Logitech International (LOGI) 26 Jul 222023 Q1 Earnings call transcript

Good morning, and good afternoon. Welcome to Logitech’s Video Call to discuss our Financial Results for the First Quarter Fiscal 2023.

Joining us today are Bracken Darrell, our President and CEO; and Nate Olmstead, our CFO.

As a reminder, 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 React of 1995.

We’re making these statements based on our views only as of today and our actual results could differ materially. to revise obligation statements. of no undertake update any or these We

finally, sales at Relations this periods encourage information between filings a of carefully. are the Bracken. will results, could and non-GAAP all recorded reconciliation prepared available and materials We being financial discuss And including as these morning, otherwise impact call sales. and our as I website. you and results We in our non-GAAP And Unless is of a are do our to and call a the our for now year-over-year financial with our this also factors available to materials are measures over Good webcast review Investor be subsequent most non-GAAP and will our can results and find page GAAP about and comparisons that use our press call with website. and that, These release in recent and on replay filings. Bracken. the and will slides turn remarks of noted, in our SEC, you currency Annual Report net well constant between

X% like companies in Ukraine of directly all for Thank and last geopolitical war The range and as versus you, about issues. year, about a Nate, earlier. thanks of reduced is impact wide net joining many us. of you we the Logitech other experiencing overlapping sales talked macroeconomic our

hybrid consumer quarter looked weakened. of into a our to more year our Inflation model. our one the affect business and the headwinds have believe now. constant net rest X% conservative shape. share, & it’s and But markets, Devices currency XX% we has optimism margins clear were Combos, of to take as inflation at we return nearly impacts. currency target dollar challenges, trends growth work increased None were view and to we highlights one year, market previously. further this currency gross delivered grew with than to at solid sales for fundamentally to for Keyboards these solid take or head prudent in There Pointing strengthening strategy and we and as Impacted Collaboration, the by our sure, despite down Foreign the and these our had rose in continued worsening quarter. We Video confidence the in

the affect manage until predict records, the can’t As the conservatively for adjust QX macros, hard can we just I picture can we We depth variable that just fiscal our evidence we but the will operating cost rates our have current of exchange inflation the XX% may change what return conditions a $XXX million performance, growth. combined markets adjust although, can’t through worsening to year, currency or sales but last or doing. the implementing in the stronger reduce rest we business them and And to year. conditions. short, to we versus about by reductions. take assumptions these of can’t our macroeconomic conditions, duration can said, our and at we overall current macroeconomic net with look business on Based to plans approximately that’s we’re we’re predominantly expenses and In

investment new this driver our our keep continue update margin revenue a future. target a us XXXX, both sustained reducing and products. outlook share in updated We an fiscal invest meet for sales provide the the into into costs offset our prices of to expectations appropriately key all in which the believe cost, that’s believe and variables geopolitical and year leading control take currency with This our we’re been raise and for us to We’ll within macroeconomic well of disproportionately takes fiscal We’ll our makes has the plans it gains, as and be As doubled innovative will variable to account lower nearly added to graphs. we year the as continue XXXX, environment since All inflation operating strong to and you to profile. we moment. to own profit. ready exciting

think picture you from Before and the the temporary. is the me with financials I believe work it’s anywhere and medium long-term say rather the the but ever writing through simply more I’d let idea just future. Nate work now – for I’m and and optimistic or take outlook as that challenging, in long-term. can’t our the trends detail, gifts. anywhere we be let Hybrid dealing about of macro is as long the of secular I logical we’re

a in over to as upgrade ago, for hybrid footprints said better that Logitech will one. renewed is continue for debate video And months few new more I As are offices the and and favor homes offices.

in While market over gaming content from leveraging and will creators even more gaming and to podcasts of expands, And to creators grow. new the increase markets, home believe to and expand, interest or soft driving content two creation growth trend this streaming trend. gaming individual as will continues the use become the grows more businesses, the gaming and grow we and content the was From streaming competitively. producing of content long-term people the cloud socially quarters, over gamers, past

continue that on businesses, gaming largest and business to to new remainder the growth, collaboration, video products long-term product of series throughout to launch across great Our run going the mean? we’re our will continue but year. What C&P So the short-term. teams a conservatively focus of does

and these packed with features, enhancements and lifestyle full at design of expect – consumers past, be innovative work critical the to play of enterprises. the features both to products in with innovative As can the you

turns for from as a just operations Our continue diversified. reduction, turns. to team working trend risks, and to costs much our cost more be components long-term flip and outside and vendors, of inflationary type A transportation always tipping hard supply the mitigate set We’ll to diversified routes chain will manufacturing it optimize we macroeconomic source diversified the of and the finally, China. now as and short

down improve continue globe. especially on next significantly teams, year. go-to-market sales this and video to We’ll enterprise companies with market project we the across to enablement hybrid align And out create maximum do fiscal Our for go world. realities their capabilities and few as expenses expand bring this we’ll we’ll our focus teams And appropriate the to over the workspaces – refine offices, all that help effectiveness this, we reconfigure we’ll go to for years. the will organizing

X% form and dividends. you shareholders development product to Our our can capital allocation just commitment in And We share good and for of growth firmly one remain were our And in capabilities, to sustainability to place. by companies M&A world. plan of in and of the in of continue. Investment turn expect repurchases sustainability driver is the will finally, EcoVadis the top our as remain and priorities returns design into accretive for capital unchanged. named sustainability to a

call Now for let performance outlook. me financial our over the our breakdown this new and to of Nate Nate? quarter a turn

to Keyboards a last until Thanks, on rest QX, Bracken. Video $X.XX prudent profitability. sales & Pointing mentioned and Bracken factors about the offset half updated pressure while Combos, growing one We reliance unfavorable flat minutes outlook. And last quarter and freight consistent X% pressures. external Collaboration, we impacts, we environment. rates macro and while net I’ll pricing we fiscal to facing compares down air walk were of spend essentially described to year tough QX rates I and year. through our favorable. the reduced shipping that our more managed XXXX In litany see after margins perspective may the on pressured the need trends grew quarter XX% become these that these did sequentially economic or few Devices higher you the signals that remained in and of environment. margins. in billion increases, and our quarter cost of Gross then the despite be on currency help It in

