Logitech Stock Tanks Despite Beating Earnings Estimates



The post Logitech Stock Tanks Despite Beating Earnings Estimates appeared first on Millennial Money.

Shares of Logitech (NASDAQ: LOGI) tanked on Tuesday amid a broad market sell-off, with tech stocks being particularly weak.

The decline comes despite a strong quarterly earnings release to kick off its new fiscal year, as the PC accessory maker continues to see strong demand from the shift to remote and hybrid work models.

As of 11:45 a.m. EDT, Logitech stock was down by 10%.

Strong growth across key categories

Revenue in the fiscal first quarter increased 66% to $1.31 billion, topping the consensus estimate of $1.2 billion. On a constant currency basis, which eliminates currency fluctuations during the quarter, sales grew by 58%.

The company said that gross margin expanded thanks to strong sales volumes and a favorable product mix. Logitech is maintaining its long-term gross margin target range of 39% to 44%.

The business is enjoying many secular tailwinds across multiple product categories. Video collaboration products saw revenue jump 81%, while gaming accessory sales increased by 84%. Those two categories are now Logitech’s largest sales drivers, collectively representing 44% of total revenue. 

Logitech notes that it is strategically investing in its supply chain due to rising component costs and extended lead times related to the global semiconductor shortage, while the company is also transitioning its overall business model to focus on marketing and innovation as opposed to promotions.

That all resulted in adjusted earnings per share of $1.22, a 91% jump from a year ago. Wall Street analysts were modeling for just $1.07 per share in adjusted profits.

“Our key categories grew high double digits,” CEO Bracken Darrell said in a release. “This performance demonstrates the strength of our capabilities, excellent operational execution, and ability to capitalize on long-term trends, like gaming, streaming and creating, hybrid work and video everywhere.”

Operating cash flow dipped to negative $115 million due in large part to a $120 million tax cash payment related to Swiss tax reform. The company typically makes quarterly installments but paid the full amount owed for fiscal 2021 due to administrative changes related to the reform. Logitech will resume quarterly payments in fiscal 2022.

Maintaining the same outlook

In terms of guidance, Logitech reiterated its fiscal 2022 outlook that calls for revenue growth to be roughly flat on a constant currency basis, plus or minus 5%.

Logitech generated a record $5.25 billion in sales in fiscal 2021, translating into a forecast of $4.99 billion to $5.51 billion. The consensus estimate currently stands at $5.28 billion in fiscal 2022 sales.

That should all result in adjusted operating income of $800 million to $850 million this fiscal year. The company had previously boosted its forecast from a previous range of $750 million to $800 million in adjusted operating profits.

Bullets:

The post Logitech Stock Tanks Despite Beating Earnings Estimates appeared first on Millennial Money.



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