Alas, poor Yorick, I knew you well ... yet I sold you too soon.        

Three months ago, I offered effusive praise to LogMeIn (Nasdaq: LOGM), the software maker whose products let you "log in" (natch) to one computer and control while sitting at an entirely different computer, whether that second comp is located right next door, or thousands of miles away. Investors, who sold off the stock in response to Q2 earnings, soon came around to my way of thinking and drove the stock up far beyond my best guess at the stock's intrinsic value. They've since reversed course, of course, driving the shares up to unheard-of heights ... and rightly so.

Don't beam me up. LogMeIn!
Because as LogMeIn demonstrated to investors yesterday, this company's growth spurt is just getting started. Reporting Q3 earnings by the quaint method of filing an 8-K report with the SEC, the company had everything to boast about:

  • Q3 revenues that beat last year's haul by a good 34%.
  • Quarterly profits of $0.16 per share, which more than doubled last year's take.
  • Plenty o' cash on the balance sheet -- $156 million in cash, equivalents, and short-term marketable securities.
  • Best of all, LogMeIn produced so much free cash flow last quarter ($5.9 million), that there's nary a chance LogMeIn will need to tap its cash reserves any time soon.

Heck, even LogMeIn's bad news wasn't all that bad. The plan to sever relations with erstwhile supporter Intel (Nasdaq: INTC) remains on track. Then again, I'm not at all sure LogMeIn needs the help anymore. Apple's (Nasdaq: AAPL) continuing antipathy to Adobe (Nasdaq: ADBE) software seems tailor-made to support demand for LogMeIn's "Ignition" software. And even if Steve Jobs comes to his senses, LogMeIn's ready with a new "Ignition" product for Android-armed hardware such as the smartphones Motorola makes.

Free cash flow dipped slightly in comparison to the year-ago quarter, but year-to-date FCF is running hot at $19.8 million, and the company looks on track to generate roughly $26.4 million by year-end, giving it an enterprise value-to-free cash flow ratio of about 27.

Mind you, that still looks pricey if all the company does is match Wall Street estimates of 21% long-term growth. Also, the company still faces competition from larger competitors like Citrix (Nasdaq: CTXS) and Cisco's (Nasdaq: CSCO) WebEx suite. Then again, after four straight quarters of beating those estimates with a stick, I'm beginning to doubt LogMeIn will limit itself to meeting such low expectations.