Good afternoon and good evening. Welcome to Logitech's video call to discuss our financial results for this quarter. 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 are making these statements based on our views only as of today. Our results could differ materially. 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 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 so much, Nate, and welcome everyone. Q2 was a memorable quarter for us as we celebrated, as you just saw in the video, Logitech's 45th anniversary. We celebrated it with the very people who built this iconic brand, our three founders, our employees, and key stakeholders from around the world. We like to say the mouse built this house, but over 45 years, there have been many, many other firsts and breakthrough products from Logitech. We are proud of the innovative, strong, and resilient business and organization we have today, and we are super excited for the growth that lies ahead in the next 45 years. Q2, in fact, was another quarter of growth, our 11th in a row, despite a challenging general environment of tight component sourcing, elevated costs, and the ongoing conflict in the Middle East. In addition to, as we told you back in July, the negative impact of the closure of one of our semiconductor suppliers for essentially the entire quarter after an accident. Despite that difficult backdrop, we increased sales by 2% year-over-year, delivered excellent gross margins, and grew non-GAAP operating income to $231 million, well ahead of our outlook. Growth was particularly strong in the Americas, in video collaboration, and in gaming. Even as global PC shipments declined by 20% in the quarter, our pointing devices and keyboards grew mid-single digits, demonstrating that our growth opportunity continues to come from the large installed PC base. We also made good progress against our strategic priorities this quarter. First, superior products and innovation. Our innovation engine is humming, fueled by the incremental investments in R&D that we initiated at the start of FY 2027. At our flagship Logitech G PLAY events held in Shanghai, L.A., and Warsaw this September, we unveiled 15 new gaming products ahead of the holiday season. The headliner of the new lineup is the PRO X3 SUPERSTRIKE, the next generation of the massively popular Superstrike gaming mouse that we launched earlier this year. It is powered by the unique Haptic Inductive Trigger System, or HITS. The X3 debuts a top-tier new chipset. It is even lighter than the original, and it boasts an extended battery life. Also in the new gaming range is exciting new sim racing gear and a sleek new Yeti 2 microphone for streamers. That was not all. In the quarter, we also introduced the MX Keypad, an AI control center designed specifically for developers seeking to streamline agentic workflows, and the Zone Vibe Pro headphones. The Zone Vibe Pro features adaptive noise canceling and AI-powered voice isolation so users can move effortlessly from morning meetings to evening playlists with the same ultra-comfortable headset. Second, doubling down on B2B. Video collaboration net sales grew 12% in constant currency. Three trends are contributing to the strong VC growth: the post-COVID refresh wave, office footprint expansion, as companies require more days in office, and AI-driven VC room expansion. Finally, we had another quarter of terrific operational excellence. Non-GAAP gross margin was very strong at 45.2%, and Matteo will detail that shortly. We maintained very strict spending discipline in G&A while continuing to invest strategically in R&D and in sales and marketing to drive long-term growth. All in all, our Q2 results demonstrate the resilience of our business model, and I am really proud of our team's ability to execute through significant external headwinds. Now, let me hand over to Matteo to walk you through the details of our financial performance and of the outlook. Matteo, over to you. All right. Thank you, Hanneke, and thank you all for joining us on the call today. Our operational discipline delivered solid second quarter profitability, allowing us to protect our margins despite the macroeconomic headwinds and significant ongoing supply constraints. Now, let me walk you through our financial results in more detail. Net sales for the second quarter were $1.2 billion, up 3% in U.S. dollars and 2% in constant currency. This marks our 11th consecutive quarter of year-over-year top-line growth, driven by sustained momentum in video collaboration and gaming. Our core business is tracking where we expected it, excluding the impact from the third-party supplier incident and the ongoing geopolitical conflicts. Estimated underlying net sales would have been up approximately 4% in constant currency. Now, taking a closer look across our categories. Video collaboration net sales grew 12% year-over-year in constant currency, supported by sustained enterprise investment as organizations refresh COVID-era equipment and upgrade meeting rooms. Gaming net sales increased 7%, driven by new product launches and the continued strong demand for our top sellers like the PRO X2 SUPERSTRIKE Mouse. Pointing devices and keyboards and combos both grew 4%. Importantly, this occurred while the PC market shipments contracted by roughly 