U.S. Markets closed

Edited Transcript of LOGM earnings conference call or presentation 28-Feb-17 10:00pm GMT

Thomson Reuters StreetEvents

Q4 2016 LogMeIn Inc Earnings Call

WOBURN Feb 28, 2017 (Thomson StreetEvents) -- Edited Transcript of LogMeIn Inc earnings conference call or presentation Tuesday, February 28, 2017 at 10:00:00pm GMT

TEXT version of Transcript

================================================================================

Conference Call Participants

================================================================================

* >>Rob Bradley

* >>Bill Wagner

* >>Ed Herdiech

* >>Raimo Lenschow

* >>Matt Hedberg

* >>Sterling Auty

* >>Will Power

* >>Tim Klasell

* >>New Speaker

================================================================================

Transcript

--------------------------------------------------------------------------------

Editor: [1]

--------------------------------------------------------------------------------

140353444672

================================================================================

Presentation

--------------------------------------------------------------------------------

>>Editor [1]

--------------------------------------------------------------------------------

Please stand by for streaming text.

--------------------------------------------------------------------------------

Operator [2]

--------------------------------------------------------------------------------

Good afternoon and welcome to the LogMeIn fourth quarter and fiscal year 2016 earnings conference call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions). I will now turn the call over to Rob Bradley, head of investor relations for LogMeIn.

--------------------------------------------------------------------------------

>>Rob Bradley, [3]

--------------------------------------------------------------------------------

Thank you and welcome to our fourth-quarter and full-year 2016 earnings conference call. I'm joined today by President and CEO Bill Wagner, and CFO Ed Herdiech. During our call we will discuss our business outlook and make other forward-looking statements. These statements are made as of today and are based on our current projections, estimates, forecasts and expectations. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent filings with the SEC. The company does not undertake to update any forward-looking statements. We will start today's call with some comments by bill and add, followed by the question-and-answer session. During the Q&A, please try and limit yourself to one question and one follow-up. As a reminder, we use non-GAAP financial measures as they are more representative to how we internally measure the business. Non-GAAP financial measures include the GoTo deferred revenue acquisition fair value adjustment and exclude stock-based compensation expense, acquisition related costs and amortization. All metrics on the call will be non-GAAP unless otherwise specified. These numbers are reconciled in the tables attached our press release. Now I want to turn the call over to our CEO, Bill Wagner. Bill?

--------------------------------------------------------------------------------

>>Bill Wagner, [4]

