Logitech (LOGI) Q2 2026: B2B Mix Climbs to 40% as Premium and Asia Drive Margin Expansion
Logitech’s second quarter saw B2B revenue climb to 40% of the business, driving double-digit operating income growth and margin resilience despite U.S. consumer softness and tariff headwinds. The company leveraged premium product launches, Asia-Pacific momentum, and manufacturing diversification to offset weaker Americas gaming demand. Guidance balances ongoing cost discipline with targeted R&D and marketing investments as management eyes cautious holiday optimism and a shifting regional sales mix.
Summary
- B2B Expansion Accelerates: Enterprise and video collaboration now make up 40% of revenue, supporting margin strength.
- Asia-Pacific and Premium Products: Double-digit China growth and high-end launches offset U.S. gaming softness.
- Margin Levers Remain Intact: Tariff mitigation, disciplined cost control, and agile promotions underpin guidance stability.
Performance Analysis
Logitech’s second quarter delivered mid-single digit constant currency revenue growth, with B2B outpacing consumer segments and operating income up 19% year over year. The company’s premium product launches, such as the MX Master 4 mouse and McLaren Racing Collection, drove robust demand in both consumer and enterprise channels. Asia-Pacific led regional performance with 19% growth, fueled by China’s continued double-digit expansion, while EMEA delivered steady gains in video collaboration and personal workspace.
Americas sales declined 4% due to gaming market contraction and tariff-related pricing actions, though management noted improvement as the quarter progressed. Gross margin held steady at 43.8% as price increases and manufacturing diversification offset tariff pressure. Operating expenses fell 3%, led by G&A reductions, enabling margin expansion even as R&D and marketing investment held steady. Cash flow remained strong, with $230 million generated from operations and $340 million returned to shareholders through dividends and buybacks.
- Regional Divergence: Asia-Pacific and EMEA growth offset Americas softness, highlighting the company’s geographic hedging strategy.
- Premium Mix Shift: High-end products, especially in gaming and personal workspace, led category performance and supported pricing power.
- Cost Control Discipline: G&A efficiencies and supply chain agility enabled operating margin gains and robust cash generation.
Logitech’s ability to offset tariff and promotional headwinds with pricing and cost actions demonstrates operational resilience, though U.S. consumer gaming weakness remains a watchpoint for the holiday quarter.
Executive Commentary
"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. We 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."
Hanukkah Faber, Chief Executive Officer
"Our execution centered on playing offense, discipline, cost control, and agility. And this focus drove a non-GAAP operating income of 230 million, up 19% year-over-year. The strong profitability was achieved in a quarter where we delivered mid single digit net sales growth year over year."
Matteo Anversa, Chief Financial Officer
Strategic Positioning
1. B2B and Enterprise Channel Scaling
B2B now constitutes 40% of Logitech’s revenue, with video collaboration and personal workspace solutions for business driving disproportionate growth. Premium enterprise solutions, such as the RallyBoard 65 and the new Zone headset line, are gaining traction, and targeted investments in configure-price-quote (CPQ) tools have improved sales velocity and customer service. The education vertical also continues to outperform, reinforcing the durability of the B2B shift.
2. Premium Product and Innovation Pipeline
Sixty new products launched in Q2, including the flagship MX Master 4 mouse and McLaren Racing Collection, underscore Logitech’s commitment to differentiation through innovation. Premium offerings are driving double-digit growth in key categories, supporting both pricing power and brand equity. The company’s global events, such as LogiWork and LogiPlay, amplified product visibility and brand reach, with social media activations reaching 200 million people.
3. Regional Diversification and China Acceleration
Asia-Pacific, led by China, delivered 19% growth, as the “China for China” strategy and locally tailored innovation, like the G316 gaming keyboard, gained momentum. China’s mix shift toward mid-range products with strong margins is helping offset U.S. volatility. EMEA remains solid, while Americas’ gaming segment is being actively managed with targeted promotions and new game tie-ins.
