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Logitech (LOGI) Q1 Earnings and Revenues Beat Estimates

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Logitech International SA (LOGI - Free Report) reported impressive first-quarter fiscal 2019 results, wherein both the top line and the bottom line beat the Zacks Consensus Estimate.

The company maintained its impressive streak of earnings beat for the 11th consecutive quarter. Non-GAAP earnings came in at 34 cents per share, surpassing the Zacks Consensus Estimate of 27 cents. Earnings also marked an improvement from the year-ago quarter’s figure of 24 cents.

Net sales for the quarter rose 15% year over year to $608 million, comfortably beating the Zacks Consensus Estimate of $584.4 million. Revenue growth stemmed from solid performance in Logitech’s Video Collaboration, Gaming businesses and Tablet & Accessories, partially offset by a lackluster Mobile Speakers and Smart Home businesses.

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

 

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

Segmental Details

Creativity and Productivity business comprises four sub-business lines — Keyboards and Combos, Pointing Devices, PC Webcams, and Tablet and Other Accessories. Each of these registered impressive year-over-year improvement, which we believe, is mainly due to a stabilizing PC market.  

Gaming surged 75% year over year to $136 million, supported by strong momentum across its latest products. Meanwhile, Video Collaboration grew 65% to $58.8 million.

However, the Mobile Speakers business and Smart Home segment put up a disappointing show. Mobile Speaker sales plunged 45% to $34 million, while the smart home category witnessed sales decline of 45% to $9 million.

Margins & Operating Metrics

Non-GAAP gross margin increased 40 basis points (bps) year over year to 37.4%.

Non-GAAP operating income climbed 40.8% to $60.52 million driven by a $10 million restructuring credit related to the realignment of resources for growth. Operating margin of 9.9% expanded 180 bps from the year-ago quarter.

Liquidity

As of Jun 30, 2018, Logitech’s cash and cash equivalents were $604.1 million compared with $641.9 million as of Mar 31, 2018. Additionally, the company generated operating cash flow of $12.3 million for the fiscal first quarter.

Guidance

The bullish momentum in Gaming and Video Collaboration businesses, along with the thriving cloud-based video conferencing services boosted the company’s confidence in their growth prospects. Coupled with the upcoming acquisition of the microphone company, Blue Microphones, which is expected to close in the current quarter, Logitech raised guidance for fiscal 2019.

Sales growth is now projected to be 9-11% in constant currency compared with its earlier guidance of high single-digit sales.

Non-GAAP operating income is expected to be in the range of $325 million to $335 million, up from $310-$320 million projected earlier.

Zacks Rank and Other Stocks to Consider

Currently, Logitech sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the broader technology sector are Adobe (ADBE - Free Report) , and Momo Inc. (MOMO - Free Report) , and SCIENCE APPLICATIONS INTERNATIONAL CORPORATION (SAIC - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Adobe, Momo and SCIENCE APPLICATIONS INTERNATIONAL is projected to be 16.20%, 22% and 5%, respectively.

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