LogMeIn Announces Second Quarter 2020 Results

BOSTON, July 29, 2020 (GLOBE NEWSWIRE) -- LogMeIn, Inc. (NASDAQ: LOGM), a leading provider of cloud-based connectivity, today announced its results for the second quarter ended June 30, 2020.

Second quarter 2020 financial highlights include:

  • Revenue was $350.7 million, up 12% compared with the second quarter of 2019
  • GAAP net income was $19.0 million or $0.39 per diluted share and non-GAAP net income was $75.9 million or $1.54 per diluted share
  • EBITDA was $101.6 million or 29.0% of revenue and Adjusted EBITDA was $119.3 million or 34.0% of revenue
  • Cash flow from operations was $80.7 million or 23.0% of revenue and adjusted free cash flow was $88.6 million or 25.3% of revenue
  • Total deferred revenue was $458.4 million, up $7.1 million from the first quarter of 2020

Update on the Merger 
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, LogMeIn’s stockholders voted to adopt the merger agreement at a special stockholders meeting. In July 2020, the parties received the final regulatory approvals required to complete the transaction and now anticipate the merger to close later in the third quarter of 2020, following the completion of Francisco Partners’ and Evergreen Coast Capital Corp.’s debt marketing periods, and subject to the satisfaction or waiver of any remaining 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 second 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 after the market closes on July 29, 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.’s (Nasdaq:LOGM) category-defining products unlock the potential of the modern workforce by making it possible for millions of people and businesses around the globe to do their best work, whenever, however, and most importantly, wherever. A pioneer in remote work technology and a driving force behind today’s work-from-anywhere movement, LogMeIn has become one of the world’s largest SaaS companies with tens of millions of active users, more than 3,500 global employees, over $1.2 billion in annual revenue and more than 2 million customers worldwide who use its software as an essential part of their daily lives. The company 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, June 30,
   2019    2020  
     
ASSETS
Current assets:    
  Cash and cash equivalents $    128,005   $    249,464  
  Accounts receivable, net     107,595      108,959  
  Prepaid expenses and other current assets    89,351      103,585  
  Total current assets    324,951      462,008  
Property and equipment, net    99,157      97,911  
Operating lease assets    99,026      94,539  
Restricted cash    1,883      1,796  
Intangibles, net    840,427      736,107  
Goodwill    2,414,287      2,414,229  
Other assets    68,272      85,203  
Deferred tax assets    7,994      9,090  
  Total assets $    3,855,997   $    3,900,883  
     
LIABILITIES AND EQUITY
Current liabilities:    
  Accounts payable $    52,104   $    43,965  
  Current operating lease liabilities    18,470      19,346  
  Accrued liabilities    161,996      151,198  
  Deferred revenue, current portion    390,087      448,755  
  Total current liabilities    622,657      663,264  
Long-term debt    200,000      200,000  
Deferred revenue, net of current portion    18,076      9,616  
Deferred tax liabilities    170,482      151,684  
Non-current operating lease liabilities    88,674      84,768  
Other long-term liabilities    15,400      20,394  
  Total liabilities    1,115,289      1,129,726  
Equity:    
  Common stock    573      577  
  Additional paid-in capital    3,369,893      3,393,750  
  Retained earnings    4,931      12,687  
  Accumulated other comprehensive income (loss)    684      (484)
  Treasury stock    (635,373)    (635,373)
  Total equity    2,740,708      2,771,157  
Total liabilities and equity $    3,855,997   $    3,900,883  
     


LogMeIn, Inc.    
Condensed Consolidated Statements of Operations (unaudited)    
(In thousands, except per share data)    
         
  Three Months Ended June 30, Six Months Ended June 30,
   2019    2020    2019    2020  
         
Revenue $313,064  $350,727  $620,764  $673,110 
Cost of revenue  80,767   93,497   158,455   178,375 
Gross profit  232,297   257,230   462,309   494,735 
Operating expenses:        
Research and development  40,379   37,170   81,096   77,049 
Sales and marketing  120,825   121,521   235,459   247,731 
General and administrative  34,539   30,291   68,425   63,990 
Restructuring charge  956   3,032   9,430   21,573 
Amortization of acquired intangibles  39,390   33,287   78,889   66,615 
Total operating expenses  236,089   225,301   473,299   476,958 
Income (loss) from operations  (3,792)  31,929   (10,990)  17,777 
Interest income  415   225   1,076   492 
Interest expense  (2,126)  (1,132)  (4,269)  (2,812)
Other income (expense), net  (107)  (374)  (367)  65 
Income (loss) before income taxes  (5,610)  30,648   (14,550)  15,522 
(Provision for) benefit from income taxes  (912)  (11,607)  (1,011)  (7,766)
Net income (loss) $(6,522) $19,041  $(15,561) $7,756 
         
