LOGITECH INTERNATIONAL SA

Previous wording

Our business has continued to be impacted by macroeconomic and geopolitical conditions. These conditions include inflation, interest rate and foreign currency fluctuations, changes in fiscal policies, low economic growth in certain regions, and uncertainty in consumer and enterprise demand.

Current wording

Our business has continued to be impacted by macroeconomic and geopolitical conditions. These conditions include inflation, interest rate and foreign currency fluctuations, changes in fiscal policies, geopolitical conflicts, low economic growth in certain regions, and uncertainty in consumer and enterprise demand.

Previous wording

Our total sales for the three months ended June 30, 2024 increased 12%, compared to the three months ended June 30, 2023, primarily due to an increase in sales for Gaming, Keyboards & Combos and Pointing Devices, driven by improved demand.

Current wording

Our total sales for the three and six months ended September 30, 2024 increased 6% and 9%, compared to the three and six months ended September 30, 2023, respectively, primarily due to an increase in sales for Gaming, Keyboards & Combos and Tablet Accessories, driven by improved demand.

Previous wording

Gross margin was 42.8% for the three months ended June 30, 2024 and increased by 430 basis points, compared to the three months ended June 30, 2023, primarily driven by lower product costs, as well as lower promotional spend.

Current wording

Gross margin was 43.6% for the three months ended September 30, 2024 and increased by 210 basis points, compared to the three months ended September 30, 2023, reflecting lower product costs and lower inventory reserves driven by improved demand, partially offset by higher promotional spending. Gross margin was 43.2% for the six months ended September 30, 2024 and increased by 310 basis points, compared to the six months ended September 30, 2023, primarily driven by lower product costs.

Previous wording

Operating expenses for the three months ended June 30, 2024 were $312.8 million, or 28.7% of sales, compared to $297.2 million, or 30.5% of sales, for the three months ended June 30, 2023. The increase in operating expense was primarily driven by an increase in marketing and advertising spend.

Current wording

Operating expenses for the three months ended September 30, 2024 were $325.2 million, or 29.1% of sales, compared to $282.0 million, or 26.7% of sales, for the three months ended September 30, 2023. Operating expenses for the six months ended September 30, 2024 were $638.0 million, or 28.9% of sales, compared to $579.2 million, or 28.5% of sales, for the six months ended September 30, 2023. The increase in operating expense was primarily driven by an increase in marketing and advertising spend.

Previous wording

We had an income tax provision of$25.6 million and$12.5 million for thethree months ended June 30, 2024 and June 30, 2023, respectively. The change in the income tax provisionfor the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily due to the mix of income and losses in the various tax jurisdictions in which we operate, the favorable tax impacts from share-based compensation and Foreign-Derived Intangible Income.

Current wording

We had an income tax provision of$30.6 million and$30.3 million for thethree months ended September 30, 2024 and September 30, 2023, respectively. We had an income tax provision of$56.1 million and $42.9 million for the six months ended September 30, 2024 and September 30, 2023, respectively. The change in the income tax provisionfor the three and six months ended September 30, 2024, compared to the three and six months ended September 30, 2023, respectively, was primarily due to the mix of income and losses in the various tax jurisdictions in which we operate, the favorable tax impacts from share-based compensation and unrecognized tax benefits due to uncertain tax positions.

Previous wording

Net income for the three months ended June 30, 2024 was $141.8 million compared to$62.7 million for the three months ended June 30, 2023.

Current wording

Net income for the three and six months ended September 30, 2024 was $145.5 million and$287.3 million, respectively, compared to$137.1 million and $199.8 million, for the three and six months ended September 30, 2023, respectively.

Previous wording

There have been no material changes in our critical accounting estimates during the three months ended June 30, 2024 compared with the critical accounting estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024.

Current wording

There have been no material changes in our critical accounting estimates during the six months ended September 30, 2024 compared with the critical accounting estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024.

Previous wording

Our sales for the three months ended June 30, 2024 increased 12%, compared to the three months ended June 30, 2023, primarily due to an increase in sales for Gaming, Keyboards & Combos and Pointing Devices, driven by improved demand. If currency exchange rates had been constant in the three months ended June 30, 2024 and 2023, our sales growth rate in constant currency would have been 13%.

