Logitech International (LOGI) 22 Oct 192020 Q2 Earnings call transcript

Good day, and welcome to the Logitech Second Quarter Fiscal 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode.

We will be conducting a question-and-answer session and instructions will follow at that time. [Operator Instructions]. This call is being recorded for replay purposes and may not be reproduced in whole or in part without written authorization from Logitech.

introduce for to call, like now your today's host Mr. I’d Head of Lu, Investor Ben Relations.

to conference of Relations of Web the the Welcome as the prepared Zack. Thanks, Logitech Investor as slides, are results The release, ir.logitech.com. well the site, available remarks XXXX. at and company's live call our for second call year page quarter webcast of fiscal a press our this financial discuss to online

company statements this the involve call, of respect we the During including the forward-looking any developments or that under with and forward-looking risks a materially future uncertainties filings noted make new made Securities course Safe differ results undertakes and operating statements of XXXX. forward-looking result The to Act to of may of in The Litigation as are no or Reform Harbor update statements results and obligation our as revise actual could quarterly otherwise. SEC. other with

on include from or are Please not GAAP isolation be in note substitute and that considered Non-GAAP reported meant limitations will today’s results. to results as results a inherent basis. call or have to superior for financial a non-GAAP

GAAP release listeners items. on provide slides press reconciliation non-GAAP We a posted Our and numbers to are our between site. and Web these IR and encourage review

will noted comparisons available site. replay be and call for are Web between being year-over-year periods is and the Unless recorded otherwise, This in constant currency. on Logitech

President are Darrell, Financial and California and from Olmstead, today Bracken Officer. Executive us Chief Chief Joining Nate Officer;

now the to over Bracken. I’ll turn call

in activities so sight so strong bigger obviously of Brexit. lose us. relevant QX you proportionally volatile U.S.-China us. all and delivered We you affecting temporary a a the execution noisy are long-term thanks Those trade the what with can and Ben, wars, in you, more and trends joining world; the currencies is and newsworthy that of volatile time Thank solid for

in traditional maybe people world calls over the phones of The video one to most a by super The all and the and lifestyle all, a we’re from choice gaming will our career everywhere as of emergent of millions the video small establishment content of exception of sports that creation and hundreds communication newer not day virtually is the large sport in eclipse to video dimensions, rooms rooms, moving for with to from if homes explosion lives. billions.

and in have than well increases this different. despite margins widespread and a gross currency quarter first rate currency our exchange tariffs no price delivered despite We X% We managed our putting more through decade. improved consistently is headwinds. growth, constant the business U.S. We

record than and In operating same September quarter fact, operating we achieved despite profits the cash more XX% flow year. factors last for quarter our regenerated these

turmoil of Performing we've you dollars come tens to wars level much expect ourselves. through at from be the seen and our that That’s managed this could Since began, good. and to we of impact trade expect marked that’s very what of millions of business. as with us what

in Going forward, in new projected the see September December. implemented and impact tariffs we will of more

us, in challenges But part of and and practice of of countries again, are a of invest excuses. you recession-resistant a these a macroeconomic types portfolio why categories no

to any in I the the have targets. and of So despite environment we this challenges. well managed The deliver quarter a and business we all where not operations is many times say we our done through managed would our it’s getting macro And solid past, easier. expect like

QX grew our XX% which categories, in Video performance let’s dig to collaboration sales into quarter. of Now tap into these record another the trends. different of many

that room both Our access easy growth from seeing of enables Rally, huddle on the to recent for one sales system a touch are incremental fast continued a meetings Tap, our large innovations camera top and we’re rooms delivering controller and MeetUp conference products.

our to of growth business, past nature times quarter of can because we this the but rate expect sales our XX% saw uneven enterprise growth continue. I just quarterly Now at wouldn’t be the

the ahead said the unusually clear This in that video on enable in us we growth we our sell-out in to was like billion all dynamic back to puts out to achieve versus laid opportunity rate the us testament sales that track prior of Analyst Just world. strong sell-in in business. tremendous quarters in the past to Day momentum the quarter’s potential $X XX% March. This of rooms market conference the well is due slow growth a the QX VC

