LogMeIn (LOGM) Q2 Earnings and Revenues Surpass Estimates

LogMeIn LOGM reported better-than-expected results for second-quarter 2018.

The company reported non-GAAP earnings of $1.32 per share, which came ahead of the Zacks Consensus Estimate of $1.25 and marked a year-over-year improvement of 30.7%.

The company’s non-GAAP revenues for the quarter came in at $307.1 million, beating the Zacks Consensus Estimate of $305 million and growing approximately 15% year over year, driven by Jive, Bold360 ai, and LastPass.

Quarter Detail

Collaboration Cloud business, accounting for 57% of total revenues, grew 5% year over year.

Identity and Access Management Cloud business rose 18% from the year-ago quarter, generating 29% of total revenues. Sales of LastPass increased 70% year over year.

Service Cloud business increased 1% on a year-over-year basis, representing 14% of revenues.

International revenues contributed 23% to total revenues.

The company’s gross renewal rate across all products was nearly 75%. A 350 basis points decline in renewal rates from Collaboration business was offset by improved retention rate in Identity and Access Management business.

During the quarter, the company’s operating income increased 19.3% year over year to $94.3 million. Operating margin expanded 110 bps to 30.7%.

Balance Sheet and Other Financial Details

LogMeIn ended the second quarter with cash and cash equivalents of $198.9 million, compared with $365.2 million in the previous quarter. The decline was due to the acquisition of Jive, for which the company paid $143 million of cash and $200 million from its credit facility.

The company generated $103.2 million of cash flow from operational activities.

In the quarter, the company repurchased 615k shares worth $68 million and paid $16 million dividends.

Guidance

For the third quarter of 2018, the company expects revenues in the range of $302-$304 million.

Adjusted EBITDA is projected to be between $111 million to 113 million. Adjusted EBITDA margin is anticipated to be 37%.

The company expects earnings per share to be in the range of $1.33 to $1.35.

For fiscal 2018, the company lowered its revenue guidance by nearly $28 million due to declining collaboration renewals and foreign exchange changes. Revenues are projected to be in the range of $1.185 billion to $1.195 million.

The company expects earnings per share to be in the range of $5.17 to $5.26.

Free cash flow is anticipated to be approximately $365 million.

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 YY Inc. YY, Science Applications SAIC and Verint Systems VRNT, 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 YY, Science Applications and Verint is projected to be 26.4%, 5% and 10%, respectively.

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