Current wording

Our sales for the three and six months ended September 30, 2024 increased 6% and 9%, respectively, compared to the three and six months ended September 30, 2023, primarily due to an increase in sales for Gaming, Keyboards & Combos and Tablet Accessories, driven by improved demand. If currency exchange rates had been constant in the three and six months ended September 30, 2024 and 2023, our sales growth rates in constant currency would have been the same as the above sales growth rates.

Previous wording

The following table presents the change in sales by region for the three months ended June 30, 2024, compared with the three months ended June 30, 2023:

Current wording

The following table presents the change in sales by region for the three and six months ended September 30, 2024, compared with the three and six months ended September 30, 2023:

Previous wording

Theincrease in sales in the Americas region for the three-month period presented above was primarily driven by an increase in sales for Keyboards & Combos, Gaming, and Pointing Devices.

Current wording

Theincrease in sales in the Americas region for the three-month period presented above was primarily driven by an increase in sales for Keyboards & Combos and Tablet Accessories. Theincrease in sales in the Americas region for the six-month period presented above was primarily driven by an increase in sales for Keyboards & Combos, Tablet Accessories and Gaming.

Previous wording

Sales by product category for the three months ended June 30, 2024 and 2023 were as follows (dollars in thousands):

Current wording

Sales by product category for the three and six months ended September 30, 2024 and 2023 were as follows (dollars in thousands):

Previous wording

Sales of Gaming increased 16%for thethree months ended June 30, 2024, compared to thethree months ended June 30, 2023, primarily driven by an increase in sales of gaming mice and gaming steering wheels.

Current wording

Sales of Gaming increased 7%for thethree months ended September 30, 2024, compared to thethree months ended September 30, 2023, primarily driven by an increase in sales of gaming steering wheels. Sales of Gaming increased 11%for thesix months ended September 30, 2024, compared to thesix months ended September 30, 2023, primarily driven by an increase in sales of gaming steering wheels and gaming mice.

Previous wording

Sales of Keyboards & Combos increased 19% for thethree months ended June 30, 2024, compared to thethree months ended June 30, 2023, primarily driven by an increase in sales of cordless combo products.

Current wording

Sales of Keyboards & Combos increased 8% and 13% for thethree and six months ended September 30, 2024, compared to thethree and six months ended September 30, 2023, respectively, primarily driven by an increase in sales of cordless combo products.

Previous wording

Sales of Pointing Devices increased 9% for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily driven by an increase in sales of cordless mice.

Current wording

Sales of Pointing Devices increased 2% and 5% for the three and six months ended September 30, 2024, compared to the three and six months ended September 30, 2023, respectively, primarily driven by an increase in sales of cordless mice, partially offset by a decrease in sales of presentation tools.

Previous wording

Sales of Video Collaboration increased 6% for the three months ended June 30, 2024, compared to thethree months ended June 30, 2023, primarily due to an increase in sales of conference room cameras and docks.

Current wording

Sales of Video Collaboration increased 5% for each of the three and six months ended September 30, 2024, compared to thethree and six months ended September 30, 2023, primarily due to an increase in sales of conference room cameras as well as an increase in service revenue.

Previous wording

Sales of Webcams decreased 3% for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily driven by a decrease in sales of our VC webcams, partially offset by an increase of sales of our PC-based webcams.

Current wording

Sales of Webcams decreased 9% and 6% for the three and six months ended September 30, 2024, compared to the three and six months ended September 30, 2023, respectively, primarily driven by a decrease in sales of our VC webcams, partially offset by an increase of sales of our PC-based webcams.

Previous wording

Sales of Tablet Accessories increased 12% for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily driven by an increase in sales of Rugged Combo 4 Touch and Rugged Combo 4, partially offset by a decrease in sales of Rugged Combo 3 Touch. Sales of Tablet Accessoriesfor the three months ended June 30, 2024, compared to the three months ended June 30, 2023, benefited from strong demand from the education sector.

Current wording

Sales of Tablet Accessories increased 34% and 22% for the three and six months ended September 30, 2024, respectively, compared to the three and six months ended September 30, 2023, primarily driven by an increase in sales of Rugged Combo 4 Touch as well as sales from our Combo Touch products for the new releases of iPad Air and iPad Pro that were launched in fiscal year 2025. Sales of Tablet Accessoriesfor the three and six months ended September 30, 2024, compared to the three and six months ended September 30, 2023, benefited from strong demand from the education sector.

