Oct 27, 2026 earnings call — Supply incident, Q2 growth and margin strength
Net sales were $1.2 billion, up 3% in U.S. dollars and 2% in constant currency.
Revenue $1.2B (est $1.2B) · EPS $1.51 (est $1.34)
Key quotes
"we now estimate the negative impact to net sales to be between $70 million to $80 million in the third quarter."
"Three trends are contributing to the strong VC growth. The post-COVID refresh wave, office footprint expansion as companies require more days in office, and AI-driven VC room expansion."
"We anticipate the third quarter gross margin rate to decline by approximately 200 basis points year-over-year, mainly due to rising logistics and material costs as well as modestly higher promotional spend."
Analyst Q&A 8
Why peripherals outperformed
Q (Erik Woodring · Morgan Stanley): Analyst asked what drove outperformance in mice, keyboards and combos — pricing, attaching to installed base, or internal initiatives. He also asked when higher OpEx will start accelerating revenue growth.
A: Management said the outperformance came from big market share gains: pointing devices up 320 basis points and keyboards up 280 basis points, driven by innovation and premium products like MX Master 4 and limited editions, which raised ASP. On OpEx, they said they are investing more in R&D and sales and marketing for AI and B2B opportunities, keeping G&A disciplined, and they cannot give a firm date for returns but expect results "sooner rather than later"; the supplier accident made the quarter timing wonky.
"So it's really down to innovation, which then continues that flywheel of having more people use the mouse and a keyboard because that's still relatively low, growing share and growing ASP because all of those innovations are premium priced." — Johanna Faber (CEO)
Video collaboration demand and margin drivers
Q (Asiya Merchant · Citi): Analyst asked if video collaboration demand will continue given enterprise spending pressure and supply constraints, and whether Logitech can meet demand. She also asked what drove the gross margin upside this quarter versus guide.
A: Management said they are very optimistic about sustained video collaboration demand, citing three long-term non-discretionary drivers: device refresh cycles, return-to-office needs, and AI integration; they launched a Generation 2 VC lineup and said they have enough memory chips to meet near-term demand, though quarter-to-quarter sales can be choppy. Finance said they proactively secured memory (raising inventory) and had raised prices in May; the gross margin upside was mainly mix and premiumization, with promotions a bit lower than expected and year-to-date gross margin near 45% excluding a tariff reimbursement.
"We're very optimistic about continued really great demand in video collaboration." — Johanna Faber (CEO)
Europe weakness and VC price vs units
Q (Joern Iffert · UBS): Analyst asked how long Europe can stay weak and what Logitech is doing to turn it around. He also asked to split recent video conferencing growth into price versus volume.
A: Management said Europe was soft, down 6% in constant currency, partly from the Middle East conflict (~50 basis points company-wide and a little over 100 basis points in EMEA) and low consumer and business confidence; their response is to keep innovating, run events like Logi PLAY and launch new products to grow share. On video collaboration, management said growth split was roughly 60-40 between price and units.
"The way I would split the growth is basically 60-40." — Matteo Anversa (CFO)
December quarter gross margin guide
Q (Didier Scemama · BofA): Analyst asked management to repeat and explain the gross margin guidance for the December quarter. He also asked for a sequential bridge from the reported margin this quarter.
A: Management said the December quarter gross margin guide is 41% to 42%, implying about a 200 basis points year-over-year reduction driven mainly by inflation (freight, logistics and material costs) and slightly higher promotions. Sequentially, they said higher promotions for the holiday quarter, some negative mix, and increased costs including premium freight will pressure margins versus the prior quarter; on gaming seasonality they added they do not rely on a single game and seasonality is not expected to change drastically.
"Didier, yes. It's our third quarter -- yes, the December quarter, it's 41% to 42%." — Matteo Anversa (CFO)
Tablet contract drop and supplier issue
Q (Michael Foeth · Vontobel): Analyst asked how Logitech will compensate for the big drop in iPad keyboard sales tied to a multi-quarter education contract. He also asked whether the easing of the supplier impact was due to the factory opening earlier or other workarounds.
A: Management said the drop was from a very large iPad keyboard education deal in APAC (supporting almost every school in Japan) and is hard to comp; they plan to sell more other products into education (especially video collaboration) and expand into government and other verticals, and the tough comparator will pass beyond Q3. On the supplier incident, they said the fab reopened mid-September but not at full capacity, the team used secondary suppliers, product redesigns, and commercial changes to reduce the net-sales impact to $70 million to $80 million in Q3 (down from an earlier estimate up to $200 million), and they expect the supply impact to be largely gone in Q4.
"We now expect that to be $70 million to $80 million in net sales." — Johanna Faber (CEO)
Input cost pressures and China growth
Q (Martin Jungfleisch · BNP Paribas): Analyst asked if there is a lagged or accelerating margin impact from freight and other input costs into next year and how contracts are structured. He also asked for growth in China for the second quarter and expectations for Q3.
A: Management said the expected third-quarter headwind to gross margin is about 150 basis points year-over-year, split roughly half from freight and logistics and half from material/component costs, and they expect inflationary pressure to continue through their fiscal year and will consider cost containment and price increases if needed. On regional performance, management said the Q3 outlook midpoint implies about negative 2.5% year-over-year including a $70 million to $80 million supplier hit (about 5 points pressure) plus roughly 1 point from the Middle East, and that China was ahead of APAC growth but they do not disclose country-level growth.
"And in the third quarter, the impact, as I mentioned, will be about 150 basis points year-over-year negative impact on the gross margin rate, third quarter of this year versus third quarter of last year." — Matteo Anversa (CFO)
Enterprise IT budgets and FX effect
Q (Craig Mcdowell · JPMorgan): Analyst asked what enterprise customers are saying about 2027 IT budgets and how much they will spend on hardware versus AI and other priorities. He also asked Matteo to quantify the currency impact on gross margin.
A: Management said enterprise demand is upbeat for video collaboration (mandatory refresh, return-to-office, AI needs) and personal workspace remains strong since they serve 71% of the Fortune 500; healthcare and government verticals also show good demand. On foreign exchange, management said FX provided about an 80 basis point lift year-over-year in the second quarter, and at current rates they do not expect major FX pressure or tailwinds for the upcoming quarter.
"the foreign exchange was about an 80 basis point lift year-over-year in the second quarter" — Matteo Anversa (CFO)
Japan education deal and China strategy
Q (Alicia Reese · Wedbush): Analyst asked which quarters were most affected by the large Japan education deal so investors can model comparisons, and asked whether China growth was mainly gaming or personal workspace and what other channels they are expanding into.
A: Management said the two quarters most affected by the large Japanese educational deal were Q2 and Q3 of this fiscal year, and they do not see other deals of that lumpy size. For China, they said both personal workspace and gaming are strong, gaming is a far larger market and Logitech is gaining share in premium gaming; they also highlighted local marketing success like Logi PLAY and expansion into i-Cafes as growth drivers.
"So it's Q2 of this fiscal year and Q3 of this fiscal year, so the 2 quarters we're talking about today that are most impacted by the big Japanese educational deal in the prior year." — Johanna Faber (CEO)