LogMeIn (LOGM, Financial) looks pretty strong this year. It posted impressive third-quarter financial results for fiscal 2014. Its revenue and earnings had exceeded the high-end of its guidance for the quarter. Also, it is now experiencing strong growth across its product portfolio in the end market that should enhance its performance in the fourth-quarter. Let us look at the growth drivers that could possibly boost its performance in the fourth-quarter and into 2015.
Growth drivers to accelerate its performance
LogMeIn is focusing on three big priorities this year and expects these priorities to drive its growth in the future. These priorities are growing join.me into the market in collaboration, enhancing its value to small and medium-sized business into IT professionals and advancing its IoT market opportunities. LogMeIn sees tremendous growth associated with each of these priorities in the future.
Join.me is gaining incredible traction in the market. The company has seen a wide-spread adoption for join.me that had comparatively a larger contribution to its results in the third-quarter. Further, the company is planning to capture global market with its join.me. It has recently launched international version of join.me in German, French, Spanish, Italian, Dutch and Brazilian Portuguese editions. This new version should enable the company to increase its market share in Non-English-Speaking markets. It is additionally focusing on promoting this new version with new marketing campaigns in key Western European markets.
Meanwhile, the company is engaged exploring many ways in order to better integrate join.me with the workflow of next-generation. It has recently introduced a new integration between join.me and Google apps. This integration will now enable the users to effectively schedule and start join.me meetings directly from Google Calendar. Also, it has successfully brought this integration into line with its join.me Pro and join.me Enterprise offerings that should certainly accelerate its sales performance going forward.
Apart from these, the company has brought in a new integration between join.me and Salesforce 1 platform of late. Join.me is seeing great initial traction in the market with this integration as it helps the users to easily demonstrate the offerings to the prospective buyers. It also enables the sales team to start a join.me session directly from within Salesforce and automatically add related session information as an activity on that lead. LogMeIn has witnessed strong growth of more than 100% for join.me in the third-quarter 2014.
Smart moves
LogMeIn also sees remarkable growth opportunity associated with is IT management, which is its second big priority this year. The company has recently acquired Meldium. Meldium provides rich password management solutions such as intuitive in the security market. Institutive password is catered to approximately 1500 popular cloud applications that should enable the company to earn extra market share going forward.
Also, it has introduced a freemium model that facilitates the user with an easy to try, easy to buy its services. LogMeIn is additionally facilitating growing widespread set of capabilities in order to assist the companies to successfully manage their cloud centric workplace that should enhance its results in the future. The company witnessed about 33% increase in sales for IT management, while it observed 85% growth for its collaborative cloud and IT management segments in the last reported quarter.
Additionally, the company is making significant progress with ‘Internet of Things’. It expects Xively to increase its growth prospects in the future. The company considers Xively to be the most essential strategic initiative in IoT. Also, its gravity platform continues to grow in the market. It connects hundreds of millions of devices across the world. IoT is relatively a new growth market for the company. However, it is pleased with the kind of progress it is making. The company expects IoT to create a competitive advantage against its peers through its expertise in connectivity, management and engagement as it look to explore the strategic opportunity.
Conclusion
LogMeIn looks great bet with these priorities that should drive its growth in the long-run. The analysts have estimated CAGR of 34.70%, greater than average industry CAGR of 16.12% for the next five years. This indicates outstanding growth potential for the stock in the future. Also, its short term gain are very attractive with CAGR of 110.9% this year and 11.20% for the next year respectively. The stock is currently trading at the trailing P/E of 321.17 and forward P/E of 40.58. It has PEG ratio of 1.29 that continues to support its growth over the coming periods. Its balance sheet carries total cash of $196.33 million and has no debt outstanding. It has operating cash flow of $71.10 million, and leverage free cash flow of $49.3 million.
