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Item 7. Management’s Discussion and Analysis

2024-05-16 compared with 2023-05-17 · 178 added, 163 removed, 250 unchanged (58% of the section changed)

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Our actual results could differ materially from those anticipated in these statements as a result of certain factors, including those set forth above in Item 1A "Risk Factors," and below in Item 7A, "Quantitative and Qualitative Disclosures about Market Risk." Please read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included under Item 8 of this Annual Report on Form 10-K.

Overview of Our Company

Logitech’s mission is to help all people pursue their passions in a way that is good for people and the planet.

We design, manufacture, and sell products that help businesses thrive and bring people together when working, creating, gaming and streaming.

We sell these products through a number of brands:

Logitech, Logitech G (including ASTRO Gaming, Streamlabs, and Blue Microphones) and Ultimate Ears.

Our products address primarily four large market opportunities:

Creativity & Productivity, Gaming, Video Collaboration and Music.

We sell our products to a broad network of international customers, including direct sales to retailers, e-tailers, and end consumers through our e-commerce platform, and indirect sales to end customers through distributors.

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 15 to our 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.

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Impacts of Macroeconomic and Geopolitical Conditions on our Business

In fiscal year 2023, our business was impacted by adverse macroeconomic and geopolitical conditions.

These conditions included inflation, foreign currency fluctuations, and slowdown of economic activity around the world, in part due to rising interest rates, and lower consumer and enterprise spending.

In addition, the war in Ukraine resulted in global supply chain, logistics, and inflationary challenges.

We had no revenue in Russia and Ukraine in fiscal year 2023 as we have indefinitely ceased all sales and shipments to Russia and sales in Ukraine have also been halted due to the ongoing military operations on the Ukrainian territory.

The global and regional economic and political conditions adversely affect demand for our products.

These conditions also had an impact on our suppliers, contract manufacturers, logistics providers, and distributors, causing volatility in cost of materials and shipping and transportation rates, and as a result, impacting the pricing of our products.

For additional information, see "Liquidity and Capital Resources" below and Item 1A " Risk Factors ," including under the caption " Adverse global and regional economic and geopolitical conditions can materially adversely affect our business, results of operations and financial condition , " “We purchase key components and products from a limited number of sources, and our business and operating results could be adversely affected if supply were delayed or constrained or if there were shortages of required components,” “Our principal manufacturing operations and third-party contract manufacturers are located in China and Southeast Asia, which exposes us to risks associated with doing business in that geographic area as well as potential tariffs, adverse trade regulations, adverse tax consequences and pressure to move or diversify our manufacturing locations,” “If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected,” and "If we do not successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales and our business and operating results could be adversely affected.”

Our business has been impacted by adverse macroeconomic and geopolitical conditions.

These conditions include inflation, interest rate and foreign currency fluctuations, changes in fiscal policies, slowdown of economic activity around the world, and lower consumer and enterprise spending.

The global and regional economic and political conditions adversely affected demand for our products.

In addition, these conditions have caused and may continue to cause volatility in the 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 Item 1A " Risk Factors ," including under the captions " Adverse global and regional economic and geopolitical conditions can materially adversely affect our business, results of operations and financial condition , " “We purchase key components and products from a limited number of sources, and our business and operating results could be adversely affected if supply were delayed or constrained or if there were shortages of required components,” “Our principal manufacturing operations and third-party contract manufacturers are located in China and Southeast Asia, which exposes us to risks associated with doing business in that geographic area as well as potential tariffs, adverse trade regulations, adverse tax consequences and pressure to move or diversify our manufacturing locations,” “If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected,” and "If we do not successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales and our business and operating results could be adversely affected.”

Trends and Uncertainties

Several long-term secular-trends offer long-term structural growth opportunities across Logitech’s product portfolio, including work and learn from anywhere (hybrid work), video everywhere, the rise of social gaming for participants and spectators, and the democratization of digital content creation.

We design, create and sell products that benefit from these secular trends.

The culture of hybrid work and learn provides an opportunity to equip meeting rooms, classrooms and personal workspaces, at home or in the office.

It also provides an opportunity for increased commercial and consumer adoption of video conferencing.

Our video collaboration products are compatible with a variety of video conference platforms, including Zoom, Microsoft Teams, Google Meet, etc.

Moving from work to play, Logitech gaming and streaming products benefit from social gaming which continues to

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

Logitech International S.A.

| Fiscal 2024 Form 10-K | 39

gain popularity through online gaming, multi-platform experiences and esports.

In addition, the democratization of digital content creation presents an opportunity for anyone to be a content creator because of the accessibility of the tools necessary to code, design, create, make music, game or broadcast to professional standards.

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 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 and low economic growth in certain regions, (ii) low consumer confidence and recent declines in enterprise spending leading to reduced demand for some of our products, (iii) the uncertainty in strategy and timing of enterprises’ “return-to-office” impacting demand for our Video Collaboration and Creativity & Productivity products, and (iv) the timing of further development of our business-to-business go-to-market capabilities.

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.

