Core Viewpoint - Logitech is accelerating the relocation of its production lines out of China, aiming to reduce the proportion of Chinese-made products in total U.S. imports to 10% by the end of the year, down from a peak of 40% to approximately 30% currently [2][2][2] Group 1: Production and Supply Chain Strategy - The company is diversifying its production capacity to Malaysia, Thailand, Vietnam, and Mexico, collaborating with local contract manufacturers [2][2] - Logitech's CEO stated that the supply chain diversification is exemplary and has not resulted in increased material costs due to the relocation [2][2] Group 2: Pricing and Market Response - To offset the tariffs imposed by the U.S. on Chinese products, Logitech raised prices by 10% in the U.S. market in the second quarter of this year, with no plans for further price increases [2][2] Group 3: Potential Challenges - Research firm IDC highlighted that Southeast Asian countries still face long-term bottlenecks such as power shortages, skilled labor shortages, and port congestion [2][2] - The ability of Logitech to rapidly scale production in new locations may be uncertain if U.S. tariffs on Chinese goods are escalated again [2][2]

Group 1 - The core investment thesis for Logitech (NASDAQ: LOGI) remains positive due to strong demand and effective strategies to manage tariff uncertainties [1] - Recent results indicate double-digit growth, supporting the long-term investment outlook [1] - The investment approach focuses on medium to long-term strategies, emphasizing bottom-up analysis of individual companies' fundamentals [1] Group 2 - The goal is to identify companies with solid fundamentals, sustainable competitive advantages, and growth potential [1]

PART I — FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Logitech's unaudited condensed consolidated financial statements for Q1 FY26 and FY25, covering key financial statements and accompanying notes [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details Logitech's revenues, costs, and profitability, including net sales, gross profit, operating income, and net income for the reported periods | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--------------------------------- | :------------------ | :------------------ | :----------- | | Net sales | $1,147,703 | $1,088,217 | +5.5% | | Cost of goods sold | $666,592 | $619,517 | +7.6% | | Gross profit | $478,962 | $466,258 | +2.7% | | Operating income | $162,094 | $153,499 | +5.6% | | Income before income taxes | $174,485 | $167,391 | +4.2% | | Net income | $146,015 | $141,833 | +2.9% | | Basic net income per share | $0.99 | $0.93 | +6.5% | | Diluted net income per share | $0.98 | $0.92 | +6.5% | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents Logitech's net income and other comprehensive income components, such as currency translation adjustments and hedging gains/losses | Metric | 2025 (in thousands) | 2024 (in thousands) | | :------------------------------------------ | :------------------ | :------------------ | | Net income | $146,015 | $141,833 | | Currency translation gain (loss), net of taxes | $27,293 | $(5,219) | | Deferred hedging gain (loss), net of taxes | $(12,349) | $1,582 | | Total other comprehensive income (loss) | $16,789 | $(4,570) | | Total comprehensive income | $162,804 | $137,263 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of Logitech's financial position, detailing assets, liabilities, and shareholders' equity at specific points in time | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | Change (QoQ) | | :--------------------------- | :--------------------------- | :--------------------------- | :----------- | | Cash and cash equivalents | $1,487,822 | $1,503,205 | -1.0% | | Accounts receivable, net | $636,523 | $454,546 | +39.9% | | Inventories | $499,770 | $503,747 | -0.8% | | Total current assets | $2,778,221 | $2,592,709 | +7.1% | | Total assets | $3,742,963 | $3,538,504 | +5.8% | | Accounts payable | $549,936 | $414,586 | +32.7% | | Total current liabilities | $1,222,724 | $1,101,089 | +11.0% | | Total liabilities | $1,555,711 | $1,411,084 | +10.2% | | Total shareholders' equity | $2,187,252 | $2,127,420 | +2.8% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement outlines Logitech's cash inflows and outflows from operating, investing, and financing activities for the reported periods | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :--------------------------------- | :------------------ | :------------------ | :----------- | | Net cash provided by operating activities | $125,045 | $176,029 | -29.0% | | Net cash used in investing activities | $(18,100) | $(15,359) | +17.8% | | Net cash used in financing activities | $(134,433) | $(145,134) | -7.4% | | Effect of exchange rate changes on cash and cash equivalents | $12,105 | $(1,998) | N/A | | Net increase (decrease) in cash and cash equivalents | $(15,383) | $13,538 | N/A | | Cash and cash equivalents, end of the period | $1,487,822 | $1,534,380 | -3.0% | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) This statement tracks changes in Logitech's shareholders' equity, including net income, share repurchases, and other comprehensive income - **Total shareholders' equity** increased from **$2,127,420 thousand** as of March 31, 2025, to **$2,187,252 thousand** as of June 30, 2025, primarily due to **total comprehensive income** of **$162,804 thousand**, partially offset by **share repurchases**[26](index=26&type=chunk) - For the three months ended June 30, 2025, **total comprehensive income** was **$162,804 thousand**, including **net income** of **$146,015 thousand** and other comprehensive income of **$16,789 thousand**[26](index=26&type=chunk) - **Share repurchases** for the three months ended June 30, 2025, amounted to **$(124,135) thousand**, while share-based compensation contributed **$33,939 thousand** to equity[26](index=26&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of Logitech's accounting policies, estimates, and specific financial statement components [Note 1 — The Company and Summary of Significant Accounting Policies and Estimates](index=10&type=section&id=Note%201%20%E2%80%94%20The%20Company%20and%20Summary%20of%20Significant%20Accounting%20Policies%20and%20Estimates) This note describes Logitech's business, global sales channels, and the significant accounting policies and estimates used in its financial statements - Logitech designs software-enabled hardware solutions for businesses and consumers, focusing on work, creation, and gaming, with a mission to extend human potential[30](index=30&type=chunk) - The company sells products globally through direct sales to retailers, e-tailers, businesses, and end consumers via e-commerce, as well as indirectly through distributors[31](index=31&type=chunk) - Logitech International S.A. is a Swiss holding company, with shares listed on the SIX Swiss Exchange (LOGN) and Nasdaq Global Select Market (LOGI)[32](index=32&type=chunk) - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and include normal and recurring adjustments[33](index=33&type=chunk)[34](index=34&type=chunk) - No material changes in significant accounting policies occurred during the three months ended June 30, 2025[35](index=35&type=chunk) - Significant estimates include goodwill and intangible asset fair value, pension obligations, customer incentives, inventory valuation, share-based compensation, uncertain tax positions, and deferred tax asset valuation allowances[36](index=36&type=chunk) - Macroeconomic and geopolitical conditions, including tariffs, inflation, interest rate and foreign currency fluctuations, and geopolitical conflicts, continue to impact demand, costs, and results of operations[37](index=37&type=chunk)[38](index=38&type=chunk) - The company is evaluating the impact of new accounting pronouncements ASU **2023-09** (Income Taxes) and ASU **2024-03** (Expense Disaggregation Disclosures), effective for annual periods beginning after December **15, 2024**, and December **15, 2026**, respectively[39](index=39&type=chunk)[40](index=40&type=chunk) [Note 2 — Net Income Per Share](index=12&type=section&id=Note%202%20%E2%80%94%20Net%20Income%20Per%20Share) This note details the calculation of Logitech's basic and diluted net income per share, including the impact of share equivalents | Metric | June 30, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Net income (in thousands) | $146,015 | $141,833 | | Weighted average shares outstanding - basic (in thousands) | 147,864 | 153,300 | | Weighted average shares outstanding - diluted (in thousands) | 149,053 | 154,978 | | Basic net income per share | $0.99 | $0.93 | | Diluted net income per share | $0.98 | $0.92 | - Share equivalents totaling **1.6 million (2025)** and **1.1 million (2024)** were excluded from diluted EPS calculation due to their antidilutive effect[41](index=41&type=chunk) [Note 3 — Employee Benefit Plans](index=12&type=section&id=Note%203%20%E2%80%94%20Employee%20Benefit%20Plans) This note outlines Logitech's various employee share purchase and stock incentive plans, along with related share-based compensation and defined benefit plan costs - Logitech offers the **2006 Employee Share Purchase Plan (Non-U.S.)