Good afternoon, and good evening. Welcome to Logitech's video call to discuss our financial results for the second quarter of our fiscal year 2026. Joining us today are Hanneke Faber, our CEO; and Matteo Anversa, our CFO. During this call, we will make forward-looking statements, including discussions of our outlook, strategy and guidance. We're making these statements based on our views only as of today. Our actual results could differ materially as a result of many factors. Additional information concerning those factors is available in our most recent annual report on Form 10-K and any subsequent reports on Forms 10-Q and 8-K, which you can find on the SEC's website and the Investor Relations section of our website. We undertake no obligation to update or revise any of these forward-looking statements, except as required by law. We will also discuss non-GAAP financial results. You can find a reconciliation between GAAP and non-GAAP results and information about our use of non-GAAP measures and factors that could impact our financial results and forward-looking statements in our press release and in our filings with the SEC. These materials as well as the shareholder letter and a webcast of this call are all available at the Investor Relations page of our website. We encourage you to review these materials carefully. And unless noted otherwise, references to net sales growth are in constant currency and comparisons between periods are year-over-year. This call is being recorded and will be available for a replay on our website. I will now turn the call over to Hanneke.

Thank you, Nate, and welcome, everyone. We delivered a strong second quarter to close out the first half of fiscal year 2026. Our teams executed with excellence, delivering good top line growth and outstanding profitability. They executed well across all regions and delivered strong growth across both B2B and consumer channels. To achieve these results in the current environment underscores Logitech's discipline and resilience. In Q2, we remained focused on our long-term strategic priorities, and they drove our results. First, of course, superior products and innovation, which are integral to our DNA. This quarter, we announced 16 new products. Some highlights included the much-anticipated MX Master 4, a new generation of our flagship premium mouse. This new product is the first in the MX line to provide advanced users with tactile haptic feedback, and it is off to a record-breaking start. We also unveiled a wide array of exciting new gaming products, including the new PRO X2 SuperStrike mouse, which blends inductive analog sensing and real-time haptic feedback for the most competitive gamers. We also launched the McLaren Racing collection, a premium lineup of SIM racing gear inspired by McLaren's iconic racing brand and technology. And for those in the business world on calls like this one, we introduced the new Zone Wireless 2ES and Zone Wired 2 headsets with AI-powered dual noise canceling microphones and adaptive hybrid active noise cancellation. Many of these new products were announced at our Logitech-owned flagship events, Logi WORK and Logi PLAY in September. These coveted live events took place in more than 30 cities around the world, attracting thousands of media, influencers, content creators, partners, and thought leaders. The Logi PLAY global live stream on the day drove more than 12 million views. And within a month, the Logi PLAY social media and creator activations reached approximately 200 million people. This underscores the growing strength of our global brand. We also continue to double down on B2B with good momentum behind our investments in new products and capabilities. Logitech for business demand was strong across video collaboration, personal workspace solutions, and the education vertical. Time Magazine recognized our new office environmental sensor, the Logitech Spot, as one of the best inventions of 2025. This is the second year in a row we have received this prestigious recognition for a new product. Logitech's global scale remains a key advantage. In Q2, we executed very well across geographies. EMEA posted solid growth. Once again, Asia Pacific had an excellent quarter, supported by our China for China investments. Their strength helped offset a modest sales decline in the Americas as we proactively managed tariffs. Importantly, demand trends in the U.S. improved as the quarter progressed. Finally, our Q2 performance underscores Logitech's capabilities as an operational powerhouse. Our cost discipline and manufacturing diversification were important factors in driving excellent gross margins and double-digit growth in non-GAAP operating income. We are on track to reduce our share of U.S. products originating from China to 10% by the end of this calendar year. We're able to do this thanks to our long-established diversified manufacturing capabilities in five other countries, while our Chinese manufacturing site continues to serve China and the rest of the world. Now looking ahead to Q3, we believe we will see continued strong momentum in our business, but we also see some market uncertainty. The North American consumer market, especially in gaming, was softer in Q2. We're cautiously optimistic that this will improve for the holiday season, but that is, of course, yet to be confirmed. The macros also remain uncertain with tariffs, export restrictions, and persistent inflation, just some of the dynamics. In this context, we believe our Q3 outlook reflects a pragmatic balance between the strong momentum of our business and the litany of uncertainties within the global economy. Our approach to deliver the holiday quarter and beyond remains unchanged. We'll focus on our long-term strategic priorities while being guided by the three in-year principles of playing offense, cost discipline, and agility. In terms of playing offense, we will continue to invest in R&D and demand generation to gain share, both in the short and the long term. As for rigorous cost discipline, we'll continue to focus on product cost optimization, tariff mitigation, and disciplined G&A spend. And of course, we will continue to be agile and move fast. In closing, we entered a holiday quarter in a dynamic global environment with a strong first half under our belts and with a unique set of assets that underpin our resilience: our extraordinary capacity for superior products and innovation, our global reach with two-thirds of sales generated outside the U.S., our diversified manufacturing footprint or China plus five, our strong and growing brand, our pristine balance sheet, and our experienced high-performing team. I believe these assets, combined with our clear strategic priorities, position us well to continue to deliver strong results. Before I hand over to Matteo, let me say a big thank you to our teams around the world. Our people are driving this strong performance and a unique culture. I was super proud that this was recognized by Forbes this quarter when they ranked Logitech out of 900 global companies as #25 on their list of the world's best employers. Matteo, over to you.

