Logitech International (LOGI) 21 Jan 202020 Q3 Earnings call transcript

Good day, and welcome to the Logitech Third 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.

I would like to introduce your host for today's call Mr. Investor of Head Lu, Relations. Benjamin

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

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

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

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

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

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

I'll to now the turn call over Bracken.

Ben. for that Thanks stimulating opening,

in out behind world churning and to macro events keep with facing we China trends Brexit, have new in us. delivered have strong thanks normal. of currencies do a everything all macro joining with world. become environment strong that to quarter tariffs, the issues despite macroeconomic news, out to do nothing our But as all, QX the We performance. quarters the volatile secular the of for you and keeps churning the First the

every biggest the room, of haven't to about by conferencing of virtually which creation rise person execute long have the largest to product macro a set in ones The powerhouse we're expansion of phenomenon every we on sports categories driven too the the the for to gaming we of existing our video long, unstoppable the time deliver of secular content These of trend perhaps all computer environment. yet and trends, growth new come regardless much of planet. well, talked a the will We world, and in creation. by portfolio and

future growth is portfolio Productivity. breadth & have. other portfolio? to also The combination It here. that we of in Gaming, enable as Collaboration, that more What are growth comprises contribution of areas contains it And a either thing growth. creates categories: invest categories strategic three a profit execution us and for got We've to construction optimized collection engines Creativity growth our sturdy the and our good or product major under areas, Video going each

Regionally, the occurring the see world. different you in of a each of three can story regions

categories, product from categories in more shift to each invested go-to-market up of made a of group to of our regions in up our approach are from In is we countries. less – pull a as push pull, engine marketing of of group of each Just made reported EMEA, of our pricing. a approach or revamping a is clusters a and

with clusters Hong is double-digit quarter our the had The growth continue part of from to issues majority the slower of every Every years, local only markets world. in net growth grew a a the well, in China to fifth than past that protests, we seen expect cluster few back In in few performing country. come Kong our row. X% issues strong and we've execution continued a we've from the solid The is with growth. hold effect as virtually Asia-Pacific,

of slight couple Finally, AMR by driven in decline is a region the the factors.

had we the categories depth during expect: to constrained the say, all the clear and we breadth me holiday over-promotion. reduced as let to we of growth in places and in First, try ourselves you'd several C&P. PC, But promotions of Gaming, quarter steer

And tariffs we've know, impressive and few Americas. made years. protect offset past of the promotions we over helped This reduced margin price in increases with as progress combination you price the the increases gross

We impacts. sustainable believe delivered the Americas. the overall higher have I no. franchises You In am sales to long-term quarters. long-term quarter? answer is a was number our not we fact, We're despite pricing the down company discipline Did go person, just our minimally gross build probably the margin in here far know, a with tariff for could I too so

category primary from the performance By over Wearables for Audio for & our and Audio down & Speakers Speakers Americas Audio Wearables the And QX. Wearables all & holidays. market trends too of was different recent accounted reason decline. Mobile tough Not category. in remained Americas globally for our Mobile that the really why were the a XX% in

the behind opportunities. sold last companies. as – product year. on comp that the challenge This our streaming capitalize Microphones growth now, decision base edition we This big the several Yeti we was exacerbated of during of final steps the a to category good of to us was move special we supply as to but as to mics supply long-term Blue made can holidays we new long-terms made return set discontinue Microphones we’ve feel by is Blue down stream constraints that were

we our Logitech the sustainability, forward until world – really years. quietly the ready focused and report, I want publicly we were to our inside even topic. I as were talked that's to Except to our talk annual moment in to take want group until leading about we’ve in sustainability leading the a many peer We've in not didn't something come companies actions. about for been on among

This out to stepped quarter, we talk.

for Logitech years. many focus for been a Sustainability really has

avert in committed we to dangerous to quarter, change. This the battle leadership climate

the to for goals committed time, For entire sustainability ambitious Logitech company. the first publicly

our to footprint carbon we for and Paris exclusively unveiled to of there. be aggressive go by support to renewable the the beyond goal our Agreement level and the XXXX. limit to support We X.X°C powered by increase commitment made Specifically, electricity pledged

