What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-05-21 compared with 2025-05-23 · 165 added, 143 removed, 280 unchanged (52% of the section changed)

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As the 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 the vast majority of our products under Logitech and Logitech G brand names.

We sell the vast majority of our products under the Logitech and Logitech G brand names.

Our diverse, innovative portfolio includes:

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Peripherals (see Note 15 to our consolidated financial statements).

We sell our products to a broad range of international customers, in the Americas, Europe, the Middle East and Africa (“EMEA”) and Asia Pacific.

We sell our products to a broad range of international customers, in the Americas;

Europe, the Middle East and Africa (“EMEA”);

and Asia Pacific.

This includes direct sales to retailers, e-tailers, businesses large and small and end consumers through our e-commerce platform, and indirect sales to end customers through distributors.

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We continually review our product offerings and our strategic direction in light of our profitability targets, competitive conditions, changing consumer trends and the evolving nature of the interface between the consumer and the digital world.

Impacts of Macroeconomic and Geopolitical Conditions on our Business

In 2025, the United States introduced trade policy actions that have increased import tariffs across a wide range of countries at various rates, with certain exemptions.

The tariff policies in the U.S.

and responsive policies enacted in other countries are evolving and may have a material adverse impact on our business.

In addition, our business has continued to be impacted by ongoing macroeconomic and geopolitical conditions.

These conditions include inflation, interest rate and foreign currency fluctuations, uncertainty in consumer and enterprise demand, low economic growth in certain regions, changes in fiscal policies and geopolitical conflicts.

The global and regional economic and political conditions, as well as changes in trade policies, have caused and may continue to cause volatility in demand for our products as well as cost of tariffs, materials and logistics, and transportation delays, and as a result have impacted and may continue to impact the pricing of our products, product availability and our results of operations.

For additional information, see Part I, 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 changes in 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.”

Impacts of Macroeconomic, Geopolitical, and Other Factors on our Business

As we conduct operations globally, our business has continued to be impacted by ongoing macroeconomic and geopolitical conditions.

These conditions include changes in inflation, interest rate and foreign currency fluctuations, uncertainty in consumer and enterprise demand, tariff and trade policies, memory chip availability, volatile energy prices and increased geopolitical tensions, including the armed conflicts in the Middle East.

In 2025, the United States introduced trade policy actions that increased import tariffs across a wide range of countries at various rates, with certain exemptions.

In February 2026, the U.S.

Supreme Court issued a decision invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act.

In May 2026, some companies began receiving notification from the U.S.

Customs and Border Protection (CBP) that tariff refunds would be issued;

however, the extent and timing of these tariff refunds remain uncertain.

Following the U.S.

Supreme Court ruling, the U.S.

government introduced new temporary tariffs for a 150-day period beginning February 24, 2026.

In May 2026, the U.S.

Court of International Trade invalidated these temporary tariffs but they remain in place, subject to appeal.

government may pursue alternative trade measures, including under Sections 301 and 302 of U.S.

trade laws, which could result in additional or replacement tariffs.

tariff policies and international trade arrangements continue to evolve and have had, and may continue to have, a significant impact on our results of operations.

We have also been affected by the increases in demand for memory chips and other components caused by the build out of new AI technologies and data centers, leading to a rise in prices for such components and some suppliers transitioning capacity away from certain components utilized in some of our Video Collaboration products.

The global and regional macroeconomic, political and other conditions have caused and may continue to cause volatility in demand for our products, component availability, transit times and cost of our products including cost of tariffs, materials, and logistics, and as a result, have impacted and may continue to impact the pricing of our products, product availability and our results of operations.

For additional information, see Part I, Item 1A " Risk Factors.

Logitech International S.A.

| Fiscal 2026 Form 10-K | 38

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Trends and Uncertainties

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We design, create and sell products that benefit from these secular trends which include the following:

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

Logitech International S.A.

| Fiscal 2025 Form 10-K | 39

different products in our portfolio, AI offers additional growth opportunities and risks as we work to integrate our capabilities with our ecosystem partners.

• New ways of working:

The new ways of working that have emerged after the pandemic in which people are splitting time between working in the office, from home, and from other places while on the go, provide opportunities for Logitech to equip multiple workspaces with products across our portfolio including Pointing Devices, Keyboards & Combos, Tablet Accessories, Headsets and Webcams.

The new ways of working also provide an opportunity for increased adoption of video conferencing by enterprises and consumers.

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

AI is reshaping expectations for product innovation, productivity improvements, and the evolution of digital technology ecosystems.

AI is embedded in our innovation strategy and product development, enabling us to provide elevated audio, video, and other capabilities throughout our product portfolio, and we plan to continue to integrate AI into future products.

