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Logitech Announces First Quarter FY 2024 Results

Company Provides Full-Year and Updated First-Half 2024 Outlook

SIX Swiss Exchange Ad hoc announcement pursuant to Art. 53 LR — Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the first quarter of Fiscal Year 2024.

  • Sales were $974 million, down 16 percent in US dollars and 15 percent in constant currency, compared to the prior year.
  • GAAP operating income was $78 million, down 32 percent compared to the prior year. Non-GAAP operating income was $109 million, down 25 percent compared to the prior year.
  • GAAP earnings per share (EPS) was $0.39, down 36 percent compared to the prior year. Non-GAAP EPS was $0.65, down 12 percent compared to the prior year.
  • Cash flow from operations was $240 million, up $275 million compared to the prior year. The quarter-ending cash balance was $1.25 billion.

“While the markets are still challenging, I am proud of the team's achievements during our first quarter,” said Guy Gecht, Logitech interim chief executive officer. “Our high-caliber seasoned team, design-led engineering and strong execution truly sets us apart. Our latest innovations and elevated outlook are just a glimpse of Logitech’s full potential as we execute our strategic vision.”

“This solid first quarter highlights steady progress on many important metrics,” said Charles Boynton, Logitech chief financial officer. “We delivered another quarter of reduced inventory and operating expenses while continuing to drive strong cash generation, further fortifying our balance sheet. With one quarter completed, we are pleased to provide a full-year and updated first-half outlook.”

Outlook

Logitech raised its outlook for the first half of Fiscal Year 2024:

 

Previous H1 2024 outlook

New H1 2024 outlook

Sales

$1.8 - $1.9 billion

$1.875 - $1.975 billion

Sales decline (in US dollars, year over year)

22% - 18%

19% - 14%

Non-GAAP operating income

$160 - $190 million

$180 - $220 million

Non-GAAP op. inc. decline (year over year)

47% - 37%

40% - 27%

Logitech also provided an estimated full-year outlook for Fiscal Year 2024:

 

 

Full FY 2024 outlook

Sales

 

$3.8 - $4.0 billion

Sales decline (in US dollars, year over year)

 

16% - 12%

Non-GAAP operating income

 

$400 - $500 million

Non-GAAP op. inc. decline (year over year)

 

32% - 15%

Financial Results Videoconference and Webcast

Logitech will hold a financial results videoconference to discuss the results for Q1 Fiscal Year 2024 on Tuesday, July 25, 2023 at 8:30 a.m. Eastern Daylight Time and 2:30 p.m. Central European Summer Time. A livestream of the event will be available on the Logitech corporate website at http://ir.logitech.com.

Use of Non-GAAP Financial Information and Constant Currency

To facilitate comparisons to Logitech’s historical results, Logitech has included non-GAAP adjusted measures in this press release, which exclude share-based compensation expense, amortization of intangible assets, acquisition-related costs, restructuring charges, net, loss (gain) on investments, non-GAAP income tax adjustment, and other items detailed under “Supplemental Financial Information” after the tables below and posted to our website at http://ir.logitech.com. Logitech also presents percentage sales growth in constant currency (“CC”), a non-GAAP measure, to show performance unaffected by fluctuations in currency exchange rates. Percentage sales growth in constant currency is calculated by translating prior period sales in each local currency at the current period’s average exchange rate for that currency and comparing that to current period sales. Logitech believes this information, used together with the GAAP financial information, will help investors to evaluate its current period performance, outlook and trends in its business. With respect to the Company’s outlook for non-GAAP operating income, most of these excluded amounts pertain to events that have not yet occurred and are not currently possible to estimate with a reasonable degree of accuracy. Therefore, no reconciliation to the GAAP amounts has been provided for the first half of Fiscal Year 2024 and full Fiscal Year 2024 non-GAAP operating income outlook.