--------------------------------------------------------------------------------

Thanks Rob. Good afternoon. And thank you for joining us today as we report LogMeIn's fourth quarter and fiscal year 2016 results. 2016 and it on a high note for us as we finished a very strong quarter and year by delivering revenue, adjusted EBITDA and earnings-per-share that all exceeded the high end of our guidance. This strong finish bolsters our confidence as we enter 2017, and more importantly as we begin a new chapter for LogMeIn. With our merger with Citrix's GoTo business now close, we begun to work at integrating two great companies and building the foundation as a company that we believe is unique amongst the SaaS sector. A company that can lead and redefine large markets to deliver enduring revenue growth, expanding margins and compelling shareholder returns. Our products are targeting markets with a combined addressable opportunity approaching $30 billion, growing in aggregate at 9% per year. And we are company with the scale, leadership position, resources and employee base needed to realize the potential of these markets. Over the long-term, we believe this will translate to a compelling financial profile consisting of 10% compounded annual growth rates, 40% adjusted EBITDA margins, and 30% cash flow margin. Furthermore, this market opportunity and financial profile, along with our confidence in our ability to execute, places us in a position to commit to a meaningful capital returns program for our shareholders. To that end, I am pleased to report that our Board of Directors has approved a three-year capital return plan intended to return approximately 75% of the company's free cash flow to shareholders over that time. That's up to $700 million in a three-year period returned through a combination of share repurchases and dividends. As a first step, LogMeIn is initiating a quarterly cash dividend of $0.25 per share with the first evident to be paid in may of this year. We believe this profile growth profits and cash flow , combined with an ongoing commitment to meaningful capital returns, represents a completely new profile for a SaaS company at our scale. Now Ed Herdiech, our CFO, is going to provide our Q4 results, as well as our preliminary outlook on 2017. But before I turn the call over to Ed, I want to share a bit more on why we are so excited and confident about the opportunity in front of us. I also want to provide some visibility into the continuing integration efforts needed to realize this potential. As I've been sharing with our stakeholders, 2017 is about getting the integration right and laying the foundation for sustained growth. As we've mentioned on our Q3 call and shared with employees and investors alike , our 2017 priorities are to first seamlessly integrate our business operations, our employees and our customers. Second, deliver the cost synergies we have identified. Third, maintain an innovative and dynamic company culture. And finally, validate and invest in long-term growth opportunities. When it comes to integrating our operations, we are taking steps to bring together our teams in our common organizational structure with clearly defined leadership and accountability. That means a single align sales force , marketing team, customer care organization, and product and engineering team. And in February we begin these efforts in earnest, focusing first and foremost on areas where integration would yield quick benefits without disrupting service. Synergy capture is an important element to value creation in 2017 and 2018, and we remain very confident in our ability to realize our stated goals. Although we've only begun the integration, we have a clear line of sight to delivering on our 12 and 24 months target. As we stated before, LogMeIn and GoTo had many offices in common geographic locations. And that provides an opportunity to both realize cost efficiencies while bringing teams together under one common roof. Both LogMeIn and GoTo had similar marketing programs and overlapping marketing agencies, again an easy opportunity to not only eliminate redundancies but also to better align teams and programs. These and other synergy related activities are now well underway. I also talked a lot about the importance of culture, and this has been a primary personal focus for me. This is an area all too often overlooked and underappreciated in mergers of the size. It's one that our team and our leadership have made a top priority. For us, this isn't just an exercise of capturing and sharing values, it is finding immediate and near-term ways to bring our teams together, and it's empowering and rewarding the right kind of leadership and innovation at all levels across all functions. Now there's a lot of work ahead, but we are executing on our plan. And we believe that by focusing on those integration synergy and cultural priorities in 2017, we can exit the year leaner and operationally optimized. Ready to pursue strategic growth opportunities. With the merger finalized, LogMeIn now holds the number one or two position in each of our core markets. And we believe those positions give us access to even larger total addressable market opportunities with numerous growth vectors. During 2017, we will begin working to validate this opportunities and prioritize our investments. For instance, we are the market leader in remote access. And as those of you who have been following us know, we believe we are favorably positioned to redefine simple and secure identity and access management for people and businesses as they evolved to an app and cloud-centric world. This in turn gives us an even bigger long-term opportunity in the $6 billion identity market. We are also the market leader in remote support and we've already begun to take steps to help businesses deliver more human, personalized and intelligent customer engagement and support across channels, devices and products. This in turn will give us an even bigger opportunity in the $13 billion customer service and contact center market. And finally, we are the number two player in terms of market share in the $2 billion web conferencing market. Number one in the small and medium business segment. And we believe we have the platform, the install base, the team and the unparalleled insight needed to create the next generation of intelligent, real-time collaboration and communication offering. As a combined company we now also have the telephony access to allow us to transform our position into leadership in the $16 billion cloud component of the unified communications and collaboration, or UCC market. So we believe we have several growth vectors and options in each of these multibillion-dollar markets. And we are starting with the best in class , 1000 %product and engineering team. We also have the scale and balance sheet that allows us to augment our organic efforts with meaningful M&A. Our job in the early part of the year will be to prioritize where the company allocates investments, where we focus and where we look to accelerate our roadmap and enhance our market position. Our long-term strategic planning is now underway, and we will be targeting a third quarter investor day to provide a deeper dive on both our product strategy and our longer-term financial target. So in summary, we are at an exciting time in LogMeIn's history. Our merger is now complete, and we are only getting started on building what will be a unique profile in SaaS. Clearly integration is job one for 2017. But given our scale, leadership position and employee base, we are now increasingly confident in our ability to deliver against our longer-term goals of 10% compounded annual revenue growth, 40% adjusted EBITDA margins, and 30% cash flow margin. I will now turn the call over to Ed, who will provide more detail on our Q4 results as well as our Q1 and full-year guidance for 2017. Ed?

