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LogMeIn Announces Second Quarter 2020 Results

LogMeIn, Inc.
·14 min read

BOSTON, July 29, 2020 (GLOBE NEWSWIRE) -- LogMeIn, Inc. (NASDAQ: LOGM), a leading provider of cloud-based connectivity, today announced its results for the second quarter ended June 30, 2020.

Second quarter 2020 financial highlights include:

  • Revenue was $350.7 million, up 12% compared with the second quarter of 2019

  • GAAP net income was $19.0 million or $0.39 per diluted share and non-GAAP net income was $75.9 million or $1.54 per diluted share

  • EBITDA was $101.6 million or 29.0% of revenue and Adjusted EBITDA was $119.3 million or 34.0% of revenue

  • Cash flow from operations was $80.7 million or 23.0% of revenue and adjusted free cash flow was $88.6 million or 25.3% of revenue

  • Total deferred revenue was $458.4 million, up $7.1 million from the first quarter of 2020

Update on the Merger
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, LogMeIn’s stockholders voted to adopt the merger agreement at a special stockholders meeting. In July 2020, the parties received the final regulatory approvals required to complete the transaction and now anticipate the merger to close later in the third quarter of 2020, following the completion of Francisco Partners’ and Evergreen Coast Capital Corp.’s debt marketing periods, and subject to the satisfaction or waiver of any remaining 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 second 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 after the market closes on July 29, 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.’s (Nasdaq:LOGM) category-defining products unlock the potential of the modern workforce by making it possible for millions of people and businesses around the globe to do their best work, whenever, however, and most importantly, wherever. A pioneer in remote work technology and a driving force behind today’s work-from-anywhere movement, LogMeIn has become one of the world’s largest SaaS companies with tens of millions of active users, more than 3,500 global employees, over $1.2 billion in annual revenue and more than 2 million customers worldwide who use its software as an essential part of their daily lives. The company 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,

June 30,

2019

2020

ASSETS

Current assets:

Cash and cash equivalents

$

128,005

$

249,464

Accounts receivable, net

107,595

108,959

Prepaid expenses and other current assets

89,351

103,585

Total current assets

324,951

462,008

Property and equipment, net

99,157

97,911

Operating lease assets

99,026

94,539

Restricted cash

1,883

1,796

Intangibles, net

840,427

736,107

Goodwill

2,414,287

2,414,229

Other assets

68,272

85,203

Deferred tax assets

7,994

9,090

Total assets

$

3,855,997

$

3,900,883

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

52,104

$

43,965

Current operating lease liabilities

18,470

19,346

Accrued liabilities

161,996

151,198

Deferred revenue, current portion

390,087

448,755

Total current liabilities

622,657

663,264

Long-term debt

200,000

200,000

Deferred revenue, net of current portion

18,076

9,616

Deferred tax liabilities

170,482

151,684

Non-current operating lease liabilities

88,674

84,768

Other long-term liabilities

15,400

20,394

Total liabilities

1,115,289

1,129,726

Equity:

Common stock

573

577

Additional paid-in capital

3,369,893

3,393,750

Retained earnings

4,931

12,687

Accumulated other comprehensive income (loss)

684

(484

)

Treasury stock

(635,373

)

(635,373

)

Total equity

2,740,708

2,771,157

Total liabilities and equity

$

3,855,997

$

3,900,883


LogMeIn, Inc.

Condensed Consolidated Statements of Operations (unaudited)

(In thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

2019

2020

2019

2020

Revenue

$

313,064

$

350,727

$

620,764

$

673,110

Cost of revenue

80,767

93,497

158,455

178,375

Gross profit

232,297

257,230

462,309

494,735

Operating expenses:

Research and development

40,379

37,170

81,096

77,049

Sales and marketing

120,825

121,521

235,459

247,731

General and administrative

34,539

30,291

68,425

63,990

Restructuring charge

956

3,032

9,430

21,573

Amortization of acquired intangibles

39,390

33,287

78,889

66,615

Total operating expenses

236,089

225,301

473,299

476,958

Income (loss) from operations

(3,792

)

