LogMeIn has grown its LastPass password management service exponentially since acquiring it in 2015. Now, the owners of the Boston-based remote work software company want to make LastPass an independent company again, hoping to continue its meteoric growth.
LogMeIn announced on Tuesday that it is planning to establish LastPass as a separate standalone company, starting in January. Both companies would still be owned by private equity firms Evergreen Coast Capital and Francisco Partners, which acquired LogMeIn last year for $4.3 billion. LogMeIn chief executive Bill Wagner and his management team will continue to run LastPass until a new chief executive is hired in 2022. Likewise, LogMeIn’s board of directors will continue to oversee LastPass until a new board is created, though some people will probably serve on both.
Wagner said LastPass had around $10 million in sales when LogMeIn paid $110 million to acquire the startup six years ago. It has since grown to about $200 million in annual recurring revenue. About 350 of LogMeIn’s 3,800 global employees work full time on LastPass today — up from 30 at the time of the 2015 acquisition — with perhaps another 150 working on LastPass for part of their time. Wagner said those 350 will become LastPass employees in the new year, and that number could double by the end of 2022.
Creating a standalone company, Wagner said, will ensure LastPass does not compete for resources with LogMeIn’s primary business lines, which include the GoToConnect and GoToMeeting software programs, and that LastPass executives can devote their full attention to the password management business. The software essentially acts as a skeleton key — a single password for one user that can be used to access a variety of accounts with their own unique passwords.
“It’s a business that has really just continued to accelerate over the last couple of years,” Wagner said. “If we split it out as a separate company, it has the best chance to reach its potential.”
It’s not clear where LastPass will be headquartered after the spinout; that decision may fall to the yet-to-be-hired CEO. But with so many employees in Europe, it’s likely that the firm will be based on the East Coast, which means Boston — where about 50 LastPass employees work today — is well-positioned.
“There’s a fair chance it could be based in Boston,” Wagner said. “We haven’t made that decision yet.”