Good afternoon, and good evening. Welcome to Logitech's video call to discuss our financial results for the second 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 discussions of our outlook, strategy and guidance. We're making these statements based on our views only as of today. Our actual results could differ materially as a result of many factors. Additional information concerning those factors is available in our most recent annual report on Form 10-K and any subsequent reports on Forms 10-Q and 8-K, which you can find on the SEC's website and the Investor Relations section of our website. We undertake no obligation to update or revise any of these forward-looking statements, except as required by law. We will also discuss non-GAAP financial results. 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. And unless noted otherwise, references to net sales growth are in constant currency and comparisons between periods are 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.

Thank you, Nate, and welcome, everyone. We delivered a strong second quarter to close out the first half of fiscal year 2026. Our teams executed with excellence, delivering good top line growth and outstanding profitability. They executed well across all regions and delivered strong growth across both B2B and consumer channels. To achieve these results in the current environment underscores Logitech's discipline and resilience. In Q2, we remain focused on our long-term strategic priorities, and they drove our results. First, of course, superior products and innovation, which are so integral to our DNA. This quarter, we announced 16 new products. Some of the highlights included the much anticipated MX Master 4, a new generation of our flagship premium mouse. This new product is the first in the MX line to provide advanced users with tactile haptic feedback, and it is off to a record-breaking start. We also unveiled a wide array of exciting new gaming products, including the new PRO X2 SuperStrike mouse, which blends inductive analog sensing and real-time haptic feedback for the most competitive gamers. We also launched the McLaren Racing collection, a premium lineup of SIM racing gear inspired by McLaren's iconic racing brand and technology. And for those of us in the business world on calls like this one, we introduced the new Zone Wireless 2ES and Zone Wired 2 headsets with AI-powered dual noise canceling microphones and adaptive hybrid active noise cancellation. Many of these new products were announced at our Logitech-ownned flagship events, Logi WORK and Logi PLAY in September. These coveted live events took place in more than 30 cities around the world, attracting thousands of media, influencers, content creators, partners and thought leaders. The Logi PLAY global live stream on the day drove more than 12 million views. And within a month,…

Thank you, Hanneke, and thank you all for joining us on the call today. I would like to start by thanking our teams around the globe for the continuous strong execution in the second quarter. While the external environment remains challenging, our execution centered on playing offense, disciplined cost control and agility. And this focus drove a non-GAAP operating income of $230 million, up 19% year-over-year. This strong profitability was achieved in a quarter where we delivered mid-single-digit net sales growth year-over-year. So let me discuss some of the key aspects of our second quarter financials. Net sales were up 4% year-over-year in constant currency, supported by continued robust demand across both consumer and B2B. And actually, B2B demand outpaced consumer in the quarter. Some key highlights to mention across our product categories. Personal Workspace grew year-over-year, fueled by double-digit growth in Pointing Devices and Keyboards & Combos. Gaming delivered 5% year-over-year growth in constant currency, driven by double-digit growth in PC gaming. Video Collaboration grew 3% in constant currency, driven by high growth in EMEA, while Americas was relatively flat due in part to the pull forward of sales that we highlighted in the first quarter. We executed well across our regions and more specifically, Asia Pacific grew 19% year-over-year in constant currency, led by sustained double-digit growth in China. EMEA grew 3% in constant currency, driven by strong growth in Video Collaboration and Personal Workspace. And conversely, Americas was down 4%, primarily due to the gaming market decline. And as Hanneke just noted, we also experienced lower demand early in the quarter as a result of the pricing actions that we took to offset tariffs, which improved in the latter half. Moving to gross margin. Our non-GAAP gross margin rate for the quarter was 43.8%, similar to the…

[Operator Instructions] And now our first question is form Asiya Merchant from Citi.

Great. I hope you can hear me.

Yes, Asiya.

