Logitech International S.A. Q1 FY2026 earnings call

• Played offense: Invested 6% of sales in R&D, focusing on superior products and innovation. Net sales grew 5% with growth in all key categories and mid-single digit demand growth. • Exercised disciplined cost controls: Reduced operating expenses by 2% YOY, including 8% reduction in G&A. OpEx as percent of sales down 200 basis points. Gross margin 42.1% despite tariffs due to product cost reductions, manufacturing diversification, and pricing. • Agility: On track to reduce share of U.S. products from China from 40% in April to 10% by end of calendar year. • New product launches: Launched G522 Wireless Gaming Headset, Flip Folio for iPad, Slim Wired Combo for business, and Logitech Muse for Apple Vision Pro. • B2B strength: Logitech for business demand outpaced consumer, led by double-digit net sales growth in video conferencing. • APAC results: China team achieved share growth in Chinese gaming market in May.

In the first quarter of fiscal year 2026, Logitech saw net sales grow 5% in constant currency. Video Collaboration delivered 13% year-over-year growth, driven by strong North American demand. Personal Workspace grew 6% year-over-year, with double-digit growth in webcams and tablet accessories (fifth consecutive quarter of growth in tablet accessories). Asia Pacific grew 15% year-over-year, led by sustained double-digit growth in China. EMEA grew 9% driven by strong demand across all product categories. North America declined 4%, primarily due to a pause in some product shipments during price negotiations which are now largely complete. Video Collaboration represented a portion of the overall sales, with 13% growth; Personal Workspace with 6% growth, etc., with each segment contributing to the overall revenue mix.

• Q2 net sales growth expected to be 1%-5% in constant currency. • Gross margin rate expected to be between 41% and 42%. • Non-GAAP operating income expected to be between $180 million and $200 million. • Tariff impact in Q2 expected to be between 200 and 300 basis points, partially offset by 200 basis points of positive price from first quarter price increases.

• Uncertainty in tariff policy, inflation, and customer sentiment. • Product classification and exemption uncertainties affecting tariff rates. • Inventory and pricing elasticity impacts on sales and share.

Q: Thoughts on consumer reaction to price actions and volumes in response?

A: Positive impact of price in Q1 was 50 basis points, but full implementation of price increase in U.S. trade ended late in Q1, so impact on consumer is hard to tell yet. Negotiations caused temporary in-stock issues but now resolved.

Q: B2B strength and economic impact, and gaming sustainability?

A: Logitech for business demand outpaced consumer, with video conferencing being accretive to margin. Gaming had strong quarter with new products, and China gaming market saw share growth in May, with premium segments showing good growth.

Q: Demand pattern in Q1 and market share vs peers?

A: Demand in Q1 was high single-digit, broad-based across B2B, consumer, products, and regions. Saw share gains in key categories in U.S. over past 3 months, but impact of price on share too early to tell fully.

Q: Inventory strategy and tablet accessories guidance?

A: Pulled in inventory in Q1 using strong balance sheet, expecting to continue leveraging balance sheet. Tablet accessories expected to do well in Q2 due to back-to-school season and strategic importance.

Q: Guidance on gross margins and tariff impacts?

A: Q1 gross margin decline due to tariffs, inventory reserves, but offset by price increases. Q2 gross margin expected 41%-42% with tariff impact 200-300bps offset by 200bps price, with macroeconomic volatility making longer-term predictions premature.

Q: Revenue guidance and Americas pause impact?

A: Q2 guidance 1%-5% CC based on market resilience and consumer impact of price increase. Americas pause impact on Q2 expected to depend on inventory replenishment and consumer sentiment.

Q: Harmonizing portfolios and share impact of pricing?

A: Harmonized portfolios are in good place, with China for China innovation potentially becoming global. Share impact of pricing includes temporary inventory issues resolved but longer-term consumer impact on share yet to be seen.

Q: ASP negotiations impact on North America and gaming growth?

A: ASP negotiations caused some SKUs to be out of stock in North America, but gaming saw 6% sell-through growth. Expect recovery in gaming quarters ahead.

Q: Timing to reach top line growth target and pricing contribution?

A: Close to 7%-10% top line growth target, with Education showing good growth, but other verticals like healthcare and government taking longer. Pricing increases in U.S. expected to contribute to top line growth but need time to play out.