be year. $XX expected, Operating expected down However, was as versus million, as remain. an profit QX from doubling QX headwinds operations negative lower these margins $XX will anticipate million and year. of we also Cash last last was than improvement as after QX

of category. and We XX% the some trends down globally. a and with while the momentum saw PC We and webcams, Europe, from grew quarter, in social our grew systems double Video Americas Let’s our room ongoing sales Creativity share. sales which these headset Productivity, reflected the products core and categories. results We saw PC outperformed Combos our & and geared as and toward declines series In last both gaming products. for to demand demand were and in in offset continued X%. Collaboration conference console Asia, gaming. peripherals gained than and our quarter during market market offset business-oriented to PC of cameras across of however, by weakness Collaboration increased double-digit gamers digits X%, review professional Devices Similar and gaming more and results in Pointing part X% growing introduced decline are to new up product consistent Keyboards the solid Video

series support and an customers. two released Our mouse, added our upgraded a line master mechanical enterprise combos and keyboards keyboard to of line we also

constant quarter highlight productivity, our work. sales products currency. gaming, in XX% flat results collaboration of the gaming Taken of and year-over-year video VC performance categories, together, were our and and the net hybrid in our trends creativity secular of these this and Sales exceeded addressing total

exclude these actually categories Russia, you If X%. grew

categories key We performance have to that other directly these in opportunities secular as Bracken the highlight well, trends referenced. areas growth I that of the strategic wanted but address

and China. declined. to sales Through were in nicely largely in Americas work Pacific we regionally, from COVID the recover Looking operations Asia quarter, grew our sales gaming, able the EMEA teams, lockdowns driven by while excellent the and of

and in balance. was earnings Shanghai bulk occurring see sales the globally, stronger of sell-through reopening why sell-in is track later however, than in timing which in those the are these quarter, The you our resulted For can metrics that China in our sell-in that Asia the of sell-through. data slides, the

our results, even by by and and of we weaker product by also hesitate and you’ll a said note in times investment design in reduced conditions sales economic that Logitech, QX. including remain Turning mentioned did would that I We’ve variable quarter for spend marketing trying R&D during investment that what XX% line is priority the to X%. reduce reduced increased warranted, given we that development we G&A expenses, and last wouldn’t marketing We expenses. to top X%.

not nearly offset reducing driving are returning with align we fixed and including for our from the our headwind ambitions. expenses balance every growth that the million a to business, We capital longer-term unproductive and actions channel. aggressive cost freight all product efficiency through can’t approximately our we but spend, share cost, supports $X.X believe program. in billion or in done predict while year, our our taking after cash our this and We we we are repurchase our investments spend We eliminating with investment $XXX sales, are ended sustaining quarter in shareholders to of go-to-market

in a our sign our million, to increase generation, for Board we and of our by shareholders, returning annual dividend confidence As our cash a commitment per approved our approval meeting. and repurchase another proposed $XXX cash authorization an September share increase in our to at to XX%

environment XXXX Finally, operating $XXX a discuss and on deterioration of our million cases, currency the X% we’ve an some in time, annual that X% external million. an continued constant profit economic Bracken seen year May, and of conditions globe. outlook. In we to to I’ll the across spend of intensified outlook growth minute Since in provided earlier. outlook updated $XXX fiscal

So potentially stronger when protracted profit factors, we number economic revenue new assumptions of we made and dollar. and a including pressure the sustained volatility U.S. this about developed from outlook,

million. level, $XXX midpoint, these about we revenue impacts versus actions to through now and are year Given million At the be Offsetting taking X% $XXX profit our last our for and full income outlook $XXX high these to unfavorable million, down The profit cost and total headwinds $XXX comes operating expect in between the year are to and including pricing. to and from we million reduced $XXX million $XXX OpEx year, estimates. cost approximately X% reduce full currency changes. offsets. currency down and considerations of volumes million non-GAAP profit and is be versus two constant from lower a headwinds prior that lower of reductions partial increases two At

open plans of the Nate, have headwinds through actions about So for year, we can questions. which we the $XXX full see you. profit XX% are we million incremental summary, of for to line offset taking. we in Thank

you, Nate. [Operator morning, JPMorgan. Great. Paul Paul. start Instructions] Chung We’ll Thank Good with from

Hi, Good to good you morning. see guys.

you Hi Paul, too.

Thanks for taking questions. my

you’re spot And in a in keyboards and of kind bright nice VC, kind a ConferenceCams. VC So strength tough in were seeing quarter. relative of some

for replacement verticals, you as this have conference are legacy you where across kind and terms there Any So seeing in rooms, update well? of Is seeing competition competitors? of of new demand regions?

was think number strong. but this very the mean quarter. Yes. think I in number digits mean it don’t I I put the ConferenceCam grew – the we strong script, I ConferenceCam double

yes. Double-digit,

was it mean of add And I work global particular return you about was it kind here reflects what have pretty the strong. Do story. The that, in And – it Nate? to a very you that’s were I much in want the West. would expected. that’s happening Americas, to to anything think

Yes.

nature if some I But just sell-through quarters. on sales. And back It’s bit predict of sell-in as as a remained of been pretty you of Paul. the stop the the consistent sometimes at the well consistent, think going quarter start another several was look it reopenings. to has of sell-through, net pretty because sell-through and little the tough actually double-digit

And buybacks of from over you. pace similar the there? way Is increase higher quarters. so Thanks. opportunities separately, today then pace about that same been over XX to valuations Got in you the next kind a are quite seeing your think on has The pace. looking last the just the more or capital allocation, private four then of market right And it? authorization where at more months, of to seat, the maybe attractive elevated

Nate. ahead, Go

just we’re to take We and dividends we strategy really it about a business. in And But gave think seeing Yes, still then repurchases. invested think the from capital option me I approach have as consistent around would right? Paul, increase Let think allocation, about the prioritize there, is really, repurchases. our the buyback. Board you I to balanced on this us the share

and repurchases recently look FYXXXX, billion going I dividends, XX% that In repurchases, over time been the continue share cash, and back that back to confidence, towards point, and think if $X.X great have several to bit over share it’s we to more through we’ll yes, last option. roughly have XX-XX, returned weighted repurchases. years But your fact, about think you to generate about we’ve little that’s we to by shareholders a

add. just I’ll Yes.

all, giving the of thankful increase good to First for I’m really program going. the really the Board about got us feel I buyback the authorization. in we’ve

been going really we no before. very M&A, We after standpoint stopped on down we mean right. did never a come available. across of M&A. In terms We’ve But from you’re valuation nothing us doubt have whatever I the aggressively stopped saw – Board. there’s that valuations

always and we’ve – a lot got activity activity a we’ve of going now. So have got we going of lot

going So it’s let up. to not

Thank Paul. you,

Thanks, Paul.