Our products are also designed to help people increase productivity and improve performance, leveraging AI benefits across work and play.

Logitech’s products are the connection between people and the digital world, providing a broad range of devices that facilitate interaction with AI.

Our video collaboration products, webcams, headsets, mice and keyboards serve as the eyes, ears and hands of AI, providing the sensory channels through which our customers experience AI.

In addition, we leverage AI internally to accelerate new product introductions, strengthen marketing effectiveness and optimize operational processes across our organization.

• Flexible work:

As flexible work models continue to evolve, with employees working from offices, homes and various remote locations, Logitech is well-positioned to meet the demand for versatile and adaptive workplace technology.

These working arrangements provide opportunities for Logitech to equip multiple workspaces with products across our portfolio including Pointing Devices, Keyboards & Combos, Tablet Accessories, Headsets and Webcams.

Additionally, the rise in distributed teams and remote collaboration is driving increased adoption of video conferencing solutions among businesses and consumers.

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

• Gaming growth:

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.

Gaming is enjoyed by men and women of all ages;

competitively as a sport or for fun;

for active participation and passive consumption;

for personal development or social interaction.

As a mainstream activity, gaming continues to gain popularity through online gaming, multi-platform experiences and esports.

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) uncertainty in tariffs on goods imported into the U.S.

and responsive policies enacted by other countries, (ii) the macroeconomic environment, including inflation, interest rate and foreign currency fluctuations, changes in fiscal policies and low economic growth in certain regions, (iii) the uncertainty of overall consumer and enterprise demand, (iv) the uncertainty of timing of enterprise investments in infrastructure and technology, and (v) the timing of further development of our B2B go-to-market capabilities.

and responsive policies enacted by other countries, (ii) uncertainty in supply and pricing of memory chips and other components, (iii) the macroeconomic environment, including inflation, interest rate and foreign currency fluctuations, volatile energy prices, and increased geopolitical tensions, and (iv) the uncertainty of overall consumer and enterprise demand.

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) continued diversification of our manufacturing footprint and supplier ecosystem, (ii) maintaining discipline in our operating expenses, (iii) managing inventory levels to align with demand, (iv) continued investment in our B2B capabilities, and (v) continued release of new products to increase the value proposition of our portfolio.

(i) continued diversification of our manufacturing footprint and supplier ecosystem, (ii) increasing pricing for certain products, (iii) maintaining discipline in our operating expenses, (iv) managing inventory levels to align with demand and component availability, and (v) continued 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

We have historically experienced higher sales in our third fiscal quarter ending December 31, compared to other fiscal quarters in our fiscal year, primarily due to increased consumer demand during the holiday season and increased spending by enterprises in the months nearing the calendar year-end.

Additionally, new product introductions and business acquisitions can significantly impact sales, product costs and operating expenses.

Sales can also be affected when consumers and distributors anticipate a product introduction or changes in business circumstances.

However, neither historical seasonal patterns nor historical patterns of product introductions should be considered reliable indicators of our future pattern of product introductions, future sales or financial performance.

Furthermore, cash flow is correspondingly lower in the first half of our fiscal year as we typically build inventories in advance of our third fiscal quarter and we also pay an annual dividend following our Annual General Meeting typically held in September.

We experience seasonal trends related to our product sales.

Sales are generally highest during our third fiscal quarter (October to December) primarily due to increased consumer demand during the holiday season and increased spending by businesses in the months nearing the calendar year-end.

Cash flow is usually correspondingly lower in the first half of our fiscal year, as we typically build inventories in advance of our third fiscal quarter and we also pay an annual dividend following our Annual General Meeting typically held in September.

Summary of Financial Results

Our total sales for fiscal year 2025 increased 6% , compared to fiscal year 2024, primarily drive n by an increase in sales of Gaming, Keyboards & Combos, Pointing Devices, and Tablet Accessories, due to improved demand.

Sales for fiscal year 2025 increased 9% , 6% and 4% in the EMEA, Asia Pacific and Americas regions, respectively, compared to fiscal year 2024.

Gross margin for fiscal year 2025 increased by 170 basis points to 43.1% , compared to 41.4% for fiscal year 2024, primarily driven by lower product costs, partially offset by higher promotional spending.

Operating expenses for fiscal year 2025 were $1,307.7 million , or 28.7% of sales, compared to $1,190.7 million, or 27.7% of sales, for fiscal year 2024.

The increase in operating expenses was primarily driven by an increase in marketing and selling expenses.

