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8-K - 8-K - LogMeIn, Inc.d764144d8k.htm

Exhibit 99.1

LogMeIn Reports 35 Percent Year-Over-Year Revenue Growth in the

Second Quarter, Raises Guidance by $6 Million

Q2 Revenue of $55 Million; Operating Cash Flow 38% of revenue;

Increases FY’14 Revenue Guidance to $216.5-218.0 Million

Boston, July 24, 2014 – LogMeIn, Inc. (NASDAQ: LOGM) today announced its results for the second quarter of 2014. Total revenue increased 35 percent to $55.0 million from $40.7 million reported in the second quarter of 2013.

Adjusted EBITDA for the second quarter of 2014 was $11.5 million, or 21 percent of revenue, as compared to $8.1 million, or 20 percent of revenue in the second quarter of 2013.

Non-GAAP net income for the second quarter of 2014 was $7.3 million, or $0.29 per diluted share. Non-GAAP net income excludes $6.7 million in stock compensation expense, $181,000 in patent litigation related expense and $2.0 million in acquisition related costs and amortization. This compares to non-GAAP net income of $3.3 million, or $0.13 per diluted share, reported in the second quarter of 2013.

GAAP net income for the second quarter of 2014 was $1.3 million, or $0.05 per diluted share, as compared to GAAP net loss of $1.4 million, or $0.06 per diluted share, reported in the second quarter of 2013.

GAAP cash flow from operations for the second quarter of 2014 was $21.0 million, or 38 percent of revenue. The Company closed the quarter with cash, cash equivalents and short-term investments of $221.0 million. Additionally, the Company reported total deferred revenue of $108.3 million, an increase of 39 percent from the $77.7 million reported in the second quarter of 2013.

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

“We’re happy to report another very good quarter and a great first half, with revenue and earnings that exceeded the high-end of our guidance,” said Michael Simon, CEO of LogMeIn.

“Our key growth drivers continue to perform very well, with join.me once again delivering 100-plus percent year-over-year revenue growth, strong ongoing contribution from our SMB IT customer base and early, encouraging customer demand and traction in the Internet of Things with Xively.”

“As a result, we are now forecasting revenue growth in excess of thirty percent for 2014,” concluded Simon.


Business Outlook

Based on information available as of July 24, 2014, LogMeIn is issuing guidance for the third quarter 2014 and fiscal year 2014.

Third Quarter 2014: The Company expects third quarter revenue to be in the range of $56.0 million to $56.5 million.

Adjusted EBITDA is expected to be in the range of $11.5 million to $12.0 million, representing an adjusted EBITDA margin of 20 to 21 percent.

Non-GAAP net income is expected to be in the range of $6.7 million to $7.1 million, or $0.27 to $0.28 per diluted share. Non-GAAP net income excludes an estimated $6.7 million of stock compensation expense, $100,000 in patent litigation related expense and $2.0 million in acquisition related costs and amortization.

Non-GAAP net income for the third quarter assumes an effective tax rate of approximately 30 percent. Non-GAAP net income per diluted share for the third quarter of 2014 is based on an estimated 25.0 million fully-diluted weighted average shares outstanding.

Including stock compensation expense, patent litigation related expense and acquisition related costs and amortization, we expect to report GAAP net income in the range of $700,000 to $1.1 million, or $0.03 to $0.04 per share.

GAAP net income for the third quarter assumes an effective tax rate of approximately 20 percent. GAAP net income per share for the third quarter of 2014 is based on an estimated 25.0 million weighted average shares outstanding.

Fiscal year 2014: The Company expects full year 2014 revenue to be in the range of $216.5 million to $218.0 million.

Adjusted EBITDA is expected to be in the range of $45.0 million to $48.0 million, representing an adjusted EBITDA margin of 21 to 22 percent.

Non-GAAP net income is expected to be in the range of $26.3 million to $28.0 million, or $1.05 to $1.12 per diluted share. Non-GAAP net income excludes an estimated $25.8 million in stock compensation expense, $400,000 in patent litigation related expense and $7.0 million in acquisition related costs and amortization.

Non-GAAP net income for the full fiscal year 2014 assumes an effective tax rate of approximately 30 percent. Non-GAAP net income per diluted share for 2014 is based on an estimated 25.0 million fully-diluted weighted average shares outstanding.


Including stock compensation expense, patent litigation related expense and acquisition related costs and amortization, we expect to report GAAP net income in the range of $3.5 million to $5.4 million, or $0.14 to $0.21 per share.

GAAP net income for the full year assumes an effective tax rate of 20 percent. GAAP net income per share for 2014 is based on an estimated 25.0 million weighted average shares outstanding.

Conference Call Information for Today, Thursday, July 24, 2014

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 888-481-2877 (for the U.S. and Canada) or 719-325-2495 (for international callers), and enter conference ID 715-9376. A live webcast will be available on the Investor Relations section of the Company’s corporate website at www.LogMeIn.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 24, 2014 until 11:59 p.m. Eastern Time on July 31, 2014, by dialing 888-203-1112 (for the U.S. and Canada) or 719-457-0820 (for international callers) and entering conference replay pass code 715-9376.