XXX feedback. momentum Last quarter, testing great we announced us close and platform. to companies had We’ve with beta, Sync giving management our device

the We’re all ahead videoconferencing got breathtaking Cloud the it. availability one. so can plus. in need enable, love things the on innovation rooms a We and we market that tuned opportunity. the stay platforms general the regular and year, It for we million business. by of XXX this great end the case, of design love In

quarter a contributions growth. Pointing with new solid delivered Devices both and grew X% PC existing from products. business X% Our of peripherals

continues Our continued mouse we’re Asia MX our great even that that up of rest distribution ramping digit released China. over across Pebble Vertical while so have sales and ago grow the well it to mouse double EMEA. in of year was into to It’s doing

premium is that as X better. even line. of Our described the recently version introduced mouse [indiscernible] redesigned making flagship MX mouse a best love I Master our

even into and often of that’s the something to like Master was speaks engineering team MX workings for common appraise inner a and products. technical that a to mouse the just the there been for fact, but iPhone. This put to our able don’t devices In achieve our you humble the something teardown has see

and X% growth regions. growth the sales seventh of representing in & increased from QX, with quarter three all consecutive Keyboards Combo

– keyboard new has the giving Choice best easily slim World wireless it slim received one MX wireless an calling our keyboards. Keys reviews PC and Award profile with great Our Editor’s it of

contributions than great saw their keyboards new that distribution. more also other were several We from limited

Let a me moment. for this touch upon

in countries. portfolio product ability our was a do. If then and of way diversified they Pebble consumers, benefits will capability resonate as they limited the distribution is we like our expand how One to product If see expected, products China, we’ll of the global rollout of is well when other to with our new do go-to-market the launched important our it exclusively keep one can then This manage the doesn’t distribution. portfolio. we risk of in limited well as ways first in them to the

the headsets tough do sales quarter get growth a QX gaming, last only gaming the to in by easier comparison to XXXX. remain headset double-digit into half all as calendar of we offset trends products. saw our Turning but were continued X% similar up with in comparisons tough other we first The head

expect improve this as more momentum fiscal to gaming growth the normalized I’d in So compares year. with we exit

are channel gaming to But all our Blue VO!CE, our LIGHTSPEED GXXX market in and decline keyboards and start. thriving miss maintained of picture strong several that by of the is offset in and gaming that’s Wireless here great to off it’s Tablet products declined our quarter. our accessories GXXX easy underlying growth Wired and headset other traditional a business. a new and education are too. this sales the X% We retail PRO with big X

of timing X XX% of anticipated MEGABOOM QX and last largely year. to mobile in BOOM when QX launched down were speakers in the we’d last As due quarter, X we

incrementally speaker favorable innovate to provides or into environment and a mobile soft, overall well neither as to new better. as worst expand remains across continue more to somewhat experiences conditions the While us for getting market This stabilizing products appear channels. new be

with slight our a provided Analyst at in the flattish decline expect Day for year. and Microphones to Blue we digits with fiscal in our Overall, the mobile double speaker which in wearables Audio and quarter. call up be growing line XX% sales forecast were we Jaybird this

financial turn through to over call to Now let walk me you the Nate metrics. our

execution pleased further, regions, grew to sales grew $XX Drilling and priorities. we operating investing with overall our our we grew to segments margins and X% non-GAAP improved across the operating gained and in financial results sales delivered. million. in and I'm gross down X% while Bracken. strategic $XXX share key profits million all Thanks, We

U.S. by as result did, adjust of orders took performance implemented tariff our point of regards was We pricing overall customers our the offset line relatively product our impacted categories to time a to QX, action. however, With price help increases unfavorably modest some X delayed of to pockets top as few approximately in saw costs. Those a certain in increases. growth recently

points Moving the currency cost and to XX XX.X%, the margins, QX basis we our rates. impact exchange to tariffs highest mix offset by and fiscal have from achieved since QX more non-GAAP margin gross than unfavorable year-over-year product improved Favorable savings 'XX. initiatives

were sequentially expect of mitigation from incremental in look on we effect year, tariffs, our will we our XA they point as did back gross List not new have as of September see Xst, tariff just impact pressures our so fiscal QX into implemented about our I X a on Now margin these net financials. of efforts. ongoing material margins QX half on tariffs the

