Logitech International (LOGI) 24 Jan 232023 Q3 Earnings call transcript

Okay. Good morning, and good afternoon, everyone. Welcome to Logitech's video call to discuss our Financial Results for the Third Quarter of 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 Reform Act of 1995. based views statements today. as these making on only our of We're

actual We any or materially. could of no statements. Our differ update undertake results obligation to these revise

including find non-GAAP and statements results about in most and and filings. could our our measures release and also impact and non-GAAP information financial in of our with factors will between non-GAAP press Report discuss you We the Annual our forward-looking can and and a use our reconciliation GAAP results SEC, results recent filings that financial subsequent

as noted, These We Investor website. slides will Relations of as all constant between materials and our replay a sales. call our of comparisons year-over-year website. recorded is encourage net are well and you our for otherwise prepared this currency sales the page and to remarks finally, will are be in this And call on and review at available being materials webcast these periods And carefully. available and be unless

with over Bracken. to turn Bracken. the that, call morning, now Good I And will

thanks Good joining all thanks, and Nate, to morning, and of us. you Nate, for

a As quarter, fiscal and saw factors consumer versus disappointing. deteriorated Enterprise were in revised outlook. last net sales is our results compressed and our promotional our in demand year quarter margins you third soft weeks during resulted more were Those concentrated purchases than and preannouncement, typical. gross and XXXX

on geopolitical disciplined control: ongoing midst strong strong and the consumer and the P&L I've we continue. dollar, low quarters can and product go-to-market challenges Logitech these, discussed inflation confidence and of we a for past the management. world. strategy focused global macroeconomic impacting innovation, the A few what In

First, demand that during pressured our QX changed what our enterprise results? declined. So

delivered VC consecutive XX% quarter. growth this of fell quarters business X% and had Our

read actions. the Microsoft, banks have Amazon, headlines. and containment other cost businesses announced have Google, layoffs You and all

uncertainty. their volatility given resilient Initially are the increasingly of in businesses and pressured business, And that too. our is the conditions, impacting of cautious spending, enterprise face in course, economic macro

our The and second of patterns. change these sales in sales Consumer this promotional those in lower weak. margins. with purchases importantly, did were time quarter remained a in resulting that pressured intensity, buy, consumers consumer’s purchasing shift concentrated in higher was And

conditions strategy, variables the quarter this time. have of We aren't the models that we they macroeconomic committed of growth potential and quarter, current long-term the away remain the impact and While this even in over our markets business long-term strong third to changed market going place don't trends, the the view in business.

this predictable, And us volatile expect Because more return look at investment, Logitech. we I'm growth by conditions. fully to hasn't struck I actually economic changed. business headlines, less rising to what of whipsaw confidence, the if daily the I believe will consumer beyond support sustained

uneven, what works approach offices industries from I and of story to best return working industries. While is return determine still and been customers teams. the office has inevitable. to remains geographies. CEOs their to across hear familiar They're Company's hybrid the pace to work hybrid for different model across a

in buildings the Area work globe on hybrid no focused Bay a We're redesigning different. across is and and Logitech relocating the environment.

a out collaboration As and will rooms. we workspaces This settle in investment companies personal It's happen. their hybrid should definitions of see on just investment of work, question timing.

portfolio categories. our We're products. in also our than diversifying through innovation across will innovation great the have ASPs more keep That's winners Product we why matters The ever. investing.

of a is new defining the category products higher oldest we've into base systematically had Our segments, XX% ago our obviously business, than fees features. have ASPs Devices, quarter This years is range broad we differentiated with Making category expanded four across sure by Pointing as goal. design. this

financial in same R&D times, and Innovation QX at during and resources than the management invested driving XX% the development up while in sustain product have we challenging quarter the investment was our more time. to efficiency discipline companies this investment investment, XXXX. requires Few

and continue advantage press We to our are that enhancing product portfolio.