We had an income tax provision of $75.3 million for fiscal year 2025, compared to $9.5 million for fiscal year 2024, primarily driven by the discrete tax benefits recognized in fiscal year 2024 for the benefit of future Swiss tax deductions, the remeasurement of the tax basis of goodwill under the Swiss Federal Act on Tax Reform and AHV Financing ("TRAF"), Foreign Derived Intangible Income ("FDII") incentive provided by the Tax Cuts and Jobs Act

Our sales for fiscal year 2026 increased 6% , compared to fiscal year 2025, primarily drive n by an increase in sales of Ga ming, Pointing Devices, Video Collaboration, and Keyboards & Combos, due to improved demand as well as favorable changes in foreign currency exchange rates.

Sales for fiscal year 2026 increased 15% and 9% in the Asia Pacific and EMEA regions, respectively, and decreased 1% in th e Americas regions, compared to fiscal year 2025.

Logitech International S.A.

| Fiscal 2026 Form 10-K | 39

and remeasurement of our Swiss deferred tax assets due to a change in tax rate, partially offset by the tax benefit recognized in fiscal year 2025 from the release of previously recorded tax reserves for uncertain tax positions.

Net income for fiscal year 2025 wa s $631.5 million , compared to $612.1 million for fiscal year 2024, reflecting higher gross margin, partially offset by an increase in operating expenses and income tax provision.

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Gross margin for fiscal year 2026 increased by 10 basis points to 43.2% , compared to 43.1% for fiscal year 2025, primarily driven by price increases in North America, product cost reductions, and favorable foreign currency exchange rate changes, substantially offset by investment in strategic promotions and increased tariffs.

Operating expenses for fiscal year 2026 were $1,316.1 million , or 27.2% of sales, compared to $1,307.7 million, or 28.7% of sales, for fiscal year 2025.

We had an income tax provision of $115.3 million for fiscal year 2026, compared to $75.3 million for fiscal year 2025, primarily driven by the expiration of statutes of limitation of uncertain tax positions in fiscal years 2026 and 2025, and the tax effect of audit resolutions in fiscal year 2025.

Net income for fiscal year 2026 wa s $711.2 million , compared to $631.5 million for fiscal year 2025, reflecting higher gross profit driven by higher demand, partially offset by higher income tax provision.

Critical Accounting Estimates

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Return rates can fluctuate over time but are sufficiently predictable to allow us to estimate expected future product returns.

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| Fiscal 2026 Form 10-K | 40

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We apply a breakage rate to reduce our accruals of Customer Programs based on the estimated percentage of these Customer Programs that will not be claimed or earned.

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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 2025 Form 10-K | 41

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

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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.

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 and to be adopted.

Logitech International S.A.

| Fiscal 2026 Form 10-K | 41

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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 and to be adopted.

Constant Currency

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For a discussion of the year ended March 31, 2025 compared to the year ended March 31, 2024, 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 23, 2025.

Our sales in fiscal year 2025 increased 6% , compared to fiscal year 2024, primarily driven b y an increase in sales of Gaming, Keyboards & Combos, Pointing Devices, and Tablet Accessories, due to improved demand .

Our sales in fiscal year 2026 increased 6% , compared to fiscal year 2025, primarily driven b y an increase in sales of Gaming, Pointing Devices, Video Collaboration, and Keyboards & Combos, due to improved demand .

Our sales for the fiscal year ended 2026, compared to the fiscal year ended 2025, benefited from improved demand in the Asia Pacific and EMEA regions as well as favorable foreign currency exchange rate changes.

If currency exchange rates had been constant in fiscal years 2026 and 2025, our sales growth rate in constant currency would have been 4% .

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Asia Pacific 15 15

The increase in sales in the Americas region for fiscal year 2025, compared to fiscal year 2024, was primarily driven by an increase in sales of Gaming, Tablet Accessories, and Video Collaboration.

The increase in sales in the EMEA region for fiscal year 2025, compared to fiscal year 2024, was primarily driven by an increase in sales of Gaming, Keyboards & Combos, and Pointing Devices.

Logitech International S.A.

| Fiscal 2026 Form 10-K | 42

Asia Pacific:

The increase in sales in the Asia Pacific region for fiscal year 2025, compared to fiscal year 2024, was primarily driven by an increase in sales of Gaming and Tablet Accessories.

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The decrease in sales in the Americas region for fiscal year 2026, compared to fiscal year 2025, was primarily driven by a decrease in sales of Gaming, partially offset by an increase in sales of Pointing Devices and Video Collaboration.

The decline in Gaming sales for fiscal year 2026 was primarily driven by a decline in the Gaming market in the region during a substantial portion of the fiscal year and a competitive pricing environment in North America.

The increase in sales in the EMEA region for fiscal year 2026, compared to fiscal year 2025, was primarily driven by an increase in sales of Video Collaboration, Gaming, Keyboards & Combos, and Pointing Devices.

