LogMeIn Announces Third Quarter 2013 Results

BOSTON, Oct. 24, 2013 (GLOBE NEWSWIRE) -- LogMeIn, Inc. (Nasdaq:LOGM), a leading provider of essential cloud and mobile services, today announced its results for the quarter ended September 30, 2013.

For the third quarter of 2013, total revenue increased 21 percent to $43.0 million from $35.4 million reported in the third quarter of 2012.

Non-GAAP net income for the third quarter of 2013 was $3.5 million, or $0.14 per diluted share. Non-GAAP net income excludes $4.6 million in stock compensation expense, $100,000 in patent litigation related expense and $700,000 in acquisition related costs and amortization. This compares to non-GAAP net income of $4.6 million, or $0.18 per diluted share, reported in the third quarter of 2012.

GAAP net loss for the third quarter of 2013 was $56,000, or $0.00 per diluted share, as compared to GAAP net income of $700,000, or $0.03 per diluted share, reported in the third quarter of 2012.

Non-GAAP cash flow from operations for the third quarter of 2013 was $8.8 million, or 20 percent of revenue. The Company closed the quarter with cash, cash equivalents and short-term investments of $199.4 million. The Company spent $5.7 million in the quarter to repurchase approximately 190,000 shares under its share repurchase program. Additionally, the Company reported total deferred revenue of $80.3 million, an increase of 23 percent from the $65.3 million reported in the third quarter of 2012.

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 good quarter with results that exceeded the high-end of our guidance. Strong growth in our collaboration business, especially with join.me, as well as continued strength in our core IT management business helped us deliver year-over-year revenue growth in excess of 20 percent," said Michael Simon, CEO of LogMeIn. "As a result, we're raising our full year outlook."

"In addition, we continue to invest in initiatives to evolve Gravity, our proven cloud platform, to address the next generation of connectivity challenges impacting our large base of high-value customers. We believe these investments, and the related introduction of new services like Xively and AppGuru, will put us in a favorable competitive position in our existing markets in the near-term, while opening up longer-term opportunities in some of technology's most promising markets."  

Business Outlook

Based on information available as of October 24, 2013, LogMeIn is issuing guidance for the fourth quarter 2013 and fiscal year 2013. 

Fourth Quarter 2013: The Company expects fourth quarter revenue to be in the range of $43.7 million to $44.2 million.

Non-GAAP net income is expected to be in the range of $3.5 million to $3.8 million, or $0.14 to $0.15 per diluted share. Non-GAAP net income excludes an estimated $5.4 million of stock compensation expense, $600,000 in patent litigation related expenses, and $600,000 in acquisition related costs and amortization.

Non-GAAP net income for the fourth quarter assumes an effective tax rate of approximately 50 percent. Non-GAAP net income per diluted share for the fourth quarter of 2013 is based on an estimated 25.2 million fully-diluted weighted average shares outstanding.

Including stock compensation expense, patent litigation related expenses, and acquisition related costs and amortization, we expect to report a GAAP net loss in the range of $1.5 million to $1.8 million, or $0.06 to $0.07 per share. 

The GAAP net loss for the fourth quarter assumes income tax expense of $2.2 million to $2.5 million. GAAP net loss per share for the fourth quarter of 2013 is based on an estimated 24.3 million weighted average shares outstanding.

Fiscal year 2013: The Company expects full year 2013 revenue to be in the range of $164.8 million to $165.3 million. 

Non-GAAP net income is expected to be in the range of $13.4 million to $13.7 million, or $0.53 to $0.54 per diluted share. Non-GAAP net income excludes an estimated $20.3 million in stock compensation expense, $7.3 million in patent litigation related expenses, and $3.5 million in acquisition related costs and amortization. 

Non-GAAP net income for the full fiscal year 2013 assumes an effective tax rate of approximately 50 percent. Non-GAAP net income per diluted share for 2013 is based on an estimated 25.2 million fully-diluted weighted average shares outstanding.

Including stock compensation expense, patent litigation related expenses, and acquisition related costs and amortization, we expect to report a GAAP net loss in the range of $8.7 million to $9.0 million, or $0.36 to $0.37 per share.  

The GAAP net loss for the full year assumes income tax expense of $5.6 million to $5.9 million. GAAP net loss per share for 2013 is based on an estimated 24.4 million weighted average shares outstanding. 

