Specialist
Former Corporate Account Executive at LogMeIn Inc
Agenda
- LogMeIn (NASDAQ: LOGM) and its offerings across communications/collaboration, IT access/support and engagement/support, noting key products and revenue mix
- Industry dynamics and competition across LogMeIn's categories and products, including from competitors such as Microsoft (NASDAQ: MSFT) and Zoom (NASDAQ: ZM)
- Coronavirus impact and impact of August 2020 acquisition by private equity
- 1-3-year outlook, noting possible product consolidation scenarios
Questions
1.
Could you briefly describe LogMeIn as a company and what it does? Many people have probably heard of LogMeIn, GoToMeeting and maybe even LastPass, but they may not know the extent and expanse of the corporate operations. The primary business segments are communications and collaborating, IT access and support and engagement and support.
2.
One of the biggest challenges to understanding LogMeIn is making sense of the three business segments and the products that fall within each of those, as you referenced. In communications and collaboration, it seems it’s mainly the GoTo products. Could you discuss the transition from GoToMeeting to GoToConnect, or maybe even a GoToTraining? How would you best characterise what the GoToMeeting business does and what’s most important there? It also has GoToRoom and GoToWebinar.
3.
The transition that you alluded to from GoToMeeting to GoToConnect is important. Why has GoToMeeting taken a back seat and GoToConnect has become the most important product in this product suite? How should we think about the importance of those two particular products? You alluded to the pandemic and the implications there.
4.
It would seem the Jive offering that has now become part of what LogMeIn offers would be strategically important. Is the company thinking about point solutions vs suite when considering communications and collaborations products, given there are competing platforms that seem to be broader and more powerful together? To what extent does it makes sense to, and the company has entertained efforts to bring these products together? You alluded to how there’s some functionality in one product and another set of functionalities in another, and people might want some from each of the solutions, but they’re not necessarily brought together.
5.
: IT access and support is the second largest part of LogMeIn based on the last information the company released as a publicly traded company for FY 2019. IT access and support seems to include GoToMyPC and LastPass as well as Central and Pro. Can you discuss these products? Which ones are most important for revenue, growth or strategically?
6.
The third business segment is engagement and support, with GoToAssist and Rescue. Is there anything noteworthy about that business segment? Based on the last available information, it was by far the smallest of the three.
7.
The last full year LogMeIn was a public company was 2019. It was then acquired by private equity in August 2020. How has revenue mix across business segments changed? Approximately half the revenues came from the communications and collaboration segment, one-third from IT access and then the remainder 15% or so from support. Could communications and collaboration have really increased due to the pandemic and its resulting demand? As you referenced, the company’s large competitors were investing, marketing and selling aggressively, so maybe that area didn’t benefit. Whereas IT access would seem to be pretty important in the context of the pandemic, so maybe it’s up from a third.
8.
What is LogMeIn’s TAM? It has these three segments and different products. There was an indication of USD 40bn-50bn TAM for the company a few years ago, admittedly, before the pandemic. I imagine the pandemic would have enhanced the TAM. Does that USD 40bn-50bn seem reasonable, or do you think that’s more aspirational?
9.
Who are the most formidable direct competitors as communications and collaboration come together increasingly and people consider shifting away from LogMeIn? Competition has intensified, especially across the communications and collaboration segment, and due to the pandemic, there’s been a lot of interest and demand, and thus these very large competitors. It seems there are two segments coming together – an online or mobile meeting-type category and UCaaS [unified-communications-as-a-service].
10.
Zoom has introduced Zoom Phone and Microsoft has Teams but also Skype. I find it interesting that the top two communications and collaboration competitors have traditional audio or phone features and functionality as well. You could argue that’s where LogMeIn is or wants to go, to an extent. You referenced this but it seems it’s an uphill battle for LogMeIn considering the average person would recognise a large number of those competitors. You touched upon LogMeIn winning in some cases because it has existing LastPass, Central or Rescue customers. The communications and the collaboration offering is really a cross-sell where people just take that because they’re already working with LogMeIn. How does LogMeIn win in this marketplace? Is it primarily due to those cross-sells? Is it that LogMeIn now has to engage in a land-grab giveaway strategy, as you mentioned?
11.
How far through this process are we, where Zoom is offering an 85% discount vs what an enterprise is paying for GoToMeeting? Obviously companies have had to strategically consider this. Is that wave of market share losses over? You alluded to how LogMeIn is now more orientated around taking back some of that market share. How do you expect that to play out over the next 1-3 years?
12.
How is LogMeIn positioned in IT access and what opportunities exist for it over the next 1-3 years? We’ve discussed LastPass and Central. There are many competitors in this segment, including Okta, Apple, BeyondTrust, Dashlane and Oracle. It seems it has a couple of really good solutions and it needs to put more R&D investment and marketing muscle behind it.
13.
How is LogMeIn positioning and pursuing growth in engagement and support? It only highlights LivePerson and TeamViewer as the two primary competitors. My sense is it and TeamViewer have been pursuing more enterprise relationships. Is that a legitimate opportunity for the company and is it consistently winning in competitive situations and gaining share? There are other competitors in this category, such as Salesforce, Freshdesk, HubSpot, ServiceNow and Zendesk.
14.
To what extent has LogMeIn been doing a good job of shifting to enterprise? You mentioned the company has to make that shift.
15.
From 2013-18, LogMeIn consistently grew annual revenues 20-30% or so. There was a large bump in 2017 because of the GoTo acquisition, but then in 2019, revenues rose only 5%. Maybe there was a difficult comparison after the acquisition of GoTo in 2017 and Jive in 2018, but that seems a quite dramatic deceleration in growth. A company consistently growing around 20-30% annually growing suddenly at 5%. Is there anything that would explain why there was this deceleration? Was it the GoTo acquisition or the Jive acquisition not working how the company expected? Did the company make these deals because it anticipated growth slowing around the corner?
16.
You referenced transitioning LastPass free users to paying users. How far along is LogMeIn in that process, assuming it supported some growth? If all those users are largely converted, then that source of gains may be largely exhausted. That doesn’t mean it can’t sign up new users and get growth that way.
17.
LogMeIn removing LastPass’s free tier would be a good indication its largely completed the effort to transition users to paid, which perhaps explains why, in 2019, revenues rose 5%. I came across an update indicating revenue growth has been in the low single digits. Where was growth in 2020? Was it somewhere between the low single digits and 5%, or did the company have a notable bump from the pandemic that helped it re-accelerate growth?
18.
You mentioned the notion of cost-cutting. LogMeIn was acquired by private equity in August 2020. There have been indications that the company has focused on cost savings and efficiencies, according to one ratings agency. Do such moves make sense? Was the company spending too much money or was it making cuts just to reduce the cost base? How would you characterise that in the context of acquisitions in 2017 and 2018 where there might’ve been some overlap with redundant employees and operations?
19.
What do you think of LogMeIn President and CEO Bill Wagner, who’s been in the role for 6 years? The company has added a new chief revenue officer, chief marketing officer, chief information security officer and a global VP of channel sales. What do you think of the new additions to leadership and the CEO staying in place, understanding new ownership came into the company last year?
20.
You referenced the company facing huge competitors in communications and collaboration, losing momentum and facing an insurmountable uphill battle. Could you anticipate it selling that business or divesting it? Could it do similar things with any of the other businesses or products? You indicated that middle segment in the context of IT access seems to have the most potential, but you also highlighted how engagement is having its fair share of difficulties.
21.
What is your 1-3-year outlook for LogMeIn and what is its biggest opportunity and risk?