The increase in sales in the Asia Pacific region for fiscal year 2026, compared to fiscal year 2025, was primarily driven by an increase in sales of Gaming, Tablet Accessories, and Pointing Devices.

Our sales growth was fueled by strong market growth in the region during the fiscal year, particularly in Gaming.

Sales by Product Category

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

Our Gaming category includes gaming mice, steering wheels, headsets, keyboards, console gaming headsets, microphones and Streamlabs services.

During fiscal year 2025, Gaming sales increased 9%, compared to fiscal year 2024, primarily driven by increases in sales of gaming mice and gaming steering wheels.

Our Gaming category includes PC gaming (mice, headsets, keyboards), steering wheels, console gaming headsets, microphones and Streamlabs services.

During fiscal year 2026, Gaming sales increased 6%, compared to fiscal year 2025, primarily driven by increases in sales of PC gaming mice and steering wheels, partially offset by a decrease in sales of other gaming products.

Sales growth in Asia Pacific and EMEA, were partially offset by a decline in sales in the Americas region.

Keyboards & Combos

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

During fiscal year 2025, Keyboards & Combos sales increased 7%, comp ared to fiscal year 2024, primarily driven by an increase in sales of our cordless combos.

During fiscal year 2026, Keyboards & Combos sales increased 6%, comp ared to fiscal year 2025, primarily driven by an increase in sales of our cordless combo products.

Pointing Devices

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During fiscal year 2026, Pointing Devices sale s increased 9%, compared to fiscal year 2025, primarily driven by an increase in sales of cordless mice.

Video Collaboration

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

During fiscal year 2025, Video Collaboration sales increased 3%, compared to fiscal year 2024, primarily due to an increase in sales of conference room cameras as well as an increase in services revenue.

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

During fiscal year 2025, Webcams sales decreased 3%, compared to fiscal year 2024, primarily driven by a decrease in sales of our VC webcams, partially offset by an increase in sales of our PC-based webcams.

Logitech International S.A.

| Fiscal 2026 Form 10-K | 43

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Video Collaboration

During fiscal year 2026, Video Collaboration sales increased 10%, compared to fiscal year 2025, primarily due to an increase in sales of conference room cameras.

Our Webcams category includes webcams and streaming cameras.

Our webcams turn any desktop into an instant collaboration space.

During fiscal year 2026, Webcams sales increased 3%, compared to fiscal year 2025, primarily driven by an increase in sales in our Americas and EMEA regions, partially offset by declining sales in the Asia Pacific region.

Tablet Accessories

Our Tablet Accessories category primarily includes tablet keyboards.

During fiscal year 2025, Tablet Accessories sal es increased 18%, compared to fiscal year 2024, primarily driven by strong sales from the education sector related to our Rugged Combo 4 products as well as sales from our new Combo Touch products launched in fiscal year 2025 for the latest releases of iPad Air and iPad Pro.

Sales of Tablet Accessories for fiscal year 2025 , compared to fiscal year 2024, also benefited from strong sales from the education sector.

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

During fiscal year 2025, Headsets sales increased 7%, c ompared to 2024, primarily driven by an increase in sales of cordless PC headsets and VC headsets.

During fiscal year 2026, Tablet Accessories sal es increased 12%, compared to fiscal year 2025, primarily benefiting from strong sales from the education sector, particularly in our Asia Pacific region.

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

During fiscal year 2026, Headsets sales remained flat c ompared to 2025 .

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

During fiscal year 2025, Other sales decreased 15% c ompared to 2024 , primarily driven by a decline in sales of mobile speakers.

During fiscal year 2026, Other sales decreased 20% c ompared to 2025 , primarily driven by a decrease in sales of mobile speakers.

Gross profit for fiscal years 2026 and 2025 was as follows (Dollars in thousands):

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Gross margin increased by 10 basis points to 43.2% during fiscal year 2026, compared to 43.1% during fiscal year 2025.

The increase in gross margin was primarily driven by lower product costs, partially offset by higher promotional spending.

The increase in gross margin was primarily driven by price increases in North America, product cost reductions, and favorable foreign currency exchange rate changes, substantially offset by investment in strategic promotions and increased tariffs.

Logitech International S.A.

| Fiscal 2026 Form 10-K | 44

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Operating Expenses

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% of sales 0.1 % 0.2 %

Impairment of intangible assets — 3,526

% of sales — % 0.1 %

Change in fair value of contingent consideration for business acquisition — (250)

% of sales — % — %

Restructuring charges, net 9,860 9,615

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% of sales 27.2 % 28.7 %

The increase in total operating expenses during fiscal year 2025, compared to fiscal year 2024, was primarily due to increases in marketing and selling expenses.

The increase in total operating expenses during fiscal year 2026, compared to fiscal year 2025, was primarily due to an increase in research and development expense.

