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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
 
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2024
 
Or
 
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Transition Period from                to                
 
Commission File Number: 0-29174
 
LOGITECH INTERNATIONAL S.A.
(Exact name of registrant as specified in its charter)
 
Canton of Vaud,SwitzerlandNone
  (State or other jurisdiction
  of incorporation or organization)		(I.R.S. Employer
Identification No.)
 
Logitech International S.A.
EPFL - Quartier de l'Innovation
Daniel Borel Innovation Center
1015 Lausanne, Switzerland
c/o Logitech Inc.
3930 North First Street
San Jose, California 95134
(Address of principal executive offices and zip code)
 
(510) 795-8500
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Registered Shares
LOGN
SIX Swiss Exchange
Registered Shares
LOGI
Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  ý  No  o


Indicate by check mark whether the registrant has submitted electronically every Interactive Data file required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ý  No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filerý Smaller reporting company☐
Accelerated filer
☐
 Emerging Growth Company☐
Non-accelerated filer
☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐   No  ý
 
As of July 11, 2024, there were 152,812,108 shares of the Registrant’s share capital outstanding.



Table of Contents
TABLE OF CONTENTS
 
  Page
   
Part IFINANCIAL INFORMATION 
 
 

In this document, unless otherwise indicated, references to the “Company,” “Logitech,” "we," "our," and "us" are to Logitech International S.A. and its consolidated subsidiaries. Unless otherwise specified, all references to U.S. Dollar, Dollar or $ are to the United States Dollar, the legal currency of the United States of America. All references to CHF are to the Swiss Franc, the legal currency of Switzerland.
 
Logitech, the Logitech logo, and the Logitech products referred to herein are either the trademarks or the registered trademarks of Logitech. All other trademarks are the property of their respective owners.

Our fiscal year ends on March 31. Interim quarters are generally thirteen-week periods, each ending on a Friday of each quarter. The first quarter of fiscal year 2025 ended on June 28, 2024. The same quarter in the prior fiscal year ended on June 30, 2023. For purposes of presentation, we have indicated our quarterly periods end on the last day of the calendar quarter.
The term “sales” means net sales, except as otherwise specified.
We make available, free of charge on our website, access to our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as reasonably practicable after we file or furnish them electronically with the Securities and Exchange Commission ("SEC").

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Recordings of our earnings videoconferences and certain events we participate in or host, with members of the investment community are posted on our investor relations website at https://ir.logitech.com. Additionally, we provide notifications of news or announcements regarding our operations and financial performance, including SEC filings, investor events, and press and earnings releases as part of our investor relations website. We intend to use our investor relations website as means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD. Our corporate governance information also is available on our investor relations website.

All references to our websites are intended to be inactive textual references only, and the contents of such websites do not constitute a part of and are not intended to be incorporated into this Quarterly Report on Form 10-Q.



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PART I — FINANCIAL INFORMATION 

ITEM 1.   FINANCIAL STATEMENTS (UNAUDITED) 

LOGITECH INTERNATIONAL S.A.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
 
Three months ended June 30,
 20242023
Net sales$1,088,217 $974,499 
Cost of goods sold619,517 595,712 
Amortization of intangible assets2,442 3,145 
Gross profit466,258 375,642 
Operating expenses:  
Marketing and selling196,905 179,185 
Research and development75,307 70,559 
General and administrative37,458 41,297 
Amortization of intangible assets and acquisition-related costs2,703 2,685 
Restructuring charges, net386 3,511 
Total operating expenses312,759 297,237 
Operating income153,499 78,405 
Interest income15,790 9,826 
Other income (expense), net(1,898)(12,972)
Income before income taxes167,391 75,259 
Provision for income taxes25,558 12,532 
Net income$141,833 $62,727 
Net income per share:  
Basic$0.93 $0.39 
Diluted$0.92 $0.39 
Weighted average shares used to compute net income per share:  
Basic153,300 158,859 
Diluted154,978 160,155 

 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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LOGITECH INTERNATIONAL S.A.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(unaudited)
 
Three months ended June 30,
 20242023
Net income$141,833 $62,727 
Other comprehensive income (loss):  
Currency translation gain (loss):
Currency translation loss, net of taxes
(5,219)(1,529)
Defined benefit plans:  
Reclassification of amortization included in other income (expense), net(200)(4)
Hedging gain (loss):  
Deferred hedging gain (loss), net of taxes1,582 (704)
Reclassification of hedging loss (gain) included in cost of goods sold(733)2,986 
Total other comprehensive income (loss)(4,570)749 
Total comprehensive income$137,263 $63,476 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

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LOGITECH INTERNATIONAL S.A.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(unaudited)
June 30, 2024March 31, 2024
Assets
Current assets:  
Cash and cash equivalents$1,534,380 $1,520,842 
Accounts receivable, net591,251 541,715 
Inventories459,582 422,513 
Other current assets141,413 146,270 
Total current assets2,726,626 2,631,340 
Non-current assets:  
Property, plant and equipment, net113,265 116,589 
Goodwill462,003 461,978 
Other intangible assets, net39,490 44,603 
Other assets
343,532 350,194 
Total assets$3,684,916 $3,604,704 
Liabilities and Shareholders’ Equity  
Current liabilities:  
Accounts payable$554,301 $448,627 
Accrued and other current liabilities 586,180 637,262 
Total current liabilities1,140,481 1,085,889 
Non-current liabilities:  
Income taxes payable116,379 112,572 
Other non-current liabilities
179,121 172,590 
Total liabilities1,435,981 1,371,051 
Commitments and contingencies (Note 10)
Shareholders’ equity:  
Registered shares, CHF 0.25 par value:
30,148 30,148 
Issued shares — 173,106 at June 30, 2024 and March 31, 2024
Additional shares that may be issued out of conditional capital — 50,000 at June 30, 2024 and March 31, 2024
Additional shares that may be issued out of authorized capital — 17,311 at June 30, 2024 and March 31, 2024
Additional paid-in capital57,036 63,524 
Shares in treasury, at cost — 20,090 at June 30, 2024 and 19,243 at March 31, 2024
(1,418,051)(1,351,336)
Retained earnings3,695,574 3,602,519 
Accumulated other comprehensive loss(115,772)(111,202)
Total shareholders’ equity2,248,935 2,233,653 
Total liabilities and shareholders’ equity$3,684,916 $3,604,704 
 


The accompanying notes are an integral part of these condensed consolidated financial statements.

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LOGITECH INTERNATIONAL S.A.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three months ended June 30,
 20242023
Cash flows from operating activities:  
Net income$141,833 $62,727 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation14,506 17,498 
Amortization of intangible assets5,079 5,827 
Loss on investments1,186 11,823 
Share-based compensation expense23,405 21,511 
Deferred income taxes11,662 2,962 
Other(24)24 
Changes in assets and liabilities:  
Accounts receivable, net(53,952)65,390 
Inventories(39,095)110,440 
Other assets4,907 34,342 
Accounts payable109,028 (18,420)
Accrued and other liabilities(42,506)(74,329)
Net cash provided by operating activities176,029 239,795 
Cash flows from investing activities:  
Purchases of property, plant and equipment(14,586)(16,238)
Purchases of deferred compensation investments(695)(1,069)
Proceeds from sales of deferred compensation investments738 1,071 
Other investing activities(816)(1,294)
Net cash used in investing activities(15,359)(17,530)
Cash flows from financing activities:  
Purchases of registered shares(130,899)(95,076)
Proceeds from exercises of stock options and purchase rights4,618 2,113 
Tax withholdings related to net share settlements of restricted stock units(18,853)(24,196)
Net cash used in financing activities(145,134)(117,159)
Effect of exchange rate changes on cash and cash equivalents (1,998)(3,043)
Net increase in cash and cash equivalents 13,538 102,063 
Cash and cash equivalents, beginning of the period1,520,842 1,149,023 
Cash and cash equivalents, end of the period$1,534,380 $1,251,086 
Supplementary Cash Flow Disclosures:
Non-cash investing and financing activities:  
Property, plant and equipment purchased during the period and included in period end liability accounts$8,130 $15,375 
Right-of-use assets obtained in exchange for operating lease liabilities
$4,292 $1,399 
Supplemental cash flow information:
Income taxes paid, net$10,374 $10,019 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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LOGITECH INTERNATIONAL S.A.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands)
(unaudited)
Three Months Ended June 30, 2024