And announced world much third-party on exciting were of also more This honored the on and World same are we in the we in our we the surprised Logitech two Finance strong first consumer results sustainability, And ago pleasantly validated We be a carbon-neutral win. year I for XX quarter, all this certified steps the underway. efforts. sustainability. the have products. only these our all that to of Gaming by We and news companies weeks sustainability work named to one you is tech despite promise company awards were magazine in

on regularly this You're going hear to from topic. us

discuss stronger QX. up how with too. more Sell-through me let our much XX% specifically we our continues Momentum in was in sales categories. Video Collaboration in Now, than did be strong to category that

course, achieved more on sales all last the of double-digit so I nine of Of XX%. growth. growth, quarter's normal combined would top the the net On Collaboration quarters of say. grew came the this In this, XX% regions our are year, heels two three unusually strong Video sales first fiscal months

humble, a Logitech's capable goal to be other companies. always been partner and has for neutral

with with Google, and Alibaba. We're closely no and the VC Zoom, U.S. after we're is like working We are others, also in all only not leading partnering Microsoft, China different. major the cloud Swiss platforms like providers

but announced management of to we're support couple can XXX but do the have ago, Since excited BXB what trying platform. a days, share to we're it's installed software our of early surely, larger capability we availability a to company's over and rooms. we Slowly are general more Sync still their the companies too see months and device exciting. of out video It's building expansion of

to as We we returned Gaming. Gaming double-digit to predicted. in quarter, on growth Now this

we the the gaming comps year. we're XX% we before in sales well as As sales headsets Fortnite double-digit the growth were PC end fiscal the up the moderated easier range, head see while mentioned decline sales as QX significantly. excluding to managed of headset in into with Gaming remaining we -- beginning before,

outside headset performance as as strong gaming our exit simulation in expect benefited ASTRO products. I PlayStation more the expanded as also the the distribution we we the of controller would fiscal compares quarter, from Gaming of the And year. see to well during X normalized U.S.

in the them through a from racing held steering beginning we world converge. in-person cars Challenge about times Logitech wheels. fact, the especially drivers virtual had see from -- and wildcard just one of Very spot a a racing qualifiers our real G behind finals if Vegas two Las driving online months grand to In mix XX,XXX safe ago. love of you exciting over of We're and racing competitions. fast and We

in assess quarter brand one. as sales having as more flattish But excited I'm on We closely this we'll conditions team, closed and underlying tuned the than market with we essentially portfolio. Streamlabs this accordingly. this to portfolio, Mobile anticipated. this had business investment situation. in adjust this continue soft. our categories about And we ever that all Stay our remain Speakers do We'll were acquisition. our

Device is PC doubled our Sales release X% three about solid business. This MX mouse best-selling our now Our the of for Peripherals I Innovation been than mouse. it also and quarter, sales we the flagship delivered sales to strongest our X, one honorees. quarter. our announced on of which X feel last has XXXX sequentially the growth. proud how Pointing of Master months. Last my say CES one the Master and named years X% mouse quarters another business this of was or quarter that award MX indicative newest is of grew four I'm more this and

where While well where MX as devices, in we're as line retail mass for for of premium doing products our with category, as the sells well market pointing $XXX, Master just executing little several $XX. we're of our MX

in product continued or performance for a from low-end ranges and dynamic Pointing testament our any unusual to high-end and the cost consumer brand strong management. our product an innovation So to the Devices company

increased sales quarter XX% Keyboards growth. the of representing in & Combos eighth QX consecutive

the slim product, As a excitement resonating premium keyboard viewed keyboard we for work. we and launch. profile innovation one with months have of segment that newest innovation Keys, it's can engine drive That the after speaks of with consumers. into to a news products few what three its a now our consumers MX out pain as just But stop MX months our some sleepy is number my might mice, line our who build have as wireless clearly continued our to ago didn't category there,

