Logitech International LOGI reported first-quarter fiscal 2021 results, wherein both bottom and top lines surpassed estimates.
Non-GAAP earnings came in at 64 cents per share, surpassing the Zacks Consensus Estimate by 77.8%. The bottom line also improved from the year-ago quarter’s 39 cents.
Net sales of $792 million surpassed the consensus mark of $706 million and rose 23% year over year in dollars and 25% at constant currency.
The year-over-year increase stemmed from strong growth across all business segments. Bracken Darrell, president and CEO, Logitech, noted, “Our company strategy focuses on four long-term trends: more of us will work from home; video calls will replace audio calls; esports will become as big as conventional sports; and billions of people worldwide will create content, not just a handful of TV and movie studios. Logitech’s business was already positioned to grow from these long-term trends, and since early March they have accelerated, making Logitech more relevant to customers than ever before.”
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 Gaming segment’s sales grew 35% year over year to $181.9 million. Video Collaboration sales witnessed a 77% rally to $130.1 million. Audio & Wearables segment sales grew 22% year over year to $71.4 million.
However, Mobile Speakers’ sales fell 42% to $29 million. Smart Home segment sales declined 31% year over year to $6.8 million.
Logitech’s Creativity and Productivity business comprises four sub-business lines — Keyboards and Combos, Pointing Devices, PC Webcams, and Tablet and Other Accessories. Revenues from Pointing Devices fell 1% year over year, whereas that from Keyboards and Combos grew 13%. Revenues from PC Webcams, and Tablet and Other Accessories rose 116% and 20%, respectively.
The Other segment declined 98% to $5 million in the quarter.
Margins & Operating Metrics
Non-GAAP gross profit rose 27.6% year over year to $310.7 million. Non-GAAP gross margin expanded 140 basis points (bps) from the year-ago quarter to 39.2%.
Non-GAAP operating expenses grew 9.6% to $193.3 million.
Non-GAAP operating income soared 75.1% to $117.3 million. Operating margin of 14.8% expanded 440 bps.
As of Jun 30, 2020, Logitech’s cash and cash equivalents were $809.4 million compared with $715.6 million in the previous quarter.
Additionally, the company generated operating cash flow of $118.8 million in the fiscal first quarter compared with $100.8 million in the prior quarter.
Logitech raised its view for fiscal 2021. The company now expects non-GAAP operating income of $410-$425 million compared with the previously guided range of $380-$400 million.
Revenue growth is now anticipated to be 10-13% year over year, instead of a mid-single-digit range, at constant currency.
Zacks Rank and Stocks to Consider
Logitech currently has a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader technology sector are Micron Technology MU, Dropbox, Inc. DBX and Asure Software Inc ASUR. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for Micron, Dropbox and Asure is currently pegged at 10.26%, 32.51% and 14%, respectively.
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