Okay, okay. All right. Wonderful. [Technical Difficulty] double down a little bit on the U.S. consumer uncertainity that you talked about specifically [indiscernible] gaming. What have you seen? Has that been a function of the price increases that you put through? And when you talk about Americas improving as the quarter progressed, was that a -- is gaming part of that? If you can just double-click on that. And then just given the fact that sell-through was so much better than sell-in, why should we have like more seasonal or maybe more like mid-teens, mid- to high teens kind of guide that you guys are talking about?

Yes. Thanks, Asiya. So there's a couple of pieces in that question. I appreciate it. Maybe first on the markets overall, we saw continued strong markets around the world on the work side of our business. So Video Conferencing and Personal Workspace, really markets were strong and growing everywhere. In Europe and in APAC, the gaming market also continued to grow. But in the Americas, it was a little bit more mixed. Again, VC and PWS were really solid market-wise, but the Gaming market in Q2 declined mid-single digits. And the reasons for that decline can be debated, but I think what's more important is that we're cautiously optimistic that the gaming market will recover and be back to growth in the holiday quarter for a number of reasons. First of all, we saw the trends improve as the quarter progressed, Q2. There have been some game releases early in Q3, notably Battlefield 6, which is the type of game that really plays to our strength and is off to a really good start. And then we have an excellent innovation bundle and some targeted promotions where needed to continue to grow the business. So I think, again, globally, market is actually quite strong. North America gaming, a little softer. And by the way, in the global context, our competitive share performance in Q2 was also very strong. So all in all, good momentum and cautiously optimistic that, that spot of North American gaming will be better during the holidays...

No, no, go ahead.

Unpacking a bit of the second portion of your question on the outlook. So the way I think I would describe it as we think it's a reasonably fair balance between the underlying strong performance that the business continues to have, as you have seen in the results that we posted earlier today with some of the litany of uncertainties that Hanneke talked about in her prepared remarks. So when you look at it by region, basically, we are expecting Asia Pacific to continue to perform extremely well with double-digit growth. China keeps doing extremely well. We have 11/11 coming up here in November. So we are expecting strong performance on gaming. So Asia Pacific will continue to perform in line with the last couple of quarters. Similar thing for EMEA, we are expecting a low to mid-single-digit growth in constant currency in Europe as well. So the bookends of our outlook is really around the -- what's going to happen in North America with the U.S. consumer to Hanneke's point earlier. And here, if you look at the low end of the outlook assumes a North America that continues to be slightly negative year-over-year in terms of net sales, like we have seen in the first 6 months of the year, while the high end of the outlook assumes a strong holiday season, strong consumer and North America actually turning flat to slightly positive. So that's are the bookends of the outlook that we provided today.

And was any of that an impact of prices that you put through, price increases that you put through?

Yes. I think mostly our brand and our products, both of which are, we believe, quite superior, protected us to a large extent from impacts of the pricing. I would say, in general, higher priced and premium products as well as our B2B portfolio, we saw very little to no impact of the price increases. Where we did see some impact was on entry-priced products and even there, probably a little bit more so on entry pricing gaming than in PWS. And we're actively managing that with targeted promotions.

Our next question comes from Erik with Morgan Stanley.

Maybe just following up on Asiya's question there. Just if you could maybe touch a little bit more on the consumer response to higher prices. And really, what I'm trying to get at is, you talked a little bit about B2B pull forward in the June quarter. What type of behavior did you see kind of prior and then after pricing increases in the U.S. that maybe informs you about the consumer? And how are you -- or what are the assumptions that you're making into the December quarter as it relates to pricing and kind of the elasticity of pricing? And then a quick follow-up, please.

Yes. So again, on the B2B side, very little impact with the exception maybe of some timing impact where, again, we saw a little bit of pull forward in our Q1. But demand-wise, very little impact. Same thing on the premium end of the portfolio, very little impact. I think the U.S. consumer at the high end is in good shape. A little bit more impact on the lower end. That's not unexpected. And again, that got better during the quarter. So overall, we're really pleased by the fact that we took pricing early and you see what that does to our gross margins where we were able to offset the entire impact of tariffs by pricing and cost reductions.