20% year-over-year in the September quarter, demonstrating the strength of our installed-base strategy and premium mix. Conversely, tablet accessories fell 30% against a tough prior year comparison, featuring a large multi-quarter educational deal in Asia-Pacific. Webcams declined 10% as the global market declined, though we continue to gain market share. Looking at the regional level, AMR led the way, accelerating to 13% net sales growth, reflecting solid business and consumer demand ahead of the holiday season, in addition to strong local sales and marketing execution. Asia-Pacific declined 2%, primarily due to a tough year-on-year comparison from the large educational deal that I just mentioned, as well as a disproportionate impact from the supply limitations. EMEA declined 6%, driven by market weakness and the ongoing Middle East conflict. Turning to profitability. Non-GAAP gross margin rate was an outstanding 45.2%, up 140 basis points year-over-year. This represents our fifth consecutive quarter posting gross margin rates above 43%. This year-over-year expansion was due to lower tariff costs supported by our manufacturing diversification, favorable product mix towards video collaboration and premium product lines, and positive currency impact. These tailwinds were partially offset by higher freight and logistic costs. Turning to operating expenses. Non-GAAP operating expenses were $320 million, flat sequentially and representing 26.3% of net sales, up 190 basis points year-over-year. This increase reflects our planned growth investments for the year, and specifically, sales and marketing grew 12% to fund key initiatives like the Logi PLAY, while R&D increased 9%. G&A held flat sequentially, corresponding to 2.8% of sales, consistent with the prior year. As a result, non-GAAP operating income was $231 million, up slightly year-over-year, and non-GAAP operating income margin came at a very strong 18.9%. Turning to cash. We generated $164 million in cash flow from operations during the quarter. We end the second quarter with $1.5 billion in cash after returning $406 million to shareholders through $235 million in annual dividends and $171 million in share repurchases. Turning to the third quarter. We expect constant currency in the third quarter net sales to be down 5% to flat year-over-year. While the underlying demand across the business remains positive, this outlook reflects the significant impact of the supply incident. After significant mitigation work, we now estimate the negative impact to net sales to be between $70 million-$80 million in the third quarter. By the fourth quarter, we expect the impact of the supplier incident to be largely resolved. On profitability, we estimate the third quarter non-GAAP operating income to be in the range of $220 million-$255 million, with a gross margin rate between 41%-42%. We anticipate the third quarter gross margin rate to decline by approximately 200 basis points year-over-year, mainly due to rising logistics and material costs, as well as modestly higher promotional spend. Despite this inflationary pressure, which we expect to continue throughout the remainder of our fiscal year, we now expect FY 2027 non-GAAP operating income margin to be at the high end of our long-term 15%-18% range, even excluding the $61 million tariff refunds from last quarter. With that, we're going to open the call for Q&A. Our first call comes from Ananda with Loop Capital. Hey, thanks guys. Really appreciate the question. Just two if I could. The first one is, I guess on the component situation. Really component situation and then holiday promos. Really, that kind of dynamic. Is there anything that you see, you had mentioned, Matteo, year-over-year, is that higher promos than typical on a year-over-year basis? Then kind of collectively, are you thinking that you can make up some of the revenue lost from the components as you move into the new year? Are those two things intertwined at all? Then I have a quick follow-up. Thanks. Let me maybe give you some qualitative perspective on the components and on holiday, and then Matteo can walk you through the numbers. On components in general, obviously really short, and the cost pressures and availability pressures there have expanded from just memory to basically all electrical components. That's not unique to us. That's the whole industry. That is affecting the gross margin outlook. Of course, we do have some levers to mitigate those, things like value engineering and pricing that we will activate over the quarters ahead. Matteo can walk you through the impacts in Q2, Q3, and Q4. As for holiday, our markets globally were pretty solid, in Q3, and we expect that to continue into the holiday season. We do expect positive holiday demand overall. But it is that proverbial K shape. We expect high-end consumers absolutely to spend, and you see that in the growth of the premium part of our portfolio. But we also expect that mainstream consumers will be cash-strapped and will be looking for promotion in order to afford their holiday shopping. Hence you see a modest increase in promo spending versus last year. And we're really comfortable with that. That is strategic and that allows us to be competitive. Ananda, in terms of quantification, to Hanneke's point, the