From Wall Street – Logitech – CY2018-Q3

Strong growth achieved in video collaboration and gaming.

Current Highlights

The highlights for FY2019-Q2 (CY2018-Q3) are as follows:

  • Q2 sales were $691 million, up 9 percent in US dollars and 10 percent in constant currency, compared to Q2 of the prior year.  With so much revenue in other currencies, Logitech is subject to fluctuations in exchange rates.  Both of these numbers (9% and 10%) are down from what was reported 3 months ago (15% and 12%).
  • Q1 GAAP operating income $65 million, compared to $59 million in the same quarter a year ago.
  • As seen in our table below, the growth leader product segments were video collaboration and gaming. Even so, video collaboration remains less than 10% of total revenues.  Gaming is the single largest of the nine product categories (23% of total).
  • America sales up 9%; EMEA sales up 1%; APAC sales up 26% vs. one year ago.

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Results Timeline

Q3-CY2018 vs. Q3-CY2017 Changes

Comments and Reflections

This was a very strong Q3 for Logitech, a nice piece of good news as the company heads into Q4, the holiday season that is typically the company’s strongest.  This is especially relevant given the very hot gaming market overall.  Logitech’s growth over the past two years has been driven by a nice combination of acquisitions and organic growth.  We note three details hidden in the numbers:

  1. PC peripherals overall, which fall into more than one of Logitech’s product categories, reported 8% growth this quarter. The reports of the death of this market appear to be exaggerated.
  2. The growth in video collaboration is likely a result of several factors, including i) Logitech’s innovation in the audio-video communications add-on space; ii) the market’s growing interest in video-enabling many new small conference rooms, particularly with VCaaS support; iii) Logitech’s investment in building out a direct enterprise sales force; and iv) the power of today’s PCs and mobile devices to deliver an excellent high definition communications experience.
  3. While collaboration revenues were up 24%, units shipped were up less than 20%, indicating higher average prices as Logitech moves up-market with more sophisticated products for the small conference room.

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