Logitech International S.A. (NASDAQ:LOGI) started fiscal 2025 on a strong note by reporting better-than-expected results for the first quarter. The computer peripheral and software maker's key metrics, including revenues and earnings, marked strong improvement on a year-over-year basis as well.
Logitech's fiscal first-quarter non-GAAP earnings of $1.13 per share beat the Zacks Consensus Estimate of 89 cents and registered a year-over-year increase of 74%. The company's bottom-line results mainly benefited from increased revenues and lower product costs and promotional costs, leading to gross margin expansion.
Logitech's first-quarter revenues of $1.1 billion outpaced the consensus mark of $1.03 billion. Moreover, the top line marked a year-over-year increase of 12% on a reported basis and 13% on a constant-currency basis, mainly driven by higher demand across key product categories and efficient inventory management.
Logitech International S.A. Price, Consensus and EPS Surprise
Logitech International S.A. price-consensus-eps-surprise-chart | Logitech International S.A. Quote
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 19% year over year to $215.3 million, while Gaming revenues increased 16% year over year to $309.5 million. Our model estimates for Keyboards & Combos and Gaming sales were pegged at $190.7 million and $281.7 million, respectively.
Revenues from the Headsets product category jumped 20% to $44.2 million, Pointing Devices grew 9% to $190 million, Tablet Accessories increased 12% to $78.5 million and Video Collaboration increased 6% to $147 million. Our model estimates for Headsets, Pointing Devices, Tablet Accessories and Video Collaboration were pegged at $37.8 million, $183.3 million, $74.8 million and $145.9 million, respectively.
On the other hand, Webcams declined 3% to $73 million and the Other category's revenues fell 1% to $30.7 million. Our estimates for Logitech's Webcams and Other category's first-quarter revenues were pegged at $77.1 million and $31.8 million, respectively.
Margins & Operating Metrics
The non-GAAP gross profit jumped 24.1% to $466.3 million from $375.6 million reported in the year-ago quarter. The non-GAAP gross margin expanded 430 basis points (bps) from the prior-year quarter to 43.3%. The year-over-year increase was driven by lower product costs and reduced promotional activities.
Non-GAAP operating expenses increased 6.6% to $289 million. As a percentage of revenues, non-GAAP operating expenses declined 130 bps to 26.6%.
The non-GAAP operating income surged 67% to $182 million from $109 million reported in the year-ago quarter. The operating margin improved 560 bps to 16.8% from 11.2% in the year-ago quarter. The increase in the operating margin was mainly driven by improved gross margins, strong executions in operations and lowered spendings on promotional activities.
Liquidity and Shareholder Return
As of Jun 30, 2024, LOGI's cash and cash equivalents were $1.53 billion, up from $1.52 billion recorded in the previous quarter. Additionally, the company generated $176 million in cash from operational activities in the first quarter of fiscal 2025.
In the first quarter, the company repurchased shares worth $131 million but did not pay out dividends.
Raised Fiscal 2025 Guidance
Buoyed by stronger-than-expected first-quarter performance, Logitech raised its guidance for fiscal 2025. It now expects fiscal 2025 sales in the band of $4.34-$4.43 billion, up from the previous guidance of $4.3-$4.4 billion. The revised top-line projection reflects a year-over-year increase in the band of 1-3%, up from the earlier range of 0-2%. The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $4.35 billion.
Logitech also revised its projections of non-GAAP operating profit to $700-$730 million, up from the previous guidance of $685-$715 million. The updated guidance for operating income projects year-over-year growth of 0-4%, up from the previous guidance between a decline of 2% and an increase of 2%.
Zacks Rank & Other Stocks to Consider
Logitech currently carries a Zacks Rank #2 (Buy). Shares of LOGI have lost 3.2% year to date (YTD).
Some other top-ranked stocks in the broader technology sector are NVIDIA (NASDAQ:NVDA), Appfolio (NASDAQ:APPF) and Twilio (NYSE:TWLO), each sporting a Zacks Rank #1 (Strong Buy) at present.
The Zacks Consensus Estimate for NVIDIA's fiscal 2025 earnings has been revised upward by a penny to $2.69 per share in the past seven days, suggesting year-over-year growth of 107%. The long-term estimated earnings growth rate for the stock is 37.6%. The stock has soared 149.2% YTD.
The Zacks Consensus Estimate for Appfolio's 2024 earnings has been revised downward by 2 cents to $3.98 per share in the past 60 days, indicating an increase of 132.8% on a year-over-year basis. Shares of APPF have jumped 55.7% YTD.
The consensus mark for Twilio's 2024 earnings has been revised upward by 2 cents to $3.12 per share over the past 30 days, indicating a 27.4% increase from 2023. It has a long-term earnings growth expectation of 33%. The stock has plunged 23.6% YTD.
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