News Column

LogMeIn Announces Fourth Quarter and Fiscal Year 2013 Results

February 13, 2014

BOSTON, Feb. 13, 2014 (GLOBE NEWSWIRE) -- LogMeIn, Inc. (Nasdaq:LOGM), a leading provider of cloud based connectivity and collaboration services, today announced its results for the fourth quarter and fiscal year ended December 31, 2013.

For the fourth quarter of 2013, total revenue increased 22 percent to $45.2 million from $37.0 million reported in the fourth quarter of 2012.

Non-GAAP net income for the fourth quarter of 2013 was $3.9 million, or $0.16 per diluted share. Non-GAAP net income excludes $4.8 million in stock compensation expense, $738,000 in patent litigation related expense and $613,000 in acquisition related costs and amortization. This compares to non-GAAP net income of $6.0 million, or $0.24 per diluted share, reported in the fourth quarter of 2012.

GAAP net loss for the fourth quarter of 2013 was $459,000, or $0.02 per diluted share, as compared to GAAP net income of $2.2 million, or $0.09 per diluted share, reported in the fourth quarter of 2012.

For fiscal year 2013, revenue increased 20 percent to $166.3 million from $138.8 million in 2012.

Non-GAAP net income for fiscal year 2013 was $13.9 million, or $0.55 per diluted share, as compared to $18.4 million, or $0.72 per diluted share, reported in fiscal year 2012. Non-GAAP net income excludes $19.7 million in stock compensation expense, $7.5 million in patent litigation related expense and $3.5 million in acquisition related costs and amortization.

GAAP net loss for fiscal year 2013 was $7.7 million, or $0.32 per diluted share, as compared to GAAP net income of $3.6 million, or $0.14 per diluted share, reported in fiscal year 2012.

Non-GAAP cash flow from operations for the fourth quarter of 2013 was $12.8 million, or 28 percent of revenue. The Company closed the quarter with cash, cash equivalents and short-term investments of $189.6 million. During the quarter, the Company spent $10.2 million to repurchase approximately 320,000 shares under its share repurchase program. Additionally, the Company reported total deferred revenue of $85.2 million, an increase of 22 percent from the $69.6 million reported in the fourth 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 very good quarter and a very strong year with results that exceeded the high-end of our guidance, and helped us to deliver 20 percent year-over-year revenue growth," said Michael Simon, CEO of LogMeIn. "Growth in our collaboration business was especially strong, as join.me, in particular, delivered another quarter of triple digit year-over-year revenue growth."

"We know that the demand for universal connectivity is growing exponentially as more and more business and IT professionals want to collaborate and connect with an ever growing array of Internet enabled products around them. During the year, we invested to expand the capabilities of our proven Gravity platform in order to position LogMeIn to address the needs of our customers today, and help them take advantage of tomorrow's next wave of connectivity opportunities."

Simon continued, "As we look ahead to 2014, we believe sustained growth will be driven by a continued focus on helping people connect to each other across multiple devices and locations, helping IT departments manage and secure the growing numbers and types of devices and applications in the workplace, and enabling companies to transform the ways they are able to directly connect and interact with both their customers and the products they sell."

Business Outlook

Based on information available as of February 13, 2014, LogMeIn is issuing guidance for the first quarter 2014 and fiscal year 2014.

First Quarter 2014: The Company expects first quarter revenue to be in the range of $46.8 million to $47.3 million.

Adjusted EBITDA is expected to be in the range of $9.5 million to $10.0 million representing an adjusted EBITDA margin of 21 percent, at the midpoint.

Non-GAAP net income is expected to be in the range of $5.0 million to $5.3 million, or $0.20 to $0.21 per diluted share. Non-GAAP net income excludes an estimated $5.8 million of stock compensation expense, $400,000 in patent litigation related expense, and $1.1 million in acquisition related costs and amortization.

Non-GAAP net income for the first quarter assumes an effective tax rate of approximately 36 percent. Non-GAAP net income per diluted share for the first 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 a GAAP net income in the range of $300,000 to $600,000, or $0.01 to $0.02 per share.

The GAAP net income for the first quarter assumes an effective tax rate of approximately 43 percent. GAAP net income per share for the first 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 $198.0 million to $202.0 million

Adjusted EBITDA is expected to be in the range of $41.0 million to $45.0 million, representing an adjusted EBITDA margin of 22 percent, at the midpoint.

Non-GAAP net income is expected to be in the range of $21.5 million to $24.0 million, or $0.86 to $0.96 per diluted share. Non-GAAP net income excludes an estimated $23.3 million in stock compensation expense, $2.2 million in patent litigation related expense, and $5.1 million in acquisition related costs and amortization. 

