LOGM Earnings: CEO Simon Talks LogMeIn Free

If LogMeIn (LOGM) was worried at all about lasting negative sentiment after it unplugged its LogMeIn Free service a few weeks ago, it didn’t show during the company’s earnings call with analysts last week. CEO Michael Simon told financial analysts that the company’s collaboration cloud grew in a big way during the fourth quarter. How fast did it grow? And what did Simon say about LogMeIn Free users? We’ll fill you in.

“Our collaboration cloud proved to be the fastest-growing product cloud in the fourth quarter,” Simon said about the company’s product line that includes online meeting product join.me, online file sharing service Cubby and the LogMeIn Pro remote access product. Specifically, the collaboration cloud grew by 32 percent year over year and 30 percent from the previous sequential quarter, according to Simon, whose comments were transcribed by Seeking Alpha.

LogMeIn’s IT management cloud, including its Central product and LogMeIn Pro for RMM delivered 30 percent year-over-year revenue growth, Simon told analysts. LogMeIn ended the year with 90,000 SMB IT customers.

“This is a segment, we believe, will play a key role in our growth as we expand our IT management offerings to help businesses address the challenges inherent in an era defined by the consumerization of IT and the bring your own technology trend,” Simon said.

Simon on LogMeIn Free

And what about LogMeIn Free and user response to the end of that service? Michael Simon had this to say: “The business model changed, which admittedly – it’s been disappointing to some of our old free users, but at the same time have been pretty well received by sort of business grade customers who actually are getting a better product, and for what is at the end a very affordable amount of money if you think about from an ROI standpoint.”

And so far a large number of users have converted over to the paid model, Simon told analysts. Simon wasn’t worried about users switching to LogMeIn Free alternatives.

And will LogMeIn look to unplug other free products such as join.me in the next year? It didn’t sound like it. Executives said they had no plans to do that in 2014.

The Earnings Numbers

LogMeIn reported total revenue for the fourth quarter of $45.2 million, $1 million higher than the top of the outlook the company provided during the previous quarter earnings news. That compares with $37 million for the same quarter a year ago.

Net loss for Q4 was $459,000 compared with net income of $2.2 million during the same period last year. On a non-GAAP basis, net income for the quarter was $3.9 million, down from just under $6 million from the same period last year. Expenses not included in the company’s non-GAAP numbers are mostly stock-based compensation, and also patent litigation costs and acquisition expenses.

For the full year LogMeIn reported revenue of $166.3 million, up from $139 million in 2012. Net loss was $1.9 million compared with the 2012 net income of just over $6 million. On a non-GAAP basis the company said net income for the full year was $13.9 million compared with $18.4 million for 2012.

LogMeIn said that its collaboration cloud contributed 22 to total revenue in Q4 and 21 percent for the full year. Its IT management cloud revenue was 34 percent of revenue in Q4 and 33 percent of revenue for the full year. Its service cloud revenue was 44 percent of total revenue in Q4 and 45 percent for the full year.

Looking forward, the company provided the following outlook for the first quarter: total revenue expected in the range of $46.8 million to $47.3 million.