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) reduction in our operating expenses as revenues have declined in order to maintain margins and size the business for the current market, (ii) reduction in inventories to more appropriately align with demand, (iii) continued investment in our business-to-business direct sales channel in order to improve performance, and (iv) release of new products to increase the value proposition of our portfolio.

(i) reduction in our operating expenses in order to maintain margins and size the business for the current market, (ii) reduction in inventories to more appropriately 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 I, Item 1A “ Risk Factors .”

Business Seasonality and Product Introductions

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Summary of Financial Results

Our total sales for fiscal year 2023 decreased 17%, compared to fiscal year 2022, primarily driven by a decline in sales of all of our product categories as a result of lower demand and unfavorable changes in currency exchange rates.

Sales for fiscal year 2023 decreased 25%, 17% and 9% in the EMEA, Americas and Asia Pacific regions, respectively, compared to fiscal year 2022.

Gross margin for fiscal year 2023 decreased by 340 basis points to 37.9%, compared to fiscal year 2022, primarily due to inflationary pressure on costs and unfavorable impacts from changes in currency exchange rates, partially offset by a reduction in our use of expedited shipping.

Our total sales for fiscal year 2024 decreased 5% , compared to fiscal year 2023, primarily drive n by a decline in sales of most of our product categories as a result of lower demand.

Sales for fiscal year 2024 decreased 16% and 2% in the Asia Pacific and Americas regions, respectively, and were flat in EMEA, compared to fiscal year 2023.

Gross margin for fiscal year 2024 increased by 350 basis points to 41.4% , compared to 37.9% for fiscal year 2023, primarily due to lower material and logistics costs as well as lower promotional spend, partially offset by unfavorable product mix.

Operating expenses for fiscal year 2024 were $1,190.7 million , or 27.7% of sales, compared to $1,261.0 million, or 27.8% of sales, for fiscal year 2023.

The decrease in operating expenses was primarily driven by a reduction in marketing and advertising spend.

Included in the income tax provision of $98.9 million and $131.3 million in fiscal year 2023 and 2022 was $48.3 million and $88.7 million, respectively, of tax expense from Switzerland.

Net income for fiscal year 2023 wa s $364.6 million , compared to $644.5 million for fiscal year 2022, reflecting lower sales and gross margin, partially offset by a reduction in operating expenses.

The decrease in operating expenses was primarily driven by a reduction in marketing spend.

Logitech International S.A.

| Fiscal 2024 Form 10-K | 40

Included in the income tax provision of $9.5 million and $98.9 million in fiscal year 2024 and 2023 was $20.7 million of tax benefit and $46.0 million of tax expense, respectively, from Switzerland.

Net income for fiscal year 2024 wa s $612.1 million , compared to $364.6 million for fiscal year 2023, reflecting higher gross margin as well as lower operating expenses and income tax provision.

Critical Accounting Estimates

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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.

Logitech International S.A.

| Fiscal 2023 Form 10-K | 37

We consider an accounting estimate critical if it:

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Customer incentive programs include performance-based incentives and consumer rebates.

We offer performance-based incentives to our customers and indirect partners based on pre-determined performance criteria.

We offer performance-based incentives to our customers and indirect partners based on predetermined performance criteria.

Consumer rebates are offered from time to time at our discretion for the primary benefit of end-users.

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Assessing the period in which claims are expected to be submitted and the relevance of the historical claim experience require significant management judgment to estimate the breakage of Customer Programs in any accounting period.

Logitech International S.A.

| Fiscal 2024 Form 10-K | 41

We regularly evaluate the adequacy of our accruals for Customer Programs and product returns.

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Further, our industry is characterized by rapid technological change, short-term customer commitments and rapid changes in demand.

Logitech International S.A.

| Fiscal 2023 Form 10-K | 38

We record inventories at the lower of cost and net realizable value and record write-downs of inventories that are obsolete or in excess of anticipated demand or net realizable value.

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For additional information about our Critical Accounting Estimates, see Note 2—Summary of Significant Accounting Policies in our Notes to our consolidated financial statements below.

Adoption of New Accounting Pronouncements

Refer to Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K for recent accounting pronouncements adopted.

Inflation Reduction Act in the U.S.

On August 16, 2022, the “Inflation Reduction Act” (H.R.

5376) ("IRA") was signed into law in the U.S.

The IRA establishes a new corporate alternative minimum tax based on financial statement income adjusted for certain items.

The new minimum tax is effective for tax years beginning after December 31, 2022.

We do not expect the IRA will have a material impact to our financial statements when it becomes effective.

New Accounting Pronouncements

Refer to Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K for recent accounting pronouncements to be adopted.

Logitech International S.A.

| Fiscal 2024 Form 10-K | 42

Constant Currency

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Dollar appreciates or depreciates in comparison to other currencies in future periods, this will affect our results of operations in future periods as well.

Logitech International S.A.

| Fiscal 2023 Form 10-K | 39

References to Sales

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In this section, we discuss the results of our operations for the year ended March 31, 2024 compared to the year ended March 31, 2023.

For a discussion of the year ended March 31, 2022 compared to the year ended March 31, 2021, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K filed with the SEC on May 18, 2022.

Our sales in fiscal year 2023 decreased 17%, compared to fiscal year 2022, driven b y a decline in sales of all of our product categories.

