Logitech Posts $1.22 Billion in Sales as Disruption Weighs on Third-Quarter Outlook
Key Facts
Logitech reported results for the second quarter of its 2027 fiscal year on October 27, posting sales of $1.22 billion, up 3% in U.S. dollars and 2% in constant currency from the same period a year earlier. The results came alongside guidance for a decline in constant-currency sales of up to 5% in the third quarter amid disruption at one of its semiconductor suppliers. The company estimated the disruption would reduce third-quarter sales by about $70 million to $80 million. It also said most of the impact is expected to be resolved by the fourth quarter. In trading on October 28, the stock fell 10.5% to 82.3 Swiss francs, according to Investing.com.
On profitability, non-GAAP gross margin was about 45.2%, up 140 basis points year over year, while GAAP gross margin reached 44.9%, an increase of 150 basis points. Non-GAAP operating income was $231 million, up 0.4% year over year. GAAP operating income was $201 million, up 5%. Non-GAAP earnings per share were $1.51, up 4%, compared with $1.25 on a GAAP basis, up 9%. Reuters reported that non-GAAP operating income exceeded the analyst average forecast of $204 million and topped the company's previous range of $185 million to $210 million.
Chief Executive Hanneke Faber said the company had delivered its "eleventh consecutive quarter of growth" and launched 19 new products for the holiday season. She added that growth in the Americas, visual collaboration and gaming businesses supported sales. Chief Financial Officer Matteo Anversa said, "Gross margins were very strong, driving non-GAAP operating income to a level well above our expectations." The remarks are consistent with the second-quarter year-over-year increase in gross margin. However, the outlook for the coming period puts supply disruption among the factors affecting the near-term sales trajectory.
Logitech said a facility operated by one of its semiconductor suppliers suffered a serious incident that led to its closure at the end of June. The facility reopened in September and began ramping up production, but its current capacity remains below the level the company needs. Logitech expects the facility to return to full production by the end of the calendar year. In the meantime, its third-quarter sales forecast range includes a year-over-year decline of between 5% and flat in constant currency. The company put expected sales at $1.36 billion to $1.43 billion, and non-GAAP operating income at $220 million to $255 million.
The company expects third-quarter gross margin to range from 41% to 42%. According to an estimate by an analyst at Vontobel cited by Reuters, that range represents a decline of about 200 basis points from a year earlier. The analyst linked some of the pressure on the stock to the expected decline, as well as weak consumer demand in Europe. Before the results were announced on October 27, the stock had risen about 12% since the start of the year, according to a Reuters report. The report estimated that the stock's decline in morning trading erased about 1.5 billion Swiss francs, or $1.81 billion, from a market value of about 14 billion francs. Logitech expects its non-GAAP operating income margin for fiscal 2027 to be at the upper end of its long-term range of 15% to 18%.