Thank you, Hanneke, and thank you all for joining us on the call today. I would like to start by thanking our teams around the globe for the continuous strong execution in the second quarter. While the external environment remains challenging, our execution centered on playing offense, disciplined cost control, and agility. This focus drove a non-GAAP operating income of $230 million, up 19% year-over-year. This strong profitability was achieved in a quarter where we delivered mid-single-digit net sales growth year-over-year. Let me discuss some of the key aspects of our second quarter financials. Net sales were up 4% year-over-year in constant currency, supported by continued robust demand across both consumer and B2B. In fact, B2B demand outpaced consumer in the quarter. Some key highlights across our product categories: Personal Workspace grew year-over-year, fueled by double-digit growth in Pointing Devices and Keyboards & Combos. Gaming delivered 5% year-over-year growth in constant currency, driven by double-digit growth in PC gaming. Video Collaboration grew 3% in constant currency, propelled by high growth in EMEA, while Americas was relatively flat due to the pull forward of sales that we highlighted in the first quarter. We executed well across our regions and more specifically, Asia Pacific grew 19% year-over-year in constant currency, led by sustained double-digit growth in China. EMEA grew 3% in constant currency, driven by strong growth in Video Collaboration and Personal Workspace. Conversely, Americas was down 4%, primarily due to the gaming market decline. As Hanneke just noted, we experienced lower demand early in the quarter as a result of the pricing actions that we took to offset tariffs, which improved in the latter half. Moving to gross margin, our non-GAAP gross margin rate for the quarter was 43.8%, similar to the prior year, and it is important to note that the negative impact of tariffs was entirely offset by our price and manufacturing diversification actions. Additionally, product cost reductions offset investments in strategic promotions. We continue to be very disciplined in managing our costs. As a result, operating expenses declined 3% year-over-year and were 24.4% of net sales, down 240 basis points from the 26.9% in the second quarter of last year. Similarly to last quarter, this decrease was primarily driven by a reduction in G&A as a result of the measures that we implemented to mitigate the impact of tariffs. As mentioned earlier, this focus drove a non-GAAP operating income of $230 million, up 19% year-over-year and a non-GAAP operating income margin expansion of more than 200 basis points. Moving to cash, our cash flow remains strong. We generated approximately $230 million in cash from operations, that is 100% of operating income, and ended the quarter with a cash balance of $1.4 billion. We returned $340 million to shareholders in the quarter through dividends and share repurchases, which is consistent with our capital allocation priorities. Looking ahead, as Hanneke pointed out, we are monitoring two pockets of uncertainty: the U.S. consumer market, particularly in gaming, and the overall macro environment, particularly around tariffs, export restrictions, global trade dynamics, and inflation. Nevertheless, we expect the overall top line trend to continue to be positive and roughly in line with the performance year-to-date. Net sales in the third quarter are expected to grow 1% to 4% year-over-year in constant currency, with a gross margin rate between 42% and 43%. Non-GAAP operating income is expected to be between $270 million and $290 million. This outlook contemplates tariff levels for the third quarter being unchanged from the current structure, and we anticipate, again, that our pricing actions and continued diversification efforts will offset the negative impacts of these tariffs. While there is a level of uncertainty in the U.S. market, we will continue to manage the business with diligence, generating strong levels of operating income and cash from operations. I want to thank our teams across the globe for their dedication and flexibility. Now, David, I think we can open the call for questions.

