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Why Is Logitech (LOGI) Down 6.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Logitech (LOGI - Free Report) . Shares have lost about 6.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Logitech due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Logitech's Q1 Earnings and Sales Outpace Expectations
Logitech reported better-than-expected results in first-quarter fiscal 2024. The computer peripheral and software maker’s fiscal first-quarter non-GAAP earnings of 65 cents per share beat the Zacks Consensus Estimate of 47 cents per share but registered a year-over-year decline of 12%.
The dismal bottom line reflects lower revenues along with an unfavorable product mix and foreign exchange pressure. However, improved component costs and reduced operating expenses partially offset the negative impacts of the aforementioned factors.
Logitech’s fiscal first-quarter revenues plunged 16% year over year to $974.5 million, surpassing the consensus mark of $905.2 million. The decline can be attributed to a strong year-over-year comparison, where revenues fell 12% in the first quarter of fiscal 2023.
In the past year, LOGI 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.
Segment Details
Logitech registered a sales decline across the majority of key product categories year over year.
Revenues from Pointing Devices dropped 5% year over year to $174.5 million, while Gaming revenues declined 11% year over year to $266.4 million. According to our model estimates, the figures were likely to decline 23.3% and 16.7% to $140.5 million and $235.7 million, respectively.
Keyboards & Combos’ sales lost 21% to $180.9 million. Sales from Webcams were down 31% to $75.2 million, while Tablet Accessories sales increased 6% to $70.3 million. Our estimates for Logitech’s Keyboards & Combos, Webcams and Tablet Accessories first-quarter revenues were pegged at $168.9 million, $40.4 million and $61.9 million, respectively. These estimates depicted a year-over-year decline of 25.8%, 31.9% and 7.1%, respectively.
Revenues from Video Collaboration also decreased 23% to $139.3 million. Our estimates for the segment were pegged at $186.5 million, suggesting a 24.2% decline. During the quarter, Logitech reclassified its product segments by removing the Audio & Wearable and Mobile Speakers categories and adding Headsets and Other categories. While the Headsets segment’s sales declined 20% year over year to $36.9 million, the Other segment’s sales plunged 35% year over year to $31 million.
Margins & Operating Metrics
The non-GAAP gross profit decreased 18.1% to $380.2 million from the year-ago quarter’s $464.1 million. The non-GAAP gross margin contracted 100 basis points from the prior-year quarter to 39%. The year-over-year decline was mainly due to unfavorable currency movements and product mix, partially offset by reduced component costs and reliance on expedited shipping.
Non-GAAP operating expenses declined 14.9% to $270.9 million. As a percentage of revenues, non-GAAP operating expenses shot up to 27.8% from the year-ago quarter’s figure of 27.5%.
The non-GAAP operating income plummeted 25% to $109.3 million from $145.6 million reported in the year-ago quarter. The operating margin declined to 11.2% from 12.6% in the year-ago quarter. The decline in profits mainly reflects reduced revenues and gross margins, partially offset by lower operating expenses.
Liquidity and Shareholder Return
As of Jun 30, 2023, LOGI’s cash and cash equivalents were $1.25 billion, up from $1.04 billion recorded in the previous quarter. Additionally, the company generated $240 million in cash from operational activities in the first quarter.
In the first quarter of fiscal 2024, the company repurchased shares worth $95 million.
Fiscal 2024 Guidance
Logitech expects fiscal 2024 sales in the band of $3.8-$4.0 billion, indicating a decline of 12-16%. Non-GAAP operating income is anticipated in the range of $400-$500 million, suggesting a 15-32% fall year over year.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, Logitech has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Logitech has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Logitech (LOGI) Down 6.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Logitech (LOGI - Free Report) . Shares have lost about 6.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Logitech due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Logitech's Q1 Earnings and Sales Outpace Expectations
Logitech reported better-than-expected results in first-quarter fiscal 2024. The computer peripheral and software maker’s fiscal first-quarter non-GAAP earnings of 65 cents per share beat the Zacks Consensus Estimate of 47 cents per share but registered a year-over-year decline of 12%.
The dismal bottom line reflects lower revenues along with an unfavorable product mix and foreign exchange pressure. However, improved component costs and reduced operating expenses partially offset the negative impacts of the aforementioned factors.
Logitech’s fiscal first-quarter revenues plunged 16% year over year to $974.5 million, surpassing the consensus mark of $905.2 million. The decline can be attributed to a strong year-over-year comparison, where revenues fell 12% in the first quarter of fiscal 2023.
In the past year, LOGI 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.
Segment Details
Logitech registered a sales decline across the majority of key product categories year over year.
Revenues from Pointing Devices dropped 5% year over year to $174.5 million, while Gaming revenues declined 11% year over year to $266.4 million. According to our model estimates, the figures were likely to decline 23.3% and 16.7% to $140.5 million and $235.7 million, respectively.
Keyboards & Combos’ sales lost 21% to $180.9 million. Sales from Webcams were down 31% to $75.2 million, while Tablet Accessories sales increased 6% to $70.3 million. Our estimates for Logitech’s Keyboards & Combos, Webcams and Tablet Accessories first-quarter revenues were pegged at $168.9 million, $40.4 million and $61.9 million, respectively. These estimates depicted a year-over-year decline of 25.8%, 31.9% and 7.1%, respectively.
Revenues from Video Collaboration also decreased 23% to $139.3 million. Our estimates for the segment were pegged at $186.5 million, suggesting a 24.2% decline. During the quarter, Logitech reclassified its product segments by removing the Audio & Wearable and Mobile Speakers categories and adding Headsets and Other categories. While the Headsets segment’s sales declined 20% year over year to $36.9 million, the Other segment’s sales plunged 35% year over year to $31 million.
Margins & Operating Metrics
The non-GAAP gross profit decreased 18.1% to $380.2 million from the year-ago quarter’s $464.1 million. The non-GAAP gross margin contracted 100 basis points from the prior-year quarter to 39%. The year-over-year decline was mainly due to unfavorable currency movements and product mix, partially offset by reduced component costs and reliance on expedited shipping.
Non-GAAP operating expenses declined 14.9% to $270.9 million. As a percentage of revenues, non-GAAP operating expenses shot up to 27.8% from the year-ago quarter’s figure of 27.5%.
The non-GAAP operating income plummeted 25% to $109.3 million from $145.6 million reported in the year-ago quarter. The operating margin declined to 11.2% from 12.6% in the year-ago quarter. The decline in profits mainly reflects reduced revenues and gross margins, partially offset by lower operating expenses.
Liquidity and Shareholder Return
As of Jun 30, 2023, LOGI’s cash and cash equivalents were $1.25 billion, up from $1.04 billion recorded in the previous quarter. Additionally, the company generated $240 million in cash from operational activities in the first quarter.
In the first quarter of fiscal 2024, the company repurchased shares worth $95 million.
Fiscal 2024 Guidance
Logitech expects fiscal 2024 sales in the band of $3.8-$4.0 billion, indicating a decline of 12-16%. Non-GAAP operating income is anticipated in the range of $400-$500 million, suggesting a 15-32% fall year over year.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, Logitech has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Logitech has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.