Company Raises FY 2022 Outlook For Both Sales and Profitability

SIX Swiss Exchange Ad hoc announcement pursuant to Art. 53 LR — Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the third quarter of Fiscal Year 2022, with strong growth in Pointing Devices, Keyboards & Combos and Gaming, and share gains in the majority of key categories. The Company raised annual guidance for both sales and profitability.

Q3 financial highlights:

  • Sales were $1.63 billion, down 2 percent in US dollars and constant currency, compared to Q3 of the prior year. This performance nearly sustains last year’s record Q3 sales which grew 85 percent in US dollars and 80 percent in constant currency.
  • Category sales in US dollars grew 29 percent in Keyboards & Combos and 8 percent in Pointing Devices and Gaming, compared to Q3 of the prior year. Video Collaboration grew 24 percent quarter over quarter and was down 2 percent compared to Q3 of the prior year in which sales grew more than 200 percent.
  • GAAP operating income declined 41 percent to $263 million, compared to $448 million in the same quarter a year ago. Non-GAAP operating income declined 37 percent to $302 million, compared to $476 million in the same quarter a year ago. This reflects the Company’s planned, strategic investments in marketing and innovation to drive future growth. Non-GAAP operating income almost doubled versus two years ago.
  • GAAP earnings per share (EPS) declined 44 percent to $1.24, compared to $2.22 in the same quarter a year ago. Non-GAAP EPS declined 37 percent to $1.55, compared to $2.45 in the same quarter a year ago.
  • Cash flow from operations was $377 million. The Company returned $116 million of cash to shareholders through share repurchases. Year to date, the Company has returned a total of $450 million to shareholders through dividends and share repurchases, more than twice the amount over the same period last year.

“I’m excited to now have in sight a fiscal year of growth for FY 2022, on top of last year’s remarkable performance,” said Bracken Darrell, Logitech president and chief executive officer. “Our Q3 results reflect the strength of our operational capabilities, innovation engine, and the choices we made to position ourselves in line with the long-term trends affecting work, play, and creating.”

Outlook

Logitech raised its Fiscal Year 2022 annual outlook to between 2 and 5 percent sales growth in constant currency, and between $850 million and $900 million in non-GAAP operating income. The Company’s previous outlook was flat sales growth in constant currency, plus or minus five percent, and $800 million to $850 million in non-GAAP operating income.

Prepared Remarks Available Online

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

Financial Results Videoconference and Webcast

Logitech will hold a financial results videoconference to discuss the results for Q3 Fiscal Year 2022 on Tuesday, January 25, 2022 at 8:30 a.m. Eastern Standard Time and 2:30 p.m. Central European Time. A livestream of the event will be available on the Logitech corporate website at http://ir.logitech.com.

Use of Non-GAAP Financial Information and Constant Currency

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

Public Dissemination of Certain Information

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

About Logitech

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

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

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

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

 

LOGITECH INTERNATIONAL S.A.

PRELIMINARY RESULTS*

(In thousands, except per share amounts) - unaudited

 

 

 

 

 

 

Three Months Ended December 31,

 

Nine Months Ended December 31,

GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

2021

 

2020

 

2021

 

2020

 

 

 

 

 

Net sales

$

1,632,782

 

$

1,667,302

$

4,251,107

 

$

3,716,354

 

Cost of goods sold

 

971,646

 

 

914,851

 

2,470,980

 

 

2,082,088

 

Amortization of intangible assets

 

3,126

 

 

3,441

 

11,028

 

 

9,800

 

Gross profit

 

658,010

 

 

749,010

 

1,769,099

 

 

1,624,466

 

 

 

 

 

 

Operating expenses:

 

 

 

 

Marketing and selling

 

269,941

 

 

204,485

 

778,882

 

 

496,520

 

Research and development

 

75,529

 

 

53,910

 

213,436

 

 

157,014

 

General and administrative

 

38,478

 

 

37,606

 

112,291

 

 

98,341

 

Amortization of intangible assets and acquisition-related costs

 

3,662

 

 

4,946

 

13,986

 

 

13,886

 

Impairment of intangible assets

 

7,000

 

 

 

7,000

 