O ur sales were negatively impacted from lower demand and unfavorable changes in currency exchange rates.

For a discussion of the year ended March 31, 2023 compared to the year ended March 31, 2022, please refer to Part II, I tem 7, "Management's Discussi on and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K filed with the SEC on May 17, 2023.

Our sales in fiscal year 2024 decreased 5% , compared to fiscal year 2023, primarily driven b y a decline in sales of most of our product categories as a result of lower demand.

If currency exchange rates had been constant in fiscal years 2024 and 2023, our sales decline in constant currency would have been 6% .

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Dollars, a portion of our sales was generated in currencies other than the U.S.

Dollar, such as the Euro, Chinese Renminbi, Japanese Yen, Australian Dollar, Canadian Dollar, Pound Sterling and New Taiwan Dollar.

Dollar, such as th e Euro, Chinese Renminbi, Japanese Yen, Australian Dollar, Canadian Dollar, Pound Sterling and New Taiwan Dollar.

For the years ended March 31, 2024 and 2023, approximately 50% and 51%, respectively, of our sales were denominated in currencies other than the U.S.

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Americas (2) % (2) %

EMEA (25) (17)

Asia Pacific (16) (13)

The decrease in sales in the Americas region for fiscal year 2023, compared to fiscal year 2022, was primarily driven by decreases in sales for Gaming, Video Collaboration, PC Webcams and Audio & Wearables.

The decrease in sales in the EMEA region for fiscal year 2023, compared to fiscal year 2022, was primarily driven by decreases in sales in Gaming, Keyboards & Combos, PC Webcams and Pointing Devices.

Asia Pacific:

The decrease in sales in the Asia Pacific region for fiscal year 2023, compared to fiscal year 2022, was primarily driven by decreases in sales of Keyboards & Combos, PC Webcams, Audio & Wearables, and Video Collaboration, partially offset by an increase in sales of Gaming.

The decrease in sales in the Americas region for fiscal year 2024, compared to fiscal year 2023, was primarily driven by decreases in sales for mobile speakers and PC speakers in our Other category.

Sales in the EMEA region for fiscal year 2024, compared to fiscal year 2023, remained flat.

Increases in sales for Gaming and Pointing Devices were offset by decreases in sales for Webcams and Video Collaboration.

Logitech International S.A.

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Sales by Product Categories

Sales by product categories for fiscal years 2023 and 2022 were as follows (Dollars in thousands):

Asia Pacific:

The decrease in sales in the Asia Pacific region for fiscal year 2024, compared to fiscal year 2023, was primarily driven by decreases in sales of Gaming, Keyboards & Combos and Video Collaboration.

Sales by Product Category

During the first quarter of fiscal year 2024, we changed the presentation of sales by product category to provide a simpler and clearer view of our business.

The change in presentation did not have an impact on previously reported total sales.

As a result of these changes, certain prior-period amounts for the fiscal year 2023 have been reclassified to conform to the current period presentation.

See Note 2 to the consolidated financial statements for further information on the change in presentation.

Sales by product category in the current presentation for fiscal years 2024 and 2023 were as follows (Dollars in thousands):

Years Ended March 31, Change

2024 2023 2024 vs.

Pointing Devices $ 728,357 $ 781,108 (7) %

Keyboards & Combos 836,432 967,301 (14)

PC Webcams 227,692 403,651 (44)

Tablet & Other Accessories 254,374 310,123 (18)

$ 1,231,063 $ 1,288,313 (4) %

Keyboards & Combos 821,441 836,432 (2)

Pointing Devices 742,987 728,357 2

Video Collaboration 609,361 677,923 (10)

Mobile Speakers 111,649 149,782 (25)

Audio & Wearables 274,231 401,424 (32)

Webcams 325,225 378,688 (14)

Tablet Accessories 254,060 254,374 —

Headsets 168,478 176,576 (5)

145,852 198,155 (26)

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(1) Gaming includes streaming services revenue generated by Streamlabs.

(2) Other includes Smart Home.

Creativity & Productivity market:

Pointing Devices

Our Pointing Devices category comprises PC- and Mac-related mice including trackballs, touchpads and presentation tools.

During fiscal year 2023, Pointing Devices sales decreased 7%, compared to fiscal year 2022, primarily driven by the decrease in sales of cordless and corded mice, particularly in our low end products.

(2) Other primarily consists of mobile speakers and PC speakers.

Our Gaming category includes gaming mice, steering wheels, headsets, keyboards, console gaming headsets, studio-quality Blue Microphones and Streamlabs services.

During fiscal year 2024, Gaming sales decreased 4%, compared to fiscal year 2023, primarily driven by decreases in sales of gaming keyboards, Blue Microphones, and Streamlabs services.

Keyboards & Combos

Our Keyboards & Combos category comprises PC keyboards and keyboard/mice combo products.

During fiscal year 2023, Keyboards & Combos sales decreased 14%, compared to fiscal year 2022, primarily driven by the decrease in sales of our cordless combos and corded PC keyboards, particularly in our low end products.

Our PC Webcams category comprises PC-based webcams targeted primarily at consumers, including streaming cameras.

