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Logitech (LOGI) Tops Q3 Earnings Estimates, Raises Sales View

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Logitech LOGI on Monday reported better-than-expected third-quarter fiscal 2022 results. The company’s third-quarter non-GAAP earnings of $1.55 per share surpassed the Zacks Consensus Estimate of $1.31. However, the bottom line registered a year-over-year decline of 37%.

The dismal bottom line reflects the company’s planned increased promotional spending, higher investment in retail point of sale marketing and industry-wide elevated component costs.

Its third-quarter revenues of $1.63 billion beat the consensus mark of $1.51 billion. However, the top line declined 2% from the year-ago quarter (2% on constant currency) due to a strong year-over-year comparison, where sales increased 85% (80% on constant currency) in the third quarter of fiscal 2021.

Logitech has been benefiting from elevated demand for its video collaboration, keyboards & combos and pointing devices tools, mainly driven by heightening work-from-home and learn-from-home trends. Additionally, demand for gaming products shot up on the growing popularity of online video games and eSports amid the stay-at-home scenario. Also, the PC peripheral market is witnessing strong traction, which is aiding the top line.

Logitech International S.A. Price and EPS Surprise

Logitech International S.A. Price and EPS Surprise
Logitech International S.A. Price and EPS Surprise

Logitech International S.A. price-eps-surprise | Logitech International S.A. Quote

Segment Details

Logitech’s Gaming segment’s sales climbed 8% year over year to $469 million. Revenues from Pointing Devices increased 8% year over year to $231 million. Keyboards & Combos’ sales grew 29% to $282 million.

Video Collaboration’s sales declined 2% year over year to $287 million, mainly due to a comparison to the year-ago quarter, where the segment registered more than 200% growth in revenues. Sales from PC Webcams were down 13% to $115 million, while the Tablet and Other Accessories’ sales dipped 40% to $83 million.

The Audio & Wearables segment’s sales declined 32% year over year to $104 million. Mobile Speakers’ sales decreased 22% to $57 million. The Smart Home segment’s sales plunged 57% year over year to $5 million.

Margins & Operating Metrics

Non-GAAP gross profit decreased 12% to $663 million from the year-ago quarter’s $574 million. Non-GAAP gross margin contracted 460 basis points from the prior-year quarter to 40.6%. The year-over-year decline was mainly due to the year-ago quarter’s elevated levels and was in line with management’s anticipation.

Non-GAAP operating expenses flared up 30% to $361 million. As a percentage of revenues, non-GAAP operating expenses shot up to 22.1% from the year-earlier quarter’s figure of 16.7%.

Non-GAAP operating income plummeted 37% to $302 million from $476 million reported in the year-ago quarter. Operating margin declined 10.1% to 18.5% from the year-ago quarter’s 28.6%. The decline in profits mainly reflects Logitech’s planned increased investment in marketing and innovations to support its long-term growth.

Liquidity and Shareholder Return

As of Dec 31, 2021, LOGI’s cash and cash equivalents were $1.36 billion compared with $1.14 billion recorded in the previous quarter. Additionally, the company generated operating cash flow of $377 million during the third quarter and $199 million in the first three quarters of fiscal 2022.

During the third quarter of fiscal 2022, the company repurchased shares worth $116 million. In the first three quarters of fiscal 2022, it bought back shares worth $291 million and paid $159 million in dividend.

Raised Fiscal 2022 Outlook

Buoyed by better-than-expected third-quarter performance, Logitech raised its fiscal 2022 outlook. The company now expects full-fiscal sales to grow between 2% and 5% compared with its earlier projection of flat (+/- 5%) sales. Management also raised the non-GAAP operating income guidance range to $850-$900 million from the $800-$850 million range projected previously.

Zacks Rank & Stocks to Consider

Currently, Logitech carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the broader technology sector include Broadcom AVGO, Advanced Micro Devices AMD and Jabil JBL. While Broadcom sports a Zacks Rank #1 (Strong Buy), Advanced Micro Devices and Jabil each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Broadcom’s first-quarter fiscal 2022 earnings has been revised upward by 8.1% to $8.15 per share over the past 60 days. For fiscal 2022, earnings estimates have moved upward by 6.5% to $33.03 per share over the past 60 days.

Broadcom’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 1.4%. Shares of AVGO have rallied 16.8% in the trailing 12 months.

The Zacks Consensus Estimate for Advanced Micro Devices’ first-quarter 2022 earnings has been revised upward by a penny to 68 cents per share over the past 30 days. For 2022, earnings estimates have moved upward by a penny to $3.32 per share in the past seven days.

Advanced Micro Devices’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 14%. AMD stock has rallied 23% over the past year.

The Zacks Consensus Estimate for Jabil’s second-quarter fiscal 2022 earnings has been revised upward to $1.47 per share from $1.41 60 days ago. For fiscal 2022, earnings estimates have been revised upward by 25 cents to $6.58 per share in the past 60 days.

Jabil’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 18.1%. Shares of JBL have rallied 44.5% over the past year.


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