Logitech Rides Work-From-Home Trend to Its 1st Billion-Dollar Quarter

Logitech CEO Bracken Darrell reinforced the staying power of videoconferencing hardware, mice and keyboards on a Tuesday call, as the company faces stiff comparable year-on-year sales trends after two strong quarters driven by work-from-home trends. “The biggest permanent changes were going to happen anyway,” he said, citing home-based work and education, “video everywhere,” esports and “democratization of content creation.”

Q2 was its first quarter with $1 billion in sales, gliding to $1.26 billion for the period ended Sept. 30, a 73% jump from the year-ago quarter. Riding soaring videoconferencing and PC peripheral sales trends during the pandemic, the company raised its FY 2021 annual outlook to 35-40% sales growth in constant currency from 10-13%. Shares hit a 52-week high Tuesday. They closed up 15.7% at $92.64.

Webcams, the top sales growth category, surged 256% to $102 million, followed by video collaboration, which grew 164% to $237 million, and tablet keyboards, 145% higher at $83 million. Audio gear increased 68% to $114 million, keyboards grew 45% to $201 million and pointing devices were up 27% to $169 million. Blue Yeti mics and retail headset sales more than doubled; product supply continued to be tight exiting the quarter, Darrell said.

Gaming was up 84% to $298 million, led by growth in Logitech G gear. In the League of Legends final four tournament last weekend, 110 million people were expected to watch live, said Darrell, with the four final teams using Logitech G products. The executive downplayed the role of mobile speakers in the Logitech portfolio; the category dropped 24% to $44 million, after a 42% fall in the June quarter, while smart home dropped 9% to $8.6 million.

Darrell predicted continued growth for webcams, video collaboration tools and PC peripherals for home-based workers and the enterprise, predicting a “big middle” of companies that choose a hybrid approach for workers after the pandemic. He expects a period where families set up separate work stations in the home for work and education, which will be followed by an upgrade cycle. He predicted video calls will replace audio calls and esports will overtake traditional sports in viewership, while millions of people take part in content creation, including podcasts and streaming video.

Direct-to-consumer sales is still a small part of the Logitech business at single digits, but it’s growing, Darrell said. The company doesn’t want to compete with its distribution so it’s giving customers the option to buy anywhere they want, he said, but “I suspect DTC will grow faster than the rest of our business." Chief Financial Officer Nate Olmstead said some business that moved to e-commerce due to the pandemic will likely shift back to retail.

The company is increasing its spend in traditional retail marketing and point-of-sale displays in the second half, Olmstead said, saying Logitech will maintain a “balanced approach” on distribution. Holiday quarter demand might not have a sharp increase “because people have been buying so steadily throughout the year.” It expects to participate in the standard holiday promotional days.