During fiscal year 2023, PC Webcams sales decreased 44%, compared to fiscal year 2022, primarily driven by the decrease in sales of our HD Pro Webcam C920, 1080p Pro Stream Webcam, and Webcam C260.

Tablet & Other Accessories

Our Tablet & Other Accessories category primarily comprises tablet keyboards and styluses.

During fiscal year 2023, Tablet & Other Accessories sales decreased 18%, compared to fiscal year 2022, primarily driven by the decrease in sales of most of our products, partially offset by increases in sales of our Rugged Combo 3 Touch.

Gaming market:

Our Gaming category comprises gaming mice, keyboards, headsets, gamepads, steering wheels, simulation controllers, console gaming headsets, and Streamlabs services.

During fiscal year 2023, Gaming sales decreased 17%, compared to fiscal year 2022, primarily driven by the decrease in sales of gaming mice, keyboards, and headsets.

Our Keyboards & Combos category includes PC keyboards and keyboard/mice combo products.

During fiscal year 2024, Keyboards & Combos sales decreased 2% , compared to fiscal year 2023, primarily driven by a decrease in sales of our cordless keyboards, partially offset by an increase in sales of our cordless combos.

Pointing Devices

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

During fiscal year 2024, Pointing Devices sales increased 2% , compared to fiscal year 2023, primarily driven by increases in sales of cordless mice and presentation tools.

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.

During fiscal year 2024, Video Collaboration sales decreased 10%, compared to fiscal year 2023, primarily due to decreases in sales of many Video Collaboration products driven by lower enterprise spending.

Logitech International S.A.

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Video Collaboration market:

Video Collaboration

During fiscal year 2023, Video Collaboration sales decreased 11%, compared to fiscal year 2022, primarily due to the decrease in sales of webcams, partially offset by an increase in sales of conference room cameras and docks.

Sales for Video Collaboration for fiscal year 2023 were negatively impacted by a slowdown in enterprise spending.

Music market:

Mobile Speakers

Our Mobile Speakers category is made up entirely of Bluetooth wireless speakers.

During fiscal year 2023, Mobile Speakers sale s decreased 25%, compared to fiscal year 2022, primarily due to a decrease in sales of most of our Mobile Speaker sub-categories, partially offset by the sales of our Ultimate Ears Wonderboom 3 mini speakers, introduced in the second quarter of fiscal year 2023.

Audio & Wearables

Our Audio & Wearables category comprises PC speakers, PC headsets, in-ear headphones, premium wireless earbuds and studio-quality Blue Microphones for professionals and consumers.

During fiscal year 2023, Audio & Wearables sales decreased 32%, compared to fiscal year 2022, primarily due to the decrease in sales of almost all sub-categories.

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.

During fiscal year 2024, Webcams sales decreased 14%, compared to fiscal year 2023, primarily driven by decreases in sales of most of our VC webcams and PC-based webcams.

Tablet Accessories

Our Tablet Accessories category primarily includes tablet keyboards.

During fiscal year 2024, Tablet Accessories sal es remained flat, compared to fiscal year 2023.

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

During fiscal year 2024, Headsets sales decreased 5%, compared to 2023, primarily driven by decreases in sales of VC headsets and corded PC headsets.

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

During fiscal year 2024, Other sales decreased 26% compared to 2023 , primarily driven by a decline in sales of mobile speakers.

Gross profit for fiscal years 2024 and 2023 was as follows (Dollars in thousands):

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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 decreased by 340 basis points to 37.9% during fiscal year 2023, compared to fiscal year 2022.

The decrease in gross margin was primarily due to inflationary pressure on costs and unfavorable impacts from changes in currency exchange rates, partially offset by a reduction in our use of expedited shipping.

Gross margin increased by 350 basis points to 41.4% during fiscal year 2024, compared to 37.9% during fiscal year 2023.

The increase in gross margin was primarily due to lower material and logistics costs as well as lower promotional spend, partially offset by unfavorable product mix.

Logitech International S.A.

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% of sales 27.7 % 27.8 %

The decrease in total operating expenses during fiscal year 2023, compared to fiscal year 2022, was mainly due to decreases in marketing and selling expenses, partially offset by an increase in restructuring charges.

The decrease in total operating expenses during fiscal year 2024, compared to fiscal year 2023, was primarily due to decreases in marketing and selling expenses and restructuring charges, net, partially offset by an increase in general and administrative 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 fiscal year 2023, marketing and selling expenses decreased $216.7 million, compared to fiscal year 2022, primarily driven by our reduction in third-party marketing and advertising spend.

During fiscal year 2024, marketing and selling expenses decreased $78.9 million, compared to fiscal year 2023, primarily driven by our reduction in third-party marketing spend.

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 fiscal year 2023, research and development expense s decreased $11.0 million, compared to fiscal year 2022, primarily driven by lower personnel-related costs, partially offset by higher outsourcing expenses.

During fiscal year 2024, research and development expense s increased $6.4 million, compared to fiscal year 2023, primarily driven by higher performance-based compensation expense.

Research and development expenses as a percentage of sales increased from 6.2% in fiscal year 2023 to 6.7% in fiscal year 2024 reflecting our continued investment in innovation.