promotional spend in the third quarter will be slightly higher, but we are talking about roughly 50 basis points of negative impact year-over-year in the gross margin rate in the third quarter versus last year. We are not talking about a huge amount. And we always keep ourselves a little bit of wiggle room during the holiday season, as you know. That's really what we factor in our financials. That's super helpful, guys. And just, I guess the quick follow-up is, what's a good way for folks to think about the way GTA kind of layers in across your console and PC gaming portfolios? Thanks. Yeah. Great question. And of course, Q3 is going to be a very exciting quarter in gaming, with GTA 6 launching on November 19. Couple of things I want to say there. First of all, of course we're going to leverage that because the whole gaming world is very excited. That's good. Now, that said, GTA 6 is launching for console first and won't launch for PC until much later, into next calendar year. We are mostly a PC gaming business, so we're not expecting a giant upside from this initial launch. Second thing I would say is, the markets in gaming, especially in the U.S., have been looking pretty good because it's not just GTA 6. There's some other big games that have come out. So I'll call out Call of Duty: Modern Warfare 4, which came out just last week, 10 days ago. We're the official partner of Call of Duty: Modern Warfare 4, and things like that really give a little extra pizzazz to the business. We're doing custom-tuned settings, unique in-game items, events, with Call of Duty. All of those things make the gaming space really happening at the moment, which is great. It's really helpful. Thanks, guys. Appreciate it. Thanks, Ananda. Our next question comes from Erik with Morgan Stanley. Hey guys, thank you for taking my questions. Congrats on the, again, the nice results in pointing devices, keyboards, and combos against that down 20% PC shipment environment. I would love to just know what the offsets were that drove that outperformance. For example, any color that you could share on pricing tailwinds or just the success that you are having attaching peripherals to the installed-base. Is there a year-over-year growth metric that you could share related to some of those internal initiatives? Just any other color that you can help us understand the nice outperformance you guys saw. Then a quick follow-up, please. Sure. Thanks, Erik. It is good to see you. I would say the big numbers really are the market share numbers in both mice and keyboards. So in the quarter, pointing devices or mice were up 320 basis points globally, and that is well ahead, I would say, of what we do on average. We always grow share, but on average, we grow at about 50 basis points a year over the last decade. So to grow 320 basis points in the quarter on mice is huge. We grew similarly in keyboards, about 280 basis points globally in the quarter. So that is massive share growth in a market that is held up much better than the PC market. So the market was flattish, I would say, in what we call PWS. What is driving that share growth is innovation and superior products. So the MX Master 4 in mice continues to be really, really strong. We have also done fun things, limited editions. You may have seen the Matcha and Latte limited edition this quarter in the U.S. In China, some really great keyboards that now have been expanded globally. So the Alto Keys performing very, very well in the U.S. and in the rest of APAC. So it is really down to innovation, which then continues that flywheel of having more people use a mouse and a keyboard because that is still relatively low, growing share, and growing ASP because all of those innovations are premium priced. Okay. That is awesome color. Thank you very much. Then maybe quickly as my follow-up, we have seen two consecutive quarters of OpEx growth outpacing sales growth. I think the implication, rough math, is something similar in the December quarter. I understand the source of this spend, of course, and maybe my question is just can you walk us through how you expect these kind of sales and marketing and R&D investments to begin materializing and, let us call it, accelerating revenue growth? Just how to think about the timing of kind of the return on those investments and when you expect those to start playing out. Thank you so much, guys. Yeah, absolutely. Thank you. Again, hopefully nothing new in that OpEx. As we've said before, we are investing in R&D and in sales and marketing because this is such a special time. The age of AI gives us so many new opportunities for innovation and to obviously market that sales and innovation and to grow in B2B, that we feel this is the right time to step up those investments a little bit, with a lot of discipline. G&A, of course, a lot of discipline and flat as a percentage quarter-over-quarter. I think you asked the million-dollar question, when? I'm not going to give you a date on when that will materialize. This quarter and also Q3 are a little wonky because of the supplier accident. As Matteo Anversa said, demand has been there. Unfortunately, we just haven't been able to have the supply to deliver on that demand. It's a little hard to say, but sooner rather than later, I think is probably the best way to