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Logitech (LOGI) Gains as Q4 Earnings & Revenues Beat Estimates

Logitech International LOGI shares rose 2.6% on Monday after the computer peripheral and software maker reported stronger-than-expected fourth-quarter fiscal 2023 results. The upbeat quarterly performance seems to have boosted investors’ confidence about its recovery from the post-pandemic downturn.

Logitech’s fiscal fourth-quarter non-GAAP earnings of 50 cents per share surpassed the Zacks Consensus Estimate of 42 cents per share. However, the bottom line plunged 38.3% from the year-ago quarter’s earnings of 81 cents.

The decline in the bottom line reflects lower revenues. However, reduced operating expenses partially offset the negative impacts of the aforementioned factors.

Logitech’s fiscal fourth-quarter revenues plunged 21.9% year over year to $960.1 million while beating the consensus mark for the same. The decline can be attributed to a challenging macroeconomic environment, which led Enterprise customers to reduce their IT budgets and delay project investments.

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In the past year, Logitech benefited from the elevated demand for its video collaboration, keyboards & combos and pointing device tools, mainly driven by the heightening of work-from-home and learn-from-home trends. Additionally, the demand for gaming products shot up because of the growing popularity of online video games and eSports amid the stay-at-home scenario.

However, the demand softened due to the reopening of economic and business activities later on. Moreover, enterprises are postponing their large and expensive IT investment plans amid growing recessionary concerns.

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

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

Segment Details

Logitech registered a sales decline across the majority of key product categories year over year.

Revenues from Pointing Devices dropped 10% year over year to $160.8 million, while Gaming revenues plunged 24% year over year to $239 million. Keyboards & Combos’ sales declined 19% to $187.8 million. Sales from PC Webcams were down 41% to $49.7 million, while Tablet and Other Accessories sales increased 2% to $68.4 million.

Revenues from Video Collaboration also decreased 27% to $178.7 million. The Audio & Wearables segment’s sales declined 24% year over year to $62.4 million. Mobile Speakers’ sales fell 53% to $11.8 million. The Other segment’s sales plunged 31% year over year to $1.4 million.

Margins & Operating Metrics

The non-GAAP gross profit decreased 30% to $348.8 million from the year-ago quarter’s $498.3 million. The non-GAAP gross margin contracted 420 basis points from the prior-year quarter to 36.3%.

Non-GAAP operating expenses declined 22.1% to $266.5 million. As a percentage of revenues, non-GAAP operating expenses remained flat at 27.8%.

The non-GAAP operating income plummeted 47.3% to $82.3 million from the $156.1 million reported in the year-ago quarter. The operating margin declined to 8.6% from 12.7% in the year-ago quarter. The decline in profits mainly reflects reduced revenues and gross margins.

Liquidity and Shareholder Return

As of Mar 31, 2023, LOGI’s cash and cash equivalents were $1.15 billion, up from the $1.04 billion recorded in the previous quarter. Additionally, the company generated $216.8 million in cash from operational activities in the fourth quarter. In the full-fiscal 2023, Logitech generated operating cash flow of $534 million.

In the fourth quarter, the company repurchased shares worth $90.6 million but didn’t pay any dividends. In fiscal 2023, it bought back shares worth $418.3 million and paid out $158.7 million in dividends.

Fiscal 2024 Guidance

For fiscal 2024, Logitech expects sales to decline between 18% and 22% to the $1.8-$1.9 billion band. The non-GAAP operating income is anticipated in the range of $160-$190 million.

Zacks Rank & Key Picks

Currently, Logitech carries a Zacks Rank #5 (Strong Sell). Shares of LOGI have declined 2% year to date (YTD).

Some better-ranked stocks from the broader technology sector are Wix.com WIX, Zscaler ZS and Adobe ADBE, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Wix.com’s first-quarter 2023 earnings has been revised upward to 23 cents per share from 16 cents per share 60 days ago. For 2023, earnings estimates have been revised northward by 7 cents to $1.49 per share in the past 60 days.

Wix.com's earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 225%. Shares of WIX have risen 15.5% YTD.

The Zacks Consensus Estimate for Zscaler's third-quarter fiscal 2023 earnings has been revised a penny northward to 39 cents per share in the past 30 days. For fiscal 2023, earnings estimates have been revised northward by 4 cents to $1.52 per share in the past 30 days.

Zscaler’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 29.7%. Shares of ZS have declined 20.7% YTD.

The Zacks Consensus Estimate for Adobe's second-quarter fiscal 2023 earnings has been revised upward by a couple of cents to $3.78 per share over the past 60 days. For fiscal 2023, earnings estimates have moved upward by 19 cents to $15.41 per share in the past 60 days.

Adobe's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 2.6%. Shares of ADBE have soared 11.2% YTD.

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Logitech International S.A. (LOGI) : Free Stock Analysis Report

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