnings on Wednesday, which raised significant concerns among investors.

The company reported revenue of $205.3 million for the period, a 7% year-over-year increase driven largely by subscription revenue, which rose by 11%. This marks the fifth consecutive quarter of double-digit growth in this category.

However, net income (non-GAAP) fell by 3% to $27.4 million, or $0.16 per share, broadly in line with consensus analyst estimates of $205.7 million for revenue and adjusted net earnings per share (EPS) of $0.15.

In a conference call discussing the results, LegalZoom's management cited abrupt changes to search algorithms by Alphabet's Google as negatively affecting online traffic from the No. 1 search engine.