put it. Thank you so much, guys. Thanks, Erik. Our next question comes from Asiya with Citi. Hey. Hello. Hi, everyone. Hi, Asiya. Great. Thanks for taking my question. Video collaboration's been another strong quarter here, low teens, double-digit growth here. How should we think about just the demand continuing? There just seems to be continued pressure on enterprise spending with all the infrastructure purchases. Just how you're thinking about demand continuing here, given whether it's AI enabling more video collaboration or otherwise, and just given supply constraints. I know maybe it doesn't necessarily affect video collaboration, the one supplier you talked about, but I think Hanneke talked about just broader supply issues. So how should we think about Logitech being able to meet demand, and how should we think about continued demand here in this VC segment? Thanks, Asiya, and it's good to see you. We're very optimistic about continued really great demand in Video Collaboration. This is not a one-quarter happening. Three reasons that I'll give a little bit of color on, which are true for the whole market, and then I'll come back to us and our position in that market. First of all, the COVID era refresh, and that is not a discretionary spend. That's a mandatory infrastructure upkeep, because customers are facing hard deadlines there from the major platform providers. Not so much from us, but from Microsoft, from Google, from Zoom. The devices they're running are end of life-ing. So that means they have to upgrade these after 5 to 7 years. So that refresh is kind of in its early innings and will continue over the next couple of years. That's one big thing, and again, that's not discretionary. Second is return to office mandates, especially here in the U.S. More and more companies, and you feel it really here in the Valley, are saying, "Come back to the office really 5 days a week." That means they need more office space. Again, that's not discretionary. If you need more office space, you also need more video-enabled rooms. Finally, AI integration. A lot of CIOs investing a lot in Copilot licenses and their competition. It makes no sense to pay for thousands of licenses when you don't have the right hardware in your meeting rooms to make sense of those. Then that's a real waste of money. Again, we also expect that trend to continue and really not being discretionary. I'd say all three of those trends in the market are longer term and not discretionary. Now, how do we play there? We didn't mention it because it didn't happen in the quarter, but at the very beginning of the third quarter, we launched the generation 2 of our entire Video Collaboration lineup, which is an absolute beauty, and we'll talk about it next quarter, but you can also see it online. We have refreshed and we've started to ship a whole new generation of all of our product, AI enabled, beautiful. So we are very well positioned with a really superior lineup of Video Collaboration products. For the first time, we're also set up to do large rooms like auditoriums, which we weren't able to do before. For the first time, we're also launching into audio for large rooms, which we weren't able to do before. So our product portfolio is outstanding. Then to your last question, can we meet the demand? It's a battle every day, but we feel pretty good that at least for the quarters ahead, we have enough memory chips to meet the demand that's out there. With all of that optimism, the only other thing I would say is demand, again, we're very positive on net sales quarter by quarter can be a little choppy in video conferencing because you can have a huge deal one quarter and not in the next or have that in the comparator. But very upbeat on the demand in video, and that will last for a while. As you adjust for, to connect the dots on the financial to Hanneke's point, we have been pretty proactive in try to secure as much memory as we could. That is why you see the inventory a little bit elevated compared to last year. The turns are not as good as last year. That is intentional, just to make sure that we can continue to fulfill the strong demand that we are seeing on VC. As a reminder, we also raised prices back in May to mitigate the impact of the cost increase. In spite of that, you saw the net sales performance has been pretty remarkable. Okay. Just if I can, a quick follow-up on the gross margin upside. I think, just to help us understand, again, very strong here relative to guide. I understand it is guided down 200 basis points here in third quarter because of component and just logistics, et cetera. Just what were the drivers for the upside here relative to, I think you guys guided maybe 44% or so for the quarter. So the 120 basis points upside, just if you could talk a little bit about what drove the upside here relative to pricing or promotional, et cetera. Thank you. Sure. So, fundamentally two things. One is the bigger one is the mix. I think if you look at the product mix and premiumization, that came in a little better than what we were thinking three months ago. As you know, with Video Collaboration growing 12% year-over-year, so that is accretive to the mix of both on the top line on the margin, but also overall our premium, the premium side of the portfolio. So