Our non-GAAP time, G&A we with operating business maintained X%, growth spend capture quarter. to long-term to and continue up gross X% as to again into opportunities. we $XXX R&D million growth sales the and reinvest back marketing spending expenses our this up increased $XX million profit At same X% at our around

favorable by company. product funded toward quarter our combined while with delivered expansion potential as growth of line operating strategy margin investment a top mix, disciplined a long-term we with So marching another

year nice our inventory operations was increase and year improved helped and X.Xx quarter holidays, our $XX balance cash flow by inventory QX, inventory me Despite $XX million last about X.Xx prior from briefly let inventory a in versus Now, management. our talk our overall flows. of the the into Cash a build million turns ago. typical declined million year strong versus $XXX

non-GAAP flows second Our cash we heavily operating equal year half full operating still full towards full are our cash roughly profit. be to year flow targeting year and the tend skewed to

capital In dividend, terms the roughly for in annual up versus paid last out year. $XXX of million our allocation, quarter XX% we

to And with turn it back Bracken. I’ll that,

into wrapped solid second of are We Thank as year the optimistic about and you, just Nate. half head first the up the we half holidays. a

So million currency today, to $XXX million. operating we’re sales mid of confirming $XXX non-GAAP high-single of to in constant digits income and growth

Our tariffs to guidance been date. includes implemented the that have

very Nate questions. and your for ready And with that, I are

Certainly. [Operator Instructions].

Asiya line Citigroup, your open. Merchant is with

and on gentlemen, about. strong morning, volatility quarter that Good the talked Bracken the all congratulations given

comps – tariffs, all which year? as feel of half you and increases going if think how and most So but the you look puts the comps talked you maybe are all second this volatility help price in as understand the so categories as about we it talk maybe with recent thinking are in tariffs into about fiscal give and guys a little the look bit then that we as you get look about against some second well, confident macro I easier could into the takes easier and about back half you half,

Yes, I’ll jump add. in first and Nate let

probably the moderate is of that’s I gaming terms enter year. we fiscal comps, going as think have in next to one the comp think we I in especially

going tariffs We in big in think impacts. expect in we more come And of know to story to Yes, be late year have will the any showing business that is change. think – seeing see solid And expect in the currencies, you performance and continue business, so we through I the effective you last as the those. we’re tariff I from on currency more not as tariffs out I when we’ll to yet our effect to C&P we’re gaming against strong, the XB That’s continue this not up net manage will especially fiscal and back performance good our key enter Fortnite the PC year. the assuming half year. would be business exit December, – the as

different. So, expect different to don’t add I Nate? you story every go Anything is we there, to the as through want quarter QX, and yes, think I dramatically but – be QX

No.

we’re We think product you’re performance invest new we’re correctly. think good quarter you outside laid headsets, VC continuing force. this great seeing sales last to gaming but Obviously in and out I launches had of right. it some I continued our in

we the on those. So back delivering I the just have strong focus on plans the of think and that really comes again year and half execution down to

the maybe margins point if negative you’ve And net tariffs expecting against can that favorable X and on impact mix back still help impact gross clarify in you product a you’re half. that then Nate, in more? that So is continuing mentioned, the the

Yes.

to you because compare that implemented if X later quarter. September. expect in to didn’t in tariffs have QX Those QX occurred us were QX the really sequentially impact in QX, on from in point an headwind So I look sequential that of QX about the they

see sequentially QX tariffs. those some we’ll there increased So QX pressure September to from

in that expect some have pressure QX. flow of the We but try to those see through plans into to mitigate P&L things, I obviously do to

you are seeing their take one last you. kind retailers of price are the or inventory? And me. from And Thank increases? retailers they they – to responding that’s moderating the Are are how sticking

then Yes. the first that our I’d over thought a of and that But in you their expect initially of more say market increases, in that’s a little bit – we the some inventory in retailers increase so U.S. far back I saw quarter. generally environment. price of think bought accepted price round the and would of in as affected to kind a come retailers what price started those decade, us the this taking end the normal rising in the business