Paul. Thanks,

up, Good we’ll Next Citi. from Merchant Asiya Asiya. morning, be

Asiya. Hey

good morning, everyone. Hey,

Good morning.

current the through understand you walk X% guidance minus that to just the the function us the on. can I And gets? of Is in? that kind Or through categories, guess suggests will question a rest for question, big of that great. you minus the A it Thank here it X% how baked if walk us easier of you the be year? kind Is that help worst It if are categories, makes if guys can you is, and that you. would each the us of some what’s environment. through comps sense through improve from of can this – in of the providing, the

of talk in I’ll part first more you the come don’t that, why the at back Nate, and take and categories. then about

at was can categories. always you Okay. it it think Asiya, can I’m year-over-year, with – about to if you going I get you the think I quarter-over-quarter. No, so just start year, look

in will about it we softer mid-teens QX outlook historically. sequentially reflects quarter-on-quarter. it’s an QX think thought from kind mid-single the QX probably of what don’t to reflects And yet. bad it about the explain that news seen What of be than been a sort digits. of increase we see the to bit every little on has Normally, that outlook try growth, I that me to is we’ve how the bit you Let

full not in the then saw some we of is see we X%, really the the think of for of we the the think and about before. has how X% to And of there back same that QX. a the that range going half QX the is there, And if that’s year, you that have difference about from spike the to the continuation trends So sort year. holiday it

end the at than So think the of little range, is low end I of the at the range. a high weaker holiday seasonality typical bit the

kind in a seasonality get normal back the on seasonality to of QX year-over-year depending in return of to down half starting midpoint, still typical really compares, weaker and reflects the talk in is on just half. outlook to That’s point to that the back than And year, normalcy then QX. some our then in at which reflects the you what QX, range seasonality end weaker your We’re the of than compares. about comes normal to some back easier the it

that’s think about how it sequentially. So I

jump add in, just categories, I’ll you can Nate. Yes. back

think is I this keyboards. mice business, from what – think we’re view see going the pretty think We you standpoint, quarter. – to a we’re to workspace continue as category our I and have we good a same about

bit. We’re constrained a little actually

mice, which We’re keyboard the still mouse business. constrained both little and shows bit in the up a on

be VC expect in pullback. We going to think to think us. stay will a continue business rooms, going probably I gaming be think business will And good We we business going to conference it solid get. a it to think rooms So think course, continue thing. conference a that’s change I don’t That’s that for we the the pullback. enabled. of pullback to are don’t is big

year, This Day. Prime Prime finished just we in said, Day QX. that all Now was

was year QX. last and – in So

think, versus Day a Nate. up year XX% Prime ago I was Our

a dollars currency. That’s the by that’s in constant way. So

of categories. our there’s in here. pullback all not plenty it’s a still mean interest I So

kind I a do at to just categories I think it’s at and us moderate of world, prudent in what’s macroeconomic the we’re what happening. really think But of reflection the that’s of looking for look our most future. good light the of across

my Yes. Keyboards of trends were I predominantly sales addressing categories those those categories those And four our mentioned talked of Devices, about in talk something to re-highlight grew Gaming, the secular Combos are Asiya, the XX% Russia. ones exclude the are Pointing often. that remarks, that you so net of Collaboration, that kind & we this combined and just quarter impact if prepared about, They Over flat. I Video that

that’s gaming the of So XX% with there. – right, decline, and in

So in you interest or it does very I indicate some if think is continued durability, will, categories, those healthy. which

year, Okay. CapEx cost guys know relative variable remains – that. been you still you Anything to at guys that high a million. guys And are fiscal then structure kind able high level, you last where to talked CapEx the fiscal at of and being for and keeping about why example? $XXX I the in manage on have

What mentioned I some Yes. here this year, you up catch investments before. is in this the see facilities.

been of invested Over we and have have as invest footprints. in the expanding count we or the people, as past couple this we’ve investments been our in CapEx making our head in haven’t years, And offices closed, year. need to

because the some So couple is predominantly year this low you run the years. last we but do been it’s have not new facilities, necessarily that catch-up a rate, of see to increase into

Okay. All you. right. Thank

Thanks.

Our afternoon. Kepler question Cheuvreux. will be Sauter good Good from Torsten, next morning. Torsten from

Torsten. Hey,

questions. everyone. two. have for Actually, my I taking hello, Hey, Thanks

million, are other to million that direct channel? US$XXX cut catalyzed needed? First, this enterprise In in is so, hurting sales non-VC deliberate extent I then what assume where say, by, BXB to the may, collaboration deliberate and supported has if can you channel also how And video And for if OpEx could selling cut fair you you if sales US$XXX words, much in I without products secondly, it franchise? wonder categories. other the the

come Nate, me we going enterprise completely force used fact, out to to yet. because focus mice, and the I Boy, take really to not in on been, in would we’re to don’t really say, business. organized at the good the at the ConferenceCam. take I I of Let direct say word has anybody’s years, really sales say I’m need second enterprise The mouth good would first to you And let we sales mouse one, that’s the I get ConferenceCam and hear force one. much for changed. want