our greatly we Last to announced looking my ergonomic our my I'm replaced and through which This the by with risk and on MX improves of at just KXXX It and on spending keyboard is portfolio points. strength. that first improves literal pain XX%. reduces comfort addition week, it support room. consumers' that Logitech window typing reduces our risk addresses muscle ERGO XX% desk our the Well latest glass I've conference by Keys wireless keyboard and over all

to adopt of I the PCWorld as lot nicely and unprecedented. our I'm mouse arthritis I'm said the much too KXXX only It's a as has We thanks hooked. our complementing keyboard. that too a of excited my not have keyboard I'm using a mouse getting to switched and complete nicely actually KXXX ERGO and having. daily me thumb little Logitech's Vertical personally the I what bit ERGO Vertical ergonomic effect keyboard basketball. mouse and them my with -- said -- MX a split MX now I'm trackball about the in and portfolio complementing about made MX that the -- have keyboard done I've

Tablet has quarter, because constraint price QX. with iPad always its partly entered own the declined it's our but downs, and the had category keyboards we points partly XX% keyboard it we This were should fully before. been distributed supply-constrained By seventh-generation way, Other supply their super Accessories and be ups in resolved Apple strategic. they hadn't because have and in this where sales and

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

X% We $XXX delivered Okay. holiday P&L strong million. up sales with Thanks, to a quarter Bracken. for our

$XXX operating profits have same high. we sales operating million. $XXX X% leverage At to also with first quarterly a record million up ever our non-GAAP delivered the The time exceeded time,

incremental currency and across despite a our tariffs headwinds, range wide strong delivered China increases said, a performance. of products, Bracken we As price

full In XX.X% our call, and As margin all only these earnings gross exchange impact and our both List declined last the below currency year. in due quarter unfavorable of rates non-GAAP tariffs. to year-over-year X.X China of XA expected and of last gross forecasted non-GAAP margin factors, spite in our sequentially point QX came

innovations. long-term earlier, I'm protect supported during pleased brands the and Bracken the quarter. depth were cost value the Margins to by and promotions limit margin choices reductions holiday as of results our we our highlighted we with of and and the made exhibited discipline the

that for would from with impact gross we I be until our like on margin. of a tariff tariffs the decrease List to are are out implementation the decreased. X.X% while XX% is this XB, QX that have tariff XA U.S. not One of will before further this glad China to the did and point List will quarter escalate not brought inventory thing rates mid-February tariffs because into That's much not of reduced actual rate for country date is the our the material

tariffs In you cancellation our never remind outlook. our full and included does addition, year not the I in impact guidance, to therefore, were want List XB that their

X% spend by flattish, expenses and $XXX up our prudently we In X% We to G&A kept R&D marketing sales costs. essentially reduced increased QX, we managed non-GAAP spend and while million. with spending our operating

invested in increases a our versus but we our us. building we out spending shift quarter, come We discipline that Collaboration of is actually again and the investments lower categories. you've Of offset to these This Video from the course, expect accelerated toward team. last strongly G&A sales with faster-growing

And delivered and cost full track that sales we despite even absorbed margin and we one these the maintained strategic in the quarter, operating not was which or our from investments last increases, over faster growth our still increased of business. headwinds than we've our on X%, mind since well in remain pressures Keep time of same profit March, gross also dollar but the X% outlook. year operating So, margin product U.S. issuing the headwind tariff of currency. profit only point we've in to targets growth the at

a X.X operations flow times. million improvement up Now in let $XXX nice me a in from year. $XXX turns, million inventory which last in Cash inventory from flow. benefited our in same QX, talk briefly reduction about at flow Cash quarter our cash the our was XX% and from ended