Public Dissemination of Certain Information

Recordings of Logitech’s earnings videoconferences and certain events Logitech participates in or hosts with members of the investment community are posted on the company’s investor relations website at https://ir.logitech.com. Additionally, Logitech provides notifications of news or announcements regarding its operations and financial performance, including its filings with the Securities and Exchange Commission (SEC), investor events, and press and earnings releases as part of its investor relations website. Logitech intends to use its investor relations website as means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD. Logitech’s corporate governance information also is available on its investor relations website.

About Logitech

Logitech helps all people pursue their passions and is committed to doing so in a way that is good for people and the planet. We design hardware and software solutions that help businesses thrive and bring people together when working, creating, gaming and streaming. Brands of Logitech include Logitech, Logitech G, ASTRO Gaming, Streamlabs, Blue Microphones and Ultimate Ears. Founded in 1981, and headquartered in Lausanne, Switzerland, Logitech International is a Swiss public company listed on the SIX Swiss Exchange (LOGN) and on the Nasdaq Global Select Market (LOGI). Find Logitech at www.logitech.com, the company blog or @logitech.

This press release contains forward-looking statements within the meaning of U.S. federal securities laws, including, without limitation, statements regarding: our preliminary financial results for the three months ended June 30, 2023, full year and first half Fiscal Year 2024 outlook for sales and non-GAAP operating income, and related assumptions. The forward-looking statements in this press release are subject to risks and uncertainties that could cause Logitech’s actual results and events to differ materially from those anticipated in these forward-looking statements, including, without limitation: macroeconomic and geopolitical conditions and other factors and their impact, for example changes in inflation levels and monetary policies; our expectations regarding our expense reduction efforts, including the timing thereof; changes in secular trends that impact our business; if our product offerings, marketing activities and investment prioritization decisions do not result in the sales, profitability or profitability growth we expect, or when we expect it; if we fail to innovate and develop new products in a timely and cost-effective manner for our new and existing product categories; if we do not successfully execute on our growth opportunities or our growth opportunities are more limited than we expect; the effect of demand variability, supply shortages and other supply chain challenges; the effect of pricing, product, marketing and other initiatives by our competitors, and our reaction to them, on our sales, gross margins and profitability; if we are not able to maintain and enhance our brands; if our products and marketing strategies fail to separate our products from competitors’ products; if we do not efficiently manage our spending; our expectations regarding our restructuring efforts, including the timing thereof; if there is a deterioration of business and economic conditions in one or more of our sales regions or product categories, or significant fluctuations in exchange rates; changes in trade regulations, policies and agreements and the imposition of tariffs that affect our products or operations and our ability to mitigate; if we do not successfully execute on strategic acquisitions and investments; risks associated with acquisitions; and the effect of changes to our effective income tax rates. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in Logitech’s periodic filings with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, and our subsequent reports filed with the SEC, available at www.sec.gov, under the caption Risk Factors and elsewhere. Logitech does not undertake any obligation to update any forward-looking statements to reflect new information or events or circumstances occurring after the date of this press release.

Note that unless noted otherwise, comparisons are year over year.

Logitech and other Logitech marks are trademarks or registered trademarks of Logitech Europe S.A. and/or its affiliates in the U.S. and other countries. All other trademarks are the property of their respective owners. For more information about Logitech and its products, visit the company’s website at www.logitech.com.

LOGITECH INTERNATIONAL S.A.

PRELIMINARY RESULTS*

(In thousands, except per share amounts) - unaudited

 

 

 

 

 

 

Three months ended June 30,

GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

2023

 

 

 

2022

 

 

 

 

 

 

Net sales

 

$

974,499

 

 

$

1,159,865

Cost of goods sold

 

 

595,712

 

 

 

697,220

 

Amortization of intangible assets

 

 

3,145

 

 

 

3,042

 

Gross profit

 

 

375,642

 

 

 

459,603

 

 

 

 

 

 

Operating expenses:

 

 

 

 

Marketing and selling

 

 

179,185

 

 

 

229,378

 

Research and development

 

 

70,559

 

 

 

75,517

 

General and administrative

 

 

41,297

 

