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Logitech Announces Q3 FY 2023 Results

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SIX Swiss Exchange Ad hoc announcement pursuant to Art. 53 LR — Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the third quarter of Fiscal Year 2023.

  • Sales were $1.27 billion, down 22 percent in US dollars and 17 percent in constant currency, compared to Q3 of the prior year. This performance reflects the challenging macroeconomic environment.
  • Category sales declined in both US dollars and constant currency. Compared to Q3 of the prior year, Gaming sales declined 16 percent and 10 percent respectively; Video Collaboration sales declined 21 percent and 16 percent respectively; Keyboards & Combos sales declined 22 percent and 17 percent respectively; and Pointing Devices sales declined 14 percent and 8 percent respectively. This reflects consumer purchasing concentrated in promotional weeks throughout the quarter, and lower enterprise and consumer spending.
  • GAAP operating income declined 33 percent to $177 million, compared to $263 million in the same quarter a year ago. Non-GAAP operating income declined 32 percent to $204 million, compared to $302 million in the same quarter a year ago.
  • GAAP earnings per share (EPS) declined 31 percent to $0.86, compared to $1.24 in the same quarter a year ago. Non-GAAP EPS declined 26 percent to $1.14, compared to $1.55 in the same quarter a year ago.
  • Cash flow from operations was $280 million, bringing the cash balance to $1.04 billion. Year to date, the Company has returned $486 million of cash to shareholders through its annual dividend payment and share repurchases, including $90 million this quarter.

“These quarterly results reflect the current challenging macroeconomic conditions, including currency exchange rates and inflation, as well as lower enterprise and consumer spending,” said Bracken Darrell, Logitech president and chief executive officer. “With these external headwinds, we continued to aggressively manage our costs in the quarter, while at the same time growing market share in key categories. Our long-term strategies remain unchanged and we remain committed to the growth trends that fuel our business.”

Outlook

As announced earlier this month, Logitech’s Fiscal Year 2023 outlook has been adjusted to between negative 15 percent and negative 13 percent sales growth in constant currency, and between $550 million and $600 million in non-GAAP operating income.

Prepared Remarks Available Online

Logitech has made its prepared written remarks for the financial results videoconference available online on the Logitech corporate website at http://ir.logitech.com.

Financial Results Videoconference and Webcast

Logitech will hold a financial results videoconference to discuss the results for Q3 Fiscal Year 2023 on Tuesday, January 24, 2023 at 8:30 a.m. Eastern Standard Time and 2:30 p.m. Central European 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, impairment of intangible assets, change in fair value of contingent consideration for business acquisition, restructuring charges, loss 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 Fiscal Year 2023 outlook.

Public Dissemination of Certain Information

Logitech webcasts its earnings calls, and certain events Logitech participates in or hosts, with members of the investment community on its 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 and nine months ended December 31, 2022 and Fiscal Year 2023 outlook for sales growth 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, including the COVID-19 pandemic and changes in the COVID-19 pandemic controls and infection levels in China, the war in Ukraine, changes in inflation levels and monetary policies; 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, 2022, our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, 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
December 31,

 

Nine Months Ended
December 31,

GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,269,925

 

$

1,632,782

 

 

$

3,578,741

 

 

$

4,251,107

 

Cost of goods sold

 

 

789,489

 

 

971,646

 

 

 

2,193,735

 

 

 

2,470,980

 

Amortization of intangible assets

 

 

3,168

 

 

3,126

 

 

 

9,355

 

 

 

11,028

 

Gross profit

 

 

477,268

 

 

658,010

 

 

 

1,375,651

 

 

 

1,769,099

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Marketing and selling

 

 

196,653

 

 

269,941

 

 

 

628,122

 

 

 

778,882

 

Research and development

 

 

65,640

 

 

75,529

 

 

 

210,166

 

 

 

213,436

 

General and administrative

 

 

29,766

 

 

38,478

 

 

 

92,215

 

 

 

112,291

 

Amortization of intangible assets and acquisition-related costs

 

 

2,810

 

 

3,662

 

 

 

9,052

 

 

 

13,986

 

Impairment of intangible assets

 

 

 

 

7,000

 

 

 

 

 

 

7,000

 

Change in fair value of contingent consideration for business acquisition

 

 

 

 

(1,110

)

 

 

 

 

 

(3,509

)

Restructuring charges, net

 

 