AP. turns inventory Excluding our of record turns impact and prior record tariffs, achieved the high. inventory fact, matched And in our would EMEA have we in

teams is seasonality, I as job working out, savings typical is operations that delivering fiscal cost single Our business capital largest quarter and flow. QX nice global continue would supply for chain business with growth, the and point do to however, while our supporting a cash efficiencies. our

lower So levels next you should the see quarter. expect normal to

profit. to continue year full the approximately cash full For our our flow we to year, expect equal non-GAAP operating

with will it And to turn back that, Bracken. I

just to a reiterating of record single-digits and sales currency impacts the Thank $XXX holiday good with that finished despite seen. you, operating tariff and to non-GAAP sales and $XXX We Nate. high constant quarter profits, our we're growth we've income million mid currency of million, in

capture look X. I'm how year outlook sure join Day, of And all on our which plans We'll March in Investor City secular we more to Tuesday, of rooms, the With our and we Analyst and you then. majority York vast Gaming to New we're positioned business forward underlying strategies really in trends all across at upcoming will our sharing growth creation, video about excited are fiscal our these content provide opportunities. XXXX

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

first go Citigroup. Your Instructions] with Asiya comes [Operator Please question from Merchant ahead.

Asiya. Hi,

everyone. morning good Hey,

Good morning, Asiya.

And thank my pronouncing correctly. you for Great quarter. name

you. Thank

quarter. question Gaming. on Great Quick

Sure.

It seems seems be that talked comps easier. back, trends Bracken double-digit like underlying about with getting those the are you coming growth Fortnite the to

just the well well. drivers? we back at a are have look that underlying rates XX% come expect given XX% growth question then typically console And for of these planned we think to kind console, Nate in I you to investor events as now about talk sort your underlying roughly the which Gaming of range new trend, I hardwares just XXXX into as As the as calendar with should to

guidance we'll year Great. next Okay. March. by give category through in Yeah, our

I Investor So March as next our mentioned X, is Analyst just Day.

China, secular had I Gaming, there. really underlying and least that just think I have in in the at Fortnite We look on way so going secular underlying trends the effect in similar the you Gaming effect things big didn't at, a some change. trend

number back long-term we'll growth expect give we I'll guidance guidance think And business guidance. reiterate come solid year I we somewhere materials -- think for hesitating makes direction I give out least good I'm and because that event. But Asiya, our haven't a for -- board. But the put just the our next the -- Gaming the for now, in I reiterate, across in at sense. will to long-term March together the

great. expect performed tariff is -- for That's from you little And XA, the March something from on your you think the to fourth a see of typically with quarter, in talked Okay. but should then discipline given December alluded -- So benefiting a that dip guys rollout briefly the quarter the Nate, quarter bit not List the margins with how guys you rollback about? really we gross tariff I do you just in here? that the

there's wouldn't to a say QX. I QX really trend consistent

Some years it's up.

a Some Obviously, some And on worked new years of some find -- teams those margins we'll I with very said, We those pressures QX. lot mix. and efficiencies have sequentially. the hard the offset in it was it's in down depends continue QX. I things like to help pleased product of do to to to

get with Where we now it that. going like from look sit we're right any to benefit doesn't currency,

have on continue of a So bunch different and our we're battle to of going to I just things think executing a offsets. good do to job

So like it’s I years down. point years no to some historically, some that real can it's consistent up and trend said, I

that? acquisition of you're did cash on no Okay. was acquisitions I guys share during All lot I consummated sitting -- know -- for just any buyback a right. the an There but this particular the cash. still And mean, you then reason quarter, quarter,

in our do reason The repurchases. and are the had, look flow I -- this That really only why, be normally strong had which opportunities. up the million market to as cash we for ability any impacted share $XX think quarter, we we we'll was it's again cash the were We year-to-date. acquisition Streamlabs

to and see M&A, it's around talked business us before continued sign opportunities that. to about the do healthy dividends, of a Obviously, a we So good repurchases. things gives share it and

Thank Okay. you. All right.

from Ananda Baruah with comes question Capital. Next Loop

Ananda. Hey

Congratulations on the solid quarter.

you. Thank

Yes, welcome. you're

understanding be So Gaming the you forecast you hold in just the of some of could from off Analyst this new a about trends But year? couple that Day. secular on for might until to want the talk -- you category, could the forthcoming me, Bracken giving aside catalysts kind

not There's the couple the upcoming there as console can as ups. time of follow of refreshes, point a And any least I then although that you may other compatibility be Are strong sort impact this at I said have backward you there's think around. catalysts there have to in general a sense? that