explosion from great and gaming today move And play be creation, People to believe The big trend. ahead. hybrid content of been trends work, video durable we've want everywhere, anywhere. our will to continue work, and of highlighting, that products this the free we enabler a

and Let currency, mentioned and declined quarter, sell-through, Ukraine, me was and share digits. We performance. grew mid-single in on provide Devices market I with our Tablet in this in spending Keyboards. Gaming, a prior little quarter's and excluding Collaboration, was the more perspective it consumer business weak Russia Video Pointing only

attach conference The mix of skewing the continued room rate per the number sales our sales conference we to year-over-year, In And of to growing, our drive higher, conference systems Collaboration, cameras. accessories ASPs Video per evidence higher-end sales which strategy of is is room cam units our drives of declined higher. services our to developing while room room working. and revenue room cam integrated that is

the mice, gain high end in In to market. fast-growing continue the keyboards we share and of

can you near-term? us expect expect conservative, last operate with manner, a us consistent You what So few should in disciplined the from quarters. in the to

plan that on million, by expenses XX% we'll well to fiscal $XXX of reduce Namely, focus track or XXXX. decreasing our goal. on to expenses. by exceed the We're year We operating end

was QX, For OpEx down XX%.

and are we in manage conditions. you We'll needs market continue costs OpEx be aggressive the Customer to as development, expect our market evolving to product on can quickly. on based us though. to You've us weaken, continue watched saw our invest

into bring operations will design to the to capabilities. our expertise, And meet have accelerate insights demand go-to-market to products flexibility customer market We and financial and this and we to engineering global cycles. and new lean refresh

before I to Nate. over it hand note final One

progressing search update to is have with CFO today. you regarding First, though an share search, well, we our our don't

Investor that has Officer pleased here to and Analyst been really years frequent Sustainability, announce seven and at our a and to Global Operating has Operations close Day. Arunkundrum, Second, Logitech. current here Head I'm our appointed for Prakash been presenter at annual is Chief of Prakash

one in making structured will short the partners ahead. road key for are of we and already newly In operationally sure many of him. this So you strategically role, long-term my know created and Prakash be

our to Nate will some results. With hand on color provide additional to Nate. that, it Thanks, I

Bracken. Thanks, everyone. Hello,

you walk me more quarter through in Let detail. the

results a XX% were Our concentrated in impacted QX weeks the down by and purchasing lower Net environment. $X.XX sales promotional consumer quarter to and This spending. throughout challenging were reflects billion. consumer enterprise macro

points. versus our cost decreased use shipping. Versus margins our the and three offset last to was three year, points of These partially and unfavorable pricing unfavorable driving XX.X%. expedited unfavorable was through eight Gross year points. by were actions of points, currency headwinds down also Promotions were inflation two prior

year. pressure, in operating from up expense. in by demand reductions and cash Cash year-to-date margin is versus operations flow partially offset was $XXX Operating profit flow was million $XXX million, million reflecting lower and last $XXX gross QX,

our console in Turning by to gaming. down XX%. products PC Gaming product Growth and our results was simulation declines in was and essentially across categories. than offset more flat

while down Asia and pressured. was Despite these nearly market modestly, only Gaming gained categories. Pacific Americas remain we declines, in Europe all share

quarter The single share. of in in were posting portfolio XX% was versus declined down down which room XX%. gained business-oriented Collaboration, Video and but last largest swing Video webcams peripherals than was negative cameras conference digits, quarters X% we our after And growth. more consecutive

of XX% driven but high market, low by Pointing grew of X% consumer webcams & XX% down the gains our pressure in end market, total share the we losses low market with were sales by portfolio, Keyboards in were and down Combos in Devices in of the end Devices. offset declined Pointing the end net nearly the year-over-year.

Turning we last Consistent reduced was year. versus down to with XX% last expenses. quarter, which our OpEx,

R&D to higher was ago. investing last remain our we committed Bracken million R&D development level QX invested in three earlier, the in modestly As XX% down R&D in investment mentioned our versus just strengthen to design And and than than leadership. year, more while $XX years product is we category

year, In expenses last QX year, and fiscal $XXX reduce annual quarter, the or of we that million expenses our approximately versus now schedule. year. full operating this that reduce goal by versus we one communicated XX% $XXX I we quarter plan will of achieved operating by year, for this ahead to expect million our last

balance throughout $XX share organization returning efficiencies quarter. to we in million to the and the on continued continue market a program, ended manage billion cash as We more $X strong will our the conditions. quarter shareholders of with based costs We focus buyback on a finding than

our based outbreaks items: revised XXXX remain three which demand, previously consumer than softer and financial enterprise related results; outlook COVID expected; availability on for may in we FY the quarter supply than We in China. recent uncertainty expected weaker third and to

revenue to year to FY dollar to US quarter, full XXXX full outlook XX% US XX% down The growth would in still down our be for versus a outlook calls year. to roughly the last dollar Our X-point constant Therefore, be dollars XX% projects headwind to weakened but currency. be revenue full currency year US for in XX%. for in

non-GAAP year outlook income operating $XXX million is between and Our million. now full $XXX

open questions. for the Nate, we line can now

[Operator Thanks, George. question Great. good Good Nate. Deutsche morning, Bracken. afternoon, Our Bank. is from George Thanks, Brown Instructions] first at