Conference Call Information for Today, Thursday, October 24, 2013

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 877-941-1465 (for the U.S. and Canada) or 480-629-9867 (for international callers). 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 7:00 p.m. Eastern Time on October 24, 2013 until 11:59 p.m. Eastern Time on October 31, 2013, by dialing 800-406-7325 (for the U.S. and Canada) or 303-590-3030 (for international callers) and entering passcode 4644868#.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures including 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. 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, the Netherlands, 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, continued investment in the Company's technology, the success of the Company's new and existing products and services, the Company's investment in new products, the expected benefits of continued investment in cloud and mobile services, potential market sizes and opportunities, and the Company's financial guidance for fiscal year 2013 and the fourth quarter of 2013. 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 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 Free, LogMeIn Rescue, LogMeIn Ignition, join.me, Cubby, AppGuru, Xively and BoldChat are trademarks or registered trademarks of LogMeIn in the US and other countries around the world.

LogMeIn, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(In thousands)
     
  December 31, September 30,
  2012 2013
     
ASSETS    
Current assets:    
 Cash and cash equivalents  $ 111,932   $ 98,984 
 Marketable securities  100,161   100,402 
 Accounts receivable, net   13,231   11,318 
 Prepaid expenses and other current assets   3,620   8,651 
 Deferred income taxes  3,214   3,165 
 Total current assets  232,158   222,520 
Property and equipment, net  6,576   12,297 
Restricted cash  3,807   3,787 
Intangibles, net  6,368   5,572 
Goodwill  18,883   18,712 
Other assets  1,550   3,620 
Deferred income taxes  10,196   10,055 
 Total assets  $ 279,538   $ 276,563 
     
LIABILITIES AND EQUITY    
Current liabilities:    
 Accounts payable  $ 7,773   $ 5,467 
 Accrued liabilities  16,657   17,611 
 Deferred revenue, current portion  65,875   77,332 
 Total current liabilities  90,305   100,410 
Deferred revenue, net of current portion  3,774   2,940 
Other long-term liabilities  822   610 
 Total liabilities  94,901   103,960 
Commitments and contingencies    
Preferred stock  --   -- 
Equity:    
 Common stock  248   253 
 Additional paid-in capital  178,546   195,062 
 Retained earnings (accumulated deficit)  6,243   (980)
 Accumulated other comprehensive loss  (400)  (1,440)
 Treasury stock  --   (20,292)
 Total equity  184,637   172,603 
Total liabilities and equity  $ 279,538   $ 276,563 
     
 
LogMeIn, Inc.
Condensed Consolidated Statements of Operations (unaudited)
(In thousands, except share and per share data)
         
  Three Months Ended September 30, Nine Months Ended September 30,
  2012 2013 2012 2013
         
Revenue   $ 35,368   $ 42,970   $ 101,853   $ 121,077 
Cost of revenue  3,687   4,685   10,529   13,870 
 Gross profit  31,681   38,285   91,324   107,207 
Operating expenses        
 Research and development  6,788   7,693   19,704   22,002 
 Sales and marketing  18,215   22,327   51,535   65,462 
 General and administrative  4,983   5,913   14,689   23,785 
 Amortization of intangibles  146   161   419   520 
 Total operating expenses  30,132   36,094   86,347   111,769 
Income (loss) from operations  1,549   2,191   4,977   (4,562)
         
Interest income, net  245   117   677   437 
Other (expense) income  (5)  (141)  (510)  313 
Income (loss) before income taxes  1,789   2,167   5,144   (3,812)
Provision for income taxes  (1,071)  (2,223)  (3,774)  (3,411)
         
Net income (loss)  $ 718   $ (56)  $ 1,370   $ (7,223)
         
Net income (loss) per share:        
 basic  $ 0.03   $ (0.00)  $ 0.06   $ (0.30)
 diluted  $ 0.03   $ (0.00)  $ 0.05   $ (0.30)
Weighted average shares outstanding:        
 basic 24,784,939 24,248,893 24,679,268 24,403,549
 diluted 25,303,230 24,248,893 25,341,473 24,403,549
         
         
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 September 30, Nine Months Ended September 30,
  2012 2013 2012 2013
         
GAAP Income (loss) from operations  $ 1,549   $ 2,191   $ 4,977   $ (4,562)
         
Add Back:        
Stock-based compensation expense  4,334   4,613   10,407   14,895 
Patent litigation related expenses  169   104   356   6,738 
Acquisition related costs and amortization  1,192   713   4,317   2,924 
         
Non-GAAP Operating income  7,244   7,621   20,057   19,995 
         
Other income, net  240   (24)  167   750 
         
Non-GAAP Income before provision for income taxes  7,484   7,597   20,224   20,745 
         