MX, Ergo, Pro all performed extremely well, end up overall better than the average sales of the company. So mix was the key driver. Promotions were a little maybe lower than what we originally anticipated. But overall, we are very pleased with the result. Yes, as you said, we are assuming for the third quarter more pressure on the inflationary side on the margin year-over-year. But so far, year to date, just to put things into perspective, our gross margin has been almost 45%, excluding the tariff reimbursement that we had in the first quarter. So, very pleased how the team keeps working on it. Thank you. Our next question comes from Joern with UBS. Hi, and thanks for taking my questions. Good to see you. Hi, Joern. Would be two questions, please. The first one is, Europe, you're not the only one who was saying the consumer environment is really tough. What is your best guess for how long Europe can remain negative territory, and what is your strategy now trying to turn this around? The second question would be, please, in video conferencing, can you please split the recent growth into volumes and price mix? I think you increased prices quite materially to pass on the rising memory costs also. Thanks a lot for this. Yeah. Let me take the European one, and then you can take the video conferencing one. Yeah. Europe, clearly a little soft, 6% down in constant currency. Part of that is the conflict in the Middle East. Clearly, about 50 basis points at a company level, and a little over 100 basis points at an EMEA level. What we're seeing in the Middle East is a really depressed environment, very cautious local businesses, but also, expats leaving, no tourism, all those big events being canceled. As a company now, I'll just speak for Logitech, we've canceled all travel in and out of the Middle East, and inside the Middle East as well. So it's a really difficult environment in the Middle East. I would say that's one thing that's definitely, unfortunately, impacting those EMEA numbers for us. Second, also, in Europe, definitely not a lot of consumer confidence nor business confidence at the moment. The markets there, we're down mid-single digits. What are we doing about it? That's probably a better question. I'm not going to answer your question, how long this will last. I would need a crystal ball. I really don't know, and it's not something that's in our control. What is in our control is what we're doing about it, and that is continuing to innovate. We're seeing our innovations doing well in Europe. Europe had a fantastic Logi PLAY event in the middle of September in Warsaw. Super well-executed. Tens of thousands of people. We had a Counter-Strike tournament that we ran, attached to Logi PLAY. Launched 15 new products. Really great reception for those. We'll continue to innovate, and we'll continue to market, to make sure that we create the awareness and the pop culture presence for those innovations. That's what it will take to win. We'll focus on growing share, and then hopefully the market will turn around, but that's unfortunately not directly in our control. Joern, on your video collaboration question, the way I would split the growth is basically 60/40. 60% was price and 40% was units. We saw both increase in price and units in the quarter. Thank you. Allow me one quick follow-up. The semiconductor issue, the incident in Q2, this was around one percentage point on top-line growth, right? For the second quarter, Joern? Yeah, for the second quarter. Basically, the way I looked at the number is we grew net sales 2% in constant currency year-over-year. If you exclude the supplier issue, plus the war impact, we would have been about 4%. Demand, in total, remains pretty resilient, and that is pretty much the same view that we have also for the third quarter. We are still expecting demand to remain positive across the regions. Yeah. But I would say, Joern, of that 200 basis point difference, about three quarters Yeah, three quarters was from the supply incident. So, it is a little more than 100 basis points. Thank you very much. Q3 carries the brunt of that supplier incident impact. Thank you. Our next question comes from Didier from Bank of America. Yeah. Good afternoon. Thank you so much. Got a question maybe just for Matteo Anversa, if you don't mind repeating what you said on gross margin for Q4, because I'm not sure I got it. I think you said 41%-42% for the December quarter, for Q3. Didier, yes. It's our third quarter. Yeah, the December quarter. Yeah. It's 41%-42%. So if you look at the year-over-year comparison, it's about a 200 basis points reduction in gross margin year-over-year, and really, the key driver is inflation. So we are seeing, like everybody else, cost increases across the board, but primarily in freight, in logistics, and then in material costs, particularly components. So it's about 150 basis points deterioration year-over-year. And then the rest is this 50 basis points slightly higher promotional spend that I talked about in the earlier question. Can you provide the bridge sequentially, though? Because you've got a big fall-off from the 45- Yeah you just reported. Sure. So sequentially is a little trickier because you are comparing a third quarter, which is a holiday quarter Yeah versus a second quarter, which is not a holiday quarter. I appreciate it. Right? But fundamentally, there are two components. About 150 basis points lower gross margin just coming by the fact that promotions tend to be a little higher in the third quarter versus the second, being the holiday season. Then you have a little bit of negative mix, because you have less VC, being a holiday quarter, so call it about 50, 60 basis points of negative mix sequentially. Then you have roughly 150 basis points of sequential increase in cost when you compare the third quarter to the second. This factors in the inflationary pressure that I just talked about. Yeah Also about 30, 40 basis points of premium freight that we are planning to spend in order to mitigate the supply impact. So obviously, as soon as we get the product, we are going to put products on planes if we have to in order to fulfill demand for the holiday season. So we wanted to be safe, and we put this cost into the walk. Yeah. Very clear. Thank you so much. You are welcome. For my follow-up, I have got a bit of a cheeky question. Online there are rumors that GTA is going to launch in Q1 on PCs, in the March quarter. I am not asking you whether that is right or wrong. What I am wondering is, how should we think about seasonality for gaming? How are you thinking about it? Yeah. If that were to be the quarter where GTA is launching. Yeah. Yeah. I do not think we are thinking about it differently right now. I think what you always have to think about, Didier, is that our business does not depend on a single game. We love the excitement that GTA VI is bringing into market, but our business does not depend on a single game. You think about us as what Adidas and Nike are to competitive runners, we are that to competitive gamers, and whatever game they play, whether that is Counter-Strike, whether that is League of Legends, whether that is GTA VI or Call of Duty, they want the best gear. What we have seen on the Superstrike is, ever since it launched in February, and now with the next generation of the Superstrike here in September, it does not matter what games are out there, people are desperate to buy it. We will be ready for whenever GTA VI comes out on PC. Trust me, the team is ready to go at a moment's notice. I do not think it is going to change our seasonality drastically because there are so many other games out there at all. All right. Thank you so much. Thank you, Didier. Our next question comes from Michael with Vontobel. Hi, nice to see you all. Hi, Michael. Thanks for taking the question. First question is on tablet accessories. You said obviously a significant drop versus the multi quarter big contract you had there. What's the plan to sort of compensate for that shortfall or do you just expect that to be the new normal level going forward, where you targeting any other markets to compensate? Yeah. That's the first question. Yeah. Okay. So again, this was iPad keyboards in the education vertical. We don't usually mention exact customers, but you can think about what that was in APAC. A very, very large deal, and one we were super happy with to be supporting basically almost every school in Japan. But it's one that's a little hard to comp and share after. So that's what you're seeing in the numbers. So I remain really positive on the education vertical and of iPad keyboards within that. What we are doing and what I'm also excited about is selling more of our other products into the education vertical. So that would be especially video conferencing, and you see that a little bit in those video conferencing numbers. Of course, we're expanding to other verticals. In the quarter, I was particularly excited about the government vertical, where we are seeing really good traction behind more talent that we have hired for that vertical. It is a little bit of a different game that you need to play there from a sales point of view, and behind making more of our product lineup TAA compliant, which is what you need to come into the U.S. federal government. Selling different product into education as well as expanding into other verticals are the ways we will offset and are offsetting already, and again, a lot of upside there going forward. That comparator will also go away, so it is good. Beyond Q3, though. Okay, so that is going to take a while, I guess. The second question is on the supplier impact. Can you just come back on the huge, let us say, easing of that impact? Is that just due to the fact that the factory opened faster than you had expected, or are there other workarounds Yeah that you have achieved to compensate? Yeah. Let me walk you through that. Definitely not because the factory opened up earlier. Let me walk you through that. The accident happened at the end of June. The fab did reopen mid-September, but not at full capacity. They very slowly began to ramp up, and we don't actually expect them to be at full capacity until later this quarter in Q3. As a result, there was a negative top-line impact in Q2, which Matteo talked about. In Q3 is really going to bear the brunt of that impact. And we now expect that to be $70 million-$80 million in net sales. That is significantly lower than what we said in July, which was up to $200 million in July. Why? Because the team has done an incredible job at mitigation plans. We