Additional Paid-in CapitalAccumulated Other Comprehensive LossTotal Shareholders’ Equity
 Registered SharesTreasury SharesRetained Earnings
 SharesAmountSharesAmount
March 31, 2024173,106 $30,148 $63,524 19,243 $(1,351,336)$3,602,519 $(111,202)$2,233,653 
Total comprehensive income— — — — — 141,833 (4,570)137,263 
Purchases of registered shares— — — 1,444 (132,132)— — (132,132)
Sales of shares upon exercise of stock options and purchase rights— — (1,539)(57)6,157 — — 4,618 
Issuance of shares upon vesting of restricted stock units— — (29,335)(540)59,260 (48,778)— (18,853)
Share-based compensation— — 24,386 — — — — 24,386 
June 30, 2024173,106 $30,148 $57,036 20,090 $(1,418,051)$3,695,574 $(115,772)$2,248,935 




Three Months Ended June 30, 2023

   Additional Paid-in Capital   Accumulated Other Comprehensive LossTotal Shareholders’ Equity
 Registered SharesTreasury SharesRetained Earnings
 SharesAmountSharesAmount
March 31, 2023173,106 $30,148 $127,380 13,763 $(977,266)$3,177,575 $(100,277)$2,257,560 
Total comprehensive income— — — — — 62,727 749 63,476 
Purchases of registered shares— — — 1,607 (95,076)— — (95,076)
Sales of shares upon exercise of stock options and purchase rights— — (1,867)(48)3,980 — — 2,113 
Issuance of shares upon vesting of restricted stock units— — (97,977)(838)73,781 — — (24,196)
Share-based compensation — — 22,198 — — — — 22,198 
June 30, 2023173,106 $30,148 $49,734 14,484 $(994,581)$3,240,302 $(99,528)$2,226,075 
 



The accompanying notes are an integral part of these condensed consolidated financial statements.
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LOGITECH INTERNATIONAL S.A.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Note 1 — The Company and Summary of Significant Accounting Policies and Estimates

The Company
 
Logitech International S.A, together with its consolidated subsidiaries ("Logitech" or the "Company"), designs software-enabled hardware solutions that help businesses thrive and bring people together when working, creating, gaming and streaming. As a point of connection between people and the digital world, the Company's mission is to
extend human potential in work and play, in a way that is good for people and the planet.
The Company sells its products to a broad network of international customers, including direct sales to retailers, e-tailers and end consumers through the Company's e-commerce platform, and indirect sales to end customers through distributors.
Logitech was founded in Switzerland in 1981 and Logitech International S.A. has been the parent holding company of Logitech since 1988. Logitech International S.A. is a Swiss holding company with its registered office in Hautemorges, Switzerland, and headquarters in Lausanne, Switzerland, which conducts its business through subsidiaries in the Americas, Europe, Middle East and Africa ("EMEA") and Asia Pacific. Shares of Logitech International S.A. are listed on both the SIX Swiss Exchange under the trading symbol LOGN and the Nasdaq Global Select Market under the trading symbol LOGI.

Basis of Presentation

The condensed consolidated financial statements include the accounts of Logitech and its subsidiaries. All intercompany balances and transactions have been eliminated. The condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and therefore do not include all the information required by U.S. GAAP for complete financial statements. The condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2024, included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on May 16, 2024.

In the opinion of management, these condensed consolidated financial statements include all adjustments, consisting of only normal and recurring adjustments, necessary and in all material aspects, for a fair statement of the results of operations, comprehensive income, financial position, cash flows and changes in shareholders' equity for the periods presented. Operating results for the three months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2025, or any future periods.

Changes in Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies during the three months ended June 30, 2024 compared with the significant accounting policies described in its Annual Report on Form 10-K for the fiscal year ended March 31, 2024.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Significant estimates and assumptions made by management involve the fair value of goodwill and intangible assets acquired from business acquisitions, valuation of investment in privately held companies classified under Level 3 fair value hierarchy, pension obligations, accruals for customer incentives, cooperative marketing, and pricing programs and related breakage when appropriate, inventory valuation, share-based compensation expense, uncertain tax positions, and valuation allowances for deferred tax assets. Although these estimates are based on management’s best knowledge of current events and actions that may impact the Company in the future, actual results could differ materially from those estimates.
 
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Risks and Uncertainties
Impacts of Macroeconomic and Geopolitical Conditions on the Company's Business
The Company's 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.
The global and regional economic and political conditions have caused and may continue to cause volatility in demand for the Company's products as well as the cost of materials and logistics, and transportation delays, and as a result may impact the pricing of the Company's products, product availability and the Company's results of operations.
Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker. In addition, ASU 2023-07 requires that all existing annual disclosures about segment profit or loss must be provided on an interim basis and clarifies that single reportable segment entities are subject to the disclosure requirement under Topic 280 in its entirety. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years beginning after December 15, 2024. A public entity should apply ASU 2023-07 retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires additional disclosures related to rate reconciliation, income taxes paid, and other disclosures. Under ASU 2023-09, for each annual period presented, public entities are required to (1) disclose specific categories in the tabular rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. In addition, ASU 2023-09 requires all reporting entities to disclose on an annual basis the amount of income taxes paid disaggregated by federal, state, and foreign taxes as well as the amount of income taxes paid by individual jurisdiction. ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024 and can be applied on a prospective basis with an option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements and related disclosures.

Note 2 — Net Income Per Share
 
The following table summarizes the computations of basic and diluted net income per share for the three months ended June 30, 2024 and 2023 (in thousands, except per share amounts):
Three months ended June 30,
 20242023
Net income$141,833 $62,727 
Shares used in net income per share computation:  
Weighted average shares outstanding - basic153,300 158,859 
Effect of potentially dilutive equivalent shares1,678 1,296 
Weighted average shares outstanding - diluted154,978 160,155 
Net income per share:  
Basic$0.93 $0.39 
Diluted$0.92 $0.39 
 
Share equivalents attributable to outstanding stock options and restricted stock units totaling 1.1 million and 2.0 million for the three months ended June 30, 2024 and 2023, respectively, were excluded from the calculation of diluted net income per share because their effect would have been anti-dilutive. A small number of performance-
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based restricted stock units were not included in the dilutive net income per share calculation because all necessary conditions had not been satisfied by the end of the respective period, and those shares were not issuable if the end of the reporting period were the end of the performance contingency period.
 
Note 3 — Employee Benefit Plans
 
Employee Share Purchase Plans and Stock Incentive Plans
 
As of June 30, 2024, the Company offers the 2006 Employee Share Purchase Plan (Non-U.S.), as amended and restated, the 1996 Employee Share Purchase Plan (U.S.), as amended and restated, and the 2006 Stock Incentive Plan, as amended and restated. Shares issued to employees as a result of purchases or exercises under these plans are generally issued from shares held in treasury stock.

The following table summarizes the share-based compensation expense and total income tax benefit recognized for share-based awards for the three months ended June 30, 2024 and 2023 (in thousands):
Three months ended June 30,
 20242023
Cost of goods sold$2,598 $1,415 
Marketing and selling11,851 10,483 
Research and development5,739 4,453 
General and administrative3,217 5,160 
Total share-based compensation expense23,405 21,511 
Income tax benefit(7,602)(5,318)
Total share-based compensation expense, net of income tax benefit$15,803 $16,193 

The income tax benefit in the respective periods primarily consisted of tax benefits related to the share-based compensation expense for the period and direct tax benefit realized.

Share-based compensation costs capitalized as part of inventory were $2.5 million and $1.9 million for the three months ended June 30, 2024 and 2023, respectively.

Defined Benefit Plans
 
Certain of the Company’s subsidiaries sponsor defined benefit pension plans or non-retirement post-employment benefits covering substantially all of their employees. Benefits are provided based on employees’ years of service and earnings, or in accordance with applicable employee benefit regulations. The Company’s practice is to fund amounts sufficient to meet the requirements set forth in the applicable employee benefit and tax regulations. The costs of $1.7 million and $1.9 million recorded for the three months ended June 30, 2024 and 2023, respectively, were primarily related to service costs.
 
Note 4 — Income Taxes
 
The Company is incorporated in Switzerland but operates in various countries with differing tax laws and rates. Further, a portion of the Company’s income before taxes and the provision for (benefit from) income taxes are generated outside of Switzerland.

The income tax provision for the three months ended June 30, 2024 was $25.6 million based on an effective income tax rate of 15.3% of pre-tax income. The income tax provision for the same period ended June 30, 2023 was $12.5 million based on an effective income tax rate of 16.7% of pre-tax income.

