Logitech Delivers Record Q2 Sales

Company Confirms FY 2022 Outlook

SIX Swiss Exchange Ad hoc announcement pursuant to Art. 53 LR —

Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the second quarter of Fiscal Year 2022.

  • Q2 sales were $1.31 billion, up 4 percent in US dollars and 2 percent in constant currency, compared to Q2 of the prior year.
  • Q2 GAAP operating income declined 44 percent to $179 million, compared to $322 million in the same quarter a year ago. Q2 GAAP earnings per share (EPS) declined 48 percent to $0.81, compared to $1.56 in the same quarter a year ago.
  • Q2 non-GAAP operating income declined 40 percent to $211 million, compared to $354 million in the same quarter a year ago. Q2 non-GAAP EPS declined 44 percent to $1.05, compared to $1.87 in the same quarter a year ago.

“In Q2 we delivered record sales which beat last year’s exceptional sales levels, growing 4% in the quarter and 82% compared to two years ago. We also grew market share in the majority of our key product categories,” said Bracken Darrell, Logitech president and chief executive officer. “We are confirming our full year outlook, despite unprecedented supply chain industry challenges. I am excited about the long-term growth potential of Logitech.”

Outlook

Logitech confirmed its Fiscal Year 2022 outlook of flat sales growth in constant currency, plus or minus five percent, and $800 million to $850 million in non-GAAP operating income.

Prepared Remarks Available Online

Logitech has made its prepared written remarks for the financial results videoconference available online on the Logitech corporate website at http://ir.logitech.com.

Financial Results Videoconference and Webcast

Logitech will hold a financial results videoconference to discuss the results for Q2 Fiscal Year 2022 on Tuesday, October 26, 2021 at 8:30 a.m. Eastern Daylight Time and 2:30 p.m. Central European Summer Time. A livestream of the event will be available on the Logitech corporate website at http://ir.logitech.com.

Use of Non-GAAP Financial Information and Constant Currency

To facilitate comparisons to Logitech’s historical results, Logitech has included non-GAAP adjusted measures, which exclude share-based compensation expense, amortization of intangible assets, acquisition-related costs, change in fair value of contingent consideration for business acquisition, restructuring charges (credits), loss (gain) on investments, non-GAAP income tax adjustment, and other items detailed under “Supplemental Financial Information” after the tables below. Logitech also presents percentage sales growth in constant currency, a non-GAAP measure, to show performance unaffected by fluctuations in currency exchange rates. Percentage sales growth in constant currency is calculated by translating prior period sales in each local currency at the current period’s average exchange rate for that currency and comparing that to current period sales. Logitech believes this information, used together with the GAAP financial information, will help investors to evaluate its current period performance and trends in its business. With respect to the Company’s outlook for non-GAAP operating income, most of these excluded amounts pertain to events that have not yet occurred and are not currently possible to estimate with a reasonable degree of accuracy. Therefore, no reconciliation to the GAAP amounts has been provided for the Fiscal Year 2022 outlook.

Public Dissemination of Certain Information

Logitech webcasts its earnings calls, and certain events Logitech participates in or hosts, with members of the investment community on its investor relations website at https://ir.logitech.com. Additionally, Logitech provides notifications of news or announcements regarding its operations and financial performance, including its filings with the Securities and Exchange Commission (SEC), investor events, and press and earnings releases as part of its investor relations website. Logitech intends to use its investor relations website as means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD. Logitech’s corporate governance information also is available on its investor relations website.

About Logitech

Logitech helps all people pursue their passions by designing experiences so everyone can create, achieve, and enjoy more. Logitech designs and creates products that bring people together through computing, gaming, video, streaming and creating, and music. Brands of Logitech include Logitech, Logitech G, ASTRO Gaming, Streamlabs, Blue Microphones, Ultimate Ears and Jaybird. Founded in 1981, and headquartered in Lausanne, Switzerland, Logitech International is a Swiss public company listed on the SIX Swiss Exchange (LOGN) and on the Nasdaq Global Select Market (LOGI). Find Logitech at www.logitech.com, the company blog or @Logitech.

