Keep an Eye on LogMeIn's Imminent IPO

Jun.29.09 | About: LogMein, Inc. (LOGM)

LogMeIn's (NASDAQ:LOGM) expected IPO pricing on Tuesday has Wall Street and the tech blogosphere abuzz. The Massachusetts-based company provides remote-connectivity solutions to small and medium sized businesses and plans to trade on the NASDAQ.

Could a successful IPO cause some unintended consequences for tech M&A activity? According to Om Malik, "A LogMeIn offering could result in more technology mergers and acquisitions. The possibility of more IPOs may drive up prices for likely buyout candidates, giving buyers a much-needed impetus to loosen their purse strings and snap up likely candidates." Tech investors are advised to keep an eye on this IPO.

Business Overview (from prospectus)

LogMeIn provides on-demand, remote-connectivity solutions to small and medium-sized businesses, or SMBs, IT service providers and consumers. We believe our solutions are used to connect more Internet-enabled devices worldwide than any other connectivity service. Businesses and IT service providers use our solutions to deliver end-user support and to access and manage computers and other Internet-enabled devices more effectively and efficiently from a remote location, or remotely. Consumers and mobile workers use our solutions to access computer resources remotely, thereby facilitating their mobility and increasing their productivity. Our solutions, which are deployed and accessed from anywhere through a web browser, or “on-demand,” are secure, scalable and easy for our customers to try, purchase and use. Our paying customer base grew from approximately 122,000 premium accounts as of March 31, 2008 to approximately 188,000 premium accounts as of March 31, 2009.

Offering: 6.7 million shares at $14 - $16 per share. Net proceeds of approximately $67.7 million will be used for working capital and other general corporate purposes, including the development of new services, sales and marketing activities and capital expenditures; the acquisition of, or investment in, companies, technologies, services or assets that complement the company's business.

Lead Underwriters: J.P. Morgan, Barclays Capital, Thomas Weisel

Financial Highlights:

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...Cost of revenue for the three months ended March 31, 2009 was $1.7 million, an increase of $0.4 million, or 30%, over cost of revenue of $1.3 million for the three months ended March 31, 2008...Research and development expenses for the three months ended March 31, 2009 were $3.0 million, an increase of $0.4 million, or 17%, over research and development expenses of $2.6 million for the three months ended March 31, 2008...Sales and marketing expenses for the three months ended March 31, 2009 were $8.4 million, an increase of $0.9 million, or 12%, over sales and marketing expenses of $7.6 million for the three months ended March 31, 2008... We recognized a net income of $2.1 million for the three months ended March 31, 2009 versus a net loss of $3.6 million for the three months ended March 31, 2008.

Competitors:

Citrix’s (NASDAQ:CTXS) Online division and Cisco’s (NASDAQ:CSCO) WebEx division are our 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 we do, while we continue to focus our development and marketing efforts on serving the needs of IT staff and IT service providers.

Additional Resources: