Logitech International S.A. (NASDAQ:LOGI) Q1 2026 Earnings Call Transcript

Logitech International S.A. (NASDAQ:LOGI) Q1 2026 Earnings Call Transcript July 29, 2025

Logitech International S.A. beats earnings expectations. Reported EPS is $1.26, expectations were $1.09.

Nate Melihercik: Good afternoon, and good evening. Welcome to Logitech’s video call to discuss our financial results for the first quarter of our fiscal year 2026. Joining us today are Hanneke Faber, our CEO; and Matteo Anversa, our CFO. During this call, we will make forward-looking statements, including with respect to future operating results under the safe harbor of the Private Securities Litigation Reform Act of 1995. We’re making these statements based on our views only as of today. Our actual results could differ materially, and we undertake no obligation to update or revise any of these statements. We will also discuss non- GAAP financial results, and you can find a reconciliation between GAAP and non-GAAP results and information about our use of non-GAAP measures and factors that could impact our financial results and forward-looking statements in our press release and in our filings with the SEC.

These materials, as well as the shareholder letter and a webcast of this call, are all available at the Investor Relations page of our website. We encourage you to review these materials carefully. Unless noted otherwise, references to net sales growth are in constant currency, and comparisons between periods or year-over-year. This call is being recorded and will be available for a replay on our website. I will now turn the call over to Hanneke. Hanneke?

Johanna W. Faber: Thanks, Nate, and welcome, everyone. The first quarter of fiscal year 2026 was an encouraging start to the year for Logitech. Amidst plenty of uncertainty, our team delivered good top line growth and improved profitability, demonstrating Logitech’s resilience in a challenging environment. During the quarter, we continue to focus on our long-term strategies and overlaid three principles. First, we played offense. We continue to invest in research and development, which represented 6% of sales this quarter. That investment underscores our long- term commitment to superior products and innovation. We also continue to focus on driving growth. Net sales grew 5%, and we grew net sales in all key categories. Demand also grew mid-single digits, closely marrying net sales and ensuring a healthy channel inventory position.

Second, we exercised disciplined cost controls. We reduced operating expenses by 2% year-over-year, including an 8% reduction in general and administrative expenses. As a result, the quarter’s OpEx as a percent of sales was down 200 basis points versus last year. And despite tariffs, we delivered a solid gross margin of 42.1% in the quarter, driven by our ability to mitigate the tariff impact through product cost reductions, manufacturing diversification as well as pricing. As we move forward, rigorous cost discipline is going to remain a cornerstone of our plans. Third, agility. We are moving fast. As we previously shared, we expect to reduce the share of U.S. products originating from China from 40% in April to just 10% by the end of this calendar year, and we are well on track to do so.

These three guiding principles, playing offense, cost discipline and agility drove our success in Q1. But just as importantly, so did our long-term strategic priorities. Superior products and innovation are always at the heart of our strategy. This quarter, we launched nine new products. We introduced the G522 Wireless Gaming Headset, a sleek, comfortable gaming headset, designed for full immersion in the game. We launched a Flip Folio for iPad, a really stylish magnetic keyboard case for on- the-go users. We introduced a Slim Wired Combo for business with Customizable AI Launch Keys. And we announced the Logitech Muse for the Apple Vision Pro, a groundbreaking digital pencil designed to support collaboration in virtual reality. In recognition of all of our team’s innovative design and engineering work, Logitech was named one of Fortune’s most innovative European companies for 2025 in the quarter.

Q&A Session

Doubling down on B2B is another important strategic pillar. Logitech for business demand outpaced our consumer business demand this quarter, led by double-digit net sales growth in video conferencing. Logitech for business progress reflects the strength of our portfolio of simpler, smarter, more sustainable enterprise solutions and the opportunities in services and new verticals. Finally, we drove very strong execution around the world. In Q1, APAC results particularly stood out. We’re seeing meaningful progress from our China for China investments. Our China team achieved a significant milestone in May when they returned to growing share in the very fast-growing Chinese gaming market. As we look ahead to the second quarter and beyond, we expect continued uncertainty when it comes to tariff policy, to inflation and customer sentiment.

But Logitech has proven time and time again that we are uniquely built to thrive in times like these. Our business is globally balanced, with about 2/3 of sales generated outside the U.S. Our diversified manufacturing footprint spans six countries and gives us flexibility and resilience. Our strong brand provides loyalty and pricing power. Our pristine balance sheet offers financial flexibility. And most importantly, our experienced team continues to execute at the highest level. So in Q2, we’re going to continue to play offense to drive growth and market share gains. We will maintain rigorous cost discipline, and we will act with agility to respond to evolving market conditions. The fundamentals of our business are strong, and our strategy positions us very well to navigate uncertainty and deliver attractive results.

Matteo, with that, I’ll turn it over to you.

Matteo Anversa: All right. Thank you, Hanneke, and thank you all for joining us on the call today. I want to, first of all, extend my gratitude to our teams around the globe for the strong execution during the quarter. Our teams demonstrated they can operate under challenging market conditions, operating with agility while making solid progress towards our overall goals. And as you have seen from the financials that we published earlier today, we began fiscal year ’26 with strong execution and focus. Net sales were up 5% year-over-year in constant currency, supported by continued robust demand across both the consumer and B2B. Despite significant external headwinds, we increased our profitability and generated strong operating cash flow.

And as expected, this fiscal year started with sell-in in line with sell-through, and we delivered another strong year-over-year growth across all our key product categories. Now a couple of highlights to mention. Video Collaboration delivered 13% year-over-year growth, driven by strong North American demand. Personal Workspace grew 6% year-over-year, fueled by double-digit growth in webcams and tablet accessories. And this marks the fifth consecutive quarter of growth in tablet accessories. And on a regional level, Asia Pacific grew 15% year-over-year, led by sustained double-digit growth in China. EMEA grew 9%, driven by strong demand across all product categories, while North America declined 4%, primarily the result of a pause in some product shipments during price negotiations which are now largely complete.

Non-GAAP gross margin rate for the quarter was 42.1%, and this reflects a 120 basis points decline from the first quarter of last year due to the negative impact from tariffs, higher promotional spend and a release in inventory reserves recorded in the prior year period. These were partially offset by price increases in the U.S. and the continued momentum from cost reductions. Operating expenses declined 2% year-over-year and were 24.5% of net sales, down from 26.5% in the first quarter of last year. This decrease was driven by operating leverage and a reduction in G&A as a result of the measures that we implemented to mitigate the impact of tariffs. Cash flow was also strong. We generated $125 million in cash from operations and ended the quarter with a cash balance of $1.5 billion.

We returned $122 million to shareholders through share repurchases, which is consistent with our capital allocation priorities. So overall, this quarter brought continued macroeconomic operational challenges, notably an approximately 100 basis points negative impact from the U.S. tariffs. And in response, we diligently followed the strategy that we outlined in the last earnings call, which allowed us to increase profitability for the company by 80 basis points in non-GAAP operating income. Now more specifically, first, we implemented price increases in North America. The execution of this price increase is now largely complete, and we expect the full benefit to be recorded in the second quarter. Second, we executed cost saving actions, mostly in G&A, around controllable expenses.

And third, we continue to leverage the strength of our balance sheet and accelerated the acquisition of the inventory in advance of tariffs going into effect. Now looking ahead to the second quarter, we are expecting net sales to grow 1% to 5% year-over-year in constant currency, gross margin rate to be between 41% and 42% and non-GAAP operating income between $180 million and $200 million. We are expecting the negative impact of tariffs in the second quarter to be between 200 and 300 basis points, which will be partially offset by 200 basis points of positive price as a result of the price increase that we executed in the first quarter. So in summary, we delivered solid results in the first quarter. I want to thank all our teams around the globe for dedication and flexibility.

So with that, let’s open the call for questions.

Nate Melihercik: Thank you, Matteo. [Operator Instructions] With that, our first question comes from Didier with Bank of America. Didier?

Didier Scemama: I just wondered if you could share your thoughts on sort of the consumer reaction to your price actions. So clearly, this had, had a positive impact. You might have given the number for the current quarter. If you could just remind us what the pricing benefit in the quarter was versus volumes? And what’s your view — hello? Yes, sorry about this. So what’s your view on the consumer reaction? Were you positively surprised by the volumes in response to the price action, the price hikes that you’ve done in the quarter? And is that encouraging you to raise prices further in order to compensate for the tariff impact?

Johanna W. Faber: Yes. Yes, thanks, Didier. Good to see you. So the positive impact of price in the first quarter was 50 basis points because, of course, we only announced a price increase in mid-April. And then as usual, it takes about 4 to 8 weeks to get it fully implemented across the trade. It’s really too early to say much about the impact on the consumer because again, we only completed the implementation towards the very end of the quarter. So you didn’t really see the new prices on-shelf across the U.S. trade until the end of the quarter. So that’s hard to tell. And what we do know — and this is expected, is that the negotiations with our customers took us 4 to 8 weeks to get this fully implemented. And during that time, we did see an impact on in-stock levels and on-shelf availability, which again is expected during a price negotiation.

And it temporarily affected the net sales, which you see in our Americas net sales number. However, that implementation is now essentially complete. In-stock levels have recovered, and this positions us really well for back-to-school and for holidays.

Didier Scemama: Super. And a quick follow-up would be on the Video Collaboration business, which is showing further strength. Is that — just — can you elaborate a little bit on that? And how confident that this trend is sustainable into — in the later part of this year?

Johanna W. Faber: Yes. So obviously, very pleased with 13% growth in VC. Overall, that business is strong, very strong demand in North America, actually. There may have been a little bit of pull-in in North America in advance of the tariffs, so that, that wouldn’t repeat. And the EU was a little low on inventory at the end of Q4. So they had to bring in a little more inside the first quarter. But at the end, the weeks on hand are still at a very healthy normal operating range. So it might have been slightly inflated, but still, a double-digit growth number is a really good number for VC showing the underlying strength of that business.

Operator: Okay. Our next question comes from Tim Long with Barclays. Tim?

Timothy Patrick Long: Yes, two, if I could. It sounded like first one, B2B was pretty strong in the quarter. Just walk us through kind of — it sounds like Video Collaboration, but any other moving parts there? And just remind us on the kind of economic financial impact of growing the B2B in the mix? And then second, on the gaming side, really strong quarter. It sounds like some new product there. Can you talk about kind of sustainability of the strength that you’re seeing in the gaming vertical?

Johanna W. Faber: Yes. So I’ll let Matteo comment on Logitech for business and the economic impact. But it definitely was another strong quarter for Logitech for business. Again, demand in that space outpacing consumer demand. And that’s really true across our full Logitech for business portfolio, which, as you know, consists of PWS as well as video conferencing and headsets. And all of that despite the 10% price increase, so — which applied across B2B and B2C. So that’s really good to see. We continue to strengthen our capabilities in B2B. We’ve now — we now have a global partner program in 135 countries. That’s one place where we needed to improve. And we’re also continuing to grow in those new verticals that we’ve talked about, and Education had another quarter of double-digit growth. So all of that is good to see. Matteo, do you want to just comment on…

Matteo Anversa: Yes, Tim, the — generally, video conferencing is actually positive for us in terms of mix. The margin on video conference is accretive to the average of the company. So it’s a good product.

Johanna W. Faber: Yes. And then on gaming, yes. Also very excited about the strength of both the gaming market and our gaming business, and we saw a very solid share growth in gaming in North America in the quarter. And China was really outstanding. And the market continues to grow very, very fast in China. We also had strong growth. You saw our APAC numbers. We don’t break out China, but APAC was at plus 15%. China was significantly ahead of that. So that’s great to see. And a big milestone for us is the fact that in May, we finally started gaining share in gaming in China, which is awesome. We’re #1 but we’ve been losing share for a while. So that’s good. One swallow does not make summer, but you got to start somewhere. And then across the world, we saw good growth in our premium segments on gaming.

So PRO and SIM are real priority for us. We extended our partnership with McLaren, and we launched a really exciting new headset, the G522. So lots of great things in gaming, and that’s just a long-term really big bet for us.

Operator: Our next question comes from Lucas with Berenberg. Lucas? Okay. Skipping ahead. Our next question will come from Martin with BNP. Martin, please go ahead.

Martin Jungfleisch: Yes. Just — maybe, can you talk about just the demand pattern in Q1? I mean was this anything different compared to typical Q1 to the tariffs? I mean have you seen demand increase a lot post the tariff announcement and then fade off towards the end of Q1 in the U.S.? That’s the first question. And then the second one is really more on just market share and competition. You wanted to play offense, obviously, in this current environment. So can you talk about how you generally see yourself positioned, I mean, compared to peers with regards to your current production setup and pricing? So could you potentially gain in market share and raise prices further on the back of your potentially better production footprint?

Matteo Anversa: I will take the first one, yes. Okay, Martin. So on your first question — so we are very pleased with the demand in the first quarter, it was high single-digit for the company. And overall, it was pretty broad-based when you look at both the B2B and the consumer were up nicely. B2B actually outpaced a bit, the consumer, but overall, very, very strong. And it was also broad in terms of products. Obviously, you had a couple of big improvements year-over-year with tablet accessories, which grew double digits and all the other product lines were in the high single digit. So it was really, really good and broad-based demand. And also geographically, back to Hanneke’s point, it was very strong in AP, in Europe and relatively flattish in North America.

To your question in terms of Poland, I go back to what Hanneke mentioned earlier. We have not seen that on the consumer side. We have seen a little bit at the beginning of the quarter on the B2B side with the customer trying to pull in some of the products like we did with our own suppliers in advance of tariffs. But when you look at overall the quarter, the impact of this pull-in was overall, immaterial. So demand was overall pretty good and broad-based.

Johanna W. Faber: Yes. Yes. And in terms of shares, we saw share gains in a number of categories at a global level. And I was particularly encouraged by the fact that across all our key categories in the U.S., past 3 months, we saw share growth. So PWS, gaming and video conferencing. The impact of price on share really is too early to tell. The last share reading we have is through May. And in the U.S., our new prices were not fully reflected on shelf by the end of May. So we have to read that carefully. I do expect a temporary softening of shares after a price increase. That’s what you tend to see, but it’s a temporary effect, and we’ll take it from there.

Operator: Okay. Our next question comes from Michael with Vontobel. Michael?

Michael Foeth:

Vontobel Holding AG: Can you hear me?

Matteo Anversa: Yes, we can hear you.

Michael Foeth:

Vontobel Holding AG: Well done on the results. I have two questions. The first one is on your inventory sort of strategy and how you’re going to proceed in the current quarter in terms of acquiring inventory and what effect it will have on net working capital and cash flow. And the second question would be on the tablet accessory business going into — obviously, now back-to-school quarter and how you lined up and what are you expecting for the current quarter on tablet accessories in your guidance?

Johanna W. Faber: Yes. Yes. Thanks. Why don’t I take the tablets, and then we can come back to inventory. So tablets are an important part of our business, quite strategic. And that 15% growth that you saw in the first quarter, we’re pleased about for two reasons. Tablets are designed for a fast-growing segment of consumers, people that work on the go, which is all of us in this virtual room. So that’s a growing segment. And second, as you just pointed out, Michael, they serve the important Education vertical. And when we can serve K to 12 young children with our products, we create a lifelong relationship with that consumer. So it’s a long-term strategic kind of first product that people get in their hands from Logitech. So very important.

I think the other thing that we’re pleased with is since the launch of the Combo Touch now a little over a year ago, that was a great design-led innovation that importantly also significantly improved the margins of the tablets. So it’s a much more attractive business for us now than it was 15 months ago. So all of that is good. We expect another good quarter because, as you said, it’s back to school. So we expect another good quarter for tablets in Q2 as people around the world — students around the world go back to school in Asia, in the U.S. and in Europe.

Matteo Anversa: Michael Foeth, on your question on inventory. So we — if you go back in the last earnings call, when we laid out the strategy that we were planning to execute on to mitigate the impact of tariffs, we said that we have a great balance sheet, and we wanted to be opportunistic and use and leverage the strength of our balance sheet to try to pull in some of the inventory ahead of tariffs being into effect. And that was — Sree and the team and the operation done a marvelous job. They were very successful in doing it in the first quarter. And actually, when you look at the gross margin that we printed earlier today, we came in on the higher end of the range that we provided 3 months ago, and that’s one of the reasons.

The team has done a fantastic job. So we want to continue to operate under the same identical framework because as you’ve seen in the first quarter results, notwithstanding the fact that we pulled in inventory, so the inventory balance is a little higher than last year. And we still closed with $125 million of operating cash flow, a cash balance remained at $1.5 billion, and the cash conversion days, thanks to very strong collections that we continue to see also in the first quarter, closed around 40, which is the framework that we outlined even at Investor Day. So our strategy will be unchanged. If we can, we will pull in as much inventory as possible to protect the company, our customer and just leverage the strong balance sheet that we have.

Michael Foeth:

Vontobel Holding AG: Any chance you will accelerate your buyback given the balance sheet position was not very intensive in the first quarter, I think?

Matteo Anversa: Yes. We’ve been pretty consistent. If you look back to the last 3, 4 quarters, we always bought back between $120 million, and call it, $130 million of shares. We had one uptick back in, I think, it was the third quarter of the last fiscal year where we — there was a dislocation in the stock price, and we opportunistically bought back more. But overall, I go back to what we said at the Investor Day, right? We clearly laid out the capital allocation priorities of the company. And we said that we are targeting a $2 billion buyback in 3 years, and we will follow that — the strategy that we outlined in March.

Operator: Our next question comes from Asiya Merchant with Citi. Asiya?

Asiya Merchant: Hopefully, you guys can hear me. Can I ask a little bit on the guidance for gross margins? If you can just peel that a little bit. I think I heard there was some benefit of inventory reserves that impacted gross margins this quarter. And how should we think about that next quarter as well? And just if you can unpack the guidance relative to the tariff impacts that you guys are seeing. And I think in the past, you had expected a much worse tariff impact, which obviously doesn’t seem to be working through right now. So how should we think about the guidance relative to that?

Matteo Anversa: Sure, Asiya. So let me — maybe the best way to answer the question is start with the first quarter that we just closed and give you a couple of numerical data points. So overall, we are very pleased with the performance in the gross margin on the higher end, pretty much in line with what we said on the higher end of the outlook that we provided 3 months ago. Thanks to the work on cost reduction and some of the comments that I made earlier to Michael’s question on the inventory. When you unpack the 120 basis points year-over-year decline, you have — the tariff impact was about 100 negative basis points, offset by 50 basis point positive price that Hanneke mentioned earlier. So net-net, the tariff impact in the quarter was negative 50, which was slightly better than what we had anticipated at the beginning of the quarter, but overall, call it, roughly in line.

I think that when we talked back — 3 months ago, we were expecting 100 basis points negative. So in the zone. And then year-over-year, we also had about 50 basis points of pressure due to inventory reserves that were released in the prior year in the first quarter, which did not occur in the first quarter of this year. So that’s how you unpack the 120 basis points of deterioration in the year-over-year comparison on gross margin for the first quarter. Now when I move — when we move to the second quarter of last year, the gross margin rate was 44%. And here is where it’s important to remember that last quarter — last year in the second quarter, we had a sizable release of inventory reserve, which benefited the gross margin by about 100 basis points.

And we even said at that time, this was — it was not going to repeat. So really, the number you have to compare yourself is about 43%, right? And so moving from there, we are expecting tariffs to impact about 200 to 300 basis points negative. But this will be offset by the 200 basis points of positive impact from price to the actions that Hanneke mentioned earlier. And then we have about roughly 100 basis points of year-over-year pressure on the gross margin coming from a slightly higher promotion net of FX. So that’s your walk to the 41% to 42%. So overall, the performance on the gross margin rate should be pretty much similar to what we have seen happening in the first quarter. And the impact of tariff, net of everything, so tariff, net of the diversification and net of price is between 0 to 100 basis points negative.

Asiya Merchant: Okay. Great. And just if I may, like as you look ahead, is that kind of what we should think about? I mean typically, you do have some promotional expenses, et cetera. So your back half of your — the back half of your fiscal year tends to be slightly margin dilutive versus your first half. So how should we think about the gross margin trajectory for the rest of the year?

Matteo Anversa: Asiya, I think the situation is still pretty volatile in terms of macroeconomic impact. We’ll have to see, there is — to Hanneke’s point, what is going to happen with the consumer, the price elasticity even in the second quarter. So I think making any comment beyond the second quarter at this point is a bit premature. So I’m going to leave it like that.

Operator: Our next question comes from Samik with JPMorgan.

Samik Chatterjee: For the first one, in the first quarter here, if you — you have about mid-single-digit growth in revenues. Sell-through is pretty similar at mid-single digit. You’re guiding to 1% to 5% for the second quarter. How much of that is sort of what you’re embedding in for what you’ve been sort of highlighting as share changes on account of pricing? Because I would expect 2Q, you also get the benefit of pricing on that front as you move from 1Q. So just trying to understand the sort of puts and takes on the revenue side, particularly given that you have benefit of pricing. And maybe as a sort of addition to that, you have the Americas pause that you’re highlighting in 1Q that impacted you. So how do you expect that to play out in 2Q? Do you expect the inventory replenishment in 2Q in the region?

Johanna W. Faber: Yes. It’s a great question, Samik. So you’ve seen that we’ve guided for the quarter with a fairly broad top line range, 1% to 5%. The high end of that assumes that the market remains resilient and that the impact of the U.S. price increase on the consumer is modest. So that would be the high end. Conversely, the low end, we would see some more deterioration in consumer sentiment and a longer lasting impact of the price increase in the U.S. on the consumer. So that’s kind of how we think about the [ bookings ] of that range.

Samik Chatterjee: And anything in terms of how you’re thinking the Americas pause sort of plays out in terms of F 2Q? And then just for my follow-up, if you can just sort of clarify for tariffs as we go into F 3Q, are we largely assuming with the price offsets, you’re neutral on the gross margin for tariffs?

Matteo Anversa: So the — so for the first part of your question, when you break down the regions to Hanneke’s point, we are expecting the AP, you saw how the performance in the first quarter was great, and we think that will continue into the second quarter on the top line. Europe had good performance in the first quarter, high single-digit, maybe a slight deceleration due to the inventory dynamic that Hanneke mentioned earlier. But overall, we’re expecting Europe to continue to perform very well. And then the range really comes down to North America, and that’s exactly what Hanneke just described. In terms of expectation for tariffs — so that’s a tough question, Samik. So the — we said for the second quarter, right, at the current — with the current tariff environment, we’re expecting the impact of tariff to be between 0 to negative 100 basis points, this all inclusive.

So tariff cost, net of manufacturing diversification and net of the price increase. With the current tariff environment, if that were not to change, that would be a good proxy also for the remainder of the year. But we’ll have to see what happens with legislation and so on and so forth. So that’s all we can say right now.

Johanna W. Faber: Absolutely. I mean, some people think everything has now settled, but it remains a moving feast. The expected tariff impact on our U.S. volumes of the countries we make in, China plus 5 is not entirely clear, so the tariff policy isn’t entirely clear. The product classification, which leads to exemptions, isn’t entirely clear. And then, of course, what also impacts the tariff rates that we see in the P&L is our own manufacturing footprint and when things change, our own mix and our own strategic inventory decisions. So there’s a lot of variables, which is why we don’t break all of those out because we drive you nuts, and we just give you what it all adds up to.

Operator: Our next question comes from Ananda with Loop Capital.

Ananda Prosad Baruah: I guess two, if I could. Hanneke, and maybe this has become more of a housekeeping question, but I do like asking it. The last year, the remarks you had made about opportunity to harmonize portfolios across various of the geographies. Can you talk — can you sort of talk to where you guys are on that? Is there anything left to do? And what the impact has been? And is there a future impact that could come from that? And I have a quick follow-up as well.

Johanna W. Faber: Yes. We — I think we’re in a very good place when it comes to harmonized portfolios across — around the world, really. And obviously, that helps in terms of cost reductions quarter-by-quarter. Simpler is always better, but we’re in a pretty good place. And if anything, our China for China program, which is working very well, does add a little bit of extra SKUs in our lineup because we’re adding China for China innovation. But what I also expect we’ll start seeing is that some of that China for China innovation actually becomes global innovation again going forward. So that will be a really good dynamic.

Ananda Prosad Baruah: And then the follow-up is, you had mentioned that during price negotiations, inventory gets a little skinny on the shelves. So that can impact sales. And then you also made later on a remark about you expect — it’s not — well, it’s not atypical to lose some share after prices increase. Are those two sort of share pressuring dynamics, distinct share pressuring dynamics?

Johanna W. Faber: Yes, you got that exactly right. So we’re through the first phase where the inventory got a little skinny. We’re through that because customers have accepted the price increase, they’re ordering, we’re back to good inventories. And we actually did see that earlier in the second quarter, we had a good Amazon Prime. So that would tell me that things are back in order in terms of inventory. But again, the effect of the actually higher consumer price, that is yet to be seen. And again, usually in the short term, that could have an effect on sales and share.

Operator: Okay. Our next question comes from Jörn with UBS. Jörn?

Jörn Iffert: Two to three, please. If I may start with the first one. Just to double check your ASP negotiations in North America, was this resulting in empty shelves and this was impacting the flattish sell-through? Or not really?

Johanna W. Faber: Yes. I wouldn’t say empty shelves, but there were certainly SKUs that went out of stock on the real and virtual shelves. So it wasn’t like there was no Logitech at all, but there were certain big SKUs that were out.

Jörn Iffert: Do you think this has a meaningful impact on your business in North America, and that is true?

Johanna W. Faber: It had some impact, probably in the last month of the quarter. So — and again, we don’t have those shares yet. So I can’t really tell. Through May, didn’t have an impact. The shares in North America were very strong. And I think in early July, we’re recovering from that impact. Now again, the second impact of the actually higher prices remains to be seen. So — but all of this is normal when you increase prices, it just — you don’t know overnight what will happen, and you will have some noise in the actual negotiations.

Jörn Iffert: And the second question is on gaming. If I remember correctly, last quarter, it was also growing low single digit or so sell-through. It seems that now it’s again in brackets only growing low single digit. It should be your key structural growth driver. Is there anything going on in simulation devices or headset which is cyclical, we should be aware of? And how do you think the growth rate in the remainder of the year in gaming?

Johanna W. Faber: Yes. So again, I think gaming was probably most affected by the noise in the price negotiations. As you know, it’s our most competitive category in the U.S. So it did suffer a little more than PWS from the out of stocks. So I think we’ll see a good recovery in gaming in the quarters ahead.