This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding: our preliminary financial results for the three and six months ended September 30, 2021, long-term growth trends, and outlook for Fiscal Year 2022 operating income and sales growth. The forward-looking statements in this press release involve risks and uncertainties that could cause Logitech’s actual results and events to differ materially from those anticipated in these forward-looking statements, including, without limitation: if our product offerings, marketing activities and investment prioritization decisions do not result in the sales, profitability or profitability growth we expect, or when we expect it; if we fail to innovate and develop new products in a timely and cost-effective manner for our new and existing product categories; if we do not successfully execute on our growth opportunities or our growth opportunities are more limited than we expect; the effect of demand variability, supply shortages and other supply chain challenges; the effect of pricing, product, marketing and other initiatives by our competitors, and our reaction to them, on our sales, gross margins and profitability; if we are not able to maintain and enhance our brands; if our products and marketing strategies fail to separate our products from competitors’ products; the COVID-19 pandemic and its potential impact; if we do not efficiently manage our spending; if there is a deterioration of business and economic conditions in one or more of our sales regions or product categories, or significant fluctuations in exchange rates; changes in trade regulations, policies and agreements and the imposition of tariffs that affect our products or operations and our ability to mitigate; risks associated with acquisitions; and the effect of changes to our effective income tax rates. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in Logitech’s periodic filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2021, our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2021, and our subsequent reports filed with the SEC, available at www.sec.gov, under the caption Risk Factors and elsewhere. Logitech does not undertake any obligation to update any forward-looking statements to reflect new information or events or circumstances occurring after the date of this press release.

Note that unless noted otherwise, comparisons are year over year.

Logitech and other Logitech marks are trademarks or registered trademarks of Logitech Europe S.A. and/or its affiliates in the U.S. and other countries. All other trademarks are the property of their respective owners. For more information about Logitech and its products, visit the company’s website at www.logitech.com.

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

 

 

PRELIMINARY RESULTS*

 

 

 

 

(In thousands, except per share amounts) - unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Six Months Ended

September 30,

GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,306,267

 

 

$

1,257,158

 

 

$

2,618,325

 

 

$

2,049,052

 

Cost of goods sold

 

760,268

 

 

684,599

 

 

1,499,334

 

 

1,167,237

 

Amortization of intangible assets

 

3,836

 

 

2,836

 

 

7,902

 

 

6,359

 

Gross profit

 

542,163

 

 

569,723

 

 

1,111,089

 

 

875,456

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Marketing and selling

 

256,627

 

 

158,797

 

 

508,941

 

 

292,035

 

Research and development

 

68,661

 

 

53,379

 

 

137,907

 

 

103,104

 

General and administrative

 

33,271

 

 

31,664

 

 

73,813

 

 

60,735

 

Amortization of intangible assets and acquisition-related costs

 

5,107

 

 

4,331

 

 

10,324

 

 

8,940

 

Change in fair value of contingent consideration for business acquisition

 

(925

)

 

 

 

(2,399

)

 

5,716

 

Restructuring charges (credits), net

 

11

 

 

(1

)

 

11

 

 

(54

)

Total operating expenses

 

362,752

 

 

248,170

 

 

728,597

 

 

470,476

 

 

 

 

 

 

 

 

 

 

Operating income

 

179,411

 

 

321,553

 

 

382,492

 

 

404,980

 

Interest income

 

201

 

 

513

 

 

517

 

 

1,133

 

Other income (expense), net

 

(6,703

)

 

1,149

 

 

1,732

 

 

3,178

 

Income before income taxes

 

172,909

 

 

323,215

 

 

384,741

 

 

409,291

 

Provision for income taxes

 

33,453

 

 

56,301

 

 

58,444

 

 

70,304

 

Net income

 

$

139,456

 

 

$

266,914

 

 

$

326,297

 

 

$

338,987

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.83

 

 

$

1.58

 

 

$

1.94

 

 

$

2.02

 

Diluted

 

$

0.81

 

 

$

1.56

 

 

$

1.90

 

 

$

1.99

 

 

 

 

 

 

 

 

 

 

Weighted average shares used to compute net income per share:

 

 

 

 

 

 

 

 

Basic

 

168,389

 

 

168,645

 

 

168,380

 

 

168,140

 

Diluted

 

171,343

 

 

171,382

 

 

171,682

 

 

170,766

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

PRELIMINARY RESULTS*

 

 

 

 

(In thousands) - unaudited

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

March 31,

CONDENSED CONSOLIDATED BALANCE SHEETS

 

2021

 

2021

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,137,296

 

 

$

1,750,327

 

Accounts receivable, net

 

728,074

 

 

612,225

 

Inventories

 

827,710

 

 

661,116

 

Other current assets

 

166,731

 

 

135,650

 

Total current assets

 

2,859,811

 

 

3,159,318

 

 

 

 

 

 

Non-current assets:

 

 