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

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The Base Erosion and Profit Shifting Project (the “BEPS Project”) undertaken by the Organization for Economic Co-operation and Development (the "OECD") recommended changes to numerous long-standing tax principles, including a proposal to reallocate profits among tax jurisdictions in which companies do business (“Pillar One”) and establishing a minimum tax on global income (“Pillar Two”). Some jurisdictions, including Switzerland, where the Company operates are implementing Pillar Two laws to effectuate a 15% minimum tax. The minimum tax effective beginning in fiscal year 2025 for the Company, is treated as a current cost and does not have a material impact on the Company's effective tax rate. The OECD and participating countries continue to issue underlying rules and administrative guidance related to Pillar Two, and the Company continues to monitor the relevant developments.

Note 5 — Balance Sheet Components
 
The following table presents the components of certain balance sheet asset amounts (in thousands): 
June 30, 2024March 31, 2024
Accounts receivable, net:  
Accounts receivable$814,127 $744,836 
Allowance for sales returns(12,212)(10,180)
Allowance for cooperative marketing arrangements(45,590)(41,634)
Allowance for customer incentive programs(67,324)(60,027)
Allowance for pricing programs(97,750)(91,280)
 $591,251 $541,715 
Inventories:  
Raw materials$54,113 $65,209 
Finished goods405,469 357,304 
 $459,582 $422,513 
Other current assets:  
Value-added tax ("VAT") receivables$34,551 $41,172 
Prepaid expenses and other assets106,862 105,098 
 $141,413 $146,270 
Property, plant and equipment, net:  
Property, plant and equipment$511,096 $503,882 
  Less: accumulated depreciation and amortization(397,831)(387,293)
$113,265 $116,589 
Other assets:  
Deferred tax assets$215,504 $224,831 
Right-of-use assets 61,846 61,163 
Investments for deferred compensation plan30,887 29,174 
Investments in privately held companies28,292 28,662 
Other assets7,003 6,364 
 $343,532 $350,194 


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The following table presents the components of certain balance sheet liability amounts (in thousands): 
June 30, 2024March 31, 2024
Accrued and other current liabilities:  
Accrued customer marketing, pricing and incentive programs$166,516 $170,371 
Accrued personnel expenses112,249 145,473 
Warranty liabilities30,476 30,270 
Accrued sales return liability29,920 30,098 
Accrued loss for inventory purchase commitments26,208 29,349 
Income taxes payable25,482 24,196 
VAT payable21,958 28,253 
Deferred revenue (1)
21,127 19,262 
Operating lease liabilities15,009 15,107 
Other current liabilities137,235 144,883 
 $586,180 $637,262 
Other non-current liabilities:  
Operating lease liabilities$62,886 $61,920 
Employee benefit plan obligations42,091 42,707 
Obligation for deferred compensation plan30,887 29,174 
Deferred revenue (1)
25,883 21,097 
Warranty liabilities14,026 14,384 
Deferred tax liabilities708 705 
Other non-current liabilities2,640 2,603 
 $179,121 $172,590 
(1) Includes deferred revenue for post-contract customer support and other services.

Note 6 — Fair Value Measurements
 
Fair Value Measurements
 
The Company considers fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company utilizes the following three-level fair value hierarchy to establish the priorities of the inputs used to measure fair value:
 
•Level 1 — Quoted prices in active markets for identical assets or liabilities.
 
•Level 2 — Observable inputs other than quoted market prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
 
•Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

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The following table presents the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis, excluding assets related to the Company’s defined benefit pension plans, classified by the level within the fair value hierarchy (in thousands): 
 June 30, 2024March 31, 2024
 Level 1Level 2Level 3Level 1Level 2Level 3
Assets:    
Cash equivalents$1,062,484 $— $— $1,042,604 $— $— 
Investments for deferred compensation plan included in other assets:    
Cash$144 $— $— $312 $— $— 
Common stock627 — — 573 — — 
Money market funds8,664 — — 8,129 — — 
Mutual funds21,452 — — 20,160 — — 
Total investments for deferred compensation plan$30,887 $— $— $29,174 $— $— 
Currency derivative assets
included in other current assets		$— $1,546 $— $— $913 $— 
Liabilities:
Contingent consideration included in accrued and other current liabilities$— $— $1,222 $— $— $1,215 
Currency derivative liabilities
included in accrued and other current liabilities		$— $68 $— $— $573 $— 

Investments for Deferred Compensation Plan

The marketable securities for the Company's deferred compensation plan were recorded at a fair value of $30.9 million and $29.2 million, as of June 30, 2024 and March 31, 2024, respectively, based on quoted market prices. Quoted market prices are observable inputs that are classified as Level 1 within the fair value hierarchy. Unrealized gains (losses) related to marketable securities for the three months ended June 30, 2024 and 2023 were not material and were included in other income (expense), net, and corresponding changes in the deferred compensation liability were included in operating expenses and cost of goods sold, in the Company's condensed consolidated statements of operations.

Equity Method Investments

The Company has certain non-marketable investments included in other assets that are accounted for as equity method investments, with a carrying value of $18.8 million and $18.0 million as of June 30, 2024 and March 31, 2024, respectively. Gains (losses) related to equity method investments for the three months ended June 30, 2024 and 2023 were not material and are included in other income (expense), net, in the Company's condensed consolidated statements of operations. There was no impairment of equity method investments during the three months ended June 30, 2024 and 2023.

Assets Measured at Fair Value on a Nonrecurring Basis

Financial Assets 

The Company has certain equity investments without readily determinable fair values due to the absence of quoted market prices, the inherent lack of liquidity, and the fact that inputs used to measure fair value are unobservable and require management's judgment. When certain events or circumstances indicate that impairment may exist, the Company revalues the investments using various assumptions, including the financial metrics and ratios of comparable public companies. The carrying value is also adjusted for observable price changes with the same or similar security from the same issuer. The amount of these equity investments without readily determinable fair value included in other assets was $8.9 million and $10.1 million as of June 30, 2024 and March 31, 2024, respectively. The impairment charges related to these equity investments were not material during three months
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ended June 30, 2024. There were no impairment charges related to these equity investments during the three months ended June 30, 2023.

During the three months ended June 30, 2023, the Company recorded an impairment loss, before tax, of $9.6 million 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 the Company's investment in a privately held company. The impairment loss is included in other income (expense), net, in the Company's condensed consolidated statement of operations for the three months ended June 30, 2023.

Non-Financial Assets

Goodwill, intangible assets, and property, plant and equipment, are not required to be measured at fair value on a recurring basis. However, if the Company is required to evaluate these non-financial assets for impairment, whether due to certain triggering events or because of the required annual impairment test, and a resulting impairment is recorded to reduce the carrying value to the fair value, the non-financial assets are measured at fair value during such period. There was no impairment of non-financial assets during the three months ended June 30, 2024 and 2023.
 
Note 7 — Derivative Financial Instruments
 
Under certain agreements with the respective counterparties to the Company’s derivative contracts, subject to applicable requirements, the Company is allowed to net settle transactions of the same type with a single net amount payable by one party to the other. However, the Company presents its derivative assets and derivative liabilities on a gross basis in other current assets and accrued and other current liabilities, respectively, on the condensed consolidated balance sheets as of June 30, 2024 and March 31, 2024. See Note 6 for the fair values of the Company’s derivative instruments as of June 30, 2024 and March 31, 2024.

Cash Flow Hedges

The Company enters into cash flow hedge contracts to protect against exchange rate exposure of forecasted inventory purchases. These hedging contracts mature within approximately four months. Gains and losses in the fair value of the effective portion of the hedges are deferred as a component of accumulated other comprehensive loss until the hedged inventory purchases are sold, at which time the gains or losses are reclassified to cost of goods sold. Cash flows from such hedges are classified as operating activities in the condensed consolidated statements of cash flows. Hedging relationships are discontinued when the hedging contract is no longer eligible for hedge accounting, or is sold, terminated or exercised, or when the Company removes hedge designation for the contract. Gains and losses in the fair value of the effective portion of the discontinued hedges continue to be reported in accumulated other comprehensive loss until the hedged inventory purchases are sold, unless it is probable that the forecasted inventory purchases will not occur by the end of the originally specified time period or within an additional two-month period of time thereafter.

The notional amounts of foreign currency exchange forward contracts outstanding related to forecasted inventory purchases were $119.6 million and $90.5 million as of June 30, 2024 and March 31, 2024, respectively. The Company had $2.0 million of net gain related to its cash flow hedges included in accumulated other comprehensive loss as of June 30, 2024, which will be reclassified into earnings within the next twelve months.

The following table presents the amounts of gain (loss) on the Company’s derivative instruments designated as hedging instruments for the three months ended June 30, 2024 and 2023 and their locations on its condensed consolidated statements of operations and condensed consolidated statements of comprehensive income (in thousands):
Three months ended June 30,
Amount of Gain (Loss)
Deferred as a Component of Accumulated
Other Comprehensive Loss 		Amount of Loss (Gain)
Reclassified from Accumulated Other Comprehensive Loss to
Costs of Goods Sold
 2024202320242023
Cash flow hedges$1,582 $(704)$(733)$2,986 

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The Company presents the earnings impact from forward points in the same line item that is used to present the earnings impact of the hedged item, i.e., cost of goods sold, for hedging forecasted inventory purchases and such amount is not material for all periods presented.
 