5,654

 

 

1,759

 

 

 

16,471

 

 

 

1,770

 

Total operating expenses

 

 

300,523

 

 

395,259

 

 

 

956,026

 

 

 

1,123,856

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

176,745

 

 

262,751

 

 

 

419,625

 

 

 

645,243

 

Interest income

 

 

4,665

 

 

278

 

 

 

9,573

 

 

 

795

 

Other income (expense), net

 

 

1,406

 

 

(3,673

)

 

 

(18,367

)

 

 

(1,941

)

Income before income taxes

 

 

182,816

 

 

259,356

 

 

 

410,831

 

 

 

644,097

 

Provision for income taxes

 

 

42,663

 

 

49,345

 

 

 

87,751

 

 

 

107,789

 

Net income

 

$

140,153

 

$

210,011

 

 

$

323,080

 

 

$

536,308

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.87

 

$

1.26

 

 

$

1.98

 

 

$

3.19

 

Diluted

 

$

0.86

 

$

1.24

 

 

$

1.96

 

 

$

3.14

 

 

 

 

 

 

 

 

 

 

Weighted average shares used to compute net income per share:

 

 

 

 

 

 

 

 

Basic

 

 

161,244

 

 

167,090

 

 

 

163,042

 

 

 

167,953

 

Diluted

 

 

162,529

 

 

169,707

 

 

 

164,427

 

 

 

171,027

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

PRELIMINARY RESULTS*

 

 

 

 

(In thousands, except per share amounts) - unaudited

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

March 31,

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

2022

 

 

 

2022

 

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,036,131

 

 

$

1,328,716

 

Accounts receivable, net

 

 

802,435

 

 

 

675,604

 

Inventories

 

 

797,695

 

 

 

933,124

 

Other current assets

 

 

125,088

 

 

 

135,478

 

Total current assets

 

 

2,761,349

 

 

 

3,072,922

 

 

 

 

 

 

Non-current assets:

 

 

 

 

Property, plant and equipment, net

 

 

118,183

 

 

 

109,807

 

Goodwill

 

 

454,471

 

 

 

448,175

 

Other intangible assets, net

 

 

69,364

 

 

 

83,779

 

Other assets

 

 

335,879

 

 

 

320,722

 

Total assets

 

$

3,739,246

 

 

$

4,035,405

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

491,488

 

 

$

636,306

 

Accrued and other current liabilities

 

 

705,569

 

 

 

784,848

 

Total current liabilities

 

 

1,197,057

 

 

 

1,421,154

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

Income taxes payable

 

 

117,608

 

 

 

83,380

 

Other non-current liabilities

 

 

165,915

 

 

 

132,133

 

Total liabilities

 

 

1,480,580

 

 

 

1,636,667

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

Registered shares, CHF 0.25 par value:

 

 

30,148

 

 

 

30,148

 

Issued shares — 173,106 at December 31, 2022 and March 31, 2022

 

 

 

 

Additional shares that may be issued out of conditional capital — 50,000 at December 31, 2022 and March 31, 2022

 

 

 

 

Additional shares that may be issued out of authorized capital — 17,311 at December 31, 2022 and March 31, 2022

 

 

 

 

Additional paid-in capital

 

 

116,012

 

 

 

129,925

 

Shares in treasury, at cost — 12,470 at December 31, 2022 and 7,855 at March 31, 2022

 

 

(906,606

)

 

 

(632,893

)

Retained earnings

 

 

3,136,080

 

 

 

2,975,681

 

Accumulated other comprehensive loss

 

 

(116,968

)

 

 

(104,123

)

Total shareholders’ equity

 

 

2,258,666

 

 

 

2,398,738

 

Total liabilities and shareholders’ equity

 

$

3,739,246

 

 

$

4,035,405

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

 

 

PRELIMINARY RESULTS*

 

 

 

 

 

 

 

 

(In thousands) - unaudited

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

Nine Months Ended
December 31,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

140,153

 

 

$

210,011

 

 

$

323,080

 

 

$

536,308

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

19,410

 

 

 

21,913

 

 

 

56,698

 

 

 

65,387

 

Amortization of intangible assets

 

 

5,929

 

 

 

6,755

 

 

 

18,173

 

 

 

24,223

 

Impairment of intangible assets

 

 

 

 

 

7,000

 

 

 

 

 

 

7,000

 

Loss on investments

 