Okay. Thank you.

much, Thank you Asiya. very

Iffert UBS, Joern with open. is your line

doing? are Joern. Hi, you How

questions. Hi. for taking my Thanks

to results your in then January? QX on your question. or first is on This be first you The this one release the reassess please new guidance taking you list will is do will tariffs from that guidance is have December, reflected when place with now guidance the your in

was is growth, balanced less question your now. from on look organic tablets the seems I and Do over medium-term XX to here more it question historic if if it VC is I it everything Second was look mobile coming please like months? was a become you more to next sales expect growth on it or And drivers, speaker, XX it your also more then gaming.

but time. VC, in slowed Now at everything it’s some down point

the organic So two you next high-single will Thanks. your what the can you guidance first maintain or questions here? makes in And confident these really please. digit be years one growth

job. a good Joern, there, nice That’s list Okay.

organic me the of jump sales let into the growth balance. So

We have kind of portfolio businesses having and We broad also both portfolio. love a a geographies. of

the dispersed the of one globally most world. We’re companies in

balanced regions. across also most great We’re we portfolio one – the have really of different also a

and category through have That going almost strong I back. one over pattern might seven, across eight when that over repeated So itself been has slow again then growth, others come but years is here. down

time? do yes, so I Yes, will Joern. become it do, And think I balanced more over

Fortnite go you nice out. strong. think super next to growth again, really go very total is quarter-after-quarter-after-quarter, spread And our I the more I over. business That it quarter, was year business when see reflects think that in that balance as with softer you line this continues a Gaming’s come business up in you’ll had the think especially back now. will be into as strong. will and X% through said, I and growth. It in little you VC the effect as look We C&P

other As before. steam. has look speaker little further, out you different a tablet-mobile the slow seen We’ve dynamic – pick up we’ve down, this categories categories seen

looking We’re digit upper always in with our so contemplated organic both new is this all targets at single long-term categories growth. of inorganic, and

do. able I to to I do be expect continue that? So to Yes, deliver

not December, In in officially of we the those tariffs guidance. terms so about you incorporate XB in never that until List talked they’re they’re on confirmed, our reflected

we’re and it, certainly saying, okay, be in go and might pricing, things reductions. the any offset on is so those and they’re straight certainly get that; But but can out how really do not in we’ll far looking take we it to do cost implemented. after relocations, job what’s figure if to Our we they out of how try now

expected cost ahead to increases, inventory a impact We not Bracken. may QX Yes, that. bit December, ahead communicated being would in that I no otherwise to as and inventory they to And so QX. our it look middle really pull since implemented But see really of of P&L. were little I try impact in of in on an agree, currently some guess have of may offset if we they’re P&L build implemented

we can to Okay, M&A. Is category the of you early maybe on in thanks. its really gaming growth or likely see similarity it acquire that new a last question will potentially maybe be a which just And many VC years? kind

looking always looking always at new Yes, we’re Joern, and categories. organically also we’re M&A on

don’t we XX-month XX we’ve door know X about out to development which to a get which we the So timeframe. X and publicly most a don’t got over at internally seeds and many in share of time don’t of that

We’ve targets share. we there completely we’re got So dodging M&A go. so why and there looking. out that’s question, in your always you always And don’t I’m

you. Thank

you, Joern. Thank

Thanks.

open. Paul is your with JPMorgan, Chung line

Hi, Paul.

Paul. Hi,

Hi, guys. Thanks for taking my questions.

you’re video team. like it collaboration, pretty looks nice first So sales expanding return your seeing on on

kind we kind are of existing share to there? should secondly, about you spending So of think kind from up. products in see some higher ASP we sales a are your starting of force that gaining and better where pace expansion how then your how traction players then And of follow I have for of OpEx your of And and the you are there?