I about. build to sales where we’re point add that ready I the feel to we’ve got feel to enterprise at think good structure now now it. a We’re where force like I – And we’re big at

the we’re the business. So through taking days our of early But very still sales are there we for in early days. rest already, very advantage it’s of but that large seeing of

that year-over-year spend on And our it is We’ve before. is about OpEx then on question to in plan, your $XXX OpEx, million. reduce talked

and cost, past it but few in Torsten. As years, in both variable fixed we’ve we’ve of the the invested invested over costs, variable majority actually

Also, time I in So about have prepared probably of portion sales. the we those expenses, our OpEx such been go so those mind, keep spend spent we’ve think important $X to We is billion we’ll and execute cost not this reduce it’s for of biggest in like where the company. plans. a in

And so looking of all areas spend. at we’re

$X.X I look that opportunities. efficiently, there’s spend sure and billion and So after make wisely spending at for go we’re looking really and of

that it’s and in difficult still cost to where optimize that to it And seen pressure need sure spend it. cost of but all we make you about we think to we’ve this sales, reduce and got is environment Now different, it, uniquely.

So we’re of on just not piece one it. focused

all at of looking it. We’re

clear. Very Thanks.

Torsten. Thanks,

next UBS. question Joern from Our will Joern? be from Iffert

Joern. Hey,

Hello, Joern.

The allowing video. not I is host switch my Hi. on cannot it.

you better underlying Maybe take may. to one for can the are the What have question X%. and Can start Maybe that with the I’ll us one, ask volume minus portfolio, read what I of on my trends? this question, is FX is, the What impact? understand if is I So price the impacts roughly to we again the impact? help acoustically. X% questions please, just first the guidance minus

Nathan?

minus midpoint midpoint constant to volume to straight the X%. midpoint, Well, Sure. plus at and went Joern, now were if you the currency impact, X% you will, we if

itself think a by the there’s currency about of So can the X there, increased you as impacts impact volume. And about excluding as currency, points. swing then X-point

impact. about year. So we X That’s currency gone points to had now X-point a for the

constant between is currency the expected versus X-point just growth previously. dollar points and So about be to spread X U.S.

And versus volumes? on pricing

Yes.

my volume profit, you I flow in cost impact the mentioned to and – our about flow one of this right, at U.S. if kind of flow big prepared that rate, if So currency it’s down remarks, through a of high you are through primarily problem goods – that to of through the problems is in very because – dollars.

So when we through have reverse, the Frankly, things very an favorably unfavorable if high is at profit. it high rate currency a impact opposite flows very true, through to operating profit. to flows to rate

currency So the to down high because on that it’s reasons rate we’ve think about be moves taken profit. do is that. which line. points, through of That normally, pricing you a flow-through, to would $XXX when of can some strategy very of flows why top currency our million That unfavorably, currency about at the X one pressure actions

mentioned. you’ve the offset the combination which more got of pricing those traditional offsetting help then taken through. And million at some that We flowing factors, of demand taken we’ve I also actions that in that many macroeconomic from more it’s and OpEx of offset So but flows to that we’ve a volume that. X and are and weaker currency $XXX volume volume impact can through million, impacts like that pricing rates, of I mentioned, about actions $XXX those side, flows demand through. points, well the of some But as

Okay.

really incremental from the you recycling on EBIT. is from, recycling $XXX savings million coming $XXX this cost exactly please, clarity? non-GAAP this provide savings of Can impact question, examples? on million negative more $XXX coming to concrete Second million or us help out the Where

Yes.

got be million, other is $XXX very the in make So I so We the to the on our little and will impact know easy million measure. mentioned, those reductions. a We about that pricing. pricing. the the those OpEx increases later year-over-year and volume the from $XXX what that put rate is. capture where but We’ve OpEx looks The of is like to in million are forth, what year. all three-fourths assumptions about $XX some

looking is. similar variable talked areas But will for marketing we’re I to about. as of expense, there’s on the good and the visibility mostly quarters lot to have at So actually. last other think reduce, But and about a come come variable talking out very what few OpEx pretty of will again, out what we’ve that that of the plans two we’ve variable that have to side, been primarily

And the of I last end sales markets. mode last weakening the have materializing open the is about and may, see gaming. a when if trends trough you terms stabilized speaking the And know for you it’s do in months over question, couple do declining consumer after recently example, the that gaming, in of or exactly not still

is summer at for know time, you what you were or except I last didn’t anything – can Europe this on traveling, of would say, if know I because in This interesting. whether but summer, it’s maybe we’re in middle the I you’re I doing move. is the do summer. the everybody can’t don’t I everybody remember China,

in gaming. It’s are a market. – say the right really read the now gaming soft very to So tough I’d trends

in and come just think back picture. they when fall about it, come you and a when Now a have back the very That’s or people you’re you of XX-week if three it. traveling weeks summer different two

this It say, the we’re extrapolate reality right really to market I the a that in But is further think in as rest key would does seeing like be think we recover? the I will question us right into be year. the down to of – it’s we’re summer gaming that the hard back that what So start the I going of for to half now. going seeing the really happen from the probably of to to to what’s year. have summer we’re middle now for And is, to the down recover. significantly going And year. And when it’s get will

a All Thanks right. lot.

Thank you, Joern.

Thanks, Joern.

Our next Duval Sachs. question at Alex. from will Hey, Goldman Alex be

Hey, Alex.

the for course, line would out lower group like EBIT altered well the you that loss question. put revenue. every looks around lost closer the If XX%. as margin dollar to guidance we look But today EBIT gross of be $X.XX know of for much at that your assuming top it you’re very Thanks guidance, as we

in so quick So a if little assuming? wondered you’re is cost taking I And of out? that, it’s expectation have drop-through we wondered, you’re I some you clear How that? because talk high could pressure And that come to inventories? then be How an pricing you’re baking out thinking should follow-up. just about the obviously, bit a that given so to further as I