 

 

Change in fair value of contingent consideration for business acquisition

 

(1,110

)

 

 

(3,509

)

 

5,716

 

Restructuring charges (credits), net

 

1,759

 

 

 

1,770

 

 

(54

)

Total operating expenses

 

395,259

 

 

300,947

 

1,123,856

 

 

771,423

 

 

 

 

 

 

Operating income

 

262,751

 

 

448,063

 

645,243

 

 

853,043

 

Interest income

 

278

 

 

311

 

795

 

 

1,444

 

Other income (expense), net

 

(3,673

)

 

6,483

 

(1,941

)

 

9,661

 

Income before income taxes

 

259,356

 

 

454,857

 

644,097

 

 

864,148

 

Provision for income taxes

 

49,345

 

 

72,334

 

107,789

 

 

142,638

 

Net income

$

210,011

 

$

382,523

$

536,308

 

$

721,510

 

 

 

 

 

 

Net income per share:

 

 

 

 

Basic

$

1.26

 

$

2.26

$

3.19

 

$

4.28

 

Diluted

$

1.24

 

$

2.22

$

3.14

 

$

4.21

 

 

 

 

 

 

Weighted average shares used to compute net income per share:

 

 

 

 

Basic

 

167,090

 

 

169,050

 

167,953

 

 

168,448

 

Diluted

 

169,707

 

 

172,587

 

171,027

 

 

171,378

 

 

LOGITECH INTERNATIONAL S.A.

PRELIMINARY RESULTS*

(In thousands) - unaudited

 

 

 

 

December 31,

 

March 31,

CONDENSED CONSOLIDATED BALANCE SHEETS

2021

 

2021

 

 

 

Current assets:

 

 

Cash and cash equivalents

$

1,364,411

 

$

1,750,327

 

Accounts receivable, net

 

845,836

 

 

612,225

 

Inventories

 

834,534

 

 

661,116

 

Other current assets

 

145,001

 

 

135,650

 

Total current assets

 

3,189,782

 

 

3,159,318

 

 

 

 

Non-current assets:

 

 

Property, plant and equipment, net

 

109,601

 

 

114,060

 

Goodwill

 

448,731

 

 

429,604

 

Other intangible assets, net

 

89,878

 

 

115,148

 

Other assets

 

323,605

 

 

324,248

 

Total assets

$

4,161,597

 

$

4,142,378

 

 

 

 

Current liabilities:

 

 

Accounts payable

$

738,992

 

$

823,233

 

Accrued and other current liabilities

 

813,684

 

 

858,617

 

Total current liabilities

 

1,552,676

 

 

1,681,850

 

 

 

 

Non-current liabilities:

 

 

Income taxes payable

 

85,610

 

 

59,237

 

Other non-current liabilities

 

155,369

 

 

139,502

 

Total liabilities

 

1,793,655

 

 

1,880,589

 

 

 

 

Shareholders’ equity:

 

 

Registered shares, CHF 0.25 par value:

 

30,148

 

 

30,148

 

Issued shares — 173,106 at December 31 and March 31, 2021

 

 

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

 

 

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

 

 

Additional paid-in capital

 

115,994

 

 

129,519

 

Shares in treasury, at cost — 6,639 at December 31, 2021 and 4,799 at March 31, 2021

 

(526,480

)

 

(279,541

)

Retained earnings

 

2,867,476

 

 

2,490,578

 

Accumulated other comprehensive loss

 

(119,196

)

 

(108,915

)

Total shareholders’ equity

 

2,367,942

 

 

2,261,789

 

Total liabilities and shareholders’ equity

$

4,161,597

 

$

4,142,378

 

 

LOGITECH INTERNATIONAL S.A.