Okay. And then quickly as my follow-up, Hanneke or maybe it's better for Matteo as well or maybe both of you is just can you talk about how Logitech is thinking about M&A today? And if there's any difference from what you outlined at your Analyst Day back in March, I only ask, we haven't seen I don't think anything has necessarily materialized over the last, let's call it, 6 or 7 months. And so is that just a function of better uses of cash? Is it a function of valuations? Is it a function of the opportunity set? Would just love your feedback there. And that's it for me.

Yes. Thanks, Erik. No change. I'm afraid versus AID. So our top priority for capital allocation is investing organically in the business, and that's definitely what we're doing. Second priority is making sure we grow the dividend every year. Third priority is M&A, and we are actively out in the market looking for the right targets, but they have to be strategic and they have to make the boat go faster. And we're looking at lots of things, but I'm going to be very careful. I want things that make the boat go faster, and those are not so easy to come by. And then our last priority when it comes to capital allocation is share buybacks because we also don't want a lazy balance sheet, and you saw us returning a lot of cash to shareholders in the quarter, mostly through the dividend in Q2, but also through some buybacks.

Our next question comes from Alek Valero with Loop Capital.

This is Alex on for Ananda. So just back to Gaming in the Americas, can you speak to how and when do you think the Americas, I believe you said entry-level gaming can normalize the higher ASPs?

Yes. Again, we saw trends improving throughout the quarter. And in America, we haven't taken price increases in a long time. So we don't have a lot of history, but we have taken price increases in other markets around the world over the last -- in recent times. And you tend to see a bit of an impact in the first quarter after. So that is no surprise. And again, we were pleased to see in the impacted parts of the portfolio trends improving throughout the quarter. And as Matteo outlined, exactly when that will normalize is a little hard to tell, which is why we have a range for Q3 and the bookends of those assume either it normalizes faster or it takes a little bit longer. But overall, we're confident that it will normalize.

Awesome. Just a quick follow-up. I believe I recall you mentioned that the B2B is going to layer in over time. Can you speak to what the mix is today in terms of business to consumer? And where does it go from here?

Yes. So Logitech for Business, which includes VC headsets and Personal Workspace sold into the enterprise channel is about 40% of the business, and that's creeping up but very slowly over time as we double down on that. And we're pleased in Q2. It was again a strong quarter for Logitech for Business. You saw the VC sales were up with double-digit demand growth. And we like -- there's a lot of things we like about Q2 in Logitech for Business. But I would say what I like particularly, we saw disproportionate growth in higher ASP, more premium solutions, including the exciting new Rally Board 65 video conferencing mobile solution, which is proving to be very popular. We continue to strengthen our go-to-market capabilities. We launched CPQ, configure price quote in the quarter, which is really helping us quote faster and deliver better service to our customers. And the education vertical continued to be -- continue to do very well in the quarter. So lots to like there, and we'll continue our focus on Logitech for Business.

Okay. Our next question comes from Samik Chatterjee with JPMorgan.

Let me check first , can you hear me?

We can hear you.

Okay. Great. Maybe Hanneke and Matteo, what are you hearing from your distribution partners in terms of promotional activity that they want to really sort of ramp into the December quarter? I know you mentioned 11/11 as well in China. Just in relation to previous years, what are you seeing in terms of intentions from retailers for promotional activity? And maybe how does that influence the gross margin guide, Matteo, that you outlined for the next quarter, particularly when we compare to the slight moderation we had seen last quarter going from Q2 to Q3 -- last year, I mean, sorry. And I have a follow-up.