force, what’s we, view Yes, I’d that investment as progress. in our in of sales terms would say a are I work our in where

keep certainly going lot to I’d it we feel but on the a say. we’re be to going We’re building hard making about said to point nowhere and good of keep near we’re that, investing would a investing. you’ve and in to say keep time put as made so progress we How we’re finished, investments and

certainly because to We’re and percentage as a keep going. we’re certain we’re a done trend investment we long-term view going – this

do of In huddle example, are and terms medium-size to really strong high did on see super of those for MeetUp which we products to both had rooms higher quarter, so large Tap, Rally, ASP and traction our well are continue products, ASP pretty too. continues a to

ASP of I’d little those mice. say for all are Logitech lot broadly sells products and old So who way really – by high a the

higher within love that subcategory, doing end video So well. the and certainly the collaboration, we whole are category products

we business, are based penetration of at I’d some now just the that related install look we’re our accounts. that metrics add too top seeing to on of able that some VC into customer think of to I track deeper

products larger strategically some solutions, and in nice favorable and end We’re trends that those to respect so work those of with them able as well. very expand higher add to

Okay, And Streamlabs. my on then last great. question’s

I So can million somewhere around scale I existing us acquisition? be not users can in what’s here frame X.X going 'XX. just user but know they and And and the opportunity kind to the the you material that year it’s you have kind behind mentioned in users, margin mobile Is And then of that strategy? rationale tuck-ins of software fiscal read base, how you. you smaller the for XXXk of your products? Thank kind existing selling of more cross now is where find of kind to then to margins? your kind of kind a potential are your impact? gross potentially some of revenue expectations preference and shift there acquisition lastly, kind of then there help accretive a And

what Paul. it. That’s that about And Thanks, question that say done It’s a it’s the about wanted hardware no one. component we you if really hit. does great Yes, direct a for excited all. at – fit think I because sizable into Thank that we’re acquisition super really we’re has talk to doing, we’ve offering strategically how Streamlabs. first you

from people at this you out the make and broadcasting put the the and even keyboards is podcaster what microphones, streaming to the doing platforms between mice other we’re are used themselves If the using. any look and there. that Twitch that webcams. the of have streamers And by that we We a are between now or sits perspective, streamer, layer

business of platform, really a really, people really are millions to a it way addition great to a it’s expand so into So using services. this And said, opportunity. in there us was you as cool for our

days. In cross cetera; et selling, terms of early

I that but acquisition about but hope happens we’re the few next the closed see. in there, yet. even haven’t We we’ll just days,

today. to I guys or see continues won’t as and are actually enabling number even their people way out opportunity either think. business make is successful. which that growth by want even them be I key geographic and experience sheer streaming here. an to some or generate sure doing I other enabling lifestyle of people what successful those we we the We that just or into income revenue get to opportunities them the that’s keep doing is is and of dispersion job it That’s think And business a that of to to have the think is

hard So for us about to I’m I’m it. it. excited mention. optimistic It’s about

gross so like core time us mentioned too. are the You margins over on Yes, higher our business cool this than there and hear you’ll it. it. more others significantly that’s from pretty think And business, I

Okay, great.

Thank you, Paul.

Paul. Thanks,

line your Jürgen Wagner open. with Mainfirst is Bank,

Hi, Jürgen.

Jürgen. Hi,

Thank Hi. taking you questions. my for

growth. us today? M&A FX remainder the on over this coming What the margin reaccelerate would enterprise enterprise the what for become dollar with that focus gross a if organic see gave year euro growth have point is or the you buying be question And margin so. assets At consider currently? the the bit to You last follow-up tariffs. organic Thank that’s gross from from fiscal solutions impact a where stays year hit versus and a We cheaper space your of the into on larger would you. additional U.S. it down

Okay.

space, include dig that categories and enterprise we FX Let would We in broad very not the then me question. the We into the categories answer today can of we’re – space. in publicly I’ll first range and today, Nate that a from love enterprise capability at let targets; couple look our and we’re and in and a standpoint. in, It’s a pretty it’s know. last years learning as from the close both standpoint area go-to-market we technology that in of from we’re investing a over from building we’re also lot an results believe you

But and would more to the that us streaming. we are latest There about consider excited relevant be feel we’ve consumer and is we spaces space. are broadcasting additional more absolutely that and So continue about the to business. talked one in M&A we

cool a we’re little probably bit ago about gaming excited too. was few that that’s So years a a us, and opportunity like for

as Now the want to that into for one. you FX, jump

was Sure. margin? Jürgen, on question your gross

Yes.