Actually Okay. business wasn't Yes. because slowed No. compatibility. the headset console the refresh historically console forward -- down cycle has there

couldn't in of you wait existing you came a to bit new buy until confusion had the So, the was There kind an one out. market. little of headset

the going yet use it's new can’t might I and it we'll one but to on have that have buy old and I we're both thing. one not good of the compatibility we're really be and think console one. work not but hopeful a forward might new confirmed looks We're refreshes, I that hopeful ones, would probably the like, on the

an or specific -- secular a thing to I go catalyst Beyond couldn't to back trend. I but the that, a will Gaming I don't business, impact will on the that point have

don't on strong, going it's unabated. suggests And that anything gone see think to change. super I it's I that's

in on fiscal you high-XXs, this, between in the the And about XX% even sort remarks the collaboration, my of XXXX term to calculation and and I talking and it's of the mid-XXs referenced of you had bounced guys then And you've quarters in really just quick the sort five five guidance couple over blending and together quarters been quarters for Video Okay. think Great. pre-call. last -- you prepared XX%. used trending last -- when

momentum forecast five the like we Day, So not quarters. been to you're know get sort catching could to about it of of until but the feel you've last does and can sort of to momentum been we at there you're it potential over have more Analyst last that give at I some XX% bit quarters? since the sustainability XX% five you've going -- the the a the little kind over The think

sell-in XX%. have our because sell-through good is about and been math Your

too we're to that. it's year. to like So you a bigger to give getting not numbers see a I'm -- I'm far around and not as don't Obviously number will that bigger next forecast today, we're sustained going I always said hesitant so It's target. the to we on out not or hard say, know. stretch

of business video of The XX there bottom I a is, but it only supposed big Frost think similar opportunity video are & remarkable. the of Gartner enableable were million something that those predicting out as has or there's amazed, I five like a people What I ago, about X% to triple a lot will it's somebody numbers. of over I'm mean year years. And line next is. and kind Sullivan think this is are And be rooms that

lot company. is, your of don't And there can know I you is do are if building there where opportunities and So Video step biggest know business. know we excited of I'm but XX%. somewhere math and -- single just need you to too, it in the our I models but the think I are XX% one I own out back about that's between super people a I

here about creation one might software can you sneak have the more ecosystem become me I And higher in long-term Anything like at to let content that could what you of what on tell part in creation? creation. just degree the And us product content level aesthetically? feel Bracken while, portfolio content a

and the most quietly software technology size we us to of the to is education are. our hardware engineering things creation. I jobs in STEM many there's U.S. Well opening because need that one The the in so of are all improve math talking content there think especially where I me amazing about to said -- that's and the this field

to exercise doing a the and probably far are that's than creative as fields going content and there by truth STEM is, grow or there people more are STEM the which creation, field. is much While more

need and software. this and need So the hardware they And -- equipment they equipment. is

the and course part So play is it of of that then keyboard, the middle and with with product now the pulled the mouse with to now. -- further that. webcams And been in most microphones ecosystem of We've recently it's services. which right into is Streamlabs And it and into we've goal with acquisition. stepped our and with

play, think I to I anything just don't into So place that and I where at up the new beyond us category the super play want users say us space. themselves Analyst expand have but the it's well Investor to preempt the to we to might overall I'm about for can we excited places find Day, and pulled us the think to are. it's opportunity that a beyond great

except -- further So space future. for in to obliviously hear us boy want I more that go a than and the it's don't to it you're going any from it's great about us

Okay. lot. I it. a Thanks appreciate

Thanks, Ananda.