And now our first question is from Asiya Merchant from Citi.

Great. I hope you can hear me.

Yes, Asiya.

Could you provide more details on the uncertainty in the U.S. consumer market, particularly in relation to gaming? What observations have you made? Has this been influenced by the price increases you've implemented? Additionally, when you mention that conditions in the Americas improved over the quarter, does that include gaming? Please elaborate on this point. Given that sell-through has significantly outperformed sell-in, why is there an expectation for a more seasonal forecast, possibly in the mid- to high-teens range?

Thanks, Asiya. There's a couple of pieces in that question. I appreciate it. Maybe first on the markets overall, we saw continued strong markets around the world on the work side of our business. So Video Conferencing and Personal Workspace, really markets were strong and growing everywhere. In Europe and in APAC, the gaming market also continued to grow. But in the Americas, it was a little bit more mixed. Again, VC and PWS were really solid market-wise, but the Gaming market in Q2 declined mid-single digits. The reasons for that decline can be debated, but I think what's more important is that we're cautiously optimistic the gaming market will recover and be back to growth in the holiday quarter for several reasons. First of all, we saw trends improve as the quarter progressed in Q2. There have been some game releases early in Q3, notably Battlefield 6, which is the type of game that plays to our strength and is off to a really good start. We also have an excellent innovation bundle and some targeted promotions where needed to continue to grow the business. So again, globally, the market is actually quite strong. North American gaming was a little softer. And by the way, in the global context, our competitive share performance in Q2 was also very strong. All in all, good momentum and cautiously optimistic that that spot of North American gaming will be better during the holidays.

No, no, go ahead.

Unpacking a bit of the second portion of your question on the outlook. The way I think I would describe it is we think it's a reasonably fair balance between the underlying strong performance that the business continues to have, as you've seen in the results we posted earlier today, with some of the litany of uncertainties that Hanneke talked about in her prepared remarks. So when you look at it by region, we're expecting Asia Pacific to continue to perform extremely well with double-digit growth. China keeps doing extremely well. We have 11/11 coming up here in November, so we expect strong performance on gaming. Asia Pacific will continue to perform in line with the last couple of quarters. Similar for EMEA, we expect low to mid-single-digit growth in constant currency in Europe as well. The bookends of our outlook are really around what's going to happen in North America with the U.S. consumer. If you look at the low end of the outlook, it assumes North America continues to be slightly negative year-over-year in terms of net sales, as we have seen in the first six months of the year, while the high end of the outlook assumes a strong holiday season, strong consumer, and North America actually turning flat to slightly positive. Those are the bookends of the outlook that we provided today.

And was any of that an impact of prices that you implemented, price increases that you put through?

Yes. I think mostly our brand and our products, both of which we believe are quite superior, protected us to a large extent from impacts of the pricing. I would say, in general, higher-priced and premium products, as well as our B2B portfolio, we saw very little to no impact from the price increases. Where we did see some impact was on entry-priced products and even there, probably a little bit more so on entry pricing gaming than in PWS. We're actively managing that with targeted promotions.

Our next question comes from Erik with Morgan Stanley.

Could you elaborate on the consumer response to the increased prices? I'm interested in understanding the behavior you observed before and after the pricing changes in the U.S., particularly in relation to the B2B pull forward mentioned for the June quarter. What assumptions are you making for the December quarter regarding pricing and price elasticity? I have a follow-up question as well.

Yes. Again, on the B2B side, very little impact with the exception of some timing impact where, again, we saw a little bit of pull forward in our Q1. But demand-wise, very little impact. Same thing on the premium end of the portfolio, very little impact. I think the U.S. consumer at the high end is in good shape. A little bit more impact on the lower end. That's not unexpected. And again, that got better during the quarter. Overall, we're really pleased by the fact that we took pricing early, and you see what that does to our gross margins, where we were able to offset the entire impact of tariffs by pricing and cost reductions.

