Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of LogMeIn (NASDAQ:LOGM), a provider of remote access and other enterprise software, rose on Friday after the company reported stronger-than-expected earnings on Thursday evening. After rising as much as 10% Friday morning, shares had settled a bit by the afternoon, up about 7.5% as of 1:45 PM.
So what: Revenue rose 33% year-over-year during the fourth quarter to $59.9 million, beating analyst estimates by about $1 million. Non-GAAP EPS was $0.35, up more than 100% year-over-year and beating analyst estimates by two cents.
LogMeIn was profitable on both a GAAP and non-GAAP basis for the fourth quarter and for the full year, a rarity among small, fast-growing software companies. Operating expenses grew more slowly than revenue, leading to a GAAP operating margin of 5.9% during the fourth quarter, up slightly year-over-year.
LogMeIn expects revenue to grow by about 17% during 2015, a significant slowdown compared to 2014. Non-GAAP EPS is expected to be between $1.24 and $1.34, up from $1.18 in 2014.
Now what: CEO Michael Simon is optimistic about LogMeIn's prospects for 2015: "Significant progress on our key growth drivers in 2014 – fueling join.me's growth, boosting our value to SMB IT and accelerating our Internet of Things opportunity with Xively -- has put us in a favorable position to deliver strong continued growth. In 2015, our goal will be to increase our strategic positions in our collaboration, SMB IT and IoT markets to accelerate longer-term growth while maximizing shareholder value."
The stock is expensive, trading at nearly six times sales and 38 times the high-end guidance for 2015 non-GAAP net income. But with the company actually generating profits along with its robust growth, something that can't be said for most fast-growing software companies, LogMeIn deserves a closer look.
Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.