always had secondary supply, but we expanded that in a very tough environment for chips. We got more from other suppliers. We redesigned products on the go faster than ever in order to be able to work with the chips we had, and we also rejigged our commercial plans around the world. That is a gargantuan piece of work. I think it shows again what an operations powerhouse this company really is. I'm so proud of the teams. And therefore, again, we're able to give the sales outlook that we now gave and the profit outlook we now gave. A lot of work here. In Q4, we do expect that the supply impact will be largely gone, and we'll be hopefully back to normal. Okay, thanks. That's very helpful. Thank you. Our next question comes from Martin with BNP Paribas. Yeah. Hi, guys. Thanks for letting me on. Just letting me come back to the input cost topic that we had discussed before on the gross margins. I think you highlighted these 150 basis points impact on margins for freight and other things. Is there sort of a lagging effect, meaning you will see an accelerated impact as of Q1 next year? So calendar Q1 next year, as maybe some of your freight contracts, et cetera, run out. Or just how does the contract structure overall look like there for your freight? Maybe also some other input costs like PCBs, et cetera. That is the first question, really. Let me talk about that. We are clearly, this is not a surprise, right? I think what we are trying to do is be proactive about it, right? Because in the current inflationary environment, Martin, we can't expect the company to continue to post gross margin rates of the tune of 45%. This is simply not reality, right? So we are just telling you what we are seeing. And in the third quarter, the impact, as I mentioned, will be about 150 basis points year-over-year negative impact on the gross margin rate, third quarter of this year versus third quarter of last year. And when you dissect these 150 basis points, you really have, call it half is freight and logistic cost, and the other half is the material cost for the components as you just described it. Now, we are clearly not providing an outlook for the fourth quarter, neither for the first quarter of next year. But I think we are expecting that this inflationary pressure will continue also in the fourth quarter. So will continue at least throughout the remainder of our fiscal year. If this inflationary pressure continues beyond the fourth quarter, then we will evaluate all the action that we have taken in the past and we know how to do to protect the profitability of the company, right? That would include, obviously, cost containment actions as well as potential price increases if needed. But I think it was important for us to be proactive and discuss this since we have not seen so far, thanks to all the work done by the operating team, the real impact of this inflation, since we delivered 45% gross margin rate for the first six months of the fiscal year, excluding the tariff impact. Yeah. No, that totally makes sense. Thank you. I guess the second question is on the regional performance. Obviously, the U.S. was pretty strong, 13% in constant currency. EMEA, APAC was a bit weaker. I think the guidance now that you are giving for the current quarter is 0% to 5% when you exclude the supplier incident, if I am correct. Can you just Let me Yeah. Yeah. Let me discuss It is 5% to 0%. It's a negative 5% to zero. I'm going to use the midpoint of the outlook, right? So midpoint is negative 2.5% year-over-year in constant currency. This includes the $70 million-$80 million supplier impact. So that equates to about five points of year-over-year pressure. And then another roughly point of pressure year-over-year driven by the conflict in the Middle East, plus a little bit more promotion, as I discussed earlier. So if you normalize for all these two factors, you're going back to a demand of about +4% in constant currency, which is the same thing that we have seen in the second quarter if you excluded the supply impact. So that's how we constructed the outlook. And then obviously the range, right? The midpoint can improve to the high end of the range or go in a little bit lower, depending on what really we are going to see in the demand during the holiday season in AMR, which we expect to continue to be strong, and then how the market will behave in Europe, back to one of the questions earlier. But overall, we are cautiously optimistic about the demand during the holiday season. Yeah. No, that makes sense. And maybe just the last quick follow on this there. Can you just disclose the growth you have seen in China for the second quarter and what you expect for Q3? Yeah, we don't disclose growth by country, Martin. Sorry. But China was ahead of the APAC numbers. And in the context of them being disproportionately affected by the supply issue just because of the mix in China, we were actually pretty pleased with the numbers. We continue to grow share in PWS and in premium gaming, and they also had a killer Logi PLAY event, which was very well-received locally. Cool. Thank you very much. Thank you. Our next question comes from Craig with J.P. Morgan. Hi there. Good evening. Thanks for taking my question. My first one, Hanneke, would be grateful to understand what you are hearing