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LogMeIn Announces First Quarter 2020 Results

BOSTON, April 23, 2020 (GLOBE NEWSWIRE) -- LogMeIn, Inc. (LOGM), a leading provider of cloud-based connectivity, today announced its results for the first quarter ended March 31, 2020.

First quarter 2020 financial highlights include:

  • Revenue was $322.4 million, up 5% compared with the first quarter of 2019

  • GAAP net loss was $11.3 million or ($0.23) per share and non-GAAP net income was $59.2 million or $1.21 per diluted share

  • EBITDA was $55.1 million or 17.1% of revenue and Adjusted EBITDA was $96.1 million or 29.8% of revenue

  • Cash flow from operations was $88.0 million or 27.3% of revenue and adjusted free cash flow was $88.1 million or 27.3% of revenue

  • Total deferred revenue was $451.3 million, up $43.1 million from the fourth quarter of 2019

Confirming status of definitive merger agreement

In December 2019, LogMeIn announced that it had reached a definitive agreement to be acquired by affiliates of Francisco Partners and Evergreen Coast Capital Corp., the private equity affiliate of Elliott Management Corporation. On March 12, 2020, the Company announced that its stockholders had voted to adopt the merger agreement. The transaction is expected to close in mid-2020, subject to receipt of FCC and remaining state communications regulatory approvals and other customary closing conditions.

Conference Call and Financial Outlook

LogMeIn will not be holding a conference call or providing a financial outlook due to the Company’s pending transaction with affiliates of Francisco Partners and Evergreen Coast Capital Corp.

Where to Find Additional Business and Financial Information

Additional information regarding the Company’s first quarter results, financial condition and operations can be found in the Company’s Quarterly Report on Form 10-Q, which will be filed with the SEC before the market opens on April 24, 2020. A copy of the Company’s Quarterly Report on Form 10-Q will be available on the SEC’s website, http://www.sec.gov, and the Company’s investor relations website at https://investor.logmeininc.com/about-us/investors/financials/sec-filings/default.aspx.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures including non-GAAP revenue, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, non-GAAP operating income, non-GAAP income before provision for income taxes, non-GAAP provision for income taxes, non-GAAP net income, non-GAAP net income per diluted share, adjusted cash flow from operations, and adjusted free cash flow.

  • Non-GAAP revenue excludes the impact of the fair value acquisition accounting adjustment on acquired deferred revenue.

  • EBITDA is GAAP net income (loss) excluding interest, income taxes, other (expense) income, net, and depreciation and amortization expense.

  • EBITDA margin is calculated by dividing EBITDA by revenue.

  • Adjusted EBITDA is EBITDA excluding the impact of the fair value acquisition accounting adjustment on acquired deferred revenue, acquisition-related costs, merger-related costs, stock-based compensation expense, restructuring charges, and litigation-related expense.

  • Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by non-GAAP revenue, or GAAP revenue if not different.

  • Non-GAAP operating income excludes the impact of the fair value acquisition accounting adjustment on acquired deferred revenue, acquisition related costs and amortization, merger-related costs, stock-based compensation expense, restructuring charges, and litigation-related expense.

  • Non-GAAP provision for income taxes excludes the tax impact of the fair value acquisition accounting adjustment on acquired deferred revenue, acquisition-related costs and amortization, merger-related costs, stock-based compensation expense, restructuring charges, litigation-related expense, and discrete integration related tax impacts.

  • Non-GAAP net income and non-GAAP net income per diluted share reflects the adjustments noted in non-GAAP operating income and non-GAAP provision for income taxes above.

  • Adjusted cash flow from operations excludes acquisition retention-based bonus, litigation, restructuring, acquisition-related payments, merger-related payments and transaction and transition-related tax payments.

  • Adjusted free cash flow is adjusted cash flow from operations excluding purchases of property and equipment and intangible asset additions.

The exclusion of certain expenses in the calculation of non-GAAP financial measures should not be construed as an inference that these costs are unusual or infrequent. We anticipate excluding these expenses in the future presentation of our non-GAAP financial measures. The Company believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to the Company's financial condition and results of operations. The Company's management uses these non-GAAP measures to compare the Company's performance to that of prior periods and uses these measures in financial reports prepared for management and the Company's board of directors. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company's financial measures with other software-as-a-service companies, many of which present similar non-GAAP financial measures to investors. The Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant elements that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management in determining these non-GAAP financial measures. In order to compensate for these limitations, management of the Company presents its non-GAAP financial measures in connection with its GAAP results. The Company urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, and not to rely on any single financial measure to evaluate the Company's business. Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP measures used in this press release are included in this release.