4. Manufacturing Diversification and Tariff Mitigation
Logitech’s “China plus five” manufacturing strategy reduced U.S.-bound China-origin products to 10%, limiting tariff exposure. Pricing actions and supply chain agility fully offset 150 basis points of tariff-related gross margin pressure, and ongoing product cost reductions are being reinvested in R&D and demand generation.
5. Capital Allocation and M&A Discipline
Capital allocation priorities remain unchanged: organic investment, dividend growth, strategic M&A, and share buybacks. Management is patient and selective on acquisitions, seeking only targets that accelerate growth or add strategic value, while maintaining a strong balance sheet and returning excess cash to shareholders.
Key Considerations
This quarter marks Logitech’s continued evolution from a consumer peripherals player to a diversified, innovation-led global brand with a growing enterprise footprint. The company’s ability to navigate regional volatility, maintain margin discipline, and reinvest in growth levers is central to its long-term trajectory.
Key Considerations:
- Enterprise Channel Gains: B2B mix is rising, with higher ASP (average selling price) solutions driving margin and stability.
- Premium Innovation Cycle: High-end launches are fueling demand and supporting price increases, especially in gaming and workspace.
- Asia and China Outperformance: “China for China” strategy and local innovation are delivering above-market growth and improving share.
- Cost and Tariff Management: Supply chain diversification and agile pricing have neutralized tariff headwinds, protecting gross margin.
- Holiday Demand Uncertainty: U.S. consumer gaming remains a wildcard, but regional momentum and lean channel inventories offer a buffer.
Risks
U.S. consumer demand, especially in gaming, remains soft and susceptible to macro pressure, with entry-level products more exposed to price sensitivity. Tariff, trade, and inflation dynamics introduce ongoing unpredictability, while increased promotional activity to defend share at the low end could pressure margins. Competitive intensity in China and Europe, particularly from low-end entrants, requires continuous innovation and marketing investment.
Forward Outlook
For Q3, Logitech guided to:
- Net sales growth of 1% to 4% year over year in constant currency
- Gross margin rate between 42% and 43%
- Non-GAAP operating income of $270 million to $290 million
For full-year 2026, management maintained a balanced outlook:
- Continued positive topline trends, with Asia-Pacific and EMEA expected to offset Americas uncertainty
Management highlighted several factors that shape guidance:
- Asia-Pacific and EMEA are forecasted to deliver steady to strong growth, with China’s 11.11 event as a tailwind
- Americas performance hinges on a potential holiday gaming rebound; guidance range reflects both continued softness and a possible seasonal lift
Takeaways
Logitech’s Q2 demonstrates a successful pivot toward higher-margin B2B and premium segments, with regional diversification and supply chain agility underpinning resilience against U.S. and tariff headwinds.
- Enterprise and Premium Shift: The rising mix of B2B and high-end products is supporting both growth and margin, while also reducing cyclicality.
- Operational Leverage: Cost discipline and manufacturing flexibility are delivering margin expansion and strong cash flow, even in a mixed demand environment.
- Holiday Watchpoint: Investors should monitor U.S. consumer gaming trends and promotional activity, as these will determine the upper end of holiday performance.
Conclusion
Logitech’s disciplined execution, innovation pipeline, and regional diversification are driving consistent growth and margin stability, even as U.S. gaming demand remains uncertain. The company’s strategic evolution toward B2B and premium offerings positions it well for long-term resilience.
Industry Read-Through
Logitech’s results highlight several sector-wide themes: The shift toward enterprise and premium consumer solutions is a durable trend, with B2B providing margin and revenue stability across hardware categories. Manufacturing diversification and agile pricing are now table stakes for global hardware brands facing tariff and inflation volatility. Asia, and especially China, is emerging as the growth engine for peripherals and collaboration tools, while U.S. consumer electronics faces more muted demand and price sensitivity. Competitors must accelerate innovation and localization to capture premium share and defend against low-end entrants, particularly in EMEA and China.