--------------------------------------------------------------------------------

>>Ed Herdiech, [5]

--------------------------------------------------------------------------------

Thank you bill. I'll begin my comments with highlights from our fourth quarter and full year. I'll then provide our business outlook for the first quarter and full-year 2017. 2016 was a unique and transformative year for the company as we announced our exciting merger with GoTo that is not only changed our scale and financial profile, but also positions the company as a leader in each of our addressable markets. And despite the potential for distraction related to closing the merger, the team continue to execute against our plan, and we over delivered relative to our fourth-quarter and full-year guidance. As a reminder, last February we provided guidance that included 20% full-year revenue growth, and we achieved 24% full-year revenue growth. We also guided to full-year 24.5% adjusted EBITDA margins, and we delivered 26.6% adjusted EBITDA margins. And finally, our initial full-year (inaudible) guide was $1.77. And our actual full-year results exceeded guidance by $0.26 per share. Our performance again reflects LogMeIn's ability to effectively manage a subscription business, our commitment to operational excellence, and to the strong work ethic and diligence of our employees. I'm pleased that we close the book on standalone LogMeIn on a positive note and that we enter 2017 and the merger on solid footing. Turning to the company's results, fourth quarter GAAP revenue was $88 million, and adjusted EBITDA was 30 44% of revenue or $26.7 million. Net income was $16.4 million or $0.62 per share. Each of these results exceeded the high end of our guidance. Our cash flow profile continues to be both highlight and a differentiator for LogMeIn. And fourth-quarter adjusted operating cash flow was $18.1 million or 21% of revenue, and for the full year adjusted operating cash flow was $110 million, or 33% of revenue. Adjusted free cash flow for the fourth quarter was $16.2 million , or 18% of revenue, and for the full year adjusted free cash flow was $94.6 million, or 28% of revenue. Looking at the results in more detail, our Q4 and full-year gross margins remain constant at 89%. Sales end marketing expenses were $35.4 million, or 40% of revenue, research and development expenses were $10.7 million or 12% of revenue. And G&A expenses were $8.5 million or 10% of revenue, which was a one percentage point increase from Q3 due to additional spending in preparation for our merger close. Our effective tax rate for both the fourth quarter and full year was 31%. On the geographic basis for both the fourth quarter and full year, international revenue was 28% of revenue. Regarding renewal rates, across all product lines, gross renewal rates were approximate 75% on an annualized dollar basis, consistent with each quarter of 2016. Turning to the balance sheet we ended the year with cash, cash equivalents end marketable securities of $196.5 million, a decrease of $20.7 million from the prayer quarter. In the quarter we paid $12.8 million for the second of three dividends that we announced in conjunction with the merger. We paid $8.2 million in merger-related expenses, and we spent $2.6 million to repurchase approximate 27,000 shares of our stock. And finally we repaid $7.5 million against our credit facility, reducing the outstanding balance to $30 million. Earlier in Q1 of this year, we upsized our credit facility to $400 million to support the merged company. Total Accounts Receivable were $25.9 million which is a $9.7 million increase from the third quarter, and Accounts Receivable days sales outstanding were 27 days. This increase was driven by a strong sales quarter. Total deferred revenue in the fourth quarter was $162.3 million, which represents 18% year-over-year growth. I'll conclude my remarks by providing our financial outlook for the first quarter and full-year of 2017, which exclude GoTo's January 2017 results. For the first quarter of 2017, we expect revenue to be in the range of $196 million to $198 million, which excludes GoTo's standalone January revenue of $58 million. Revenue includes a $13 million acquisition accounting adjustment to record GoTo's deferred revenue balance at fair value. We are currently targeting adjusted EBITDA to be in the range of $59 million to $61 million, and adjusted EBITDA margins of approximately 30.5% of revenue. Our net income per diluted share is expected to be in the range of $0.72 to $0.76, which includes the GoTo deferred revenue acquisition fair value adjustment and excludes stock-based compensation expense and acquisition related costs and amortization. Net income per diluted share also includes the acquisition accounting adjustment to amortization expense associated with GoTo's internally capitalized software development costs that were adjusted to fair value. GAAP net loss per share is expected to be in the range of $0.54 to $0.48. Net income assumes an effective tax rate of approximately 30% and GAAP net loss assumes a tax benefit of approximately $15 million. Net income per share is based on an estimated 45 million fully diluted weighted average shares outstanding, and GAAP net loss per share is based on an estimated 43 million weighted average basic shares outstanding. For the full year 2017, we expect revenue to be in the range of $1 billion to $1.01 billion, which excludes GoTo's standalone January revenue of $58 million. Revenue includes a $31 million acquisition accounting adjustment to record GoTo's deferred revenue balance at fair value. We are expecting adjusted EBITDA for the full year to be in the range of $335 million to $348 million, with adjusted EBITDA margins of approximately 34% of revenue. Our net income per diluted share is expected to be in the range of $3.64 to $3.82. Which includes the GoTo deferred revenue acquisition fair value adjustment and excludes stock-based compensation expense and acquisition related costs and amortization. Net income per diluted share includes the acquisition accounting adjustment to amortization expense related to GoTo's internally capitalized software development costs that were adjusted to fair value. GAAP net income or loss per share is expected to be in the range of $0.10 net loss to net income of $0.06 per share. Net income assumes an effective tax rate of approximately 30% and GAAP net income or loss assumes the tax benefit in the range of approximately $34 million to $29 million. Net income per share is based on an estimated 52 million fully diluted weighted average shares outstanding. GAAP net loss per share is based on an estimated 51 million weighted average basic shares outstanding. And GAAP net income per share is based on an estimated 52 million fully diluted weighted average shares outstanding. With that, I'll turn the call back over to our operator to take your questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions). Raimo Lenschow, Barclays.

