Logitech Q3 Sales Jumped 85% on Webcam, Gaming Accessory Sales

Many companies are sidestepping quarterly revenue projections due to market uncertainties, but Logitech raised its outlook for the year, estimating 57%-60% sales growth vs. the previous 35%-40%, and operating income of $1.05 billion, vs. $700 million-$725 million. The annual outlook implies a Q4 revenue increase of 40% to 50%, Darrell said.

Already a champion of hybrid work models -- with employees dividing time between work and an office -- Darrell doubled down on the vision Tuesday, citing a meeting with about 60 CEOs this week where the “vast majority” indicated they would adopt hybrid work “as the new norm.” The “explosive growth” of video conferencing means people will be looking for high-quality solutions at home -- and at the office, he said.

A global trend toward spectator gaming continued, Darrell said, saying over 1 billion people watched a part of the League of Legends final last quarter, and over 100 million watched the final game live, the same number of viewers as the Super Bowl had last year.

Pointing devices, keyboards and combos, falling into the creativity and productivity category, delivered 30% growth in Q3. The transition to a “work-from-anywhere culture and a mixed learning environment creates increased peripheral attach opportunities for us against a large and growing PC installed base,” said Darrell. Customers who upgrade devices can benefit from improved aesthetics, performance and ergonomics, he said: “We simply have upgrade opportunities across every workspace in the world.”

PC webcam sales more than quadrupled in Q3, and year-to-date sales more than tripled. Darrell called growth rates a “drop in the bucket” vs. the installed base of 600 million monitors and 1.5 billion PCs webcams can attach to. The company is working to expand capacity to support higher webcam demand, he said. Tablet and other accessory sales in the quarter quadrupled to $138 million, the first time the category had sales over $100 million in a single quarter, Darrell said. He highlighted “tremendous growth” in education tablet keyboards.

Responding in Q&A to a question whether gaming and webcam sales are being pulled forward, Darrell said games drive growth in that category, with Fortnite the leader a few years ago and League of Legends topping charts today. “There will be more,” he said, saying gaming “is just going to keep chugging along and growing long term.”

The executive is even more sanguine about videoconferencing, saying the typical webcam is “not very good” and the company has an opportunity to provide a better experience. With video calls, people are looking at themselves four or five times a minute, he said: “I think we have opportunities.” Streaming and creating are poised for long-term growth, too, said Darrell, referencing podcasts and the rise of creators on TikTok and Instagram that represent the “democratization of digital content.” The trends that grew during the pandemic will “surely grow after the pandemic,” he said.

Wedbush Securities raised its target price for Logitech in a Tuesday investor note, assuming increased investment in video technology to support hybrid work models. Students will go back to the classroom and will increasingly use technology, said analyst Michael Pachter. “Esports and gaming will continue to expand and shift toward cloud gaming, and content consumption will continue to shift toward streaming/podcasting,” he said: “All of these trends should benefit Logitech for years to come.” Shares dropped 3.2% Tuesday to $97.73.