Sorry.

quarter for year-over-year a exchange million us at rates. is impact current FX about $XX

Okay. Thank you.

Jürgen. you, Thank

line Loop open. Ananda your with Capital, is Baruah

Ananda. Hi,

guys. guys the Hi. taking Good appreciate I morning, here. you question

morning. Good

me. couple from Just a

perspective, guys sound the Bracken, about obviously business. pretty you – Just of confident the from tempo you a macro

couple that or experienced in XX macro And opened the as revenue to to doing a just q-over-q And is anything ups the September wasn’t just mixed business, you it when that? the I that – last just in days seem call growth Have have like is in incremental you���re as of mentioned last regards experiencing couple you that calculation, do sort impact? feel Thanks. also ongoing did You sequential over the so follow macro of dynamics or too. growth of seen years? you the of headwinds. strong sort anything like there

Okay. you to I about Nate them. in respond I’m one. anything would going I don’t say of that term let incremental think no, second know the really the macro, significant don’t to there’s

So the tariff changes are kind of any XX what you see last expect. we I days. don’t think real from a macroeconomic environment the over difference

escapes or productive more are anywhere to money they’re travel are I products a it’s similar. good if they home recession. to of so save actually at help the of you you think people you about and you’re good view we A company low avoid are fact very and make recession, needing got of because else as company. We you or relatively priced that lot talking ourselves recession-resistant really or recession, that can a really kind much

there know there in that don’t recession will if but feel good will be it we to business our I a about So context were point. really Sure, whether be come. at some

your the that disrupt sequential to think have I dynamics some get impacts. rates.” think introductions product got of back And so strong you did you might gaming seasonality, in and into baseline, of growth sort year the product to what also growth some the extremely “typical regarding come call what to those you I with of prior New

being expected other just this that with was see models, that slower in than sell-out somewhat what sequentially versus to we line see that roughly what in of surprising probably again bit little offsetting quarter sell-in bit again a I but But timing just was the we our I really didn’t stronger than business. being had of just QX we in a because anything me. think little

opportunity. just to Bracken the as about past that’s as picture, you the then helpful context. real bigger in you over sound market clearly and gaming just you guys enthusiastic Okay, great the quick, moving have And –

sort you enthusiastic and 'XX. Just the of for second fiscal sound ramping the 'XX about into and – half fiscal

Fortnite Just as that market go just for effect think fiscal you through you than do the impact, the second that you you or or anticipated we back that least a a potential having get the year? greater 'XX, the headwind feel forecasted at greater range to at do half up of into is

really Well, effect it the I think Fortnite was. was huge,

you’re If you it add had, a to growth always strong. love it you good The thing at quarters But any more strong, because when compare, years looks like have the I you – certainly it is ago, get like always really And big that a when from that the was a look it that rate. compares hard about and I the easier. I’d feel was of means two normalized going emerge say we’ve that effect. then

pretty We’re close that. to

we to And calls day won’t letters putting Every that get young growth gaming here. think sport. people am we and their that’s drive a fundamental calls this grow the into or about in Ananda, about or I and a or said, are we that college, this that into or university get days small next trend year. So coming as a gaming I program have that interested to engineer somebody continue. and We I It high think is and really long-term as continues the almost day. year or as just see fact every few had says anything the bodes optimistic, it that going compare fiscal we go every quarter into about secular XXXX, I I’m you don’t excited not school well. into

I Bracken. And a ask let great. bigger Okay, one, guess picture me

Sure.

year? start did Do you of feel opportunity this any you differently at about the the gaming than

really No. don’t. feel exactly I I No, same. the

companies. for and a for us opportunity of think I great just it’s a lot other

question. have great. last Okay, I picture strategic one bigger

is and Sort a service, unified communications fits just of part Streamlabs a as into kind UCaaS. of broader that this

distinct So toe way a very what the you increasingly is as could kind become any or large. as is others UCaaS to of aware of could pond aspect service context water or forward, evolve what of a been as service around place offerings dip portfolio? obviously of you the us give whether distinct that to took from more oriented. year, last that Plantronics kind those Streamlabs like the in a bit yet of opportunity services into but there, potential not – appetite you develop a little we’re go the from at that it’s the the What’s model? is

Yes.

