Logitech International S.A. (NASDAQ: LOGI) reported its third-quarter fiscal year 2024 results, leading to a decline in its shares premarket. The company’s revenue fell 1% year-over-year (3% in constant currencies) to $1.255 billion, slightly surpassing the consensus of $1.245 billion.
The sales in the Video Collaboration category decreased by 2% year-over-year, while Gaming sales dropped by 1%. On the other hand, Keyboards & Combos sales and Pointing Devices saw a growth of 4% each.
Logitech experienced an expansion in adjusted gross margin, which increased by 440 basis points year-over-year to 42.3%. This improvement was primarily driven by lower product and logistics costs, as well as reduced promotional activities.
As a result, adjusted operating income grew by 22% year-over-year to $248 million in the quarter. The adjusted earnings per share (EPS) of $1.53 exceeded the consensus estimate of $1.13.
Logitech had $1.41 billion in cash and equivalents and generated $443 million in operating cash flow during the quarter. Additionally, the company returned $188 million to shareholders through share repurchases.
Looking ahead, Logitech raised its guidance for sales to $4.2 billion – $4.25 billion and adjusted operating income to $610 million – $660 million for fiscal year 2024. This represents a 4% to 12% year-over-year increase. The company had previously projected sales of $4.0 billion – $4.15 billion and adjusted operating income of $525 million – $575 million.
Despite an improvement in the net sales decline rate, Logitech acknowledges that several headwinds and uncertainties may impact its net sales throughout fiscal year 2025.
In October 2023, Logitech appointed Hanneke Faber as its new chief executive officer, effective December 1, 2023, following an extensive search.
In terms of price action, Logitech’s shares were down 6.89% at $89.32 in premarket trading as of the last check on Tuesday.
It is evident that Logitech faced some challenges in the third quarter, particularly in certain sales categories. However, the company’s adjusted gross margin expansion and increased operating income demonstrate its ability to navigate these difficulties. With the appointment of Hanneke Faber as the new CEO and the raised guidance for fiscal year 2024, Logitech aims to overcome the headwinds and uncertainties it anticipates in the coming year. Investors will be closely watching the company’s performance and how it adapts to the evolving market conditions.