JPMorgan. with comes Chung Paul question from Next

Paul. Hey,

Paul Hi,

Hey, my guys. question. for taking Thanks

gains you driving just strength outperformance on expansion, can or products the in want particular some of any off, What's channel to share first market there, seeing So that Europe? highlight? expand you you're or kind

say would of different change is the a approach I just What all first is driver key taking we're that there. of

our half took to year Asia EMEA next sitting ago. a leader who over Pacific I'm about of -- So a who and

was about really on the the to of demand. more and things rest focused brought being demand he Europe, and lot which and push of a time China the were doing in generate at Pacific Asia -- we trying into So

push. versus pull So

to the over over and an market there think he I our really shares team to And improve try also there. effort have led

U.S. a We close many our our it's categories. opportunity in us in there. we room have and Europe than most of think an to shares higher gap And of in for we I market the do have that's categories in still and

to be say to mean if for to to And So demand quarters the -- the in those three four we I overnight. other. biggest and it's the going digits would obviously, specific category creation, to or to to that's pull two think or I I wouldn't a a double years. five doing we keep world have -- pretty one are board, an over And XX% you're next going doesn't the We're pretty everywhere impressive. is dynamics. bringing you continue grow that and across happen point to happen. five well the our grow that probably capability. row I But opportunity our around think have improve going to I

And from then on last side, but you still comp had the tough pretty Okay, keyboard great. a year growth. impressive

So strengths are regions are expand It could a seeing ASPs product if you your where lines? I And follow-up. then across that? and of your on raising have pockets lines premium you like overall sounds

Sure. Yeah, keyboards have a always for been good category us.

stay. in and desk is you where has to they'll offices I really something people think increasingly so world Well, ago, a in keyboards, use keyboard and years stop a I nobody eight to will just number -- people at when want especially yet people -- that's sitting in their you're an -- better when came And open you, using whatever when hear created of a an here lot increasing thought with voice. didn't they keyboard a of to not. talking next than don't they're here

are being reflects how innovate. at this performance really we I Our quarter strong to think able

MX -- of Keys, the is high-end high line, never which which our the think line. the we I the end MX had of really a

of could strongly right think do think I wrong high end now. line we with never as the we've had that's here, I this one quite operated be a but I as

which that opening, in we is cool is segment the keyboard, mentioned really very coming ergonomic out -- then I a announced just and which also And of with an different we're people.

getting these categories think So to what in everybody are to because innovate there's these categories just lots so lots going of mature. bring to innovate more. would we're and opportunities them of despite There's and opportunity we're

last great. on That's is And VC. one then

you. so starting making So to growth see you And your even then starting seasonal kind you are upgrades momentum protecting mode investments, are some still this nice the but and Or to difficult? software see more it's competition it given else of sales ramping? patterns? this expanding are Thank market of in how You or there still share? you kind force some mentioned is segment, in

it's of expecting -- probably or there's we've expect -- fiscal even it's to much it is it you the The Video least but really Collaboration more so heavier wouldn't I although business. maybe, to would at businesses, the of a buying the BXB far, seasonal it -- a much maybe say a If happen. I noted is obviously that enterprise our because some Sure. keep a too something, year seasonality end that

really playing just coming? up -- Absolutely. competition makes better. They're coming. And competitive is you the sports I grew definitely as and And I competition

I they're tripling we're and So the our everything we're down because they're expected there -- competition game raise time. we we've all out here, to doing, need on doubling,

And opening, and as cool. said last introduced quarter, I in you it's Sync really as said, we the

What We are need product competitive force portfolio keep to our for to We and, we're edge? sure. doing keep our sales need very keep shrewdly and think, building that. doing innovating our we to I building

have And we great a We portfolio right now. are relentless.

just we give going up we're stuff keep new So don't to up. bringing and

Google you of lot the Nate. investments also R&D product the what Bracken Hey, and Bracken with to like development is increased partnerships that of And going support on we VC, Microsoft A around be VC, people mentioned, I that focus. to a others. Also saw our that Zoom Paul, kind then, mean, have it's was the and continue saying X%. to into and

these business our their strategies large very complementary that strategy to players to be elsewhere that It's partner is well. very as we're with and business trying great similar growth to support

we're overall be partners them investments and doing make VC to making the good the with we're to right that sure ecosystem. grow things So

It's awesome. Thanks, guys.

