SaaS Vendor LogMeIn Shares Jump 30 Percent In IPO

LogMeIn's IPO of 6.7 million shares was underwritten by JPMorgan Chase & Co. and Barclays Capital and priced at $16 per share. LogMeIn shares began trading on Nasdaq Wednesday and rose nearly 30 percent to $20.77 at midday.

Woburn, Mass.-based LogMeIn began life in 2003 as 3am Labs and soon won a following of solution providers with its core LogMeIn Free remote access offering. The company has since added customer support, virtual private network, data backup, and remote data shredding services, and was also an early mover in bringing remote access to Macs and smartphones such as the iPhone and BlackBerry Storm.

Keith Schiehl, president of Rent-A-Geek Computer Services, a solution provider in Okanagan Valley, British Columbia, began working with LogMeIn in 2004, and has been impressed with the steady pace with which the company has added features and functionality to its product lineup.

"They've made their products stable, fast and very affordable from an end user and service provider point of view. And they've done all of this without raising the price, which has enabled us to extract even more value from their products," Schiehl said.

Despite its popularity, LogMeIn operated in the red for several years and only began turning a profit in Q3 of 2008. In Q1 of this year, LogMeIn's revenue rose 73 percent year-on-year to $17.2 million.

LogMeIn is aware of the looming competition in the remote access space and sees Citrix's Online division and Cisco's WebEx division as its two most significant competitors. In December 2007, Intel agreed to acquire roughly 5 percent of LogMeIn for $10 million, in a deal that also included tighter integration between LogMeIn's and Intel's products.

About 43 percent of LogMeIn's employees work in engineering and development, and the company's main R&D facilities are based in Budapest, Hungary. LogMeIn's founding engineering team has worked together for more than a decade, according to a company filing with the Securities and Exchange Commission.

"We believe that our large-scale user base, efficient customer acquisition model and low service delivery costs enable us to compete effectively," LogMeIn said in the SEC filing.