Other Derivatives
 
The Company also enters into foreign currency exchange forward and swap contracts to reduce the short-term effects of currency exchange rate fluctuations on certain receivables or payables denominated in currencies other than the functional currencies of its subsidiaries. These contracts generally mature within approximately one month. The primary risk managed by using forward and swap contracts is the currency exchange rate risk. The gains or losses on these contracts are not material and included in other income (expense), net, in the condensed consolidated statements of operations based on the changes in fair value. The notional amounts of these contracts outstanding as of June 30, 2024 and March 31, 2024 were $93.8 million and $79.4 million, respectively.
 
The fair value of all foreign currency exchange forward and swap contracts is determined based on observable market transactions of spot currency rates and forward rates. Cash flows from these contracts are classified as operating activities in the condensed consolidated statements of cash flows.

Note 8 — Goodwill and Other Intangible Assets

The Company conducts its impairment analysis of goodwill annually at December 31 or more frequently if changes in facts and circumstances indicate that it is more likely than not that the fair value of the Company’s reporting unit may be less than its carrying amount. There have been no triggering events identified affecting the valuation of goodwill and intangible assets during the three months ended June 30, 2024 and 2023.

The following table summarizes the activities in the Company’s goodwill balance (in thousands):

As of March 31, 2024$461,978 
Effects of foreign currency translation25 
As of June 30, 2024$462,003 

The Company's acquired intangible assets were as follows (in thousands):
 June 30, 2024March 31, 2024
 Gross Carrying AmountAccumulated
Amortization		Net Carrying AmountGross Carrying AmountAccumulated
Amortization		Net Carrying Amount
Trademarks and trade names$32,390 $(26,473)$5,917 $32,390 $(25,739)$6,651 
Developed technology107,421 (89,311)18,110 107,421 (86,855)20,566 
Customer contracts/relationships69,087 (52,957)16,130 69,087 (51,061)18,026 
Effects of foreign currency translation(1,048)381 (667)(1,019)379 (640)
Total$207,850 $(168,360)$39,490 $207,879 $(163,276)$44,603 

Note 9 — Financing Arrangements
 
The Company had several uncommitted, unsecured bank lines of credit and letters of credit aggregating $171.8 million and $172.5 million as of June 30, 2024 and March 31, 2024, respectively. There are no financial covenants under the lines of credit with which the Company must comply. There was no borrowing outstanding under the lines of credit as of June 30, 2024 or March 31, 2024. As of June 30, 2024 and March 31, 2024, the Company had outstanding bank guarantees of $13.5 million and $14.3 million, respectively.

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Note 10 — Commitments and Contingencies
 
Product Warranties
 
Changes in the Company’s warranty liabilities for the three months ended June 30, 2024 and 2023 were as follows (in thousands): 
Three months ended June 30,
 20242023
Beginning of the period$44,654 $40,886 
Provision10,186 9,092 
Settlements(10,038)(9,918)
Effects of foreign currency translation(300)(175)
End of the period$44,502 $39,885 

Indemnifications
 
The Company indemnifies certain suppliers and customers for losses arising from matters such as intellectual property disputes and product safety defects, subject to certain restrictions. The scope of these indemnities varies, but in some instances includes indemnification for damages and expenses, including reasonable attorneys’ fees. As of June 30, 2024, no material amounts have been accrued for indemnification provisions. The Company does not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid under its indemnification arrangements.
 
The Company also indemnifies its current and former directors and certain current and former officers. Certain costs incurred for providing such indemnification may be recoverable under various insurance policies. The Company is unable to reasonably estimate the maximum amount that could be payable under these arrangements because these exposures are not capped, the obligations are conditional in nature, and the facts and circumstances involved in any situation that might arise are variable.

Legal Proceedings

From time to time the Company is involved in claims and legal proceedings that arise in the ordinary course of its business. The Company is currently subject to several such claims and legal proceedings. The Company intends to vigorously defend against them. Management periodically assesses the Company’s liabilities and contingencies in connection with these matters based upon the latest information available. The Company follows ASC ("Accounting Standards Codification") 450, Contingencies, in determining the accounting and disclosure for these contingencies. Based on currently available information, the Company does not believe that resolution of pending matters will have a material adverse effect on its financial condition, cash flows and results of operations. However, litigation is subject to inherent uncertainties, and there can be no assurances that the Company's defenses will be successful or that any such lawsuit or claim would not have a material adverse impact on the Company's business, financial condition, cash flows and results of operations in a particular period. Any claims or proceedings against the Company can have an adverse impact because of defense costs, diversion of management and operational resources, negative publicity and other factors. Any failure to obtain a necessary license or other rights, or litigation arising out of intellectual property claims, could adversely affect the Company's business.

Note 11 — Shareholders’ Equity

Share Repurchases

In June 2023, the Company's Board of Directors approved a three-year share repurchase program, which allows the Company to use up to $1.0 billion to repurchase its shares. The 2023 share repurchase program enables the Company to repurchase shares for cancellation, as well as to support equity incentive plans or potential acquisitions. The Swiss Takeover Board approved the 2023 share repurchase program in July 2023 and the program became effective on July 28, 2023. During the three months ended June 30, 2024, the Company repurchased 1.4 million shares for an aggregate cost of $132.1 million under the 2023 share repurchase program
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for cancellation, of which $20.8 million of the aggregate cost was not paid yet as of June 30, 2024. As of June 30, 2024, $503.8 million was available for repurchase under the 2023 share repurchase program.

During the three months ended June 30, 2023, the Company repurchased 1.6 million shares for an aggregate cost of $95.1 million under the previous share repurchase program. This program was initially approved by the Company's Board of Directors in May 2020, to purchase Logitech shares to support equity incentive plans or potential acquisitions, and expired on July 27, 2023.

Swiss law limits a company’s ability to hold or repurchase its own shares. The aggregate par value of all shares held in treasury by the Company and its subsidiaries may not exceed 10% of the share capital of the Company, which for the Company corresponds to approximately 17.3 million registered shares. This limitation does not apply to shares repurchased for cancellation, due to the Board of Directors’ authority under the Company’s capital band set forth in the Company’s Articles of Incorporation to cancel shares up to a limit of 10% of the Company's current share capital. As of June 30, 2024, the Company had a total of 20.1 million shares held in treasury stock, which includes 5.6 million shares that have been repurchased for cancellation and 14.5 million shares that have been purchased to support equity incentive plans or potential acquisitions.

To the extent that the shares are repurchased to support equity incentive plans or potential acquisitions, the shares are repurchased on the ordinary trading line of SIX Swiss Exchange (“SIX”) and/or The Nasdaq Global Select Market (“Nasdaq”). Shares repurchased for cancellation purposes are repurchased on a second trading line on SIX. Shares may be repurchased from time to time on the open market or in privately negotiated transactions, including under plans complying with the provisions of Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934, as amended. Purchases may be started or stopped at any time without prior notice depending on market conditions and other factors and the program does not require the purchase of any minimum number of shares.

Accumulated Other Comprehensive Loss
 
The accumulated other comprehensive loss was as follows (in thousands):
Currency Translation Adjustment
Defined Benefit Plans
Deferred Hedging Gains
Total
March 31, 2024$(103,947)$(8,395)$1,140 $(111,202)
Other comprehensive income (loss)(5,219)(200)849 (4,570)
June 30, 2024$(109,166)$(8,595)$1,989 $(115,772)
 
Note 12 — Segment Information
 
The Company operates in a single operating segment that encompasses the design, manufacturing and marketing of peripherals for gaming, personal computers ("PCs"), tablets, video conferencing, and other digital platforms. Operating performance measures are provided directly to the Company's Chief Executive Officer ("CEO"), who is considered to be the Company’s Chief Operating Decision Maker. The CEO periodically reviews information such as sales and adjusted operating income (loss) to make business decisions. These operating performance measures do not include restructuring charges, net, share-based compensation expense, amortization and impairment of intangible assets, acquisition-related costs, and change in fair value of contingent consideration from business acquisitions.

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

Three months ended June 30,
 20242023
Gaming (1)
$309,475 $266,429 
Keyboards & Combos215,333 180,855 
Pointing Devices189,946 174,454 
Video Collaboration147,042 139,346 
Webcams72,904 75,200 
Tablet Accessories78,539 70,336 
Headsets44,236 36,850 
Other (2)
30,742 31,029 
Total Sales$1,088,217 $974,499 
(1) Gaming includes streaming services revenue generated by Streamlabs.
(2) Other primarily consists of mobile speakers and PC speakers.