PRELIMINARY RESULTS*

(In thousands) - unaudited

 

 

Three Months Ended December 31,

 

Nine Months Ended December 31,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

2021

 

2020

 

2021

 

2020

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net income

$

210,011

 

$

382,523

 

$

536,308

 

$

721,510

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation

 

21,913

 

 

13,409

 

 

65,387

 

 

36,010

 

Amortization of intangible assets

 

6,755

 

 

8,388

 

 

24,223

 

 

23,627

 

Impairment of intangible assets

 

7,000

 

 

 

 

7,000

 

 

 

Loss on investments

 

460

 

 

2,173

 

 

1,421

 

 

4,692

 

Share-based compensation expense

 

24,792

 

 

19,814

 

 

72,465

 

 

64,714

 

Deferred income taxes

 

20,561

 

 

17,531

 

 

27,369

 

 

37,683

 

Change in fair value of contingent consideration for business acquisition

 

(1,110

)

 

 

 

(3,509

)

 

5,716

 

Other

 

9

 

 

207

 

 

1,068

 

 

(1,670

)

Changes in assets and liabilities, net of acquisitions:

 

 

 

 

Accounts receivable, net

 

(123,350

)

 

(129,966

)

 

(236,358

)

 

(476,804

)

Inventories

 

(10,240

)

 

(78,258

)

 

(177,828

)

 

(239,378

)

Other assets

 

27,871

 

 

(21,714

)

 

(20,569

)

 

(53,281

)

Accounts payable

 

74,845

 

 

141,848

 

 

(80,637

)

 

541,024

 

Accrued and other liabilities

 

117,059

 

 

173,945

 

 

(17,612

)

 

264,576

 

Net cash provided by operating activities

 

376,576

 

 

529,900

 

 

198,728

 

 

928,419

 

Cash flows from investing activities:

 

 

 

 

Purchases of property, plant and equipment

 

(16,494

)

 

(18,389

)

 

(63,726

)

 

(46,163

)

Investment in privately held companies

 

(359

)

 

(120

)

 

(1,260

)

 

(3,525

)

Acquisitions, net of cash acquired

 

(300

)

 

(360

)

 

(15,886

)

 

(360

)

Proceeds from return of strategic investments

 

 

 

2,934

 

 

 

 

2,934

 

Purchases of short-term investments

 

(10,000

)

 

 

 

(10,000

)

 

 

Proceeds from the sale of short-term investments

 

1,225

 

 

 

 

1,225

 

 

 

Purchases of trading investments

 

(1,178

)

 

(2,473

)

 

(3,644

)

 

(10,672

)

Proceeds from sales of trading investments

 

1,308

 

 

2,493

 

 

4,285

 

 

11,332

 

Net cash used in investing activities

 

(25,798

)

 

(15,915

)

 

(89,006

)

 

(46,454

)

Cash flows from financing activities:

 

 

 

 

Payment of cash dividends

 

 

 

 

 

(159,410

)

 

(146,705

)

Payment of contingent consideration for business acquisition

 

(880

)

 

 

 

(880

)

 

 

Purchases of registered shares

 

(116,245

)

 

(50,271

)

 

(290,625

)

 

(72,725

)

Proceeds from exercises of stock options and purchase rights

 

8

 

 

3,643

 

 

16,644

 

 

29,709

 

Tax withholdings related to net share settlements of restricted stock units

 

(3,777

)

 

(3,731

)

 

(58,528

)

 

(29,475

)

Net cash used in financing activities

 

(120,894

)

 

(50,359

)

 

(492,799

)

 

(219,196

)

Effect of exchange rate changes on cash and cash equivalents

 

(2,769

)

 

7,896

 

 

(2,839

)

 

10,408

 

Net increase / (decrease) in cash and cash equivalents

 

227,115

 

 

471,522

 

 

(385,916

)

 

673,177

 

Cash and cash equivalents, beginning of the period

 

1,137,296

 

 

917,221

 

 

1,750,327

 

 

715,566

 

Cash and cash equivalents, end of the period

$

1,364,411

 

$

1,388,743

 

$

1,364,411

 

$

1,388,743

 

 

LOGITECH INTERNATIONAL S.A.