The primary a through about Alex, $XXX pricing. pressure line that’s a said on because right? top And offset portion XXX% reason, is excluding at incremental currency there’s of flow-through see of can some and impact that, million gross, the of almost that of higher the that. is why again, flows we I you’d currency big

you about So use you think an is when the currency. real reason think be going the you high pricing But can the offset about which to headwind as to math. the to want why flow-through

that. than EBIT some with have obviously, guidance, been significantly be would still your also pre-pandemic. at and level Very clear. even appreciate asking, new investors I the higher And then revenues a

the more where to of moment? these you for your Is that reassess are of prompt any of about to trends sort endure pull anything the reversion you of mean of of structural a the at forward you and So that the consumer you concerned of sort all extent signs are long-term? that would seeing kind risk beforehand? moment, will thesis these are to more categories about at a demand at what sort Or were

the are Right kind period Yes. structure suggest that of that temporary This It of slow to temporary a we’ve wouldn’t down. see would I like trends adjustment anything this that our feels secular seeing say, we period. period. – been going now, or

each hybrid but world, what of we’re we’ve you yet. their and around of of If And one doing talk many through and we’re we one-tenth of go what our lot us, including of think strongly. kind you still them, our have it – around is number trying We at a looking so trend, the are the growing to to companies are going And enabled decide just really and do? I know companies world, really landed plane the still ConferenceCam rooms them, the we’re only now. footprints if work conference all to

them. looks go the of replacement what on increased upgrading that significantly rate, is a part pre-pandemic of to the It’s sheer it it’s day long. And If workspace number workspaces, more it lot has kind you’re more of kind workspace into home like did of there’s upgrading just all rate because it just so living your with of the you – a you decor, replacement lot dynamic. have a different do,

to you’re in working – the of in going So office the too. home and some be

and is there’s space. So absolutely more into of gaming. gaming, compelling below. business. because what or investing ever be things. coming This gaming the in the the gaming space And confidence gaming business, in – the then companies generation the like They’re that’s Microsoft and our creation and long-term gaming the more a as much meta There are very are to as on engine, is new strong who large drives very, of going growth content, investment

of – are you’ve So happening totally to think trips years now. very it a right doing definitely do I lot people gaming. spending secular other should now had But I in what’s money And very, be don’t think a got getting out. and of back you’ve wouldn’t overreacting trends back two their gaming anybody got the again things strong and I will think out who get continue. and on and I

Thanks very much.

during taken year. then entertainment. slow And looked is back reopen we or at went another see effect, declined now. gaming that strong And – And or on categories probably of some headset I years down FYXXXX up all from lot we what plus have other thought past now take a would. of if and the the use demand down thought certainly, XX% so seeing see for back but might reopen, right? weakness Analyst on on as flat also I We I’m substitution comment releases last of have of in buying our they the other hybrid year-over-year really that think year themselves. the last of we’re of some them couple – year of thinking gaming and gaming probably consoles headsets listen, Day market I really X%. thought the as like been see lot. to We’ll think be that our But that of there’ll after a isn’t The growing business Zoom People as they hey, and I right some gaming, shortages was, I think that’s non-gaming that didn’t headsets, from market minus A I we know was well, originally, what Be in is ago, kind be is like work. things using I we due the headsets. seeing using bit. years shortages thought title ended pause to On that clear, things forms side, – but couple a calls specifically, at the the Alex, particular, this a and But think and in things console well. timing

see to in drivers I for gaming I industry unexpected But fundamental mentioned, strong. particular category. the not So pressure, Bracken of reasons some think, the the think remains that

Thanks a lot.

Sure.

you. Thank

All right.

up be morning, will Woodring Morgan Stanley. from Erik Good Next Erik.

Erik. Hey,

Hey, good guys. morning,

Nate. Bracken, maybe then one pose and I’ll to one you So to

you into markets of kind a to back new adjacent that the kind accelerate goal move you mice, that kind of of to kind or about a firmer markets regain think work the had, all you’re we markets enter to once of to XX% you keyboards, Obviously, a in maybe desire should As own How coded where of post we further investments hybrid obviously like request establishing on environment. all get hold headsets. number this X% growth the or your webcams, music into share in range. can

about how question. curious Just think you that

Erik. Since a I’ve categories We’re little always now. dozen over XX categories, think new at looking over to or XX about been I from gone we’ve here, a

go programs augment the try either things categories. in replace to start to the We So – accelerated really makes development if that seed acquire so new something try all into and got to time to it. it we’ve first to and sense we’ll then

So is a in of the opportunity cameras screens. to category the I in good think that. gone space. room And bit us. done whiteboard would we’ve enterprise meeting I doing We’ve we’re and that into cabling, for quite going a into expansion keep actually And say,

we of pulling particular, think I speaker the business, so continue same really business – And whole I see And to like on on and look across Bluetooth in point. way back business. us the talked business, at we the just the The we’ll about that, music fundamentals down to didn’t your don’t that. still because doubling you’ll love we feel that that. about

of I we have in talked we and mean, opportunity And here, spaces have of sale. We’re growth guidance us ways. haven’t keep for on a workspace under everybody I came categories you and have and creators But still But kids is phenomenon. marketing conference XX. marketing. a now super aspirational to of growth disproportionately in opportunity. about. never long-term board would really strongly of just – the where I good we that in are they’ll think of actually about we across It’s our it that’s will it. the keyboards in dreamed a that’s not all I say And It’s still we many of selling, of mice what’s look – rooms future themselves And directly, those for the be just minimum at, we other see a influencing you current about expanding. contributor When of many only think the news most be large transacting flow – is is, course, we’d don’t think And but that the thing the us. in the exciting. of lot of deliver or streaming would mean our kind great spent creating the the already. are age we the talked time that if fundamental discussions can space what I talking fundamentals gaming, ahead I opportunity and future the the the have of

So streamer want to many be people a creator.