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 (loss) income excluding (provision for) benefit from income taxes, interest income, net, other expense, depreciation and amortization, acquisition related costs, stock compensation expense, and patent 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 compensation expense, and patent litigation related expense. Non-GAAP provision for income taxes excludes the tax impact of acquisition related costs and amortization, stock compensation expense, and patent litigation related expense. Non-GAAP net income and non-GAAP net income per diluted share exclude acquisition related costs and amortization, stock compensation expense, and patent litigation related expense. Non-GAAP cash flow from operations excludes payments and receipts related to patent 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 (Nasdaq:LOGM) transforms the way people work and live through secure connections to the computers, devices, data, and people that make up their digital world. The Company’s cloud services free millions of people to work from anywhere, empower IT professionals to securely embrace the modern cloud-centric workplace, give companies new ways to reach and support today’s connected customer, and help businesses bring the next generation of connected products to market.

LogMeIn is headquartered in Boston’s Innovation District with offices in Australia, Hungary, India, Ireland, and the UK.

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 progress or success of the Company’s products and services, and the Company’s financial guidance for fiscal year 2014 and the third quarter of 2014. 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 Company’s markets, customer adoption of the Company’s solutions, 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, 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, LogMeIn Central, LogMeIn Pro, LogMeIn Rescue, join.me, Cubby, AppGuru, Xively and BoldChat are trademarks or registered trademarks of LogMeIn 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,  
     2013     2014  
ASSETS   

Current assets:

    

Cash and cash equivalents

   $ 89,257      $ 120,828   

Marketable securities

     100,299        100,170   

Accounts receivable, net

     12,957        10,601   

Prepaid expenses and other current assets

     6,508        7,537   

Restricted cash, current portion

     23        1,492   

Deferred income taxes

     3,053        3,053   
  

 

 

   

 

 

 

Total current assets

     212,097        243,681   

Property and equipment, net

     13,198        13,661   

Restricted cash, net of current portion

     3,902        2,584   

Intangibles, net

     16,886        17,476   

Goodwill

     18,712        25,007   

Other assets

     5,348        5,231   

Deferred income taxes

     9,470        9,218   
  

 

 

   

 

 

 

Total assets

   $ 279,613      $ 316,858   
  

 

 

   

 

 

 
LIABILITIES AND EQUITY   

Current liabilities:

    

Accounts payable

   $ 6,390      $ 5,958   

Accrued liabilities

     20,110        19,023   

Deferred revenue, current portion

     82,496        106,496   
  

 

 

   

 

 

 

Total current liabilities

     108,996        131,477   

Deferred revenue, net of current portion

     2,667        1,845   

Other long-term liabilities

     611        2,022   
  

 

 

   

 

 

 

Total liabilities

     112,274        135,344   
  

 

 

   

 

 

 

Commitments and contingencies

    

Preferred stock

     —          —     

Equity:

    

Common stock

     254        262   

Additional paid-in capital

     200,235        219,127   

(Accumulated deficit) retained earnings

     (1,439     895   

Accumulated other comprehensive loss

     (1,186     (1,296

Treasury stock

     (30,525     (37,474
  

 

 

   

 

 

 

Total equity

     167,339        181,514   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 279,613      $ 316,858   
  

 

 

   

 

 

 


LogMeIn, Inc.

Condensed Consolidated Statements of Operations (unaudited)

(In thousands, except share and per share data)

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2013     2014      2013     2014  

Revenue

   $ 40,670      $ 54,975       $ 78,107      $ 103,995   

Cost of revenue

     4,776        7,397         9,185        13,517   
  

 

 

   

 

 

    

 

 

   

 

 

 

Gross profit

     35,894        47,578         68,922        90,478   
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating expenses

         

Research and development

     6,918        7,973         14,309        14,685   

Sales and marketing

     22,567        31,053         43,135        58,763   

General and administrative

     6,352        7,448         17,872        14,125   

Amortization of intangibles

     180        322         359        525   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total operating expenses

     36,017        46,796         75,675        88,098   
  

 

 

   

 

 

    

 

 

   

 

 

 

(Loss) income from operations

     (123     782         (6,753     2,380   

Interest income, net

     155        149         320        260   

Other (expense) income

     (198     224         454        196   
  

 

 

   

 

 

    

 

 

   

 

 

 

(Loss) income before income taxes

     (166     1,155         (5,979     2,836   

(Provision for) benefit from income taxes

     (1,194     175         (1,188     (502
  

 

 

   

 

 

    

 

 

   

 

 

 

Net (loss) income

   $ (1,360   $ 1,330       $ (7,167   $ 2,334   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net (loss) income per share:

         

basic

   $ (0.06   $ 0.05       $ (0.29   $ 0.10   

diluted

   $ (0.06   $ 0.05       $ (0.29   $ 0.09   

Weighted average shares outstanding:

         

basic

     24,262,417        24,425,081         24,485,429        24,134,686   

diluted

     24,262,417        25,159,340         24,485,429        24,889,730   

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

(In thousands, except share and per share data)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2013     2014     2013     2014  