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 2025, marketing and selling expenses increased $84.1 million, compared to fiscal year 2024, primarily driven by increased investment in marketing and advertising, a provision for credit loss on accounts receivable recorded in fiscal year 2025, and higher performance-based compensation expense.

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

During fiscal year 2026, marketing and selling expenses increased $2.2 million, compared to fiscal year 2025, primarily driven by increased investment in marketing and selling, partially offset by a provision for credit loss on accounts receivable recorded in fiscal year 2025.

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 2025, research and development expense s increased $21.8 million, compared to fiscal year 2024, primarily driven by increased investment in product innovation and higher personnel-related costs driven by increased headcount as well as higher performance-based compensation expense.

Research and development expenses consist of personnel and related overhead costs, fees 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 2026, research and development expense s increased $7.2 million, compared to fiscal year 2025, primarily driven by increased investment in product innovation.

General and Administrative

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

During fiscal year 2025, general and administrative expenses increased $9.0 million , compared to fiscal year 2024, primarily driven by higher personnel-related costs to support business growth .

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

During fiscal year 2026, general and administrative expenses increased $3.1 million , compared to fiscal year 2025, primarily driven by higher variable compensation expense, partially offset by disciplined cost management.

Amortization of Intangible Assets and Acquisition-Related Costs

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

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

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

During fiscal year 2025, amortization of intangible assets and acquisition-related cos ts remained flat, compared to fiscal year 2024 .

Impairment of Intangible Assets

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.

During fiscal year 2026, amortization of intangible assets and acquisition-related cos ts decreased $4.4 million, compared to fiscal year 2025, driven by full amortization of certain intangible assets .

Logitech International S.A.

| Fiscal 2026 Form 10-K | 45

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Restructuring Charges, Net

The restructuring charges, net, for the fiscal year 2025 were related to costs incurred as a result of our restructuring plan initiated during the fourth quarter of fiscal year 2025.

The restructuring charges, net, for the fiscal year 2024 were related to costs incurred as a result of our restructuring plan initiated during fiscal year 2023 and substantially completed during fiscal year 2024.

The restructuring charges, net, for fiscal years 2026 and 2025 were related to costs incurred as a result of our restructuring plan initiated during the fourth quarter of fiscal year 2025, which was substantially completed in fiscal year 2026.

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

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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 2025, compared to fiscal year 2024 , was primarily driven by an increase in the average cash equivalents balance.

The decrease in interest income for fiscal year 2026, compared to fiscal year 2025 , was primarily driven by a decrease in interest rates, partially offset by an increase in the cash equivalents balance.

Other Income (Expense), Net

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Total $ 3,079 $ (2,980)

Investment gain (loss) related to the deferred compensation plan for fiscal years 2025 and 2024 represents earnings, gains, and losses on marketable securities related to a deferred compensation plan offered by one of our subsidiaries.

The decrease in investment gain for fiscal year 2025, compared to fiscal year 2024, primarily relates to the change in market performance of the underlying securities.

Investment gain related to the deferred compensation plan for fiscal years 2026 and 2025 represents earnings, gains, and losses on marketable securities related to a deferred compensation plan offered by one of our subsidiaries.

The increase in investment gain for fiscal year 2026, compared to fiscal year 2025, 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 2026 was related to the exchange rate fluctuations of the Swedish Krona and Swiss Franc versus the U.S.

The loss for fiscal year 2025 was related to the exchange rate fluctuations of the Chinese Renminbi and Mexican Peso versus the U.S.

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.

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

The loss on investments, net, for fiscal years 2026 and 2025 was not material.

During fiscal year 2026, non-service cost net pension income and oth er remained relatively flat , compared to fiscal year 2025.

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The loss on investments, net, for fiscal year 2025 was not material.

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 was deemed no longer recoverable.

This note receivable was previously obtained in conjunction with an exchange transaction related to our investment in a privately held company.

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

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Provision for Income Taxes

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Effective income tax rate 14.0 % 10.7 %

The change in the effective income tax rate between fiscal years 2025 and 2024 was primarily due to the tax effect of audit resolutions and the expiration of statutes of limitation of uncertain tax positions in fiscal year 2025 compared with the discrete tax benefits recognized in fiscal year 2024 for the benefit of future Swiss tax deductions, the remeasurement of the tax basis of goodwill under TRAF, FDII incentive provided by the Tax Cuts and Jobs Act and remeasurement of our Swiss deferred tax assets due to a change in tax rate.

On March 28, 2024, the Swiss canton of Vaud confirmed a future tax benefit to be recognized for ten years.

This resulted in the Company recording an income tax benefit of $50.1 million during the fiscal year ended March 31, 2024, which will be utilized over a ten-year period.

