Reflecting On Online Marketplace Stocks’ Q3 Earnings: LegalZoom (NASDAQ:LZ)

Earnings results often indicate what direction a company will take in the months ahead. With Q3 behind us, let’s have a look at LegalZoom and its peers.

Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission-paying sellers, generating flywheel scale effects that feed back into further customer acquisition.

The 12 online marketplace stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.3% while next quarter’s revenue guidance was in line.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 5.7% since the latest earnings results.

LegalZoom

Founded by famous lawyer Robert Shapiro, LegalZoom offers online legal services and documentation assistance for individuals and businesses.

LegalZoom reported revenues of $190.2 million, up 12.8% year on year. This print exceeded analysts’ expectations by 3.9%. Overall, it was a satisfactory quarter for the company with revenue guidance for next quarter beating analysts’ expectations but a significant miss of analysts’ number of subscription units estimates.

"Our results further validate the strategic shift we made in our business. Importantly, the proof points we’re seeing across the business give us confidence that we’ve built a strong foundation for our next phase of growth," said Jeff Stibel, Chairman and Chief Executive Officer of LegalZoom.

Unsurprisingly, the stock is down 11.1% since reporting and currently trades at $9.05.

Best Q3: EverQuote

Aiming to simplify a once complicated process, EverQuote is an online insurance marketplace where consumers can compare and purchase various types of insurance from different providers

EverQuote reported revenues of $173.9 million, up 20.3% year on year, outperforming analysts’ expectations by 4.3%. The business had an exceptional quarter with a solid beat of analysts’ EBITDA estimates and revenue guidance for next quarter exceeding analysts’ expectations.

The market seems content with the results as the stock is up 3.5% since reporting. It currently trades at $23.19.

Weakest Q3: ACV Auctions

Founded in 2014, ACV Auctions (NASDAQ:ACVA) is an online auction marketplace for car dealers and wholesalers to buy and sell used cars.

ACV Auctions reported revenues of $199.6 million, up 16.5% year on year, in line with analysts’ expectations. It was a disappointing quarter as it posted full-year revenue guidance slightly missing analysts’ expectations and full-year EBITDA guidance missing analysts’ expectations significantly.

ACV Auctions delivered the highest full-year guidance raise but had the weakest performance against analyst estimates in the group. The company reported 218,065 units sold, up 9.9% year on year. Interestingly, the stock is up 2.5% since the results and currently trades at $8.35.

Read our full analysis of ACV Auctions’s results here.

MercadoLibre

Originally started as an online auction platform, MercadoLibre is a one-stop e-commerce marketplace and fintech platform in Latin America.

MercadoLibre reported revenues of $7.41 billion, up 39.5% year on year. This number surpassed analysts’ expectations by 2.9%. Aside from that, it was a mixed quarter as it also logged impressive growth in its users but a miss of analysts’ EBITDA estimates.

MercadoLibre delivered the fastest revenue growth among its peers. The company reported 76.8 million daily active users, up 26.3% year on year. The stock is flat since reporting and currently trades at $2,296.

Read our full, actionable report on MercadoLibre here, it’s free.

Cars.com

Originally started as a joint venture between several media companies including The Washington Post and The New York Times, Cars.com is a digital marketplace that connects new and used car buyers and sellers.

Cars.com reported revenues of $181.6 million, up 1.1% year on year. This print was in line with analysts’ expectations. Aside from that, it was a mixed quarter as it underperformed in some other aspects of the business.

The company reported 19,526 active buyers, up 1.4% year on year. The stock is up 12.1% since reporting and currently trades at $11.67.

Read our full, actionable report on Cars.com here, it’s free.