About LogMeIn, Inc.
LogMeIn, Inc. (LOGM) simplifies how people connect with each other and the world around them to drive meaningful interactions, deepen relationships, and create better outcomes for individuals and businesses. One of the world’s top 10 public SaaS companies, and a market leader in unified communications and collaboration, identity and access management, and customer engagement and support solutions, LogMeIn has millions of customers spanning virtually every country across the globe. LogMeIn is headquartered in Boston, Massachusetts with additional locations in North America, South America, Europe, Asia and Australia.

LogMeIn is a registered trademark of LogMeIn, Inc. in the US and other countries around the world.

Contact Information:
Investors
Rob Bradley
LogMeIn, Inc.
781-897-1301
rbradley@LogMeIn.com

Press
Craig VerColen
LogMeIn, Inc.
781-897-0696
Press@LogMeIn.com

LogMeIn, Inc.

Condensed Consolidated Balance Sheets (unaudited)

(In thousands)

December 31,

March, 31

2019

2020

ASSETS

Current assets:

Cash and cash equivalents

$

128,005

$

189,550

Accounts receivable, net

107,595

106,541

Prepaid expenses and other current assets

89,351

104,283

Total current assets

324,951

400,374

Property and equipment, net

99,157

98,449

Operating lease assets

99,026

99,067

Restricted cash

1,883

1,808

Intangibles, net

840,427

787,091

Goodwill

2,414,287

2,413,611

Other assets

68,272

71,435

Deferred tax assets

7,994

8,364

Total assets

$

3,855,997

$

3,880,199

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

52,104

$

45,478

Current operating lease liabilities

18,470

18,979

Accrued liabilities

161,996

158,465

Deferred revenue, current portion

390,087

437,266

Total current liabilities

622,657

660,188

Long-term debt

200,000

200,000

Deferred revenue, net of current portion

18,076

13,992

Deferred tax liabilities

170,482

161,200

Non-current operating lease liabilities

88,674

88,735

Other long-term liabilities

15,400

15,878

Total liabilities

1,115,289

1,139,993

Equity:

Common stock

573

573

Additional paid-in capital

3,369,893

3,384,902

Retained earnings

4,931

(6,354

)

Accumulated other comprehensive income (loss)

684

(3,542

)

Treasury stock

(635,373

)

(635,373

)

Total equity

2,740,708

2,740,206

Total liabilities and equity

$

3,855,997

$

3,880,199


LogMeIn, Inc.

Condensed Consolidated Statements of Operations (unaudited)

(In thousands, except per share data)

Three Months Ended March 31,

2019

2020

Revenue

$

307,700

$

322,383

Cost of revenue

77,688

84,878

Gross profit

230,012

237,505

Operating expenses:

Research and development

40,717

39,879

Sales and marketing

114,634

126,210

General and administrative

33,886

33,699

Restructuring charge

8,474

18,541

Amortization of acquired intangibles

39,499

33,328

Total operating expenses

237,210

251,657

Income (loss) from operations

(7,198

)

(14,152

)

Interest income

661

267

Interest expense

(2,143

)

(1,680

)

Other income (expense), net

(260

)

439

Income (loss) before income taxes

(8,940

)

(15,126

)

(Provision for) benefit from income taxes

(99

)

3,841

Net income (loss)

$

(9,039

)

$

(11,285

)

Net income (loss) per share:

Basic

$

(0.18

)

$

(0.23

)

Diluted

$

(0.18

)

$

(0.23

)

Weighted average shares outstanding:

Basic

50,639

48,600

Diluted

50,639

48,600


LogMeIn, Inc.

Calculation of Non-GAAP Revenue (unaudited)

Three Months Ended March 31,

2019

2020

(in thousands)

GAAP Revenue

$

307,700

$

322,383

Add Back:

Effect of acquisition accounting on fair value of acquired deferred revenue

418

-

Non-GAAP Revenue

$

308,118

$

322,383

Calculation of Non-GAAP Operating Income, Non-GAAP Net Income and Non-GAAP Net Income per Diluted Share (unaudited)

Three Months Ended March 31,

2019

2020

(In thousands, except per share data)

GAAP Net income (loss) from operations

$

(7,198

)

$

(14,152

)

Add Back:

Effect of acquisition accounting on fair value of acquired deferred revenue

418

-

Stock-based compensation expense

15,031

16,861

Acquisition related costs

3,924

2,463

Merger related costs

-

2,253

Restructuring charge

8,474

18,541

Litigation related expenses

163

920

Amortization of acquired intangibles

60,469

52,686

Non-GAAP Operating income

81,281

79,572

Interest and other expense, net

(1,742

)

