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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2019

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to                     

Commission file number: 001-34391

 

LOGMEIN, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

20-1515952

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

320 Summer Street

Boston, Massachusetts

 

02210

(Address of principal executive offices)

 

(Zip Code)

 

781-638-9050

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

LOGM

NASDAQ Global Select Market

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

 

 

 

Non-accelerated filer

 

☐  

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of October 21, 2019, there were 48,814,852 shares of the registrant’s Common Stock, par value $0.01 per share, outstanding.

 

 

 

 


LOGMEIN, INC.

INDEX

 

 

 

PAGE
NUMBER

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

ITEM 1: Financial Statements (Unaudited)

 

 

Condensed Consolidated Balance Sheets as of December 31, 2018 and September 30, 2019

 

3

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018 and 2019

 

4

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2018 and 2019

 

5

Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2018 and 2019

 

6

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2019

 

8

Notes to Condensed Consolidated Financial Statements

 

9

ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

28

ITEM 3: Quantitative and Qualitative Disclosures about Market Risk

 

42

ITEM 4: Controls and Procedures

 

43

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

ITEM 1: Legal Proceedings

 

44

ITEM 1A: Risk Factors

 

44

ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds

 

58

ITEM 6: Exhibits

 

59

Signatures

 

60

 

2


LogMeIn, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

 

 

 

December 31,

2018

 

 

September 30,

2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

148,652

 

 

$

119,197

 

Accounts receivable (net of allowances of $2,785 and $4,413 as of

   December 31, 2018 and September 30, 2019, respectively)

 

 

95,354

 

 

 

80,876

 

Prepaid expenses and other current assets

 

 

83,887

 

 

 

81,120

 

Total current assets

 

 

327,893

 

 

 

281,193

 

Property and equipment, net

 

 

98,238

 

 

 

97,005

 

Operating lease assets (Note 9)

 

 

 

 

 

101,345

 

Restricted cash, net of current portion

 

 

1,840

 

 

 

1,834

 

Intangibles, net

 

 

1,059,988

 

 

 

895,800

 

Goodwill

 

 

2,400,390

 

 

 

2,414,335

 

Other assets

 

 

41,545

 

 

 

61,261

 

Deferred tax assets

 

 

6,059

 

 

 

5,895

 

Total assets

 

$

3,935,953

 

 

$

3,858,668

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

35,447

 

 

$

56,671

 

Current operating lease liabilities (Note 9)

 

 

 

 

 

17,900

 

Accrued liabilities

 

 

119,379

 

 

 

144,285

 

Deferred revenue, current portion

 

 

369,780

 

 

 

381,635

 

Total current liabilities

 

 

524,606

 

 

 

600,491

 

Long-term debt

 

 

200,000

 

 

 

200,000

 

Deferred revenue, net of current portion

 

 

9,518

 

 

 

11,189

 

Deferred tax liabilities

 

 

201,212

 

 

 

170,378

 

Non-current operating lease liabilities (Note 9)

 

 

 

 

 

91,407

 

Other long-term liabilities

 

 

25,929

 

 

 

10,077

 

Total liabilities

 

 

961,265

 

 

 

1,083,542

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value — 5,000 shares authorized, 0 shares

   outstanding as of December 31, 2018 and September 30, 2019

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

Common stock, $0.01 par value—145,000 shares authorized; 56,703 and

   57,160 shares issued; and 50,692 and 48,968 outstanding as of

   December 31, 2018 and September 30, 2019, respectively

 

 

567

 

 

 

572

 

Additional paid-in capital

 

 

3,316,603

 

 

 

3,349,108

 

Retained earnings

 

 

84,043

 

 

 

24,854

 

Accumulated other comprehensive income (loss)

 

 

2,133

 

 

 

(1,946

)

Treasury stock, at cost - 6,011 and 8,192 shares as of December 31, 2018

   and September 30, 2019, respectively

 

 

(428,658

)

 

 

(597,462

)

Total equity

 

 

2,974,688

 

 

 

2,775,126

 

Total liabilities and equity

 

$

3,935,953

 

 

$

3,858,668

 

 

See notes to condensed consolidated financial statements.