Net income (loss) per share:        
Basic $(0.13) $0.39  $(0.31) $0.16 
Diluted $(0.13) $0.39  $(0.31) $0.16 
Weighted average shares outstanding:        
Basic  49,768   48,887   50,201   48,744 
Diluted  49,768   49,186   50,201   49,189 


LogMeIn, Inc.   
Calculation of Non-GAAP Revenue (unaudited)   
          
   Three Months Ended June 30, Six Months Ended June 30,
    2019    2020    2019    2020  
      
   (in thousands) (in thousands)
GAAP Revenue $313,064  $350,727  $620,764  $673,110 
 Add Back:        
 Effect of acquisition accounting on fair value of acquired deferred revenue  330   -   748   - 
Non-GAAP Revenue $313,394  $350,727  $621,512  $673,110 
          
Calculation of Non-GAAP Operating Income, Non-GAAP Net Income and Non-GAAP Net Income per Diluted Share (unaudited)   
          
   Three Months Ended June 30, Six Months Ended June 30,
    2019    2020    2019    2020  
      
   (In thousands, except per share data) (In thousands, except per share data)
GAAP Net income (loss) from operations $(3,792) $31,929  $(10,990) $17,777 
 Add Back:        
 Effect of acquisition accounting on fair value of acquired deferred revenue  330   -   748   - 
 Stock-based compensation expense  18,203   13,432   33,234   30,293 
 Acquisition related costs  2,947   168   6,871   2,631 
 Merger related costs  -   355   -   2,608 
 Restructuring charge  956   3,032   9,430   21,573 
 Litigation related expenses  530   786   693   1,706 
 Amortization of acquired intangibles  60,428   52,619   120,897   105,305 
Non-GAAP Operating income  79,602   102,321   160,883   181,893 
 Interest and other expense, net  (1,818)  (1,281)  (3,560)  (2,255)
Non-GAAP Income before income taxes  77,784   101,040   157,323   179,638 
 Non-GAAP Provision for income taxes  (19,173)  (25,182)  (38,859)  (44,603)
Non-GAAP Net income $58,611  $75,858  $118,464  $135,035 
          
Non-GAAP net income per diluted share $1.17  $1.54  $2.34  $2.75 
Diluted weighted average shares outstanding used in computing per share amounts  50,027   49,186   50,587   49,189 
          
Calculation of EBITDA and Adjusted EBITDA (unaudited)   
          
   Three Months Ended June 30, Six Months Ended June 30,
    2019    2020    2019    2020  
      
   (in thousands) (in thousands)
GAAP Net income (loss) $(6,522) $19,041  $(15,561) $7,756 
 Add Back:        
 Interest and other expense, net  1,818   1,281   3,560   2,255 
 Income tax provision (benefit)  912   11,607   1,011   7,766 
 Amortization of acquired intangibles  60,428   52,619   120,897   105,305 
 Depreciation and amortization expense  15,961   17,009   31,436   33,568 
EBITDA  72,597   101,557   141,343   156,650 
 Add Back:        
 Effect of acquisition accounting on fair value of acquired deferred revenue  330   -   748   - 
 Stock-based compensation expense  18,203   13,432   33,234   30,293 
 Acquisition related costs  2,947   168   6,871   2,631 
 Merger related costs  -   355   -   2,608 
 Restructuring charge  956   3,032   9,430   21,573 
 Litigation related expenses  530   786   693   1,706 
Adjusted EBITDA $95,563  $119,330  $192,319  $215,461 
 EBITDA Margin  23.2%  29.0%  22.8%  23.3%
 Adjusted EBITDA Margin  30.5%  34.0%  30.9%  32.0%
          
Calculation of Adjusted Cash Flows from Operations and Adjusted Free Cash Flow (unaudited)   
          
   Three Months Ended June 30, Six Months Ended June 30,
    2019    2020    2019    2020  
      
