LogMeIn (LOGM) Tops Q4 EPS by 6c, Revenues Beat; Offers Q1 & FY19 EPS Guidance Below Consensus

LogMeIn (NASDAQ: LOGM) reported Q4 EPS of $1.47, $0.06 better than the analyst estimate of $1.41. Revenue for the quarter came in at $310.7 million versus the consensus estimate of $306.56 million.

• GAAP revenue was $310.2 million and non-GAAP revenue was $310.7 million
• GAAP net income was $25.4 million or $0.49 per diluted share and non-GAAP net income was $75.5 million or $1.47 per diluted share
• EBITDA was $97.4 million or 31.4% of GAAP revenue and Adjusted EBITDA was $118.7 million or 38.2% of non-GAAP revenue
• Cash flow from operations was $73.2 million or 23.5% of non-GAAP revenue, and Adjusted cash flow from operations was $86.8 million or 27.9% of non-GAAP revenue
• Total GAAP deferred revenue was $379.3 million
• The Company closed the quarter with cash and cash equivalents of $148.7 million and $200.0 million of borrowings under its existing credit agreement

“LogMeIn had a strong fourth quarter with all key metrics exceeding guidance, and perhaps more importantly, we closed the year with significant momentum in each of our growth markets,” said Bill Wagner, President and CEO of LogMeIn. “As we enter 2019, we believe we are poised to enter a new era of growth in which LogMeIn can achieve leadership positions in Unified Communications & Collaboration, Identity and Access Management, and Customer Engagement and Support. We are now embarking on an investment plan designed to accelerate growth in ways that we expect will allow us to exit 2019 growing more rapidly and give us a line of sight to double-digit organic growth.”

Chairman Succession Plan The Company is announcing a board succession plan whereby the Company’s co-founder and Chairman, Michael K. Simon, will resign from the board, effective upon the conclusion of the Company’s Annual Meeting of Stockholders on May 30, 2019 and his position as Chairman effective March 1, 2019. The Board has named Robert Calderoni, who is currently serving as a member of the Board, to succeed Mr. Simon as the Company’s Chairman.

“The success of LogMeIn is one of the brightest spots of my career in technology, and it has been my privilege to work with such an amazing group of talented people around the world. As I step down to pursue a new personal business interest, I leave with the utmost confidence in the executive leadership team,” said Michael Simon, co-founder of LogMeIn. “I fully support our strategic plans to invest in growth and believe they will lead to the creation of long-term enduring value”.

Based on information available as of February 14, 2019, the Company is issuing guidance for the first quarter 2019 and fiscal year 2019.

First Quarter 2019:

• The Company expects first quarter non-GAAP revenue to be in the range of $304 million to $306 million. The Company expects first quarter GAAP revenue to be in the range of $303 million to $305 million. 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 $65 million to $67 million, or approximately 22% of GAAP revenue. Adjusted EBITDA is expected to be in the range of $94 million to $96 million, or approximately 31% of non-GAAP revenue.
• Non-GAAP net income is expected to be in the range of $57 million to $59 million, or $1.12 to $1.15 per diluted share. Non-GAAP net income adds back the non-GAAP revenue adjustment described above and excludes an estimated $16 million in stock-based compensation expense, $3 million in acquisition and litigation-related costs, $61 million of amortization expense of acquired intangible assets, and $9 million of restructuring charges, as well as the income tax effect of the above items.
• Non-GAAP net income for the first quarter assumes an effective tax rate of approximately 25% and GAAP net income assumes a tax benefit of approximately $2 million for the first quarter. Non-GAAP net income per diluted share is based on an estimated 51.1 million fully-diluted weighted average shares outstanding. GAAP net loss per share is based on an estimated 50.7 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 $11 million to $9 million, or $0.21 to $0.17 per share.

Fiscal year 2019:

• The Company expects full year 2019 non-GAAP revenue to be in the range of $1.250 billion to $1.260 billion. The Company expects full year 2019 GAAP revenue to be in the range of $1.249 billion to $1.259 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 $300 million to $305 million, or approximately 24% of GAAP revenue. Adjusted EBITDA is expected to be in the range of $407 million to $412 million, or approximately 33% of non-GAAP revenue.
• Non-GAAP net income is expected to be in the range of $248 million to $252 million, or $4.90 to $4.97 per diluted share. Non-GAAP net income adds back the non-GAAP revenue adjustment described above and excludes an estimated $77 million in stock-based compensation expense, $13 million in acquisition and litigation-related costs, $244 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 income for the fiscal year assumes a tax benefit of approximately $1 million. Non-GAAP net income per diluted share is based on an estimated 50.6 million fully-diluted weighted average shares outstanding. GAAP net loss per share is based on an estimated 49.9 million weighted average shares outstanding.

GUIDANCE:

LogMeIn sees Q1 2019 EPS of $1.12-$1.15, versus the consensus of $1.37. LogMeIn sees Q1 2019 revenue of $304-309 million, versus the consensus of $304.07 million.

LogMeIn sees FY2019 EPS of $4.90-$4.97, versus the consensus of $5.80. LogMeIn sees FY2019 revenue of $1.25-1.26 billion, versus the consensus of $1.26 billion.

For earnings history and earnings-related data on LogMeIn (LOGM) click here.

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