 

 

Property, plant and equipment, net

 

111,625

 

 

114,060

 

Goodwill

 

449,357

 

 

429,604

 

Other intangible assets, net

 

103,501

 

 

115,148

 

Other assets

 

331,870

 

 

324,248

 

Total assets

 

$

3,856,164

 

 

$

4,142,378

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

660,720

 

 

$

823,233

 

Accrued and other current liabilities

 

709,878

 

 

858,617

 

Total current liabilities

 

1,370,598

 

 

1,681,850

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

Income taxes payable

 

67,651

 

 

59,237

 

Other non-current liabilities

 

155,232

 

 

139,502

 

Total liabilities

 

1,593,481

 

 

1,880,589

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

Registered shares, CHF 0.25 par value:

 

30,148

 

 

30,148

 

Issued shares — 173,106 at September 30 and March 31, 2021

 

 

 

 

Additional shares that may be issued out of conditional capitals — 50,000 at September 30 and March 31, 2021

 

 

 

 

Additional shares that may be issued out of authorized capital — 17,311 at September 30 and March 31, 2021

 

 

 

 

Additional paid-in capital

 

99,434

 

 

129,519

 

Shares in treasury, at cost — 5,331 at September 30, 2021 and 4,799 at March 31, 2021

 

(413,345

)

 

(279,541

)

Retained earnings

 

2,657,465

 

 

2,490,578

 

Accumulated other comprehensive loss

 

(111,019

)

 

(108,915

)

Total shareholders’ equity

 

2,262,683

 

 

2,261,789

 

Total liabilities and shareholders’ equity

 

$

3,856,164

 

 

$

4,142,378

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

 

 

PRELIMINARY RESULTS*

 

 

 

 

 

 

 

 

(In thousands) - unaudited

 

 

 

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Six Months Ended

September 30,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

139,456

 

 

$

266,914

 

 

$

326,297

 

 

$

338,987

 

Adjustments to reconcile net income to net cash provided by/ (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

23,012

 

 

10,854

 

 

43,474

 

 

22,601

 

Amortization of intangible assets

 

8,625

 

 

7,107

 

 

17,468

 

 

15,239

 

Loss on investments

 

2,032

 

 

2,693

 

 

961

 

 

2,519

 

Share-based compensation expense

 

24,022

 

 

24,785

 

 

47,673

 

 

44,900

 

Deferred income taxes

 

10,966

 

 

16,563

 

 

6,808

 

 

20,152

 

Change in fair value of contingent consideration for business acquisition

 

(925

)

 

 

 

(2,399

)

 

5,716

 

Other

 

14

 

 

(1,886

)

 

1,059

 

 

(1,877

)

Changes in assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

(186,316

)

 

(244,746

)

 

(113,008

)

 

(346,838

)

Inventories

 

(52,422

)

 

(120,735

)

 

(167,588

)

 

(161,120

)

Other assets

 

(17,644

)

 

(15,797

)

 

(48,440

)

 

(31,567

)

Accounts payable

 

(39,862

)

 

230,830

 

 

(155,482

)

 

399,176

 

Accrued and other liabilities

 

26,164

 

 

103,090

 

 

(134,671

)

 

90,631

 

Net cash provided by / (used in) operating activities

 

(62,878

)

 

279,672

 

 

(177,848

)

 

398,519

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

(22,718

)

 

(15,466

)

 

(47,232

)

 

(27,774

)

Investment in privately held companies

 

(400

)

 

(3,375

)

 

(901

)

 

(3,405

)

Acquisition, net of cash acquired

 

 

 

 

 

(15,586

)

 

 

Purchases of trading investments

 

(1,375

)

 

(5,775

)

 

(2,466

)

 

(8,199

)

Proceeds from sales of trading investments

 

1,632

 

 

6,477

 

 

2,977

 

 

8,839

 

Net cash used in investing activities

 

(22,861

)

 

(18,139

)

 

(63,208

)

 

(30,539

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payment of cash dividends

 

(159,410

)

 

(146,705

)

 

(159,410

)

 

(146,705

)

Purchases of registered shares

 

(119,508

)

 

(22,454

)

 

(174,380

)

 

(22,454

)

Proceeds from exercises of stock options and purchase rights

 

13,886

 

 

16,074

 

 

16,636

 

 

26,066

 

Tax withholdings related to net share settlements of restricted stock units

 

(4,340

)

 

(2,623

)

 

(54,751

)

 

(25,744

)

Net cash used in financing activities

 