Sales by geographic region (based on the customers’ locations) for the three months ended June 30, 2024 and 2023 were as follows (in thousands):
Three months ended June 30,
20242023
Americas$485,289 $445,168 
EMEA309,817 258,878 
Asia Pacific293,111 270,453 
Total Sales$1,088,217 $974,499 
 
Revenue from sales to customers in the United States, China and Germany each represented 10% or more of the total consolidated sales for each of the periods presented herein. No other countries represented 10% or more of the Company’s total consolidated sales for the periods presented herein.

Switzerland, the Company’s country of domicile, represented 2% of the Company's total consolidated sales for each of the three months ended June 30, 2024 and 2023.

Three customers of the Company each represented 10% or more of the total consolidated gross sales for each of the three months ended June 30, 2024 and 2023.

Property, plant and equipment, net (excluding software) and right-of-use assets by geographic region were as follows (in thousands):
June 30, 2024March 31, 2024
Americas$65,661 $67,762 
EMEA30,919 30,819 
Asia Pacific57,690 58,901 
Total$154,270 $157,482 

 Property, plant and equipment, net (excluding software) and right-of-use assets in the United States, China, and Ireland were $64.3 million, $40.9 million and $15.7 million, respectively, as of June 30, 2024, and $66.5 million, $41.2 million, and $16.2 million, respectively, as of March 31, 2024. No other countries represented more than 10% of the Company’s total consolidated property, plant and equipment, net (excluding software) and right-of-use assets as of June 30, 2024 or March 31, 2024.

Property, plant and equipment, net (excluding software) and right-of-use assets in Switzerland, the Company’s country of domicile, were $7.7 million and $9.0 million as of June 30, 2024 and March 31, 2024, respectively.
 
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ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on beliefs of our management as of the filing date of this Quarterly Report on Form 10-Q. These forward-looking statements include, among other things, statements related to:

•Our strategy for growth, future revenues, earnings, cash flow, uses of cash and other measures of financial performance, and market position;
•Our business strategy and investment priorities in relation to competitive offerings and evolving consumer demand trends affecting our products and markets, current and future worldwide geopolitical, economic and capital market conditions, including fluctuations in currency exchange rates, changes in fiscal policies, inflation, economic downturns, and disruptions in global logistics;
•Our expectations regarding any restructuring efforts, including the timing thereof;
•Long-term, secular trends that impact our product categories;
•The evolution and adoption of artificial intelligence (“AI”), its impact on our industry and related risks and opportunities for our business;
•The scope, nature or impact of acquisition, strategic alliance, and divestiture activities;
•Our expectations regarding the success of our strategic acquisitions, including integration of acquired operations, products, technology, internal controls, personnel and management teams;
•Our expectations regarding our effective tax rate, future tax benefits, tax settlements, the adequacy of our provisions for uncertain tax positions;
•Our expectations regarding our potential indemnification obligations, and the outcome of pending or future legal proceedings and tax audits;
•Our business development, product development and innovation, and their impact on future operating results and anticipated operating costs for fiscal year 2025 and beyond;
•Opportunities for growth and our ability to execute on and take advantage of them, including our marketing initiatives and strategy and our expectations regarding the success thereof;
•Potential tariffs, their effects and our ability to mitigate their effects;
•Our expectations regarding our share repurchase and dividend programs;
•The sufficiency of our cash and cash equivalents, cash generated from operations, and available borrowings under our bank lines of credit to fund capital expenditures and working capital needs; and
•The effects of environmental and other laws and regulations in the United States and other countries in which we operate.

Forward-looking statements also include, among others, those statements including the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should,” “will,” and similar language. These statements reflect our views and assumptions as of the date of this Quarterly Report on Form 10-Q. All forward-looking statements involve risks and uncertainties that could cause our actual performance to differ materially from those anticipated in the forward-looking statements depending on a variety of factors. Important information as to these factors can be found in this Quarterly Report on Form 10-Q under the headings of “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Company Overview,” “Critical Accounting Estimates,” and “Liquidity and Capital Resources,” among others. Factors that might cause or contribute to such differences include, but are not limited to, those discussed under Part II, Item 1A “Risk Factors” as well as elsewhere in this Quarterly Report on Form 10-Q, in our Annual Report on Form 10-K for the year ended March 31, 2024, and in our other filings with the U.S. Securities and Exchange Commission, or “SEC.” You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

You should read the following discussion in conjunction with the interim unaudited condensed consolidated financial statements and related notes.
 
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Company Overview
Logitech designs software-enabled hardware solutions that help businesses thrive and bring people together when working, creating, gaming and streaming. As a point of connection between people and the digital world, our mission is to extend human potential in work and play, in a way that is good for people and the planet. We sell these products through a number of brands, including Logitech, Logitech G and others.
Our diverse portfolio includes: Gaming, Keyboards & Combos, Pointing Devices, Video Collaboration, Webcams, Tablet Accessories, and Headsets. These products are all classified under a single operating segment: Peripherals (see Note 12 to our condensed consolidated financial statements).
We sell our products to a broad network of international customers in the Americas, Europe, the Middle East and Africa (“EMEA”) and Asia Pacific. This includes direct sales to retailers, e-tailers, and end consumers through our e-commerce platform, and indirect sales to end customers through distributors.
From time to time, we may seek to partner with or acquire, when appropriate, companies that have products, personnel, and technologies that complement our strategic direction. We continually review our product offerings and our strategic direction in light of our profitability targets, competitive conditions, changing consumer trends and the evolving nature of the interface between the consumer and the digital world.
Impacts of Macroeconomic and Geopolitical Conditions on our Business
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.
The global and regional economic and political conditions have caused and may continue to cause volatility in demand for our products as well as cost of materials and logistics, and transportation delays, and as a result may impact the pricing of our products, product availability and our results of operations.
For additional information, see Part II, Item 1A "Risk Factors."
Trends and Uncertainties
Several long-term secular-trends offer long-term structural growth opportunities across Logitech’s product portfolio. We design, create and sell products that benefit from these secular trends which include the following:
•Hybrid work: Hybrid work provides an opportunity to equip multiple workspaces including in the office and other places of work, as well as at home and away from home. Hybrid work also provides an opportunity for increased enterprise and consumer adoption of video conferencing. Our video collaboration products are compatible with a variety of video conference platforms, including Zoom, Microsoft Teams and Google Meet.
•Gaming: The ongoing growth and evolution of gaming creates an opportunity for us to provide more tools to a wider community of gamers. In particular, social gaming continues to gain popularity through online gaming, multi-platform experiences and esports.
•AI: AI has reshaped expectations for productivity improvements, product innovation and technology ecosystem evolution. While we have used AI solutions and machine learning to enhance the features of different products in our portfolio, AI offers additional growth opportunities and risks as we work to integrate our capabilities with our ecosystem partners.
•Climate change: Climate change affects everyone. We already consider sustainability as part of our product design and in other areas and intend to continue to do so in the future.
•The importance of trust: With our well-established Logitech brand, consumer-centric design philosophy, and commitment to high privacy and security standards, we strive to deliver trusted user experiences.
While we believe we will further benefit from these secular trends, we have experienced and will continue to experience challenges that impact our business and financial results. These challenges include (i) the current macroeconomic environment, including interest rate fluctuations, inflation, foreign exchange movements, changes in fiscal policies and low economic growth in certain regions, (ii) the uncertainty with overall consumer and enterprise demand, (iii) the uncertainty with enterprise strategy for office space utilization and related timing of enterprise investments in infrastructure and technology, and (iv) the timing of further development of our B2B go-to-market capabilities.
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We expect these challenges to continue in the near-term. We have taken steps to mitigate the impact of these challenges, including but not limited to: (i) maintaining discipline in our operating expenses, (ii) managing inventory levels to align with demand, (iii) continued investment in our B2B capabilities, and (iv) release of new products to increase the value proposition of our portfolio.
For additional information, see Part II, Item 1A "Risk Factors."
Business Seasonality and Product Introductions
We have historically experienced higher sales in our third fiscal quarter ending December 31, compared to other fiscal quarters in our fiscal year, primarily due to the increased consumer demand for our products during the year-end holiday buying season and year-end spending by enterprises. Additionally, new product introductions and business acquisitions can significantly impact sales, product costs and operating expenses. Product introductions can also impact our sales to distribution channels as these channels are filled with new product inventory following a product introduction, and often channel inventory of an earlier model product declines as the next related major product launch approaches. Sales can also be affected when consumers and distributors anticipate a product introduction or changes in business circumstances. However, neither historical seasonal patterns nor historical patterns of product introductions should be considered reliable indicators of our future pattern of product introductions, future sales or financial performance. Furthermore, cash flow is correspondingly lower in the first half of our fiscal year as we typically build inventories in advance for the third quarter and we pay an annual dividend following our Annual General Meeting, which is typically in September.
Summary of Financial Results
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.
Sales for the three months ended June 30, 2024 increased 20%, 9%, and 8% in EMEA, the Americas, and Asia Pacific regions, respectively, compared to the three months ended June 30, 2023.
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.
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.
We had an income tax provision of $25.6 million and $12.5 million for the three months ended June 30, 2024 and June 30, 2023, respectively. The change in the income tax provision for 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.
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.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires us to make assumptions, judgments, and estimates, that affect reported amounts of assets, liabilities, sales and expenses, and the disclosure of contingent assets and liabilities.
We consider an accounting estimate critical if it (i) requires management to make judgments and estimates about matters that are inherently uncertain and (ii) is important to an understanding of our financial condition and operating results.
We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. On a regular basis, we evaluate our assumptions, judgments and estimates. We also discuss our critical accounting policies and estimates with the Audit Committee of the Board of Directors.
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We believe that the assumptions, judgments and estimates involved in the accounting for accruals for customer incentives and related breakage when appropriate, accrued sales return liability, inventory valuation, and uncertain tax positions, have the greatest potential impact on our condensed consolidated financial statements. These areas are key components of our results of operations and are based on complex rules requiring us to make judgments and estimates and consequently, we consider these to be our critical accounting policies. Historically, our assumptions, judgments and estimates relative to our critical accounting policies have not differed materially from actual results.
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.
New Accounting Pronouncements
Refer to Note 1 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for recent accounting pronouncements to be adopted.
Constant Currency
We refer to our net sales growth rates excluding the impact of currency exchange rate fluctuations as "constant currency" sales growth rates. Percentage of constant currency sales growth 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.
Given our global sales presence and the reporting of our financial results in U.S. Dollars, our financial results could be affected by significant shifts in currency exchange rates. See “Results of Operations” for information on the effect of currency exchange rate fluctuations on our sales. If the U.S. Dollar appreciates or depreciates in comparison to other currencies in future periods, this will affect our results of operations in future periods as well.
References to Sales
The term “sales” means net sales, except as otherwise specified and the sales growth discussion and sales growth rate percentages are in U.S. Dollars, except as otherwise specified.
Results of Operations