And spaces. of growth lot all in a them. ahead of all we’re So there’s those in

Nate. Okay. Thank you, you, helpful. That’s Maybe one Bracken. to

XX% it, in down, and So marketing the quarter. June call sales

growth sizable variable discounting containing that costs night? outlook you pullback to way help a chunk last fiscal of sales alluded think How can XXXX on your kind which the provided about and of marketing, your in You’ve that. does impact discount need to assume, of you those sales us And of products? kind efforts of is any I in a impact net

levels strategies. and may where which and having to we’re on comment that’s some We’ve this unexpected it’s the with even little really of preference you to the this drive our not year. drive and during do marketing at of continuing our activity really promotional. lower marketing one, that bit promotional Sure. a pockets, drive Why sticking with marketing without investment increased, to start want the we’re has really – long-term I Bracken, strategy, even is seen increase don’t And that’s to so for to brand too marketing to value be our strategy, Erik, been Logitech but

– on rates pressure before, gross some reasons I think, of that cost now margins cost for down have the we’ve structure. some that’s again, increases, the as temporal Now currency, I come logistics put about talked think, more increases,

going invest is volatile we’re some sense that to demand to Is address spend. I in variable place as in think makes weaker. and now with that don’t much this the in of a it marketing so And environment. right cases, And go lot the

road innovation think the I it that, to But on put pull back sense you in makes we’ll marketing drive long-term maps. and it more So should think investment to think makes environment, probably as sense. continue that when this in the about back in it I

slot. would think it I Yes, overinvest in marketing like, makes employee the you sense said said, Nate. when themselves have some I retracting everything are don’t markets to

to about pricing a pressures. more wouldn’t guess, And of about talk some get me mean, of as you’ve promotional that. result signal that Yes. heard as try that we’re to think I those manage to to going having I offset a I

And so remains think that focus. I the

inflation currency, and pressure. drivers cost In year-over-year look were fact, the things margins logistics this down drivers. biggest not year-over-year, promotion of year, that Those at one rates. margins margin was were of increased drove the the I if Really, big

bit. been historically, longer think cost relative still stopped are I slowed. Month-over-month, I so Logistics The they see down those but increases things some quarter-over-quarter to they’ve would where levels been. have increasing settle like have definitely rates very And no high we’re of to little say, increasing. they’ve at or starting month-over-month a

those hopefully, on some some and out. bottom gross those which to we the cycle, economy see would this areas, as a had costs some returns through that previously favorability margin. we things continues in us So go of see lift the we’ll to can And then nice give

add one more thing. just I’ll

marketing track right now, I in think less directing like games experience, your effective. markets just is were when my

think is He I and to will as we’re now. don’t much that’s you what temporal. doing spend come So want back, this

we’ll we So again. come have does a the but back, still probably spending. marketing of it But will lot marketing increase

these going even lot numbers, with spending be of market. still to to be a We’re we’re going wrong,

Yes.

are should making at P&L. be I spend this model roughly help still to of And think the OpEx seeing to lower shape adjustments revenue think and manage I that And business the these shape too, with Erik, sometimes We outlook and talked about to we we’re area. the sustain P&L. the of about what’s really the us these XX% OpEx on of same sales. run the reductions

R&D. in You’ll investments sustain see marketing while mix a to lower of and sales we continue

If could one sneak just you. one in Bracken, for I just last

a me? on Can you of obviously, base just you manufacturing it you any earlier what guys. But diversification a big that maybe there? supply of remarks a be for helpful China. mean in outside elaborate that, mentioned the would that's details bit You and have prepared Thanks chain incremental by

total had tariffs we – than of outside the Yeah, when we manufacturing years I a happened started our less ago, about, China. of absolutely. X% start, think had We we few when

up at set good really but because chain our factory, flexibility had we have a of moving didn't and that things really was there. in out So we supply

we had things things move move to and to we quickly. ability even ability the though in the have very and So in out, didn't out

So working been we've that. really on

XX%. to The in for of XX% say right to activity the we tariff tariff big during post happened of wave work got the of the about middle kind first I'd

things. also better get Our positions goal will only not give other flexibility, case in closer to was up And tariffs, us but just cost that to XX%. and of

to So about or want for reason. need China site, progress that we very move for able on manufacturing a even or making. to, high need beyond We're flexible. feel to but good we be costs we still as geopolitical We to be XX% we very we're when if want either the to

Thanks guys. Super.

you, Eric. Thank

Thanks Eric.

Angelov Adam up, Next America. from Bank of

Adam. Hello

Hey Adam.

Hello. Thanks for letting me on.

the think one my further Opex from to flexibility revenue you do you just so most questions, worse I through me gone have outlook If please. cut we've if needed? of guidance, than is think your

would It's There a about just about think Opex, is always opportunity. I I $X.X also again, Like I I say but think would would said, costs overall. well, billion.

think different, you If number. but it's big costs about is a all cost again that Opex and goods so sold, of

it's If you're inefficient $X.X billion, million. on X% $XX

time. majority working worse, tougher. going not tougher revenue's that have captures all edges, We're that for the the to it wait outlook of mean become today, business around to we're decisions manage you gets things try know, outcomes, make some going at it the and to our the the the out but we'll you think will little more a cost bit always out, find take long-term. but we're get but I I certainly if those our on but the worse, to things if for environment, So

for things do to the health want we sense company. So long-term the that of make

Yeah. And nice add point. a I'd

I the way business to size you have any think adjust to the the think, of is I business. about

just have it's You to, a must.

happened, The question going it fast to to not how think we we we'll face is, into be it a happen, with of do we? going did that's question if will. if that but will We deal it's don't it so but And and it. can

Thank great. it, you. Got

Thanks Adam.

Thanks Adam.

morning, Our Ananda, Good be Capital. will next from Loop question Ananda.

Hello Ananda.