General and Administrative

General and administrative expenses consist primarily 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 fiscal year 2023, general and administrative expenses decreased $24.0 million, compared to fiscal year 2022, primarily driven by lower personnel-related costs.

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 fiscal year 2024, general and administrative expenses increased $30.4 million , compared to fiscal year 2023, primarily driven by higher performance-based compensation expense .

Logitech International S.A.

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Amortization of Intangible Assets and Acquisition-Related Costs

Amortization of intangible assets included in operating expense and acquisition-related costs during fiscal years 2023 and 2022 were as follows (in thousands):

Years Ended March 31,

Amortization of intangible assets $ 11,542 $ 16,156

Acquisition-related costs 301 791

Total $ 11,843 $ 16,947

Amortization of intangible assets consists of amortization of acquired intangible assets, including customer relationships and trademarks and trade names.

Acquisition-related costs include legal expense, due diligence costs, and other professional costs incurred for business acquisitions.

The decrease in amortization of intangible assets and acquisition-related costs from fiscal year 2022 to 2023 was primarily due to certain acquired intangible assets becoming fully amortized and the write-off of Jaybird intangible assets in fiscal year 2022.

Acquisition-related costs include legal expenses, due diligence costs, and other professional costs incurred for business acquisitions.

During fiscal year 2024, amortization of intangible assets and acquisition-related costs decreased $0.9 million, compared to fiscal year 2023, primarily due to certain acquired intangible assets becoming fully amortized.

Impairment of Intangible Assets

During fiscal year 2022, we recognized a pre-tax impairment charge of $7.0 million, related to the intangibles acquired as part of the Jaybird acquisition due to our decision to discontinue Jaybird-branded products.

Restructuring Charges (Credits), Net

During fiscal year 2024, we recognized a pre-tax impairment charge of $3.5 million, related to our in-process Research and Development intangible asset.

Restructuring Charges, Net

During the second quarter of fiscal year 2023, we initiated a restructuring plan to realign our business group and engineering structure with our go-to-market strategy to more effectively compete within the enterprise market and to better serve end-users.

During the fourth quarter of fiscal year 2023, we undertook further actions to remove organization layers as well as streamline our marketing organization to increase efficiency.

As a result, we recorded pre-tax restructuring charges totaling $34.6 million primarily related to employee severance and other termination benefits.

We expect to substantially complete these restructuring activities within the next twelve months.

The restructuring charges of $2.2 million for fiscal year 2022, were recorded as a result of our decision to exit Jaybird-branded products during the third quarter of fiscal year 2022.

This restructuring plan has been substantially completed.

As a result, we recorded pre-tax restructuring charges totaling $3.9 million and $34.6 million during fiscal years 2024 and 2023, respectively, primarily related to employee severance and other termination benefits.

These restructuring activities were substantially completed during fiscal year 2024 .

See Note 16 to our consolidated financial statements for additional information.

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Interest income

$ 50,636 $ 18,331

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.

The increase in interest income for fiscal year 2023, compared to fiscal year 2022, was primarily driven by th e increase in interest rates.

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The increase in interest income for fiscal year 2024, compared to fiscal year 2023 , was primarily driven by an increase in interest rates and increased cash equivalents balance.

Other Income (Expense), Net

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Loss on investments, net (14,674) (14,073)

Non-service cost net pension income (expense) and other 10,093 5,616

Non-service cost net pension income and other

Total $ (16,376) $ (13,278)

Investment gain (loss) related to the deferred compensation plan for fiscal years 2024 and 2023 represents earnings, gains, and losses on marketable securities related to a deferred compensation plan offered by one of our subsidiaries.

The decrease in investment income for fiscal year 2023 compared to fiscal year 2022 primarily relates to the change in market performance of the underlying securities.

The increase in investment gain for fiscal year 2024, compared to fiscal year 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 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 fiscal year 2024 was related to the exchange rate fluctuations of the Chinese Renminbi, Australian Dollar, Brazilian Real, and Japanese Yen versus the U.S.

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The loss for fiscal year 2023 was primarily related to the weakening of the Brazilian Real and Australian Dollar against U.S.

The loss for fiscal year 2022 was primarily related to the strengthening of the Chinese Renminbi against the U.S.

Loss on investments, net, includes unrealized gain (loss) from the fair value change of investment, gain (loss) on equity-method investments and impairment of investments during the periods presented, as applicable.

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 fiscal year 2024 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.

The loss on investments, net for fiscal year 2023 was primarily due to the impairment charge related to one of our equity method investments, partially offset by the unrealized gain related to one of our equity investments without readily determinable fair value resulting from observable price changes.

See Note 9 to our consolidated financial statements for additional information.

Non-service cost net pension income (expense) and other increased in fiscal year 2023, compared to fiscal year 2022, primarily due to the curtailment gain recognized in fiscal year 2023 for one of our defined benefit plans as a result of the restructuring actions undertaken by the Company (see Notes 5 and 16 to our consolidated financial statements).

Non-service cost net pension income and oth er decreased in fiscal year 2024 , compared to fiscal year 2023 , primarily due to the curtailment gain recognized in fiscal year 2023 for one of our defined benefit plans as a result of the restructuring actions undertaken by the Company (see Notes 5 and 16 to our consolidated financial statements).

