Logitech Announces Q2 FY 2023 Results

Company Reaffirms Fiscal Year 2023 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 2023.

  • Sales were $1.15 billion, down 12 percent in US dollars and 7 percent in constant currency, compared to Q2 of the prior year. This performance reflects a challenging macroeconomic environment.
  • Category sales in US dollars grew 2 percent in Video Collaboration and declined 2 percent in Pointing Devices compared to Q2 of the prior year. Sales in these categories in constant currency grew 7 percent and 3 percent respectively. Gaming and Keyboard & Combos sales declined 10 percent and 15 percent in US dollars respectively, and 4 percent and 10 percent in constant currency, compared to Q2 of the prior year.
  • GAAP operating income declined 29 percent to $127 million, compared to $179 million in the same quarter a year ago. Non-GAAP operating income declined 26 percent to $156 million, compared to $211 million in the same quarter a year ago.
  • GAAP earnings per share (EPS) declined 38 percent to $0.50, compared to $0.81 in the same quarter a year ago. Non-GAAP EPS declined 20 percent to $0.84, compared to $1.05 in the same quarter a year ago.
  • Cash flow from operations was $73 million, compared to negative $63 million in the same quarter a year ago. In the quarter, the Company returned $276 million of cash to shareholders through its annual dividend payment and share repurchases.

“As we enter the holiday season we continue to drive innovation, announcing more than 20 products which tap into the long-term trends of hybrid work, video everywhere, gaming and digital content creation,” said Bracken Darrell, Logitech president and chief executive officer. “In the face of global macroeconomic headwinds we will continue to pursue operational excellence and deliver industry-leading innovation.”

Chief Financial Officer

Separately, Logitech also announced that Nate Olmstead, chief financial officer, will be leaving the Company. Logitech will be launching a search and Mr. Olmstead currently plans to stay on as CFO through the transition.

“Over the past nearly four years, Nate has been an incredible partner. His leadership helped steer Logitech through an unprecedented pandemic and period of extraordinary growth,” said Bracken Darrell. “Nate has built a world-class finance team and I’m grateful for his contribution."

“I am honored to have been part of the transformational change Logitech has undergone these last four years,” said Nate Olmstead. “I’m proud of the strong finance team we have in place and excited about what’s ahead for Logitech.”

Outlook

Logitech reaffirmed its Fiscal Year 2023 outlook of between negative 8 percent and negative 4 percent sales growth in constant currency, and between $650 million and $750 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 2023 on Tuesday, October 25, 2022 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, loss 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 2023 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 and Ultimate Ears. 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, 2022, secular growth trends, operational performance, product innovation, product launches, executive leadership, and outlook for Fiscal Year 2023 sales growth and non-GAAP operating income, and related assumptions. 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: macroeconomic and geopolitical conditions and other factors and their impact, including the COVID-19 pandemic, the war in Ukraine, changes in inflation levels and monetary policies; 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; if we do not efficiently manage our spending; our expectations regarding our restructuring efforts, including the timing thereof; 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; if we do not successfully execute on strategic acquisitions and investments; 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, 2022, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, 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

2022

 

2021

 

2022

 

2021

 

 

 

 

 

Net sales

$

1,148,951

 

$

1,306,267

 

$

2,308,816

 

$

2,618,325

 

Cost of goods sold

 

707,026

 

 

760,268

 

 

1,404,246

 

 

1,499,334

 

Amortization of intangible assets

 

3,145

 

 

3,836

 

 

6,187

 

 

7,902

 

Gross profit

 

438,780

 

 

542,163

 

 

898,383

 

 

1,111,089

 

 

 

 

 

 

Operating expenses:

 

 

 

 

Marketing and selling

 

202,091

 

 

256,627

 

 

431,469

 

 

508,941

 

Research and development

 

69,009

 

 

68,661

 

 

144,526

 

 

137,907

 

General and administrative

 

26,589

 

 

33,271

 

 

62,449

 

 

73,813

 

Amortization of intangible assets and acquisition-related costs

 

2,873

 

 

5,107

 

 

6,242

 

 

10,324

 

Change in fair value of contingent consideration for business acquisition

 

 

 

(925

)

 

 

 

(2,399

)

Restructuring charges, net

 

10,817

 

 

11

 

 

10,817

 

 

11

 

Total operating expenses

 

311,379

 

 

362,752

 

 

655,503

 

 

728,597

 

 

 

 

 

 

Operating income

 

127,401

 

 

179,411

 

 

242,880

 

 

382,492

 

Interest income

 

3,459

 

 

201

 

 

4,908

 

 

517

 

Other income (expense), net

 

(25,397

)

 

(6,703

)

