Canada Markets close in 4 hrs 40 mins

LogMeIn (LOGM) Q3 Earnings and Revenues Surpass Estimates

Zacks Equity Research

LogMeIn LOGM delivered third-quarter 2019 non-GAAP earnings of $1.39 per share, which came ahead of the Zacks Consensus Estimate of $1.36. However, the metric was a penny less than the year-ago quarterly figure.

Meanwhile, the company’s non-GAAP revenues for the reported quarter summed $317 million, beating the Zacks Consensus Estimate of $315 million and also growing approximately 2.5% year over year. Strong performance of the company’s growth products is a consistent key driver.

Quarter in Detail

Unified Communication and Collaboration (UCC) business dipped 2% year over year to $172 million. However, Jive revenues surged 37% year over year to $37 million. Strong adoption of UCaaS suite is an added positive.

Identity and Access Management revenues rose 13% from the year-ago quarter to $103 million, aided by LastPass, which soared 64% year over year to $22 million.

Customer Engagement and Support business declined 3% on a year-over-year basis to $43 million. Further, slowdown in legacy GoToAssist, GoToAssist Corporate, LogMein Rescue business is a dampener. However, large deal wins for Bold360 AI during the quarter are an upside.

The company’s growth products, particularly Jive and LastPass, accounting for 26% of revenues in the third quarter grew 34% year over year.

The company’s gross renewal rate across all products was nearly 80%. Excluding Jive, renewal rates for Collaboration were 82% in the quarter under discussion.

LogMein, Inc. Price, Consensus and EPS Surprise

LogMein, Inc. Price, Consensus and EPS Surprise

LogMein, Inc. price-consensus-eps-surprise-chart | LogMein, Inc. Quote

Margins

In the third quarter, the company’s non-GAAP operating income decreased 5.9% year over year to $93.5 million. Also, operating margin contracted 260 bps to 29.5%.

Adjusted EBITDA was down 5% year over year to $109.3 million. Additionally, adjusted EBITDA margin shrank 270 bps to 34.5%.

Balance Sheet and Other Financial Details

LogMeIn ended the third quarter with cash and cash equivalents of $119.2 million compared with $111.5 million, sequentially.

The company generated $88.05 million of adjusted cash flow from operational activities and $69.6 million of adjusted free cash flow in the quarter under review.

In the third quarter, the company repurchased 628,000 shares worth $45 million and paid out $16 million as dividends.

Guidance

For the fourth quarter of 2019, the company expects revenues in the range of $319-$321 million. The Zacks Consensus Estimate is currently pegged at $323.4 million.

Adjusted EBITDA is projected between $110 million and $111 million. While adjusted EBITDA margin is anticipated to be 34.5%.

The company forecasts earnings per share in the band of $1.39-$1.41. The Zacks Consensus Estimate currently stands at $1.38.

For 2019, revenues are envisioned to be $1.258-$1.260 billion, tweaked from $1.258-$1.263 billion predicted earlier. Adverse foreign exchange volatility is likely to have an impact of $3 million.

Adjusted EBITDA is predicted to be $412-$413 million compared with $409-$413 million projected earlier. Adjusted EBITDA margin is assumed to be 33%.

The company’s earnings per share are likely to be in the $5.12-$5.14 bracket, raised from the earlier outlook of $5.05-$5.11.

Zacks Rank and Stocks to Consider

LogMeIn currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader technology sector are Benefitfocus BNFT, Five9, Inc. FIVN and NIC EGOV, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Benefitfocus, Five9 and NIC is currently estimated at 20%, 10% and 18%, respectively.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.