Net Sales

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%.

Sales Denominated in Other Currencies

Although our financial results are reported in U.S. Dollars, a portion of our sales was generated in currencies other than the U.S. Dollar, such as the Euro, Chinese Renminbi, Australian Dollar, Canadian Dollar, Japanese Yen, Pound Sterling and New Taiwan Dollar. During the three months ended June 30, 2024, approximately 49% of our sales were denominated in currencies other than the U.S. Dollar.
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Sales by Region
 
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:
Sales Growth RateConstant Dollar
Sales Growth Rate
Americas9 %9 %
EMEA20 %20 %
Asia Pacific8 %13 %
 
Americas:
 
The increase 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.
 
EMEA:
 
The increase in sales in our EMEA region for the three-month period presented above was primarily driven by an increase in sales for Keyboards & Combos, Gaming, and Pointing Devices.

Asia Pacific:
 
The increase in sales in our Asia Pacific region for the three-month period presented above was primarily driven by an increase in sales for Gaming and Keyboards & Combos.

Sales by Product Category

Sales by product category for the three months ended June 30, 2024 and 2023 were as follows (dollars in thousands):
Three months ended June 30,
 20242023Change
Gaming (1)
$309,475 $266,429 16 %
Keyboards & Combos215,333 180,855 19 
Pointing Devices189,946 174,454 9 
Video Collaboration147,042 139,346 6 
Webcams72,904 75,200 (3)
Tablet Accessories78,539 70,336 12 
Headsets44,236 36,850 20 
Other (2)
30,742 31,029 (1)
Total Sales$1,088,217 $974,499 12 %
(1) Gaming includes streaming services revenue generated by Streamlabs.
(2) Other primarily consists of mobile speakers and PC speakers.
Gaming
Our Gaming category includes gaming mice, steering wheels, headsets, keyboards, console gaming headsets, studio-quality Blue Microphones and Streamlabs services.
 
Sales of Gaming increased 16% 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 gaming mice and gaming steering wheels.

Keyboards & Combos
Our Keyboards & Combos category includes PC keyboards and keyboard/mice combo products.
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Sales of Keyboards & Combos increased 19% 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 combo products.

Pointing Devices
Our Pointing Devices category includes PC- and Mac-related mice including trackballs and presentation tools.
 
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.

Video Collaboration
Our Video Collaboration category includes Logitech’s conference room cameras, which combine affordable enterprise-quality audio and high definition 4K video to bring video conferencing to a variety of room sizes.

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

Webcams
Our Webcams category includes PC-based webcams that are targeted primarily at consumers, including streaming cameras, and VC webcams that turn any desktop into an instant collaboration space.

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.

Tablet Accessories
Our Tablet Accessories category primarily includes tablet keyboards.
 
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 Accessories for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, benefited from strong demand from the education sector.

Headsets
Our Headsets category includes PC and VC headsets, in-ear headphones, and premium wireless earbuds.

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.

Other
Our Other category primarily consists of mobile speakers and PC speakers.

Sales in Other category remained flat for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

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Gross Profit
 
Gross profit for the three months ended June 30, 2024 and 2023 was as follows (dollars in thousands):
Three months ended June 30,
 20242023Change
Net sales$1,088,217$974,49912 %
Gross profit$466,258$375,64224 %
Gross margin42.8 %38.5 %
 
Gross profit consists of sales, less cost of goods sold (which includes materials, direct labor and related overhead costs, costs of manufacturing facilities, royalties, costs of purchasing components from outside suppliers, distribution costs, warranty costs, customer support costs, shipping and handling costs, outside processing costs and write-down of inventories), and amortization of intangible assets.

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. The gross margin increase was primarily driven by lower product costs, as well as lower promotional spend.

Operating Expenses

Operating expenses for the three months ended June 30, 2024 and 2023 were as follows (dollars in thousands):
Three months ended June 30,
 20242023
Marketing and selling$196,905 $179,185 
% of sales18.1 %18.4 %
Research and development75,307 70,559 
% of sales6.9 %7.2 %
General and administrative37,458 41,297 
% of sales3.5 %4.2 %
Amortization of intangible assets and acquisition-related costs2,703 2,685 
% of sales0.2 %0.3 %
Restructuring charges, net386 3,511 
% of sales— %0.4 %
Total operating expenses$312,759 $297,237 
% of sales28.7 %30.5 %
The increase in 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.

Marketing and Selling
Marketing and selling expenses consist of personnel and related overhead costs, corporate and product marketing, promotions, advertising, trade shows, technical support for customer experiences and facilities costs.

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.
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Research and Development 
Research and development expenses consist of personnel and related overhead costs for contractors and outside consultants, supplies and materials, equipment depreciation and facilities costs, all associated with the design and development of new products and enhancements of existing products.
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.

General and Administrative 
General and administrative expenses primarily consist of personnel and related overhead, information technology, and facilities costs for the infrastructure functions such as finance, information systems, executives, human resources and legal.

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.

Amortization of Intangible Assets and Acquisition-Related Costs
Amortization of intangible assets consists of amortization of acquired intangible assets, including customer relationships and trademarks and trade names. Acquisition-related costs include legal expenses, due diligence costs, and other professional costs incurred for business acquisitions.

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.

Restructuring Charges, Net
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.

Interest Income
Interest income for the three months ended June 30, 2024 and 2023 was as follows (in thousands):
 
Three months ended June 30,
 20242023
Interest Income$15,790 $9,826 
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.
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Other Income (Expense), Net
Other income (expense), net for the three months ended June 30, 2024 and 2023 was as follows (in thousands):
Three months ended June 30,
 20242023
Investment gain related to the deferred compensation plan
$447 $1,024 
Currency exchange loss, net
(2,318)(3,086)
Loss on investments, net(1,186)(11,823)
Non-service cost net pension income and other1,159 913 
Total$(1,898)$(12,972)

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.

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.

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.

Provision for Income Taxes
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):
 Three months ended June 30,
 20242023
Provision for income taxes$25,558 $12,532 
Effective income tax rate15.3 %16.7 %

The change in the effective income tax rate for the three 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.