 

(19,773

)

 

1,732

 

Income before income taxes

 

105,463

 

 

172,909

 

 

228,015

 

 

384,741

 

Provision for income taxes

 

23,372

 

 

33,453

 

 

45,088

 

 

58,444

 

Net income

$

82,091

 

$

139,456

 

$

182,927

 

$

326,297

 

 

 

 

 

 

Net income per share:

 

 

 

 

Basic

$

0.50

 

$

0.83

 

$

1.12

 

$

1.94

 

Diluted

$

0.50

 

$

0.81

 

$

1.11

 

$

1.90

 

 

 

 

 

 

Weighted average shares used to compute net income per share:

 

 

 

 

Basic

 

163,186

 

 

168,389

 

 

163,937

 

 

168,380

 

Diluted

 

164,328

 

 

171,343

 

 

165,371

 

 

171,682

 

 

LOGITECH INTERNATIONAL S.A.

PRELIMINARY RESULTS*

(In thousands, except per share amounts) - unaudited

 

 

 

 

September 30,

 

March 31,

CONDENSED CONSOLIDATED BALANCE SHEETS

2022

 

2022

 

 

 

Current assets:

 

 

Cash and cash equivalents

$

868,501

 

$

1,328,716

 

Accounts receivable, net

 

772,731

 

 

675,604

 

Inventories

 

879,979

 

 

933,124

 

Other current assets

 

136,924

 

 

135,478

 

Total current assets

 

2,658,135

 

 

3,072,922

 

 

 

 

Non-current assets:

 

 

Property, plant and equipment, net

 

113,327

 

 

109,807

 

Goodwill

 

449,892

 

 

448,175

 

Other intangible assets, net

 

73,495

 

 

83,779

 

Other assets

 

350,050

 

 

320,722

 

Total assets

$

3,644,899

 

$

4,035,405

 

 

 

 

Current liabilities:

 

 

Accounts payable

$

546,563

 

$

636,306

 

Accrued and other current liabilities

 

663,621

 

 

784,848

 

Total current liabilities

 

1,210,184

 

 

1,421,154

 

 

 

 

Non-current liabilities:

 

 

Income taxes payable

 

97,450

 

 

83,380

 

Other non-current liabilities

 

168,704

 

 

132,133

 

Total liabilities

 

1,476,338

 

 

1,636,667

 

 

 

 

Shareholders’ equity:

 

 

Registered shares, CHF 0.25 par value:

 

30,148

 

 

30,148

 

Issued shares — 173,106 at September 30, 2022 and March 31, 2022

 

 

Additional shares that may be issued out of conditional capitals — 50,000 at September 30, 2022 and March 31, 2022

 

 

Additional shares that may be issued out of authorized capital — 17,311 at September 30, 2022 and March 31, 2022

 

 

Additional paid-in capital

 

106,130

 

 

129,925

 

Shares in treasury, at cost — 10,943 at September 30, 2022 and 7,855 at March 31, 2022

 

(824,650

)

 

(632,893

)

Retained earnings

 

2,995,927

 

 

2,975,681

 

Accumulated other comprehensive loss

 

(138,994

)

 

(104,123

)

Total shareholders’ equity

 

2,168,561

 

 

2,398,738

 

Total liabilities and shareholders’ equity

$

3,644,899

 

$

4,035,405

 

 

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

2022

 

2021

 

2022

 

2021

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net income

$

82,091

 

$

139,456

 

$

182,927

 

$

326,297

 

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

 

 

 

 

Depreciation

 

18,662

 

 

23,012

 

 

37,288

 

 

43,474

 

Amortization of intangible assets

 

6,015

 

 

8,625

 

 

12,244

 

 

17,468

 

Loss on investments

 

22,934

 

 

2,032

 

 

11,577

 

 

961

 

Share-based compensation expense

 

12,245

 

 

24,022

 

 

35,935

 

 

47,673

 

Deferred income taxes

 

2,775

 

 

10,966

 

 

3,040

 

 

6,808

 

Change in fair value of contingent consideration for business acquisition

 

 

 

(925

)

 

 

 

(2,399

)

Other

 

242

 

 

14

 

 

118

 

 

1,059

 

Changes in assets and liabilities, net of acquisitions:

 

 

 

 

Accounts receivable, net

 

(77,337

)

 

(186,316

)

 

(121,909

)

 

(113,008

)

Inventories

 

22,114

 

 

(52,422

)

 

21,790

 

 

(167,588

)

Other assets

 

(175

)

 

(17,644

)

 

4,757

 

 

(48,440

)

Accounts payable

 

(8,320

)

 

(39,862

)

 

(78,354

)

 

(155,482

)