 

1,488

 

 

 

460

 

 

 

13,065

 

 

 

1,421

 

Share-based compensation expense

 

 

15,805

 

 

 

24,792

 

 

 

51,740

 

 

 

72,465

 

Deferred income taxes

 

 

21,188

 

 

 

20,561

 

 

 

24,228

 

 

 

27,369

 

Change in fair value of contingent consideration for business acquisition

 

 

 

 

 

(1,110

)

 

 

 

 

 

(3,509

)

Other

 

 

1,293

 

 

 

9

 

 

 

1,411

 

 

 

1,068

 

Changes in assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(1,638

)

 

 

(123,350

)

 

 

(123,547

)

 

 

(236,358

)

Inventories

 

 

104,519

 

 

 

(10,240

)

 

 

126,309

 

 

 

(177,828

)

Other assets

 

 

16,161

 

 

 

27,871

 

 

 

20,918

 

 

 

(20,569

)

Accounts payable

 

 

(56,494

)

 

 

74,845

 

 

 

(134,848

)

 

 

(80,637

)

Accrued and other liabilities

 

 

12,097

 

 

 

117,059

 

 

 

(60,060

)

 

 

(17,612

)

Net cash provided by operating activities

 

 

279,911

 

 

 

376,576

 

 

 

317,167

 

 

 

198,728

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(23,738

)

 

 

(16,494

)

 

 

(69,122

)

 

 

(63,726

)

Investment in privately held companies

 

 

(351

)

 

 

(359

)

 

 

(2,626

)

 

 

(1,260

)

Acquisitions, net of cash acquired

 

 

(2,688

)

 

 

(300

)

 

 

(8,527

)

 

 

(15,886

)

Purchases of short-term investments

 

 

 

 

 

(10,000

)

 

 

 

 

 

(10,000

)

Proceeds from the sale of short-term investments

 

 

 

 

 

1,225

 

 

 

 

 

 

1,225

 

Purchases of deferred compensation investments

 

 

(2,687

)

 

 

(1,178

)

 

 

(5,186

)

 

 

(3,644

)

Proceeds from sales of deferred compensation investments

 

 

2,314

 

 

 

1,308

 

 

 

4,750

 

 

 

4,285

 

Net cash used in investing activities

 

 

(27,150

)

 

 

(25,798

)

 

 

(80,711

)

 

 

(89,006

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payment of cash dividends

 

 

 

 

 

 

 

 

(158,680

)

 

 

(159,410

)

Payment of contingent consideration for business acquisition

 

 

 

 

 

(880

)

 

 

(5,954

)

 

 

(880

)

Purchases of registered shares

 

 

(90,170

)

 

 

(116,245

)

 

 

(327,731

)

 

 

(290,625

)

Proceeds from exercises of stock options and purchase rights

 

 

3,214

 

 

 

8

 

 

 

16,064

 

 

 

16,644

 

Tax withholdings related to net share settlements of restricted stock units

 

 

(1,992

)

 

 

(3,777

)

 

 

(28,734

)

 

 

(58,528

)

Net cash used in financing activities

 

 

(88,948

)

 

 

(120,894

)

 

 

(505,035

)

 

 

(492,799

)

Effect of exchange rate changes on cash and cash equivalents

 

 

3,817

 

 

 

(2,769

)

 

 

(24,006

)

 

 

(2,839

)

Net increase (decrease) in cash and cash equivalents

 

 

167,630

 

 

 

227,115

 

 

 

(292,585

)

 

 

(385,916

)

Cash and cash equivalents, beginning of the period

 

 

868,501

 

 

 

1,137,296

 

 

 

1,328,716

 

 

 

1,750,327

 

Cash and cash equivalents, end of the period

 

$

1,036,131

 

 

$

1,364,411

 

 

$

1,036,131

 

 

$

1,364,411

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

 

 

 

 

 

 

PRELIMINARY RESULTS*

 

 

 

 

 

 

 

 

 

 

(In thousands) - unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

 

Three Months Ended

December 31,

 

Nine Months Ended

December 31,

NET SALES

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales by product category:

 

 

 

 

 

 

 

 

 

 

 

 

Pointing Devices

 

$

199,106

 

$

231,090

 

(14

)%

 

$

567,589

 

$

602,982

 

(6

)%

Keyboards & Combos

 

 

220,059

 

 