--------------------------------------------------------------------------------

>>Raimo Lenschow, [2]

--------------------------------------------------------------------------------

That was a good try. Congratulations on a strong quarter and all the best for the new entity. But the one question and one follow-up I think it allows us. On the question I had is, Bill, there's also been a lot of noise in the market on the app conferencing with Amazon announcing a new product and your share price obviously got a hit. Can you talk a little bit about the setup of this market, and how easy is it to kind of, but the product? I know Microsoft has been trying for a while but actually hasn't succeeded. Can you talk a little bit about you kind of see this whole market and how easy or difficult it is to compete there?

--------------------------------------------------------------------------------

>>Bill Wagner, [3]

--------------------------------------------------------------------------------

Thanks for your questions. I think people should remember we been competing with industry players like Cisco, Microsoft and Google for years. And every time one of them introduces a new product, we get the same let me of questions about new competitive threat to the marketplace. And the history has shown that those competitive threats tend not to materialize perhaps the way people anticipate . And in spite of that the collaboration space has been our fastest-growing market for several years now. So while we take all competitors seriously and I would never be dismissive of course of a company like Amazon, we don't anticipate any meaningful impact our business. Like those other companies, we believe Amazon is really following a platform strategy as they try to get more business -- businesses to rely on AWS, and keep in mind we have a very different focus and business model than Amazon. For instance we are targeting the SMB market rather than the enterprise market , the use case for our collaboration software is intercompany communications versus internal communications, and perhaps most importantly our go-to-market model and product strategy is driven by end-user adoption of products that people love to use. Rather than being IT-mandated tools. So I do think it validates how big and dynamic the collaboration space is. And as a combined entity we have the products, the scale and focus we think to be a leader as the market continues to evolve. So again I think for us to take away is great validation of the space and doesn't impact our strategy whatsoever.

