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LogMeIn )LOGM) IPO, on demand software & services, scheduled for Wednesday July 1, 2009 |
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See ‘compare & contrast’ below with other on demand software companies including Salesforce (CRM), Netsuite (N), SuccessFactors (SFSF) |
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LOGM Pluses |
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. 5 sequential quarters of increasing top line revenue
. Recurring revenue base with 80% renewal rate
. high gross margin, net profit margins increasing on a quarterly basis
. Less expensive customer acquisition model than major competitors
. High rate of customer acquisition |
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Negatives |
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. Relies on a combination of copyright, trade secret, trademark and other rights |
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LogMeIn |
LOGM, C+, 8 |
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Provides on-demand remote connectivity |
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Post-IPO shrs: 21.4mm |
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COMPARE & CONSTRAST |
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VALUATION RATIOS |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
Price |
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(annualized March qrt) |
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
6/30/09 |
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LogMeIn (LOGM) |
$321 |
4.7 |
38.2 |
4.4 |
4.5 |
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On-demand remote connectivity |
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Salesforce (CRM) |
$4,700 |
3.9 |
63.9 |
6.5 |
7.3 |
$38.11 |
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Software-as-a-System services, on demand |
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Netsuite (N) |
$737 |
4.4 |
-49.8 |
6.7 |
8.7 |
$11.93 |
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On-demand, integrated business management |
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SuccessFactors (SFSF) |
$526 |
3.7 |
-23.1 |
-69.2 |
-69.2 |
$9.27 |
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On-demand performance and talent management software solutions |
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=================== |
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Location: Woburn, MA |
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2006 |
2007 |
2008 |
MarchQtr 09 |
IPO Mkt |
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Rev ($mm) |
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$11 |
$27 |
$52 |
$17 |
Cap (mm) |
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Gross profit % |
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85% |
85% |
52% |
90% |
$321 |
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Operating income % |
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-50% |
-37% |
-10% |
13% |
@$15 |
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Net after-tax income |
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-$6.7 |
-$9.0 |
-$5.4 |
$2.1 |
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Net income % |
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-61% |
-33% |
-10% |
12% |
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2008 Quarterly Progression |
2009 |
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March |
June |
Sept |
Dec |
March |
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Rev ($mm) |
$10 |
$11 |
$14 |
$16 |
$17 |
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Gross profit % |
86% |
91% |
91% |
89% |
90% |
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Operating income % |
-37% |
-27% |
0% |
8% |
13% |
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Net after-tax income |
-$3.6 |
-$3.0 |
$0.0 |
$1.2 |
$2.1 |
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Net income % |
-36% |
-26% |
0% |
8% |
12% |
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VALUATION RATIOS |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
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(annualized March qrt) |
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
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LogMeIn (LOGM) |
$321 |
4.7 |
38.2 |
4.4 |
4.5 |
31% |
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SCORECARD |
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Mgt |
Market |
Market Do- |
Proprie- |
Total |
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1-5, 5 is high |
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Growth |
mination |
tary |
rating |
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20 is perfect |
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3 |
2 |
2 |
1 |
8 |
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Business |
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. Internet-based subscription service for remote support, access & backup
. Provides two free services with nine premium services that offer additional features and functionality. |
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Three Months Ended March 31, 2009 and 2008 |
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. Revenue for the three months ended March 31, 2009 was $17.2 million, an increase of $7.3 million, or 73%, over revenue of $9.9 million for the three months ended March 31, 2008. Most of the 73% increase in revenue was due to increased revenue from new customers (including $1.5 million of incremental revenue from Intel), as the number of premium accounts increased by 54% to 188,000 as of March 31, 2009, compared to 122,000 premium accounts as of March 31, 2008. The remaining increase in revenue was due to incremental subscription revenue from our existing customers. |
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. Total number of devices connected to LOGM’s service increased to 70 million as of March 31, 2009 from 40 million as of March 31, 2008. |
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Subscriptions, term & renewal rates |
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. 94% of subscriptions have a one-year term.
. For the three months ended March 31, 2009, the dollar-weighted average renewal rate was approximately 80%. |
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Customers |
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. Small to medium-sized businesses, IT service providers, consumers
. Paying customer base grew from 122,000 premium accounts as of March 31, 2008 to 188,000 premium accounts as of March 31, 2009. During the first quarter of 2009, the total number of devices connected grew at an average of 95,000 per day.
. As of March 31, 2009, over 22.1 million registered users have connected over 70 million computers and other Internet enabled devices to a LogMeIn service |
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Pricing |
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. Premium services at prices ranging from $30 to $1,900 per year.
. During the three months ended March 31, 2009, the average transaction price was approximately $153, and LOGM completed over 120,000 transactions. |
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Intel business relationship |
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. Entered into a service and marketing agreement with Intel Corporation in December 2007 pursuant to which LOGM is adapting its service delivery platform, Gravity, to work with specific technology delivered with Intel hardware and software products. The agreement provides that Intel will market and sell the services to its customers. |
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. Intel pays LOGM a minimum license and service fee on a quarterly basis during the term of the agreement. LOGM and Intel shares revenue generated by the use of the services by third parties to the extent it exceeds the minimum payments. |
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. Began recognizing revenue associated with the Intel service and marketing agreement in the quarter ended September 30, 2008. During the three months ended March 31, 2009, LOGM recognized $1.5 million in revenue from this agreement. |
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Competition |
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. Citrix’s Online division and Cisco’s WebEx division are the two most significant competitors. Both companies offer a service that provides hosted remote access and remote access-based services. Both of these competitors focus a greater percentage of their product offerings on collaboration than LOGM, while LOGM continues to focus development and marketing efforts on serving the needs of IT staff and IT service providers.
. Both of these competitors attract new customers through traditional marketing and sales efforts, while LOGM has focused first on building a large-scale community of users. LOGM’s approach is differentiated from both Citrix and WebEx because LOGM believes it can reach significantly more users which allows LOGM to attract paying customers efficiently.
. In addition, certain of LOGM’s solutions, including free remote access service, also competes with current or potential services offered by Microsoft and Apple.
. LOGM currently competes against several smaller competitors, including NTRglobal (headquartered in Spain), NetViewer (headquartered in Germany) and Bomgar. In addition, potential customers may look to software-based and free solutions, including Symantec’s PCAnywhere and Microsoft’s Remote Desktop and others, which comes bundled into most current versions of the Microsoft operating system |
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Intellectual property |
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Relies on a combination of copyright, trade secret, trademark and other rights |
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Use of $68mm in IPO proceeds from sale of 5mm shares |
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(shareholders intend to sell 1.7mm shares)
Working capital and other general corporate purposes, including the development of new services, sales and marketing activities and capital expenditures.
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