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Logitech Q3-2017: Something to Envy

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Logitech Q3-2017: Something to Envy
    

By: -
25 Oct 2017
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Logitech reported strong results for its fiscal Q2-2018, a period that corresponds to calendar Q3-2017.  Revenues (in constant currency) were $634 million, up 12% in US dollars and up 11% in constant currency compared to Q2 of the previous year.  GAAP operating income grew to $60 million, also up 12%.

Logitech reports its financial results in terms of nine product categories:  Pointing Devices, Keyboards & Combos, PC Webcams, Tablets & other accessories, Video Collaboration, Mobile speakers, Audio-PC & Wearables, Gaming, and Smart Home.   Growth rates for these widely varying categories in this quarter ranged from -7% for mobile speakers to +61% for video collaboration.  In one sense, Logitech is diversified like any large mutual fund, and in another, intimately tied to the personal electronics marketplace with pointing devices plus keyboards accounting for 38% of total revenues.  Gaming adds another 18%.

Like me, readers of this blog are undoubtedly more focused on the video collaboration category than the other elements of Logitech's business.  During the conference call, CEO Bracken Darrell commented that it took the company over three years to reach the $100 million annual sales run rate for collaboration back in December 2015, and just a year and a half later the sales run rate is approaching $200 million.  What you can see from the numbers:

  • The collaboration category is a growth driver for the company, with growth rates consistently above those of the other categories.  In other words, video collaboration is growing faster than the company as a whole.
  • Video collaboration nevertheless remains well below 10% of total revenues.
  • Logitech's overall revenue growth rate over the past two years is approximately 13%, a number that most other companies (other than startups) would envy.

It's always dangerous to translate any company's quarterly numbers into a market trend, but Logitech's video collaboration products like Logitech Group, SmartDock, and MeetUp are aimed at prosumers and small conference room situations where video conferencing solutions are needed or desired.  While Logitech has lots of competition in the emerging "huddle room" space, no one is better positioned in terms of product portfolio, distribution network, and channel partners than this Switzerland-based enterprise.

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