Previous wording

Sales of Headsets increased 20% for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily driven by an increase in sales of corded and cordless PC headsets and VC headsets.

Current wording

Sales of Headsets increased 6% for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily driven by an increase in sales of cordless PC headsets. Sales of Headsets increased 12% for the six months ended September 30, 2024, compared to the six months ended September 30, 2023, primarily driven by an increase in sales of cordless PC headsets and VC headsets.

Previous wording

Gross profit for the three months ended June 30, 2024 and 2023 was as follows (dollars in thousands):

Current wording

Gross profit for the three and six months ended September 30, 2024 and 2023 was as follows (dollars in thousands):

Previous wording

The increasein total operating expenses for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, was primarily driven by an increase in marketing and selling expenses.

Current wording

The increasein total operating expenses during thethree and six months ended September 30, 2024, compared to thethree and six months ended September 30, 2023, was primarily driven by an increase in marketing and selling expenses.

Previous wording

During the three months ended June 30, 2024, marketing and selling expenses increased $17.7 million, compared to the three months ended June 30, 2023, primarily driven by an increase in third-party marketing and advertising spend as well as higher performance-based compensation expense.

Current wording

During thethree and six months ended September 30, 2024, marketing and selling expenses increased $25.5 million and $43.2 million, respectively, compared to the three and six months ended September 30, 2023, primarily driven by increased investment in marketing and advertising as well as higher performance-based compensation expense.

Previous wording

During the three months ended June 30, 2024, research and development expenses increased $4.7 million, compared to the three months ended June 30, 2023, primarily driven by higher performance-based compensation expense.

Current wording

During the three and six months ended September 30, 2024, research and development expenses increased $7.6 million and $12.4 million, respectively, compared to the three and six months ended September 30, 2023, primarily driven by higher performance-based compensation expense and increased investment in product innovation.

Previous wording

During the three months ended June 30, 2024, general and administrative expenses decreased $3.8 million, compared to the three months ended June 30, 2023, primarily driven by an accrued litigation cost recorded in the three months ended June 30, 2023.

Current wording

During the three and six months ended September 30, 2024, general and administrative expenses increased $8.6 million and $4.8 million, respectively, compared to the three and six months ended September 30, 2023, primarily driven by higher performance-based compensation expense.

Previous wording

During the three months ended June 30, 2024, amortization of intangible assets and acquisition-related costs remained flat, compared to the three months ended June 30, 2023.

Current wording

During the three and six months ended September 30, 2024, amortization of intangible assets and acquisition-related costs remained flat, compared to the three and six months ended September 30, 2023.

Previous wording

The restructuring charges, net for the three months ended June 30, 2024 and 2023, were related to costs incurred as a result of our restructuring plan initiated during fiscal year 2023. These restructuring activities were substantially completed during fiscal year 2024.

Current wording

The restructuring charges (credits), net for the three and six months ended September 30, 2024 and 2023, were related to costs incurred as a result of our restructuring plan initiated during fiscal year 2023. These restructuring activities were substantially completed during fiscal year 2024.

Previous wording

Interest income for the three months ended June 30, 2024 and 2023 was as follows (in thousands):

Current wording

Interest income for the three and six months ended September 30, 2024 and 2023 was as follows (in thousands):

Previous wording

We invest in highly liquid instruments with an original maturity of three months or less at the date of purchase, which are classified as cash equivalents. During the three months ended June 30, 2024, interest income increased $6.0 million, compared to the three months ended June 30, 2023, primarily driven by an increase in the balance of our investments that are classified as cash equivalents as well as an increase in interest rates.

Current wording

We invest in highly liquid instruments with an original maturity of three months or less at the date of purchase, which are classified as cash equivalents. During the three and six months ended September 30, 2024, interest income increased $2.8 million and $8.7 million, respectively, compared to the three and six months ended September 30, 2023, primarily driven by an increase in the balance of our investments that are classified as cash equivalents as well as an increase in interest rates.

Previous wording

Other income (expense), net for the three months ended June 30, 2024 and 2023 was as follows (in thousands):

Current wording

Other income (expense), net for the three and six months ended September 30, 2024 and 2023 was as follows (in thousands):

Previous wording

Investment gain (loss) related to the deferred compensation plan represents earnings, gains, and losses on marketable securities related to a deferred compensation plan offered by one of our subsidiaries. The decrease in investment gain for three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily relates to the change in market performance of the underlying securities.