George. Hi,

Thanks Hi, afternoon. my questions. taking I guys. have may. Good I if two, for

interested the CLOUD detail your released provide how performed products launches, I'm And some at Can expectations terms has in you G season. it of and quite product met few not. leave Logitech I'll particular, that. out QX in a and that's holiday Firstly, in whether performed in of they on you or how

four that well we're the or we to next new pretty are QX would Okay. three on products to And launches overall, six in say, would months track. after I that. overall, I Yes. -- say announced XX launching sometime in our

G very a in particular, is The CLOUD, launch. narrow

it expanding good. launched we only so Japan. far, US. and now We're We're in the so it Europe into So

skis far, want far, us. say always George, good. a so on It's say, don't very of get kind to our it's tips conservative because on but the we’d track. for new so of new over would I So, so here, categories, category We're as we

feel really, our say, good And have -- our well mean, about with to generally and would just track. continue I in performance I in new a of innovation I products all really on insight-driven we our speaking, total. innovation pretty good is really

just then Perfect. And question. second a

the forward, clearly of Cyber What and could high quite demand Monday expect terms there from forward discounting beyond the pull level? in period. of Friday given going into a stands after a and level promotional Just some we at of forward QX inventory was going perspective, during Black

inventory in because think not I we're position the have levels. don't a going at to it discount, of say a I where we're -- Yes. would

fine, looks channel and internal again, you probably as quarter-over-quarter, saw. down came inventories Our our

make we're the going environment. But we're responsive to to sure

to I levels promotion the overall will you So be. where wouldn't commit exactly

our were I high think of percentage this particularly as and though, I that again. quarter, they expect a business wouldn't

Yes, George, comments just your on quick questions. TWO

an that there from the quarter. in that I agree was say wouldn't significant a standpoint, off anything really I NPI was think there with start. I to First, good in Bracken, financially

products promoted this then still we said, there. on up definitely Bracken So saw quarter. ramping more as discounting, preference consumer And the towards

going the say there's assumed think QX. we what Too to looks like higher be would I that But of seems some environment higher the sales. had promotions out I holiday early that of saw year, that during to here forward the that weeks the say. the with percentage next certainly with in into

Perfect. guys. Thanks,

George. Thanks,

Good Merchant you, morning, Asiya good Asiya. up, from Next Citi. to see

Hey, Asiya.

Hey, Asiya.

to Couple see questions. Good of too. you Hey. guys,

the in are on change quarter customers customers with been of anecdotes Clearly, with layoffs, any VC can reported side any is discussions environment First give -- VC? about there us demand as where their has around pretty for of there conversations if as the since going gloomy these you out these far now? things, still terms how but your

much as release, press March well, pre-announcement. you us are out, the And release for then the you that's secondly, play the of do really in and post And there you discussed when of press that the in quarter? were that concerns still quarter? tell those Nate your affecting Can expect Thank some the with kind expecting I you you. issues supply quarter mentioned supply or to March how know March

say, first, take just tone CES. second Everybody wouldn't Yeah, you sure in Nate, would see. to the right same. And generally sense But what the long-term, the I about real say, any take there's the and let feel was back conservatism. and I Okay. that setups, do committed came we I overall, I'll the say, seems got the from making speaking, I'll change the very I the do from one. secular – term would I they've I

the were some March, a sure salespeople, was saying that I hear really our who pushing of they future in companies it March, into spending date, think but were right I'm quarters. the And you could not are March. lot saying of out

the Nate, I China our certainly question to guidance. So that's QX, still And do think we probably in reflected go happy as assuming there. and to? it's we're want out or you take into that I'm

to few listen, it's learned over thing last a Yeah. we years COVID – No, all the probably little the I hard think I with think is that predict.

