Logitech International (LOGI - Free Report) reported third-quarter fiscal 2020 results, wherein both bottom and top lines surpassed estimates.

Non-GAAP earnings came in at 84 cents per share, surpassing the Zacks Consensus Estimate of 77 cents. The bottom line also improved from the year-ago quarter’s 79 cents.

Net sales of $903 million surpassed the consensus mark of $899 million and rose 4% year over year in dollars and 5% at constant currency. The year-over-year increase stemmed from strong growth in Gaming, Video Collaboration and PC peripheral segments.

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

Logitech International S.A. price-consensus-eps-surprise-chart | Logitech International S.A. Quote

Segmental Details

Logitech’s Gaming segment’s sales grew 15% year over year to $245.74 million.

Video Collaboration sales witnessed a 24% rally to $91.96 million.

Mobile Speakers’ sales, however, fell 3% to $92.97 million.

Audio & Wearables segment sales declined 17% year over year to reach $81.93 million. Smart Home segment sales fell 19% year over year to $15.79 million.

Logitech’s Creativity and Productivity business comprise four sub-business lines — Keyboards and Combos, Pointing Devices, PC Webcams, and Tablet and Other Accessories. Revenues from Pointing Devices, and Keyboards and Combos grew 4% and 8% year over year, respectively. However, revenues from PC Webcams, and Tablet and Other Accessories declined 3% and 13%, respectively.

The company did not report any revenues from the Other segment in the quarter.

Margins & Operating Metrics

Non-GAAP gross profit rose 3% year over year to $339.61 million. Non-GAAP gross margin, however, contracted 50 basis points (bps) from the year-ago quarter to 37.6%. The impact of tariffs remained an overhang on margins.

Non-GAAP operating expenses inched up 0.8% to $187.97 million.

Non-GAAP operating income climbed 5.9% to $151.65 million. Operating margin of 16.8% expanded 20 bps.

Liquidity

As of Dec 31, 2019, Logitech’s cash and cash equivalents were $656.05 million compared with $574.5 million in the previous quarter.

Additionally, the company generated operating cash flow of $181.12 million in the fiscal third quarter compared with $106.5 million in the prior quarter.

Guidance

Logitech reaffirmed view for fiscal 2020. The company expects non-GAAP operating income of $375-$385 million.

Revenue growth is anticipated in the mid to high-single-digit range at constant currency.

Zacks Rank & Key Picks

The company currently has a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader technology sector are ManTech International Corporation (MANT - Free Report), SYNNEX (SNX - Free Report) and Silicon Motion Technology Corporation (SIMO - Free Report), all sporting a Zacks Rank #1 (Strong Buy). 

Long-term earnings growth rate for ManTech, SYNNEX and Silicon Motion is currently pegged at 8%, 12% and 7%, respectively.