I conference expectations. activity. opportunity that can you service part consumer don’t we’re service track BXB and and a be think a and we We monitor a want room opportunity place service from that’s that think now to I really is a Synch opportunity a equipment starting actually Streamlabs BXB where room playing. should of overstep conference can as and that

I think our as this do capability organically the building going more I opportunity do right business a the future, from inside on expect Ananda, with pace build us we’re we of in is you and capability as think our Streamlabs. both service very of our hardware to back you and can saw there. But inorganically strong at continued

I Thanks great. Okay, guys. appreciate the a lot, context.

Thank you.

is Vontobel, with your Foeth line open. Michael

Hi, Michael.

my afternoon. A side. Hi. questions Good few from

is on of that not then would you if you suggesting the business question maybe give showing one you is your The be the would measures. regarding you’re and comment final and VC a already again. comment that your development initial visibility inventories how sell-in regarding third sell-through the into us And VC on Can sales from season? the building general mitigation seen and yet. Have the second question data the I think on differs be significant you And going maybe rest How any see a is your can portfolio? is inventory lot? how tariff channel first up? how holiday that building it in

are comment other specific but can mentioned have the obviously, measures price that taken any during quarter on? have you that increases there you You

those. – going talk inventory, Yes, I’m through big channel go a think so about described there. I correctly. let I don’t we generally let’s Nate see let impact it you to the I’ll think but

mentioned of terms tariff before. we In this mitigation,

quarter, the relocating Within are some manufacturing. we

both I’m the hard and cost margins tariffs. to usually We continue impressed currency on back and public, don’t very ability I’m by gross of in but down. the our us to drive manage I pat in personally by our context impressed personally

we’ve really But the doing so done our no So relocating things a job supply. quickly think nice I team really it there’s think hiccup has a good. doing that’s right it job done and of I and nice in and been well

in the pricing July of world, I we decade, pricing have first a so very in the want said, we don’t the we a difficulty long time end factor done in – there. overstate the parts different of implemented to As in around July We’ve we U.S.

better visibility than activity core like to the doing what business the know else little does do so we visibility, again have of we and need have You in way to. ready because force little it a enterprise sales better our we picture VC use a as everybody and we’re we’re VC a that’s space in coming.

are channel of of think improve. so us a sort see profile you’ll see the or – gives developing. And way that I sales And that we’ll

bit say that. look better. future time into improve spend as But will ability we’re And this it’s little to years about over a in Our I’d the business. optimistic we more

going have companies than past we think is I’ve the are get of in structure, best we and opportunities future into the and capability don’t said VC for all future bright in a building you the – by better we’re I visibility quarter-over-quarter. already. the that about those is enough probably better go-to-market inside building of video expect better us guide We sales quarter-over-quarter but force, today, and where have what exactly to but visibility of

how maybe visibility months just do you Can quantify many have? you

that. do hesitant to I’d be

about the I’d talked and business. expect say would the with haven’t is in past, you but getting time as better in visibility our more We better that that

All right.

D.A. your with open. is Davidson, Forte line Tom

Hi, Thomas.

Thanks questions. the for

business. Just gaming the in new back gaming the category lifecycle the and you. product headsets rollout effect half in segment talk in the gaming Thank to you other segments about are and of the to Can of the expected as next for anticipating to consoles back wanted segment you’re come the how the year?

Yes.

in is space. is of headsets first lifecycle gaming cool really obviously product. we in and is a So C&P the launched just faster wireless Pro our new business all, I the which really, time I headset product you’ll recently; see all it And of you’re more as in ramp that and good think several particular than see the gaming on, areas in a would activity in in goes think to continue expect I activity going in but lot a to space

that’s new different, trend in. a remains kind The cycle, This comes refreshes be console so a are to have as came to I’d seen. they’re of which product. console refresh would rate no that console think past, you’d lower past a both In the it say good compatibility to counterweight I console of coming. the terms the In normal be with sales time the

half improve backward line through the different. though improve Fortnite the since those will year business So our it and compares. will especially escape we Anyway, headset I into overall compatibility, overall this we first bottom think may time gaming business from think I after of next our got is you be as go

Great. I it. appreciate

Thank you.