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 increased 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 remeasured the tax basis of goodwill under TRAF, 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.

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 to fiscal years 2021, 2022 and 2023.

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.

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 then 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.

The Base Erosion and Profit Shifting Project (the “BEPS Project”) undertaken by the Organization for Economic Co-operation and Development (the “OECD”) recommended changes to numerous long-standing tax principles, including a proposal to reallocate profits among tax jurisdictions in which companies do business (“Pillar One”) and establishing a minimum tax on global income (“Pillar Two”).

Some jurisdictions, including Switzerland, where we operate have implemented Pillar Two laws to effectuate a 15% minimum tax.

The minimum tax, effective beginning in fiscal year 2025 for the Company, is treated as a current cost and does not have an impact on the Company's effective tax rate.

The OECD and participating countries continue to issue underlying rules and administrative guidance related to Pillar Two, and we continue to monitor the relevant developments.

The change in the effective income tax rate between fiscal years 2026 and 2025 was primarily due to the expiration of statutes of limitation of uncertain tax positions in fiscal years 2026 and 2025, and the tax effect of audit resolutions in fiscal year 2025.

On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA") was enacted into law in the United States and most relevant provisions will be effective for us beginning in fiscal year 2027.

The OBBBA includes numerous provisions that affect corporate taxation, impacting areas such as R&D expensing, bonus depreciation, and international tax provisions.

We have reviewed the provisions of the OBBBA to determine the potential impact on our financial statements.

Based on this review, and considering our current tax position and operations, at this time we do not expect the OBBBA to have a material impact on our income taxes, including current and deferred tax balances and the effective tax rate.

For the fiscal year 2026, we assessed our exposure to the OECD Pillar Two global minimum tax rules.

We have determined that, for the fiscal year 2026, most jurisdictions in which we operate should qualify for the transitional Country-by-Country Reporting ("CbCR") safe harbor, as outlined in the OECD Administrative Guidance and enacted domestic legislation.

Our CbCR has been prepared in accordance with the requirements for a Qualified CbCR, using qualified financial statements.

Based on this data, most jurisdictions continue to meet safe harbor qualifications at 16% tax rates, and therefore, we are only required to perform a detailed Pillar Two top-up tax calculation for limited jurisdictions.

The estimated top up tax for fiscal year 2026 is de minimis.

On January 5, 2026, the OECD released an Administrative Guidance package.

This package includes a “Side-by-Side” System designed to align the U.S.

tax regime with Pillar Two for U.S.-parented multinational groups, effective for tax years beginning on or after January 1, 2026.

As we are a non-U.S.

headquartered multinational, the “Side-by-Side” System itself does not apply to our tax profile.

However, the broader guidance package also introduces a new permanent safe harbor (to replace the transitional CbCR safe harbor for fiscal years beginning in 2027) and a one-year extension of the transitional CbCR safe harbor that may potentially impact our Pillar Two compliance and reporting.

We continue to monitor these developments but do not expect a material change to our Pillar Two liability.

As of March 31, 2026 and 2025, the total amount of unrecognized tax benefits due to uncertain tax positions was $131.4 million and $152.0 million, respectively, all of which would affect the effective income tax rate if recognized.

As of March 31, 2026 and 2025, we had $86.3 million and $88.5 million, respectively, in non-current income taxes payable, including interest and penalties, related to our income tax liability for uncertain tax positions.

As of March 31, 2026 and 2025, we had $8.3 million and $7.2 million, respectively, of accrued interest and penalties related to uncertain tax positions.

Our unrecognized tax benefits decreased by $20.6 million during the fiscal year ended March 31, 2026, primarily due to the expiration of the statutes of limitations for certain U.S.

federal positions.

In the United States, the federal and state tax agencies have the authority to examine periods prior to fiscal year 2022, to the extent allowed by law, but only to the extent tax attributes were generated, carried forward, and are being utilized in subsequent years.

The statute of limitations in the United States otherwise lapsed for fiscal year 2022 in fiscal year 2026.

We are under examination in several foreign tax jurisdictions.

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March 31, 2025 and 2024, we had $7.2 million and $7.8 million, respectively, of accrued interest and penalties related to uncertain tax positions.

We file Swiss and foreign tax returns.

We received final tax assessments in Switzerland through fiscal year 2023.

For other material foreign jurisdictions such as the United States and China, we are generally not subject to tax examinations for years prior to fiscal year 2020 and calendar year 2020, respectively.

In the United States, the federal and state tax agencies have the authority to examine periods prior to fiscal year 2020, to the extent allowed by law, where tax attributes were generated, carried forward, and being utilized in subsequent years.

We are under examination in foreign tax jurisdictions.

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

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Liquidity and Capital Resources

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

Treasury securities, of w hich 53% was held in Switzerland and 27% was held in the United States.