Yeah, heads into when I for Thanks taking Nate Thanks. neither on. But you. will here Thanks Hey, Yeah. visual just man. question. give guys. good good. a so. I morning Thanks, yet can jump hope let Nate here, guys. you're me up the go it me let

So if I could. just two

the keyboards get you it segments. up to process your I and think one or love behind made of mice Bracken, then that. thought hold And continue about Do to questions up? a is first The expect I well, mention to actually was to would follow the you the remarks have prepared

I we have. have comment contributing that that guess things to several a I that belief and

experiencing office it of many awareness you you that, up. in One are the I like to go we're And world, category's when the And hybrid I away is be not dependent. a going still also think you're go a into of and week think dependent them that. a on It's is probably few days to today. going the

products lot And seeing have demand it. much stronger We launch before. we interest. We're so there's a had new than of we

new As to mechanical launch well. product, we extremely a a be keyboard launch we

think So is key that's dynamic. this I one that there

to back heart started business, to and The as second and went of one really if mice mice this a soul and business go the is, you then keyboard. it

very vision, segmentation. thing. We have whole strategy very, an the good feel incredibly execution, the about good and And strategy, innovation a for good engine I the just the very

and They've because I in So about getting destiny I came we the a I'd secular were excited own I been a when these secular be company, almost else think those categories. better than Logitech, we're anywhere joined categories thought going Like decline. say so said, it's operate. I whole to I yeah, long-term our the of more control I'm actually And growth term long to better. trend in time

keyboard on tight market and were too. we supply in actually, mice we of the Amanda, areas some

we have the more something there. So the If we've we quarter, I it's had this. there actually recent case think a if got short-on quarters our been that's cleared I mean, and every been supply, little always results the could in better

And really a or so web-based how force broad, have a you sense like, do mentioned sort much know sensitive goes upper income sensitive. I have it's environment how their if middle because employment's sell, sales mostly is are Bracken keyboard and little is how sell class, Well, for in of you a good. less like sense, and it's channel guys, used as sort you pretty do any any super your secondarily, – much business not then but do mice you And enterprise sales middle earlier, guys like business even inflation this for so less class, folks of much context? of

we So don't employment have an issue.

have income. have still an issue, discretionary so inflation We

Okay.

it's So hard first we question, it's it's measure, guess, you a really, number about to of yeah a – quarter to would sense, but your kind answer it's have a some probably as we're and bet there the never done we're a quarter. We've can market of to go-to where you job underdeveloped the that through enterprise attacking particularly really focused great of in now. that workspace

going we're one. to So work to that resolve

it versus doing also with In of terms economic that marketplace. less. creating an business, hurt end the and the low not mean of, for, the the most kind that I we the is high you're if mice health economic day, well was is sure or a or of sell a on remind for average jobs people. lifeblood think I at it's your job Yeah. $XX of going all two this other your in And if once. $XX you especially actually or end just a and stuff. to it's side. I availability just, that versus customer talking lot and don't This who's I'll people your got the hands making hardship

why mice negative too the going and not we that's it's sensitive of on and not to mice lowered us when the discussion think too are the economic be, environment. don't hear where So reasons to keyboards. don't sensitive our to I you we We're And now. keyboard, of think one super I revenue's especially

to okay. recessionary in I think do even a going environment they're

How I'm one segment up that's hold I ‎Brios, That's those the quick here. then quarter. the collab think the video the going helpful. webcams And had webcam? high-end to during ask in more the one it's is

like, they the And what's sorry, for how up. the outlook held And then hold what's them? – also

back camera in on and have general I get think Webcam that's people shocking. just mean, scrambling camera. and Yeah. really I most get people a found way think I now way pulled on not too to are to

So the market pulled back.

ago. it out still versus years way it's was two what Now

what about but So in to kind to of want you. innovation don't think and going into much mislead we're do I the I there, growth business can webcams future. don't a today excited we we're strong – category we've turn it's bigger a got

to – I good going great we'll think it's That's and do and well And I to share to as there, we're We market happen one got I that's but how wouldn't we'll a business bellwether We're – we've us. gaining and there. thing for but category. do. for one be for going at a gosh, point I'm attractive focus to think it's And not solid innovate heavy know going to there. look market not that is there. really us, going say, what share to our a

I sale. Sure. think of really point about essential Think work it's is, But think about the it's rather part webcam entire workspace. a really the workspace.

is you're so before. doing And I the video what more webcam than was as essential more it calls, definitely think

of that because workspace. So – is of highs, back entire it couple that's The more about off think last Certainly years. bigger base the I sales over strategy it's but is than before the the exciting. pulled those installed about was our

of we keyboard, do entire camera, it's webcam's business personal the headsets. the and that. that it's control, it's it's mice, web more So workspace How gain the the a of more part

Absolutely.

also, are like that also classified Did collaboration, segment? softer the they reported high-end the webcams. in webcams the And video are were they

reported segment? similar Yeah. not Not much similar. but the Yeah, quite, as down to quite

Cool. guys. Thanks

Thank you.

Great.

is question next [indiscernible]. Our

Michael. Hey

webcams, one sort capital actually, all shares? my the you there just the Hi, it need. detail. allocation and when second it's and canceling first creator your Are questions what devices on you is then think And employee the question. type add-on these other taking or to the of those and on about make And economy all buyback. shares The keyboard a to to economy guess do such are the the really have products? is just order three, question. and or I similar an considering them up that do creator is re-valuable I you intentions them Yes. or is mice, you the people going for headsets. first those all of Actually That adding what and disconnect for be with sort you you one in or of thank come two on mice have between some webcams, How keyboards, shareholders? of for shares other to will said

next to jump allocation want you capital I'll discussion Natt off take and one. the the

year, employee of have we cancel proposals general a anything on own some. Sure. uses We is could proxy Yeah, of for We for still percentage don't some take them, grants. total. could shareholders Michael, there's the small several but some this relatively We that meeting. at to the

So Bracken, you the general the yeah, it's message to or But not to general second decision had the in really me take one want right I a take we past, today. do want face it? – is like say would now. in you do uses we've

we've think, the critical that small. sure very new correct got story And It's We've buying No, going called opportunity small marketing camera one is opportunity what those for really that the to business. there are creator long cameras And see a our we've is are today. well, big that's launched what and probably difference is, positioned is placed really people we right then I saying, described, having what between why super very, a as which places. they is down? economy. what things just All really need you audience. And and and think for sub-camera we're getting are great you're the are I you the got And what keyboards in a really make term, Mevo, growth said, mice big.

in that small. think, many super how interesting feels lights, know people for sure to and are we need, see so like launched very, a example, looking very We've one limited that I they creator far, and we're it's so just product launched and far. distribution for light they making very what

