Logitech

Logitech's Q3 sales came in at $1.42bn, 1% above the Visible Alpha consensus and increased by 6% yoy (+4% in cc). Sales growth was supported by a 9% cc growth in Pointing Devices, 8% growth in Video Collaboration and a 6% growth in Keyboards & Combos. Gaming grew by 2%, with strong growth in APAC and Tablet & Accessories sales grew by 19% on the back of strong demand in the education sector. Gross profit was 3% above the consensus and up 7% yoy supported by lower product costs, tariff-driven price increases and currency tailwinds. The gross margin increased by 30bps yoy. Non-GAAP operating profit was $312m, 9% above the consensus and up 17% yoy, supported by higher gross profit and a 2% reduction in operating expenses. Operating expenses as % of sales declined by 180bps yoy. CFO came in at $481m, up 30% yoy due to higher profits and lower working capital needs.

Outlook - For Q4, Logitech expects sales of $1.07-1.09bn and Non-GAAP operating profits between $155-165m. This would put the FY26 figures at $4.825-4.845bn and $900-910m respectively. Considering the Q4 outlook, we expect a 1% upward revision in sales and an MSD increase in our adjusted operating profit estimate. The beat on profitability is clearly a positive, but the market is now used to Logitech being conservative. As we write, the stock is trading flat in post-market trading in the US. Lastly, valuations have finally reverted to the 10-year average multiples but the risk-reward ratio needs to be more favorable for investors with a long horizon.