Accrued and other liabilities

 

(8,322

)

 

26,164

 

 

(72,157

)

 

(134,671

)

Net cash provided by (used in) operating activities

 

72,924

 

 

(62,878

)

 

37,256

 

 

(177,848

)

Cash flows from investing activities:

 

 

 

 

Purchases of property, plant and equipment

 

(25,821

)

 

(22,718

)

 

(45,384

)

 

(47,232

)

Investment in privately held companies

 

(187

)

 

(400

)

 

(2,275

)

 

(901

)

Acquisitions, net of cash acquired

 

 

 

 

 

(5,839

)

 

(15,586

)

Purchases of deferred compensation investments

 

(1,577

)

 

(1,375

)

 

(2,499

)

 

(2,466

)

Proceeds from sales of deferred compensation investments

 

1,493

 

 

1,632

 

 

2,436

 

 

2,977

 

Net cash used in investing activities

 

(26,092

)

 

(22,861

)

 

(53,561

)

 

(63,208

)

Cash flows from financing activities:

 

 

 

 

Payment of cash dividends

 

(158,680

)

 

(159,410

)

 

(158,680

)

 

(159,410

)

Payment of contingent consideration for business acquisition

 

(5,954

)

 

 

 

(5,954

)

 

 

Purchases of registered shares

 

(116,942

)

 

(119,508

)

 

(237,561

)

 

(174,380

)

Proceeds from exercises of stock options and purchase rights

 

12,850

 

 

13,886

 

 

12,850

 

 

16,636

 

Tax withholdings related to net share settlements of restricted stock units

 

(2,598

)

 

(4,340

)

 

(26,742

)

 

(54,751

)

Net cash used in financing activities

 

(271,324

)

 

(269,372

)

 

(416,087

)

 

(371,905

)

Effect of exchange rate changes on cash and cash equivalents

 

(13,664

)

 

(5,314

)

 

(27,823

)

 

(70

)

Net decrease in cash and cash equivalents

 

(238,156

)

 

(360,425

)

 

(460,215

)

 

(613,031

)

Cash and cash equivalents, beginning of the period

 

1,106,657

 

 

1,497,721

 

 

1,328,716

 

 

1,750,327

 

Cash and cash equivalents, end of the period

$

868,501

 

$

1,137,296

 

$

868,501

 

$

1,137,296

 

 

LOGITECH INTERNATIONAL S.A.

PRELIMINARY RESULTS*

(In thousands) - unaudited

 

 

 

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

Three Months Ended

September 30,

Six Months Ended

September 30,

NET SALES

2022

2021

Change

2022

2021

Change

 

 

 

 

 

 

 

Net sales by product category:

 

 

 

 

 

 

Pointing Devices

$

185,200

$

189,014

(2

)%

$

368,483

$

371,892

(1

)%

Keyboards & Combos

 

200,853

 

236,272

(15

)

 

428,573

 

454,629

(6

)

PC Webcams

 

60,166

 

94,471

(36

)

 

119,552

 

204,389

(42

)

Tablet & Other Accessories

 

54,203

 

80,801

(33

)

 

120,788

 

160,073

(25

)

Gaming (1)

 

297,676

 

330,777

(10

)

 

580,482

 

666,174

(13

)

Video Collaboration

 

236,180

 

231,653

2

 

 

482,422

 

466,538

3

 

Mobile Speakers

 

39,195

 

39,492

(1

)

 

61,505

 

67,976

(10

)

Audio & Wearables

 

73,271

 

98,078

(25

)

 

142,717

 

214,685

(34

)

Other (2)

 

2,207

 

5,709

(61

)

 

4,294

 

11,969

(64

)

Total Sales

$

1,148,951

$

1,306,267

(12

)%

$

2,308,816

$

2,618,325

(12

)%

(1)

Gaming includes streaming services revenue generated by Streamlabs.

(2)

Other includes Smart Home.

 

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)

2022

 

2021

 

2022

 

2021

 

 

 

 

 

Gross profit - GAAP

$

438,780

 

$

542,163

 

$

898,383

 

$

1,111,089

 

Share-based compensation expense

 

1,443

 

 

2,102

 

 

2,904

 

 

3,471

 

Amortization of intangible assets

 

3,145

 

 

3,836

 

 

6,187

 

 

7,902

 

Gross profit - Non-GAAP

$

443,368

 

$

548,101

 

$

907,474

 

$

1,122,462

 

 

 

 

 

 

Gross margin - GAAP

 

38.2

%

 

41.5

%

 

38.9

%

 

42.4

%

Gross margin - Non-GAAP

 

38.6

%

 

42.0

%

 

39.3

%

 