Non-GAAP net income for the full fiscal year 2014 assumes an effective tax rate of approximately 36 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 a GAAP net income in the range of $1.7 million to $3.9 million, or $0.07 to $0.16 per share.  

The GAAP net income for the full year assumes an effective tax rate of 43 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, February 13, 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 877-941-9205 (for the U.S. and Canada) or 480-629-9771 (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 February 13, 2014 until 11:59 p.m. Eastern Time on February 27, 2014, by dialing 800-406-7325 (for the U.S. and Canada) or 303-590-3030 (for international callers) and entering passcode 4664143#.

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 income (loss) excluding benefit from (provision for) income taxes, interest income, net, other expense, depreciation and amortization, acquisition related costs, stock-based compensation, 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'sInnovation 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, continued investment in the Company's technology, the success of and demand for the Company's new and existing products and services, the Company's investment in new products and markets, potential market sizes, potential market growth, and the Company's financial guidance for fiscal year 2014 and the first 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 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 Rescue, 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,December 31,
 2012 2013
     
ASSETS
Current assets:    
Cash and cash equivalents  $ 111,932   $ 89,257 
Marketable securities  100,161   100,299 
Accounts receivable, net  13,231   12,957 
Prepaid expenses and other current assets  3,620   6,531 
Deferred income taxes  3,214   3,053 
Total current assets  232,158   212,097 
Property and equipment, net  6,576   13,198 
Restricted cash  3,807   3,902 
Intangibles, net  6,368   16,886 
Goodwill  18,883   18,712 
Other assets  1,550   5,348 
Deferred income taxes  10,196   9,470 
Total assets  $ 279,538   $ 279,613 
     
LIABILITIES AND EQUITY
Current liabilities:    
Accounts payable  $ 7,773   $ 6,390 
Accrued liabilities  16,657   20,110 
Deferred revenue, current portion  65,875   82,496 
Total current liabilities  90,305   108,996 
Deferred revenue, net of current portion  3,774   2,667 
Other long-term liabilities  822   611 
Total liabilities  94,901   112,274 
Commitments and contingencies    
Preferred stock  --  --
Equity:    
Common stock  248   254 
Additional paid-in capital  178,546   200,235 
Retained earnings (accumulated deficit)  6,243   (1,439)
Accumulated other comprehensive loss  (400)  (1,186)
Treasury stock  --   (30,525)
Total equity  184,637   167,339 
Total liabilities and equity  $ 279,538   $ 279,613 
 
LogMeIn, Inc.
Condensed Consolidated Statements of Operations (unaudited)
(In thousands, except share and per share data)
         
 Three Months Ended December 31,Twelve Months Ended December 31,
 2012 2013 2012 2013
         
Revenue  $ 36,984   $ 45,181   $ 138,837   $ 166,258 
Cost of revenue  3,975   4,946   14,504   18,816 
Gross profit  33,009   40,235   124,333   147,442 
Operating expenses        
Research and development  6,657   7,021   26,361   29,023 
Sales and marketing  18,523   23,332   70,058   88,794 
General and administrative  6,649   6,584   21,338   29,181 
Legal settlements  --  500   --  1,688 
Amortization of acquired intangibles  146   162   565   682 
Total operating expenses  31,975   37,599   118,322   149,368 
Income (loss) from operations  1,034   2,636   6,011   (1,926)
         
Interest income, net  210   110   887   547 
Other expense  (131)  (402)  (641)  (89)
Income (loss) before income taxes  1,113   2,344   6,257   (1,468)
Benefit from (provision for) income taxes  1,083   (2,803)  (2,691)  (6,214)
         
Net income (loss)  $ 2,196   $ (459)  $ 3,566   $ (7,682)
         
Net income (loss) per share:        
basic  $ 0.09   $ (0.02)  $ 0.14   $ (0.32)
diluted  $ 0.09   $ (0.02)  $ 0.14   $ (0.32)
Weighted average shares outstanding:        
basic 24,806,471 24,194,719 24,711,242 24,350,913
diluted 25,292,822 24,194,719 25,356,305 24,350,913
         
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 December 31,Twelve Months Ended December 31,
 2012 2013 2012 2013
         
GAAP Income (loss) from operations  $ 1,034   $ 2,636   $ 6,011   $ (1,926)
         
Add Back:        
Stock-based compensation expense  4,385   4,819   14,792   19,714 
Patent litigation related expenses  1,114   738   1,470   7,476 
Acquisition related costs and amortization  1,133   613   5,450   3,537 
         