Current wording

Investment gain (loss) related to the deferred compensation plan represents earnings, gains, and losses on marketable securities related to a deferred compensation plan offered by one of our subsidiaries. The increase in investment gain for three and six months ended September 30, 2024, compared to the three and six months ended September 30, 2023, primarily relates to the change in market performance of the underlying securities.

Previous wording

Currency exchange loss, net, relates to balances denominated in currencies other than the functional currency in our subsidiaries, as well as to the sale of currencies, and gains or losses recognized on currency exchange forward contracts. We do not speculate in currency positions, but we are alert to opportunities to maximize currency exchange gains and minimize currency exchange losses. The loss for the three months ended June 30, 2024 was primarily due to fluctuations in currency exchange rates of the Mexican Peso and Japanese Yen against the U.S. Dollar. The loss for the three months ended June 30, 2023 was primarily due to the weakening of the Japanese Yen against the U.S. Dollar.

Current wording

Currency exchange loss, net, relates to balances denominated in currencies other than the functional currency in our subsidiaries, as well as to the sale of currencies, and gains or losses recognized on currency exchange forward contracts. We do not speculate in currency positions, but we are alert to opportunities to maximize currency exchange gains and minimize currency exchange losses. The loss for the three months ended September 30, 2024 was primarily due to fluctuations in currency exchange rates of the Chinese Renminbi against the U.S. Dollar. The loss for the three months ended September 30, 2023 was primarily due to fluctuations in the currency exchange rates of the Swiss Franc against the U.S. Dollar. The loss for the six months ended September 30, 2024 was primarily due to fluctuations in currency exchange rates of the Chinese Renminbi and the Mexican Peso against the

Previous wording

Loss on investments, net, includes unrealized gain (loss) from the change in fair value of investments, gain (loss) on equity-method investments and impairment of investments during the periods presented, as applicable. The loss on investments, net, for the three months ended June 30, 2024 was not material. The loss on investments, net, for the three months ended June 30, 2023 was primarily due to an impairment loss, as a result of the write-off of a note receivable which has been deemed no longer recoverable. This note receivable was previously obtained in conjunction with an exchange transaction related to our investment in a privately held company. See Note 6 to our condensed consolidated financial statements for more information.

Current wording

Gain (loss) on investments, net, includes unrealized gain (loss) from the change in fair value of investments, gain (loss) on equity-method investments and impairment of investments during the periods presented, as applicable. The loss on investments, net, for the three and six months ended September 30, 2024 and the gain on investments, net, for the three months ended September 30, 2023 were not material. The loss on investments, net, for the six months ended September 30, 2023 was primarily due to an impairment loss, as a result of the write-off of a note receivable which has been deemed no longer recoverable. This note receivable was previously obtained in conjunction with an exchange transaction related to our investment in a privately held company. See Note 6 to our condensed consolidated financial statements for more information.

Previous wording

The provision for income taxes and effective income tax rates for the three months ended June 30, 2024 and 2023 were as follows (dollars in thousands):

Current wording

The provision for income taxes and effective income tax rates for the three and six months ended September 30, 2024 and 2023 were as follows (dollars in thousands):

Previous wording

The change in the effective income tax rate for thethree months ended June 30, 2024 compared with the three months ended June 30, 2023 was primarily due to the change in the mix of income and losses in the various tax jurisdictions in which we operate, the favorable tax impacts from share-based compensation and Foreign-Derived Intangible Income.

Current wording

The change in the effective income tax rate for thethree and six months ended September 30, 2024, compared with thethree and six months ended September 30, 2023, was primarily due to the change in the mix of income and losses in the various tax jurisdictions in which we operate, the favorable tax impacts from share-based compensation and unrecognized tax benefits due to uncertain tax positions.

Previous wording

As of June 30, 2024, we had cash and cash equivalents of $1,534.4 million, compared with $1,520.8 million as of March 31, 2024. Our cash and cash equivalents consist of bank demand deposits, short-term time deposits, and U.S. Treasury securities, of which 71% is held in Switzerland and 15% is held in Germany. We do not expect to incur any material adverse tax impact except for what has already been recognized, or to be significantly inhibited by any country in which we do business, from the repatriation of funds to Switzerland, our country of domicile.