Yes. I'll let Matteo comment on the gross margin guide for the next quarter. In terms of what we're hearing, I've been out in the market quite a bit here in the U.S. and in Canada in the last few weeks, talking to customers, to consumers, to some of our partners. I would say they're also optimistic on the holidays. They want to be sure that our premium offerings look really great. And if you go into a Best Buy or in Europe into a MediaMarkt, you'll see fabulous execution, I think, of the McLaren collection and the MX Master 4, which is at beast. They also want to be sure that we together offer great value on the low end of the portfolio. So both in Europe and the U.S., you've seen us in the past quarter do a little bit more promotion there. And I would say that, that kind of mix of great visibility of the high end and targeted promo on the low end will continue into Q4. And that's important -- Q3, sorry, that's continuing. That's important, not just in the U.S., but also in Europe, where we need to do a lot of blocking and tackling versus low-end Chinese competition, which for obvious reasons, is more active in Europe now than last year.

So Samik, let me unpack to you the gross margin a bit. I think the best way to think about the third quarter is almost looking back at the second as the story is actually pretty similar. We've been now for quite some time, pretty surgical on promotion and really, to Hanneke's point, really spend the money very carefully where we think is needed. And that's exactly what happened in the second quarter, and that's what you can expect us to do also in the third. So if you look at the gross margin rate in the second, we're basically flattish year-over-year. As we said in our prepared remarks, our pricing actions completely offset the impact of tariffs. Then we had -- the team -- the operating team did a marvelous job and continue to work on product cost reduction, while they were also concurrently working on the manufacturing diversification. And this gave us about 100 basis points of margin expansion year-over-year, which was offset by slightly higher promotion to Hanneke's point that she just described. And then last quarter, if you recall, last year, we had a release of inventory reserves, which was -- did not occur this year that put about 100 basis points pressure year-over-year on the gross margin side, but this was offset by the positive effects due to the current exchange rate, primarily euro to USD. So that's the breakdown of the second quarter. So if you look at the third quarter, actually, the story is going to be -- we are expecting this to be very, very similar. So we will continue to work on product cost reduction. So that should help us offset a little bit more of the promotional spend that you normally have in the third quarter being the holiday quarter. And then price will continue to offset the impact of tariffs. So that's how we layered out the outlook of 42% to 43% that we described today.

Okay. Okay. Got it. Maybe just for my follow-up, for the OpEx run rate that you're managing the business to fairly -- looks fairly disciplined and you're managing it with a lower OpEx envelope year-over-year. I mean, obviously, the business is still growing. So what are the areas you're sort of making those trade-offs on? And where are you finding those efficiencies to keep the OpEx envelope this tight at this point?

Sure. So starting at a high level with the numbers, right? We outlined even at the Investor Day that our objective is to have OpEx in the range of 24% to 26% of net revenue, right? Last year, you saw us maybe more on the higher end of this range. And this year, so far, we have been a bit on the lower end. And that's fundamentally driven by the -- some of the measures that we took in light of tariffs to control some of the cost. And here, we need to be very clear that as we did also in the first quarter, most of these cost control actions were centered around G&A. So the typical semi blocking and tackling that you would expect a company to do on G&A, control the contractor cost, pausing hires of people that are not related to R&D or sales and marketing and travel control, this kind of stuff. And so that's really where the focus has been. So really trying to curtail the cost on G&A, but at the same time, take these savings on the G&A side and then refunnel it back into the growth of the business, which for us means R&D and then sales and marketing. And that's what should expect -- you should expect us to continue to do in the next couple of quarters.

[Operator Instructions] And with that, our next question goes to Didier with Bank of America.

I've got a couple. Maybe first, maybe for Matteo, Hanneke, whoever. I'm just wondering, I think you touched on it a little bit, but how should we think about the marketing spend in the holiday season? Because I can think like some -- you've got some sort of tailwinds from FX. You've got also a sort of difficult consumer environment or slightly more difficult consumer environment in the U.S. So you would want to use that FX tailwind maybe to invest in the U.S. At the same time, you also have a channel that is very lean. So I just wonder how you should we think about that?

