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LogMein (LOGM) Q4 Earnings and Revenues Surpass Estimates

Zacks Equity Research

LogMeIn LOGM delivered fourth-quarter 2018 non-GAAP earnings of $1.47 per share, which came ahead of the Zacks Consensus Estimate of $1.41 and also marked a year-over-year improvement of 22.5%.

The company’s non-GAAP revenues for the reported quarter summed $311 million, beating the Zacks Consensus Estimate of $307 million and also growing approximately 11% year over year, driven by Jive, Bold360 ai and LastPass.

Quarter in Detail

Unified Communication and Collaboration (UCC) business, accounting for 56% of total revenues, inched up 1% year over year. Jive revenues surged more than 35% year over year in the quarter under review.  UCC excluding Jive declined 4% on a year-over-year basis.

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Identity and Access Management Cloud revenues rose 12% from the year-ago quarter, generating 30% of total revenues, aided by LastPass, which consistently shows a great momentum. LastPass closed five large enterprise deals in December alone.

Customer Engagement and Support business excluding Xively was down 2% on a year-over-year basis at $44 million, representing 14% of revenues. The segment is favored by Bold360, which considering the customer interest and competitive position, demonstrates a solid growth opportunity in the large and strategic customer engagement market.

During the quarter under consideration, Bold360 ai led the company to snap up eight six-figure deals, equaling the figure achieved during 2017.

International revenues contributed to 22% of the total revenue base.

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, approximately 100 basis points (bps) lower, sequentially.

LogMein, Inc. Price, Consensus and EPS Surprise

LogMein, Inc. Price, Consensus and EPS Surprise | LogMein, Inc. Quote

Margins

During the fourth quarter, the company’s non-GAAP operating income increased 10.5% year over year to $102.3 million. However, operating margin contracted 20 bps to 32.9%.

Adjusted EBITDA increased 9% year over year to $118.7 million. Adjusted EBITDA margin contracted 70 bps to 38.2%.

Balance Sheet and Other Financial Details

LogMeIn ended the fourth quarter with cash and cash equivalents of $252.4 million, which was flat sequentially.

The company generated $32.9 million of cash flow from operational activities compared with  $73.7 million of cash flow generated in the previous reported quarter.

In the fourth quarter, the company repurchased 667,000 shares worth $57 million and paid $15 million as dividends.

Full-Year Results

For 2018, the company delivered annual revenues of $1.2 billion, adjusted EBITDA of 37% and earnings per share of $5.39.

Jive recorded 35% year-over-year revenue growth in 2018 compared with 20% in 2017, driven by bundling Jive with GoToMeeting in the second half of the year.

Guidance

For the first quarter of 2019, the company expects revenues in the range of $304-$306 million.

Adjusted EBITDA is projected between $94 million and $96 million. Adjusted EBITDA margin is anticipated to be 31%. The company forecasts earnings per share in the range of $1.12-$1.15.

For 2019, revenues are envisioned in the band of $1.25-$1.26 billion. Adjusted EBITDA is predicted between $407 million and $412 million. Adjusted EBITDA margin is assumed to be 33%. The company’s earnings per share are likely to be within $4.90-$4.97.

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 CommVault Systems, Inc. CVLT, MeetMe, Inc. MEET and Verint Systems Inc. VRNT, each sporting 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 CommVault, MeetME and Verint is projected at 15.8%, 20% and 10%, respectively.

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