Okay. And then quickly as my follow-up, Hanneke or maybe it's better for Matteo as well, or maybe both of you, can you talk about how Logitech is thinking about M&A today? And if there's any difference from what you outlined at your Analyst Day back in March? I only ask because we haven't seen, I don't think anything has necessarily materialized over the last, let's call it, six or seven months. Is that just a function of better uses of cash? Is it a function of valuations? Is it a function of the opportunity set? Would just love your feedback there. That's it for me.

Yes. Thanks, Erik. No change. I'm afraid versus Analyst Day. Our top priority for capital allocation is investing organically in the business, and that's definitely what we're doing. The second priority is making sure we grow the dividend every year. The third priority is M&A, and we are actively out in the market looking for the right targets, but they have to be strategic and they have to make the boat go faster. We're looking at lots of things, but I'm going to be very careful. I want things that make the boat go faster, and those are not so easy to come by. Our last priority when it comes to capital allocation is share buybacks because we also don't want a lazy balance sheet. You saw us returning a lot of cash to shareholders in the quarter, mostly through the dividend in Q2, but also through some buybacks.

Our next question comes from Alek Valero with Loop Capital.

This is Alex on for Ananda. Just back to Gaming in the Americas, can you speak to how and when you think the Americas, I believe you said entry-level gaming can normalize the higher ASPs?

Yes. Again, we saw trends improving throughout the quarter. In America, we haven't taken price increases in a long time. We don't have a lot of history, but we have taken price increases in other markets around the world over recent times. You tend to see a bit of an impact in the first quarter after that. That is no surprise. Again, we were pleased to see in the impacted parts of the portfolio trends improving throughout the quarter. As Matteo outlined, exactly when that will normalize is a little hard to tell, which is why we have a range for Q3. The bookends of those assume either it normalizes faster or it takes a little bit longer. Overall, we're confident that it will normalize.

Awesome. Just a quick follow-up. I believe I recall you mentioned that the B2B is going to layer in over time. Can you speak to what the mix is today in terms of business to consumer? And where does it go from here?

Yes. Logitech for Business, which includes VC headsets and Personal Workspace sold into the enterprise channel, is about 40% of the business, and that's creeping up but very slowly over time as we double down on that. In Q2, it was again a strong quarter for Logitech for Business. You saw the video conferencing sales were up with double-digit demand growth. There are a lot of things we like about Q2 in Logitech for Business. However, I would particularly highlight that we saw disproportionate growth in higher ASP, more premium solutions, including the exciting new Rally Board 65 video conferencing mobile solution, which is proving to be very popular. We're continuing to strengthen our go-to-market capabilities. We launched CPQ, configure price quote in the quarter, which is helping us quote faster and deliver better service to our customers. The education vertical continued to perform well in the quarter. So lots to like there, and we'll continue our focus on Logitech for Business.

And with that, our next question goes to Didier with Bank of America.

I have a couple of questions. First, for Matteo, Hanneke, or whoever would like to respond. I'm curious about how we should view the marketing spend during the holiday season. You've mentioned some factors, but considering the tailwinds from foreign exchange and the somewhat challenging consumer environment in the U.S., it seems like the FX benefits could be used to invest more in the U.S. However, the channel is also quite lean. How should we approach this?

Yes. We feel good about inventories ahead of the holidays, both in the channel and our own inventory levels. They're healthy. We have enough. We don't have too much. The overall OpEx, again, Matteo said it just now, we had a great quarter in terms of OpEx, 24.4%. That's 240 basis points down versus last year. That's a really great discipline. That was focused on G&A, where we're very purposeful and just tight. R&D was virtually unchanged in Q2, and we're going to continue to invest there; that's our bread and butter. And in terms of marketing, it was also close to last year in Q2. The effectiveness of our marketing spend globally continues to improve. We're shifting money from non-working producing stuff to working producing stuff, which is much better. We're also strengthening our marketing capabilities. In China, we are really doing well in marketing. Last week, at China's big marketing ROI Festival, there were 2,400 entries for best marketing ROI, and we were one of only 11 Gold Award winners. It shows the strength of our marketing team and how we've modernized it. We're getting more value from our marketing spend, and I expect that to continue in Q3. We won't hesitate to lean into either R&D or sales and marketing spend if we think it can accelerate the top line.

