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LogMeIn Announces Fourth Quarter and Fiscal Year 2019 Results

BOSTON, Feb. 13, 2020 (GLOBE NEWSWIRE) -- LogMeIn, Inc. (LOGM), a leading provider of cloud-based connectivity, today announced its results for the fourth quarter and fiscal year ended December 31, 2019.

Fourth quarter 2019 highlights include:

  • GAAP revenue was $322.7 million and non-GAAP revenue was $322.9 million
  • GAAP net loss was $4.1 million or ($0.08) per share and non-GAAP net income was $69.8 million or $1.43 per diluted share
  • EBITDA was $79.4 million or 24.6% of GAAP revenue and Adjusted EBITDA was $111.1 million or 34.4% of non-GAAP revenue
  • Cash flow from operations was $74.5 million or 23.1% of non-GAAP revenue, and adjusted free cash flow was $62.6 million or 19.4% of non-GAAP revenue
  • Total GAAP deferred revenue was $408.2 million
  • The Company closed the quarter with cash and cash equivalents of $128.0 million and $200.0 million of borrowings under its existing credit agreement

Fiscal year 2019 highlights include:

  • GAAP revenue was $1.260 billion and non-GAAP revenue was $1.262 billion
  • GAAP net loss was $14.6 million or ($0.29) per share and non-GAAP net income was $256.9 million or $5.15 per diluted share
  • EBITDA was $302.9 million or 24.0% of GAAP revenue and Adjusted EBITDA was $412.7 million or 32.7% of non-GAAP revenue
  • Cash flow from operations was $360.8 million or 28.6% of non-GAAP revenue and adjusted free cash flow was $308.9 million or 24.5% of non-GAAP revenue
  • $273.1 million returned to stockholders with $208.5 million of share repurchases and $64.6 million of dividends

Conference Call and Financial Outlook       
LogMeIn will not be holding a conference call or be providing a financial outlook due to the Company’s previously announced proposed transaction with affiliates of Francisco Partners and Evergreen Coast Capital Corp., the private equity affiliate of Elliott Management Corporation.  Additional information about the proposed transaction can be found in the definitive proxy statement which was filed with the Securities and Exchange Commission (the “SEC”) on February 7, 2020.    

Where to Find Additional Business and Financial Information
Additional information regarding the Company’s fourth quarter and fiscal year 2019 results, financial condition and operations, including details regarding a global restructuring plan initiated by the Company in the first quarter of 2020 to help fund its strategic initiatives, can be found in the Form 8-K filed in connection with this press release as well as the Company’s Annual Report on Form 10-K to be filed on February 14, 2020, both of which will be available on the SEC’s website, http://www.sec.gov, and the Company’s investor relations website.

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, gain on disposition of non-core assets, 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, gain on disposition of non-core assets, stock-based compensation expense, restructuring charges, and litigation-related expense and includes amortization expense for acquired company internally capitalized software development costs that were adjusted in acquisition accounting.
  • 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, gain on disposition of non-core assets, stock-based compensation expense, restructuring charges, litigation-related expense, discrete integration related tax impacts, and the tax impact related to the enactment of the U.S. Tax Cuts and Jobs Act of 2017, and includes the tax impact of amortization expense for acquired company internally capitalized software development costs that were adjusted in acquisition accounting.
  • 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 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,   December 31,  
      2018       2019    
           
ASSETS  
Current assets:          
  Cash and cash equivalents   $ 148,652     $ 128,005    
  Accounts receivable, net     95,354       107,595    
  Prepaid expenses and other current assets     83,887       89,351    
  Total current assets     327,893       324,951    
Property and equipment, net     98,238       99,157    
Operating lease assets     -       99,026    
Restricted cash     1,840       1,883    
Intangibles, net     1,059,988       840,427    
Goodwill     2,400,390       2,414,287    
Other assets     41,545       68,272    
Deferred tax assets     6,059       7,994    
  Total assets   $ 3,935,953     $ 3,855,997    
           