42.9

%

 

 

 

 

 

Operating expenses - GAAP

$

311,379

 

$

362,752

 

$

655,503

 

$

728,597

 

Less: Share-based compensation expense

 

10,802

 

 

21,920

 

 

33,031

 

 

44,202

 

Less: Amortization of intangible assets and acquisition-related costs

 

2,873

 

 

5,107

 

 

6,242

 

 

10,324

 

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

 

 

 

(925

)

 

 

 

(2,399

)

Less: Restructuring charges, net

 

10,817

 

 

11

 

 

10,817

 

 

11

 

Operating expenses - Non-GAAP

$

286,887

 

$

336,639

 

$

605,413

 

$

676,459

 

 

 

 

 

 

% of net sales - GAAP

 

27.1

%

 

27.8

%

 

28.4

%

 

27.8

%

% of net sales - Non-GAAP

 

25.0

%

 

25.8

%

 

26.2

%

 

25.8

%

 

 

 

 

 

Operating income - GAAP

$

127,401

 

$

179,411

 

$

242,880

 

$

382,492

 

Share-based compensation expense

 

12,245

 

 

24,022

 

 

35,935

 

 

47,673

 

Amortization of intangible assets and acquisition-related costs

 

6,018

 

 

8,943

 

 

12,429

 

 

18,226

 

Change in fair value of contingent consideration for business acquisition

 

 

 

(925

)

 

 

 

(2,399

)

Restructuring charges, net

 

10,817

 

 

11

 

 

10,817

 

 

11

 

Operating income - Non-GAAP

$

156,481

 

$

211,462

 

$

302,061

 

$

446,003

 

 

 

 

 

 

% of net sales - GAAP

 

11.1

%

 

13.7

%

 

10.5

%

 

14.6

%

% of net sales - Non-GAAP

 

13.6

%

 

16.2

%

 

13.1

%

 

17.0

%

 

 

 

 

 

Net income - GAAP

$

82,091

 

$

139,456

 

$

182,927

 

$

326,297

 

Share-based compensation expense

 

12,245

 

 

24,022

 

 

35,935

 

 

47,673

 

Amortization of intangible assets and acquisition-related costs

 

6,018

 

 

8,943

 

 

12,429

 

 

18,226

 

Change in fair value of contingent consideration for business acquisition

 

 

 

(925

)

 

 

 

(2,399

)

Restructuring charges, net

 

10,817

 

 

11

 

 

10,817

 

 

11

 

Loss on investments

 

22,934

 

 

2,032

 

 

11,577

 

 

961

 

Non-GAAP income tax adjustment

 

3,607

 

 

6,825

 

 

7,066

 

 

(591

)

Net income - Non-GAAP

$

137,712

 

$

180,364

 

$

260,751

 

$

390,178

 

 

 

 

 

 

Net income per share:

 

 

 

 

Diluted - GAAP

$

0.50

 

$

0.81

 

$

1.11

 

$

1.90

 

Diluted - Non-GAAP

$

0.84

 

$

1.05

 

$

1.58

 

$

2.27

 

 

 

 

 

 

Shares used to compute net income per share:

 

 

 

 

Diluted - GAAP and Non-GAAP

 

164,328

 

 

171,343

 

 

165,371

 

 

171,682

 

 

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

2022

 

2021

 

2022

 

2021

 

 

 

 

 

Share-based Compensation Expense

 

 

 

 

Cost of goods sold

$

1,443

 

$

2,102

 

$

2,904

 

$

3,471

 

Marketing and selling

 

7,429

 

 

9,758

 

 

17,226

 

 

18,288

 

Research and development

 

3,280

 

 

4,724

 

 

8,812

 

 

9,785

 

General and administrative

 

93

 

 

7,438

 

 

6,993

 

 

16,129

 

Total share-based compensation expense

 

12,245

 

 

24,022

 

 

35,935

 

 

47,673

 

Income tax expense (benefit)

 

102

 

 

(3,285

)

 

(4,220

)

 

(19,879

)

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

$

12,347

 

$

20,737

 

$

31,715

 

$

27,794

 

*Note: These preliminary results for the three and six months ended September 30, 2022 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, 2022 and prior periods presented, 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, net. These expenses are associated with restructuring plans, and will vary based on the initiatives in place during any given period. Restructuring charges may include costs related to employee terminations, facility closures and early cancellation of certain contracts as well as other costs resulting from our restructuring initiatives. We believe that providing the non-GAAP measures excluding these items, as well as the GAAP measures, assists our investors because such charges are not reflective of our ongoing operating results.

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:

Nate Melihercik, Head of Global Investor Relations - ir@logitech.com

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

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

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