Logitech International S.A. Q3 FY2026 earnings call

• Superior products and innovation: At the end of September, launched the MX Master 4 mouse, which sold at record levels. In gaming, delivered winning news across price bands, including the Pro X Superlight 2 mouse and G316 gaming keyboard. AI now plays a critical role in video and audio innovation, with AI-powered and AI-enabling devices shipped globally. • Doubling down on B2B: Logitech for business demand outpaced B2C in the third quarter, driven by strength in video collaboration and the education vertical. • Execution around the world: The December quarter had positive year-over-year net sales growth across all major geographies, with strong holiday in-store execution and social-first digital brand building campaigns. • Operational excellence: Non-GAAP gross margin was 43.5%, up 30 basis points from the prior year. Successfully reduced the percentage of U.S. products manufactured in China to less than 10% by the end of December 2025. Non-GAAP operating expense was $306 million, a decline of 2% year-over-year.

Personal workspace net sales increased 7%, with 9% growth in pointing devices due to the launch of the MX Master 4 and double-digit growth in tablet accessories. Video collaboration net sales grew 8% with double-digit growth in EMEA and Asia Pacific driven by the AI-enabled Rally Board 65. Gaming net sales grew 2%, driven by double-digit growth in Asia Pacific while Americas and EMEA declined. Geographically, Asia Pacific led the way with a 15% year-over-year growth driven by double-digit growth in gaming, video collaboration, and tablet accessories. EMEA grew 2% due to double-digit growth in video conferencing as well as solid growth in keyboards and combos. The Americas reversed the negative trend of the past couple of quarters with the U.S. returning to modest growth with pointing devices up double digits, offset by gaming.

• Fourth quarter net sales are expected to grow 3% to 5% year-over-year in constant currency. • Gross margin rate is expected to be approximately 43% to 44%. • Non-GAAP operating income is expected to be between $155 million and $165 million, up 20% year-over-year at the midpoint. • Expect to close fiscal year '26 above the long-term model targets for non-GAAP gross margin and non-GAAP operating margin outlined at the Analyst and Investor Day last year.

• Geopolitical uncertainties that could impact business operations. • Tariff environment challenges that may affect costs. • Consumer confidence fluctuations that could influence demand.

Q: Asiya from Citi asked about confidence in long-term growth and gross margin outlook.

A: Hanneke Faber discussed the large installed base of PCs as an opportunity for peripheral growth, and Matteo Anversa spoke about the gross margin foundation from the company's brand, innovation, and ongoing product cost reduction efforts.

Q: Joern from UBS asked about PC attach rates and the gaming market.

A: Johanna Faber talked about the gaming market's resilience and Matteo Anversa provided context on PC peripheral outperformance versus PC sales trends.

Q: Erik from Morgan Stanley asked about convincing users to purchase PC peripherals and the PC attach rate.

A: Johanna Faber emphasized product superiority and effective marketing to drive user adoption, citing the success of the MX Master 4 as an example.

Q: Ananda from Loop Capital asked about PC growth and potential pull-forward sales.

A: Johanna Faber and Matteo Anversa addressed no significant pull-forward sales and highlighted strong personal workspace growth in the quarter.

Q: Joe from JPMorgan asked about pull-forward sales and manufacturing diversification.

A: Johanna Faber stated there was no evidence of pull-forward sales, and Matteo Anversa discussed the progress of manufacturing diversification and its impact on margins.

Q: Didier from Bank of America asked about components of personal workspace organic growth.

A: Johanna Faber and Matteo Anversa discussed the mix of volume, price, and premiumization contributing to personal workspace growth.

Q: Unknown Analyst asked about Q3 guidance and sell-through.

A: Matteo Anversa provided details on the fourth quarter outlook and confirmed healthy channel inventory levels and sell-through performance