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Mad dash for webcams with surge in videoconferencing has turned out rather nicely for Logitech
'The pandemic hasn't changed these trends: it has accelerated them'
Webcams – like toilet paper and disinfectant wipes – have become an increasingly scarce commodity since the start of the pandemic, with analysts at the NPD Group reporting an almost-threefold increase in sales for the first three weeks of March.
This was not lost on Swiss peripheral maker Logitech International, whose balance sheet saw the benefit of those remote workers suddenly needing a cam, with sales of the teleconferencing aids increasing 13.6 per cent – nearly $10m – from the same quarter last year to $40.1m in its Q4 ended March 31.
"We have delivered five consecutive years at or near double-digit growth, and Logitech's products have never been more relevant," said Bracken Darrell, Logitech president and CEO. "Video conferencing, working remotely, creating and streaming content, and gaming are long-term secular trends driving our business. The pandemic hasn't changed these trends: it has accelerated them."
Overall sales for the quarter grew to $709m from Q4 2019's $624.3m. A significant amount of that growth comes thanks to its webcam and video collaboration business units, which grew 32 per cent and 60 per cent respectively.
Much like the aforementioned toilet paper and cleansing wipes, which are slowly returning to supermarket shelves, webcams have fallen victim to a spate of price gouging from entrepreneurial third-party sellers.
Logitech's basic HD webcam, the C270, is perhaps the best example of this. The tech staple typically costs $25 in the US. During normal times, it's sold for as little as £12 on Amazon UK, according to data from CamelCamelCamel. But immediately after the start of the nationwide lockdowns in the US and UK, some eBay sellers were asking for as much as $130.
The strongest growth for this business unit came from the Americas and APAC regions, with Logitech citing "increased remote work, distance learning, and telemedicine adoption" as the driving factors. Of course, Logitech's bread-and-butter is keyboards and pointing devices, and these units reported growth of 12 and 3 per cent respectively. The Swiss firm attributed this to the launch of its pricey MX Master 3 and MX Keys peripherals.
In Q4, Logitech sold $125m worth of mice and $147.6m of keyboards, accounting for just under half of its entire revenue.
Of course, some areas of the business proved weaker. Sales of smart home tech plunged 28 per cent to $8.3m. Logitech attributed this to declines of its Harmony remotes and hubs, which allow users to control their various TV-connected devices from a single point. These have faded in relevance thanks to the rise of streaming and smart TVs.
Similarly, sales of mobile speakers slumped 7 per cent, which the firm attributed to the closure of brick-and-mortar retail stores. The fact that most people are confined to their homes also probably doesn't help.
Despite the sales leap, a hike in operating expenses for marketing and selling, R&D, and general and admin costs dented Logitech's operating income, which fell to $32.14m from $42.22m. That said, the sale of its investment in Lifesize helped Logitech bolster the bottom line. ®