LogMeIn Announces First Quarter 2016 Results

30% Revenue Growth; 21% Adjusted EBITDA margin; $38 million in operating cash flow; Increases FY’16 Revenue and Non-GAAP EPS Guidance


BOSTON, April 28, 2016 (GLOBE NEWSWIRE) -- LogMeIn, Inc. (NASDAQ:LOGM), a leading provider of cloud-based connectivity, today announced its results for the first quarter ended March 31, 2016.

First quarter 2016 highlights include:

  • Revenue was $79.7 million, up 30% compared with the first quarter of 2015
  • Adjusted EBITDA was $16.6 million and Adjusted EBITDA margin was 20.8%, versus $12.6 million and 20.5% in the first quarter of 2015
  • Non-GAAP net income was $9.1 million, or $0.35 per diluted share, as compared to $8.5 million, or $0.33 per diluted share, in the first quarter of 2015
  • GAAP net loss was $1.1 million, or $0.04 per share, as compared to GAAP net income of $0.4 million, or $0.01 per diluted share, in the first quarter of 2015
  • Cash flow from operations was $38.0 million, or 48% of revenue, as compared to $40.0 million in the first quarter of 2015
  • Total deferred revenue was $165.3 million, up 29% from $128.6 million in the first quarter of 2015
  • The Company closed the quarter with cash, cash equivalents, and short-term investments of $226.5 million

“We had a great first quarter and very strong start to the year, with revenue, adjusted EBITDA margins, and earnings per share all well above the high end of our guidance,” said Bill Wagner, President and CEO of LogMeIn. “Our Collaboration, Identity and Access Management, and Service Clouds all saw double digit year-over-year revenue growth, and our key strategic products significantly outperformed the business, overall.”

Business Outlook   
Based on information available as of April 28, 2016, the Company is issuing guidance for the second quarter 2016 and fiscal year 2016. 

Second Quarter 2016:  The Company expects second quarter revenue to be in the range of $81.5 million to $82.0 million.

Adjusted EBITDA is expected to be in the range of $19.8 million to $20.2 million.  

Non-GAAP net income is expected to be in the range of $11.6 million to $11.9 million, or $0.45 to $0.46 per diluted share.  Non-GAAP net income excludes an estimated $10.0 million in stock-based compensation expense, $0.2 million in litigation-related expense, and $4.4 million in acquisition-related costs and amortization.

Non-GAAP net income for the second quarter assumes an effective tax rate of approximately 30%. Non-GAAP net income per diluted share for the second quarter of 2016 is based on an estimated 25.9 million fully-diluted weighted average shares outstanding.

Including stock-based compensation expense, litigation-related expense, and acquisition-related costs and amortization, we expect to report GAAP net income in the range of $1.7 million to $2.0 million, or $0.07 to $0.08 per share.

GAAP net income for the second quarter assumes an effective tax rate of approximately 20%. GAAP net income per share for the second quarter of 2016 is based on an estimated 25.9 million fully-diluted weighted average shares outstanding.

Fiscal year 2016:  The Company expects full year 2016 revenue to be in the range of $330.0 million to $332.0 million. 

Adjusted EBITDA is expected to be in the range of $81.8 million to $85.3 million.

Non-GAAP net income is expected to be in the range of $47.6 million to $50.0 million, or $1.83 to $1.93 per diluted share. Non-GAAP net income excludes an estimated $36.8 million in stock-based compensation expense, $0.6 million in litigation-related expense, and $18.4 million in acquisition-related costs and amortization. 

Non-GAAP net income for the full fiscal year 2016 assumes an effective tax rate of approximately 30%.  Non-GAAP net income per diluted share for 2016 is based on an estimated 26.0 million fully-diluted weighted average shares outstanding.

Including stock-based compensation expense, litigation-related expense, and acquisition-related costs and amortization, we expect to report GAAP net income in the range of $9.7 million to $12.5 million, or $0.37 to $0.48 per diluted share.  

GAAP net income for the full year assumes an effective tax rate of 20%.  GAAP net income per share for 2016 is based on an estimated 26.0 million fully-diluted weighted average shares outstanding. 

A reconciliation of the most comparable GAAP financial measures to non-GAAP measures used above is included in the tables attached to this release.

Conference Call Information for Today, Thursday, April 28, 2016
The Company will host a corresponding conference call and live webcast at 5:00 p.m. Eastern Time today.  To access the conference call, dial 877-407-9124 (for the U.S.) or 201-689-8584 (for international callers).  A live webcast will be available on the Investor Relations section of the Company’s corporate website at www.LogMeInInc.com and via replay beginning approximately two hours after the completion of the call.  An audio replay of the call will also be available to investors until 11:59 p.m. Eastern Time on May 28th, 2016, by dialing 877-660-6853 (for the U.S.) or 201-612-7415 (for international callers) and entering passcode 13634718.