The BEPS Project undertaken by the OECD recommended changes to numerous long-standing tax principles, including a proposal to reallocate profits among tax jurisdictions in which companies do business (“Pillar One”) and establishing a minimum tax on global income (“Pillar Two”). Some jurisdictions, including Switzerland, where we operate are implementing Pillar Two laws to effectuate a 15% minimum tax. The minimum tax effective beginning in fiscal year 2025 for the Company, is treated as a current cost and does not have a material impact on the Company's effective tax rate. The OECD and participating countries continue to issue underlying rules and administrative guidance related to Pillar Two, and we continue to monitor the relevant developments.
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We file Swiss and foreign tax returns. We received final tax assessments in Switzerland through fiscal year 2019. For other material foreign jurisdictions such as the United States, we are generally not subject to tax examinations for years prior to fiscal year 2020 and calendar year 2020, respectively. In the United States, the federal and state tax agencies have the authority to examine periods prior to fiscal year 2020, to the extent allowed by law, where tax attributes were generated, carried forward, and being utilized in subsequent years. We are under examination in foreign tax jurisdictions. If the examinations are resolved unfavorably, there is a possibility that they may have a material negative impact on our results of operations.
Liquidity and Capital Resources
 
Cash Balances, Available Borrowings, and Capital Resources
 
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.

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.

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.
 
The following tables present selected financial information and statistics as of and for the three months ended June 30, 2024 and 2023 (dollars in thousands): 
As of June 30,
 20242023
Accounts receivable, net$591,251 $562,602 
Accounts payable$554,301 $386,599 
Inventories$459,582 $572,344 

Three months ended June 30,
 20242023
Days sales in accounts receivable (“DSO”) (Days)(1)
49 52 
Days accounts payable outstanding (“DPO”) (Days)(2)
80 58 
Inventory turnover (“ITO”) (x)(3)
5.4 4.2 

(1) DSO is determined using ending accounts receivable, net, as of the most recent quarter-end and sales for the most recent quarter.
(2) DPO is determined using ending accounts payable as of the most recent quarter-end and cost of goods sold for the most recent quarter. 
(3) ITO is determined using ending inventories as of the most recent quarter-end and annualized cost of goods sold (based on cost of goods sold for the most recent quarter).

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.

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.

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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.

If we are not successful in launching and phasing in our new products, or market competition increases, or we are not able to sell the new products at the prices planned, it could have a material impact on our sales, gross profit margin, operating results including operating cash flow, and inventory turnover in the future.

The following table summarizes our condensed consolidated statements of cash flows (in thousands):
Three months ended June 30,
 20242023
Net cash provided by operating activities$176,029 $239,795 
Net cash used in investing activities(15,359)(17,530)
Net cash used in financing activities(145,134)(117,159)
Effect of exchange rate changes on cash and cash equivalents (1,998)(3,043)
Net increase in cash and cash equivalents $13,538 $102,063 

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 to higher 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.

For the three months ended June 30, 2024, net cash used in investing activities was $15.4 million, primarily resulting from $14.6 million of purchases of property, plant, and equipment.

For the three months ended June 30, 2024, net cash used in financing activities was $145.1 million, primarily resulting from payment for repurchases of our registered shares of $130.9 million.

For the three months ended June 30, 2024, the effect of exchange rate changes on cash and cash equivalents is not material.

Cash Outlook

Our principal sources of liquidity are our cash and cash equivalents, cash flow generated from operations, and, to a much lesser extent, capital markets and borrowings. Our future working capital requirements and capital expenditures may increase to support investments in product innovations and growth opportunities or to acquire or invest in complementary businesses, products, services, and technologies. Market volatility driven by the current macroeconomic and geopolitical environment may increase our costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity.

In May 2024, the Board of Directors recommended that we pay cash dividends for fiscal year 2024 of CHF 1.16 per share (approximately $1.28 per share based on the exchange rate on March 31, 2024). Based on our shares outstanding, net of treasury shares, as of March 31, 2024 (153,863,262 shares), this would result in an aggregate gross dividend of approximately CHF 178.5 million (approximately $197.2 million based on the exchange rate on March 31, 2024). In fiscal year 2024, we paid a cash dividend of CHF 1.06 per share, or CHF 169.1 million (U.S. Dollar amount of $182.3 million based on the exchange rate on the date of payment) out of fiscal year 2023 retained earnings.

In June 2023, our Board of Directors approved a three-year share repurchase program, which allows us to use up to $1.0 billion to repurchase our shares. The 2023 share repurchase program enables us to repurchase shares for cancellation, as well as to support equity incentive plans or potential acquisitions. The Swiss Takeover Board approved the 2023 share repurchase program in July 2023 and the program became effective on July 28, 2023. During the three months ended June 30, 2024, we repurchased 1.4 million shares for an aggregate cost of $132.1 million, under the 2023 share repurchase program for cancellation, of which $20.8 million of the aggregate
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cost was not paid yet as of June 30, 2024. As of June 30, 2024, $503.8 million was available for repurchase under the 2023 share repurchase program.

Swiss law limits a company’s ability to hold or repurchase its own shares. The aggregate par value of all shares held in treasury by us and our subsidiaries may not exceed 10% of our share capital, which corresponds to approximately 17.3 million registered shares. This limitation does not apply to shares repurchased for cancellation, due to the Board of Directors' authority under the capital band set forth in the Company's Articles of Incorporation to cancel shares up to a limit of 10% of our current share capital. As of June 30, 2024, we had a total of 20.1 million shares held in treasury stock, which includes 5.6 million shares that have been repurchased for cancellation and 14.5 million shares that have been purchased to support equity incentive plans or potential acquisitions.

Although we enter into trading plans for systematic repurchases (e.g., 10b5-1 trading plans) from time to time, our 2023 share repurchase program provides us with the opportunity to make opportunistic repurchases during periods of favorable market conditions and is expected to remain in effect for a period of three years through July 27, 2026. To the extent that the shares are repurchased to support equity incentive plans or potential acquisitions, the shares are repurchased on the ordinary trading line of Swiss Exchange ("SIX") and/or the Nasdaq Global Select Market ("Nasdaq"). Shares repurchased for cancellation purposes are repurchased via a second trading line on SIX. Opportunistic purchases may be started or stopped at any time without prior notice depending on market conditions and other factors.

If we do not generate sufficient operating cash flows to support our operations and future planned cash requirements, our operations could be harmed and our access to credit facilities could be restricted or eliminated. However, we believe that the trend of our historical cash flow generation, our projections of future operations and our available cash balances will provide sufficient liquidity to fund our operations for at least the next 12 months.

Operating Leases Obligations 

We lease facilities under operating leases, certain of which require us to pay property taxes, insurance and maintenance costs. Operating leases for facilities are generally renewable at our option and usually include escalation clauses linked to inflation. There have been no material changes to our contractual obligations as previously disclosed in our Annual Report on Form 10-K for the year ended March 31, 2024. The remaining terms of our non-cancelable operating leases expire in various years through 2034.
 
Purchase Commitments
 
As of June 30, 2024, we had non-cancelable purchase commitments of $390.4 million for inventory purchases made in the normal course of business from original design manufacturers, contract manufacturers and other suppliers, the majority of which are expected to be fulfilled within the next 12 months. We recorded a liability for firm, non-cancelable, and unhedged inventory purchase commitments in excess of anticipated demand or net realizable value consistent with our valuation of excess and obsolete inventory. As of June 30, 2024, the liability for these purchase commitments was $26.2 million and is recorded in accrued and other current liabilities in the condensed consolidated balance sheet.

We have firm purchase commitments of $12.9 million for capital expenditures primarily related to commitments for tooling and equipment for new and existing products. We expect to continue making capital expenditures in the future to support product development activities and ongoing and expanded operations. Although open purchase commitments are considered enforceable and legally binding, the terms generally allow us to reschedule or adjust our requirements based on business needs prior to delivery of goods or performance of services.

Other Contractual Obligations and Commitments
 
For further detail about our contractual obligations and commitments, refer to our Annual Report on Form 10-K for the fiscal year ended March 31, 2024.

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Indemnifications
 
We indemnify certain suppliers and customers for losses arising from matters such as intellectual property disputes and product safety defects, subject to certain restrictions. The scope of these indemnities varies, but in some instances includes indemnification for damages and expenses, including reasonable attorneys’ fees. As of June 30, 2024, no material amounts have been accrued for indemnification provisions. We do not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid under our indemnification arrangements.
 
We also indemnify our current and former directors and certain current and former officers. Certain costs incurred for providing such indemnification may be recoverable under various insurance policies. We are unable to reasonably estimate the maximum amount that could be payable under these arrangements because these exposures are not capped, the obligations are conditional in nature, and the facts and circumstances involved in any situation that might arise are variable.