31,929

(10,990

)

17,777

Interest income

415

225

1,076

492

Interest expense

(2,126

)

(1,132

)

(4,269

)

(2,812

)

Other income (expense), net

(107

)

(374

)

(367

)

65

Income (loss) before income taxes

(5,610

)

30,648

(14,550

)

15,522

(Provision for) benefit from income taxes

(912

)

(11,607

)

(1,011

)

(7,766

)

Net income (loss)

$

(6,522

)

$

19,041

$

(15,561

)

$

7,756

Net income (loss) per share:

Basic

$

(0.13

)

$

0.39

$

(0.31

)

$

0.16

Diluted

$

(0.13

)

$

0.39

$

(0.31

)

$

0.16

Weighted average shares outstanding:

Basic

49,768

48,887

50,201

48,744

Diluted

49,768

49,186

50,201

49,189


LogMeIn, Inc.

Calculation of Non-GAAP Revenue (unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2019

2020

2019

2020

(in thousands)

(in thousands)

GAAP Revenue

$

313,064

$

350,727

$

620,764

$

673,110

Add Back:

Effect of acquisition accounting on fair value of acquired deferred revenue

330

-

748

-

Non-GAAP Revenue

$

313,394

$

350,727

$

621,512

$

673,110

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

Three Months Ended June 30,

Six Months Ended June 30,

2019

2020

2019

2020

(In thousands, except per share data)

(In thousands, except per share data)

GAAP Net income (loss) from operations

$

(3,792

)

$

31,929

$

(10,990

)

$

17,777

Add Back:

Effect of acquisition accounting on fair value of acquired deferred revenue

330

-

748

-

Stock-based compensation expense

18,203

13,432

33,234

30,293

Acquisition related costs

2,947

168

6,871

2,631

Merger related costs

-

355

-

2,608

Restructuring charge

956

3,032

9,430

21,573

Litigation related expenses

530

786

693

1,706

Amortization of acquired intangibles

60,428

52,619

120,897

105,305

Non-GAAP Operating income

79,602

102,321

160,883

181,893

Interest and other expense, net

(1,818

)

(1,281

)

(3,560

)

(2,255

)

Non-GAAP Income before income taxes

77,784

101,040

157,323

179,638

Non-GAAP Provision for income taxes

(19,173

)

(25,182

)

(38,859

)

(44,603

)

Non-GAAP Net income

$

58,611

$

75,858

$

118,464

$

135,035

Non-GAAP net income per diluted share

$

1.17

$

1.54

$

2.34

$

2.75

Diluted weighted average shares outstanding used in computing per share amounts

50,027

49,186

50,587

49,189

Calculation of EBITDA and Adjusted EBITDA (unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2019

2020

2019

2020

(in thousands)

(in thousands)

GAAP Net income (loss)

$

(6,522

)

$

19,041

$

(15,561

)

$

7,756

Add Back:

Interest and other expense, net

1,818

1,281

3,560

2,255

Income tax provision (benefit)

912

11,607

1,011

7,766

Amortization of acquired intangibles

60,428

52,619

120,897

105,305

Depreciation and amortization expense

15,961

17,009

31,436

33,568

EBITDA

72,597

101,557

141,343

156,650

Add Back:

Effect of acquisition accounting on fair value of acquired deferred revenue

330

-

748

-

Stock-based compensation expense

18,203

13,432

33,234

30,293

Acquisition related costs

2,947

168

6,871

2,631

Merger related costs

-

355

-

2,608

Restructuring charge

956

3,032

9,430

21,573

Litigation related expenses

530

786

693

1,706

Adjusted EBITDA

$

95,563

$

119,330

$

192,319

$

215,461

EBITDA Margin

23.2

%

29.0

%

22.8

%

23.3

%

Adjusted EBITDA Margin

30.5

%

34.0

%

30.9

%

32.0

%

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

Three Months Ended June 30,

Six Months Ended June 30,

2019

2020

2019

2020

(in thousands)