Treasury securities, of w hich 50% was held in the United States, 33% 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, 2026, our working capital was $1,602.3 million, compared to $1,491.6 million as of March 31, 2025.

The decrease was primarily driven by a decrease in accounts receivable, net, and an increase in accrued and other liabilities, partially offset by an increase in inventories.

The increase was primarily driven by increases in cash and cash equivalents and accounts receivable, net, partially offset by increases in accounts payable and accrued and other liabilities.

On January 27, 2025, we entered into an unsecured revolving credit facility with a syndicate of banks (the "Credit Agreement").

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As of March 31, 2026, we had outstanding bank guarantees of $2.1 million .

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Key Working Capital Metrics

The following table presents selected financial information and statistics as of March 31, 2026 and 2025 (Dollars in thousands):

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(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, 2025 decreased by 8 days to 40 days, compared to 48 days as of March 31, 2024, primarily due to the timing of sales within the fourth quarter of the fiscal years 2025 and 2024.

DPO as of March 31, 2025 decreased by 5 days to 65 days, compared to 70 days as of March 31, 2024, primarily due to timing of inventory purchases.

ITO as of March 31, 2025 decreased by 0.8 to 4.6, compared to 5.4 as of March 31, 2024, primarily due to a pre-build of inventory in advance of the effective date for incremental tariffs.

DSO as of March 31, 2026 increased by 2 days to 42 days, compared to 40 days as of March 31, 2025, primarily due to the timing of sales within the fourth quarters of fiscal years 2026 and 2025.

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DPO as of March 31, 2026 increased by 14 days to 79 days, compared to 65 days as of March 31, 2025, primarily due to higher inventory purchases to align with improved demand.

ITO as of March 31, 2026 increased by 0.3 to 4.9, compared to 4.6 as of March 31, 2025, primarily due to improved 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.

Cash Flow Activities

The following table summarizes our consolidated statement of cash flows for the year ended March 31, 2026 (in thousands):

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Effect of exchange rate changes on cash and cash equivalents 14,637

Net decrease in cash and cash equivalents

For fiscal year 2025, net cash provided by operating activities was $842.6 million resulting from net income of $631.5 million, a favorable impact from adding back non-cash adjustments totaling $228.4 million, and an unfavorable net change in operating assets and liabilities of $17.3 million.

Net increase in cash and cash equivalents

For fiscal year 2026, net cash provided by operating activities was $1,037.2 million resulting from net income of $711.2 million, a favorable impact from adding back non-cash adjustments totaling $220.3 million, and a favorable net change in operating assets and liabilities of $105.7 million.

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

The increase in inventories was primarily due to higher inventory purchases to align with demand.

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

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

The increase in accrued and other liabilities was primarily driven by higher income tax payable and higher performance-based compensation accrual due to strong business performance as well as higher deferred revenue due to an increase in services bookings.

The increase in accounts receivable, net, was primarily attributable to increase in sales driven by improved demand as well as the timing of sales within the quarter.

The increase in accounts payable was primarily driven by higher inventory purchases to align with improved demand .

The increase in accrued and other liabilities was p rimarily driven by higher income tax payable and as well as higher revenue reserves.

For fiscal year 2026, net cash used in investing activities was $62.4 million, primarily due to $61.6 million purchases of property, plant, and equipment .

Our expenditures for property, plant and equipment during fiscal year 2026 were primarily for tooling and equipment, and computer hardware and software .

For fiscal year 2025, net cash used in financing activities was $797.4 million , primarily resulting from repurchases of our registered shares of $588.8 million , payments of cash dividends of $207.9 million , and tax

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withholdings related to net share settlements of restricted stock units of $32.5 million , partially offset by proceeds from exercise of stock options and purchase rights of $36.4 million .

During fiscal year 2025 , the effect of exchange rate changes on cash and cash equivalents was not material.

For fiscal year 2026, net cash used in financing activities was $751.1 million, primarily resulting from repurchases of our registered shares of $534.9 million, payments of cash dividends of $233.1 million, and tax withholdings related to net share settlements of restricted stock units of $21.4 million, partially offset by proceeds from exercise of stock options and purchase rights of $38.3 million.

During fiscal year 2026 , there was a $14.6 million gain from foreign currency exchange rate effect on cash and cash equivalents, primarily due to exchange rate fluctuations of Swiss Franc, Chinese Renminbi, Brazilian Real and Euro versus the U.S.

Our principal sources of liquidity are our cash and cash equivalents, cash flow generated from operations and, to a much lesser extent, capital markets and borrowings.

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Our principal uses of cash, aside from operational needs and capital expenditures, include outlays for dividends and share repurchases reflecting our commitment to return value to our shareholders.

