Logitech International S.A. LOGI reported second-quarter fiscal 2025 non-GAAP earnings of $1.2 per share, which beat the Zacks Consensus Estimate of $1.1 and increased 10% year over year. The company’s bottom-line results mainly benefited from increased revenues and lower product costs, slightly offset by rising promotional spending leading to gross margin expansion.
Logitech’s second-quarter revenues of $1.12 billion outpaced the consensus mark of $1.09 billion. Moreover, the top line marked a year-over-year increase of 6% on a reported basis and 6% on a constant-currency basis, mainly driven by higher demand across key product categories and efficient inventory management.
Buoyed by stronger-than-expected fiscal second-quarter performance, Logitech raised its guidance for fiscal 2025. The company’s revised sales guidance for the full fiscal exceeded the Zacks Consensus Estimate.
Shares of Logitech have remained highly volatile so far this year due to macroeconomic uncertainties. The stock has lost 3.4% of its value in the year-to-date period, underperforming the Zacks Computer and Technology sector’s return of 26.2%. However, its recently reported strong second-quarter results and upbeat guidance for fiscal 2025 will boost investors’ confidence in Logitech’s prospects, thereby driving the share prices higher in the near term.
Logitech International S.A. Price, Consensus and EPS Surprise
Logitech International S.A. price-consensus-eps-surprise-chart | Logitech International S.A. Quote
Logitech’s Segment Details
Logitech registered sales growth across the majority of key product categories year over year. In the first quarter of fiscal 2024, LOGI reclassified its product segments by removing the Audio & Wearable and Mobile Speakers categories and adding Headsets and Other categories.
Revenues from Keyboards & Combos improved 8% year over year to $210 million. Gaming revenues increased 7% year over year to $300.5 million. Our model estimates for Keyboards & Combos and Gaming revenues were pegged at $207.3 million and $294.6 million, respectively.
Revenues from the Headsets product category jumped 6% to $46.9 million, Pointing Devices grew 2% to $196 million, Tablet Accessories increased 34% to $85.6 million and Video Collaboration increased 5% to $159.7 million. Our model estimates for Headsets, Pointing Devices, Tablet Accessories and Video Collaboration were pegged at $44.9 million, $192.7 million, $66.7 million and $153 million, respectively.
On the other hand, Webcams declined 9% to $80.2 million and the Other category’s revenues fell 6% to $37.3 million. Our estimates for Logitech’s Webcams and Other category’s first-quarter revenues were pegged at $83.4 million and $34.8 million, respectively.
Logitech’s Margins & Operating Metrics
The non-GAAP gross profit jumped 11% to $492.4 million from $444 million reported in the year-ago quarter. The non-GAAP gross margin expanded 210 basis points (bps) from the prior-year quarter to 44.1%.
Non-GAAP operating expenses increased 15% to $299.7 million. As a percentage of revenues, non-GAAP operating expenses increased 220 bps to 26.9%.
The non-GAAP operating income grew 5.2% to $192.8 million from $183.2 million reported in the year-ago quarter. The operating margin remained flat at 17.3% year over year. The increase in the operating margin was due to lower inventory reserves due to improved demand, partially offset by higher promotional spending.
Logitech’s Liquidity and Shareholder Return
As of Sept. 30, 2024, LOGI’s cash and cash equivalents were $1.36 billion, down from $1.53 billion recorded in the previous quarter. Additionally, the company generated $166 million in cash from operational activities in the second quarter of fiscal 2025.
In the fiscal second quarter, the company returned $340 million of cash to shareholders through share repurchases and dividends. In the second quarter of 2025, LOGI repurchased shares worth $132 million.
Logitech Lifts Fiscal 2025 Guidance
Buoyed by stronger-than-expected second-quarter performance, Logitech raised its guidance for fiscal 2025. It now expects fiscal 2025 sales in the band of $4.39-$4.47 billion, up from the previous guidance of $4.34-$4.43 billion. The revised top-line projection reflects a year-over-year increase in the band of 2-4%, up from the earlier range of 1-3%. The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $4.39 billion.
Logitech also revised its projections of non-GAAP operating profit to $720-$750 million, up from the previous guidance of $700-$730 million. The updated guidance for operating income projects year-over-year growth of 3-7%, up from the previous guidance of a growth of 0-4%.
Logitech’s Zacks Rank & Stocks to Consider
Logitech currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are CyberArk Software CYBR, F5 Inc. FFIV and Fortinet FTNT, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The consensus mark for CyberArk’s 2024 earnings has been revised upward by 2 cents to $2.29 per share over the past 60 days, indicating a 104.5% year-over-year increase. The long-term expected earnings growth rate for the stock stands at 33.4%. The stock of CYBR has soared 37% year-to-date.
The Zacks Consensus Estimate for FFIV’s fiscal 2024 earnings has been revised downward by a penny to $13.15 per share in the past 30 days, suggesting a year-over-year increase of 12.4%. It has a long-term earnings growth expectation of 7.8%. Shares of FFIV have gained 21.8% year-to-date.
The Zacks Consensus Estimate for Fortinet’s 2024 earnings has been revised upward by 2 cents to $2.03 per share in the past 60 days, indicating an increase of 24.5% on a year-over-year basis. It has a long-term earnings growth expectation of 16.3%. Shares of FTNT have gained 40.2% year-to-date.
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