Why Is LogMein (LOGM) Down 4.9% Since Last Earnings Report?

It has been about a month since the last earnings report for LogMein (LOGM). Shares have lost about 4.9% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is LogMein due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

LogMeIn Q4 Earnings and Revenues Surpass Estimates

LogMeIn recently released fourth-quarter 2019 results, wherein both top and bottom lines beat estimates. Non-GAAP revenues of $322.9 million beat the Zacks Consensus Estimate by 0.87% and increased 3.9% year over year.

Non-GAAP earnings of $1.43 per share beat the consensus mark by 2.14%. However, the figure decreased 2.7% year over year.

In December 2019, the company entered into a definitive agreement to be acquired by technology-focused global private equity firms Francisco Partners and Evergreen Coast Capital Corp. The transaction is expected to be completed by mid-2020.

LogMeIn did not hold a conference discussing the recently released fourth-quarter 2019 result or provide any guidance due to its impending acquisition agreement.

Q4 Details

Unified Communication and Collaboration (UCC) business revenues dipped 1% year over year to $173 million.

Identity and Access Management revenues rose 15% from the year-ago quarter to $106 million.

Customer Engagement and Support business revenues declined 1% on a year-over-year basis to $44 million.

The company’s gross renewal rate across all products was nearly 85%.

International revenues constituted 21% of total revenues during the quarter.

Margins

In the fourth quarter, the company’s non-GAAP operating income decreased 7.1% year over year to $95 million. Also, operating margin contracted 350 bps to 29.4%.

Adjusted EBITDA was down 6.4% year over year to $111.1 million. Additionally, adjusted EBITDA margin shrank 380 bps to 34.4%.

Balance Sheet and Other Financial Details

LogMeIn ended the quarter with cash and cash equivalents of $128 million compared with $119.2 million, sequentially.

The company generated $78.6 million of adjusted cash flow from operational activities and $62.6 million of adjusted free cash flow in the quarter under review.

Full-Year Highlights

LogMeIn reported full-year revenues of $1.26 billion, up 4.2% year over year. However, non-GAAP earnings of $5.15 per share declined 4.5% year over year.

In 2019, the company repurchased shares worth $208.5 million and paid out $64.6 million as dividends.

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months.

VGM Scores

At this time, LogMein has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

LogMein has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.