View:
United States securities and exchange commission logo
June 1, 2021
Dan Wernikoff
Chief Executive Officer
LegalZoom.com, Inc.
101 North Brand Boulevard, 11th Floor
Glendale, California 91203
Re: LegalZoom.com, Inc.
Amendment No. 1 to
Draft Registration Statement on Form S-1
Submitted May 17,
2021
CIK No. 0001286139
Dear Mr. Wernikoff:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments. References to prior comments are to those in our letter dated
May 3, 2021.
Amendment No. 1 to Draft Registration Statement on Form S-1 submitted
May 17, 2021
Prospectus Summary, page 1
1. We note your revised
disclosures in response to prior comment 3. However, we also note
that you continue to
discuss the reason for the changes in adjusted EBITDA and free cash
flow, both here and in
the MD&A Overview section, without providing similar
information for your
GAAP measures. Also, your comprehensive discussion regarding
the changes in free
cash flow should not be presented with greater prominence than your
Liquidity discussion.
Please revise. Refer to Question 102.10 of the non-GAAP C&DIs.
2. We note that in
response to prior comment 1 you disclose the net promoter score ("NPS")
for traditional online
attorneys. Please also disclose the NPS for your business formation
products, small
businesses and attorney network.
Dan Wernikoff
LegalZoom.com, Inc.
June 1, 2021
Page 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Our Business Model, page 68
3. We note your response and revised disclosure to prior comment 9. You
state that annual
retention rate is based on annual subscriptions related to business
formations. Please
clarify whether this measure is calculated using the contract value,
annualized revenue or
subscription unit count. Also, explain what constitutes a "business
formation"
subscription and tell us what percentage of your subscription
arrangements relate to
business formations. To the extent a significant portion of your
subscriptions are excluded
from this metric, revise to also disclose the annual retention rate
applicable to the
excluded arrangements. Lastly, please disclose your annual retention
rate for each period
presented.
4. Also, you state that the annual retention rate includes the impact of
business failures.
Please tell us specifically how you track this information. In this
regard, if a customer
who entered into a business formation subscription in the prior period
is no longer an
active subscription customer 13-months later, tell us how you are able
to differentiate
between business failure versus normal customer attrition.
5. Regarding your response to prior comment 9, and as previously
requested, please revise to
define the term "attach rates." Also, disclose such rates for each
period and explain how
this measure is calculated. Specifically, you state that your sales
team works to establish
themselves as trusted advisors by helping potential customers through
the business
formation process and explaining the products and services they may
need, which
generally results in higher subscription attach rates, and that you
aim to increase both
average order value and subscription units by increasing attach rates,
among other factors.
Ensure your disclosure, if not otherwise clear, addresses how attach
rates impact each of
these metrics.
Growing Lifetime Value per Business Formation Customer, page 69
6. Please revise your discussion of customer lifetime value to explain
how the amounts used
to calculate this measure relate to GAAP, or clearly indicate that
this measure is not
calculated based on GAAP amounts and clarify how it may differ from
GAAP.
Key Business Metrics, page 71
FirstName LastNameDan Wernikoff
7. We note your response to prior comment 7. Please provide us with a
breakdown for each
Comapany NameLegalZoom.com,
of your transaction revenue, Inc.
number of transactions, subscription
revenue and number of
June 1,subscription
2021 Page 2units by both consumer and small business customer.
FirstName LastName
Dan Wernikoff
FirstName LastNameDan Wernikoff
LegalZoom.com, Inc.
Comapany
June 1, 2021NameLegalZoom.com, Inc.
June 1,
Page 3 2021 Page 3
FirstName LastName
8. We note your response and revised disclosures to prior comment 8. As
this metric now
includes subscriptions that are still within the 60-day customer
guarantee window, please
revise to disclose this fact and that such subscriptions are subject
to cancellation with
possible refund or partial refund. Further, tell us, and consider
disclosing if significant,
the number of subscription units included in this metric that are
within this 60-day
window for each period.
Business
Customer Success Stories, page 117
9. Please disclose how you compiled these customer success stories, why
you selected the
profiled clients, how the clients provide a meaningful representation
of your user base and
any limitations in using these individual case studies. Also, tell us
whether the customers
profiled in this section have consented to their stories being
disclosed in your filing.
Notes to Consolidated Financial Statements
Note 13. Commitments and Contingencies, page F-32
10. We note your revised disclosures in response to prior comment 16 where
you state the loss
is not probable and you cannot estimate a possible loss or range of
loss. Your reference
here to estimating a possible loss or range of loss appears to be
addressing whether you
met the accrual requirements of ASC 450-20-25-2. In this regard, you
then state
"accordingly" you have not recorded any loss accrual. Please revise
your disclosures to
separately address: (i) whether a loss has been accrued, and (ii)
whether you believe there
is at least a reasonable possibility that a loss may have been
incurred in excess of amounts
recognized and, if so, disclose an estimate of such loss or range of
loss or state that such
estimate cannot be made.
You may contact Brittany Ebbertt, Senior Staff Accountant, at (202)
551-3572 or
Kathleen Collins, Accounting Branch Chief, at (202) 551-3499 if you have
questions regarding
comments on the financial statements and related matters. Please contact
Matthew Crispino,
Staff Attorney, at (202) 551-3456 or Jan Woo, Legal Branch Chief, at (202)
551-3453 with any
other questions.
Sincerely,
Division of
Corporation Finance
Office of
Technology
cc: Jonie Ing Kondracki