Non-GAAP Financial Measures
This press release contains non-GAAP financial measures including 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 and non-GAAP cash flow from operations.

Adjusted EBITDA is GAAP net income (loss) excluding income tax expense (benefit), interest, and other (income) expense, net, depreciation and amortization, acquisition related costs, stock-based compensation expense, and litigation related expense.  Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by revenue.  Non-GAAP operating income excludes acquisition related costs and amortization, stock-based compensation expense, and litigation related expense. Non-GAAP provision for income taxes excludes the tax impact of acquisition related costs and amortization, stock-based compensation expense, and litigation related expense. Non-GAAP net income and non-GAAP net income per diluted share exclude acquisition related costs and amortization, stock-based compensation expense, and litigation related expense. Non-GAAP cash flow from operations excludes payments and receipts related to litigation related costs, and acquisition related payments.

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, including this press release, 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. (NASDAQ:LOGM) simplifies how people connect to each other and the world around them.  With millions of users worldwide, our cloud-based solutions make it possible for people and companies to connect and engage with their workplace, colleagues, customers and products anywhere, anytime. LogMeIn is headquartered in Boston with offices in Bangalore, Budapest, Dublin, London, San Francisco and Sydney.

Cautionary Language Concerning Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding the popularity, value and effectiveness of the Company's products and services, the Company’s ability to deliver future growth, and the Company's financial guidance for fiscal year 2016 and the second quarter of 2016. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond the Company's control.  The Company's actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, dependence on the remote support and software market, customer adoption of the Company's solutions, the Company’s ability to execute on its strategic initiatives, the Company’s ability to integrate acquired products or companies, the Company's ability to attract new customers and retain existing customers, adverse economic conditions in general and adverse economic conditions specifically affecting the markets in which the Company operates, the effectiveness of the Company’s cybersecurity measures, intellectual property litigation, the Company's ability to continue to promote and maintain its brand in a cost-effective manner, the Company's ability to compete effectively, the Company's ability to develop and introduce new products and add-ons or enhancements to existing products, the Company's ability to manage growth, the Company's ability to attract and retain key personnel, the Company's ability to protect its intellectual property and other proprietary rights, the result of any pending litigation, and other risks detailed in the Company's other publicly available filings with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent the Company's views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. The Company undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this press release.

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


 
LogMeIn, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(In thousands)
      
      
     
  December 31, March 31, 
   2015    2016   
      
ASSETS 
Current assets:     
  Cash and cash equivalents $123,143  $141,191  
  Marketable securities  85,284   85,314  
  Accounts receivable, net   16,011   15,139  
  Prepaid expenses and other current assets   11,997   15,968  
  Total current assets  236,435   257,612  
Property and equipment, net  21,711   23,438  
Restricted cash  2,467   2,618  
Intangibles, net  71,590   68,902  
Goodwill  117,545   117,545  
Other assets  5,753   6,305  
Deferred income tax assets  198   214  
  Total assets $455,699  $476,634  
      
LIABILITIES AND EQUITY 
Current liabilities:     
  Accounts payable $10,327  $10,911  
  Accrued liabilities  31,674   30,282  
  Deferred revenue, current portion  134,297   162,874  
  Total current liabilities  176,298   204,067  
Long-term debt  60,000   52,500  
Deferred revenue, net of current portion  2,692   2,386  
Deferred tax liabilities  5,812   5,860  
Other long-term liabilities  3,086   5,321  
  Total liabilities  247,888   270,134  
Commitments and contingencies     
Preferred stock    -      -   
Equity:     
  Common stock  275   277  
  Additional paid-in capital  276,793   284,394  
  Retained earnings  21,074   20,001  
  Accumulated other comprehensive loss  (5,216)  (4,690) 
  Treasury stock  (85,115)  (93,482) 
  Total equity  207,811   206,500  
Total liabilities and equity $455,699  $476,634  
      

 

 
LogMeIn, Inc.
Condensed Consolidated Statements of Operations (unaudited)
(In thousands, except per share data)
     
  Three Months Ended March 31,
   2015    2016  
     
Revenue  $61,109  $79,734 
Cost of revenue  7,982   11,200 
  Gross profit  53,127   68,534 
Operating expenses    
  Research and development  9,123   15,364 
  Sales and marketing  34,386   42,242 
  General and administrative  6,706   10,252 
  Legal settlements  3,600   - 
  Amortization of acquired intangibles  276   1,383 
  Total operating expenses  54,091   69,241 
Loss from operations  (964)  (707)
Interest income  175   183 
Interest expense  (37)  (392)
Other income (expense), net  1,261   (404)
Income (loss) before income taxes  435   (1,320)
(Provision for) benefit from income taxes  (63)  247 
Net income (loss) $372  $(1,073)
     