For modeling purposes, remember, the third quarter’s OpEx as a percentage of net sales tends to be a little lower due to it being the biggest quarter of the year. That will imply a sequential increase to Hanneke's point, both overall in OpEx and the increase will primarily be in R&D and sales and marketing. That's what you can expect.

Our next question comes from Samik Chatterjee with JPMorgan.

Let me check first, can you hear me?

We can hear you.

Okay. Hanneke and Matteo, what feedback are you getting from your distribution partners regarding the promotional activities they plan to increase in the December quarter? You mentioned November 11th as well in China. How do the intentions from retailers for promotional activities this year compare to previous years? Additionally, how does this impact the gross margin forecast you provided for the next quarter, particularly in light of the slight decrease we observed last quarter from Q2 to Q3 last year? I have a follow-up.

Yes. In terms of what we're hearing, I've been out in the market quite a bit in the U.S. and in Canada in the last few weeks, talking to customers, consumers, and some of our partners. I'd say they're also optimistic on the holidays. They want to be sure that our premium offerings look really great. If you go into a Best Buy or in Europe into a MediaMarkt, you'll see fabulous execution of the McLaren collection and the MX Master 4, which is at its best. They're also looking for us to together offer great value on the lower end of the portfolio. So in both Europe and the U.S., we've done a little more promotion there in the past quarter, and that kind of mix of great visibility of the high end and targeted promotions on the low end will continue into Q3. That's important not just in the U.S. but in Europe as well, where we need to do ongoing work against lower-end Chinese competition, which is more active in Europe now than last year.

Samik, let me unpack the gross margin a bit. The third quarter is expected to be very similar to the second. We have been very precise on promotion, and to Hanneke's point, we are spending money very carefully where necessary. If you look at the gross margin rate in the second quarter, it was flattish year-over-year. We mentioned that our pricing actions completely offset the tariff impact. The operating team did a fantastic job continuing to work on product cost reduction while concurrently working on manufacturing diversification. This gave us about 100 basis points of margin expansion year-over-year, which was offset by slightly higher promotion as mentioned. Last quarter, we had a release of inventory reserves, which didn't occur this year. That put about 100 basis points of pressure year-over-year on the gross margin side but was offset by positive effects due to the current exchange rate, primarily euro to USD. Similar dynamics will play out in the third quarter as we will continue to work on product cost reduction, allowing us to offset some promotional spend in the holiday quarter while pricing will continue to mitigate the tariff impact. That's the outlook of 42% to 43% that we've described today.

Okay. Got it. Maybe just for my follow-up, the OpEx run rate that you're managing looks fairly disciplined, and you're doing it with a lower OpEx envelope year-over-year despite the business still growing. What are the areas you're making those trade-offs on? Where are you finding those efficiencies to keep the OpEx envelope this tight?

Sure. Starting at a high level with the numbers, we outlined even at the Investor Day that our objective is to have OpEx in the range of 24% to 26% of net revenue. Last year, you saw us maybe more on the higher end of this range. This year, so far, we've been on the lower end. That is fundamentally driven by some measures we took in light of tariffs to control costs. It’s important to be clear that most of these cost control actions were centered around G&A. This includes managing contractor costs, pausing hires of people that are not related to R&D or sales and marketing, and travel control. That is where the focus has been. We’re trying to curtail costs on G&A and redirect those savings back into the growth of the business, which means R&D and then sales and marketing. Expect to continue this approach in the next couple of quarters.

Our next question goes to Didier with Bank of America.

I have a couple of questions. First, for Matteo or Hanneke, I was wondering about the marketing spend during the holiday season. You mentioned it briefly, but how should we approach it? On one hand, there's some support from foreign exchange rates, but on the other hand, the consumer environment in the U.S. seems a bit challenging. It would make sense to utilize the benefits from FX to invest in the U.S., but there’s also the fact that the channel is very lean. I'm curious how we should consider this.

