Logitech International (NASDAQ:LOGI) has been a major beneficiary of the work-from-home trend this year. Its revenue shot higher again in its most recent quarter, driven by strong sales of PC webcams and gaming products. 

Some investors might be concerned that its growth might slow after the pandemic recedes, but Logitech CEO Bracken Darrell said he sees recent trends continuing to fuel demand for these products for a long time.

More content creation is driving sales of PC peripherals

In its fiscal 2021 second quarter, which ended Sept. 30, Logitech reported a year-over-year sales increase of 75%, with higher margins sending non-GAAP operating income up 295% year over year. Even though Logitech stock has doubled year to date, its price-to-earnings ratio remains at a relatively low 24 due to strong performance on the bottom line. 

A girl playing a video game on a PC.

Image source: Getty Images.

While it's not realistic to expect sales to nearly double year over year every quarter, Logitech can continue to grow sales and earnings by double-digit percentages.

During the conference call to discuss the quarter, Darrell expressed his view of how the demand curve will shake out in a post-pandemic world. "In my opinion, the biggest permanent changes were going to happen anyway," he said. "But the pandemic accelerated them."  

Darrell explained that Logitech has for years been targeting the "major changes" in how people will work and play in the future. The company has built its business around the ongoing trends of more video calls, remote work, and the growth in gaming. 

Video collaboration sales, adjusted for foreign currency changes, jumped by 161% year over year last quarter. Some of this was driven by its conference room products, such as MeetUp and Rally, sales of which nearly doubled. This shows that Logitech is still seeing growing demand for its video products even as people return to the office, and is not dependent on pandemic-driven demand. 

Gaming sales surged by 84% year over year, adjusted for foreign currency shifts. Darrell cited strong demand for its Logitech G family of gaming products. Video games are increasingly becoming social network platforms, where friends meet up and play together online. Darrell sees "no end in sight" in the rise of video games as both spectator and participant sports. This is creating a growing customer base that should remain interested in upgrading to better products down the road.

Also emerging as long-term growth drivers are the company's PC peripherals, which are designed for streaming and creating content on game-streaming sites, Alphabet's YouTube, and other video platforms. Sales of PC webcams soared 258% last quarter excluding currency changes, significantly accelerating over the previous quarter's 121% growth rate. What's amazing is that Logitech achieved this level of growth despite not being able to produce enough webcams to fully meet demand. 

While sales of webcams won't continue growing at triple-digit percentage rates over the long term, sales will remain strong for the foreseeable future. And Logitech is expanding its capacity to meet what Darrell characterized as "unprecedented demand for video devices." 

Preparing for more demand

Logitech raised its growth outlook for fiscal 2021. Management now expects sales to increase year over year by 35% to 40%, and adjusted operating profit by 87%. 

They are working to capitalize on the company's growth opportunities by developing new products and categories, and increasing production capacity. As Darrell said, "We're building capabilities, and we're building new growth engines for the future." Given all of that, this growth stock has plenty of room to climb.

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