In May 2025, the B oard of Directors recommended that we pay cash dividends for fiscal year 2025 of CHF 1.26 per share (approximately $1.43 per share based on the exchange rate on March 31, 2025).

In May 2026, the Board of Directors recommended that we pay cash dividends for fiscal year 2026 of CHF 1.36 per share (approximately $1.70 per share based on the exchange rate on March 31, 2026).

Based on our shares outstanding, net of treasury shares, as of March 31, 2026 (143,502,564 shares), this would result in an aggregate gross dividend of approximately CHF 195.2 million (approximately $243.9 million based on the exchange rate on March 31, 2026).

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In fiscal year 2025, we paid a cash dividen d of CHF 1.16 per share, or CHF 176.3 million (U.S.

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Dollar amount of $207.9 million based on the exchange rate on the date of payment ) out of fiscal year 2024 retained earnings.

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The Swiss Takeover Board approved the 2023 share repurchase program in July 2023 and the program became effective on July 28, 2023.

In March 2025, our Board of Directors approved an increase of $600.0 million to the 2023 share repurchase program, to an aggregate amount of $1.6 billion.

During the fiscal year ended March 31, 2026, we repurchased 6.2 million shares for an aggregate cost of $557.0 million, under the 2023 share repurchase program for cancellation, of which $40.8 million of the aggregate cost was not paid yet as of March 31, 2026.

As of March 31, 2026, $91.8 million was available for repurchase under the 2023 share repurchase program.

In March 2025, our Board of Directors approved an increase of $600.0 million to the 2023 share repurchase program, to an aggregate amount of $1.6 billion.

The Swiss Takeover Board approved this increase in April 2025 and it became effective on April 2, 2025.

We plan to target share repurchases of $2 billion over the next three years, subject to market conditions and regulatory approvals.

In March 2026, our Board of Directors approved a new, three-year share repurchase program to repurchase shares to an aggregate amount of $1.4 billion, or a maximum of 16,078,446 shares.

The 2026 share repurchase program enables the Company to repurchase shares for cancellation, as well as to support equity incentive plans or potential acquisitions.

The 2026 share repurchase program became effective on May 8, 2026, following approval from the Swiss Takeover Board and the completion of the 2023 share repurchase program.

Swiss law limits a company’s ability to hold or repurchase its own shares.

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As of March 31, 2026 , we had a total of 17.3 million shares held in treasury stock, which includes 4.7 million shares that have been repurchased for cancellation and 12.6 million shares that have been purchased to support equity incentive plans or potential acquisitions.

Although we enter into trading plans for systematic repurchases (e.g., 10b5-1 trading plans) from time to time, our 2023 share repurchase program provides us with the opportunity to make opportunistic repurchases during periods of favorable market conditions and is expected to remain in effect for a period of three years through July 27, 2026.

To the extent that the shares are repurchased to support equity incentive plans or potential acquisitions, the shares are repurchased on the ordinary trading line of Swiss Exchange ("SIX") and/or the Nasdaq Global Select Market ("Nasdaq").

Shares repurchased for cancellation purposes are repurchased via a second trading line on SIX.

Although we enter into trading plans for systematic repurchases (e.g., 10b5-1 trading plans) from time to time, our share repurchase program provides us with the opportunity to make opportunistic repurchases during periods of favorable market conditions.

T o 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 the SIX Swiss Exchange and/or the Nasdaq Global Select Market.

Shares repurchased for cancellation purposes are repurchased via a second trading line on the SIX Swiss Exchange.

Opportunistic purchases may be started or stopped at any time without prior notice depending on market conditions and other factors.

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If we do not generate sufficient operating cash flows to support our operations and future planned cash requirements, our operations could be harmed and our access to credit facilities could be restricted or eliminated.

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by the current macroeconomic and geopolitical environment may increase our costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity.

Although we believe that the trend of our historical cash flow generation, our projections of future operations and our available cash balances will provide sufficient liquidity to fund our operations for at least the next 12 months, m arket volatility driven by the current macroeconomic and geopolitical environment may increase our costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity.

Our other contractual obligations and commitments that require cash are described in the following sections.

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We expect to continue making capital expenditures in the future to support product development activities and ongoing and expanded operations.

Although open purchase commitments are considered enforceable and legally binding, the terms generally allow us to reschedule or adjust our requirements based on business needs prior to delivery of goods or performance of services.

Operating Leases Obligations

Although open purchase

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commitments are considered enforceable and legally binding, the terms generally allow us to reschedule or adjust our requirements based on business needs prior to delivery of goods or performance of services.

Operating Lease Obligations

We lease facilities under operating leases, certain of which require us to pay property taxes, insurance and maintenance costs.

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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