--------------------------------------------------------------------------------

>>Raimo Lenschow, [4]

--------------------------------------------------------------------------------

Okay. And as a follow-up, could you talk a little bit -- so we introduce the dividend now which is kind of relatively unique in the essay a space. Can you talk a little bit about is that like a token dividend, are you expecting to grow that, how do I have to think about your cash returns there?

--------------------------------------------------------------------------------

>>Bill Wagner, [5]

--------------------------------------------------------------------------------

That's -- I'm not sure that's a follow-up question, it sounds like another question. But it's a good question. And clearly first and foremost demonstrates I think the confidence we have in our business and our commitment that we are making to shareholder return. It reflects I think a very unique nature of our profile the company with strong cash flow margins, cash generation, and as we said it's a meaningful plan with $700 million in capital, consisting of what will be a regular dividend and a commitment to repurchase shares, not only to offset dilution but also we anticipate to reduce the number of outstanding shares over time. So we are in a unique position. We have a very different profile for SaaS company at our size and scale, and the dividend we think is a statement that we think is a strong -- underscores our confidence in our business model, and where we are headed with this business. So I would expect that to be consistent ongoing regular, and probably grow over time.

--------------------------------------------------------------------------------

>>Raimo Lenschow, [6]

--------------------------------------------------------------------------------

Perfect, thanks.

--------------------------------------------------------------------------------

Operator [7]

--------------------------------------------------------------------------------

Matt Hedberg, RBC capital markets.

--------------------------------------------------------------------------------

>>Matt Hedberg, [8]

--------------------------------------------------------------------------------

Hey guys, congrats again on a great year. Bill, I know some of your initial guide for 2017 assume some revenue to synergies, I think talk about that in the past. Now that you've owned GoTo for about a month, what are some of your early thoughts on cross-selling product between GoTo an LogMeIn and vice versa?

--------------------------------------------------------------------------------

>>Bill Wagner, [9]

--------------------------------------------------------------------------------

Thanks for the question met. As he said, it's been less than 30 days. But we are excited by the opportunity to cross sell but we need to validate it over the next couple of quarters. I've been pretty cautious when I got that question about saying until people have quota that the site and are actually trained to sell, we are not going to be building that into any guidance. So it's really about validating this over the next couple of quarters, we have some 90 day plans I think in the next month or so, we will be kicking off some cross-selling initiatives in earnest, open voice into the join.me base, LastPass across the (inaudible) base for instance, BoldChat the GoToAssist base, to some very specific plans that will get kicked off here in early Q2. I expect us to give an update on progress at our investor day that we talked about in Q3, but again if it's too early to build out to any guidance.

--------------------------------------------------------------------------------

>>Matt Hedberg, [10]

--------------------------------------------------------------------------------

That's great. And Ed, maybe one for you. Your 2017 guidance is great, maybe I missed it, but could you comment on your expectations for free cash flow margins in 2017?

--------------------------------------------------------------------------------

>>Ed Herdiech, [11]

--------------------------------------------------------------------------------

Sure. We are modeling full-year adjusted operating cash flow of about 33%, 34%. And full-year adjusted free cash flow in the neighborhood of 25%. Now to be clear, cash flows will be lower in the first half of the year and ramp throughout the year as synergies are realized. So that implies CapEx at about 8% to 9%, which is a weighted average really of LogMeIn's historical profile of 5%, 6%, and GoTo's, which was closer to 10% higher due to their internal capitalized stock (inaudible) policy.

--------------------------------------------------------------------------------

>>Matt Hedberg, [12]

--------------------------------------------------------------------------------

Great, very helpful. Thanks guys.

--------------------------------------------------------------------------------

Operator [13]

--------------------------------------------------------------------------------

Sterling Auty, JPMorgan.

--------------------------------------------------------------------------------

>>Sterling Auty, [14]

--------------------------------------------------------------------------------

Thanks, hi guys. I had a couple of companies reporting, so if you said this in the very beginning of the call and I missed it, I apologize. But in terms of the milestones that we should be watching on the cost-cutting plans, because I think you talked about the first focus is getting the structure, the cost in line. What has already been done and what are the next milestones that we should be watching for?