281,608

 

(22

)

 

 

648,632

 

 

736,237

 

(12

)

PC Webcams

 

 

58,481

 

 

115,115

 

(49

)

 

 

178,033

 

 

319,504

 

(44

)

Tablet & Other Accessories

 

 

65,157

 

 

82,859

 

(21

)

 

 

185,945

 

 

242,932

 

(23

)

Gaming (1)

 

 

391,975

 

 

469,282

 

(16

)

 

 

972,457

 

 

1,135,456

 

(14

)

Video Collaboration

 

 

226,374

 

 

287,187

 

(21

)

 

 

708,796

 

 

753,725

 

(6

)

Mobile Speakers

 

 

38,321

 

 

56,748

 

(32

)

 

 

99,826

 

 

124,724

 

(20

)

Audio & Wearables

 

 

69,104

 

 

104,280

 

(34

)

 

 

211,821

 

 

318,965

 

(34

)

Other (2)

 

 

1,348

 

 

4,613

 

(71

)

 

 

5,642

 

 

16,582

 

(66

)

Total Sales

 

$

1,269,925

 

$

1,632,782

 

(22

)%

 

$

3,578,741

 

$

4,251,107

 

(16

)%

(1)

 

Gaming includes streaming services revenue generated by Streamlabs.

(2)

 

Other includes Smart Home.

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

 

 

PRELIMINARY RESULTS*

 

 

 

 

 

 

 

 

(In thousands, except per share amounts) - unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

 

Three Months Ended
December 31,

 

Nine Months Ended
December 31,

GAAP TO NON-GAAP RECONCILIATION (A)

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

Gross profit - GAAP

 

$

477,268

 

 

$

658,010

 

 

$

1,375,651

 

 

$

1,769,099

 

Share-based compensation expense

 

 

1,324

 

 

 

1,782

 

 

 

4,228

 

 

 

5,253

 

Amortization of intangible assets

 

 

3,168

 

 

 

3,126

 

 

 

9,355

 

 

 

11,028

 

Gross profit - Non-GAAP

 

$

481,760

 

 

$

662,918

 

 

$

1,389,234

 

 

$

1,785,380

 

 

 

 

 

 

 

 

 

 

Gross margin - GAAP

 

 

37.6

%

 

 

40.3

%

 

 

38.4

%

 

 

41.6

%

Gross margin - Non-GAAP

 

 

37.9

%

 

 

40.6

%

 

 

38.8

%

 

 

42.0

%

 

 

 

 

 

 

 

 

 

Operating expenses - GAAP

 

$

300,523

 

 

$

395,259

 

 

$

956,026

 

 

$

1,123,856

 

Less: Share-based compensation expense

 

 

14,481

 

 

 

23,010

 

 

 

47,512

 

 

 

67,212

 

Less: Amortization of intangible assets and acquisition-related costs

 

 

2,810

 

 

 

3,662

 

 

 

9,052

 

 

 

13,986

 

Less: Impairment of intangible assets

 

 

 

 

 

7,000

 

 

 

 

 

 

7,000

 

Less: Change in fair value of contingent consideration for business acquisition

 

 

 

 

 

(1,110

)

 

 

 

 

 

(3,509

)

Less: Restructuring charges, net

 

 

5,654

 

 

 

1,759

 

 

 

16,471

 

 

 

1,770

 

Operating expenses - Non-GAAP

 

$

277,578

 

 

$

360,938

 

 

$

882,991

 

 

$

1,037,397

 

 

 

 

 

 

 

 

 

 

% of net sales - GAAP

 

 

23.7

%

 

 

24.2

%

 

 

26.7

%

 

 

26.4

%

% of net sales - Non-GAAP

 

 

21.9

%

 

 

22.1

%

 

 

24.7

%

 

 

24.4

%

 

 

 

 

 

 

 

 

 

Operating income - GAAP

 

$

176,745

 

 

$

262,751

 

 

$

419,625

 

 

$

645,243

 

Share-based compensation expense

 

 

15,805

 

 

 

24,792

 

 

 

51,740

 

 

 

72,465

 

Amortization of intangible assets and acquisition-related costs

 

 

5,978

 

 

 

6,788

 

 

 

18,407

 

 

 

25,014

 

Impairment of intangible assets

 

 

 

 

 

7,000

 

 

 

 

 

 

7,000

 