Yes. So we feel good about inventories ahead of the holidays, both in the channel and our own inventory levels. So they're healthy. We have enough. We don't have too much. It's all good. The way -- if I look at overall OpEx, again, Matteo said it just now, we had a great quarter in terms of OpEx, 24.4%. That's, I think, 240 basis points down versus last year. So that's a really great discipline. That was focused on G&A, where we're super purposeful and just tight. R&D was virtually unchanged in Q2, and we're going to continue to invest there. That's our bread and butter. And then to your point, marketing was also in Q2 close to last year. I think what's important to note there is that the effectiveness of our marketing spend globally continues to improve. We're shifting money from nonworking producing stuff to working, which is, in general, much better. And we're also strengthening our marketing capabilities. I've mentioned China before, but in China, we are really rocking it in marketing. And in fact, just last week, at China's big marketing ROI Festival, there were 2,400 entries for best marketing ROI, and we were one of only 11 Gold Award winners. So it just shows the strength of our marketing team and how we've modernized marketing. We're getting more bang for the buck in marketing. And I expect that to continue in Q3, and we won't hesitate to lean into either R&D or sales and marketing spend if we think it can accelerate the top line.

For modeling purposes, the -- remember, the third quarter, OpEx as a percentage of net sales tends to be a little lower just because it's the biggest quarter of the year. So that would imply a sequential increase to Hanneke's point, both overall in OpEx and the increase will be primarily in R&D and sales and marketing. So that's what you can expect.

Perfect. And the quick follow-up is on the China for China strategy. I think Hanneke last quarter, you sort of mentioned that there was a pivot in the competitive positioning of Logitech. You were starting to gain share after several quarters of difficult, let's say, competitive environment for the company. So maybe can you elaborate a little bit more on the products you've introduced, the price points you're hitting and where you've encountered the greatest success?

Yes. No, happy to do that. So again, China had -- we don't break it out, but you've seen the APAC numbers and China was ahead of those APAC numbers. We continue to hold the #1 shares. Actually, in Q2, PWS share now grew for the entire quarter, which I haven't seen since I've been at Logitech. So that was great to see. And gaming share for the quarter was still slightly down, but the trends are improving. So that's good to see. That's driven by the marketing I just mentioned, where the team is doing a great job versus even a year ago and by innovation. So our global innovations are working well in China, but we've also invested in China for China innovation. So the most exciting thing we launched in Q2 was a new gaming keyboard, the G316 just for China, really cool and unique RGB lighting, retro vintage display and of course, all the cool performance stuff, 8 kilohertz, et cetera. That is doing very well. That's actually on the medium, I would say, the lower medium end of the price range, which is an important part in China to really go big on. Still great margins. The team has done a great job designing and building that in China. And you'll see that type of innovation more and more of it going forward, but super excited about the momentum we now have in China in a fast-growing market as well.

Okay. Our final question will come from Michael with Vontobel.

You actually answered just all my questions on China just now. But I have 2 small follow-ups. One is on the channel inventories. You said channel inventories are quite lean. You're happy with inventories. Is that the same dynamic across all regions? Or are there any differences across the regions? And can you tie that also maybe with the numbers you showed on sell-in and sell-through? And the second question would be just on gaming. Could you give a bit more color on the different subsegments in gaming, simulation, console and PC gaming? I mean you mentioned PC gaming being very strong, but what about the other categories?

Why don't I take the gaming and then you can comment on the inventory. So yes, we talked a lot about gaming in the U.S., but maybe if we zoom out gaming globally, again, continue to be really strong with net sales up 5% and demand up double digits, driven by very strong, again, double-digit sales growth in our #1 market, which is China. When we look at the different parts of the business, Michael, we're seeing continued strong demand at the top end. So Pro was up more than 25%. SIM was up more than 10%. So that's really great. And again, we continue to block and tackle in the lower end of the portfolio, which is also important, which also saw solid growth, but the kind of disproportionate growth is coming from the top end of the gaming business. Again, excited for the short term on gaming with things like the SuperStrike and the McLaren Collection. I'm very excited about the mid- and long-term perspectives in gaming.

