Takeaway: We got our estimate cut, but a miss on FCF, a slowing of the CC segment, and a l-t-e Capital Intensity rate leave us hungry for more answers

We have done two deep dives on LOGM now (CLICK HERE for our December 2017 LOGM Initial Black Book and CLICK HERE for our February 2017 Update Call). Both efforts concluded with us calling for an estimate cut; one into the Analyst Day in December, and one into EPS last night. We got both estimate cuts, and theoretically this is where we turn more bullish. But we have some remaining questions that are holding us back…

When will core of C&C re-accelerate?

How far along in the billing conversion is LOGM, and why can’t they get to the end by 4Q18?

Capital intensity is up but not to the 7-8% we called for. Is that still ahead?

Will they disclose the closing date of Jive and the $ amount of revenue contribution to 1Q18?

It sounds like this year’s buyback will only reduce the share count by ~200k shares (incremental to 4Q17). What are the total dollars available to buy back this year? Does the M&A intention to spend the balance sheet imply that the buyback takes a back seat?

One other important process piece for us: the bull case on LOGM was around acceleration of revenue growth and the revaluation of the business from 15-20x FCF to 25-30x FCF. Unfortunately, on the FCF miss in 4Q, the company is now trading ~27x clean LTM FCF (clean = GAAP). While it is trading 20-21x forward FCF on clean #s, we note that as the balance sheet gets spent on Jive that will add 1.5x turns to the EV/FCF multiple, further dampening the cheapness factor.

More to come.