--------------------------------------------------------------------------------

>>Bill Wagner, [15]

--------------------------------------------------------------------------------

I think -- thanks Sterling. I'm going to take the opportunity to maybe step back and really talk about integration and synergy together. Because those two things are going hand-in-hand. And we are making really good progress on both. We had an incredible day one experience for our employees and customers, lots of enthusiasm, we had no disruption to the customer experience. Now within weeks of close, we also completed rolling out our new organizational model. Leadership across the organization is in place, and we've completed the process of eliminating overlapping roles and redundancy. So all that work has been done. We've also begun to shift some development efforts to our European locations in Germany and Budapest, and we begun bringing facilities together where we had multiple locations in the city. So I think we've done a lot in a little over three weeks. And from a synergy perspective I think we are on track, I think you're going to see that reflected in adjusted EBITDA, which is about 35% at the high end of our outlook. And as a reminder, we expect about $55 million in synergies in the first 12 months on a run rate basis and $100 million in 24 months. But look, we feel we have a really good line of sight to achieving these targets. I would be hopeful that as we work through the year we will provide frequent update on how we are doing with both integration and synergy capture, and we will go into detail obviously when we have an analyst day , you may have missed it, we are now planning for Q3 of this year.

--------------------------------------------------------------------------------

>>Sterling Auty, [16]

--------------------------------------------------------------------------------

Got it. And then you mentioned some very specific items. I thought it sounded like those were cross sell initiatives, but I'm just curious what if anything you are ready to announce in terms of product integrations. I think there's some thought maybe we would see Grasshopper integrated into (inaudible) more for collaboration into join.me etc. What things like that are now underway or past the idea of generation point?

--------------------------------------------------------------------------------

>>Bill Wagner, [17]

--------------------------------------------------------------------------------

As we speak, our teams, our product teams are in Budapest right now working on our long-term product strategy. So that work is really underway. But really early. So I think you're going to have to -- going to have to wait a little bit until we are ready to provide more details about the integration of our different product.

--------------------------------------------------------------------------------

>>Sterling Auty, [18]

--------------------------------------------------------------------------------

Fair enough, thank you.

--------------------------------------------------------------------------------

Operator [19]

--------------------------------------------------------------------------------

Will Power, Baird.

--------------------------------------------------------------------------------

>>Will Power, [20]

--------------------------------------------------------------------------------

Great, thank you. I want to probably just a housekeeping, as we think about revenue categories going forward, I guess A, do you plan to report same way you are currently of three different categories, and if so, any further color kind of framing how to think about your growth for those different areas. And I guess kind of the follow-up piece would be any color how to think about trends within the GoToAssist, GoToMyPC pieces from Citrix. Thanks.

--------------------------------------------------------------------------------

>>Ed Herdiech, [21]

--------------------------------------------------------------------------------

We are -- as Bill said, we are early days in the integration , we're going to have an analyst day in Q3, it's really too early for us to get into much more detail along reporting around what we used to call cloud, if you will. It's likely it looks different once we do report it, but it's too early. And that is the information we would be ready to share at our analyst day.

--------------------------------------------------------------------------------

>>Will Power, [22]

--------------------------------------------------------------------------------

Okay, all right. Thank you.

--------------------------------------------------------------------------------

Operator [23]

--------------------------------------------------------------------------------

Tim Klasell, Northland securities.

--------------------------------------------------------------------------------

>>Tim Klasell, [24]

--------------------------------------------------------------------------------

Most of my questions have been answered, but maybe you could sort of prioritize for us around where you plan on investing just so we sort of think of maybe where we should expect to see more product initiatives, and maybe some areas where maybe things were higher on the list before, maybe move down on the priority list. Just sort of give us an idea of what's job one and what tales off after that.

