Highlights Include Continued Growth and Margin Improvement with Strong Cash Flows

LogMeIn, Inc. (NASDAQ:LOGM), a leading provider of cloud-based connectivity, today announced its results for the third quarter ended September 30, 2017.

Third quarter 2017 highlights include:

• GAAP revenue was $269.3 million and non-GAAP revenue was $276.1 million 
• GAAP net income was $9.9 million or $0.19 per diluted share and non-GAAP net income was $62.1 million or $1.16 per diluted share
• EBITDA was $67.3 million or 25.0% of GAAP revenue, and Adjusted EBITDA was $104.0 million or 37.7% of non-GAAP revenue
• Cash Flow from Operations was $90.5 million or 32.8% of non-GAAP revenue, and Adjusted Cash Flow from Operations was $102.5 million or 37.1% of non-GAAP revenue
• Total deferred revenue was $328.5 million

The Company closed the quarter with cash, cash equivalents and short-term investments of $276.0 million

“The Company continued to perform well, with revenue, adjusted EBITDA, and non-GAAP earnings per share above the high-end of our guidance,” said Bill Wagner, President and CEO of LogMeIn.  “We are also pleased with the success we have made integrating these businesses to create a software leader with a compelling profile.”

Business Outlook

Based on information available as of October 26, 2017, the Company is issuing guidance for the fourth quarter 2017 and fiscal year 2017.  Since the Company’s merger with Citrix Systems, Inc.’s GetGo, Inc. subsidiary (referred to below as “GoTo”) officially closed on January 31, 2017, the Company’s business outlook for fiscal year 2017 excludes GoTo’s January 2017 results.

Fourth Quarter 2017:  The Company expects fourth quarter non-GAAP revenue to be in the range of $277 million to $278 million.  The Company expects fourth quarter GAAP revenue to be in the range of $273 million to $274 million.  Non-GAAP revenue adds back $4 million for the impact of an acquisition accounting adjustment recorded to reduce GoTo’s deferred revenue balance to the fair value of the remaining obligation.

Adjusted EBITDA is expected to be in the range of $105 million to $106 million, or approximately 38% of non-GAAP revenue.  EBITDA is expected to be in the range of $71 million to $72 million, or approximately 26% of GAAP revenue.

Non-GAAP net income is expected to be in the range of $62 million to $63 million, or $1.16 to $1.17 per diluted share.  Non-GAAP net income adds back the $4 million non-GAAP revenue adjustment described above and excludes an estimated $19 million in stock-based compensation expense, $10 million in acquisition and litigation related costs, $50 million of amortization expense of acquired intangible assets and also includes $4 million of amortization expense for GoTo’s internally capitalized software development costs that were adjusted in acquisition accounting to fair value, as well as the income tax effect of the above items and discrete integration related tax items.

Non-GAAP net income for the fourth quarter assumes an effective tax rate of approximately 30% and non-GAAP net income per diluted share is based on an estimated 53.5 million fully-diluted weighted average shares outstanding.

Including stock-based compensation expense, acquisition and litigation related costs, amortization expense, and excluding the acquisition accounting adjustments to revenue and amortization expense, the Company expects to report GAAP net income in the range of $11 million to $12 million, or $0.21 to $0.22 per diluted share.

GAAP net income for the fourth quarter assumes a tax benefit of approximately $2 million and GAAP net income per share is based on an estimated 53.5 million fully-diluted weighted average shares outstanding.

Fiscal Year 2017:  The Company expects full year 2017 non-GAAP revenue to be in the range of $1.021 billion to $1.022 billion, which excludes GoTo’s January 2017 revenue of $58 million.  The Company expects full year 2017 GAAP revenue to be in the range of $987 million to $988 million.  Non-GAAP revenue adds back $34 million for the impact of an acquisition accounting adjustment recorded to reduce GoTo’s deferred revenue balance to the fair value of the remaining obligation.

