What Logitech International (LOGI) Said on Its Q2 Earnings Call

Key Points

• Q2 sales reached $1.2 billion, rising 3% year over year in U.S. dollars and marking Logitech’s 11th consecutive quarter of revenue growth. Results exceeded the company’s outlook despite supply constraints, higher logistics costs and geopolitical pressures.
• Video collaboration and gaming led growth, increasing 12% and 7% in constant currency, respectively. Pointing devices and keyboard products also grew 4% each, supported by product innovation and market-share gains, while tablet accessories and webcams declined.
• Supply disruptions will weigh on Q3. Logitech expects constant-currency sales to range from a 5% decline to flat growth, with the semiconductor supplier incident reducing sales by an estimated $70 million to $80 million, though the disruption is expected to be largely resolved by Q4.

Logitech International NASDAQ: LOGI reported second-quarter net sales of $1.2 billion, up 3% in U.S. dollars and 2% in constant currency from a year earlier, marking its 11th consecutive quarter of year-over-year revenue growth. The company said results exceeded its outlook despite supply constraints, elevated component and logistics costs, and geopolitical pressures in the Middle East.

Chief Executive Officer Hanneke Faber said a semiconductor supplier’s facility closure following an accident affected the company for essentially the entire quarter. Logitech estimated that, excluding the supplier incident and the Middle East conflict, underlying constant-currency sales growth would have been approximately 4%.

Non-GAAP operating income totaled $231 million, while non-GAAP operating margin was 18.9%. Non-GAAP gross margin rose 140 basis points from the prior year to 45.2%, which Chief Financial Officer Matteo Anversa said was supported by lower tariff costs, a more favorable product mix, premium product demand and currency effects. Higher freight and logistics expenses partially offset those benefits.

Video Collaboration and Gaming Lead Growth

Video collaboration revenue increased 12% in constant currency, driven by enterprise spending on refreshes of COVID-era equipment, expanding office footprints and AI-related meeting room investments. Faber said the company sees those trends as durable because customers must replace end-of-life systems and equip additional rooms as more employees return to offices.

Logitech also said it introduced a second-generation video collaboration product lineup at the start of the third quarter, including offerings for larger rooms and audio products for those settings. Anversa said the company has increased inventory intentionally to secure memory supply and meet demand in the category.

Gaming sales rose 7%, aided by product launches and continued demand for the company’s premium gaming products. Logitech unveiled 15 gaming products at its Logi PLAY events in Shanghai, Los Angeles and Warsaw, including the PRO X3 SUPERSTRIKE mouse, sim-racing equipment and the Yeti 2 microphone for streamers.

Faber said the company expects the release of major games to support broader gaming interest, though Logitech does not expect any single title to materially alter its seasonal business pattern because its gaming portfolio serves players across multiple games and platforms.

Pointing devices and keyboards and combos each grew 4%, even as global PC shipments fell roughly 20% during the September quarter. Faber attributed the performance to product innovation, market-share gains and the company’s installed-base strategy. Logitech said global market share in pointing devices increased 320 basis points during the quarter, while keyboard share grew about 280 basis points.

Tablet accessories sales declined 30%, primarily reflecting a difficult comparison with a large, multiquarter education deal in Asia-Pacific in the prior year. Webcam sales declined 10% alongside the broader market, although Logitech said it continued to gain share.

Regional Results and Spending

The Americas posted 13% constant-currency sales growth, supported by consumer and business demand ahead of the holiday period. Asia-Pacific sales declined 2%, reflecting the prior-year education deal comparison and a disproportionate impact from supply constraints. EMEA sales fell 6%, as the company cited weaker markets and the ongoing Middle East conflict.

Faber said the Middle East environment has been particularly difficult, with cautious local businesses, reduced tourism and canceled events. Logitech has suspended travel into, out of and within the region, she said.

Non-GAAP operating expenses were $320 million, flat sequentially but up as a percentage of sales from the prior year. Sales and marketing expense rose 12%, while research and development expense increased 9% as Logitech continued investments in innovation and growth initiatives. General and administrative spending was flat sequentially and represented 2.8% of sales.

The company generated $164 million in operating cash flow and ended the quarter with $1.5 billion in cash after returning $406 million to shareholders, including $235 million in annual dividends and $171 million in share repurchases.

Third-Quarter Outlook Includes Supply Headwinds

For the third quarter, Logitech expects constant-currency sales to decline between 5% and remain flat year over year. The company expects the supplier incident to reduce third-quarter sales by $70 million to $80 million, though it said the disruption should be largely resolved by the fourth quarter.

Anversa said the revised estimate is substantially below the up-to-$200 million impact discussed in July because Logitech expanded secondary supply, redesigned products to work with available chips and adjusted commercial plans. The supplier’s facility reopened in mid-September but is not expected to return to full capacity until later in the third quarter.

Logitech forecast third-quarter non-GAAP operating income of $220 million to $255 million and a non-GAAP gross margin of 41% to 42%. The anticipated year-over-year gross-margin decline of about 200 basis points reflects higher freight, logistics and material costs, along with approximately 50 basis points of higher promotional spending.

Despite the expected cost pressures, Logitech said it now expects fiscal 2027 non-GAAP operating margin to be at the high end of its long-term 15% to 18% range, excluding $61 million in tariff refunds recorded in the prior quarter.

About Logitech International (NASDAQ:LOGI)

Logitech International designs and manufactures hardware and software that connect people to digital devices and support communication, collaboration, content creation and gaming. Its products are sold under the Logitech brand and are used by consumers, businesses, educators, gamers and other professional users worldwide.

The company's portfolio includes computer mice and keyboards, webcams, headsets, microphones, speakers, video-conferencing systems, presentation tools and gaming peripherals.

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