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LogMeIn reported better-than-expected results for third-quarter 2018.
The company reported non-GAAP earnings of $1.40 per share, which came ahead of the Zacks Consensus Estimate of $1.34 and marked a year-over-year improvement of 20.7%.
The company’s non-GAAP revenues for the quarter came in at $309.6 million, beating the Zacks Consensus Estimate of $302.9 million and growing approximately 15% year over year, driven by Jive, Bold360 ai and LastPass.
The company’s efforts to address renewal headwinds in Communications & Collaboration business are showing positive returns. Moreover, the initial traction for the company’s GoToMeeting and Jive bundle is also a positive. Buoyed by the encouraging results, the company raised its guidance for 2018.
Quarter Detail
Collaboration Cloud business, accounting for 57% of total revenues, grew 2% year over year to $175 million. Jive revenues of $27 million grew more than 30% year over year in the quarter. Collaboration revenues, excluding Jive, declined 2% on a year-over-year basis.
Identity and Access Management Cloud revenues of $90 million rose 14% from the year-ago quarter, generating 29% of total revenues, driven by LastPass, which continues to show great momentum. Revenues for LastPass grew 70% year over year in the quarter.
Service Cloud business, excluding Xively, remained flat on a year-over-year basis at $44 million, representing 14% of revenues. The segment is driven by Bold360 which, given the customer interest and competitive position, demonstrates solid growth opportunity in the large and strategic customer engagement market.
International revenues contributed 22% to total revenues.
The company’s gross renewal rate across all products was nearly 80% driven by strong renewals in Collaboration business. Excluding Jive, renewal rates for Collaboration were 83% in the quarter, approximately 550 basis points (bps) higher sequentially.
During the quarter, the company’s non-GAAP operating income increased 12% year over year to $99.3 million. However, operating margin contracted 110 bps to 32.1%.
LogMeIn ended the third quarter with cash and cash equivalents of $252.4 million compared with $198.9 million in the previous quarter.
The company generated $73.7 million of cash flow from operational activities.
Guidance
For the fourth quarter of 2018, the company expects revenues in the range of $306-$307 million. The company has taken a conservative approach with revenue guidance as it believes improvement of renewals and revenue performance to be a multi-quarter effort.
However, the company believes the addition of features in Bold360 ai in the fourth quarter will help in expanding “use cases into sales and e-commerce-focused digital engagement.”
Adjusted EBITDA is projected to be between $115 million and 116 million. Adjusted EBITDA margin is anticipated to be 38%.
The company expects earnings per share to be in the range of $1.41 to $1.42.
For 2018, the company increased revenue and earnings guidance. Revenues are projected to be in the range of $1.203 billion to $1.204 billion compared with $1.185 billion to $1.195 billion projected earlier. Free cash flow is anticipated to be approximately $370 million.
The company expects earnings per share to be in the range of $5.33 to $5.34, up from the earlier guidance of $5.17 to $5.26.
Long-term earnings growth for Vishay, Cadence and CyberArk is projected to be 9.2%, 12% and 19.8%, respectively.
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LogMeIn (LOGM) Beats Q3 Earnings Estimates, Raises Guidance
LogMeIn reported better-than-expected results for third-quarter 2018.
The company reported non-GAAP earnings of $1.40 per share, which came ahead of the Zacks Consensus Estimate of $1.34 and marked a year-over-year improvement of 20.7%.
The company’s non-GAAP revenues for the quarter came in at $309.6 million, beating the Zacks Consensus Estimate of $302.9 million and growing approximately 15% year over year, driven by Jive, Bold360 ai and LastPass.
The company’s efforts to address renewal headwinds in Communications & Collaboration business are showing positive returns. Moreover, the initial traction for the company’s GoToMeeting and Jive bundle is also a positive. Buoyed by the encouraging results, the company raised its guidance for 2018.
Quarter Detail
Collaboration Cloud business, accounting for 57% of total revenues, grew 2% year over year to $175 million. Jive revenues of $27 million grew more than 30% year over year in the quarter. Collaboration revenues, excluding Jive, declined 2% on a year-over-year basis.
Identity and Access Management Cloud revenues of $90 million rose 14% from the year-ago quarter, generating 29% of total revenues, driven by LastPass, which continues to show great momentum. Revenues for LastPass grew 70% year over year in the quarter.
Service Cloud business, excluding Xively, remained flat on a year-over-year basis at $44 million, representing 14% of revenues. The segment is driven by Bold360 which, given the customer interest and competitive position, demonstrates solid growth opportunity in the large and strategic customer engagement market.
International revenues contributed 22% to total revenues.
The company’s gross renewal rate across all products was nearly 80% driven by strong renewals in Collaboration business. Excluding Jive, renewal rates for Collaboration were 83% in the quarter, approximately 550 basis points (bps) higher sequentially.
During the quarter, the company’s non-GAAP operating income increased 12% year over year to $99.3 million. However, operating margin contracted 110 bps to 32.1%.
LogMein, Inc. Price, Consensus and EPS Surprise
LogMein, Inc. Price, Consensus and EPS Surprise | LogMein, Inc. Quote
Balance Sheet and Other Financial Details
LogMeIn ended the third quarter with cash and cash equivalents of $252.4 million compared with $198.9 million in the previous quarter.
The company generated $73.7 million of cash flow from operational activities.
Guidance
For the fourth quarter of 2018, the company expects revenues in the range of $306-$307 million. The company has taken a conservative approach with revenue guidance as it believes improvement of renewals and revenue performance to be a multi-quarter effort.
However, the company believes the addition of features in Bold360 ai in the fourth quarter will help in expanding “use cases into sales and e-commerce-focused digital engagement.”
Adjusted EBITDA is projected to be between $115 million and 116 million. Adjusted EBITDA margin is anticipated to be 38%.
The company expects earnings per share to be in the range of $1.41 to $1.42.
For 2018, the company increased revenue and earnings guidance. Revenues are projected to be in the range of $1.203 billion to $1.204 billion compared with $1.185 billion to $1.195 billion projected earlier. Free cash flow is anticipated to be approximately $370 million.
The company expects earnings per share to be in the range of $5.33 to $5.34, up from the earlier guidance of $5.17 to $5.26.
Zacks Rank and Stocks to Consider
LogMeIn currently carries a Zacks Rank #4 (Sell).
A few better-ranked stocks in the broader technology sector are Vishay Intertechnology, Inc. (VSH - Free Report) , Cadence Design Systems, Inc. (CDNS - Free Report) and CyberArk Software Ltd. (CYBR - Free Report) all 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 for Vishay, Cadence and CyberArk is projected to be 9.2%, 12% and 19.8%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>