Current wording

As of September 30, 2024, we had cash and cash equivalents of $1,363.3 million, compared with $1,520.8 million as of March 31, 2024. Our cash and cash equivalents consist of bank demand deposits, short-term time deposits, and U.S. Treasury securities, of which 71% is held in Switzerland and 11% is held in Germany. We do not expect to incur any material adverse tax impact except for what has already been recognized, or to be significantly inhibited by any country in which we do business, from the repatriation of funds to Switzerland, our country of domicile.

Previous wording

As of June 30, 2024, our working capital was $1,586.1 million, compared to $1,545.5 million as of March 31, 2024. The increase was primarily driven by a decrease in accrued and other liabilities and increases in accounts receivable, net, and inventories, partially offset by an increase in accounts payable.

Current wording

As of September 30, 2024, our working capital was $1,457.2 million, compared to $1,545.5 million as of March 31, 2024. The decrease was primarily driven by a decrease in cash and cash equivalents and an increase in accounts payable, partially offset by an increase in inventories and accounts receivable.

Previous wording

We had several uncommitted, unsecured bank lines of credit and letters of credit aggregating $171.8 million as of June 30, 2024. There are no financial covenants under these lines of credit with which we must comply. There was no borrowing outstanding under the lines of credit as of June 30, 2024. As of June 30, 2024, we had outstanding bank guarantees of $13.5 million.

Current wording

We had several uncommitted, unsecured bank lines of credit and letters of credit aggregating $178.7 million as of September 30, 2024. There are no financial covenants under these lines of credit with which we must comply. There was no borrowing outstanding under the lines of credit as of September 30, 2024. As of September 30, 2024, we had outstanding bank guarantees of $29.5 million.

Previous wording

DSO for the three months ended June 30, 2024 decreased by 3 days to 49 days, compared to 52 days for the three months ended June 30, 2023, primarily due to higher sales driven by improved demand.

Current wording

DSO for the three months ended September 30, 2024 decreased by 5 days to 51 days, compared to 56 days for the three months ended September 30, 2023, primarily due to higher sales from improved demand as well as timing of sales within the quarter.

Previous wording

DPO for the three months ended June 30, 2024 increased by 22 days to 80 days, compared to 58 days for the three months ended June 30, 2023, primarily due to higher inventory purchases to replenish certain products during the first quarter of fiscal year 2025.

Current wording

DPO for the three months ended September 30, 2024 increased by 7 days to 79 days, compared to 72 days for the three months ended September 30, 2023, primarily due to higher inventory purchases during the second quarter of fiscal year 2025 to align with demand.

Previous wording

ITO for the three months ended June 30, 2024 increased by 1.2 to 5.4, compared to 4.2 for the three months ended June 30, 2023, primarily due to lower inventory balance as of June 30, 2024, compared to June 30, 2023, driven by our efforts to manage inventory level.

Current wording

ITO for the three months ended September 30, 2024 increased by 0.2 to 4.8, compared to 4.6 for the three months ended September 30, 2023, primarily due to lower inventory balances driven by our efforts to manage inventory levels as well as due to improved demand.

Previous wording

For the three months ended June 30, 2024, net cash provided by operating activities was $176.0 million resulting from net income of $141.8 million, a favorable impact from adding back non-cash expenses totaling $55.8 million, partially offset by an unfavorable net change in operating assets and liabilities of $21.6 million. Non-cash adjustments were primarily related to share-based compensation expenses, and depreciation and amortization. The increase in accounts receivable, net, was primarily driven by higher sales. The increases in inventories and accounts payable were due tohigher inventory purchases to replenish certain products. The decrease in accrued and other liabilities was primarily driven by payment of the fiscal year 2024 annual bonus.

Current wording

For the six months ended September 30, 2024, net cash provided by operating activities was $342.0 million resulting from net income of $287.3 million, a favorable impact from adding back non-cash expenses totaling $107.3 million, partially offset by an unfavorable net change in operating assets and liabilities of $52.6 million. Non-cash adjustments were primarily related to share-based compensation expenses, depreciation and amortization and deferred income taxes. The increase in accounts receivable, net, was primarily driven by higher sales. The increases in inventories and accounts payable were due tohigher inventory purchases to replenish certain products.