   (in thousands) (in thousands)
GAAP Cash flows from operations $83,717  $80,656  $203,367  $168,655 
 Add Back:        
 Litigation related payments  5   1,229   19   1,794 
 Acquisition retention-based bonus payments  3,763   9,343   5,226   12,629 
 Restructuring payments  5,155   13,901   7,049   17,543 
 Merger related payments  -   1,860   -   12,666 
 Acquisition related payments  1,065   59   1,879   562 
Adjusted cash flows from operations   93,705   107,048   217,540   213,849 
 Purchases of property and equipment  (9,894)  (9,703)  (22,081)  (18,104)
 Intangible asset additions  (9,830)  (8,759)  (18,745)  (19,078)
Adjusted Free Cash Flow $73,981  $88,586  $176,714  $176,667 
 GAAP Cash flows from operations as a % of Non-GAAP Revenue  26.7%  23.0%  32.7%  25.1%
 Adjusted Cash flows from operations as a % of Non-GAAP Revenue  29.9%  30.5%  35.0%  31.8%
 Adjusted Free Cash Flow as a % of Non-GAAP Revenue  23.6%  25.3%  28.4%  26.2%
          
Stock-Based Compensation Expense (unaudited)   
          
   Three Months Ended June 30, Six Months Ended June 30,
    2019    2020    2019    2020  
      
   (in thousands) (in thousands)
Cost of revenue $1,301  $1,232  $2,281  $2,490 
Research and development  3,914   3,737   7,989   8,393 
Sales and marketing  5,216   4,660   8,994   9,133 
General and administrative  7,772   3,803   13,970   10,277 
Total stock based-compensation $18,203  $13,432  $33,234  $30,293 
          


  LogMeIn, Inc.   
  Condensed Consolidated Statements of Cash Flows (unaudited)   
  (In thousands)   
           
    Three Months Ended June 30, Six Months Ended June 30,
     2019    2020    2019    2020  
Cash flows from operating activities        
Net income (loss) $(6,522) $19,041  $(15,561) $7,756 
Adjustments to reconcile net income (loss) to net cash        
provided by operating activities:        
Stock-based compensation  18,203   13,432   33,234   30,293 
Depreciation and amortization  76,389   69,628   152,333   138,873 
Benefit from deferred income taxes  (11,135)  (10,161)  (22,786)  (19,942)
Other, net  794   838   1,131   1,359 
Changes in assets and liabilities, excluding effect of acquisitions:        
Accounts receivable  (1,914)  (2,135)  4,110   (3,121)
Prepaid expenses and other current assets  1,894   1,321   4,777   (15,226)
Other assets  (6,872)  (12,777)  (13,546)  (17,039)
Accounts payable  6,163   (713)  15,507   (9,318)
Accrued liabilities  (3,124)  (6,111)  16,226   (2,508)
Deferred revenue  6,430   4,129   30,250   52,655 
Other long-term liabilities  3,411   4,164   (2,308)  4,873 
Net cash provided by operating activities  83,717   80,656   203,367   168,655 
Cash flows from investing activities        
Purchases of property and equipment  (9,894)  (9,703)  (22,081)  (18,104)
Intangible asset additions  (9,830)  (8,759)  (18,745)  (19,078)
Acquisition of businesses, net of cash acquired  -   -   (22,463)  - 
Net cash provided by (used in) investing activities  (19,724)  (18,462)  (63,289)  (37,182)
Cash flows from financing activities        
Proceeds from issuance of common stock upon option exercises and employee stock purchase plan  41   6,771   82   6,856 
Payments of withholding taxes in connection with restricted stock unit vesting  (9,888)  (11,351)  (17,676)  (13,288)
Payment of contingent consideration  (1,857)  -   (1,857)  (1,294)
Dividends paid on common stock  (16,182)  -   (32,699)  - 
Purchase of treasury stock  (70,164)  -   (124,232)  - 
Net cash provided by (used in) financing activities  (98,050)  (4,580)  (176,382)  (7,726)
Effect of exchange rate changes on cash, cash equivalents and restricted cash  593   2,288   (792)  (2,375)
Net increase (decrease) in cash, cash equivalents and restricted cash  (33,464)  59,902   (37,096)  121,372 
Cash, cash equivalents and restricted cash, beginning of period  146,860   191,358   150,492   129,888 
Cash, cash equivalents and restricted cash, end of period $113,396  $251,260  $113,396  $251,260 
           

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