LegalZoom.com, Inc. (NASDAQ:LZ) Q1 2024 Earnings Call Transcript

And it almost feels like it’s just normalizing to what has been a longer-term 4% to 5% CAGR in a macro that we feel like as you even go further out, it’s going to be easier for smaller businesses, solopreneurs to form. So overall, we feel good about it. Obviously, there’s some wobbliness in the short-term, but the long-term looks healthy.

Ella Smith: That’s clear. Thank you, Dan. And as a follow-up, do you have any comments about business failures so far this year and maybe how that compares to years past?

Dan Wernikoff: Yes. The way we measure it might be a little bit different. You typically see people measure it by bankruptcy rate and maybe a precursor oftentimes or something that’s a more simple thing as someone just shutting their business altogether, and that’s a dissolution. We offer dissolution services to our customers, and they were extremely elevated in Q1, almost up 40% year-over-year. But one of the things that we’re recognizing is whenever a new compliance requirement is introduced into the industry and it’s – and there’s a cost associated with it – in many ways, it’s kind of healthy because it shakes out businesses that weren’t necessarily in operations. And they realize that, I need to shut this down or else I could be held criminally liable or I have other fees that I’m going to have to pay.

And so there is a component of the elevation and dissolutions that could be tied to BOIR and some of the messaging we’re doing to our own base. But I would also say that generally speaking, dissolution rates have been a little bit higher than they have historically been as well.

Ella Smith: Got it. Very clear. Thanks so much.

Dan Wernikoff: Thanks, Ella.

Operator: And thank you. And there are no further questions at this time. This concludes today’s conference call. Thank you for participating, and you may now disconnect.