Max Grigoryev
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Max Grigoryev in Fundamentality,

LogMeIn: investment opportunity

LogMeIn provides cloud-based services for individuals and businesses to securely connect to their workplace, colleagues, and customers. The company's stock price lost more than 2% today after the Q3 results announcement. 

However, I think that LogMeIn results are at least interesting. 

  • Number of clients and ARPA

LogMeIn didn't report about the number of clients and therefore the level of ARPA this quarter. This is the only uncertainty I have about this stock. Firstly, number of subscribers grew up from 462K in 2012 to 800K in 2014, 3-y CAGR is 20%. Secondly, ARPA dropped down from $301 per subscriber in 2012 to $277 in 2014. As we can see, the growth rate in number of clients compensate the reduction in ARPA. 

  • Operating expenses

LogMeIn reduced the Sales and Marketing expenses as % of revenue: it was around 55% last year vs less than 53% now. The company kept the same level of R&D costs, so the actual marginality of the product grew up 35% in comparison with the previous year.

I assume that the company will have a small reduction in marginality per subscriber, but overall the business is doing well. I think that investors should take a look at LogMeIn.