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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  

 

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Source: LogMeIn, Inc.