Logitech (LOGI) cuts 2023 outlook after Q4 2022 sales fall 20%

Logitech has reported their Q4 2022 earnings results, and slashed their full year revenue guidance for 2023. Here's a breakdown of everything you need to know.

Asif Khan

May 3, 2022 12:20 AM

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Logitech reported their Q4 2022 financial results and it appears that the company faces some tough year-over-year comparisons. Sales for the quarter were down 20% from the same period in 2021, and Logitech went ahead and lowered their outlook for their full fiscal year 2023.  

Here are some highlights from the earnings report:

For Fiscal Year 2022:

• Sales were Logitech’s highest ever at $5.48 billion, up 4 percent in US dollars and 4 percent in constant currency compared to the prior year. This growth is on top of last year’s record sales which grew 76 percent in US dollars and 74 percent in constant currency. The Company’s sales have more than doubled in the past four years.
• GAAP operating income declined 33 percent to $774 million, compared to $1.15 billion a year ago. Non-GAAP operating income declined 29 percent to $904 million, compared to $1.27 billion a year ago. This reflects the Company’s planned, strategic investments in marketing and product development to drive future growth, and significantly exceeds its original Fiscal Year 2022 non-GAAP operating income outlook. The Company has more than doubled its non-GAAP operating income versus two years ago.
• GAAP earnings per share (EPS) declined 31 percent to $3.78, compared to $5.51 a year ago. Non-GAAP EPS declined 28 percent to $4.63, compared to $6.42 a year ago.

For Q4 Fiscal Year 2022:

• Sales were $1.23 billion, down 20 percent in US dollars and 17 percent in constant currency compared to Q4 of the prior year.
• GAAP operating income declined 56 percent to $129 million, compared to Q4 of the prior year. Non-GAAP operating income declined 52 percent to $156 million, compared to Q4 of the prior year.

“This year, we sustained our scale, delivering record sales on top of last year’s 74% sales growth,” said Bracken Darrell, Logitech president and chief executive officer. “We grew for the ninth straight year and grew market share across the portfolio. We also beat our original profit target by over $100 million.

Despite strong year-over-year results, our focus is the long term. We’re riding secular growth trends in hybrid work, video collaboration, esports and digital content creation. We’ll continue to deliver against those with agility, operational excellence and a diverse, innovative portfolio. I’m excited for the future.”

Outlook

Logitech reduced its Fiscal Year 2023 outlook, removing the estimate of annual sales and profits that would have been generated in Ukraine and Russia. This reflects the current, uncertain environment in which the war in Ukraine continues without sign of resolution in the near term.

Sales growth in constant currency is now expected to be between 2 and 4 percent, and non-GAAP operating income is expected to be between $875 million and $925 million. Previously, sales growth in constant currency was expected to be in the mid single digits, and non-GAAP operating income was expected to be between $900 million and $950 million.

Logitech CEO Bracken Darrell struck an optimistic tone in his comments on the company's results. It's important to note that Logitech did indeed deliver record sales for the full year 2022, but the Q4 2022 results, which covered the three month period ending on March 31, 2022, painted a less rosy picture. Even Darrell admits that Logitech (LOGI) just faces very tough year-over-year comparisons, and the company now expects muted sales growth of 2-4% in FY 2023. 

After some tremendous results driven by increased demand for their products during the first two years of the pandemic, it appears that Logitech's results may be in for the other side of that pull forward in demand. Management seems to believe that they are still a secular growth story, but the market has thrown the stock in the with the other so-called "stay-at-home" stocks and sold it with both hands.

Trading around two times their revenue with a market capitalization of $11 billion, Logitech is trading at a material discount to its all-time high of $140.17/share in June 2021, and fetches a more reasonable 14 price-to-earnings ratio at its current price of $67.98/share.

This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.

Asif Khan

CEO/EIC/EIEIO

Asif Khan is the CEO, EIC, and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.