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Why LogMeIn, Inc. Stock Dropped 21.5% in July

By Steve Symington – Aug 10, 2018 at 5:56PM

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Reduced guidance overshadowed a seemingly strong quarter from the remote connectivity services leader. Here's what happened.

What happened

Shares of LogMeIn Inc. (LOGM) declined 21.5% in July, according to data from S&P Global Market Intelligence, after the remote connectivity solutions specialist followed a strong quarterly report by lowering its full-year outlook.

To be sure, shares fell 25.5% on July 27, 2018, alone -- the first trading day after LogMeIn told investors it earned adjusted net income of $69.8 million, or $1.32 per share on adjusted revenue of $307.1 million. Both figures easily outpaced consensus estimates at the time, which called for earnings of $1.25 per share on revenue of $305.2 million.

Stock market data with red line indicating losses

IMAGE SOURCE: GETTY IMAGES.

So what

LogMeIn CEO Bill Wagner called it a "solid" performance, adding during the subsequent conference call that the company "made meaningful progress toward our goal to expand into larger, faster-growing addressable markets, namely in unified communications, digital engagement, and identity." 

But he also explained that the traditional communications and collaboration businesses fell short of expectations, particularly given operational execution issues and competitors taking market share following the company's merger with Citrix's GoTo business last year.

Now what

As a result, and while LogMeIn works to resolve those issues, it now expects full-year 2018 revenue of $1.181 billion to $1.191 billion, a reduction from its previous outlook for a range of $1.21 billion to $1.22 billion. LogMeIn also revised its guidance for 2018 adjusted earnings per share to be in the range of $5.17 to $5.26, down from $5.20 to $5.31 before.

In the end, that certainly doesn't mean LogMeIn is a broken business. But given its operational missteps and reduced guidance, it's no surprise to see the stock falling in response.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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