(974

)

Non-GAAP Income before income taxes

79,539

78,598

Non-GAAP Provision for income taxes

(19,686

)

(19,421

)

Non-GAAP Net income

$

59,853

$

59,177

Non-GAAP net income per diluted share

$

1.17

$

1.21

Diluted weighted average shares outstanding used in computing per share amounts

50,990

49,098

Calculation of EBITDA and Adjusted EBITDA (unaudited)

Three Months Ended March 31,

2019

2020

(in thousands)

GAAP Net income (loss)

$

(9,039

)

$

(11,285

)

Add Back:

Interest and other expense, net

1,742

974

Income tax provision (benefit)

99

(3,841

)

Amortization of acquired intangibles

60,469

52,686

Depreciation and amortization expense

15,475

16,559

EBITDA

68,746

55,093

Add Back:

Effect of acquisition accounting on fair value of acquired deferred revenue

418

-

Stock-based compensation expense

15,031

16,861

Acquisition related costs

3,924

2,463

Merger related costs

-

2,253

Restructuring charge

8,474

18,541

Litigation related expenses

163

920

Adjusted EBITDA

$

96,756

$

96,131

EBITDA Margin

22.3

%

17.1

%

Adjusted EBITDA Margin

31.4

%

29.8

%

Calculation of Adjusted Cash Flows from Operations and Adjusted Free Cash Flow (unaudited)

Three Months Ended March 31,

2019

2020

(in thousands)

GAAP Cash flows from operations

$

119,650

$

87,999

Add Back:

Litigation related payments

14

565

Acquisition retention-based bonus payments

1,463

3,286

Restructuring payments

1,894

3,642

Merger related payments

-

10,806

Acquisition related payments

814

503

Adjusted cash flows from operations

123,835

106,801

Purchases of property and equipment

(12,187

)

(8,401

)

Intangible asset additions

(8,915

)

(10,319

)

Adjusted Free Cash Flow

$

102,733

$

88,081

GAAP Cash flows from operations as a % of Non-GAAP Revenue

38.8

%

27.3

%

Adjusted Cash flows from operations as a % of Non-GAAP Revenue

40.2

%

33.1

%

Adjusted Free Cash Flow as a % of Non-GAAP Revenue

33.3

%

27.3

%

Stock-Based Compensation Expense (unaudited)

Three Months Ended March 31,

2019

2020

(in thousands)

Cost of revenue

$

980

$

1,258

Research and development

4,075

4,656

Sales and marketing

3,778

4,473

General and administrative

6,198

6,474

Total stock based-compensation

$

15,031

$

16,861


LogMeIn, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(In thousands)

Three Months Ended March 31,

2019

2020

Cash flows from operating activities

Net income (loss)

$

(9,039

)

$

(11,285

)

Adjustments to reconcile net income (loss) to net cash

provided by operating activities:

Stock-based compensation

15,031

16,861

Depreciation and amortization

75,944

69,245

Benefit from deferred income taxes

(11,651

)

(9,781

)

Other, net

337

521

Changes in assets and liabilities, excluding effect of acquisitions:

Accounts receivable

6,024

(986

)

Prepaid expenses and other current assets

2,883

(16,547

)

Other assets

(6,674

)

(4,262

)

Accounts payable

9,344

(8,605

)

Accrued liabilities

19,350

3,603

Deferred revenue

23,820

48,526

Other long-term liabilities

(5,719

)

709

Net cash provided by operating activities

119,650

87,999

Cash flows from investing activities

Purchases of property and equipment

(12,187

)

(8,401

)

Intangible asset additions

(8,915

)

(10,319

)

Acquisition of businesses, net of cash acquired

(22,463

)

-

Net cash provided by (used in) investing activities

(43,565

)

(18,720

)

Cash flows from financing activities

Proceeds from issuance of common stock upon option exercises

41

85

Payments of withholding taxes in connection with restricted stock unit vesting

(7,789

)

(1,937

)

Payment of contingent consideration

-

(1,294

)

Dividends paid on common stock

(16,517

)

-

Purchase of treasury stock

(54,067

)

-

Net cash provided by (used in) financing activities

(78,332

)

(3,146

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(1,385

)

(4,663

)

Net increase (decrease) in cash, cash equivalents and restricted cash

(3,632

)

61,470

Cash, cash equivalents and restricted cash, beginning of period

150,492

129,888

Cash, cash equivalents and restricted cash, end of period

$

146,860

$

191,358