LIABILITIES AND EQUITY  
Current liabilities:          
  Accounts payable   $ 35,447     $ 52,104    
  Current operating lease liabilities     -       18,470    
  Accrued liabilities     119,379       161,996    
  Deferred revenue, current portion     369,780       390,087    
  Total current liabilities     524,606       622,657    
Long-term debt     200,000       200,000    
Deferred revenue, net of current portion     9,518       18,076    
Deferred tax liabilities     201,212       170,482    
Non-current operating lease liabilities     -       88,674    
Other long-term liabilities     25,929       15,400    
  Total liabilities     961,265       1,115,289    
Equity:          
  Common stock     567       573    
  Additional paid-in capital     3,316,603       3,369,893    
  Retained earnings     84,043       4,931    
  Accumulated other comprehensive income (loss)     2,133       684    
  Treasury stock     (428,658 )     (635,373 )  
  Total equity     2,974,688       2,740,708    
Total liabilities and equity   $ 3,935,953     $ 3,855,997    
           


LogMeIn, Inc.   
Condensed Consolidated Statements of Operations (unaudited)   
(In thousands, except per share data)   
                   
    Three Months Ended December 31,   Twelve Months Ended December 31,  
      2018       2019       2018       2019    
                   
Revenue   $ 310,198     $ 322,680     $ 1,203,992     $ 1,260,385    
Cost of revenue     72,853       83,980       281,481       323,665    
  Gross profit     237,345       238,700       922,511       936,720    
Operating expenses:                  
  Research and development     40,153       39,951       169,409       160,499    
  Sales and marketing     100,399       115,015       382,997       461,078    
  General and administrative     33,462       41,401       145,453       144,780    
  Restructuring charge     -       (134 )     -       14,468    
  Gain on disposition of assets     -       -       (33,910 )     -    
  Amortization of acquired intangibles     43,841       39,312       172,539       157,569    
  Total operating expenses     217,855       235,545       836,488       938,394    
Income (loss) from operations     19,490       3,155       86,023       (1,674 )  
  Interest income     337       276       1,671       1,651    
  Interest expense     (2,128 )     (1,930 )     (6,342 )     (8,247 )  
  Other income (expense), net     (154 )     (401 )     (556 )     (588 )  
Income (loss) before income taxes     17,545       1,100       80,796       (8,858 )  
(Provision for) benefit from income taxes     7,843       (5,202 )     (6,425 )     (5,697 )  
Net income (loss)   $ 25,388     $ (4,102 )   $ 74,371     $ (14,555 )  
                   
Net income (loss) per share:                  
  Basic   $ 0.50     $ (0.08 )   $ 1.44     $ (0.29 )  
  Diluted   $ 0.49     $ (0.08 )   $ 1.42     $ (0.29 )  
Weighted average shares outstanding:                  
  Basic     50,995       48,696       51,814       49,586    
  Diluted     51,353       48,696       52,496       49,586    
                   


LogMeIn, Inc.     
Calculation of Non-GAAP Revenue (unaudited)
   
                       
      Three Months Ended December 31,   Twelve Months Ended December 31,    
        2018       2019       2018       2019      
        (in thousands)     (in thousands)    
GAAP Revenue   $ 310,198     $ 322,680     $ 1,203,992     $ 1,260,385      
  Add Back:                    
  Effect of acquisition accounting on fair value of acquired deferred revenue     533       253       3,718       1,231      
Non-GAAP Revenue   $ 310,731     $ 322,933     $ 1,207,710     $ 1,261,616      
                       
Calculation of Non-GAAP Operating Income, Non-GAAP Net Income and Non-GAAP Net Income per Diluted Share (unaudited)
   