(in thousands)

GAAP Cash flows from operations

$

83,717

$

80,656

$

203,367

$

168,655

Add Back:

Litigation related payments

5

1,229

19

1,794

Acquisition retention-based bonus payments

3,763

9,343

5,226

12,629

Restructuring payments

5,155

13,901

7,049

17,543

Merger related payments

-

1,860

-

12,666

Acquisition related payments

1,065

59

1,879

562

Adjusted cash flows from operations

93,705

107,048

217,540

213,849

Purchases of property and equipment

(9,894

)

(9,703

)

(22,081

)

(18,104

)

Intangible asset additions

(9,830

)

(8,759

)

(18,745

)

(19,078

)

Adjusted Free Cash Flow

$

73,981

$

88,586

$

176,714

$

176,667

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

26.7

%

23.0

%

32.7

%

25.1

%

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

29.9

%

30.5

%

35.0

%

31.8

%

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

23.6

%

25.3

%

28.4

%

26.2

%

Stock-Based Compensation Expense (unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2019

2020

2019

2020

(in thousands)

(in thousands)

Cost of revenue

$

1,301

$

1,232

$

2,281

$

2,490

Research and development

3,914

3,737

7,989

8,393

Sales and marketing

5,216

4,660

8,994

9,133

General and administrative

7,772

3,803

13,970

10,277

Total stock based-compensation

$

18,203

$

13,432

$

33,234

$

30,293


LogMeIn, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(In thousands)

Three Months Ended June 30,

Six Months Ended June 30,

2019

2020

2019

2020

Cash flows from operating activities

Net income (loss)

$

(6,522

)

$

19,041

$

(15,561

)

$

7,756

Adjustments to reconcile net income (loss) to net cash

provided by operating activities:

Stock-based compensation

18,203

13,432

33,234

30,293

Depreciation and amortization

76,389

69,628

152,333

138,873

Benefit from deferred income taxes

(11,135

)

(10,161

)

(22,786

)

(19,942

)

Other, net

794

838

1,131

1,359

Changes in assets and liabilities, excluding effect of acquisitions:

Accounts receivable

(1,914

)

(2,135

)

4,110

(3,121

)

Prepaid expenses and other current assets

1,894

1,321

4,777

(15,226

)

Other assets

(6,872

)

(12,777

)

(13,546

)

(17,039

)

Accounts payable

6,163

(713

)

15,507

(9,318

)

Accrued liabilities

(3,124

)

(6,111

)

16,226

(2,508

)

Deferred revenue

6,430

4,129

30,250

52,655

Other long-term liabilities

3,411

4,164

(2,308

)

4,873

Net cash provided by operating activities

83,717

80,656

203,367

168,655

Cash flows from investing activities

Purchases of property and equipment

(9,894

)

(9,703

)

(22,081

)

(18,104

)

Intangible asset additions

(9,830

)

(8,759

)

(18,745

)

(19,078

)

Acquisition of businesses, net of cash acquired

-

-

(22,463

)

-

Net cash provided by (used in) investing activities

(19,724

)

(18,462

)

(63,289

)

(37,182

)

Cash flows from financing activities

Proceeds from issuance of common stock upon option exercises and employee stock purchase plan

41

6,771

82

6,856

Payments of withholding taxes in connection with restricted stock unit vesting

(9,888

)

(11,351

)

(17,676

)

(13,288

)

Payment of contingent consideration

(1,857

)

-

(1,857

)

(1,294

)

Dividends paid on common stock

(16,182

)

-

(32,699

)

-

Purchase of treasury stock

(70,164

)

-

(124,232

)

-

Net cash provided by (used in) financing activities

(98,050

)

(4,580

)

(176,382

)

(7,726

)

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

593

2,288

(792

)

(2,375

)

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

(33,464

)

59,902

(37,096

)

121,372

Cash, cash equivalents and restricted cash, beginning of period

146,860

191,358

150,492

129,888

Cash, cash equivalents and restricted cash, end of period

$

113,396

$

251,260

$

113,396

$

251,260