GAAP (Loss) income from operations

   $ (123   $ 782      $ (6,753   $ 2,380   

Add Back:

        

Stock-based compensation expense

     5,117        6,713        10,282        12,151   

Patent litigation related expenses

     569        181        6,634        244   

Acquisition related costs and amortization

     1,141        2,012        2,211        3,152   

Non-GAAP Operating income

     6,704        9,688        12,374        17,927   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income, net

     (43     373        774        456   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Income before income taxes

     6,661        10,061        13,148        18,383   

Non-GAAP Provision for income taxes

     (3,395     (2,749     (6,753     (5,574
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net income

   $ 3,266      $ 7,312      $ 6,395      $ 12,809   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Diluted net income per share:

   $ 0.13      $ 0.29      $ 0.26      $ 0.51   

Diluted weighted average shares outstanding used in computing per share amounts:

     24,867,371        25,159,340        25,028,953        24,889,730   

Calculation of Adjusted EBITDA (unaudited)

(In thousands)

 

     For the Three Months Ended June 30,     For the Six Months Ended June 30,  
     2013     2014     2013     2014  

GAAP Net (Loss) Income

   $ (1,360   $ 1,330      $ (7,167   $ 2,334   

Add Back:

        

Stock-based compensation expense

     5,117        6,713        10,282        12,151   

Patent litigation related expenses

     569        181        6,634        244   

Acquisition related costs

     632        756        1,194        1,055   

Interest income and other expense (income), net

     43        (373     (774     (456

Income tax expense (benefit)

     1,194        (175     1,188        502   

Depreciation and amortization expense

     1,892        3,027        3,596        5,499   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 8,087      $ 11,459      $ 14,953      $ 21,329   
  

 

 

   

 

 

   

 

 

   

 

 

 

Stock-Based Compensation Expense

(In thousands)

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2013      2014      2013      2014  

Stock-based compensation expense:

           

Cost of revenue

   $ 181       $ 274       $ 384       $ 509   

Research and development

     1,045         1,008         2,062         1,784   

Sales and marketing

     2,146         2,796         4,227         4,857   

General and administrative

     1,745         2,635         3,609         5,001   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total stock based-compensation

   $ 5,117       $ 6,713       $ 10,282       $ 12,151   
  

 

 

    

 

 

    

 

 

    

 

 

 


LogMeIn, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(In thousands)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2013     2014     2013     2014  

Cash flows from operating activities

        

Net (loss) income

   $ (1,360   $ 1,330      $ (7,167   $ 2,334   

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

        

Depreciation and amortization

     1,892        3,027        3,596        5,499   

Amortization of premiums on investments

     63        59        77        122   

Provision for bad debts

     13        (2     41        32   

Provision for deferred income taxes

     167        3        198        268   

Stock-based compensation

     5,117        6,713        10,282        12,151   

Gain on disposal of equipment

     —          1        (1     (1

Changes in assets and liabilities:

        

Accounts receivable

     2,329        1,056        3,601        2,575   

Prepaid expenses and other current assets

     (535     (93     (3,388     (1,009

Other assets

     87        120        (1,794     210   

Accounts payable

     (1,280     1,441        (2,409     433   

Accrued liabilities

     (3,350     2,950        1,997        (1,327

Deferred revenue

     3,639        4,036        8,052        23,394   

Other long-term liabilities

     14        388        (174     721   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     6,796        21,029        12,911        45,402   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities

        

Purchases of marketable securities

     (10,004     (14,999     (60,381     (19,984

Proceeds from sale or disposal of marketable securities

     10,000        15,000        60,000        20,000   

Purchases of property and equipment

     (4,301     (2,568     (6,456     (4,348

Intangible asset additions

     (373     (816     (915     (1,322

Cash paid for acquisition, net of cash acquired

     —          —          —          (7,434

Decrease (increase) in restricted cash and deposits

     125        (200     125        (200
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (4,553     (3,583     (7,627     (13,288
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities

        

Proceeds from issuance of common stock upon option exercises

     193        4,533        267        10,306   

Income tax benefit from the exercise of stock options

     (23     —          2        —     

Common stock withheld to satisfy income tax withholdings for restricted stock unit vesting

     (681     (2,656     (917     (3,557

Purchase of treasury stock

     (5,627     (2,040     (14,607     (6,949
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

     (6,138     (163     (15,255     (200
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     226        (191     (883     (343
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (3,669     17,092        (10,854     31,571   

Cash and cash equivalents, beginning of period

     104,747        103,736        111,932        89,257   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 101,078      $ 120,828      $ 101,078      $ 120,828   
  

 

 

   

 

 

   

 

 

   

 

 

 

Calculation of Non-GAAP Cash Flows from Operating Activities (unaudited)

(In thousands)

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2013      2014      2013      2014  

GAAP Cash flows from operating activities

   $ 6,796       $ 21,029       $ 12,911       $ 45,402   

Add Back:

           

Patent litigation related payments

     7,895         63         7,285         360   

Acquisition related payments

     43         59         518         115   
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash flows from operating activities before patent litigation related payments and acquisition related payments

   $ 14,734       $ 21,151       $ 20,714       $ 45,877