                       
      Three Months Ended December 31,   Twelve Months Ended December 31,    
        2018       2019       2018       2019      
        (In thousands, except per share data) (In thousands, except per share data)  
GAAP Net income (loss) from operations   $ 19,490     $ 3,155     $ 86,023     $ (1,674 )    
  Add Back:                    
  Effect of acquisition accounting on fair value of acquired deferred revenue     533       253       3,718       1,231      
  Stock-based compensation expense     16,914       17,361       65,734       68,206      
  Acquisition related costs     3,806       2,665       22,880       12,926      
  Merger related costs     -       10,919       -       10,919      
  Restructuring charge     -       (134 )     -       14,468      
  Litigation related expenses     107       623       584       2,029      
  Amortization of acquired intangibles     62,158       60,139       245,244       241,263      
  Gain on disposition of assets     -       -       (33,910 )     -      
  Effect of acquisition accounting on internally capitalized software development costs     (749 )     -       (8,385 )     -      
Non-GAAP Operating income     102,259       94,981       381,888       349,368      
  Interest and other expense, net     (1,945 )     (2,055 )     (5,227 )     (7,184 )    
Non-GAAP Income before income taxes     100,314       92,926       376,661       342,184      
  Non-GAAP Provision for income taxes     (24,828 )     (23,148 )     (93,637 )     (85,238 )    
Non-GAAP Net income   $ 75,486     $ 69,778     $ 283,024     $ 256,946      
                       
Non-GAAP net income per diluted share   $ 1.47     $ 1.43     $ 5.39     $ 5.15      
Diluted weighted average shares outstanding used in computing per share amounts     51,353       48,938       52,496       49,900      
                       
Calculation of EBITDA and Adjusted EBITDA (unaudited)     
                       
      Three Months Ended December 31,   Twelve Months Ended December 31,    
        2018       2019       2018       2019      
        (in thousands)     (in thousands)    
GAAP Net income (loss)   $ 25,388     $ (4,102 )   $ 74,371     $ (14,555 )    
  Add Back:                    
  Interest and other expense, net     1,945       2,055       5,227       7,184      
  Income tax provision (benefit)     (7,843 )     5,202       6,425       5,697      
  Amortization of acquired intangibles     62,158       60,139       245,244       241,263      
  Depreciation and amortization expense     15,731       16,102       55,827       63,333      
EBITDA     97,379       79,396       387,094       302,922      
  Add Back:                    
  Effect of acquisition accounting on fair value of acquired deferred revenue     533       253       3,718       1,231      
  Stock-based compensation expense     16,914       17,361       65,734       68,206      
  Gain on disposition of assets     -       -       (33,910 )     -      
  Acquisition related costs     3,806       2,665       22,880       12,926      
  Merger related costs     -       10,919       -       10,919      
  Restructuring charge     -       (134 )     -       14,468      
  Litigation related expenses     107       623       584       2,029      
Adjusted EBITDA   $ 118,739     $ 111,083     $ 446,100     $ 412,701      
  EBITDA Margin     31.4 %     24.6 %     32.2 %     24.0 %    
  Adjusted EBITDA Margin     38.2 %     34.4 %     36.9 %     32.7 %    
                       
Calculation of Adjusted Cash Flows from Operations and Adjusted Free Cash Flow (unaudited)
   
                       
      Three Months Ended December 31,   Twelve Months Ended December 31,    
        2018       2019       2018       2019      
        (in thousands)     (in thousands)    
GAAP Cash flows from operations   $ 73,175     $ 74,481     $ 404,039     $ 360,849      
  Add Back:                    
  Litigation related payments     305       676       1,467       1,498      
  Acquisition retention-based bonus     577       1,198       3,720       7,779      
  Restructuring payments     -       655       -       10,153      
  Tax payment for gain on Xively disposition and integration-related IP realignment     10,862       -       15,098       -      
  Transaction related payments (acquisitions and dispositions)     1,890       1,542       18,684       3,859      
Adjusted cash flows from operations     86,809       78,552       443,008       384,138      
  Purchases of property and equipment     (9,375 )     (5,625 )     (30,965 )     (35,438 )    
  Intangible asset additions     (8,081 )     (10,368 )     (34,219 )     (39,789 )    
Adjusted Free Cash Flow   $ 69,353     $ 62,559     $ 377,824     $ 308,911      
  GAAP Cash flows from operations as a % of Non-GAAP Revenue     23.5 %     23.1 %     33.5 %     28.6 %    
  Adjusted Cash flows from operations as a % of Non-GAAP Revenue     27.9 %     24.3 %     36.7 %     30.4 %    
  Adjusted Free Cash Flow as a % of Non-GAAP Revenue     22.3 %     19.4 %     31.3 %     24.5 %    
                       