 

3


LogMeIn, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2018

 

 

2019

 

 

2018

 

 

2019

 

Revenue

 

$

308,927

 

 

$

316,941

 

 

$

893,794

 

 

$

937,705

 

Cost of revenue

 

 

72,853

 

 

 

81,230

 

 

 

208,628

 

 

 

239,685

 

Gross profit

 

 

236,074

 

 

 

235,711

 

 

 

685,166

 

 

 

698,020

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

42,220

 

 

 

39,452

 

 

 

129,256

 

 

 

120,548

 

Sales and marketing

 

 

95,041

 

 

 

110,604

 

 

 

282,599

 

 

 

346,063

 

General and administrative

 

 

37,441

 

 

 

34,954

 

 

 

111,990

 

 

 

103,379

 

Restructuring charge

 

 

 

 

 

5,172

 

 

 

 

 

 

14,602

 

Gain on disposition of assets

 

 

 

 

 

 

 

 

(33,910

)

 

 

 

Amortization of acquired intangibles

 

 

44,268

 

 

 

39,368

 

 

 

128,698

 

 

 

118,257

 

Total operating expenses

 

 

218,970

 

 

 

229,550

 

 

 

618,633

 

 

 

702,849

 

Income (loss) from operations

 

 

17,104

 

 

 

6,161

 

 

 

66,533

 

 

 

(4,829

)

Interest income

 

 

293

 

 

 

299

 

 

 

1,335

 

 

 

1,375

 

Interest expense

 

 

(2,033

)

 

 

(2,048

)

 

 

(4,213

)

 

 

(6,317

)

Other income (expense), net

 

 

(77

)

 

 

180

 

 

 

(403

)

 

 

(187

)

Income (loss) before income taxes

 

 

15,287

 

 

 

4,592

 

 

 

63,252

 

 

 

(9,958

)

(Provision for) benefit from income taxes

 

 

(2,570

)

 

 

516

 

 

 

(14,269

)

 

 

(495

)

Net income (loss)

 

$

12,717

 

 

$

5,108

 

 

$

48,983

 

 

$

(10,453

)

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.25

 

 

$

0.10

 

 

$

0.94

 

 

$

(0.21

)

Diluted

 

$

0.24

 

 

$

0.10

 

 

$

0.93

 

 

$

(0.21

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

51,652

 

 

 

49,265

 

 

 

52,090

 

 

 

49,886

 

Diluted

 

 

52,066

 

 

 

49,368

 

 

 

52,829

 

 

 

49,886

 

Cash dividends declared and paid per share

 

$

0.30

 

 

$

0.325

 

 

$

0.90

 

 

$

0.975

 

 

See notes to condensed consolidated financial statements.

 

4


LogMeIn, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2018

 

 

2019

 

 

2018

 

 

2019

 

Net income (loss)

 

$

12,717

 

 

$

5,108

 

 

$

48,983

 

 

$

(10,453

)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net translation gains (losses)

 

 

(1,215

)

 

 

(4,326

)

 

 

(9,780

)

 

 

(4,079

)

Comprehensive income (loss)

 

$

11,502

 

 

$

782

 

 

$

39,203

 

 

$

(14,532

)

 

See notes to condensed consolidated financial statements.

5


LogMeIn, Inc.

Condensed Consolidated Statements of Equity

(In thousands)

 

 

 

Three Months Ended September 30, 2018

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Number of

Shares

 

 

Amount

 

 

Additional

Paid-In

Capital

 

 

Retained

Earnings

 

 

Other

Comprehensive

Income (Loss)

 

 

Treasury

Stock

 

 

Total

Equity

 

Balance at July 1, 2018

 

 

52,029

 

 

$

565

 

 

$

3,283,856

 

 

$

76,763

 

 

$

7,005

 

 

$

(297,264

)

 

$

3,070,925

 

Issuance of common stock upon exercise of stock options

 

 

98

 

 

 

1

 

 

 

2,808

 

 

 

 

 

 

 

 

 

 

 

 

2,809

 

Net issuance of common stock upon vesting of restricted

   stock units

 

 

51

 

 

 

1

 

 

 

(1,537

)

