LOGM LogMeIn Inc

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 BradleyLogMeIn, Inc.781-897-1301rbradley@LogMeIn.com 

PressCraig VerColenLogMeIn, 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