Provision for Income Taxes

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Effective income tax rate 1.5 % 21.3 %

The change in the effective income tax rate between fiscal years 2023 and 2022 was primarily due to the mix of income and losses in the various tax jurisdictions in which we operate.

We recognized excess tax benefits from share-based payments, net of shortfalls of $1.3 million and $16.3 million in the United States in fiscal years 2023 and 2022, respectively, and recognized income tax benefit from the reversal of uncertain tax positions from the expiration of statutes of limitations in the amount of $4.3 million and $4.9 million in fiscal years 2023 and 2022, respectively.

In addition, we recognized income tax benefit of $3.7 million from the reversal of uncertain tax positions from an effective settlement of a foreign income tax audit in fiscal year 2022.

As of March 31, 2023 and 2022, the total amount of unrecognized tax benefits due to uncertain tax positions was $186.8 million and $176.0 million, respectively, all of which would affect the effective income tax rate if recognized.

The change in the effective income tax rate between fiscal years 2024 and 2023 was primarily due to the mix of income and losses in the various tax jurisdictions in which we operate as well as the favorable tax impacts from share-based compensation, an agreement to remeasure the tax basis of goodwill under the Swiss Federal Act on Tax Reform and AHV Financing (“TRAF”) with the canton of Vaud, remeasurement of our Swiss deferred tax assets due to a change in tax rate, a Swiss Tax Ruling that provides future tax benefits as discussed below, and Foreign-Derived Intangible Income ("FDII") incentive in the U.S.

The canton of Vaud completed the legislative process to enact TRAF, a reform to better align the Swiss tax system to international tax standards, on March 10, 2020, that took effect as of January 1, 2020.

In March 2020, we reached an agreement with the Vaud Tax Administration that would allow for an increase in the tax basis of goodwill, as a transition measure under TRAF, to be amortized over ten years beginning on January 1, 2020.

During the fiscal year ended March 31, 2024, we reached an agreement to remeasure the tax basis of goodwill under TRAF with the canton of Vaud, which resulted in an income tax benefit of $25.1 million, net of assessment for uncertain tax positions.

The remeasurement of the step-up will be amortized over the remaining ten-year amortization period.

On December 29, 2023, a change to the cantonal tax legislation was published.

According to the law approved by the Vaud parliament, a progressive scale will be applicable for cantonal tax purposes resulting in an increase from the current tax rate of 13.61% to 14.28% effective fiscal year 2025.

The increase in tax rate resulted in a tax benefit of $5.1 million due to a remeasurement of our Swiss deferred tax assets in the fiscal year ended March 31, 2024.

On March 28, 2024, we executed a Swiss Tax Ruling with the canton of Vaud that provides future tax benefit for ten years.

The Swiss Tax Ruling resulted in an income tax benefit of $50.1 million, which will be utilized over a ten-year period.

The Tax Cuts and Jobs Act enacted Section 250, which provides for a deduction with respect to Global Intangible Low-Taxed Income ("GILTI") and FDII in the US.

The application of this tax incentive is inherently complex.

During the fiscal year ended March 31, 2024, we analyzed the applicability of FDII and determined that this tax incentive applies in fiscal 2021 to 2023 tax years.

As a result, we realized a tax benefit of $18.7 million related to FDII.

We have also concluded that any GILTI tax since the enactment of Tax Cuts and Jobs Act is immaterial.

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

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| Fiscal 2024 Form 10-K | 48

establishing a minimum tax on global income (“Pillar Two”).

Some jurisdictions where we operate are implementing Pillar Two laws to effectuate a 15% minimum tax, which will be effective for the Company starting fiscal year 2025.

More specifically, the Federal Council enacted the relevant ordinance for implementing a (Qualified) Domestic Minimum Tax (QDMTT) in Switzerland for tax years beginning from January 1, 2024.

As many countries have proposed or enacted Pillar Two legislation in jurisdictions in which we operate, we continue to monitor the relevant developments.

As of March 31, 2024 and 2023, the total amount of unrecognized tax benefits due to uncertain tax positions was $192.7 million and $186.8 million, respectively, all of which would affect the effective income tax rate if recognized.

As of March 31, 2024 and 2023, we had $112.6 million and $106.4 million, respectively, in non-current income taxes payable, including interest and penalties, related to our income tax liability for uncertain tax positions.

We recognized $2.7 million and $1.5 million, in interest and penalties related to unrecognized tax positions in income tax expense during fiscal years 2023 and 2022, respectively.

As of March 31, 2024 and 2023, we had $7.8 million and $6.1 million, respectively, of accrued interest and penalties related to uncertain tax positions.

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If the examinations are resolved unfavorably, there is a possibility that they may have a material negative impact on our results of operations.

Pursuant to the Tax Cuts and Jobs Act of 2017, research and development expenses are required to be capitalized and amortized over five years for U.S.

tax purposes if the research and development activities are performed in the U.S.

effective for tax year beginning after December 31, 2021.

The provision was effective for us beginning in fiscal year 2023.

