LogMeIn Announces Second Quarter 2019 Results

BOSTON, July 25, 2019 (GLOBE NEWSWIRE) -- LogMeIn, Inc. (NASDAQ: LOGM), a leading provider of cloud-based connectivity, today announced its results for the second quarter ended June 30, 2019.

Second quarter financial highlights include:

• GAAP revenue was $313.1 million and non-GAAP revenue was $313.4 million
• GAAP net loss was $6.5 million or ($0.13) per share and non-GAAP net income was $58.6 million or $1.17 per diluted share
• EBITDA was $72.6 million or 23.2% of GAAP revenue and Adjusted EBITDA was $95.6 million or 30.5% of non-GAAP revenue
• Cash flow from operations was $83.7 million or 26.7% of non-GAAP revenue, and adjusted free cash flow was $74.0 million or 23.6% of non-GAAP revenue
• Total GAAP deferred revenue was $409.1 million
• The Company closed the quarter with cash and cash equivalents of $111.6 million and $200.0 million of borrowings under its existing credit agreement

Second quarter operational highlights include:

• Launched the expanded suite of LastPass Business solutions that include single-sign on (SSO) and multi-factor authentication - LastPass Enterprise, LastPass MFA, LastPass Identity
• Unveiled Bold360 Service, Bold360 Advise and Bold360 Acquire; three new offerings purpose-built to help organizations deliver impactful customer experience from the very first engagement throughout the entire customer lifecycle
• Announced GoToRoom partnership with Dolby, whose best-in-class hardware solutions will help turn huddle and conference rooms into high-end video enabled collaboration spaces
• Two Software & Information Industry Association (SIIA) CODiE awards for Best Collaboration Solution (GoToMeeting) and for Best Customer Service Solution (Bold360)

“We had a strong second quarter, exceeding the high-end of our guidance on all key financial metrics, while making meaningful progress executing the strategic investment plan we outlined in February of this year,” said Bill Wagner, President and CEO of LogMeIn.  “We improved our competitive position in our core meeting market while successfully launching new product offerings aimed at accelerating our momentum in our growth markets. Most significantly, the contribution of our growth products continued to accelerate and is now 24 percent of total company revenue.” 

Business Outlook
Based on information available as of July 25, 2019, the Company is issuing guidance for the third quarter 2019 and fiscal year 2019. 

Third Quarter 2019: The Company expects third quarter GAAP and non-GAAP revenue to be in the range of $314 million to $316 million. 

EBITDA is expected to be in the range of $80 million to $81 million, or approximately 25% of GAAP revenue.  Adjusted EBITDA is expected to be in the range of $108 million to $109 million, or approximately 34.5% of non-GAAP revenue. 

Non-GAAP net income is expected to be in the range of $67 million to $68 million, or $1.35 to $1.37 per diluted share.  Non-GAAP net income excludes an estimated $19 million in stock-based compensation expense, $3 million in acquisition and litigation-related costs, $60 million of amortization expense of acquired intangible assets, and $6 million of restructuring charges, as well as the income tax effect of the above items.  

Non-GAAP net income for the third quarter assumes an effective tax rate of approximately 25% and GAAP net income assumes a tax provision of approximately $1 million for the third quarter.  Non-GAAP and GAAP net income per diluted share is based on an estimated 49.7 million fully-diluted weighted average shares outstanding. 

Including stock-based compensation expense, acquisition-related costs and amortization, litigation-related expense, and restructuring charges, the Company expects to report GAAP net income in the range of breakeven to $1 million, or $0.00 to $0.02 per diluted share.         

Fiscal year 2019: The Company expects full year 2019 non-GAAP revenue to be in the range of $1.258 billion to $1.263 billion.  The Company expects full year 2019 GAAP revenue to be in the range of $1.257 billion to $1.262 billion.  Non-GAAP revenue adds back $1 million for the impact of an acquisition accounting adjustment recorded to reduce acquired deferred revenue to the fair value of the remaining obligation.

EBITDA is expected to be in the range of $307 million to $311 million, or approximately 24% of GAAP revenue.  Adjusted EBITDA is expected to be in the range of $409 million to $413 million, or approximately 33% of non-GAAP revenue.

Non-GAAP net income is expected to be in the range of $253 million to $256 million, or $5.05 to $5.11 per diluted share.  Non-GAAP net income adds back the non-GAAP revenue adjustment described above and excludes an estimated $71 million in stock-based compensation expense, $14 million in acquisition and litigation-related costs, $242 million of amortization expense of acquired intangible assets, and $16 million of restructuring charges, as well as the income tax effect of the above items.

Non-GAAP net income for the fiscal year assumes an effective tax rate of approximately 25% and GAAP net loss for the fiscal year assumes a tax provision of approximately $2 million.  Non-GAAP net income per diluted share is based on an estimated 50.0 million fully-diluted weighted average shares outstanding.  GAAP net loss per share is based on an estimated 49.6 million weighted average shares outstanding.

Including stock-based compensation expense, acquisition-related costs and amortization, litigation-related expense, and restructuring charges, the Company expects to report GAAP net loss in the range of $9 million to $5 million, or ($0.18) to ($0.10) per share.

Promotion of Chris Manton-Jones to Senior Vice President of Worldwide Sales
The Company is announcing the promotion of Chris Manton-Jones from SVP & General Manager, International to SVP of Worldwide Sales, reporting directly to the Company’s Chief Operating Officer, Marc van Zadelhoff.  Chris has led all international sales for the Company since 2015 and has been an integral part of the team that helped scale LogMeIn’s global business.  Prior to LogMeIn, Chris also led large multinational sales organizations at IBM and Verint, where he developed domain expertise in customer engagement and contact centers.  As part of a leadership succession plan, Chris will be taking over worldwide sales responsibilities from Larry D’Angelo, who is leaving the Company in September 2019. 

Dividend
In accordance with its previously announced capital return plan, the Company will pay a $0.325 per share dividend on August 23rd, 2019 to stockholders of record as of August 7th, 2019.  The Company currently has approximately 49.4 million shares of common stock outstanding.

Conference Call Information for Today, Thursday, July 25, 2019
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 (800) 309-1256 and enter passcode 757118.  A live webcast will be available on the Investor Relations section of the Company’s corporate website at https://www.logmeininc.com and via replay beginning approximately two hours after the completion of the call until the Company’s announcement of its financial results for the next quarter.  An audio replay of the call will also be available to investors beginning at approximately 8:00 p.m. Eastern Time on July 25, 2019 until 8:00 p.m. Eastern Time on August 1, 2019, by dialing 888-203-1112 and entering passcode 5336663.

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, 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, 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, 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, and 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. (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. 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.

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 progress made on the Company’s strategic initiatives and revenue growth objectives, improvements made to the Company’s competitive positioning, the contributions made by our growth products to total Company revenue, as well as the Company's financial guidance for the third quarter of 2019 and fiscal year 2019. 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, 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, 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 including intellectual property 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.

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

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

Source: LogMeIn, Inc.