Legal Proceedings
 
From time to time, we are involved in claims and legal proceedings that arise in the ordinary course of our business. For more information about Legal Proceedings, see Part II Item 1 Legal Proceedings of this quarterly report on Form 10-Q for the period ended June 30, 2024.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Market Risk
 
Market risk represents the potential for loss due to adverse changes in the fair value of financial instruments. As a company with global operations, we face exposure to adverse movements in currency exchange rates and interest rates. These exposures may change over time as business practices evolve and could have a material adverse impact on our financial results.
 
Currency Exchange Rates
 
We report our results in U.S. Dollars. Changes in currency exchange rates compared to the U.S. Dollar can have a material impact on our results when the financial statements of our non-U.S. subsidiaries are translated into U.S. Dollars. The functional currency of our operations is primarily the U.S. Dollar. Certain operations use the Swiss Franc or the local currency of the country as their functional currencies. Accordingly, unrealized currency gains or losses resulting from the translation of net assets or liabilities denominated in other currencies to the U.S. Dollar are accumulated in the cumulative translation adjustment component of accumulated other comprehensive income (loss) ("AOCI") in shareholders' equity.

We are exposed to currency exchange rate risk as we transact business in multiple currencies, including exposure related to anticipated sales, anticipated purchases and assets and liabilities denominated in currencies other than the U.S. Dollar. We transact business in approximately 30 currencies worldwide, of which the most significant to operations are the Euro, Chinese Renminbi, Australian Dollar, Canadian Dollar, Japanese Yen, Pound Sterling and New Taiwan Dollar. For the three months ended June 30, 2024, approximately 49% of our sales were in non-U.S. denominated currencies, with 21% of our sales denominated in Euro. The mix of our costs of goods sold and operating expenses by currency are significantly different from the mix of our sales, with a larger portion denominated in U.S. Dollar and less denominated in Euro and other currencies. A strengthening U.S. Dollar has a more unfavorable impact on our sales compared to the favorable impact on our cost of goods sold and operating expenses, resulting in an adverse impact on our operating results. 

We enter into currency forward and swap contracts to reduce the short-term effects of currency fluctuations on certain receivables or payables denominated in currencies other than the functional currencies of our subsidiaries. These contracts generally mature within approximately one month. The gains or losses on these contracts are recognized in earnings based on the changes in fair value.

If an adverse 10% foreign currency exchange rate change had been applied to total monetary assets and liabilities denominated in currencies other than the functional currencies at the balance sheet dates, it would have resulted in an adverse effect on income before income taxes of approximately $14.6 million and $19.1 million as of
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June 30, 2024 and March 31, 2024, respectively. The adverse effect as of June 30, 2024 and March 31, 2024 is after consideration of the offsetting effect of approximately $8.9 million and $6.9 million, respectively, from foreign exchange contracts in place as of such dates.

We enter into cash flow hedge contracts to protect against exchange rate exposure of forecasted inventory purchases. These hedging contracts mature within approximately four months. Gains and losses in the fair value of the effective portion of the hedges are deferred as a component of AOCI until the hedged inventory purchases are sold, at which time the gains or losses are reclassified to cost of goods sold.

If the U.S. dollar had weakened by 10%, the amount recorded in AOCI related to our foreign exchange contracts before tax effect as of June 30, 2024 and March 31, 2024 would have been approximately $12.0 million and $9.0 million lower, respectively. The change in the fair value recorded in AOCI would be expected to offset a corresponding foreign currency change in cost of goods sold when the hedged inventory purchases are sold. 

ITEM 4.   CONTROLS AND PROCEDURES
 
Disclosure Controls and Procedures
 
Logitech's management, with the participation of the Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO"), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, the CEO and the CFO have concluded that, as of such date, our disclosure controls and procedures are effective at the reasonable assurance level.
 
Definition of Disclosure Controls

Disclosure Controls are controls and procedures designed to reasonably assure that information required to be disclosed in the Company’s reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure Controls are also designed to reasonably assure that such information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. The Company’s Disclosure Controls include components of its internal control over financial reporting, which consists of control processes designed to provide reasonable assurance regarding the reliability of its financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the United States. To the extent that components of the Company’s internal control over financial reporting are included within its Disclosure Controls, they are included in the scope of the Company’s annual controls evaluation.

Limitations on the Effectiveness of Controls

The Company’s management, including the CEO and the CFO, does not expect that the Company’s Disclosure Controls or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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Changes in Internal Control over Financial Reporting
 
There have been no changes in the Company’s internal control over financial reporting during the fiscal quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. 

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PART II — OTHER INFORMATION
 
ITEM 1.   LEGAL PROCEEDINGS

From time to time, the Company is involved in claims and legal proceedings that arise in the ordinary course of its business. The Company is currently subject to several such claims and legal proceedings. The Company intends to vigorously defend against them. Management periodically assesses the Company’s liabilities and contingencies in connection with these matters based upon the latest information available. The Company follows ASC ("Accounting Standards Codification") 450, Contingencies, in determining the accounting and disclosure for these contingencies. Based on currently available information, the Company does not believe that resolution of pending matters will have a material adverse effect on its financial condition, cash flows and results of operations. However, litigation is subject to inherent uncertainties, and there can be no assurances that the Company's defenses will be successful or that any such lawsuit or claim would not have a material adverse impact on the Company's business, financial condition, cash flows and results of operations in a particular period. Any claims or proceedings against the Company can have an adverse impact because of defense costs, diversion of management and operational resources, negative publicity and other factors. Any failure to obtain a necessary license or other rights, or litigation arising out of intellectual property claims, could adversely affect the Company's business.

As a result of Regulation S-K disclosure requirements related to environmental proceedings to which the government is a party and such proceedings involve potential monetary sanctions, the Company selected the quantitative threshold of $1.0 million.

ITEM 1A.   RISK FACTORS

The Company’s business, reputation, results of operations, financial condition and stock price can be affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2024, under the heading “Risk Factors.” When any one or more of these risks materialize from time to time, the Company’s business, reputation, results of operations, financial condition and stock price can be materially and adversely affected. In the first quarter of fiscal year 2025, there have been no material changes to the risk factors disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2024.


ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Share Repurchases

In the first quarter of fiscal year 2025, the following approved share repurchase program was in place (in thousands):
Share Repurchase ProgramShares ApprovedApproved Amounts
July 2023 (1)
17,311 $1,000,000 

(1) See Note 11 to the condensed consolidated financial statements for further information on this share repurchase program.

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The following table presents certain information related to purchases made by Logitech of its equity securities under the 2023 share repurchase program (in thousands, except per share amounts):
Total Number of Shares
Repurchased		Weighted Average Price Paid Per ShareRemaining Amount that May Yet Be
Repurchased under the Programs
During the three months ended June 30, 2024
CHF (LOGN)USD (LOGI)
Month 1
April 1, 2024 to April 26, 2024
SIX440 
(1)
76.04 N/A$598,976 
Nasdaq— N/A$— 598,976 
Month 2
April 27, 2024 to May 24, 2024
SIX386 
(1)
80.76 N/A564,644 
Nasdaq— N/A$— 564,644 
Month 3
May 25, 2024 to June 28, 2024
SIX618 
(1)
88.53 N/A503,750 
Nasdaq— N/A$— 503,750 
1,444 82.65 N/A$503,750 
(1) Shares repurchased on the second trading line for cancellation under the 2023 share repurchase program.
ITEM 3.   DEFAULTS UPON SENIOR SECURITIES
 
Not applicable.
 
ITEM 4.   MINE SAFETY DISCLOSURES
 
None.
 
ITEM 5.   OTHER INFORMATION

Securities Trading Plans of Directors and Executive Officers

During the first quarter of fiscal year 2025, no director or officer, as defined in Rule 16a-1(f), adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Regulation S-K Item 408.
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ITEM 6.   EXHIBITS
 
Exhibit Index
 
Exhibit No. Description
31.1 
   
31.2 
   
32.1*
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
   
101.SCH XBRL Taxonomy Extension Schema Document
   
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
   
101.LAB XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
   
101.DEF XBRL Taxonomy Definition Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
 
*                 This exhibit is furnished herewith, but not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that we explicitly incorporate it by reference.


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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 LOGITECH INTERNATIONAL S.A.
  
  
July 25, 2024
/s/ Johanna (Hanneke) Faber
Date
Johanna (Hanneke) Faber
Chief Executive Officer
 
 
July 25, 2024
/s/ Meeta Sunderwala
Date
Meeta Sunderwala
 
Interim Chief Financial Officer
  
  

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