PRELIMINARY RESULTS*

(In thousands) - unaudited

 

 

 

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

Three Months Ended December 31,

 

Nine Months Ended December 31,

NET SALES

2021

 

2020

 

Change

 

2021

 

2020

 

Change

 

 

 

 

 

 

 

Net sales by product category:

 

 

 

 

 

 

Pointing Devices

$

231,090

$

213,638

8

%

$

602,982

$

503,228

20

%

Keyboards & Combos

 

281,608

 

218,269

29

 

 

736,237

 

565,246

30

 

PC Webcams

 

115,115

 

131,700

(13

)

 

319,504

 

295,020

8

 

Tablet & Other Accessories

 

82,859

 

138,052

(40

)

 

242,932

 

267,186

(9

)

Gaming (1)

 

469,282

 

436,426

8

 

 

1,135,456

 

916,040

24

 

Video Collaboration

 

287,187

 

292,500

(2

)

 

753,725

 

659,278

14

 

Mobile Speakers

 

56,748

 

72,566

(22

)

 

124,724

 

145,156

(14

)

Audio & Wearables

 

104,280

 

152,952

(32

)

 

318,965

 

338,592

(6

)

Smart Home

 

4,559

 

10,593

(57

)

 

16,380

 

25,976

(37

)

Other (2)

 

54

 

606

(91

)

 

202

 

632

(68

)

Total Sales

$

1,632,782

$

1,667,302

(2

)%

$

4,251,107

$

3,716,354

14

%

(1)

Gaming includes streaming services revenue generated by Streamlabs.

 

(2)

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

 

LOGITECH INTERNATIONAL S.A.

PRELIMINARY RESULTS*

(In thousands, except per share amounts) - unaudited

 

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

Three Months Ended December 31,

 

Nine Months Ended December 31,

GAAP TO NON GAAP RECONCILIATION (A)

2021

 

2020

 

2021

 

2020

 

 

 

 

 

Gross profit - GAAP

$

658,010

 

$

749,010

 

$

1,769,099

 

$

1,624,466

 

Share-based compensation expense

 

1,782

 

 

1,747

 

 

5,253

 

 

4,919

 

Amortization of intangible assets

 

3,126

 

 

3,441

 

 

11,028

 

 

9,800

 

Gross profit - Non-GAAP

$

662,918

 

$

754,198

 

$

1,785,380

 

$

1,639,185

 

 

 

 

 

 

Gross margin - GAAP

 

40.3

%

 

44.9

%

 

41.6

%

 

43.7

%

Gross margin - Non-GAAP

 

40.6

%

 

45.2

%

 

42.0

%

 

44.1

%

 

 

 

 

 

Operating expenses - GAAP

$

395,259

 

$

300,947

 

$

1,123,856

 

$

771,423

 

Less: Share-based compensation expense

 

23,010

 

 

18,067

 

 

67,212

 

 

59,795

 

Less: Amortization of intangible assets and acquisition-related costs

 

3,662

 

 

4,946

 

 

13,986

 

 

13,886

 

Less: Impairment of intangible assets

 

7,000

 

 

 

 

7,000

 

 

 

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

 

(1,110

)

 

 

 

(3,509

)

 

5,716

 

Less: Restructuring charges (credits), net

 

1,759

 

 

 

 

1,770

 

 

(54

)

Operating expenses - Non-GAAP

$

360,938

 

$

277,934

 

$

1,037,397

 

$

692,080

 

 

 

 

 

 

% of net sales - GAAP

 

24.2

%

 

18.0

%

 

26.4

%

 

20.8

%

% of net sales - Non - GAAP

 

22.1

%

 

16.7

%

 

24.4

%

 

18.6

%

 

 

 

 

 

Operating income - GAAP

$

262,751

 

$

448,063

 

$

645,243

 

$

853,043

 

Share-based compensation expense

 

24,792

 

 

19,814

 

 

72,465

 

 

64,714

 

Amortization of intangible assets and acquisition-related costs

 

6,788

 

 

8,387

 

 

25,014

 

 

23,686

 

Impairment of intangible assets

 

7,000

 

 

 

 

7,000

 

 

 

Change in fair value of contingent consideration for business acquisition

 

(1,110

)

 

 

 

(3,509

)

 

5,716

 

Restructuring charges (credits), net

 

1,759

 

 

 

 

1,770

 

 

(54

)

Operating income - Non - GAAP

$

301,980

 

$

476,264

 

$

747,983

 

$

947,105

 

 

 

 

 

 

% of net sales - GAAP

 

16.1

%

 

