Logitech Stock Climbs After Earnings. Things Aren’t Quite So Bad.

For the quarter, Logitech posted sales of $974 million, down 16% from a year ago, but well above the Street consensus forecast of $916 million, as tracked by FactSet. Adjusted earnings were 65 cents a share, above consensus at 46 cents.

Logitech CFO Chuck Boynton said in an interview with Barron’s that results were “much better than expected,” with the company gaining market share in multiple categories, including pointing devices, mice, and keyboards. He noted that gross margin was strong at 39%, driving $240 million in free cash flow, the company’s best ever for a June quarter.

Logitech now expects sales for the first half of its fiscal year, through September, of between $1.875 billion and $1.975 billion, up from a previous target range of $1.8 billion to $1.9 billion. The new forecast represents a year-over-year sales decline of 14% to 19%; the previous forecast called for an 18% to 22% drop.

For the full fiscal year ending March 2024, Logitech sees sales of $3.8 billion to $4 billion, down between 12% and 16% from the previous year, with non-GAAP operating income of $400 million to $500 million.

While the results beat expectations, Logitech is still shrinking, so there is obvious room for improvement. Boynton noted that the company’s long-term target is for sales growth in the 8% to 10% range, similar to the range in the prepandemic period. What’s uncertain, he says, is when the company will get there.

The company expects expansion from a combination of organic growth and acquisitions, Boynton added. Earlier this month the company acquired Loupedeck, a Helsinki-based start-up which builds content editing gear.

Asked about trends in PC demand, Boynton says PC vendors seem to be “a little more bullish” on demand for the 2023 second half. Logitech also continues to be bullish on the outlook for hybrid work, which provides an opportunity to provide peripherals for both home and office desktops, he adds.

The Swiss-listed stock tumbled 12.5% in one day last month when the company announced the sudden departure of CEO Bracken Darrell. Last month, Darrell accepted the CEO post at
VFCorp.
(CFC), parent of clothing and lifestyle brands like Vans, Timberland, and The North Face. Boynton says the CEO search is “going well,” with the search committee considering both internal and external candidates for the role.

Write to Callum Keown at [email protected] and Eric J. Savitz at [email protected]