LogMein, Inc. reports 84.8% EBITDA growth in 2018 and 11.0 pp EBITDA Margin growth from 21.2% to 32.2%
02/14/2019 • About LogMein, Inc. (
$LOGM) • By InTwits
LogMein, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- LogMein, Inc. is a fast growth stock: 2018 revenue growth was 21.6%, 5 year revenue CAGR was 48.6% at 2018 ROIC 2.7%
- EBITDA Margin is quite volatile: 32.2% in 2018, 21.2% in 2017, 7.7% in 2016, 11.0% in 2015, 8.9% in 2014
- LogMein, Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 was 7.0% while average EBITDA Margin was 22.2% for the sames years
- LogMein, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.8%. At the same time it's in pair with industry average of 7.6%
- CAPEX is quite volatile: $31m in 2018, $37m in 2017, $14m in 2016, $14m in 2015, $7m in 2014
- In the last 5 years the company invested considerably less than D&A: $103m vs. $569m. In 2018 this situation was still the same: CAPEX was 31 while D&A was 301
- The company has potentially unprofitable business model: ROIC is 2.7%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.1x while industry average is -2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 21.6%. Revenue growth showed slowdown in 18Q4 - it was 12.4% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 11.0 pp from 21.2% to 32.2% in 2018.
Gross Margin decreased on 2.8 pp from 79.5% to 76.6% in 2018. Gross Margin declined at -2.8 pp per annum in 2014-2018. SG&A as a % of Revenue decreased on 7.4 pp from 51.3% to 43.9% in 2018. SG&A as a % of Revenue followed a declining trend at -5.9 pp per annum in the last 5 years. Stock Based Compensation (SBC) as a % of Revenue decreased slightly on 1.3 pp from 6.8% to 5.5% in 2018. SBC as a % of Revenue followed a declining trend at -1.3 pp per annum in the last 5 years.
Net Income margin decreased on 3.9 pp from 10.1% to 6.2% in 2018. The efficient tax rate was 8.0% in 2018.
Investments (CAPEX, working capital and M&A)
LogMein, Inc.'s CAPEX/Revenue was 2.6% in 2018. LogMein, Inc. showed decline in CAPEX/Revenue of 2.7 pp from 5.2% in 2015 to 2.6% in 2018. It's average level of CAPEX/Revenue for the last three years was 3.5%. During 2014-2018 CAPEX as a % of Revenue topped in 2015 at 5.2% and was declining since that time.
Accounts receivable as a % of Revenue decreased slightly on 1.6 pp from 9.5% to 7.9% in 2018. Accounts payable as a % of Revenue increased slightly on 1.7 pp from 10.9% to 12.6% in 2018.
LogMein, Inc. has spent
$342m on M&A in 2018 which accounts for 28.4% of revenue.
Return on investment
The company operates at low ROIC (2.7%) and ROE (2.4%). ROIC increased on 3.4 pp from -0.70% to 2.7% in 2018. ROE decreased on 3.5 pp from 5.9% to 2.4% in 2018.
Leverage (Debt)
Debt level is 0.1x Net Debt / EBITDA and 0.5x Debt / EBITDA. Net Debt / EBITDA surged on 1.3x from -1.2x to 0.1x in 2018. Debt jumped while cash dropped on 41.1%.
LogMein, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 13.6x. The company has no short term refinancing risk: short term debt is zero.
Average interest expence paid by the company was 3.2% in 2018.
Valuation and dividends
The company's trades at EV/EBITDA 11.1x and P/E 57.1x.
The company paid 83.4% of Net Income as dividends in 2018.
Management team
The company's CEO is William R Wagner "Bill". William R Wagner "Bill" is a founder and has 3 years tenure with the company. CEO total compensation was
$7,224,220 in 2018 which included
$625,000 salary. LogMein, Inc.'s CFO Edward K Herdiech "Ed" has spent 4 years with the company.
Insider ownership is 1.9%. Insider ownership didn't change in 2018.
The company has 3,515 employees. The number of employees surged on 27.4%. Average revenue per employee in 2018 was
$342,530 and it decreased on 4.5%.