**, **1996 Employee Share Purchase Plan (U.S.)**, and **2006 Stock Incentive Plan**, with shares generally issued from treasury stock[42](index=42&type=chunk) | Share-based Compensation Expense (in thousands) | June 30, 2025 | June 30, 2024 | | :---------------------------------------------- | :------------ | :------------ | | Cost of goods sold | $2,380 | $2,598 | | Marketing and selling | $13,930 | $11,851 | | Research and development | $6,351 | $5,739 | | General and administrative | $10,167 | $3,217 | | Total share-based compensation expense | $32,828 | $23,405 | | Income tax benefit | $(4,906) | $(7,602) | | Total share-based compensation expense, net of income tax benefit | $27,922 | $15,803 | - Share-based compensation costs capitalized as part of inventory were **$2.8 million** for Q1 FY26 and **$2.5 million** for Q1 FY25[44](index=44&type=chunk) - Defined benefit plan costs were **$1.7 million** for both three-month periods ended June 30, 2025 and 2024, primarily related to service costs[45](index=45&type=chunk) [Note 4 — Income Taxes](index=13&type=section&id=Note%204%20%E2%80%94%20Income%20Taxes) This note provides details on Logitech's income tax provision, effective tax rate, and the potential impacts of new tax legislation and global tax reforms | Income Tax Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :------------------------ | :--------------------------- | :--------------------------- | | Income tax provision | $28,500 | $25,600 | | Effective income tax rate | **16.3%** | **15.3%** | - The **effective income tax rate increased** primarily due to changes in the mix of income/losses across tax jurisdictions, less tax incentives for foreign derived intangible income and R&D, and less benefit on stock-based compensation, partially offset by a change in uncertain tax positions[48](index=48&type=chunk) - The company does not expect the recently enacted U.S. One Big Beautiful Bill Act (OBBBA), effective FY27, to have a **material impact** on its income taxes, but is still evaluating its full impact[49](index=49&type=chunk) - For FY26, most jurisdictions are expected to qualify for the OECD Pillar Two transitional Country-by-Country Reporting safe harbor, with the estimated top-up tax being **immaterial**[50](index=50&type=chunk) [Note 5 — Balance Sheet Components](index=14&type=section&id=Note%205%20%E2%80%94%20Balance%20Sheet%20Components) This note provides a detailed breakdown of key asset and liability components on Logitech's condensed consolidated balance sheets | Asset Component (in thousands) | June 30, 2025 | March 31, 2025 | | :----------------------------- | :------------ | :------------- | | Accounts receivable, net | $636,523 | $454,546 | | Inventories | $499,770 | $503,747 | | Other current assets | $154,106 | $131,211 | | Property, plant and equipment, net | $116,103 | $113,858 | | Other assets | $362,525 | $344,077 | | Liability Component (in thousands) | June 30, 2025 | March 31, 2025 | | :--------------------------------- | :------------ | :------------- | | Accrued and other current liabilities | $672,788 | $686,503 | | Other non-current liabilities | $235,913 | $221,512 | | Accrued customer marketing, pricing and incentive programs | $203,412 | $173,401 | | Accrued personnel expenses | $134,992 | $180,763 | | Deferred revenue (current) | $29,768 | $25,798 | | Deferred revenue (non-current) | $43,382 | $38,216 | [Note 6 — Fair Value Measurements](index=15&type=section&id=Note%206%20%E2%80%94%20Fair%20Value%20Measurements) This note explains Logitech's fair value hierarchy for financial instruments and provides details on various asset and liability valuations - The company uses a three-level fair value hierarchy (Level **1**: quoted prices in active markets; Level **2**: observable inputs other than Level **1**; Level **3**: unobservable inputs) for financial assets and liabilities[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) | Financial Assets (in thousands) | June 30, 2025 (Level 1) | March 31, 2025 (Level 1) | | :------------------------------------ | :---------------------- | :----------------------- | | Cash equivalents | $822,300 | $852,467 | | Investments for deferred compensation plan | $33,657 | $29,006 | | Currency derivative assets (Level 2) | $731 | $90 | | Currency derivative liabilities (Level 2) | $10,038 | $2,849 | - Equity method investments had a carrying value of **$18.3 million** as of June 30, 2025, with no material income/loss or impairment during the period[60](index=60&type=chunk) - Non-marketable equity investments without readily determinable fair values amounted to **$8.8 million** as of June 30, 2025, with no impairment during the period[61](index=61&type=chunk) - No impairment of non-financial assets (**goodwill**, **intangible assets**, property, plant and equipment) occurred during the three months ended June 30, 2025 and 2024[62](index=62&type=chunk) [Note 7 — Derivative Financial Instruments](index=17&type=section&id=Note%207%20%E2%80%94%20Derivative%20Financial%20Instruments) This note describes Logitech's use of derivative financial instruments to manage currency exchange rate risks for inventory purchases and other transactions - Logitech uses cash flow hedge contracts to protect against exchange rate exposure for forecasted inventory purchases, extending coverage from four months to **up to twelve months** starting Q1 FY26[64](index=64&type=chunk) - **Notional amounts of foreign currency exchange forward contracts for inventory purchases were $314.8 million** as of June 30, 2025, up from **$74.6 million** as of March 31, 2025[65](index=65&type=chunk) - A **net loss of $13.4 million** related to cash flow hedges was included in accumulated other comprehensive loss as of June 30, 2025, expected to be reclassified to earnings within twelve months[65](index=65&type=chunk) | Cash Flow Hedges (in thousands) | June 30, 2025 | June 30, 2024 | | :------------------------------------------------------------------------------------------------ | :------------ | :------------ | | Amount of Gain (Loss) Deferred as a Component of Accumulated Other Comprehensive Loss | $(12,349) | $1,582 | | Amount of Loss (Gain) Reclassified from Accumulated Other Comprehensive Loss to Costs of Goods Sold | $2,002 | $(733) | - Other foreign currency exchange forward and swap contracts are used to reduce short-term effects of currency fluctuations on receivables/payables, with **notional amounts of $156.9 million** as of June 30, 2025[67](index=67&type=chunk) [Note 8 — Goodwill and Other Intangible Assets](index=18&type=section&id=Note%208%20%E2%80%94%20Goodwill%20and%20Other%20Intangible%20Assets) This note details Logitech's goodwill and acquired intangible assets, including impairment analysis and carrying amounts - **Goodwill** impairment analysis is conducted annually at December **31** or more frequently if triggering events occur; no triggering events were identified during the three months ended June 30, 2025 and 2024[69](index=69&type=chunk) | Goodwill Balance (in thousands) | Amount | | :---------------------- | :----- | | As of March 31, 2025 | $463,230 | | Effects of foreign currency translation | $2,560 | | As of June 30, 2025 | $465,790 | | Acquired Intangible Assets (Net Carrying Amount in thousands) | June 30, 2025 | March 31, 2025 | | :------------------------------------------- | :------------ | :------------- | | Trademarks and trade names | $2,981 | $3,715 | | Developed technology | $8,825 | $10,957 | | Customer contracts/relationships | $8,544 | $10,441 | | Total | $20,324 | $24,630 | [Note 9 — Financing Arrangements](index=18&type=section&id=Note%209%20%E2%80%94%20Financing%20Arrangements) This note outlines Logitech's credit facilities and bank lines, including terms, covenants, and outstanding borrowings - On January **27, 2025**, Logitech entered into an unsecured revolving credit facility of up to **$750.0 