(269,372

)

 

(155,708

)

 

(371,905

)

 

(168,837

)

Effect of exchange rate changes on cash and cash equivalents

 

(5,314

)

 

2,001

 

 

(70

)

 

2,512

 

Net increase / (decrease) in cash and cash equivalents

 

(360,425

)

 

107,826

 

 

(613,031

)

 

201,655

 

Cash and cash equivalents, beginning of the period

 

1,497,721

 

 

809,395

 

 

1,750,327

 

 

715,566

 

Cash and cash equivalents, end of the period

 

$

1,137,296

 

 

$

917,221

 

 

$

1,137,296

 

 

$

917,221

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

 

 

 

 

 

 

PRELIMINARY RESULTS*

 

 

 

 

 

 

 

 

 

 

(In thousands) - unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

 

Three Months Ended

 

Six Months Ended

 

 

September 30,

 

September 30,

NET SALES

 

2021

 

2020

 

Change

 

2021

 

2020

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales by product category:

 

 

 

 

 

 

 

 

 

 

 

 

Pointing Devices

 

$

189,014

 

 

$

169,121

 

 

12

%

 

$

371,892

 

 

$

289,590

 

 

28

%

Keyboards & Combos

 

236,272

 

 

201,617

 

 

17

 

 

454,629

 

 

346,977

 

 

31

 

PC Webcams

 

94,471

 

 

102,469

 

 

(8

)

 

204,389

 

 

163,320

 

 

25

 

Tablet & Other Accessories

 

80,801

 

 

83,086

 

 

(3

)

 

160,073

 

 

129,134

 

 

24

 

Gaming (1)

 

330,777

 

 

297,711

 

 

11

 

 

666,174

 

 

479,614

 

 

39

 

Video Collaboration

 

231,653

 

 

236,704

 

 

(2

)

 

466,538

 

 

366,778

 

 

27

 

Mobile Speakers

 

39,492

 

 

43,581

 

 

(9

)

 

67,976

 

 

72,590

 

 

(6

)

Audio & Wearables

 

98,078

 

 

114,275

 

 

(14

)

 

214,685

 

 

185,640

 

 

16

 

Smart Home

 

5,649

 

 

8,573

 

 

(34

)

 

11,821

 

 

15,383

 

 

(23

)

Other (2)

 

60

 

 

21

 

 

186

 

 

148

 

 

26

 

 

469

 

Total Sales

 

$

1,306,267

 

 

$

1,257,158

 

 

4

%

 

$

2,618,325

 

 

$

2,049,052

 

 

28

%

(1) Gaming includes streaming services revenue generated by Streamlabs.

(2) Other includes products that the Company currently intends to phase out, or has already phased out, because they are no longer strategic to the Company's business.

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

 

 

PRELIMINARY RESULTS*

 

 

 

 

 

 

 

 

(In thousands, except per share amounts) - unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

 

Three Months Ended

September 30,

 

Six Months Ended

September 30,

GAAP TO NON GAAP RECONCILIATION (A)

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Gross profit - GAAP

 

$

542,163

 

 

$

569,723

 

 

$

1,111,089

 

 

$

875,456

 

Share-based compensation expense

 

2,102

 

 

1,772

 

 

3,471

 

 

3,172

 

Amortization of intangible assets

 

3,836

 

 

2,836

 

 

7,902

 

 

6,359

 

Gross profit - Non-GAAP

 

$

548,101

 

 

$

574,331

 

 

$

1,122,462

 

 

$

884,987

 

 

 

 

 

 

 

 

 

 

Gross margin - GAAP

 

41.5

%

 

45.3

%

 

42.4

%

 

42.7

%

Gross margin - Non-GAAP

 

42.0

%

 

45.7

%

 

42.9

%

 

43.2

%

 

 

 

 

 

 

 

 

 

Operating expenses - GAAP

 

$

362,752

 

 

$

248,170

 

 

$

728,597

 

 

$

470,476

 

Less: Share-based compensation expense

 

21,920

 

 

23,013

 

 

44,202

 

 

41,728

 

Less: Amortization of intangible assets and acquisition-related costs

 

5,107

 

 

4,331

 

 

10,324

 

 

8,940

 

Less: Change in fair value of contingent consideration for business acquisition

 

(925

)

 

 

 

(2,399

)

 

5,716

 

Less: Restructuring charges (credits), net

 

11

 

 

(1

)

 

11

 

 

(54

)

Operating expenses - Non-GAAP

 

$

336,639

 