Financial and operational results
FY ended 12/31/2018
LogMein, Inc. ($LOGM) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 222 | 272 | 336 | 990 | 1,204 | 21.6% |
| Gross Profit | 193 | 236 | 291 | 787 | 923 | 17.3% |
| SG&A | 150 | 172 | 224 | 507 | 528 | 4.2% |
| EBITDA | 20 | 30 | 26 | 210 | 387 | 84.8% |
| EBIT | 9 | 16 | 4 | -12 | 86 | |
| Interest expence | | 1 | 1 | 1 | 6 | 350.4% |
| Tax | 1 | 3 | 1 | -112 | 6 | |
| Net Income | 8 | 15 | 3 | 100 | 74 | -25.3% |
| Stock Based Compensation | 24 | 24 | 32 | 67 | 66 | -2.3% |
Balance Sheet
|
|---|
| Cash | 101 | 123 | 141 | 252 | 149 | -41.1% |
| Accounts Receivable | 18 | 16 | 26 | 94 | 95 | 1.5% |
| Accounts Payable | 7 | 10 | 15 | 22 | 35 | 59.4% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 60 | 30 | 0 | 200 | |
Cash flow
|
|---|
| Capex | 7 | 14 | 14 | 37 | 31 | -15.5% |
| Dividends | | | 25 | 52 | 62 | 19.2% |
| Acquisitions | 22 | 108 | 6 | 22 | 342 | 1,430.7% |
Ratios
|
|---|
| Revenue growth | 33.5% | 22.4% | 23.7% | 194.5% | 21.6% | |
| EBITDA growth | 243.1% | 50.1% | -12.9% | 708.3% | 84.8% | |
|
|---|
| Gross Margin | 87.1% | 86.9% | 86.5% | 79.5% | 76.6% | -2.8% |
| EBITDA Margin | 8.9% | 11.0% | 7.7% | 21.2% | 32.2% | 11.0% |
| EBIT Margin | 3.9% | 5.9% | 1.3% | -1.2% | 7.1% | 8.3% |
| SG&A, % of revenue | 67.6% | 63.3% | 66.5% | 51.3% | 43.9% | -7.4% |
| SBC, % of revenue | 11.0% | 8.7% | 9.5% | 6.8% | 5.5% | -1.3% |
| Net Income Margin | 3.6% | 5.4% | 0.8% | 10.1% | 6.2% | -3.9% |
| CAPEX, % of revenue | 3.4% | 5.2% | 4.2% | 3.7% | 2.6% | -1.1% |
|
|---|
| ROIC | 5.1% | 7.2% | 1.8% | -0.7% | 2.7% | 3.4% |
| ROE | 4.7% | 7.6% | 1.3% | 5.9% | 2.4% | -3.5% |
| Net Debt/EBITDA | -5.1x | -2.1x | -4.3x | -1.2x | 0.1x | 1.3x |
| Interest expence / Average debt | | 1.9% | 4.7% | | 3.2% | |
People
|
|---|
| Insider ownership | 1.9% | 1.9% | 1.9% | 1.9% | 1.9% | 0.0% |
| Employees | 804 | 1,006 | 1,124 | 2,760 | 3,515 | 27.4% |
| Revenue/Employee, th. $ | 276 | 270 | 299 | 359 | 343 | -4.5% |
LogMein, Inc. ($LOGM) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 279 | 306 | 309 | 310 | | 48.9% | 18.9% | 14.7% | 12.4% |
| EBITDA | 114 | 82 | 94 | 97 | | 1,762.0% | 40.2% | 39.5% | 25.7% |
| Net Income | 30 | 7 | 13 | 25 | | | -55.9% | 28.2% | -72.8% |
Balance Sheet
|
|---|
| Cash | 365 | 199 | 168 | 149 | | 36.9% | -23.8% | -36.0% | -41.1% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 200 | 200 | 200 | | -100.0% | | | |
Ratios
|
|---|
| Gross Margin | 77.5% | 76.2% | 76.4% | 76.5% | | -1.8% | -3.1% | -2.9% | -3.4% |
| EBITDA Margin | 40.7% | 26.9% | 30.4% | 31.4% | | 37.4% | 4.1% | 5.4% | 3.3% |
| Net Income Margin | 10.6% | 2.1% | 4.1% | 8.2% | | 20.5% | -3.6% | 0.4% | -25.6% |
Peers in Application Software
Below you can find LogMein, Inc. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 13.5% | 13.6% | 14.8% | 15.2% |
|---|
| LogMein, Inc. ($LOGM) | | 22.4% | 23.7% | 194.5% | 21.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 62.8% | 61.7% | 63.8% | 64.4% | 65.7% |
|---|
| LogMein, Inc. ($LOGM) | 87.1% | 86.9% | 86.5% | 79.5% | 76.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| LogMein, Inc. ($LOGM) | 8.9% | 11.0% | 7.7% | 21.2% | 32.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| LogMein, Inc. ($LOGM) | 3.4% | 5.2% | 4.2% | 3.7% | 2.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -10.4% |
|---|
| LogMein, Inc. ($LOGM) | 5.1% | 7.2% | 1.8% | -0.7% | 2.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.2x | -0.9x | -0.9x | -0.8x | -0.7x |
|---|
| LogMein, Inc. ($LOGM) | -5.1x | -2.1x | -4.3x | -1.2x | 0.1x |