Change in fair value of contingent consideration for business acquisition

 

 

 

 

 

(1,110

)

 

 

 

 

 

(3,509

)

Restructuring charges, net

 

 

5,654

 

 

 

1,759

 

 

 

16,471

 

 

 

1,770

 

Operating income - Non-GAAP

 

$

204,182

 

 

$

301,980

 

 

$

506,243

 

 

$

747,983

 

 

 

 

 

 

 

 

 

 

% of net sales - GAAP

 

 

13.9

%

 

 

16.1

%

 

 

11.7

%

 

 

15.2

%

% of net sales - Non-GAAP

 

 

16.1

%

 

 

18.5

%

 

 

14.1

%

 

 

17.6

%

 

 

 

 

 

 

 

 

 

Net income - GAAP

 

$

140,153

 

 

$

210,011

 

 

$

323,080

 

 

$

536,308

 

Share-based compensation expense

 

 

15,805

 

 

 

24,792

 

 

 

51,740

 

 

 

72,465

 

Amortization of intangible assets and acquisition-related costs

 

 

5,978

 

 

 

6,788

 

 

 

18,407

 

 

 

25,014

 

Impairment of intangible assets

 

 

 

 

 

7,000

 

 

 

 

 

 

7,000

 

Change in fair value of contingent consideration for business acquisition

 

 

 

 

 

(1,110

)

 

 

 

 

 

(3,509

)

Restructuring charges, net

 

 

5,654

 

 

 

1,759

 

 

 

16,471

 

 

 

1,770

 

Loss on investments

 

 

1,488

 

 

 

460

 

 

 

13,065

 

 

 

1,421

 

Non-GAAP income tax adjustment

 

 

16,230

 

 

 

13,054

 

 

 

23,296

 

 

 

12,463

 

Net income - Non-GAAP

 

$

185,308

 

 

$

262,754

 

 

$

446,059

 

 

$

652,932

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Diluted - GAAP

 

$

0.86

 

 

$

1.24

 

 

$

1.96

 

 

$

3.14

 

Diluted - Non-GAAP

 

$

1.14

 

 

$

1.55

 

 

$

2.71

 

 

$

3.82

 

 

 

 

 

 

 

 

 

 

Shares used to compute net income per share:

 

 

 

 

 

 

 

 

Diluted - GAAP and Non-GAAP

 

 

162,529

 

 

 

169,707

 

 

 

164,427

 

 

 

171,027

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

 

 

PRELIMINARY RESULTS*

 

 

 

 

 

 

 

 

(In thousands) - unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

 

Three Months Ended
December 31,

 

Nine Months Ended
December 31,

SHARE-BASED COMPENSATION EXPENSE

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

Share-based Compensation Expense

 

 

 

 

 

 

 

 

Cost of goods sold

 

$

1,324

 

 

$

1,782

 

 

$

4,228

 

 

$

5,253

 

Marketing and selling

 

 

8,014

 

 

 

10,699

 

 

 

25,240

 

 

 

28,987

 

Research and development

 

 

2,756

 

 

 

4,510

 

 

 

11,568

 

 

 

14,295

 

General and administrative

 

 

3,711

 

 

 

7,801

 

 

 

10,704

 

 

 

23,930

 

Total share-based compensation expense

 

 

15,805

 

 

 

24,792

 

 

 

51,740

 

 

 

72,465

 

Income tax benefit

 

 

(3,276

)

 

 

(3,581

)

 

 

(7,496

)

 

 

(23,460

)

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

 

$

12,529

 

 

$

21,211

 

 

$

44,244

 

 

$

49,005

 

*Note: These preliminary results for the three and nine months ended December 31, 2022 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 December 31, 2022 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 and change in fair value of contingent consideration for business acquisition. 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. Fair value of contingent consideration is associated with our estimates of the value of earn-outs in connection with certain acquisitions. 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.

Impairment of intangible assets. We may incur impairment of intangible assets expense, primarily in connection with our past business or asset acquisitions. We believe that providing the non-GAAP measures excluding these items, as well as the GAAP measures, assists our investors because such expenses 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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Contact information

Editorial Contacts:
Nate Melihercik, Head of Global Investor Relations - ir@logitech.com
Nicole Kenyon, Head of Global Corporate & Employee Communications - USA (510) 988-8553
Ben Starkie, Corporate Communications - Europe +41 (0) 79-292-3499

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