Adjusted EBITDA is expected to be in the range of $366 million to $369 million, or approximately 36% of non-GAAP revenue.  EBITDA is expected to be in the range of $201 million to $204 million, or approximately 20% of GAAP revenue.

Non-GAAP net income is expected to be in the range of $214 million to $217 million, or $4.16 to $4.22 per diluted share.  Non-GAAP net income adds back the $34 million non-GAAP revenue adjustment described above and excludes an estimated $68 million in stock-based compensation expense, $63 million in acquisition and litigation related costs, $183 million of amortization expense of acquired intangible assets and also includes $20 million of amortization expense for GoTo’s internally capitalized software development costs that were adjusted in acquisition accounting to fair value, as well as the income tax effect of the above items and discrete integration related tax items.

Non-GAAP net income for the full fiscal year 2017 assumes an effective tax rate of approximately 30% and non-GAAP net income per diluted share is based on an estimated 51.5 million fully-diluted weighted average shares outstanding.

Including stock-based compensation expense, acquisition and litigation related costs, amortization expense, and excluding the acquisition accounting adjustments to revenue and amortization expense, the Company expects to report GAAP net income in the range of $15 million to $18 million, or $0.29 to $0.35 per diluted share.

GAAP net income for the full year assumes a tax benefit of approximately $35 million. GAAP net income per share is based on an estimated 51.5 million fully-diluted weighted average shares outstanding.

Dividend

In accordance with its previously announced capital return plan, the Company will pay a $0.25 per share dividend on November 24, 2017 to stockholders of record as of November 8, 2017.  The Company currently has approximately 52.6 million shares of common stock outstanding.

Conference Call Information for Today, Thursday, October 26, 2017

The Company will host a corresponding conference call and live webcast at 5:00 p.m. Eastern Time today.  To access the conference call, dial 800-239-9838 (for the U.S. and Canada) or 323-794-2551 (for international callers) and entering passcode 6598155.  A live webcast will be available on the Investor Relations section of the Company’s corporate website at https://www.logmeininc.com and via replay beginning approximately two hours after the completion of the call until the Company’s announcement of its financial results for the next quarter.  An audio replay of the call will also be available to investors beginning at approximately 8:00 p.m. Eastern Time on October 26, 2017 until 8:00 p.m. Eastern Time on November 3, 2017, by dialing 719-457-0820 and entering passcode 6598155.

Our Use of 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 and adjusted cash flow from operations.

• Non-GAAP revenue is GAAP revenue and adds back the impact of the fair value acquisition accounting adjustment on acquired GoTo’s deferred revenue.
• EBITDA is GAAP net income excluding provision for income taxes, interest income, interest expense, and other (expense) income net, and depreciation and amortization.
• EBITDA margin is calculated by dividing EBITDA by revenue.
• Adjusted EBITDA is GAAP net income excluding provision for income taxes, interest income, interest expense, and other (expense) income net, depreciation and amortization, acquisition and litigation related costs, stock-based compensation expense, and adds back the impact of the fair value acquisition accounting adjustment on acquired GoTo’s deferred revenue. 
• Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by non-GAAP revenue, or GAAP revenue if not different. 
• Non-GAAP operating income is GAAP operating income and adds back the impact of the fair value acquisition accounting adjustment on acquired GoTo’s deferred revenue and excludes acquisition related costs and amortization, litigation related costs, stock-based compensation expense, and also includes amortization expense for GoTo’s internally capitalized software development costs that were adjusted in acquisition accounting to fair value.
• Non-GAAP provision for income taxes is GAAP provision (benefit) for incomes taxes and excludes the tax impact of the fair value acquisition accounting adjustment on acquired GoTo’s deferred revenue, acquisition related costs and amortization, litigation related costs, stock-based compensation expense, discrete integration related tax impacts and also includes the tax impact of amortization expense for GoTo’s internally capitalized software development costs that were adjusted in acquisition accounting to fair value.
• 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 and litigation related payments.

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 to compare 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.