million**, terminating on January **27, 2030**, with options for increase and extension[71](index=71&type=chunk) - The credit agreement includes a maximum net debt to adjusted EBITDA ratio covenant and interest rates based on benchmark rates plus a spread[72](index=72&type=chunk) - No borrowing was outstanding under the credit agreement as of June 30, 2025[73](index=73&type=chunk) - The company also had uncommitted, unsecured bank lines of credit totaling **$174.3 million** as of June 30, 2025, with no outstanding borrowings[74](index=74&type=chunk) [Note 10 — Commitments and Contingencies](index=19&type=section&id=Note%2010%20%E2%80%94%20Commitments%20and%20Contingencies) This note details Logitech's warranty liabilities, indemnification obligations, and involvement in legal proceedings | Warranty Liabilities (in thousands) | June 30, 2025 | June 30, 2024 | | :---------------------------------- | :------------ | :------------ | | Beginning of the period | $49,184 | $44,654 | | Provision | $8,622 | $10,186 | | Settlements | $(8,249) | $(10,038) | | Effects of foreign currency translation | $649 | $(300) | | End of the period | $50,206 | $44,502 | - The company indemnifies suppliers and customers for intellectual property disputes and product safety defects, but no material amounts have been accrued as of June 30, 2025[76](index=76&type=chunk) - Logitech is involved in legal proceedings but does not believe their resolution will have a material adverse effect on its financial condition, cash flows, and results of operations[78](index=78&type=chunk) [Note 11 — Shareholders' Equity](index=20&type=section&id=Note%2011%20%E2%80%94%20Shareholders'%20Equity) This note provides information on Logitech's share capital, treasury shares, share repurchase programs, and accumulated other comprehensive loss - As of June 30, 2025, Logitech's nominal share capital is **CHF 42.2 million**, consisting of **168,994,142 issued shares (CHF 0.25 par value each)**, with **21,442,654 shares held in treasury**[79](index=79&type=chunk) - The 2023 share repurchase program, increased to **$1.6 billion** in March 2025, had **$524.3 million** available for repurchase as of June 30, 2025[81](index=81&type=chunk) | Share Repurchase Activity (in thousands) | June 30, 2025 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------ | | Number of shares repurchased | 1,531 | 1,444 | | Aggregate cost of shares repurchased | $124,135 | $132,132 | - In June 2025, the Board approved the cancellation of **8.2 million treasury shares (repurchased for $712.2 million)**, expected to take effect in Q2 FY26[86](index=86&type=chunk) | Accumulated Other Comprehensive Loss (in thousands) | March 31, 2025 | June 30, 2025 | | :-------------------------------------------------- | :------------- | :------------ | | Currency Translation Adjustment | $(118,652) | $(91,359) | | Defined Benefit Plans | $(25,276) | $(25,433) | | Deferred Hedging Losses | $(3,024) | $(13,371) | | Total | $(146,952) | $(130,163) | [Note 12 — Segment Information](index=21&type=section&id=Note%2012%20%E2%80%94%20Segment%20Information) This note details Logitech's single operating segment, Peripherals, and provides a breakdown of sales by product category and geographic region - Logitech operates as a single operating segment: Peripherals, encompassing design, manufacturing, and sales of peripherals for gaming, PCs, tablets, video conferencing, and other digital platforms[88](index=88&type=chunk) | Sales by Product Category (in thousands) | June 30, 2025 | June 30, 2024 | | :----------------------- | :------------ | :------------ | | Gaming | $315,875 | $309,475 | | Keyboards & Combos | $222,492 | $215,333 | | Pointing Devices | $195,780 | $189,946 | | Video Collaboration | $166,716 | $147,042 | | Webcams | $84,374 | $72,904 | | Tablet Accessories | $91,227 | $78,539 | | Headsets | $45,523 | $44,236 | | Other | $25,716 | $30,742 | | Total Sales | $1,147,703 | $1,088,217 | | Sales by Geographic Region (in thousands) | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Americas | $461,690 | $485,289 | | EMEA | $346,840 | $309,817 | | Asia Pacific | $339,173 | $293,111 | | Total Sales | $1,147,703 | $1,088,217 | - Sales to customers in the United States, China, and Germany each represented **10% or more of total consolidated sales** for the periods presented[92](index=92&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Logitech's Q1 FY26 financial condition and results, covering performance drivers, macroeconomic impacts, and liquidity, noting a 5% net sales increase [Company Overview](index=25&type=section&id=Company%20Overview) This section provides a high-level description of Logitech's business, product portfolio, and global sales strategy - Logitech designs software-enabled hardware solutions for businesses and consumers, focusing on work, creation, and gaming, with a mission to extend human potential[99](index=99&type=chunk) - The product portfolio includes Gaming, Keyboards & Combos, Pointing Devices, Video Collaboration, Webcams, Tablet Accessories, and Headsets, all classified under a single operating segment: Peripherals[100](index=100&type=chunk) - Products are sold internationally through direct sales to retailers, e-tailers, businesses, and end consumers via e-commerce, and indirectly through distributors[101](index=101&type=chunk) [Impacts of Macroeconomic and Geopolitical Conditions on our Business](index=25&type=section&id=Impacts%20of%20Macroeconomic%20and%20Geopolitical%20Conditions%20on%20our%20Business) This section discusses how macroeconomic and geopolitical factors, including tariffs, inflation, and currency fluctuations, affect Logitech's operations - Increased import tariffs in the U.S. and responsive policies in other countries continue to adversely impact results of operations[103](index=103&type=chunk) - Ongoing macroeconomic and geopolitical conditions, including inflation, interest rate and foreign currency fluctuations, uncertain demand, low economic growth, and conflicts, cause volatility in product demand and costs[103](index=103&type=chunk)[104](index=104&type=chunk) [Trends and Uncertainties](index=25&type=section&id=Trends%20and%20Uncertainties) This section identifies key long-term growth trends and challenges, along with Logitech's strategies to mitigate associated risks - Long-term secular trends offering growth opportunities include AI (for productivity and innovation), new ways of working (hybrid work driving demand for peripherals and video conferencing), and gaming growth (online, multi-platform, esports)[105](index=105&type=chunk) - Challenges include tariff uncertainty, macroeconomic environment (inflation, interest rates, currency fluctuations), uncertain consumer/enterprise demand, timing of enterprise investments, and B2B go-to-market capabilities development[105](index=105&type=chunk)[106](index=106&type=chunk) - Mitigation steps include diversifying manufacturing, disciplined operating expenses, managing inventory, investing in B2B capabilities, and releasing new products[107](index=107&type=chunk) [Seasonality](index=26&type=section&id=Seasonality) This section explains the seasonal patterns in Logitech's sales and cash flow, typically peaking in the third fiscal quarter - Sales are generally highest in the **third fiscal quarter** (October to December) due to holiday season consumer demand and year-end enterprise spending[108](index=108&type=chunk) - Cash flow is typically lower in the first half of the fiscal year due to inventory build-up for Q3 and annual dividend payments[108](index=108&type=chunk) [Summary of Financial Results](index=26&type=section&id=Summary%20of%20Financial%20Results) This section provides a concise overview of Logitech's net sales, gross margin, operating expenses, and net income for the reporting period - **Net sales** for the three months ended June 30, 2025, increased **5% year-over-year** to **$1,147.7 million**, driven by Video Collaboration, Tablet Accessories, and Webcams, with improved demand in Asia Pacific and EMEA[109](index=109&type=chunk) - **Gross margin** decreased by **110 basis points to 41.7%** due to increased tariffs, higher promotional spend, and a prior year release in inventory reserves, partially offset by price increases and cost reductions[111](index=111&type=chunk) - **Operating expenses** remained relatively flat at **$316.9 million (27.6% of sales)** for the three months ended June 30, 2025, reflecting efforts to offset higher tariff costs[112](index=112&type=chunk)[141](index=141&type=chunk) - **Net income** for the three months ended June 30, 2025, was **$146.0 million**, up from **$141.8 million** in the prior year[112](index=112&type=chunk) [Critical Accounting Estimates](index=26&type=section&id=Critical%20Accounting%20Estimates) This section highlights Logitech's key accounting estimates, such as customer incentives, inventory valuation, and uncertain tax positions - Critical accounting estimates include accruals for customer incentives and related breakage, accrued sales return liability, inventory valuation, and uncertain tax positions[116](index=116&type=chunk) - No material changes in critical accounting estimates occurred during the three months ended June 30, 2025[118](index=118&type=chunk) [New Accounting Pronouncements](index=27&type=section&id=New%20Accounting%20Pronouncements) This section refers to Note 1 for details on new accounting pronouncements that Logitech will adopt - Refer to Note **1** for information on new accounting pronouncements to be adopted[119](index=119&type=chunk) [Constant Currency](index=27&type=section&id=Constant%20Currency) This section defines constant currency sales growth and explains its calculation, highlighting susceptibility to exchange rate shifts - Constant currency sales growth rates exclude the impact of currency exchange rate fluctuations, calculated by translating prior period sales at current period's average exchange rates[120](index=120&type=chunk) - Financial results are reported in U.S. Dollars, making them susceptible to significant shifts in currency exchange rates[121](index=121&type=chunk) [References to Sales](index=27&type=section&id=References%20to%20Sales) This section clarifies that 'sales' refers to net sales and that growth discussions are in U.S. Dollars - The term 'sales' refers to **net sales**, unless otherwise specified, and sales growth discussions are in U.S. Dollars[122](index=122&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section analyzes Logitech's financial performance, including net sales, gross profit, and operating expenses, for the reported periods [Net Sales](index=27&type=section&id=Net%20Sales) This section analyzes Logitech's net sales performance, including growth drivers and currency denomination - **Net sales** increased **5%** for the three months ended June 30, 2025, compared to the prior year, driven by Video Collaboration, Tablet Accessories, and Webcams[123](index=123&type=chunk) - Sales growth in constant currency was also **5%** for the three months ended June 30, 2025[123](index=123&type=chunk) - Approximately **53% of sales** were denominated in non-U.S. currencies during the three months ended June 30, 2025[124](index=124&type=chunk) [Sales by Region](index=28&type=section&id=Sales%20by%20Region) This section provides a breakdown of Logitech's sales performance across different geographic regions, highlighting growth rates | Region | Sales Growth Rate (USD) | Constant Dollar Sales Growth Rate | | :----------- | :---------------------- | :-------------------------------- | | Americas | (5)% | (4)% | | EMEA | 12% | 9% | | Asia Pacific | 16% | 15% | - The decrease in Americas sales was primarily due to a decline in **Gaming sales**[126](index=126&type=chunk) - EMEA sales increased due to growth in **Gaming, Video Collaboration, Keyboards & Combos, and Tablet Accessories**[127](index=127&type=chunk) - Asia Pacific sales increased primarily driven by **Gaming and Tablet Accessories**[128](index=128&type=chunk) [Sales by Product Category](index=28&type=section&id=Sales%20by%20Product%20Category) This section details Logitech's sales performance across various product categories, identifying key growth areas | Product Category | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :----------------------- | :------------------ | :------------------ | :----------- | | Gaming | $315,875 | $309,475 | +2% | | Keyboards & Combos | $222,492 | $215,333 | +3% | | Pointing Devices | $195,780 | $189,946 | +3% | | Video Collaboration | $166,716 | $147,042 | +13% | | Webcams | $84,374 | $72,904 | +16% | | Tablet Accessories | $91,227 | $78,539 | +16% | | Headsets | $45,523 | $44,236 | +3% | | Other | $25,716 | $30,742 | -16% | | **Total Sales** | **$1,147,703** | **$1,088,217** | **+5%** | - **Gaming sales increased 2%**, primarily from gaming mice[131](index=131&type=chunk) - **Video Collaboration sales increased 13%**, mainly due to conference room cameras[134](index=134&type=chunk) - **Webcams and Tablet Accessories sales both increased 16%**, driven by PC-based webcams and strong demand from the education sector, respectively[135](index=135&type=chunk)[136](index=136&type=chunk) - Sales in the 'Other' category **decreased 16%**, primarily due to a decline in mobile speakers[138](index=138&type=chunk) [Gross Profit](index=30&type=section&id=Gross%20Profit) This section analyzes Logitech's gross profit and gross margin, discussing factors influencing changes, such as tariffs and promotional spend | Gross Profit Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :------------------ | :------------------ | :------------------ | :----------- | | Net sales | $1,147,703 | $1,088,217 | +5% | | Gross profit | $478,962 | $466,258 | +3% | | Gross margin | 41.7% | 42.8% | -110 bps | - **Gross margin** decreased by **110 basis points to 41.7%**, primarily due to unfavorable impacts from increased tariffs, higher promotional spend, and a prior year release in inventory reserves, partially offset by price increases in North America and product cost reductions[140](index=140&type=chunk) [Operating Expenses](index=30&type=section&id=Operating%20Expenses) This section details Logitech's operating expenses, including marketing, R&D, G&A, and restructuring charges, and their impact on profitability | Operating Expense (in thousands) | 2025 | % of sales (2025) | 2024 | % of sales (2024) | | :--------------------------------------------- | :--- | :---------------- | :--- | :---------------- | | Marketing and selling | $195,796 | 17.1% | $196,905 | 18.1% | | Research and development | $74,587 | 6.5% | $75,307 | 6.9% | | General and administrative | $41,797 | 3.6% | $37,458 | 3.5% | | Amortization of intangible assets and acquisition-related costs | $2,646 | 0.2% | $2,703 | 0.2% | | Restructuring charges, net | $2,042 | 0.2% | $386 | — % | | Total operating expenses | $316,868 | 27.6% | $312,759 | 28.7% | - Total **operating expenses** remained relatively flat, reflecting efforts to reduce expenses and offset higher tariff costs[141](index=141&type=chunk) - General and administrative expenses increased by **$4.3 million**, primarily due to higher performance-based stock compensation expense[145](index=145&type=chunk) - Restructuring charges, net, increased significantly from **$386 thousand** in 2024 to **$2,042 thousand** in 2025, related to a restructuring plan initiated in Q4 FY25[148](index=148&type=chunk) [Interest Income](index=31&type=section&id=Interest%20Income) This section reports Logitech's interest income and explains the factors contributing to its changes | Interest Income (in thousands) | 2025 | 2024 | | :----------------------- | :--- | :--- | | Interest income | $11,229 | $15,790 | - Interest income decreased by **$4.6 million**, primarily due to decreases in cash equivalents balance and interest rates[149](index=149&type=chunk) [Other Income (Expense), Net](index=32&type=section&id=Other%20Income%20(Expense)%2C%20Net) This section details Logitech's other income and expenses, including investment gains, currency exchange losses, and pension income | Other Income (Expense), Net (in thousands) | 2025 | 2024 | | :----------------------------------------- | :--- | :--- | | Investment gain related to the deferred compensation plan | $2,060 | $447 | | Currency exchange loss, net | $(2,003) | $(2,318) | | Loss on investments, net | $(393) | $(1,186) | | Non-service cost net pension income and other | $1,498 | $1,159 | | Total | $1,162 | $(1,898) | - The increase in investment gain from the deferred compensation plan is due to changes in market performance of underlying securities[150](index=150&type=chunk) - Currency exchange loss in 2025 was primarily due to fluctuations of the **Swiss Franc** and **New Taiwan dollar** against the U.S. Dollar[151](index=151&type=chunk) [Provision for Income Taxes](index=32&type=section&id=Provision%20for%20Income%20Taxes) This section outlines Logitech's income tax provision and effective tax rate, discussing factors influencing changes and future tax impacts | Income Tax Metric | 2025 | 2024 | | :------------------------ | :--- | :--- | | Provision for income taxes (in thousands) | $28,470 | $25,558 | | Effective income tax rate | 16.3% | 15.3% | - The **effective income tax rate increased** primarily due to changes in the mix of income/losses across tax jurisdictions, less tax incentives, and less benefit on stock-based compensation, offset by changes in uncertain tax positions[153](index=153&type=chunk) - The company does not expect the U.S. One Big Beautiful Bill Act (OBBBA) to have a **material impact** on its income taxes, but is still evaluating its full impact[154](index=154&type=chunk)[155](index=155&type=chunk) - Most jurisdictions are expected to qualify for the OECD Pillar Two transitional safe harbor for FY26, with the estimated top-up tax being **immaterial**[156](index=156&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses Logitech's financial liquidity and capital resources, including cash balances, available borrowings, and working capital management [Cash Balances, Available Borrowings, and Capital Resources](index=33&type=section&id=Cash%20Balances%2C%20Available%20Borrowings%2C%20and%20Capital%20Resources) This section details Logitech's cash position, available credit facilities, and key liquidity metrics like DSO, DPO, and inventory turnover - **Cash and cash equivalents** were **$1,487.8 million** as of June 30, 2025, a slight decrease from **$1,503.2 million** as of March 31, 2025[157](index=157&type=chunk) - **Working capital** increased to **$1,555.5 million** as of June 30, 2025, from **$1,491.6 million** as of March 31, 2025, primarily due to an increase in accounts receivable, net, partially offset by an increase in accounts payable[158](index=158&type=chunk) - The company has an undrawn unsecured revolving credit facility of up to **$750.0 million** and uncommitted, unsecured bank lines of credit totaling **$174.3 million** as of June 30, 2025[159](index=159&type=chunk)[161](index=161&type=chunk) | Financial Metric | June 30, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------ | | Days sales in accounts receivable (DSO) | **50 days** | **49 days** | | Days accounts payable outstanding (DPO) | **74 days** | **80 days** | | Inventory turnover (ITO) | **5.4x** | **5.4x** | - **Net cash provided by operating activities** decreased to **$125.0 million** for the three months ended June 30, 2025, from **$176.0 million** in the prior year, mainly due to an unfavorable net change in operating assets and liabilities[166](index=166&type=chunk)[167](index=167&type=chunk) - **Net cash used in financing activities** was **$134.4 million**, primarily due to **$121.7 million in share repurchases**[168](index=168&type=chunk) - The Board recommended a cash dividend of **CHF 1.26 per share** for fiscal year 2025, totaling approximately **CHF 187.1 million**[171](index=171&type=chunk) - The company plans to target **share repurchases of $2 billion** over the three-year period ending March 31, 2028[172](index=172&type=chunk) [Operating Leases Obligations](index=36&type=section&id=Operating%20Leases%20Obligations) This section describes Logitech's commitments under operating leases for facilities and any material changes to contractual obligations - The company leases facilities under operating leases, with remaining non-cancelable terms expiring through **2035**[176](index=176&type=chunk) - No material changes to contractual obligations were reported compared to the Annual Report on Form **10-K** for FY25[176](index=176&type=chunk) [Purchase Commitments](index=36&type=section&id=Purchase%20Commitments) This section outlines Logitech's non-cancelable purchase commitments for inventory and capital expenditures - As of June 30, 2025, non-cancelable purchase commitments for inventory were **$368.7 million**, mostly expected to be fulfilled within **12 months**[177](index=177&type=chunk) - A liability of **$23.5 million** was recorded for firm, non-cancelable, and unhedged inventory purchase commitments in excess of anticipated demand[177](index=177&type=chunk) - Firm purchase commitments for capital expenditures, primarily tooling and equipment, totaled **$19.1 million**[178](index=178&type=chunk) [Other Contractual Obligations and Commitments](index=36&type=section&id=Other%20Contractual%20Obligations%20and%20Commitments) This section refers to the Annual Report on Form 10-K for additional details on Logitech's contractual obligations and commitments - Further details on contractual obligations and commitments are available in the Annual Report on Form **10-K** for fiscal year ended March **31, 2025**[179](index=179&type=chunk) [Indemnifications](index=36&type=section&id=Indemnifications) This section describes Logitech's indemnification obligations to suppliers, customers, directors, and officers - Logitech indemnifies suppliers and customers for intellectual property and product safety issues, but no material amounts have been accrued as of June 30, 2025[180](index=180&type=chunk) - The company also indemnifies directors and officers, but the maximum payable amount cannot be reasonably estimated due to the conditional and variable nature of these obligations[181](index=181&type=chunk) [Legal Proceedings](index=37&type=section&id=Legal%20Proceedings) This section provides an overview of Logitech's involvement in legal proceedings and management's assessment of their potential financial impact - The company is involved in claims and legal proceedings in the ordinary course of business, as detailed in Part II Item **1** Legal Proceedings[183](index=183&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details Logitech's market risk exposure from currency exchange rates and interest rates, and its mitigation strategies using derivatives [Market Risk](index=37&type=section&id=Market%20Risk) This section defines market risk and identifies Logitech's primary exposures to currency exchange rates and interest rates - Market risk represents potential loss from adverse changes in fair value of financial instruments, primarily due to currency exchange rates and interest rates[184](index=184&type=chunk) [Currency Exchange Rates](index=37&type=section&id=Currency%20Exchange%20Rates) This section details Logitech's exposure to currency exchange rate fluctuations and its hedging strategies using derivative instruments - Logitech reports in U.S. Dollars, but transacts in approximately **30 currencies**, with **53% of sales in non-U.S. currencies (24% in Euro)**, making it exposed to currency exchange rate risk[186](index=186&type=chunk) - A strengthening **U.S. Dollar** has a more unfavorable impact on sales than a favorable impact on costs, leading to an adverse effect on operating results[186](index=186&type=chunk) - The company uses currency forward and swap contracts to reduce short-term currency fluctuations on receivables/payables and cash flow hedge contracts for forecasted inventory purchases (**up to twelve months**)[187](index=187&type=chunk)[189](index=189&type=chunk) - An adverse **10% foreign currency exchange rate change** would result in an adverse effect on income before income taxes of approximately **$15.9 million** as of June 30, 2025, after considering hedging effects[188](index=188&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded Logitech's disclosure controls and procedures were effective as of June 30, 2025, also clarifying control system limitations [Disclosure Controls and Procedures](index=39&type=section&id=Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of Logitech's disclosure controls and procedures as evaluated by management - Logitech's management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[191](index=191&type=chunk) [Definition of Disclosure Controls](index=39&type=section&id=Definition%20of%20Disclosure%20Controls) This section defines disclosure controls as systems designed to ensure timely and accurate reporting of SEC-required information - Disclosure Controls are designed to reasonably assure that information required for SEC reports is recorded, processed, summarized, and reported timely, and communicated to management for disclosure decisions[192](index=192&type=chunk) [Limitations on the Effectiveness of Controls](index=39&type=section&id=Limitations%20on%20the%20Effectiveness%20of%20Controls) This section acknowledges that control systems provide reasonable, not absolute, assurance and are subject to inherent limitations - Control systems provide only reasonable, not absolute, assurance and can be circumvented by errors, individual acts, collusion, or management override due to inherent limitations and resource constraints[193](index=193&type=chunk) [Changes in Internal Control over Financial Reporting](index=39&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section confirms no material changes in Logitech's internal control over financial reporting during the fiscal quarter - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[194](index=194&type=chunk) PART II — OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=40&type=section&id=Item%201.%20Legal%20Proceedings) Logitech is involved in ordinary course legal proceedings, which management believes will not materially affect financial condition or operations, despite inherent litigation uncertainties - The company is currently subject to several claims and legal proceedings in the ordinary course of business and intends to vigorously defend against them[195](index=195&type=chunk) - Management does not believe that the resolution of pending matters will have a material adverse effect on Logitech's financial condition, cash flows, and results of operations[195](index=195&type=chunk) - Litigation is subject to inherent uncertainties, and any claims or proceedings can adversely impact the company through defense costs, diversion of resources, and negative publicity[195](index=195&type=chunk) [ITEM 1A. RISK FACTORS](index=40&type=section&id=Item%201A.%20Risk%20Factors) This section highlights material risks to Logitech's business, focusing on changes in tax laws, treaties, and global tax reforms like OECD Pillar Two and U.S. OBBBA - Changes in tax laws, treaties, rulings, or their interpretation, or loss of major tax disputes, could increase effective income tax rates and adversely affect **net income** and cash flows[198](index=198&type=chunk) - The U.S. One Big Beautiful Bill Act (OBBBA), effective FY27, includes corporate taxation provisions, but the company currently does not expect a **material impact**, though evaluation is ongoing[198](index=198&type=chunk) - The OECD Pillar Two global minimum tax rules could result in tax increases in Switzerland and other jurisdictions, with the company monitoring developments regarding potential exemptions for non-U.S. parented groups[201](index=201&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details Logitech's Q1 FY26 share repurchase activities under its 2023 program, including the number of shares repurchased and their aggregate cost [Share Repurchases](index=41&type=section&id=Share%20Repurchases) This section details Logitech's share repurchase activities under its 2023 program, including shares repurchased and remaining authorization - The 2023 share repurchase program was approved for **$1.6 billion**, with **$524.3 million** remaining available as of June 30, 2025[203](index=203&type=chunk)[204](index=204&type=chunk) | Share Repurchase Activity (in thousands) | Total Number of Shares Repurchased | Weighted Average Price Paid (CHF) | | :--------------------------------------- | :--------------------------------- | :-------------------------------- | | During the Three Months Ended June 30, 2025 | 1,531 | 66.95 | - All repurchased shares were for cancellation, executed on the **second trading line of SIX Swiss Exchange**[204](index=204&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item indicates no defaults upon senior securities for the reporting period - Not applicable; no defaults upon senior securities[205](index=205&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item indicates no mine safety disclosures are applicable to the company - None; no mine safety disclosures[206](index=206&type=chunk) [ITEM 5. OTHER INFORMATION](index=42&type=section&id=Item%205.%20Other%20Information) This section confirms no directors or executive officers adopted, modified, or terminated trading arrangements during Q1 FY26 [Securities Trading Plans of Directors and Executive Officers](index=42&type=section&id=Securities%20Trading%20Plans%20of%20Directors%20and%20Executive%20Officers) This section confirms no new, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by directors or officers - No director or officer adopted, modified, or terminated **Rule 10b5-1** or **non-Rule 10b5-1 trading arrangements** during the first quarter of fiscal year 2026[207](index=207&type=chunk) [ITEM 6. EXHIBIT INDEX](index=43&type=section&id=Item%206.%20Exhibit%20Index) This section lists exhibits filed with the Form 10-Q, including agreements, certifications, and XBRL taxonomy documents - Key exhibits include performance share unit agreements (**10.1, 10.2**), certifications of Principal Executive Officer and Principal Financial Officer (**31.1, 31.2, 32.1**), and XBRL taxonomy documents (**101.INS, 101.SCH, 101.CAL, 101.LAB, 101.PRE, 101.DEF, 104**)[209](index=209&type=chunk) [Signatures](index=44&type=section&id=Signatures) This section contains the required signatures of Logitech's CEO and CFO, certifying the filing of the report - The report is signed by **Johanna (Hanneke) Faber, Chief Executive Officer**, and **Matteo Anversa, Chief Financial Officer**, on **July 30, 2025**[213](index=213&type=chunk)

Core Insights - Logitech International S.A. (LOGI) reported first-quarter fiscal 2026 non-GAAP earnings of $1.26 per share, exceeding the Zacks Consensus Estimate by 15.6% and reflecting a 12% year-over-year increase [1] - The company achieved revenues of $1.15 billion in the first quarter, surpassing the consensus mark by 3.2% and showing a 5% increase compared to the same quarter last year [1] Revenue Breakdown - Revenues from Keyboards & Combos rose 3% year over year to $222.5 million, while Pointing Devices grew 3% to $195.8 million [2] - Tablet Accessories saw a significant increase of 16% to $91.2 million, and Webcams also increased by 16% to $84.4 million [2] - Gaming revenues increased 2% year over year to $315.9 million, and Video Collaboration sales rose 13% to $166.7 million [3] - Headsets product category revenues increased 3% to $45.5 million, while Other categories' sales decreased by 16% to $25.7 million [3] Margins and Operating Metrics - Non-GAAP gross profit increased to $483.5 million from $471.3 million in the prior year, but non-GAAP gross margin contracted by 120 basis points to 42.1% [4] - Non-GAAP operating expenses decreased by 2.5% year over year to $281.7 million, representing 24.5% of revenues, a decrease of 200 basis points [4] - Non-GAAP operating income increased by 10.6% to $201.8 million, with the operating margin expanding by 80 basis points to 17.6% [5] Liquidity and Shareholder Return - As of June 30, 2025, LOGI's cash and cash equivalents were $1.49 billion, slightly down from $1.5 billion in the previous quarter [6] - The company generated $125 million in cash from operational activities in the first quarter and returned $122 million to shareholders through share repurchases, with no dividends paid during the quarter [6] Future Guidance - Logitech issued strong sales guidance for the second quarter of fiscal 2026, projecting revenues between $1.145 billion and $1.19 billion, indicating year-over-year growth of 3-7% on a reported basis [7][8] - The company also forecasts non-GAAP operating profit in the range of $180 million to $200 million for the upcoming quarter [8]

Core Insights - Logitech reported $1.15 billion in revenue for the quarter ended June 2025, marking a year-over-year increase of 5.5% and an EPS of $1.26 compared to $1.13 a year ago, exceeding Zacks Consensus Estimate of $1.11 billion by 3.16% [1] - The company delivered an EPS surprise of 15.6%, with the consensus EPS estimate being $1.09 [1] Financial Performance Metrics - Logitech's net sales for Pointing Devices reached $195.78 million, exceeding the average estimate of $193.93 million, with a year-over-year change of 3.1% [4] - Net Sales for Keyboards & Combos were $222.49 million, surpassing the average estimate of $220.75 million, reflecting a year-over-year increase of 3.3% [4] - Webcams generated net sales of $84.37 million, significantly above the average estimate of $73.99 million, with a year-over-year change of 15.7% [4] - Headsets reported net sales of $45.52 million, slightly above the average estimate of $45.07 million, with a year-over-year change of 2.9% [4] - Video Collaboration net sales were $166.72 million, exceeding the average estimate of $148.75 million, representing a year-over-year increase of 13.4% [4] - Gaming net sales reached $315.88 million, slightly below the average estimate of $321.13 million, with a year-over-year change of 2.1% [4] - Other net sales were $25.72 million, below the average estimate of $29.12 million, reflecting a year-over-year decline of 16.4% [4] - Tablet Accessories net sales were $91.23 million, exceeding the average estimate of $79.76 million, with a year-over-year increase of 16.2% [4] Stock Performance - Logitech shares have returned 4.9% over the past month, outperforming the Zacks S&P 500 composite's 3.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - Logitech reported quarterly earnings of $1.26 per share, exceeding the Zacks Consensus Estimate of $1.09 per share, and up from $1.13 per share a year ago [1] - The earnings surprise was +15.60%, following a previous surprise of +8.14% in the last quarter [2] - The company achieved revenues of $1.15 billion for the quarter, surpassing the Zacks Consensus Estimate by 3.16% and up from $1.09 billion year-over-year [3] Financial Performance - Logitech has surpassed consensus EPS estimates in all four of the last quarters [2] - The company has also topped consensus revenue estimates three times over the last four quarters [3] - Year-to-date, Logitech shares have increased by approximately 14.8%, outperforming the S&P 500's gain of 8.6% [4] Future Outlook - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at $1.05 for the coming quarter and $4.49 for the current fiscal year [5][8] - The Zacks Rank for Logitech is currently 3 (Hold), indicating expected performance in line with the market in the near future [7] - The Computer - Peripheral Equipment industry is ranked in the top 26% of over 250 Zacks industries, suggesting a favorable outlook for Logitech [9]

Financial Data and Key Metrics Changes - Net sales grew by 5% year over year in constant currency, with strong demand across both consumer and B2B segments [15][19] - Non-GAAP gross margin for the quarter was 42.1%, reflecting a 120 basis points decline from the previous year due to tariffs and higher promotional spending [16][70] - Operating expenses decreased by 2% year over year, representing 24.5% of net sales, down from 26.5% in the same quarter last year [17][18] Business Line Data and Key Metrics Changes - Video collaboration segment saw a 13% year over year growth, driven by strong demand in North America [15][28] - Personal workspace grew by 6% year over year, with double-digit growth in webcams and tablet accessories [15] - Gaming segment experienced a 6% growth, with significant share gains in North America and a notable recovery in China [36][100] Market Data and Key Metrics Changes - Asia Pacific region grew by 15% year over year, with strong performance in China [16][36] - EMEA region grew by 9%, driven by robust demand across all product categories [16] - North America declined by 4%, primarily due to a pause in product shipments during price negotiations [16] Company Strategy and Development Direction - The company is focused on three guiding principles: playing offense, disciplined cost control, and agility [5][6] - Continued investment in research and development, representing 6% of sales, to drive innovation and superior products [5] - Expansion in B2B markets, particularly in video conferencing, with double-digit growth in this segment [10][33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing uncertainty regarding tariff policies, inflation, and customer sentiment but expressed confidence in the company's resilience [11][12] - The company expects net sales growth of 1% to 5% year over year in the second quarter, with gross margin rates projected between 41% and 42% [20][70] - Management emphasized the importance of maintaining rigorous cost discipline and agility in response to evolving market conditions [13][19] Other Important Information - The company returned $122 million to shareholders through share repurchases, consistent with its capital allocation priorities [19] - The company launched nine new products during the quarter, including innovative gaming and business solutions [9][10] Q&A Session Summary Question: Consumer reaction to price actions - Management noted a positive impact of price increases in the first quarter, contributing 50 basis points to growth, but it was too early to assess the full consumer reaction [24][25] Question: Strength of video collaboration business - Management expressed confidence in the sustainability of the 13% growth in video collaboration, although some pull-in demand may have occurred ahead of tariffs [28] Question: Economic impact of growing B2B mix - Management confirmed strong demand in the B2B segment, outpacing consumer demand, and highlighted the positive margin contribution from video conferencing products [33][34] Question: Inventory strategy and cash flow - Management indicated a strategy to pull in inventory ahead of tariffs, resulting in a strong cash flow of $125 million from operations [60][61] Question: Guidance for gross margins - Management provided detailed guidance on gross margins, expecting a negative impact from tariffs offset by price increases, with a projected range of 41% to 42% [70][71] Question: Demand patterns in Q1 - Management reported high single-digit demand growth across both B2B and consumer segments, with broad-based strength in various product lines [45][46] Question: Market share and competition - Management noted share gains in key categories but anticipated a temporary softening of shares following price increases [49][50] Question: Future growth in gaming - Management expressed optimism about the gaming segment, citing strong growth in premium segments and a recovery in share in China [36][100]

Financial Data and Key Metrics Changes - Net sales grew by 5% year over year in constant currency, with strong demand across both consumer and B2B segments [14][4] - Non-GAAP gross margin for the quarter was 42.1%, reflecting a 120 basis points decline from the previous year due to tariffs and higher promotional spending [15][16] - Operating expenses decreased by 2% year over year, representing 24.5% of net sales, down from 26.5% [16][5] - Generated $125 million in cash from operations, ending the quarter with a cash balance of $1.5 billion [17] Business Line Data and Key Metrics Changes - Video collaboration segment saw a 13% year over year growth, driven by strong demand in North America [14] - Personal workspace grew by 6% year over year, with double-digit growth in webcams and tablet accessories [14] - Gaming segment experienced a 6% growth, with significant share growth in North America and a notable recovery in China [32][33] Market Data and Key Metrics Changes - Asia Pacific region grew by 15% year over year, led by strong demand in China [15] - EMEA region grew by 9%, while North America declined by 4% due to pauses in product shipments during price negotiations [15] Company Strategy and Development Direction - The company continues to focus on long-term strategies, emphasizing investment in research and development, which accounted for 6% of sales [4] - A strategic shift towards B2B is evident, with demand in this segment outpacing consumer demand, particularly in video conferencing [8] - The company aims to reduce the share of US products originating from China from 40% to 10% by the end of the calendar year [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate uncertainty, citing a globally balanced business model and a strong brand [11] - The company anticipates continued uncertainty regarding tariff policies and inflation, but remains committed to driving growth and market share gains [12][10] - Future net sales growth is expected to be between 1% to 5% year over year in constant currency for the second quarter [18] Other Important Information - The company launched nine new products during the quarter, including a wireless gaming headset and a digital pencil for virtual reality [7] - The company returned $122 million to shareholders through share repurchases, consistent with its capital allocation priorities [17] Q&A Session Summary Question: Consumer reaction to price actions - Management noted a positive impact of 50 basis points from price increases in the first quarter, but it is too early to assess consumer reaction fully [22][24] Question: Strength of video collaboration business - Management confirmed strong demand in North America, with a 13% growth in video collaboration, though some pull-in demand may have occurred ahead of tariffs [25][26] Question: B2B performance and economic impact - B2B demand outpaced consumer demand, with strong growth in video conferencing and education sectors [30] Question: Inventory strategy and cash flow - The company plans to continue leveraging its strong balance sheet to pull in inventory ahead of tariffs, maintaining a healthy cash flow [57][58] Question: Guidance for gross margins - Management provided guidance indicating a gross margin rate between 41% and 42%, factoring in tariff impacts and price increases [67][68] Question: Impact of tariffs on future quarters - The expected tariff impact for the second quarter is between 200 to 300 basis points, with ongoing monitoring of the situation [78][79] Question: Timing to reach top line growth target - Management indicated that while the company is close to its growth target, expansion into new verticals like healthcare and government will take time [108][109]

[Financial Highlights & Management Commentary](index=1&type=section&id=Financial%20Highlights%20%26%20Management%20Commentary) Logitech reported strong Q1 FY2026 results with sales up 5% to $1.15 billion and non-GAAP operating income growing 11% to $202 million, driven by innovation and robust demand - Management attributes the strong quarterly performance to superior innovation, robust demand in B2B and consumer channels, and excellent execution across all regions[2](index=2&type=chunk) - The company returned **$122 million** in cash to shareholders through share repurchases during the quarter[3](index=3&type=chunk) Q1 FY2026 Key Financial Metrics (YoY) | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Sales | $1.15 billion | +5% (USD & Constant Currency) | | GAAP Gross Margin | 41.7% | -110 bps | | Non-GAAP Gross Margin | 42.1% | -120 bps | | GAAP Operating Income | $162 million | +6% | | Non-GAAP Operating Income | $202 million | +11% | | GAAP EPS | $0.98 | +7% | | Non-GAAP EPS | $1.26 | +12% | | Cash Flow from Operations | $125 million | - | | Quarter-ending Cash | $1.5 billion | - | [Business Outlook](index=2&type=section&id=Business%20Outlook) The company projects Q2 FY2026 sales between $1.145 billion and $1.190 billion, with non-GAAP operating income ranging from $180 million to $200 million Q2 FY2026 Outlook | Metric | Guidance Range | | :--- | :--- | | Sales | $1,145 - $1,190 million | | Sales Growth (USD, YoY) | 3% - 7% | | Sales Growth (Constant Currency, YoY) | 1% - 5% | | Non-GAAP Operating Income | $180 - $200 million | [Preliminary Consolidated Financial Statements](index=4&type=section&id=Preliminary%20Consolidated%20Financial%20Statements) This section presents unaudited GAAP condensed consolidated financial statements for Q1 FY2026, detailing the company's financial position and performance [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 FY2026 net sales reached **$1.148 billion** (+5%), with GAAP operating income at **$162.1 million** (+6%) and diluted EPS at **$0.98** (+7%) Q1 Statement of Operations Highlights (in thousands, except per share) | Metric | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Net Sales | $1,147,703 | $1,088,217 | | Gross Profit | $478,962 | $466,258 | | Operating Income | $162,094 | $153,499 | | Net Income | $146,015 | $141,833 | | Diluted EPS | $0.98 | $0.92 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were **$3.74 billion**, total liabilities **$1.56 billion**, and cash and cash equivalents **$1.49 billion** Key Balance Sheet Items (in thousands) | Metric | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,487,822 | $1,503,205 | | Total Assets | $3,742,963 | $3,538,504 | | Total Liabilities | $1,555,711 | $1,411,084 | | Total Shareholders' Equity | $2,187,252 | $2,127,420 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 FY2026 operating cash flow was **$125.0 million**, a decrease from prior year, with **$134.4 million** used in financing activities, mainly for share repurchases Q1 Cash Flow Summary (in thousands) | Metric | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Net cash provided by operating activities | $125,045 | $176,029 | | Net cash used in investing activities | ($18,100) | ($15,359) | | Net cash used in financing activities | ($134,433) | ($145,134) | [Supplemental Financial Information](index=7&type=section&id=Supplemental%20Financial%20Information) This section provides supplemental financial details, including net sales by product category, GAAP to non-GAAP reconciliation, and share-based compensation expense [Net Sales by Product Category](index=7&type=section&id=Net%20Sales%20by%20Product%20Category) Sales growth was driven by Video Collaboration (+13%), Webcams (+16%), and Tablet Accessories (+16%), with Gaming as the top revenue category at **$315.9 million** Net Sales by Product Category (in thousands) | Product Category | Q1 FY2026 Sales | Q1 FY2025 Sales | Change YoY | | :--- | :--- | :--- | :--- | | Gaming | $315,875 | $309,475 | 2% | | Keyboards & Combos | $222,492 | $215,333 | 3% | | Pointing Devices | $195,780 | $189,946 | 3% | | Video Collaboration | $166,716 | $147,042 | 13% | | Webcams | $84,374 | $72,904 | 16% | | Tablet Accessories | $91,227 | $78,539 | 16% | | Headsets | $45,523 | $44,236 | 3% | | Other | $25,716 | $30,742 | (16)% | | **Total Net Sales** | **$1,147,703** | **$1,088,217** | **5%** | [GAAP to Non-GAAP Reconciliation](index=8&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation) Non-GAAP operating income increased 11% to **$201.8 million**, with non-GAAP diluted EPS at **$1.26** (+12%), adjusted for share-based compensation, amortization, and restructuring charges Q1 Operating Income Reconciliation (in thousands) | Metric | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | **Operating income - GAAP** | **$162,094** | **$153,499** | | Share-based compensation expense | $32,828 | $23,405 | | Amortization of intangible assets | $4,795 | $5,145 | | Restructuring charges, net | $2,042 | $386 | | **Operating income - Non-GAAP** | **$201,759** | **$182,435** | Q1 Diluted EPS Reconciliation | Metric | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | **Diluted EPS - GAAP** | **$0.98** | **$0.92** | | **Diluted EPS - Non-GAAP** | **$1.26** | **$1.13** | [Share-Based Compensation Expense](index=9&type=section&id=Share-Based%20Compensation%20Expense) Total share-based compensation expense for Q1 FY2026 was **$32.8 million**, primarily driven by Marketing and selling (**$13.9 million**) and General and administrative (**$10.2 million**) Share-Based Compensation Expense by Function (in thousands) | Expense Category | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Cost of goods sold | $2,380 | $2,598 | | Marketing and selling | $13,930 | $11,851 | | Research and development | $6,351 | $5,739 | | General and administrative | $10,167 | $3,217 | | **Total** | **$32,828** | **$23,405** | [Notes on Financial Reporting](index=2&type=section&id=Notes%20on%20Financial%20Reporting) This section explains the use of non-GAAP financial measures and constant currency calculations, along with disclaimers for forward-looking statements and associated risks - The company uses non-GAAP financial measures, excluding items like share-based compensation, amortization of intangibles, and restructuring charges, to facilitate historical comparisons and provide investors with additional insight into performance[6](index=6&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) - Sales growth is also presented in constant currency, a non-GAAP measure, to show performance unaffected by fluctuations in currency exchange rates[6](index=6&type=chunk)[29](index=29&type=chunk) - The press release contains forward-looking statements, including the Q2 FY26 outlook, which are subject to various risks and uncertainties such as macroeconomic conditions, consumer demand, and supply chain challenges[10](index=10&type=chunk)

Core Insights - The article compares LG Display (LPL) and Logitech (LOGI) to determine which stock offers better value for investors [1] - A strong Zacks Rank combined with a good Value grade is highlighted as an effective method for identifying value opportunities [2] Valuation Metrics - LG Display has a Zacks Rank of 2 (Buy), while Logitech has a Zacks Rank of 3 (Hold), indicating a more favorable earnings outlook for LPL [3] - LPL's forward P/E ratio is 6.23, significantly lower than LOGI's forward P/E of 21.54, suggesting LPL is undervalued [5] - LPL has a PEG ratio of 0.23 compared to LOGI's PEG ratio of 18.26, indicating LPL's earnings growth is expected to be more favorable relative to its price [5] - LPL's P/B ratio is 0.7, while LOGI's P/B ratio is 7.19, further supporting the notion that LPL is undervalued [6] - Based on these metrics, LPL holds a Value grade of A, whereas LOGI has a Value grade of D, making LPL the more attractive option for value investors [6]