Non-GAAP Operating income  7,666   8,806   27,723   28,801 
         
Other income (expense), net  79   (292)  246   458 
         
Non-GAAP Income before provision for income taxes  7,745   8,514   27,969   29,259 
         
Non-GAAP Provision for income taxes  (1,756)  (4,567)  (9,613)  (15,408)
         
Non-GAAP Net income  $ 5,989   $ 3,947   $ 18,356   $ 13,851 
         
Non-GAAP Diluted net income per share:  $ 0.24   $ 0.16   $ 0.72   $ 0.55 
Diluted weighted average shares outstanding used in computing per share amounts: 25,292,822 25,018,600 25,356,305 25,018,758
         
Stock-Based Compensation Expense
(In thousands)
         
 Three Months Ended December 31,Twelve Months Ended December 31,
 2012 2013 2012 2013
         
Stock-based compensation expense:        
Cost of revenue  $ 135   $ 164   $ 484   $ 706 
Research and development  825   864   2,826   3,761 
Sales and marketing  1,592   1,421   4,962   7,242 
General and administrative  1,833   2,370   6,520   8,005 
Total stock based-compensation  $ 4,385   $ 4,819   $ 14,792   $ 19,714 
 
LogMeIn, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(In thousands)
         
 Three Months Ended December 31,Twelve Months Ended December 31,
 2012 2013 2012 2013
Cash flows from operating activities        
Net income (loss)  $ 2,196   $ (459)  $ 3,566   $ (7,682)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:        
Depreciation and amortization  1,665   2,052   6,112   7,704 
Amortization of premiums on investments  22   59   54   198 
Provision for bad debts  22   44   100   116 
(Benefit from) provision for deferred income taxes  (5,682)  705   (7,465)  909 
Stock-based compensation  4,385   4,819   14,792   19,714 
Changes in assets and liabilities:        
Accounts receivable  (2,666)  (1,539)  (4,471)  302 
Prepaid expenses and other current assets  (179)  2,021   (1,070)  (2,986)
Other assets  (1,307)  (1,694)  (1,308)  (3,764)
Accounts payable  1,550   (52)  1,552   (2,233)
Accrued liabilities  1,529   2,365   5,853   3,457 
Deferred revenue  4,355   3,870   10,960   14,493 
Other long-term liabilities  180   18   (418)  (208)
Net cash provided by operating activities  6,070   12,209   28,257   30,020 
Cash flows from investing activities        
Purchases of marketable securities  (14,986)  (24,996)  (135,085)  (90,376)
Proceeds from sale or disposal of marketable securities  15,000   25,000   130,000   90,000 
Purchases of property and equipment  (1,090)  (1,279)  (5,277)  (10,938)
Intangible asset additions  (260)  (11,942)  (1,049)  (13,061)
Cash paid for acquisition, net of cash acquired  --  --  (14,831)  --
(Increase) decrease in restricted cash and deposits  --  (118)  (3,558)  7 
Net cash used in investing activities  (1,336)  (13,335)  (29,800)  (24,368)
Cash flows from financing activities        
Proceeds from issuance of common stock upon option exercises  87   1,268   2,682   3,798 
Income tax benefit from the exercise of stock options  1,991   (626)  6,635   17 
Payment of contingent consideration  --  --  (89)  (104)
Common stock withheld to satisfy income tax withholdings for restricted stock unit vesting  --  (288)  --  (1,834)
Purchase of treasury stock  --  (10,233)  --  (30,525)
Net cash provided by (used in) financing activities  2,078   (9,879)  9,228   (28,648)
Effect of exchange rate changes on cash and cash equivalents and restricted cash  117   1,278   643   321 
Net increase (decrease) in cash and cash equivalents  6,929   (9,727)  8,328   (22,675)
Cash and cash equivalents, beginning of period  105,003   98,984   103,604   111,932 
Cash and cash equivalents, end of period  $ 111,932   $ 89,257   $ 111,932   $ 89,257 
     
Calculation of Non-GAAP Cash Flows from Operating Activities (unaudited)
(In thousands)
         
 Three Months Ended December 31,Twelve Months Ended December 31,
 2012 2013 2012 2013
         
GAAP Cash flows from operating activities  $ 6,070   $ 12,209   $ 28,257   $ 30,020 
         
Add Back:        
Patent litigation related payments  89   568   399   8,390 
Acquisition related payments  28   61   1,969   3,934 
         
Non-GAAP Cash flows from operating activities  $ 6,187   $ 12,838   $ 30,625   $ 42,344 

CONTACT: Investors Rob BradleyLogMeIn, Inc. 781-897-1301 rbradley@LogMeIn.comPress Craig VerColenLogMeIn, Inc. 781-897-0696 Press@LogMeIn.com



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