Logitech
reported better-than-expected earnings for the quarter ended in December and raised its financial forecasts for the fiscal year ending in March. But cautious commentary about the company’s outlook for fiscal 2025 is weighing heavily on the stock.
Logitech shares were 11% lower Tuesday at $85.54.
For the December quarter, the provider of computer peripherals, videogame accessories, and videoconferencing hardware posted sales of $1.26 billion, down 1% from a year ago, but slightly above the Street consensus at $1.24 billion. Non-GAAP profits were $1.53 a share, well above the consensus view of $1.15 a share among analysts tracked by
FactSet.
Cash flow from operations jumped 58%, to $443 million. Logitech said it repurchased $188 million of stock in the quarter.
For the March 2024 fiscal year, Logitech now sees revenue of between $4.2 billion and $4.25 billion, with non-GAAP operating income ranging from $610 million to $660 million. That is ahead of its previous forecast of $525 million to $575 million.
But in its quarterly letter to shareholders, Logitech noted that it continues to face “a number of headwinds and uncertainties that may impact our net sales through FY 25.”
In an interview with Barron’s, CEO Hanneke Faber, who joined Logitech in December after a long career at consumer-products companies such as Unilever and Procter & Gamble, said that “the team delivered a really strong Q3, outperforming gross margin expectations, with a 22% increase in operating income.”
Faber said that she is “super-impressed” by the company’s mid-to-long term growth prospects in gaming, hybrid work and videoconferencing.
But Faber added that she remains “a little cautious for the next few quarters ahead,” given a mixed economic environment. A a combination of “uneven” GDP growth and inflation that is more persistent than expected is affecting corporate IT budgets, “which have not snapped back to where they were a few years ago.”
She said a return to growth at Logitech is a matter of “not if, but when.” But for now, she cautioned, “we’re just not seeing a rebound in corporate IT budgets.”
And where spending is picking up, she added, it is more focused on cybersecurity than PC peripherals and videoconferencing hardware, particularly given that many offices still remain vacant.
Before the pandemic, Faber said, Logitech was growing at 8% to 10% a year, including acquisitions. She thinks the company can eventually return to growth at that level with an assist from M&A, but she isn’t ready to say when.
The company will provide detailed forecasts of the outlook for fiscal 2025 at a meeting with analysts in May, the CEO says.
Write to Eric J. Savitz at [email protected] and Brian Swint at [email protected]
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