Logitech (LOGI) Maintains Earnings Streak In Q4, View Intact

Logitech International SA (NASDAQ:LOGI) continued its impressive streak of earnings beats for the sixth consecutive quarter, as its fourth-quarter fiscal 2017 adjusted earnings (including stock-based compensation expense adjustments) of 15 cents per share beat the Zacks Consensus Estimate of 12 cents by nearly 25.0%.

Also, on a non-GAAP basis, the company’s earnings per share came in at 21 cents, up 50.0% on a year-over-year basis. The bottom line’s remarkable year-over-year growth was driven by strong top-line growth.

For fiscal 2017, the company reported non-GAAP earnings per share of $1.32, an impressive increase of 35% compared to the year-ago tally.

Inside the Headlines

Net sales for the quarter rose an impressive 15.2%, year over year, to $496.2 million, surpassing the Zacks Consensus Estimate of $478 million. The entire growth was attributable to the company’s Retail segment, which grew a remarkable 15% year over year, in constant currency. This was the highest quarterly growth achieved by Retail in six years. Also, previously completed Jaybird buyout stoked top-line growth significantly.

For fiscal 2017, the company’s sales grew 9.4% to $2,207 million. Growth in Retail was broad-based growth for the fiscal year, driven by double digit sales growth of four product categories—Video Collaboration, Mobile Speakers, Gaming and Home Control.

Creativity and Productivity business comprises four sub-business lines—Keyboards and Combos, Pointing Devices, PC Webcams, and Tablet and Other Accessories. Of these, Keyboards & Combos grew 14% year over year, while Pointing Devices and PC Webcams showed modest growth of 4% and 11%, respectively. However, revenues of Tablet & Other Accessories plunged 43% due to sluggishness in overall tablet markets.

Gaming surged 23% year over year to $69.0 million, driven by strength in PC gaming. Impressive product sales in both the high-end segment (including G900 wireless gaming mouse) and the more casual offerings (including our Logitech G Prodigy family of gaming gear) fuelled revenues. On the other hand, Video Collaboration grew 70% to $37.1 million on the back of double-digit growth from all three regions.

The Music business, which comprises Mobile Speakers units and Audio-PC & Wearables, witnessed impressive growth driven by solid performance of both the sub-businesses. While Mobile Speaker sales grew 61% due to strong sales in the Americas, Audio PC & Wearables category sales rose 27% during the fourth quarter of fiscal 2017, driven by the Jaybird buyout.

In addition, sales under the Home Control category increased 45% to $15.2 million, driven by continued demand for smart home products. Integration of voice assistants (such as Alexa and Google (NASDAQ:GOOGL) Assistant) into Harmony Hub proved conducive to the sales performance of this segment.

During the fourth quarter of fiscal 2017, Logitech generated record non-GAAP gross margin growth, up 430 basis points to 37.4% year over year. Non-GAAP operating margin for the company expanded a remarkable 210 bps, year over year, to 7.3%, as non-GAAP operating income jumped 61.7% year over year to $36.1 million on top-line strength. Growth in operating profits reflects focused cost-control initiatives and disciplined operational spending as well.

Logitech International S.A. Price, Consensus and EPS Surprise

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Written By: Zacks Investment Research