Matteo Anversa: And demand was up 6% in the quarter for gaming. So it was pretty good.

Jörn Iffert: So sell-through is plus 6% in gaming?

Matteo Anversa: That is correct.

Johanna W. Faber: Yes.

Jörn Iffert: Okay. Okay. And the last question, if you allow me. On the tariffs, when you say 200 to 300 basis points gross tariff impact. If my calculations are totally wrong, it’s an average tariff of around 15%, plus/minus, you are paying currently. Is this roughly correct? So when, for example, there’s anything happening with China going to 55%. When this passes over Taiwan, Malaysia has to pay 30% that this 270 basis points is increasing likely in the back half of the year?

Matteo Anversa: I think the amount for the first quarter was a little lower than that. But as you know, Jorn, we — in the first quarter, we benefited for — of the inventory that we were able to pull in back to the prior question that mitigated the impact. So I think your math is relatively close. As far as the — we — only today, we just talk about the outlook for the second quarter, right? So at this point, based on the inventory that we have and we think based on the demand that we see for the quarter in this inventory flushing through the system. Whatever is going to happen in the next month, 1.5 months should be relatively limited the impact for the second quarter and embedded in the range of the 200 to 300 basis points that we provided today.

And then we’ll have to see what happens for the future. That’s why we just — to Hanneke’s point earlier, we’ll stop at the second quarter, we’ll update you moving forward. But the 15% that you calculate — but the roughly 15% that you mentioned moving forward, so excluding the first quarter, is actually close to my calculations, close — you’re close.

Operator: Okay. Our final question comes from Maya Neuman with Morgan Stanley. Maya?

Maya C. Neuman: Awesome. Hanneke, maybe if you can help us better understand the timing to reach your 7% to 10% top line growth target disclosed in March? I know there were some TAM expansionary initiatives in there that I assume takes some time. But at the same time, you’re already seeing success in Education. So how long do you think until we get to that high single-digit top line growth target?

Johanna W. Faber: Yes. Great question. So as you know, last fiscal, we were actually at plus 7%. So — but we can already be pretty close. Clearly, a lot of uncertainty and a lot of challenges in the markets in the past quarter after Liberation Day. But again, we’re pleased with even now, the top line that we’re seeing and the demand that we’re seeing in the markets. In terms of that enlarged TAM, that’s going to take time. Education was the first vertical that we addressed. We’ve been in that for a few years now. So we continue to see good growth there. That’s very encouraging. The other two, healthcare and government, we’re really just starting, and we’re starting almost from scratch. So before that has a material impact, it will take a little longer. But all that said, I would say even our core categories, again, we showed last fiscal that we can get to high single digit or be pretty close to it. So don’t have a crystal ball, but it’s going to happen.

Maya C. Neuman: Understood. And then maybe kind of going back to an earlier question. If we think about the midpoint of guidance, is there a way you can help us understand how much the pricing increases in the U.S. are estimated to contribute to September quarter top line growth?

Matteo Anversa: Maya, we said that we are expecting the impact of price to be 200 basis points at the gross margin level. And that’s what we are counting on, on our financials, then we’ll see what happens at the end of the quarter based on some of the uncertainties that Hanneke just talked about.

Johanna W. Faber: Yes. I could add, in the first quarter, most of that 5% net sales growth, the vast majority was from volume actually. So again, pricing could be an additional benefit over time. But we got to see it always needs a little bit of time to play out in the market.

Operator: At this time, there are no further questions.

Nate Melihercik: Thanks, everybody. I think we’re ready to wrap.

Johanna W. Faber: Absolutely. Thank you so much for joining us today and for sticking with us at this late hour in Switzerland. Just to summarize, our teams had a great start to fiscal. Looking ahead, I’m excited actually about the opportunity that’s before us. So we’re going to continue to play offense. We’ll continue to manage costs, and we’re going to continue to be super agile. And I look forward to speaking with you next quarter. So take care, everyone. Good night.