LogMeIn Announces First Quarter 2020 Results

BOSTON, April 23, 2020 (GLOBE NEWSWIRE) -- LogMeIn, Inc. 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. 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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