LogMeIn Announces Third Quarter 2011 Results

LogMeIn, Inc., a leading provider of cloud-based connectivity solutions, today announced results for the quarter ended September 30, 2011. For the third quarter of 2011, revenue increased 22 percent to $31.0 million from $25.3 million reported in the third quarter of 2010. Core product revenue, which excludes $1.7 million of revenue related to the Company's Intel agreement from the third quarter of 2010, increased by 31 percent in the quarter from the third quarter of 2010.

The third quarter of 2011

Cash flow from operations for the third quarter of 2011 was $10.2 million, or 33 percent of revenue, as compared to $7.0 million in the third quarter of 2010.  The Company closed the quarter with cash, cash equivalents and marketable securities of $185.5 million. Additionally, the Company reported total deferred revenue of $54.0 million, an increase of 33 percent from $40.5 million reported in the third quarter of 2010 and an increase of $2.9 million, or 5.6 percent, over the prior quarter. 

"Record new clients and a growing market possibility helped to deliver a very strong third quarter, exceeding our outlook," said Michael Simon, president and CEO of LogMeIn. "Business and IT demand fueled strong sales of our Access, Collaboration and Support services, during generating solid growth in revenue and profitability." 

"Previously this year we announced a strategic initiative for expanding our Support possibility, working with the world's top mobile operators and mobile device OEMs to pre-deploy LogMeIn Rescue on new Android devices. By the end of the third quarter, Rescue was shipping on near 20 top-selling Android models from OEMs like Samsung, LG, HTC and Motorola. We believe the early success of this initiative provides distinct advantages in the marketplace and has played a key role in attracting new customer care business from some of the world's largest operators."

Simon continued, "On the Access side, our iPhone, iPad and Android app, LogMeIn Ignition, continues to be a very effective means for attracting new clients to LogMeIn's product family. Ignition had a very strong third quarter, bringing in a record number of new customer adds. In the fourth quarter we plan to unveil a new business model for Ignition, one designed to take advantage of favorable changes in the app ecosystem during expanding Ignition's appeal to a growing audience of smart device owners.  The new model will shift Ignition from a perpetually licensed product to a subscription based model, a move that we believe will better serve our customers during increasing the lifetime value of this growing base." 

The contingency arise

"Should the contingency arise, we continue to invest in our research platform to better capitalize on what we believe to be large and emerging opportunities.  In the third quarter, this included organic investments in cloud-based data services - we successfully deployed our first data services cluster in August - as then as our acquisition of the Internet of Things platform, Pachube, which will significantly expand the number and types of devices that can connect to our services. "

"We expect that these investments and the evolution of our business will open the doors to new services and markets, including the ability to add cloud data access, storage and sync offerings to our portfolio. Looking ahead to the fourth quarter and beyond, we believe that this technical foundation puts LogMeIn at the intersection of big data and the Internet of Things during delivering distinct advantages to capitalize on growing opportunities."

Based on information available as of October 26, 2011, which includes the plan to change the Ignition business model, the Company is issuing guidance for the fourth quarter and fiscal year 2011 as detailed below. 

The fourth quarter of 2011

For the fourth quarter of 2011, we expect earnings to be in the range of $31.6 million to $32.0 million. Non-GAAP net income for the fourth quarter is expected to be in the range of $4.2 million to $4.5 million, or $0.17 cents to $0.18 cents per diluted share. Non-GAAP net income for the fourth quarter excludes $2.4 million of stock compensation expense, $1.3 million of acquisition related costs and amortization and $100,000 of patent litigation expenses.

For the full fiscal year we expect earnings to be in the range of $118.7 million to $119.1 million. This represents growth in our core business of 30 percent over the prior year. 

This press release contains non-GAAP financial measures including non-GAAP operating income, non-GAAP income earlier 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. Non-GAAP operating income excludes the amortization of intangibles, stock compensation expense, patent litigation expense, acquisition related costs and an accrual for an uncollected state sales tax claim.  Non-GAAP provision for income taxes excludes the tax impact of amortization of intangibles, stock compensation expense, patent litigation expense, acquisition related costs and an accrual for an uncollected state sales tax claim, if any. Non-GAAP net income and non-GAAP net income per diluted share exclude the amortization of intangibles, stock compensation expense, patent litigation expense, acquisition related costs, and an accrual for an uncollected state sales tax claim. For the nine months ended September 30, 2010, non-GAAP net income furthermore excludes a tax benefit for the reversal of a valuation allowance related to U.S. and certain foreign deferred tax assets. Non-GAAP cash flow from operations excludes patent litigation expense.  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 hereafter 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 under GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant items that are required by GAAP to be recorded in the Company's financial statements. Should the contingency arise, they are subject to inherent limitations as they reflect the exercise of judgments 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.

LogMeIn provides cloud-based remote access, support and collaboration solutions to quickly, simply and securely connect millions of Internet-enabled devices across the globe - computers, smartphones, iPad? and Android? tablets, and digital displays. Designed for consumers, mobile professionals and IT organizations, LogMeIn's solutions empower more than 13 million users to connect over 100 million devices. LogMeIn is based in Woburn, Massachusetts, USA, with offices in Australia, Hungary, Japan, the Netherlands, and the UK.

LogMeIn, LogMeIn Pro, LogMeIn Rescue LogMeIn Ignition, and join.me are trademarks or registered trademarks of LogMeIn in the US and other countries.  iPad is a trademark of Apple, Inc. in the US and other countries around the world. Android is a trademark of Goggle, Inc. in the US and around the world. Intel is the trademark of Intel Corporation in the US and other countries around the world. Kindle is a trademark of Amazon.com, Inc. in the US and around the world.