Stock-Based Compensation Expense (unaudited)
   
                       
      Three Months Ended December 31,   Twelve Months Ended December 31,    
        2018       2019       2018       2019      
        (in thousands)     (in thousands)    
Cost of revenue   $ 1,242     $ 1,272     $ 4,997     $ 4,862      
Research and development     4,637       4,749       18,869       17,574      
Sales and marketing     4,207       4,718       15,995       17,930      
General and administrative     6,828       6,622       25,873       27,840      
Total stock based-compensation   $ 16,914     $ 17,361     $ 65,734     $ 68,206      
                       


 LogMeIn, Inc. 
Condensed Consolidated Statements of Cash Flows (unaudited) 
 (In thousands) 
                     
        Three Months Ended December 31,   Twelve Months Ended December 31,
          2018       2019       2018       2019  
Cash flows from operating activities                
Net income (loss)   $ 25,388     $ (4,102 )   $ 74,371     $ (14,555 )
Adjustments to reconcile net income (loss) to net cash                
  provided by operating activities:                
  Stock-based compensation     16,914       17,361       65,734       68,206  
  Depreciation and amortization     77,889       76,241       301,071       304,596  
  Gain on disposition of assets, excluding transaction costs     -       -       (36,281 )     -  
  Change in fair value of contingent consideration liability     -       268       -       849  
  Restructuring-related property and equipment charges     -       -       -       3,164  
  Benefit from deferred income taxes     (23,395 )     (1,597 )     (57,456 )     (35,698 )
  Other, net     490       502       1,771       1,776  
  Changes in assets and liabilities, excluding effect of acquisitions and dispositions:                
  Accounts receivable     (8,551 )     (26,129 )     7,751       (13,521 )
  Prepaid expenses and other current assets     (22,145 )     (7,583 )     (13,671 )     (12,998 )
  Other assets     (3,765 )     (6,760 )     (16,596 )     (27,147 )
  Accounts payable     (2,471 )     (3,987 )     11,104       17,464  
  Accrued liabilities     5,697       13,738       26,811       37,884  
  Deferred revenue     7,385       11,383       35,416       29,047  
  Other long-term liabilities     (261 )     5,146       4,014       1,782  
  Net cash provided by operating activities     73,175       74,481       404,039       360,849  
Cash flows from investing activities                
Purchases of property and equipment     (9,375 )     (5,625 )     (30,965 )     (35,438 )
Intangible asset additions     (8,081 )     (10,368 )     (34,219 )     (39,789 )
Acquisition of businesses, net of cash acquired     -       -       (342,072 )     (22,463 )
Proceeds from disposition of assets     -       -       42,394       7,500  
  Net cash provided by (used in) investing activities     (17,456 )     (15,993 )     (364,862 )     (90,190 )
Cash flows from financing activities                
Borrowings (repayments) under credit facility     -       -       200,000       -  
Proceeds from issuance of common stock upon option exercises and employee stock purchase plan         -       5,071       3,831       5,204  
Payments of withholding taxes in connection with restricted stock unit vesting     (1,126 )     (1,646 )     (30,617 )     (20,114 )
Payment of contingent consideration     -       -       -       (1,857 )
Dividends paid on common stock     (15,302 )     (15,821 )     (62,202 )     (64,557 )
Purchase of treasury stock     (56,914 )     (39,316 )     (247,144 )     (208,504 )
  Net cash provided by (used in) financing activities     (73,342 )     (51,712 )     (136,132 )     (289,828 )
Effect of exchange rate changes on cash, cash equivalents and restricted cash     (1,336 )     2,081       (6,762 )     (1,435 )
Net increase (decrease) in cash, cash equivalents and restricted cash     (18,959 )     8,857       (103,717 )     (20,604 )
Cash, cash equivalents and restricted cash, beginning of period     169,451       121,031       254,209       150,492  
Cash, cash equivalents and restricted cash, end of period   $ 150,492     $ 129,888     $ 150,492     $ 129,888