 

$

220,827

 

 

$

676,459

 

 

$

414,146

 

 

 

 

 

 

 

 

 

 

% of net sales - GAAP

 

27.8

%

 

19.7

%

 

27.8

%

 

23.0

%

% of net sales - Non - GAAP

 

25.8

%

 

17.6

%

 

25.8

%

 

20.2

%

 

 

 

 

 

 

 

 

 

Operating income - GAAP

 

$

179,411

 

 

$

321,553

 

 

$

382,492

 

 

$

404,980

 

Share-based compensation expense

 

24,022

 

 

24,785

 

 

47,673

 

 

44,900

 

Amortization of intangible assets and acquisition-related costs

 

8,943

 

 

7,167

 

 

18,226

 

 

15,299

 

Change in fair value of contingent consideration for business acquisition

 

(925

)

 

 

 

(2,399

)

 

5,716

 

Restructuring charges (credits), net

 

11

 

 

(1

)

 

11

 

 

(54

)

Operating income - Non - GAAP

 

$

211,462

 

 

$

353,504

 

 

$

446,003

 

 

$

470,841

 

 

 

 

 

 

 

 

 

 

% of net sales - GAAP

 

13.7

%

 

25.6

%

 

14.6

%

 

19.8

%

% of net sales - Non - GAAP

 

16.2

%

 

28.1

%

 

17.0

%

 

23.0

%

 

 

 

 

 

 

 

 

 

Net income - GAAP

 

$

139,456

 

 

$

266,914

 

 

$

326,297

 

 

$

338,987

 

Share-based compensation expense

 

24,022

 

 

24,785

 

 

47,673

 

 

44,900

 

Amortization of intangible assets and acquisition-related costs

 

8,943

 

 

7,167

 

 

18,226

 

 

15,299

 

Change in fair value of contingent consideration for business acquisition

 

(925

)

 

 

 

(2,399

)

 

5,716

 

Restructuring charges (credits), net

 

11

 

 

(1

)

 

11

 

 

(54

)

Loss on investments

 

2,032

 

 

2,693

 

 

961

 

 

2,519

 

Non-GAAP income tax adjustment

 

6,825

 

 

18,351

 

 

(591

)

 

21,399

 

Net income - Non - GAAP

 

$

180,364

 

 

$

319,909

 

 

$

390,178

 

 

$

428,766

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Diluted - GAAP

 

$

0.81

 

 

$

1.56

 

 

$

1.90

 

 

$

1.99

 

Diluted - Non - GAAP

 

$

1.05

 

 

$

1.87

 

 

$

2.27

 

 

$

2.51

 

 

 

 

 

 

 

 

 

 

Shares used to compute net income per share:

 

 

 

 

 

 

 

 

Diluted - GAAP and Non - GAAP

 

171,343

 

 

171,382

 

 

171,682

 

 

170,766

 

LOGITECH INTERNATIONAL S.A.

 

 

 

 

 

 

 

 

PRELIMINARY RESULTS*

 

 

 

 

 

 

 

 

(In thousands) - unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

 

Three Months Ended

September 30,

 

Six Months Ended

September 30,

SHARE-BASED COMPENSATION EXPENSE

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Share-based Compensation Expense

 

 

 

 

 

 

 

 

Cost of goods sold

 

$

2,102

 

 

$

1,772

 

 

$

3,471

 

 

$

3,172

 

Marketing and selling

 

9,758

 

 

10,377

 

 

18,288

 

 

19,169

 

Research and development

 

4,724

 

 

3,763

 

 

9,785

 

 

6,866

 

General and administrative

 

7,438

 

 

8,873

 

 

16,129

 

 

15,693

 

Total share-based compensation expense

 

24,022

 

 

24,785

 

 

47,673

 

 

44,900

 

Income tax benefit

 

(3,285

)

 

(3,958

)

 

(19,879

)

 

(12,069

)

Total share-based compensation expense, net of income tax benefit

 

$

20,737

 

 

$

20,827

 

 

$

27,794

 

 

$

32,831

 

*Note: These preliminary results for the three and six months ended September 30, 2021 are subject to adjustments, including subsequent events that may occur through the date of filing our Quarterly Report on Form 10-Q.

(A) Non-GAAP Financial Measures

To supplement our condensed consolidated financial results prepared in accordance with GAAP, we use a number of financial measures, both GAAP and non-GAAP, in analyzing and assessing our overall business performance, for making operating decisions and for forecasting and planning future periods. We consider the use of non-GAAP financial measures helpful in assessing our current financial performance, ongoing operations and prospects for the future as well as understanding financial and business trends relating to our financial condition and results of operations.