 

 

35,860

 

Amortization of intangible assets and acquisition-related costs

 

 

2,685

 

 

 

3,369

 

Restructuring charges, net

 

 

3,511

 

 

 

 

Total operating expenses

 

 

297,237

 

 

 

344,124

 

 

 

 

 

 

Operating income

 

 

78,405

 

 

 

115,479

 

Interest income

 

 

9,826

 

 

 

1,449

 

Other income (expense), net

 

 

(12,972

)

 

 

5,624

 

Income before income taxes

 

 

75,259

 

 

 

122,552

 

Provision for income taxes

 

 

12,532

 

 

 

21,716

 

Net income

 

$

62,727

 

 

$

100,836

 

 

 

 

 

 

Net income per share:

 

 

 

 

Basic

 

$

0.39

 

 

$

0.61

 

Diluted

 

$

0.39

 

 

$

0.61

 

 

 

 

 

 

Weighted average shares used to compute net income per share:

 

 

 

 

Basic

 

 

158,859

 

 

 

164,679

 

Diluted

 

 

160,155

 

 

 

166,406

 

 

LOGITECH INTERNATIONAL S.A.

PRELIMINARY RESULTS*

(In thousands, except share amounts) - unaudited

 

 

 

 

 

 

 

June 30,

 

March 31,

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

2023

 

 

 

2023

 

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,251,086

 

 

$

1,149,023

 

Accounts receivable, net

 

 

562,602

 

 

 

630,382

 

Inventories

 

 

572,344

 

 

 

682,893

 

Other current assets

 

 

111,572

 

 

 

142,876

 

Total current assets

 

 

2,497,604

 

 

 

2,605,174

 

 

 

 

 

 

Non-current assets:

 

 

 

 

Property, plant and equipment, net

 

 

126,965

 

 

 

121,503

 

Goodwill

 

 

453,922

 

 

 

454,610

 

Other intangible assets, net

 

 

57,230

 

 

 

63,173

 

Other assets

 

 

304,160

 

 

 

316,293

 

Total assets

 

$

3,439,881

 

 

$

3,560,753

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

386,599

 

 

$

406,968

 

Accrued and other current liabilities

 

 

570,544

 

 

 

643,139

 

Total current liabilities

 

 

957,143

 

 

 

1,050,107

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

Income taxes payable

 

 

107,925

 

 

 

106,391

 

Other non-current liabilities

 

 

148,738

 

 

 

146,695

 

Total liabilities

 

 

1,213,806

 

 

 

1,303,193

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

Registered shares, CHF 0.25 par value:

 

 

30,148

 

 

 

30,148

 

Issued shares — 173,106 at June 30, 2023 and March 31, 2023

 

 

 

 

Additional shares that may be issued out of conditional capital — 50,000 at June 30, 2023 and March 31, 2023

 

 

 

 

Additional shares that may be issued out of authorized capital — 17,311 at June 30, 2023 and March 31, 2023

 

 

 

 

Additional paid-in capital

 

 

49,734

 

 

 

127,380

 

Shares in treasury, at cost — 14,484 at June 30, 2023 and 13,763 at March 31, 2023

 

 

(994,581

)

 

 

(977,266

)

Retained earnings

 

 

3,240,302

 

 

 

3,177,575

 

Accumulated other comprehensive loss

 

 

(99,528

)

 

 

(100,277

)

Total shareholders’ equity

 

 

2,226,075

 

 

 

2,257,560

 

Total liabilities and shareholders’ equity

 

$

3,439,881

 

 

$

3,560,753

 

 

LOGITECH INTERNATIONAL S.A.