We are confident about our inventory levels as we approach the holidays, both in our distribution channels and our own stock. They are in a healthy state, with sufficient supply but not excessive. In terms of overall operating expenses, we had an excellent quarter at 24.4%, which is a 240 basis point decrease from last year. This reflects strong discipline, particularly in general and administrative expenses where we are very focused and efficient. Research and development expenses remained stable in Q2, and we plan to keep investing in that area, as it is crucial for us. Regarding marketing, spending in Q2 was similar to last year, but the effectiveness of our marketing investments globally is consistently improving. We are reallocating funds from less productive initiatives to more impactful ones. Our marketing capabilities are also getting stronger. In China especially, we are excelling in our marketing efforts. Recently, at a major marketing ROI Festival in China, we had 2,400 entries for the best marketing ROI, and we were proud to be among just 11 Gold Award winners. This highlights the capability of our marketing team and our modernization efforts in the field. We are achieving better results from our marketing investments, and I expect this trend to continue in Q3. We are open to increasing our spending in either research and development or sales and marketing if we believe it will help drive revenue growth.

For modeling purposes, the third quarter, OpEx as a percentage of net sales tends to be a little lower just because it's the biggest quarter of the year. So that would imply a sequential increase to Hanneke's point, both overall in OpEx and the increase will be primarily in R&D and sales and marketing. So that's what you can expect.

Our next question goes to Didier with Bank of America.

I have a couple of questions. First, for Matteo, Hanneke, or whoever wants to answer. I'm curious about how we should approach the marketing spend during the holiday season. You've mentioned it briefly, but I'm noting that there are some favorable conditions from foreign exchange, while at the same time, the consumer environment in the U.S. seems a bit more challenging. It might be wise to leverage that FX advantage to invest in the U.S. However, you also have a very streamlined channel. So, how should we consider this?

We are confident about our inventory levels going into the holiday season. Both our channel inventory and our own stocks are in a healthy state; we have sufficient supply without excess. Regarding overall operating expenses, we experienced a strong quarter at 24.4%, which is a reduction of 240 basis points compared to last year, demonstrating effective discipline primarily focused on general and administrative costs where we've been very strategic. Research and development expenses were nearly the same in Q2, and we plan to keep investing in that area as it is crucial for us. Marketing expenses in Q2 were close to last year’s levels, and it's important to highlight that the effectiveness of our global marketing investments is on the rise. We are reallocating funds from less productive initiatives to those that yield better results. We are also enhancing our marketing capabilities; particularly in China, our marketing efforts are thriving. Last week at a major marketing ROI Festival in China, we were recognized as one of the few Gold Award winners among 2,400 entries. This exemplifies the strength of our marketing team and our modernization efforts. We are achieving better returns on our marketing investments, and I anticipate this trend to continue into Q3. We are prepared to increase our spending in either research and development or sales and marketing if we believe it will enhance our revenue growth.

For modeling purposes, the third quarter, OpEx as a percentage of net sales tends to be a little lower just because it's the biggest quarter of the year. This would imply a sequential increase to Hanneke's point, both overall in OpEx and the increase will primarily be in R&D and sales and marketing. So that's what you can expect.

Our next question comes from Didier with Bank of America.

I have a couple of questions. First, for Matteo or Hanneke, I'm curious about how we should interpret the marketing spend during the holiday season. You've mentioned it a bit, but considering the positive effects from foreign exchange and the tougher consumer environment in the U.S., it seems like you might want to use the FX benefits to invest in the U.S. However, the channel is also quite lean. How should we approach this?

We are optimistic about our inventory levels as we approach the holidays, both in the channel and our own stock. Our inventory is healthy and well-managed. When it comes to operating expenses, we had an excellent quarter at 24.4%, which is down 240 basis points compared to last year. This reflects our strong discipline, particularly in general and administrative costs, where we are very focused and efficient. Research and development expenses remained steady in Q2, and we plan to continue investing there since it's crucial for us. Regarding marketing, our spending in Q2 was similar to last year, but it's worth noting that our marketing effectiveness globally is improving. We are reallocating funds from less effective areas to more productive ones, which typically yields better results. Our marketing capabilities are also strengthening, especially in China, where we've excelled and recently received recognition for our performance at a major marketing festival with over 2,400 entries. We are getting more value from our marketing investments and expect this trend to continue into Q3. We are prepared to increase spending in R&D or sales and marketing if we believe it will help boost our revenue.