However, the provision which delays the deductibility of research and development expenses is not applicable to our existing research and development activities in the U.S.

We evaluate our business activities regularly should the provision become applicable.

Liquidity and Capital Resources

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As of March 31, 2024, we had cash and cash equivalents of $1,520.8 million, compared with $1,149.0 million as of March 31, 2023.

Our cash and cash equivalents consist of bank demand deposits and short-term time deposits, of w hich 78% is held in Switzerland and 12% is held in China (including Hong Kong).

Our cash and cash equivalents consist of bank demand deposits, short-term time deposits, and U.S.

Treasury securities, of w hich 71% was held in Switzerland and 11% was held in China (including Hong Kong).

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 Ma rch 31, 2024, our working capital was $1,545.5 million, compared to $1,555.1 million as of March 31, 2023.

The decrease was primarily driven by lower inventories, lower cash balances resulting from share repurchases and payments of cash dividends, and lower accounts receivable, net, partially offset by decreases in accounts payable and accrued liabilities.

We had several uncommitted, unsecured bank lines of credit aggregating $181.3 million as of March 31, 2023.

There are no financial covenants under these lines of credit with which we must comply.

As of March 31, 2023, we had outstanding bank guarantees of $13.6 million under these lines of credit.

The decrease was primarily driven by decreases in inventories and accounts receivable, net, and an increase in accounts payable, partially offset by an increase in cash and cash equivalents.

We had several uncommitted, unsecured bank lines of credit and letters of credit aggregating $172.5 million as of March 31, 2024.

There are no financial covenants under the lines of credit with which we must comply.

There was no borrowing outstanding under the lines of credit as of March 31, 2024 .

As of March 31, 2024, we had outstanding bank guarantees of $14.3 million .

Logitech International S.A.

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(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 and annualized cost of goods sold (based on the most recent quarterly cost of goods sold).

DSO as of March 31, 2023 increased by 10 days to 59 days, as compared to 49 days as of March 31, 2022, primarily due to lower revenues resulting from softened demand, partially offset by timing of sales within the quarter.

DPO as of March 31, 2023 decreased 19 days, compared to March 31, 2022, primarily due to a reduction in inventory purchases and lower marketing spend, partially offset by softened demand.

ITO as of March 31, 2023 increased 0.4, compared to March 31, 2022, primarily due to a lower inventory balance as of March 31, 2023, partially offset by softened demand.

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 margin, operating results including operating cash flow, and inventory turnover in the future.

The following table summarizes our consolidated statement of cash flows for the year ended March 31, 2023 (Dollars in thousands):

(3) ITO is determined using ending inventories as of the most recent quarter-end and annualized cost of goods sold (based on the most recent quarterly cost of goods sold).

DSO as of March 31, 2024 decreased by 11 days to 48 days, compared to 59 days as of March 31, 2023, primarily due to the timing of sales within the fourth quarter of the fiscal years 2024 and 2023.

DPO as of March 31, 2024 increased by 11 days to 70 days, compared to 59 days as of March 31, 2023, primarily due to an increase in inventory purchases to replenish certain products during the fourth quarter of fiscal year 2024 as well as softened demand .

ITO as of March 31, 2024 increased by 1.8 to 5.4, compared to 3.6 as of March 31, 2023, primarily due to lower inventory balance as of March 31, 2024 resulting from focused inventory management to align with softened demand.

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, operating results including operating cash flow, and inventory turnover in the future.

The following table summarizes our consolidated statement of cash flows for the year ended March 31, 2024 (in thousands):

Year ended March 31, 2024

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Effect of exchange rate changes on cash and cash equivalents (12,789)

Net decrease in cash and cash equivalents $ (179,693)

For fiscal year 2023, net cash provided by operating activities was $534.0 million resulting from net income of 364.6 million, a favorable impact from adding back non-cash expenses totaling $213.1 million, and an unfavorable net change in operating assets and liabilities of $43.6 million.

Non-cash expenses were primarily related to depreciation and amortization, share-based compensation expense , and deferred income taxes.

The decrease in accounts receivable, net was primarily driven by lower sales, partially offset by the timing of sales within the quarter.

The decrease in inventories was primarily driven by a reduction in inventory purchases to align with lower demand.

The decrease in accounts payable was primarily driven by the reduction in inventory purchases.

The decrease in accrued and other liabilities was primarily driven by a lower annual bonus accrual and lower marketing spend.

Net increase in cash and cash equivalents

For fiscal year 2024, net cash provided by operating activities was $1,145.1 million resulting from net income of $612.1 million, a favorable impact from adding back non-cash adjustments totaling $143.5 million, and a favorable net change in operating assets and liabilities of $389.4 million.

Non-cash adjustments were primarily related to depreciation and amortization, share-based compensation expense , and deferred income taxes.

The decrease in accounts receivable, net, was primarily driven by the timing of sales within the fourth quarter of fiscal years 2024 and 2023.

The decrease in inventories was primarily driven by our effort to manage inventory level to align with softened demand.

The increase in accounts payable was primarily driven by an increase in inventory purchases to replenish certain products during the fourth quarter of fiscal year 2024 .

For fiscal year 2024, net cash used in investing activities was $70.3 million, primarily due to $55.9 million purchases of property, plant, and equipment .

