Why Shares of LogMeIn Inc. Jumped on Friday

What: Shares of LogMeIn jumped on Friday after the company reported its second-quarter results, beating analyst estimates for both revenue and earnings. At 2:45 Friday afternoon, the stock was up about 11%.

So what: LogMeIn reported quarterly revenue of $64.8 million, up 18% year-over-year and just slightly higher than the average analyst estimate of $64 million. The company's deferred revenue balance grew at a faster rate, rising 26% year-over-year to $136 million.

LogMeIn's non-GAAP EPS was $0.35, up from $0.29 in the same period last year and $0.02 better than analysts were expecting. On a GAAP basis, EPS rose to $0.09, up from $0.05 in the same period last year. Operating expenses grew at a slower rate than revenue, up 14.8% year-over-year, helping to drive the growth in earnings.

The company's guidance for the third quarter and the full year also came in above analyst expectations. LogMeIn expects revenue between $68.8 million and $69.3 million during the third quarter, and between $265 million and $266.5 million for the full year, above analyst estimates of $67.7 million and $263.9 million, respectively.

Non-GAAP EPS is expected to be between $0.43 and $0.44 during the third quarter, above the analyst consensus of $0.36. For the full year, the company expects non-GAAP EPS of $1.51 to $1.57, also above the analyst consensus of $1.40.

Now what: It was a strong second quarter for LogMeIn, with both revenue growth and earnings growth above analyst expectations, and the third quarter should be strong as well. Profitability is improving as revenue growth outpaces expense growth, and the company has a pristine balance sheet, with $236.5 million in cash and cash equivalents, and no debt.

LogMeIn isn't an inexpensive stock, trading for about 46 times the high end of the company's full-year guidance for non-GAAP EPS, and a far higher multiple if GAAP numbers are used. But the company is making progress on the profitability front, and investors are sending the stock higher as a result.

The article Why Shares of LogMeIn Inc. Jumped on Friday originally appeared on Fool.com.

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.