Michael, a think to opportunity get right portfolio, to the positioning just I sure think distribution. keep working got there, I the right big and there's make we've we've So for the right those

sales did be perform? And well add-on did the the drag happened would What microphones space Could there? Thank down, what in you. there. actually, business what the in Wearables you give a Okay. how on more bit and the how went Audio & – detail

you talk Yeah, I'll segment. about the cover – to would particular. microphones want overall I in Nate,

Sure. question Well, speakers are your in or… you including mobile Michael

Overall?

wearables? No just the and PC audio

I Yeah. mentioned headsets of think kind And that I and in headsets was think on one I overall earlier hand we there had a market. tough

have the where an weaker on comment was but So and also that microphones coming that some to was I let pandemic decline. and was and area other very of was pieces again up high that share, drivers beyond for you there was would probably Bracken last think new has of, not then weaker follow speakers period of sort the And as there. to demand. launch products be off we above the made decision but one probably a where a I'll market a normal biggest say demand creator expected. microphones PC Microphones with decline. that I'd additional then been some we've one, And year-over-year, the category that probably of piece category are Jaybird in declining

Jaybird the you on want mice? to decline in did well. comment Bracken seeing expected So as we're

mic just versus good as felt the than the growth pre-pandemic. up, business think their I dramatically was more still it's enough that who think during we desktop. said, The And by a on people Natt their XX% mic lot like grew wasn't driven Yeah. of mics, pandemic,

underlying very And that. working way just interesting it, that with and and podcasters, so is found have most segment, of which the believe around in creators, isn't But really you segment, their and as that described they business stringers healthy. microphone another the people dealing they not still in really it's were were I

Now it in that got into before. the pandemic, weren't of a people lot podcasting in

we'll spike is this So of big a the probably point to period come strong it's think growth you very see that's this But real we the reduction market, core okay, say, and down. I kind after get through where again. of then

is I and is think to in the going the road need for products streaming and streaming bigger. ahead bigger be

haven't And innovated so And that's about that coming. it. we're and we much in pretty either optimistic business

we've some talked I quarters. for, has gaming it exposure strategic keep also slower very Still market, couple mind, to the has Yeah. of in which been the think last about

Thanks very Okay. Thank you. helpful.

Michael. Thanks,

Okay.

Credit will come today Our Rotzer, final from Serge question Suisse.

good have that two quick I Hi, in everybody. case. morning, one Yes.

in very Keyboards& one you Collaboration, Pointing QX a favorable with Video is had mix Devices. First sales Combos,

gross the low margining margining product profit growing profit products high the gross So declining.

So margining it? not QX, improving expect Not as single but higher we now in we expect have growth in high volumes than can Nate volume mentioned, even but Isn't QX sequential. margins, electric to mice product, still wrong? lower high does gross high in in keyboards and QX? margin the product I'm decline than see the high we that and gross Video or imply sales profit where profit this So will Collaboration

category the is other Serge. And larger just We the that mix see reality that year-over-year in called margin saw wasn't the my think I gross as of I impact as other than I big out. ones favorable It are mix. bridge. category that did the just impacts

So VC is that I It's mix. story think pre-pandemic. It down was remains, of now gone. about still XX% our XX% think I over

in kind impacts. increases, the overall other are currency, it's those logistics to the the So company. relative of were size big. The the factors overwhelmed cost too of doubled most But the other rates, just

Fair Okay. point.

me second products and The ship how giving the world, finished one you much semi-finished finished will is is products? much inventory, are cost. high remind around the can finished how products probably you is not these days in or your Because

do impairment this so because in I'm place stock? inventory, on secondly, you the wrong some only this, you in then inventory, or any it's gives there once, if mentioned You ratio? obviously your of products are have the wondering the And wrong sense, your it at

just I mixed want you, understand Can sure sort I to make between your question of…

that. products components, The is impairment you'll ship then wherever, from products have finished that's that worse because then and an And finished I risk how first one say it's do fear because Europe much not finished could you to on way? Asia not and much to secondly, products, how that is

risk you impairment time on have there? So help could me them? is over inventory, you your what Can

say, would including I the think P&L I levels in XX many but growth have this the really last the at last reserves to that's been of of because over and think we've the I reverting normal selling, have we during taken those year, everything something reserves, over of impairment height didn't the thing, very of was every period sort pandemic months. look more quarter on Well, we quarter, some we obviously the

that obviously So come a or inspection make customers that sure gets very reserves the something to continues those reflected aging every moving in that and and things that that P&L. things all or that's carry slow from quarter are close back all

mind keep has business mix other to our is The thing too, Serge in shifted.

off talking category is a a right. couple emphasized. Which than a speakers, It's a of VC. questions, which – points category sales. just started It's was we we've de very now say your about our So different music

purchase, product mentioned sort forth. life much So that more holiday was higher much demand much so is the It a a category. discretionary longer a with why unattractiveness sales. business was of had model. VC Bracken And steadier of cycles that and

the shifted that. long risk think I things overall few like cycles, we're in holding different product what and years which which keyboards, life have to product ago, inventory VC, mice that was it business have amount cycles, is types our So than a the more of life more has of as long

that. to add just would I Yeah.

get look our also categories outside I one, not else, to I probably generally out – new many obsolescence technology's But like just have this, always think risk know while, be just, out. been risk, we it's Not any it's and it that one we discounted a little everybody you following you we're approach where to and it place in obsolete taken. if too another some much don't do. hyper saying in doesn't I that because of we're going it get have come mean, not and say need or us we And we to big the business category. patient inventory a have out. us. risk not we has we've but really of a a I'm that's look the for mean, you've for I'll inventory,

Okay. Got it. thanks. Bye-bye. Many

our Bracken Thanks questions. wrap That's final Serge. Thanks everyone any and thank for call. your Nate, comments? Bracken on a you.

high be you the the very forward about exciting No, we're seems I'm optimistic I tuned. now, the a engaged It very of to discussion talking last one, to time It's year another and another, stay an was you great Thank last really the much. Every world. We'll the again today. it. quarter And in in years. appreciate or first so, but from different four to look very future. quarter next one three

in spot. think great I we're a

everyone. Thanks Wonderful.

Natt. Thanks