And Michael, on the -- on your question on the channel inventory, we feel the channel overall across all our regions is in a good spot. When we look at the weeks on hand, it's in the range that where we wanted this to be. It's important not to confuse. We had a little bit of a channel inventory dynamic in B2B in VC actually last quarter. That's why you saw in the first quarter, the sell-in of VC outpaced the sell-through and now the reverse happened in the second quarter. But that's a dynamic that has been fixed here in the last 6 months. So overall, we are pleased where the inventory is. And overall, if you look at AMR, that's where you have the biggest discrepancy, the sell-out outpaced the sell-in a bit, which is a positive sign as we enter into the third quarter and the earlier season.

Sorry, we do have one more question from Martin with BMP. Martin?

Two quick follow-ups. The first one is really on the strength in keyboard and mice. Would you say that is Windows 10 Refresh driven? Or is it more COVID refresh? Or none of those 2? That's the first question.

Yes. Sorry go ahead, go ahead for your second one.

Yes. The second one is more for Matteo, I would say, just on the tariff headwind. I think was it the 200 to 300 basis points that you were expecting that you saw in the third quarter? And then also going forward, as you exit the -- or slowly exit the China to U.S. business, should we actually see that headwind ease over the next couple of quarters?

Yes. Maybe I'll take the PWS one first. And thanks for noticing that really great results in Keyboards & Combos and Mice. Some people think those things can't grow. But as you can see, they can grow. What were the drivers? I'd say the first driver was, again, the premium end of our portfolio. So MX and Ergo are doing extremely well, both with double-digit growth in the quarter. And again, that MX Master 4, a lot of pent-up demand for it, entire subredits dedicated to it before launch, just a lot of excitement on that launch. Then we're seeing continued excellent execution in-store and online on our core keyword and mice business. And to your question, is this linked to the Windows 11 Refresh? We've always said I don't think our growth -- we know our growth is not directly tied to any PC sales trends. And historically, peripherals have always grown a couple of hundred basis points ahead of PC sales, but it can't hurt. And we're always very focused on attach programs in-store and online. When you buy a new PC, we also hope you will attach one of our peripherals. And of course, with some of the excitement about the Windows 11 Refresh and the AI PCs, that gives us more attach opportunities. So I would say that's a mild tailwind, but the real growth comes from our premium portfolio.

So Michael, let me -- Martin, sorry, let me talk about the other question. So the -- if I rewind the tape a little bit, right? So in the last earnings call, we said that we were expecting the tariff impact to be about 200 to 300 basis points, offset by 200 basis points of price. So we were expecting the net impact all in, including the diversification action and price to be between 0 and 100 basis points negative for the gross margin for the quarter. What in reality happened is, as we mentioned in the prepared remarks, we were able through -- we were able to offset the entire impact of tariffs. It's about 150 basis points each. So the impact of tariff net of diversification was 150 basis points pressure to the gross margin and price was a lift of 150 basis points. So net-net, we were able to offset entirely. And really, that's driven by 3 key things. Number one, the continued work that our supply chain team is doing on manufacturing diversification, which is trending in line with plan. The price actions that we took in April and then supply chain management. Really, they're doing a fantastic job in managing inventory, and they were able, as we said in prior calls, to pull in some of the inventory, some of the purchases ahead of new tariffs being placed. So we were able to mitigate some of the impact of the tariffs. So this 150 basis points dynamic, that's what I would expect also to happen in the third quarter. So 150 basis points impact on tariffs, offset by price, assuming, obviously, the tariff structure stays as it is currently.

And now we have no further questions.

Great. Well, thank you always great to see you all. Looking forward to seeing you in the follow-ups, and thanks for being with us today. Have a good week.