While we use non-GAAP financial measures as a tool to enhance our understanding of certain aspects of our financial performance and to provide incremental insight into the underlying factors and trends affecting both our performance and our cash-generating potential, we do not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, we believe that disclosing non-GAAP financial measures to the readers of our financial statements provides useful supplemental data that, while not a substitute for GAAP financial measures, can offer insight in the review of our financial and operational performance and enables investors to more fully understand trends in our current and future performance. In assessing our business during the quarter ended September 30, 2021 and previous periods, we excluded items in the following general categories, each of which are described below:

Share-based compensation expense. We believe that providing non-GAAP measures excluding share-based compensation expense, in addition to the GAAP measures, allows for a more transparent comparison of our financial results from period to period. We prepare and maintain our budgets and forecasts for future periods on a basis consistent with this non-GAAP financial measure. Further, companies use a variety of types of equity awards as well as a variety of methodologies, assumptions and estimates to determine share-based compensation expense. We believe that excluding share-based compensation expense enhances our ability and the ability of investors to understand the impact of non-cash share-based compensation on our operating results and to compare our results against the results of other companies.

Amortization of intangible assets. We incur intangible asset amortization expense, primarily in connection with our acquisitions of various businesses and technologies. The amortization of purchased intangibles varies depending on the level of acquisition activity. We exclude these various charges in budgeting, planning and forecasting future periods and we believe that providing the non-GAAP measures excluding these various non-cash charges, as well as the GAAP measures, provides additional insight when comparing our gross profit, operating expenses, and financial results from period to period.

Acquisition-related costs and change in fair value of contingent consideration for business acquisition. We incurred expenses and credits in connection with our acquisitions which we generally would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition related costs include all incremental expenses incurred to effect a business combination. Fair value of contingent consideration is associated with our estimates of the value of earn-outs in connection with certain acquisitions. We believe that providing the non-GAAP measures excluding these costs and credits, as well as the GAAP measures, assists our investors because such costs are not reflective of our ongoing operating results.

Restructuring charges (credits). These expenses are associated with re-aligning our business strategies based on current economic conditions. We have undertaken several restructuring plans in recent years. In connection with our restructuring initiatives, we incurred restructuring charges related to employee terminations, facility closures and early cancellation of certain contracts. We believe that providing the non-GAAP measures excluding these items, as well as the GAAP measures, assists our investors because such charges (credits) are not reflective of our ongoing operating results in the current period.

Loss (gain) on investments. We recognize losses (gains) related to our investments in various companies, which vary depending on the operational and financial performance of the companies in which we invest. These amounts include our losses (earnings) on equity method investments, investment impairments and losses (gains) resulting from sales or other events related to our investments. We believe that providing the non-GAAP measures excluding these items, as well as the GAAP measures, assists our investors because such losses (gains) are not reflective of our ongoing operations.

Non-GAAP income tax adjustment. Non-GAAP income tax adjustment primarily measures the income tax effect of non-GAAP adjustments excluded above and other events; the determination of which is based upon the nature of the underlying items, the mix of income and losses in jurisdictions and the relevant tax rates in which we operate.

Each of the non-GAAP financial measures described above, and used in this press release, should not be considered in isolation from, or as a substitute for, a measure of financial performance prepared in accordance with GAAP. Further, investors are cautioned that there are inherent limitations associated with the use of each of these non-GAAP financial measures as an analytical tool. In particular, these non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and may be reflected in the Company’s financial results for the foreseeable future. We compensate for these limitations by providing specific information in the reconciliation included in this press release regarding the GAAP amounts excluded from the non-GAAP financial measures. In addition, as noted above, we evaluate the non-GAAP financial measures together with the most directly comparable GAAP financial information.

Additional Supplemental Financial Information - Constant Currency

In addition, Logitech presents percentage sales growth in constant currency to show performance unaffected by fluctuations in currency exchange rates. Percentage sales growth in constant currency is calculated by translating prior period sales in each local currency at the current period’s average exchange rate for that currency and comparing that to current period sales.

(LOGIIR)

Contacts

Editorial Contacts:

Nicole Noutsios, Investor Relations - lir@logitech.com

Nicole Kenyon, Head of Global Corporate & Employee Communications - USA +1 (510) 988-8553

Ben Starkie, Corporate Communications - Europe +41 (0) 79-292-3499

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