--------------------------------------------------------------------------------

>>Bill Wagner, [25]

--------------------------------------------------------------------------------

Thanks, Tim. Look, it's really clear that integration is job one, and synergy capture is closely linked to that. As I said earlier, those two things are well underway and will continue throughout the year. The product strategy is we are now kind of turning our attention now with 30 days into the close now we got a lot of that work the integration work kicked off, really digging and on the product strategy, we don't need to be disruptive and generate any kind of disruptive customer experience, that something we are being cautious of as we develop these product strategies. At that something will start providing more detail as we work through the year. I think that's something to look for, as well as a longer-term financial model. Our hope is at our analyst day we're going to be talking about a three to five-year plan and we'll be prepared to share that's in line with and supporting the things that we've already been talking about to the long-term financial profile . But look, I think it's right now our focus is on synergy and integration, delivering on those things, and then the product component of our strategy will be shared as we work through the year.

--------------------------------------------------------------------------------

>>Tim Klasell, [26]

--------------------------------------------------------------------------------

Okay, good. And I know you gave us an update here last month, but on the synergies, $65 million this year and $35 million next year, how is that progressing? Is that going to be sort more front-end loaded in this year how should we think about that in our models particularly as we start to model more seasonality for the combined, any?

--------------------------------------------------------------------------------

>>Bill Wagner, [27]

--------------------------------------------------------------------------------

I think it's fair to say a little bit we will be a little bit more frontloaded. That work is, as I said, it's underway, and we I think started very strong in February. Making some -- moving quickly, we wanted to get a lot of the hard work underway and behind us so we can start focusing on long-term growth. And I think that's representative of where we are, Ed?

--------------------------------------------------------------------------------

>>Ed Herdiech, [28]

--------------------------------------------------------------------------------

As Bill mentioned earlier, I think a good spot also keep your eye on is on our EBITDA results. And particularly we gave EBITDA guidance , adjusted EBITDA guidance at the high-end of the range of 35% today. So I think that's another good way to track our progress going forward.

--------------------------------------------------------------------------------

>>Tim Klasell, [29]

--------------------------------------------------------------------------------

Great, thank you.

--------------------------------------------------------------------------------

Operator [30]

--------------------------------------------------------------------------------

(technical difficulty)

--------------------------------------------------------------------------------

>>New Speaker, [31]

--------------------------------------------------------------------------------

(technical difficulty) on the call for Ben. I was wondering if at this point you could give us an update on employee turnover in the merger, you spoke about cultural earlier, but long-term do think you can keep the GoTo employees that you really want to keep.

--------------------------------------------------------------------------------

>>Bill Wagner, [32]

--------------------------------------------------------------------------------

Thanks for the question. That's a part of the integration I think a lot of that work is now behind us. We were -- we had planned and we executed a reorganization kind of within the first two weeks after he completed the merger, we wanted -- my goal is to get people really aligned and the people who were here and the people going forward and working as one team, and I think we are there. so I think we've had good employee retention, I think the employee base -- I know the employee base is really excited about being one company and I've spent a lot of time with the employees from the former GoTo business as well as the LogMeIn business, but I can tell you that everyone is really excited and now with all that work behind us, now can focus on the go forward business.

--------------------------------------------------------------------------------

>>New Speaker, [33]

--------------------------------------------------------------------------------

All right, thank you very much.

--------------------------------------------------------------------------------

Operator [34]

--------------------------------------------------------------------------------

That does conclude our question-and-answer session, I'd like to turn the call back over to Bill Wagner for closing remarks.

--------------------------------------------------------------------------------

>>Bill Wagner, [35]

--------------------------------------------------------------------------------

Thank you for your questions tonight. LogMeIn finished 2016 on a high note, and with the merger now closed, we believe we have the opportunity to create a unique SaaS profile. Our focus in 2017 will be making the integration of success and laying the foundation for a company that over the long-term is targeting 10% compounded annual revenue growth, 40% adjusted EBITDA margins, and 30% cash flow. All while returning to $700 million to our shareholders. And we have a lot of work in front of us, but we are executing well, and it's an incredibly exciting time in our history. We look forward to sharing our progress when we report our Q1 results in April. Thanks again for taking the time this evening.

--------------------------------------------------------------------------------

Operator [36]

--------------------------------------------------------------------------------

Once again that does conclude today's call, we appreciate your participation.