quarter. made disruptions a hard on So recover and expedited working assumptions through have But to We some that, supply could forth still freight, some be the I've on things. We're in opportunities some that. fluid there may those situation, Asiya. of so

a of really to not outlook. possibilities say, I We called range just there's specific So out. would tried a factor in the we in number,

was the that full us that the things adjust one of so And year caused outlook. to

Yeah, just I that. would to add

think most because New it's we're uncertain middle in just the – the – I Year probably the in the period now, we're right started. of

or COVID on and of it's factory rates, homes. whether our their went of problem people suppliers. do a back All our to that's anybody's guess And have people to back we'll to some what going getting

uncertain out I period few an It's unlimited next But kind the months. So now. will we're of over it this risk. settle think, not in

it pretty think, our in well, bracketed outlook. we I So

I the done think we've amount has increasing certainly couple of of factory. through that last other the the thing investment the over automation been in years

So, improved ago company's the by we to of that ability factory, disruptions driving to on things reliance couple the reduced something labor fully labor, and somewhat risk of still versus that automation we up like can't but a got the tightly. that But has years that. which in we've really manage have do the offset

Are you macro post in there. the expect the where the we of March have you rates point just we terms can to obviously given continue? confident on on you're outlook just that growth? quarter, kind the return March we have quarter, then indication at growth guys And that growth outlined Great. should of target a trends beyond model that when a out so Any guys will

Day. the shortly. and Certainly, we're there date have planning We'll out Analyst Investor

that look for and think macroeconomic March. we don't can't early what but too to a imagine a tell – I – going year like we'll in the snapback clear of in is when it's next to have come think, a into to hopefully, I you us quarter. going picture we're that, I see picture

optimistic last. an get opinion fiscal the back, wouldn't everybody market is to but our I'm long expect in I that this and So I things next to, out the then pretty call about think – But – this year next end better. I year to think going come how on it you'll somewhere or suddenly so over the there see has on

you. Thank Okay.

Thank you.

Asiya. Thanks,

Great.

Next up be will from Chung JPMorgan. morning, Good Paul Paul.

Hello, Paul.

Hey, Paul.

taking Thanks for my questions.

in about margins, of rebound pricing do of gross the how on target to couple Just a some as component we lower kind kind of your XX% think about of shipping some kind Can headwinds, lapping comfortably and increases done inflation think quarters lapping costs. couple we of FX we line, you've XX% a quarters? down of into

the I'll Paul, currency headwinds was that points we go mean, had the largest. take ahead sense Bracken. of that Yes, had eight and one, year-over-year, I similar factors in this very we quarter,

this also inflation. also increased from mix, promotional we quarter had did We the the have and some then headwind

think some mentioned I I quarter. some side, some looks continue little it on rates of more last I And about Ocean quarter, last the favorable progress down. currency there. the a costs feel start we than As of trends to did on we come to freight, good inflation the the bit make see mean,

through We've that of little that yet some expect I little seeing any bit got as really benefits takes quarter, of see quarter. come that didn't I to of down those to It well. time this a inventory think yet. bit the being work to of with And next a higher. see So start trends, but lot don't we favorability good really flow a through really

yes, these I become -- become into some year, excuse next tailwinds. me, probably probably could could think I think But of tailwinds headwinds of some these

I think I misspoke earlier. Those headwinds. are obviously

those number prices tailwinds. become could some in That's good we I to whether these action unfolds pricing, headwinds the the environment, think year early not. with those kind what across or terms promo of of next of I environment increase can we'll it's and And of this few hold helped see a Some And that offset we promo think categories. quarters took of pressures. over the

lot I do some So been this of But pieces, I absorbing of and moving begin headwinds into to do expect a lots year. Paul. of we've that year, next those to think those reverse