26.9

%

 

15.2

%

 

23.0

%

% of net sales - Non - GAAP

 

18.5

%

 

28.6

%

 

17.6

%

 

25.5

%

 

 

 

 

 

Net income - GAAP

$

210,011

 

$

382,523

 

$

536,308

 

$

721,510

 

Share-based compensation expense

 

24,792

 

 

19,814

 

 

72,465

 

 

64,714

 

Amortization of intangible assets and acquisition-related costs

 

6,788

 

 

8,387

 

 

25,014

 

 

23,686

 

Impairment of intangible assets

 

7,000

 

 

 

 

7,000

 

 

 

Change in fair value of contingent consideration for business acquisition

 

(1,110

)

 

 

 

(3,509

)

 

5,716

 

Restructuring charges (credits), net

 

1,759

 

 

 

 

1,770

 

 

(54

)

Loss on investments

 

460

 

 

2,173

 

 

1,421

 

 

4,692

 

Non-GAAP income tax adjustment

 

13,054

 

 

10,165

 

 

12,463

 

 

31,564

 

Net income - Non - GAAP

$

262,754

 

$

423,062

 

$

652,932

 

$

851,828

 

 

 

 

 

 

Net income per share:

 

 

 

 

Diluted - GAAP

$

1.24

 

$

2.22

 

$

3.14

 

$

4.21

 

Diluted - Non - GAAP

$

1.55

 

$

2.45

 

$

3.82

 

$

4.97

 

 

 

 

 

 

Shares used to compute net income per share:

 

 

 

 

Diluted - GAAP and Non - GAAP

169,707

 

172,587

 

 

171,027

 

171,378

LOGITECH INTERNATIONAL S.A.

PRELIMINARY RESULTS*

(In thousands) - unaudited

 

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

Three Months Ended December 31,

 

Nine Months Ended December 31,

SHARE-BASED COMPENSATION EXPENSE

2021

 

2020

 

2021

 

2020

 

 

 

 

 

Share-based Compensation Expense

 

 

 

 

Cost of goods sold

$

1,782

 

$

1,747

 

$

5,253

 

$

4,919

 

Marketing and selling

 

10,699

 

 

8,390

 

 

28,987

 

 

27,559

 

Research and development

 

4,510

 

 

3,482

 

 

14,295

 

 

10,348

 

General and administrative

 

7,801

 

 

6,195

 

 

23,930

 

 

21,888

 

Total share-based compensation expense

 

24,792

 

 

19,814

 

 

72,465

 

 

64,714

 

Income tax benefit

 

(3,581

)

 

(3,471

)

 

(23,460

)

 

(15,540

)

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

$

21,211

 

$

16,343

 

$

49,005

 

$

49,174

 

 

*Note: These preliminary results for the three and nine months ended December 31, 2021 are subject to adjustments, including subsequent events that may occur through the date of filing our Quarterly Report on Form 10-Q.

(A) Non-GAAP Financial Measures

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

While we use non-GAAP financial measures as a tool to enhance our understanding of certain aspects of our financial performance and to provide incremental insight into the underlying factors and trends affecting both our performance and our cash-generating potential, we do not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, we believe that disclosing non-GAAP financial measures to the readers of our financial statements provides useful supplemental data that, while not a substitute for GAAP financial measures, can offer insight in the review of our financial and operational performance and enables investors to more fully understand trends in our current and future performance. In assessing our business during the quarter ended December 31, 2021 and previous periods, we excluded items in the following general categories, each of which are described below:

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

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

Impairment of intangible assets. We may incur impairment of intangible assets expense, primarily in connection with our past business or asset acquisitions. We believe that providing the non-GAAP measures excluding these items, as well as the GAAP measures, assists our investors because such expenses are not reflective of our ongoing operating results.

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

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

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

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

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

Additional Supplemental Financial Information - Constant Currency

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

(LOGIIR)

Editorial Contacts: Nicole Noutsios, Investor Relations - lir@logitech.com Nicole Kenyon, Head of Global Corporate & Employee Communications - USA +1 (510) 988-8553 Ben Starkie, Corporate Communications - Europe +41 (0) 79-292-3499

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