Non-GAAP Provision for income taxes  (2,864)  (4,088)  (7,857)  (10,841)
         
Non-GAAP Net income  $ 4,620   $ 3,509   $ 12,367   $ 9,904 
         
Non-GAAP Diluted net income per share:  $ 0.18   $ 0.14   $ 0.49   $ 0.40 
Diluted weighted average shares outstanding used in computing per share amounts: 25,303,230 25,023,116 25,341,473 25,005,699
         
         
Stock-Based Compensation Expense
(In thousands)
         
  Three Months Ended September 30, Nine Months Ended September 30,
  2012 2013 2012 2013
         
Stock-based compensation expense:        
 Cost of revenue  $ 134   $ 158   $ 349   $ 542 
 Research and development  844   835   2,000   2,897 
 Sales and marketing  1,520   1,594   3,371   5,821 
 General and administrative  1,836   2,026   4,687   5,635 
 Total stock based-compensation  $ 4,334   $ 4,613   $ 10,407   $ 14,895 
         
 
LogMeIn, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(In thousands)
         
  Three Months Ended September 30, Nine Months Ended September 30,
  2012 2013 2012 2013
Cash flows from operating activities        
Net income (loss)  $ 718   $ (56)  $ 1,370   $ (7,223)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:        
 Depreciation and amortization  1,598   2,057   4,447   5,652 
 Amortization of premiums on investments  10   62   32   139 
 Provision for bad debts  23   31   78   72 
 (Benefit from) provision for deferred income taxes  (1,783)  6   (1,783)  204 
 Stock-based compensation  4,334   4,613   10,407   14,895 
 Changes in assets and liabilities:        
 Accounts receivable  (2,246)  (1,761)  (1,805)  1,841 
 Prepaid expenses and other current assets  (378)  (1,619)  (891)  (5,007)
 Other assets  (12)  (275)  (1)  (2,070)
 Accounts payable  880   228   9   (2,181)
 Accrued liabilities  2,082   (905)  4,317   1,092 
 Deferred revenue  2,467   2,571   6,605   10,623 
 Other long-term liabilities  (1,652)  (52)  (598)  (226)
 Net cash provided by operating activities  6,041   4,900   22,187   17,811 
Cash flows from investing activities        
Purchases of marketable securities  (45,111)  (4,999)  (120,098)  (65,380)
Proceeds from sale or disposal of marketable securities  45,000   5,000   115,000   65,000 
Purchases of property and equipment  (1,902)  (3,203)  (4,187)  (9,659)
Intangible asset additions  (223)  (204)  (789)  (1,119)
Cash paid for acquisition, net of cash acquired  --   --   (14,832)  -- 
(Increase) decrease in restricted cash and deposits  --   --   (3,558)  125 
 Net cash used in investing activities  (2,236)  (3,406)  (28,464)  (11,033)
Cash flows from financing activities        
Proceeds from issuance of common stock upon option exercises  582   2,263   2,595   2,530 
Income tax benefit from the exercise of stock options  2,092   641   4,644   643 
Payment of contingent consideration  (89)  (104)  (89)  (104)
Common stock withheld to satisfy income tax withholdings for restricted stock unit vesting  --   (629)  --   (1,546)
Purchase of treasury stock  --   (5,685)  --   (20,292)
 Net cash provided by (used in) financing activities  2,585   (3,514)  7,150   (18,769)
Effect of exchange rate changes on cash and cash equivalents and restricted cash  169   (74)  526   (957)
Net increase (decrease) in cash and cash equivalents  6,559   (2,094)  1,399   (12,948)
Cash and cash equivalents, beginning of period  98,444   101,078   103,604   111,932 
Cash and cash equivalents, end of period  $ 105,003   $ 98,984   $ 105,003   $ 98,984 
         
     
Calculation of Non-GAAP Cash Flows from Operating Activities (unaudited)
(In thousands)
         
  Three Months Ended September 30, Nine Months Ended September 30,
  2012 2013 2012 2013
         
GAAP Cash flows from operating activities  $ 6,041   $ 4,900   $ 22,187   $ 17,811 
         
Add Back:        
Patent litigation related payments  45   537   310   7,822 
Acquisition related payments  1,634   3,355   1,852   3,873 
         
Non-GAAP Cash flows from operating activities  $ 7,720   $ 8,792   $ 24,349   $ 29,506 
         
CONTACT: Investors         Rob Bradley         LogMeIn, Inc.         781-897-1301         rbradley@LogMeIn.com                  Press         Craig VerColen         LogMeIn, Inc.         781-897-0696         Press@LogMeIn.com

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