LogMeIn Announces First Quarter 2020 Results


BOSTON, April 23, 2020 (GLOBE NEWSWIRE) -- LogMeIn, Inc. (NASDAQ: 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. (NASDAQ: 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