PRELIMINARY RESULTS*

(In thousands) - unaudited

 

 

Three months ended June 30,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

2023

 

 

 

2022

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net income

 

$

62,727

 

 

$

100,836

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

Depreciation

 

 

17,498

 

 

 

18,626

 

Amortization of intangible assets

 

 

5,827

 

 

 

6,229

 

Loss (gain) on investments

 

 

11,823

 

 

 

(11,357

)

Share-based compensation expense

 

 

21,511

 

 

 

23,690

 

Deferred income taxes

 

 

2,962

 

 

 

265

 

Other

 

 

24

 

 

 

(124

)

Changes in assets and liabilities, net of acquisitions:

 

 

 

 

Accounts receivable, net

 

 

65,390

 

 

 

(44,572

)

Inventories

 

 

110,440

 

 

 

(324

)

Other assets

 

 

34,342

 

 

 

4,932

 

Accounts payable

 

 

(18,420

)

 

 

(70,034

)

Accrued and other liabilities

 

 

(74,329

)

 

 

(63,835

)

Net cash provided by (used in) operating activities

 

 

239,795

 

 

 

(35,668

)

Cash flows from investing activities:

 

 

 

 

Purchases of property, plant and equipment

 

 

(16,238

)

 

 

(19,563

)

Investment in privately held companies

 

 

(34

)

 

 

(2,088

)

Acquisitions, net of cash acquired

 

 

 

 

 

(5,839

)

Purchases of deferred compensation investments

 

 

(1,069

)

 

 

(922

)

Proceeds from sales of deferred compensation investments

 

 

1,071

 

 

 

943

 

Other investing activities

 

 

(1,260

)

 

 

 

Net cash used in investing activities

 

 

(17,530

)

 

 

(27,469

)

Cash flows from financing activities:

 

 

 

 

Purchases of registered shares

 

 

(95,076

)

 

 

(120,619

)

Proceeds from exercises of stock options and purchase rights

 

 

2,113

 

 

 

 

Tax withholdings related to net share settlements of restricted stock units

 

 

(24,196

)

 

 

(24,144

)

Net cash used in financing activities

 

 

(117,159

)

 

 

(144,763

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(3,043

)

 

 

(14,159

)

Net increase (decrease) in cash and cash equivalents

 

 

102,063

 

 

 

(222,059

)

Cash and cash equivalents, beginning of the period

 

 

1,149,023

 

 

 

1,328,716

 

Cash and cash equivalents, end of the period

 

$

1,251,086

 

 

$

1,106,657

 

 

LOGITECH INTERNATIONAL S.A.

PRELIMINARY RESULTS*

(In thousands) - unaudited

 

 

 

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

 

Three months ended June 30,

NET SALES

 

 

2023

 

 

 

2022 (1)

 

Change

 

 

 

 

 

 

 

Net sales by product category:

 

 

 

 

 

 

Gaming (2)

 

$

266,429

 

$

297,921

 

(11

)%

Keyboards & Combos

 

 

180,855

 

 

 

227,720

 

 

(21

)

Pointing Devices

 

 

174,454

 

 

 

183,283

 

 

(5

)

Video Collaboration

 

 

139,346

 

 

 

181,632

 

 

(23

)

Webcams

 

 

75,200

 

 

 

109,262

 

 

(31

)

Tablet Accessories

 

 

70,336

 

 

 

66,585

 

 

6

 

Headsets

 

 

36,850

 

 

 

45,943

 

 

(20

)

Other (3)

 

 

31,029

 

 

 

47,519

 

 

(35

)

Total Net Sales

$

974,499

$

1,159,865

(16

)%

(1)

 

The Company has reclassified certain prior period amounts to conform to the current period presentation.

(2)

 

Gaming includes streaming services revenue generated by Streamlabs.

(3)

 

Other primarily consists of mobile speakers and PC speakers.

 

LOGITECH INTERNATIONAL S.A.