Our expenditures for property, plant and equipment during fiscal year 2023 were primarily for tooling and equipment, building improvements, and computer hardware and software.

For fiscal year 2023, net cash used in financing activities was $583.4 million, resulting from repurchases of our registered shares of $418.3 million, payments of cash dividends of $158.7 million, and tax withholdings related to

Our expenditures for property, plant and equipment during fiscal year 2024 were primarily for building improvements, tooling and equipment, and computer hardware and software.

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net share settlements of restricted stock units of $29.2 million, partially offset by proceeds from exercise of stock options and purchase rights of $28.8 million.

During fiscal year 2023 , there was a $24.6 million loss from currency exchange rate effect on cash and cash equivalents, primarily due to exchange rate fluctuations of Euro, Swiss Franc, Chinese Renminbi, and Australian Dollar versus the U.S.

For fiscal year 2024, net cash used in financing activities was $690.2 million , primarily resulting from repurchases of our registered shares of $504.2 million , payments of cash dividends of $182.3 million , and tax withholdings related to net share settlements of restricted stock units of $29.7 million , partially offset by proceeds from exercise of stock options and purchase rights of $32.2 million .

During fiscal year 2024 , there was a $12.8 million loss from currency exchange rate effect on cash and cash equivalents, primarily due to exchange rate fluctuations of Euro, Chinese Renminbi, Australian Dollar and Swiss Franc versus the U.S.

Dollar and timing of our cash transactions over the period.

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In fiscal year 2023, we paid a cash dividen d of CHF 0.96 per share, or CHF 156.1 million (U.S.

Dollar amount of $159.4 million) out of fiscal year 2021 retained earnings.

Dollar amount of $158.7 million based on the exchange rate on the date of payment ) out of fiscal year 2022 retained earnings.

In fiscal year 2022, we paid a cash dividend of CHF 0.87 per share, or CHF 147.0 million (U.S.

Dollar amount of $159.4 million ) out of fiscal year 2021 retained earnings.

In May 2020, our Board of Directors approved the 2020 share repurchase program, which authorized us to invest up to $250.0 million to purchase our own shares.

In May 2020, our Board of Directors approved the 2020 share repurchase program, which authorized us to invest up to $250.0 million to purchase our own shares to support equity incentive plans or potential acquisitions.

In April 2021, our Board of Directors approved an increase of $750.0 million to the 2020 share repurchase program, to an aggregate amount of $1.0 billion.

The Swiss Takeover Board approved this increase and it became effective on May 21, 2021.

In July 2022, our Board of Directors approved an increase of $500 million to the 2020 share repurchase program, to an aggregate amount of up to $1.5 billion to purchase up to 17.3 million of Logitech shares.

In July 2022, our Board of Directors approved an increase of $500 million to the 2020 share repurchase program, to an aggregate amount of up to $1.5 billion.

The Swiss Takeover Board approved this increase and it became effective on August 19, 2022.

As of March 31, 2023 , $505.8 million was available for repurchase under the 2020 repurchase program.

The 2020 share repurchase program expired on July 27, 2023.

We repurchased 16.7 million shares for an aggregate cost of $1.2 billion under the 2020 share repurchase program, of which 2.6 million shares for an aggregate cost of $159.1 million were repurchased during fiscal year 2024 prior to the expiration of the program.

In June 2023, our Board of Directors approved a new, 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 fiscal year ended March 31, 2024, we repurchased 4.5 million shares for an aggregate cost of $364.7 million, under the 2023 share repurchase program, of which $19.5 million of the aggregate cost was not paid yet as of March 31, 2024.

4.1 million shares for an aggregate cost of $332.1 million were repurchased for cancellation and the remaining shares were repurchased to support equity incentive plans.

As of March 31, 2024, $635.8 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 March 31 2024 , we had a total of 19.2 million shares held in treasury stock, which includes 4.1 million shares that have been repurchased for cancellation.

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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.

Shares may be repurchased from time to time on the open market, through block trades or otherwise.

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.

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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 March 31, 2023, the liability for

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| Fiscal 2023 Form 10-K | 48

these purchase commitments was $46.6 million and is recorded in accrued and other current liabilities in the consolidated balance sheet.

We have firm purchase commitments of $26.3 million for capital expenditures, primarily related to commitments for tooling and equipment for new and existing products and commitments to vendors to fit out and furnish office facilities.

As of March 31, 2024, the liability for these purchase commitments was $29.3 million and is recorded in accrued and other current liabilities in the consolidated balance sheet.

We have firm purchase commitments of $13.4 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.

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Operating leases for facilities are generally renewable at our option and usually include escalation clauses linked to inflation .

The remaining terms of our non-cancelable operating leases expire in various years thro ugh 2033.

The remaining terms of our non-cancelable operating leases expire in various years thr ough 2033.

See Note 17 - Leases in our Notes to the consolidated financial statements included in this report for more information on leases.

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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.

We are unable to reasonably estimate the maximum amount that could be payable under these arrangements because these

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exposures are not capped, the obligations are conditional in nature, and the facts and circumstances involved in any situation that might arise are variable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis