Logitech(LOGI) - 2026 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (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 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 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 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 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 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] - 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] - 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] Notes to the Condensed Consolidated Financial Statements 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 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] - 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] - 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] - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and include normal and recurring adjustments[33][34] - No material changes in significant accounting policies occurred during the three months ended June 30, 2025[35] - 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] - 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][38] - 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][40] Note 2 — Net Income Per Share 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] Note 3 — Employee Benefit Plans 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] | 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] - 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] Note 4 — Income Taxes 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] - 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] - 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] Note 5 — Balance Sheet Components 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 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][56][57] | 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] - 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] - 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] Note 7 — Derivative Financial Instruments 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] - 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] - 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] | 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] Note 8 — Goodwill and Other Intangible Assets 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] | 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 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] - The credit agreement includes a maximum net debt to adjusted EBITDA ratio covenant and interest rates based on benchmark rates plus a spread[72] - No borrowing was outstanding under the credit agreement as of June 30, 2025[73] - The company also had uncommitted, unsecured bank lines of credit totaling $174.3 million as of June 30, 2025, with no outstanding borrowings[74] Note 10 — Commitments and Contingencies 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] - 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] Note 11 — Shareholders' Equity 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] - 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] | 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] | 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 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] | 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] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 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] - 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] - Products are sold internationally through direct sales to retailers, e-tailers, businesses, and end consumers via e-commerce, and indirectly through distributors[101] Impacts of Macroeconomic and Geopolitical Conditions on our Business 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] - 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][104] Trends and Uncertainties 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] - 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][106] - Mitigation steps include diversifying manufacturing, disciplined operating expenses, managing inventory, investing in B2B capabilities, and releasing new products[107] 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] - 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] Summary of Financial Results 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] - 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] - 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][141] - Net income for the three months ended June 30, 2025, was $146.0 million, up from $141.8 million in the prior year[112] Critical Accounting Estimates 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] - No material changes in critical accounting estimates occurred during the three months ended June 30, 2025[118] New Accounting Pronouncements 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] Constant Currency 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] - Financial results are reported in U.S. Dollars, making them susceptible to significant shifts in currency exchange rates[121] References to Sales 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] Results of Operations This section analyzes Logitech's financial performance, including net sales, gross profit, and operating expenses, for the reported periods Net Sales 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] - Sales growth in constant currency was also 5% for the three months ended June 30, 2025[123] - Approximately 53% of sales were denominated in non-U.S. currencies during the three months ended June 30, 2025[124] Sales by Region 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] - EMEA sales increased due to growth in Gaming, Video Collaboration, Keyboards & Combos, and Tablet Accessories[127] - Asia Pacific sales increased primarily driven by Gaming and Tablet Accessories[128] Sales by Product Category 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] - Video Collaboration sales increased 13%, mainly due to conference room cameras[134] - Webcams and Tablet Accessories sales both increased 16%, driven by PC-based webcams and strong demand from the education sector, respectively[135][136] - Sales in the 'Other' category decreased 16%, primarily due to a decline in mobile speakers[138] Gross Profit 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] Operating Expenses 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] - General and administrative expenses increased by $4.3 million, primarily due to higher performance-based stock compensation expense[145] - 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] Interest Income 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] Other Income (Expense), Net 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] - Currency exchange loss in 2025 was primarily due to fluctuations of the Swiss Franc and New Taiwan dollar against the U.S. Dollar[151] Provision for Income Taxes 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] - 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][155] - 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] Liquidity and Capital Resources 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 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] - 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] - 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][161] | 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][167] - Net cash used in financing activities was $134.4 million, primarily due to $121.7 million in share repurchases[168] - The Board recommended a cash dividend of CHF 1.26 per share for fiscal year 2025, totaling approximately CHF 187.1 million[171] - The company plans to target share repurchases of $2 billion over the three-year period ending March 31, 2028[172] Operating Leases Obligations 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] - No material changes to contractual obligations were reported compared to the Annual Report on Form 10-K for FY25[176] Purchase Commitments 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] - A liability of $23.5 million was recorded for firm, non-cancelable, and unhedged inventory purchase commitments in excess of anticipated demand[177] - Firm purchase commitments for capital expenditures, primarily tooling and equipment, totaled $19.1 million[178] Other Contractual Obligations and Commitments 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] 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] - 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] Legal Proceedings 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] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section details Logitech's market risk exposure from currency exchange rates and interest rates, and its mitigation strategies using derivatives Market Risk 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] Currency Exchange Rates 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] - 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] - 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][189] - 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] ITEM 4. CONTROLS AND PROCEDURES Management concluded Logitech's disclosure controls and procedures were effective as of June 30, 2025, also clarifying control system limitations Disclosure Controls and Procedures 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] Definition of Disclosure Controls 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] Limitations on the Effectiveness of Controls 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] Changes in Internal Control over Financial Reporting 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] PART II — OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 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] - 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] - 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] ITEM 1A. RISK FACTORS 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] - 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] - 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] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 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 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][204] | 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] ITEM 3. DEFAULTS UPON SENIOR SECURITIES This item indicates no defaults upon senior securities for the reporting period - Not applicable; no defaults upon senior securities[205] ITEM 4. MINE SAFETY DISCLOSURES This item indicates no mine safety disclosures are applicable to the company - None; no mine safety disclosures[206] ITEM 5. OTHER INFORMATION 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 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] ITEM 6. EXHIBIT INDEX 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] 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]