Chokshi [Operator with Maxim Instructions]. line Nehal Group, is open. your

Nehal. Hi,

are doing? Thank you How Hello. you.

results to you’re were currency successfully? growth increases that I able price much wondering seeing, So implement of the constant of and to nice due was how that that guys the was you

price anything price sure per related It’s really kind I’d really just to attribute the that organic increases. is constant X. I not to flat. not X to We purely assumed growth of say almost and elasticity currency the probably would I’m pretty the se. of increases

Yes.

unfavorable I just as In of of purchases channel fact, existing a mentioned impact point quarter. the our sort in use I actually as delay saw did their earlier, some customers some about X inventories and

a as it expected increase of help think actually price we little went I there about But was bit think I some cost increase. and actually as Bracken So mentioned, the the of headwind. did offset

Nate, then? in elasticity impact you that point X.X implies the than X cite, that less price So that

price sold It customer. increase the say, on lot varied product, magnitude by products the a and would of by by based the different I

in. But I’ll jump

was and I more think about pricing referring less what on was elasticity impact. Nate to channel about

do So to the then digestion you lift changed, in period every market’s of after they the just have the pricing in. beginning. in And buy. the world. back like come the where the look don’t market, of then anywhere It time the new this a who customers we in starting happens don’t They prices are

way really temporary its And And an to inventory mitigating channel so largely that’s out. question. right it’s elasticity more on a It’s of impact. not

tariffs who then think a in to think around may things And sometimes the this can and uncertainty dynamics. wait their I and maybe lower you bit right. lots it’s again if It’s so as of the little at news get be quite also they prices, customers I to often favor some see just buy willing in will turn

to new go that the the okay, and let’s don’t tariffs it presuming prices And understood. accept and take say, usually does Right, how long ahead for customers away, order? the go

I and we’re think XX, that products. right normalized think then buying And days over XX take a most buying down that slow the our away. to few level gets way there. back it stop I are some will There or on XX,

there We’re quite but in there. we’ll sometime XXX% yet not probably QX be

a Okay. give the far then bit actually what can as you the of was magnitude as offset And tariffs? to of price increase little the color

in thought stop but competitive put of that. a here at all didn’t the was the that but Because any fully at pricing we level, in in And do I’m little environment I’ll we we’re tariff to in, hesitant that reflect reasonable. we level

right. All Understood.

impressive given So incredibly really is been gaming compares. flat actually tough the has year-over-year which

a actually six months? into have the perspective I Could share as as terms good the of growth. base past what gaming does far the in view installed think accessory like your installed you growth look guys base pretty over what’s you rate

rate what be. installed Yes. would growth the I’m sure not base

though, digits of take headset they’re gaming if still business the or categories that. in I out, all outside three think the double of underlying you all the growth categories growing rate

around that quite it So continues base to strongly can the pretty I’m And to grow I suggest imagine that and you world that continue. sure that installed does. the expect

so headsets first-time launched we we last and was is but over that’s to upgrade I big and opportunity think well an there’s many of especially year. headsets as those headsets Now go those an of premium gate the headsets see there fact the to probably now they’re that’s the start this gamer out but next why probably right year, opportunity because right doing opportunity. year, hold and couple opportunity, sold the we’ll into years And that take we next

Great.

side? the do on Finally, elevated any of channel inventories gaming you see signs

the good in are inventories shape into holiday. heading Channel

As pretty was Bracken mentioned, had modest. we but headsets from sell-in some it new the

So looks everything clean.

Great. Thank much. very you

Thank much. so you

Thank you. to It the are further call turn Mr. At will I back appears for remarks. there questions. this closing time, over Darrell no

exciting us. time an It’s an time it’s interesting everybody for Thanks at in Logitech. joining and the world

will see We QX. after you

you. Thank

Thank participation. call. for fiscal This concludes the Logitech second your quarter results XXXX you conference financial

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