Thanks, Paul.

go from ahead. Andreas Müller comes question Next Please ZKB. with

Hey, Andreas.

release, be the afternoon. tariff of kind won't year, basis? to the Hello actually on in QX, relief questions. talk two mentioned the One Hi. on Yes. phase I've seen. Good is hello is about and But what the there be you margin got providing gross any current you everybody. next one

Yes.

you're think, I right.

to inventory. that's So in due no when from timing on to in XA, -- of when in we material List rate benefit the QX, tariff the the bring implemented and nothing reduction timing us just material the of

Day again when Next in cover year, more the March. we'll something get to in Analyst we detail

at course, at us And, with X with a reduced still of rate. is The XX%. List be XA is us going still to

us still have those few annualize of in the we until of quarters year. next a tariffs ahead we So all

of a for in us, headwind a the still it's first year Andreas. half So especially bit next of

understand growth on Okay. I I to mechanics -- mean, the line? behind still, is some again? to that. there sort marketing sales But some that and And enough driving keep that top the a line, then, we reacceleration do see X%. of mean, growth I Or the in the on

around. move It'll Yes.

invest, I mean, the the increase though, our beginning said, mentioned of year there. we again. than have I it number I more continuing in we my comments will very VC think, of to as Again, we've actually since we're VC. in like probably doubled headcount XXXX, fiscal and accelerated investments I dedicated that aggressively

category. Really investments investments in did redirected our that been those some of We in and it into realigning pull areas. back have not was that around other some businesses we growing

investment. raised But So that think, around just from as level no to will of around portfolio move think about concern, quarter-to-quarter. number the needs that be I management,

a count Yes. X% next growth that. anything or I for like year No. wouldn't the on

Yes. No.

Okay. Thank you.

Thank Thanks, you. Andreas.

with Thomas D.A. Davidson. comes question next from Forte Your

Thomas. Hi.

my Thank for taking question. Great. you

had I that questions three I thought So important. were

So sustainability. the congrats recognition getting the on on

Thank you.

of of how should a collaboration we at How having was the that XG that on should extent we kind story the to sourcing? prices the for you margin sustainability affect impact increase your your efforts or And your catalyst as then, think the been show, about it of just serving video think help may efforts? about potentially Show, second, the as Consumer Electronics

lastly, as gamers existing gamers thoughts were? space, into we Fortnite, as are the new the distance on rate any refresh gain the then, you same that brought at Fortnite buying they And this second rates? headset do on start to have

Okay.

directions, sustainability try give On higher other I've -- pricing chance to it the us margins, of in make or our is impact had going questions expensive, both and ahead more margin people? of our to going to or out increase is because to it to we're get products going the step

of any on The answer not that. we're counting is,

more a a going to the it's in the kind truth to really be you're catalyst good going doing of citizen global to term. about long our being into a working future. help now what I'm how sustainability -- optimistic we're from is of is going standpoint we're I built business is to the think that fabric hear and

a put companies I either, about leading. term I'm couldn't you but a I thing going probably long but the it. will possibly this. on -- it to We -- the right wouldn't believe excited that we're it's And be -- leading to number I wouldn't put that, do, anyway. do for as It's really are that rewarded be in

faster there's new an VC, to on broadly too any these like our go, way early And things is that enough any XG, to XG businesses long a it's really say other better. think make on in VC. impact to and for including come and available I of but the have of technologies On

business going the it soon it's be tech for and enough. to think, world and catalyst come can't consumer I a

the on the C&P. or rates in for general console refresh rates Finally refresh

I from I probably see. of to going refresh think has hearing what And what two-year I business think, in how a kind fast those me it's say hard that's to for be. it's about rate we're headset can the are mean, a marketplace. we

started We and with very premium done well. they've that in launching headsets very mind

premium in Mic really, with it. well Blue the has done year. Our It really this headset

to So, into of young of the in no end group doubt a inflow at we'll there's of new category. sure, there's And think Fortnite brought But a day, that I'm lot I gamers. going be that continuous age see. the the

going think can time it whether I people but did I in where trade the with over to quite frame. in like So, then and as know you up Fortnite, they'll come as Two a don't time. years right are come trend long-term expect seems lumpy

Bracken. Thank you,

much. very you, Thank

Please ahead. from Foeth Vontobel. a We with Instructions] [Operator have go Michael question

Hey Michael.