from enterprise customers as they begin to look to IT budgets for 2027. How much would they be willing to put towards hardware and peripherals, just given competing pressures on AI spend, cybersecurity, and so on? Matteo, thanks so much for the color on the gross margin. You mentioned currency. Just be grateful if you could clarify or quantify that. I think you pulled out the data as the tailwinds. But maybe just give some color on how that impacts your gross margin. Thank you. Sure. Welcome, Craig. Good to have you on this group. Enterprise demand. I think I talked about earlier, a large part of our enterprise business is in video collaboration. There, the demand is strong, and we expect it to continue to be strong for the reasons I outlined. It is not discretionary. You need to refresh those rooms. You need expanded office space if you are going to ask people to come back to work. You need great working equipment if you are going to invest in Copilot and other AI for your employees. So video conferencing, very upbeat. On the PWS side, I am also upbeat. We serve 71% of the Fortune 500. Amongst them, many, many companies that are doing rather well at the moment, including those headquartered right here around us in the Silicon Valley. So that is looking pretty good. In verticals as well, which are really a strategic priority for us and where our shares are still very low, a multi-year strategic priority. We are seeing healthcare spending strong, as they move more to telehealth. Again, there is money there. As I said in the call before, government as well around the world is strong in terms of demand. So overall, continue to be bullish on the Logitech for Business business, and we will continue to double down on that. Craig, on your foreign exchange question, the foreign exchange was about an 80 basis point lift year-over-year in the second quarter. At the current exchange rates, we are not expecting any major pressure nor tailwinds for the upcoming quarter year-over-year. Very clear. Thank you. You bet. Our final question comes from Alicia with Wedbush. Alicia, I think you're in mute because we cannot hear you. Thank you. Thanks for taking my question. Appreciate it. I was just wondering if we could double-click a little bit on some of the topics that you've discussed already. A lot of the questions that I had have been answered. The Logitech for Business and the education front, especially into Japan. Clearly, that's been pretty lumpy. But there are more regions surely that you could go into. If you could talk about just briefly which of the quarters were most heavily impacted by the sales into Japan in the last year so we could look at the comparisons, and what regions might be next, might you have some headway in there, whether it's government or it sounded like the U.S., or education, or into other verticals? Yeah. It's Q2 of this fiscal year and Q3 of this fiscal year. The two quarters we're talking about today that are most impacted by the big Japanese educational deal in the prior year. To be honest, I don't see any other deals of that size and that make the comparator as lumpy, and I have to say, I don't particularly like it either, so we'll try and stay away from those huge highs and lows. But in B2B, things can be a little lumpier, and this definitely is an example of that. But it's Q2 and Q3. Great. Thank you. If we could dig in a little bit more on the China. Was that predominantly gaming? You did mention the personal workspace is growing there. I know gaming has been the primary focus as you've been re-expanding into China. Is personal workspace something that is the next frontier with re-expansion in the area? Yeah, no. We have a great personal workspace business in China, as well as a great gaming business in China. It's just that the market in gaming in China is far bigger than the market in PWS. But we hold commanding shares in PWS, and we're growing those shares, so that's good news. But again, the market opportunity, China's half of the world's gaming markets in one country. That's why winning in gaming is absolutely so critical there. Again, I'm super pleased to say that we're continuing to gain share in premium gaming there. From innovation, Logi PLAY was fantastic. I think the team is doing a great job in local marketing as well. This is really where AI is making a difference. If you were on the live stream for Logi PLAY, the content that we're creating there, AI-enabled, but with a lot of human creativity, it is quite something to see, and we're doing that at less than 10% of the cost that it would've been a year ago. So I love it when things come together that way. On a more, maybe, pedestrian note in China, we're also doing a great job in expanding into i-cafes, which is a big channel there. People go out in China to game together. There's more than 60,000 i-cafes, where our presence was relatively limited, but where we're quickly expanding, and that's a very nice growth driver as well. Excellent. Thank you so much. Thank you. That concludes Q&A. Over to you, Hanneke. Super. Well, thank you all. I look forward to seeing you again next quarter. I wish you a happy Halloween. In the meantime, until we see each other, please go out and buy some of our fabulous products for the holiday season. See you in January.