 

 

 

 

 

 

 

 

 

 

 

(1,536

)

Stock-based compensation

 

 

 

 

 

 

 

 

15,688

 

 

 

 

 

 

 

 

 

 

 

 

15,688

 

Treasury stock

 

 

(847

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(75,129

)

 

 

(75,129

)

Dividends on common stock

 

 

 

 

 

 

 

 

 

 

 

(15,523

)

 

 

 

 

 

 

 

 

(15,523

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

12,717

 

 

 

 

 

 

 

 

 

12,717

 

Cumulative translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,215

)

 

 

 

 

 

(1,215

)

Balance at September 30, 2018

 

 

51,331

 

 

$

567

 

 

$

3,300,815

 

 

$

73,957

 

 

$

5,790

 

 

$

(372,393

)

 

$

3,008,736

 

 

 

 

Nine Months Ended September 30, 2018

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Number of

Shares

 

 

Amount

 

 

Additional

Paid-In

Capital

 

 

Retained

Earnings

 

 

Other

Comprehensive

Income (Loss)

 

 

Treasury

Stock

 

 

Total

Equity

 

Balance at January 1, 2018

 

 

52,564

 

 

$

560

 

 

$

3,276,891

 

 

$

50,445

 

 

$

15,570

 

 

$

(179,725

)

 

$

3,163,741

 

Issuance of common stock upon exercise of stock options

 

 

126

 

 

 

1

 

 

 

3,830

 

 

 

 

 

 

 

 

 

 

 

 

3,831

 

Net issuance of common stock upon vesting of restricted

   stock units

 

 

507

 

 

 

6

 

 

 

(28,726

)

 

 

 

 

 

 

 

 

 

 

 

(28,720

)

Stock-based compensation

 

 

 

 

 

 

 

 

48,820

 

 

 

 

 

 

 

 

 

 

 

 

48,820

 

Treasury stock

 

 

(1,866

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(192,668

)

 

 

(192,668

)

Dividends on common stock

 

 

 

 

 

 

 

 

 

 

 

(46,900

)

 

 

 

 

 

 

 

 

(46,900

)

Adoption of ASC 606

 

 

 

 

 

 

 

 

 

 

 

21,429

 

 

 

 

 

 

 

 

 

21,429

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

48,983

 

 

 

 

 

 

 

 

 

48,983

 

Cumulative translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,780

)

 

 

 

 

 

(9,780

)

Balance at September 30, 2018

 

 

51,331

 

 

$

567

 

 

$

3,300,815

 

 

$

73,957

 

 

$

5,790

 

 

$

(372,393

)

 

$

3,008,736

 

 

 

 

Three Months Ended September 30, 2019

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Number of

Shares

 

 

Amount

 

 

Additional

Paid-In

Capital

 

 

Retained

Earnings

 

 

Other

Comprehensive

Income (Loss)

 

 

Treasury

Stock

 

 

Total

Equity

 

Balance at July 1, 2019

 

 

49,566

 

 

$

571

 

 

$

3,332,239

 

 

$

35,783

 

 

$

2,380

 

 

$

(552,528

)

 

$

2,818,445

 

Issuance of common stock upon exercise of stock options

 

 

1

 

 

 

 

 

 

51

 

 

 

 

 

 

 

 

 

 

 

 

51

 

Net issuance of common stock upon vesting of restricted

   stock units

 

 

29

 

 

 

1

 

 

 

(793

)

 

 

 

 

 

 

 

 

 

 

 

(792

)

Stock-based compensation

 

 

 

 

 

 

 

 

17,611

 

 

 

 

 

 

 

 

 

 

 

 

17,611

 

Treasury stock

 

 

(628

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(44,934

)

 

 

(44,934

)

Dividends on common stock

 

 

 

 

 

 

 

 

 

 

 

(16,037

)

 

 

 

 

 

 

 

 

(16,037

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

5,108

 

 

 

 

 

 

 

 

 

5,108

 

Cumulative translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,326

)

 

 

 

 

 

(4,326

)

Balance at September 30, 2019

 

 

48,968

 

 

$

572

 

 

$

3,349,108

 

 

$