Michael. Hey

any would the early. addition Year last your of reason Yes, little already being question And sort be seen why quarter. a sort the guidance my to that, is that on hi, was you're conservative also, side. the say for is New my questions if quarter in fact pull-in good of due Two you've Chinese early afternoon. I that wondering, effect to from quite could a I bit in whether

-- And And on to can share business model? and but Streamlabs? early, you affect again, How going or How you're I want any make doing? the your can second comments to question if any it's it's how integrating on you know thoughts it's additional would be that?

faster. the On and mean, especially team, something are -- when I to to in to the to it's early guys like have in the great and super exciting. moving until a say have I really kick an I fast I from. the learned And can appropriately It's business I business. about we action saw you that we entrepreneurial And Those world good say. brand it's new Streamlabs, the were faster thought in they real Streamlabs it's -- a business, do. on lead-driven bring it's a too service-driven I'm tail they excited move in a faster say, and and software move it's

On the -- so stay tuned.

really of is cool. Streamlabs We've a lot think, got there. exciting things I happening

our had all from Year the about over aren't the On Chinese out it's Year is early only this how New point fact on go that the sites. I would of its going effect say, -- we celebrate talk Chinese to having Chinese year with timing, needed to that New Year obviously -- think I whatever. whether go kind or New can yet But quarter because, we I we this going pull-in I

year my be to exciting. it's the year ready. super -- super, the really It's so year rat, had to it's for really, fun fun it a to mice all we going go good the And because, pull in get our but I and so, -- for of enough. And in close calendar mouse, sites was was and China. This

Okay. you. Thanks a lot. Thank

Müller a question with from go ahead. have Andreas ZKB. We Please

Andreas. Hey

again. back Hey

in the that mean, and -- how Thanksgiving Just was explained was effect? much also one Was growth by the there of lines, but the late I question on you Americas. it this product an effect

hard to really Yes, of was kind there have say. could pin Year. hoping hard an period you is It be think so and Yes probably, between might It's was were Christmas, one. that. and one. to wouldn't New that Thanksgiving been There there or effect. I possibly so -- That the we have shortest Thanksgiving

bigger on Mic didn't effect year. as go challenge really yes the took effect there's we fact increases probably we some the deep think effect. price So, is ongoing promotions and some I then But this we the speakers. the and that And that the of Blue had

when So, doubt to you was it. is lot distance. that together drove I really of what it roll Christmas I Thanksgiving if a all think

specific what Yes. It those I decisions and I the -- called categories mean, we think I out really Bracken think Bracken as those drivers. really were was made.

great. to pricing this to on about and me I the I'm you this -- we're good for general. always so is -- to the call feel kind happened what think you're time because, -- of get from on I it we kind coming by focused in what's on learn call, to the anticlimactic decision just so focused which try of is very

for the than And so, more things tariffs, it what, was I there learned cost think And on this we there. realized. quarter realized. gotten one you room than if know on And we weren't more of room the we that pricing was as we well there have wouldn't

more not thing. sooner. It's us that getting for shame good out of a So, on

a Thanks lot. clear. That’s Okay.

Andreas. Thanks,

time, the the presenters. this to call turn And at I'll over

know another you good quarter, another Well Great. what, good holiday.

you beyond. building next year we'll what's hard white out it We'll thanks way three for with As we're driving and QX on the set year And talking I on we'll who a our super growth these we've be And And X, biggest March working York into bring way, we're already for to too. big the New being lot there's knows, engines. there. one about board that make and soon. you exciting. on a said, of been there got we're I plans way, trends much. that those next. of a and other thinking many secular very Thank that But be whole it's maybe are hope But call. will

you. Thank

you call. conference Ladies Thank and gentlemen, concludes participating. for this today's

disconnect. now may You