PRELIMINARY RESULTS*

(In thousands, except per share amounts) - unaudited

 

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

 

Three months ended June 30,

GAAP TO NON-GAAP RECONCILIATION (A)

 

 

2023

 

 

 

2022

 

 

 

 

 

 

Gross profit - GAAP

 

$

375,642

 

 

$

459,603

 

Share-based compensation expense

 

 

1,415

 

 

 

1,461

 

Amortization of intangible assets

 

 

3,145

 

 

 

3,042

 

Gross profit - Non-GAAP

 

$

380,202

 

 

$

464,106

 

 

 

 

 

 

Gross margin - GAAP

 

 

38.5

%

 

 

39.6

%

Gross margin - Non-GAAP

 

 

39.0

%

 

 

40.0

%

 

 

 

 

 

Operating expenses - GAAP

 

$

297,237

 

 

$

344,124

 

Less: Share-based compensation expense

 

 

20,096

 

 

 

22,229

 

Less: Amortization of intangible assets and acquisition-related costs

 

 

2,685

 

 

 

3,369

 

Less: Restructuring charges, net

 

 

3,511

 

 

 

 

Operating expenses - Non-GAAP

 

$

270,945

 

 

$

318,526

 

 

 

 

 

 

% of net sales - GAAP

 

 

30.5

%

 

 

29.7

%

% of net sales - Non-GAAP

 

 

27.8

%

 

 

27.5

%

 

 

 

 

 

Operating income - GAAP

 

$

78,405

 

 

$

115,479

 

Share-based compensation expense

 

 

21,511

 

 

 

23,690

 

Amortization of intangible assets and acquisition-related costs

 

 

5,830

 

 

 

6,411

 

Restructuring charges, net

 

 

3,511

 

 

 

 

Operating income - Non-GAAP

 

$

109,257

 

 

$

145,580

 

 

 

 

 

 

% of net sales - GAAP

 

 

8.0

%

 

 

10.0

%

% of net sales - Non-GAAP

 

 

11.2

%

 

 

12.6

%

 

 

 

 

 

Net income - GAAP

 

$

62,727

 

 

$

100,836

 

Share-based compensation expense

 

 

21,511

 

 

 

23,690

 

Amortization of intangible assets and acquisition-related costs

 

 

5,830

 

 

 

6,411

 

Restructuring charges, net

 

 

3,511

 

 

 

 

Loss (gain) on investments

 

 

11,823

 

 

 

(11,357

)

Non-GAAP income tax adjustment

 

 

(2,001

)

 

 

3,459

 

Net income - Non-GAAP

 

$

103,401

 

 

$

123,039

 

 

 

 

 

 

Net income per share:

 

 

 

 

Diluted - GAAP

 

$

0.39

 

 

$

0.61

 

Diluted - Non-GAAP

 

$

0.65

 

 

$

0.74

 

 

 

 

 

 

Shares used to compute net income per share:

 

 

 

 

Diluted - GAAP and Non-GAAP

 

 

160,155

 

 

 

166,406

 

 

LOGITECH INTERNATIONAL S.A.

PRELIMINARY RESULTS*

(In thousands) - unaudited

 

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

 

Three months ended June 30,

SHARE-BASED COMPENSATION EXPENSE

 

 

2023

 

 

 

2022

 

 

 

 

 

 

Share-based Compensation Expense

 

 

 

 

Cost of goods sold

 

$

1,415

 

 

$

1,461

 

Marketing and selling

 

 

10,483

 

 

 

9,797

 

Research and development

 

 

4,453

 

 

 

5,532

 

General and administrative

 

 

5,160

 

 

 

6,900

 

Total share-based compensation expense

 

 

21,511

 

 

 

23,690

 

Income tax benefit

 

 

(5,318

)

 

 

(4,322

)

Total share-based compensation expense, net of income tax benefit

 

$

16,193

 

 

$

19,368

 

*Note: These preliminary results for the three months ended June 30, 2023 are subject to adjustments, including subsequent events that may occur through the date of filing our Quarterly Report on Form 10-Q.

(A) Non-GAAP Financial Measures

To supplement our condensed consolidated financial results prepared in accordance with GAAP, we use a number of financial measures, both GAAP and non-GAAP, in analyzing and assessing our overall business performance, for making operating decisions and for forecasting and planning future periods. We consider the use of non-GAAP financial measures helpful in assessing our current financial performance, ongoing operations and prospects for the future as well as understanding financial and business trends relating to our financial condition and results of operations.

