Image source: Logitech International.
Shares of Logitech International (NASDAQ: LOGI) jumped on Wednesday following the release of the company's preliminary third-quarter results. Both revenue and earnings grew faster than analysts expected, with Logitech raising its full-year outlook as a result. At 10:45 a.m. EST, the stock was up about 13%.
Logitech reported third-quarter revenue of $667 million, up 7% year over year despite the elimination of OEM sales. Analysts expected revenue of just $643.5 million. Logitech filled the hole left by OEM sales by growing sales in its retail channel by 12% year over year. Retail sales now account for all of Logitech's revenue.
Mobile speakers, gaming, and video collaboration products all grew sales by 25% or more compared to the prior-year period, more than offsetting weakness in tablet accessories. Other categories, including keyboards, mice, and home control, grew sales by single-digit percentages.
Non-GAAP EPS came in at $0.56, up 37% year over year and $0.12 higher than analysts were expecting. Gross margin rose from 33.6% during the third quarter of 2015 to 37%, reflecting the shift away from OEM sales. As Logitech CEO Bracken Darrell summed up the quarter:
This Q3, our results exceeded expectations and were outstanding, with broad-based growth across all our regions and almost all product categories. We delivered both the highest retail revenue and the highest non-GAAP gross margin in Logitech's 35-year history. Our strategy is working, and we are just at the beginning of our path to deliver what we're capable of. We have significantly raised our outlook on the back of this performance.
Logitech now expects to grow fiscal 2017 retail revenue by 12% to 13% at constant currency, up from previous expectations of 8% to 10% growth. Non-GAAP operating income guidance also got a boost, with the company now calling for $225 million to $230 million during fiscal 2017, up from previous guidance of $195 million to $205 million.
While mice and keyboards are still the two biggest product categories for Logitech, categories like mobile speakers and gaming are quickly gaining ground. The company's diversification away from products tied to the PC and its shift away from selling lower-margin OEM products have returned the company to growth after years of stagnation.
10 stocks we like better than Logitech International
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Logitech International wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of January 4, 2017