Net income (loss) per share:    
  Basic $0.02  $(0.04)
  Diluted $0.01  $(0.04)
Weighted average shares outstanding:    
  Basic  24,627   25,152 
  Diluted  25,557   25,152 
     
Calculation of Non-GAAP Operating Income, Non-GAAP Net Income and Non-GAAP Diluted Net Income per share (unaudited)
(In thousands, except per share data)
     
  Three Months Ended March 31,
   2015    2016  
     
GAAP Loss from operations $(964) $(707)
Add Back:    
Stock-based compensation expense  4,853   8,592 
Litigation related expenses  4,259   35 
Acquisition related costs and amortization   2,513   5,760 
Non-GAAP Operating income  10,661   13,680 
Interest and other income (expense), net  1,399   (613)
Non-GAAP Income before income taxes  12,060   13,067 
Non-GAAP Provision for income taxes   (3,547)  (4,002)
Non-GAAP Net income $8,513  $9,065 
     
Non-GAAP Diluted net income per share: $0.33  $0.35 
Diluted weighted average shares outstanding used in    
  computing per share amounts:  25,557   25,815 
     
Calculation of Adjusted EBITDA (unaudited)
(In thousands)
     
  Three Months Ended March 31,
   2015    2016  
     
GAAP Net income (loss) $372  $(1,073)
Add Back:    
Stock-based compensation expense  4,853   8,592 
Litigation related expenses  4,259   35 
Acquisition related costs   1,528   3,222 
Interest and other (income) expense, net  (1,399)  613 
Income tax expense (benefit)  63   (247)
Depreciation and amortization expense  2,877   5,444 
  Adjusted EBITDA $12,553  $16,586 
     
Stock-Based Compensation Expense (unaudited)
(In thousands)
     
  Three Months Ended March 31,
   2015    2016  
     
Stock-based compensation expense:    
  Cost of revenue $354  $548 
  Research and development  1,328   1,498 
  Sales and marketing  2,030   3,827 
  General and administrative  1,141   2,719 
  Total stock based-compensation $4,853  $8,592 
     

 

 
LogMeIn, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(In thousands)
     
     
     
  Three Months Ended March 31,
   2015    2016  
Cash flows from operating activities    
Net income (loss) $372  $(1,073)
Adjustments to reconcile net income (loss) to net cash    
  provided by operating activities:    
  Depreciation and amortization  2,877   5,444 
  Amortization of premiums on investments  67   137 
  Change in fair value of contingent consideration liability  2   332 
  Amortization of debt issuance costs  23   70 
  Provision for bad debts  19   19 
  Stock-based compensation  4,853   8,592 
  Other, net  5   (12)
  Changes in assets and liabilities:    
  Accounts receivable  5,031   1,053 
  Prepaid expenses and other current assets  (8,691)  (4,098)
  Other assets  194   (85)
  Accounts payable  3,843   1,712 
  Accrued liabilities  3,894   (2,498)
  Deferred revenue  27,484   26,344 
  Other long-term liabilities  5   2,063 
  Net cash provided by operating activities (1)  39,978   38,000 
Cash flows from investing activities    
Purchases of marketable securities  (19,996)  (13,784)
Proceeds from sale or disposal or maturity of marketable securities  20,000   13,750 
Purchases of property and equipment  (3,901)  (4,376)
Intangible asset additions  (1,018)  (392)
Cash paid for acquisitions  -   (61)
Increase in restricted cash and deposits  (50)  (126)
  Net cash used in investing activities  (4,965)  (4,989)
Cash flows from financing activities    
Repayments of borrowings under credit facility  -   (7,500)
Proceeds from issuance of common stock upon option exercises  8,850   1,125 
Payments of withholding taxes in connection with restricted stock unit vesting  (1,642)  (2,115)
Payment of debt issuance costs  (676)  (265)
Payment of contingent consideration  (226)  - 
Purchase of treasury stock  (5,064)  (8,367)
  Net cash provided by (used in) financing activities  1,242   (17,122)
Effect of exchange rate changes on cash and cash equivalents  (5,055)  2,159 
Net increase in cash and cash equivalents  31,200   18,048 
Cash and cash equivalents, beginning of period  100,960   123,143 
Cash and cash equivalents, end of period $132,160  $141,191 
     
(1) Cash flows from operating activities in the three months ended March 31, 2015 and 2016 includes $2.0 million and $4.5 million, respectively, of acquisition-related contingent retention-based bonus payments.
     
     
Calculation of Non-GAAP Cash Flows from Operating Activities (unaudited)
(In thousands)
     
     
  Three Months Ended March 31,
   2015    2016  
     
GAAP Cash flows from operating activities $39,978  $38,000 
Add Back:    
Litigation related payments  177   100 
Acquisition related payments  15   140 
Cash flows from operating activities before litigation related payments and     
  acquisition related payments $40,170  $38,240 
     

 


            

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