While we use non-GAAP financial measures as a tool to enhance our understanding of certain aspects of our financial performance and to provide incremental insight into the underlying factors and trends affecting both our performance and our cash-generating potential, we do not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, we believe that disclosing non-GAAP financial measures to the readers of our financial statements provides useful supplemental data that, while not a substitute for GAAP financial measures, can offer insight in the review of our financial and operational performance and enables investors to more fully understand trends in our current and future performance. In assessing our business during the quarter ended June 30, 2023 and prior periods presented, we excluded items in the following general categories, each of which are described below:

Share-based compensation expense. We believe that providing non-GAAP measures excluding share-based compensation expense, in addition to the GAAP measures, allows for a more transparent comparison of our financial results from period to period. We prepare and maintain our budgets and forecasts for future periods on a basis consistent with this non-GAAP financial measure. Further, companies use a variety of types of equity awards as well as a variety of methodologies, assumptions and estimates to determine share-based compensation expense. We believe that excluding share-based compensation expense enhances our ability and the ability of investors to understand the impact of non-cash share-based compensation on our operating results and to compare our results against the results of other companies.

Amortization of intangible assets. We incur intangible asset amortization expense, primarily in connection with our acquisitions of various businesses and technologies. The amortization of purchased intangibles varies depending on the level of acquisition activity. We exclude these various charges in budgeting, planning and forecasting future periods and we believe that providing the non-GAAP measures excluding these various non-cash charges, as well as the GAAP measures, provides additional insight when comparing our gross profit, operating expenses, and financial results from period to period.

Acquisition-related costs. We incurred expenses and credits in connection with our acquisitions which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition-related costs include certain incremental expenses incurred to effect a business combination. We believe that providing the non-GAAP measures excluding these costs and credits, as well as the GAAP measures, assists our investors because such costs are not reflective of our ongoing operating results.

Restructuring charges, net. These expenses are associated with restructuring plans, and will vary based on the initiatives in place during any given period. Restructuring charges may include costs related to employee terminations, facility closures and early cancellation of certain contracts as well as other costs resulting from our restructuring initiatives. We believe that providing the non-GAAP measures excluding these items, as well as the GAAP measures, assists our investors because such charges are not reflective of our ongoing operating results.

Loss (gain) on investments. We recognize losses (gains) related to our investments in various companies, which vary depending on the operational and financial performance of the companies in which we invest. These amounts include our losses (earnings) on equity method investments, investment impairments and losses (gains) resulting from sales or other events related to our investments. We believe that providing the non-GAAP measures excluding these items, as well as the GAAP measures, assists our investors because such losses (gains) are not reflective of our ongoing operations.

Non-GAAP income tax adjustment. Non-GAAP income tax adjustment primarily measures the income tax effect of non-GAAP adjustments excluded above and other events; the determination of which is based upon the nature of the underlying items, the mix of income and losses in jurisdictions and the relevant tax rates in which we operate.

Each of the non-GAAP financial measures described above, and used in this press release, should not be considered in isolation from, or as a substitute for, a measure of financial performance prepared in accordance with GAAP. Further, investors are cautioned that there are inherent limitations associated with the use of each of these non-GAAP financial measures as an analytical tool. In particular, these non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and may be reflected in the Company’s financial results for the foreseeable future. We compensate for these limitations by providing specific information in the reconciliation included in this press release regarding the GAAP amounts excluded from the non-GAAP financial measures. In addition, as noted above, we evaluate the non-GAAP financial measures together with the most directly comparable GAAP financial information.

Additional Supplemental Financial Information - Constant Currency

In addition, Logitech presents percentage sales growth in constant currency to show performance unaffected by fluctuations in currency exchange rates. Percentage sales growth in constant currency is calculated by translating prior period sales in each local currency at the current period’s average exchange rate for that currency and comparing that to current period sales.

(LOGIIR)

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