I'll one Paul, more add Maybe, perspective. piece of

little standpoint. on technical caught it seeing I me cetera. we're I et year think natural its a and We're way the Exactly reverses now. thing is amount makes not hedges that best this feel the gross a clearly, about and that incredible yet, margin is currency but the headwind is it's hedges hedges, from mean facing unclear. of when on

excited of a super have do Again, we to headwind because points out. we I'm to would XXX not of getting see that range come basis hope points I out next XXX But it going going improvement. of back But basis year. we're that's again, sure

year, fiscal by mean So year, XQ…? maybe next by you I assume? So next

right. That's

just do kind cost assume pretty term. maybe Okay. of XX% while line you seeing we Where near you I are back is follow-up aggressive to top right-size a opportunities that you. cuts. And Thank it further OpEx, kind get on normalizing? to Do challenged? material of cuts where of or sales, in the then see more

probably that on one, real that gross to come earlier back quick And full hand-in-hand. been. margin, basis, a it around OpEx -- go has is I where on your things see be those on on you'll XX%, Paul think comment the year which

that margin returns in more us line good if to to investment room if drive we of get good we So for available see gross confidence growth. creates to sight expansion

unchanged. strategy that So remains

Certainly, more to you'd and marketing add we that's the that's driven committed one to that, to investments. investment Bracken, that? to through think in away innovation, like Moving key. something promotion-driven full from we're product strategy increased

Perfect. everything. got you No,

you. Both thank

Paul. Thanks,

Thanks.

Thanks, Paul.

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

Hey, of of think morning. kind I of if some of kind facing the four you guys. end first, brunt world take questions. and of furthest we for your Thank along major a you terms taking challenges back maybe, in the markets, Good my think faces do guess, about those step are where the today?

Meaning, correct than is perhaps consumer earlier we earlier enterprise. which perhaps PCs than corrected electronics, saw

you where a to maybe could And have then I relative curious think a your so, see you of rebound follow-up. other just perhaps end markets? And first

I'll a you to Well, a going a I'm to feel. really that of but is question. good you give answer, definitive kind hesitate give

I it Gaming Gaming. we also because it But has depends, it see first sensitive kind could pretty that quarter. think promotion of seemed in be the market this to

So me little it a me that to tentative -- makes that. little made say less a more

and little think the later. you later later generally mean, that's into a enterprise in comes of go the softening spending longer I economy, And, comes hangs then in a I out starts kind the of out and it view. when

us to right then our just reserve somewhere in though, because I And like. workspace business, the reverse visibility for secular be to completely term. feel is think the what really all to on not personal honest, I is between. do the I long really super we'd those see. I news its solid. trends hard good are three think, good But the It's about

purchasing the color than then, in it, maybe, that's historically? different December No, quarter. it guys on, you Bracken, periods patterns? mentioned to And purchasing get maybe some is during I'd love mentioned visibility just from different why helpful. know promotional-heavy the I just Is Okay. you you because

cadence they much. might when it just for or changed preferences just Thank improve, me. to than it back, some how just why for purchasing and/or that’s taking changing? a And more that at and you, it used Would on maybe are But consumer could purchasing a so improve? maybe different has love visibility step color enterprises

two Absolutely. Thanks, put pieces. I'll Erik. those just

been this demand think you it said the in consumer promotion. The concentrated I side, On we really all. quarter, weaker. consumer And in saw it has

starts some through heaviest soon, hope saying, Now, fade because was a we're go point the could at promotion to of quarter. is during normally, I hope the I that it more be -- Nate assuming that as promotional year. rest holiday that we

but better we the all I prepared but that outside go is from the year. to way we're that that will a way for promotional that, be the promotion start not see And normal hope in see. that it on -- to through standpoint. the quarters all not get holiday may have through QX, would Now we'll heavy But

see. we'll So

this a term, had comes On the BXB to days. just happening. in XX just settling we've there's down when that's strong I've of may we've can't -- And think, turmoil that a the had a announcements be layoff the -- I remember lot in anyway side, job it really last such too kind but since I of there's been

think just spending visibility. lot of there's construction your I and automatically happening, think a that of I drops

out it's you something. think or suddenly, have two been pushed it's you in -- seems What like visibility, quarter a or

I So it. think reduced that's

fact actually that be it's sharp out it I back And from think again. that booking now a means up. standpoint, I like maybe optimism business I a faster a reduction the might head think my because right its exit that's

would kind But and that see rather see people something. of easing I gradually into

around construction. So of there's this I don't discussion but feeling the sort feel good about that restriction. good business, me our feel wrong, I'm about don't all I get good

will think suggests making that right year. are as next steps, I and clarity the come then go that we into the people

Erik. little If to I bit a could add that, just

Yeah Yeah. of Please, .Please, course,. please.

to different. it be what causes asked You

a I think obviously, from of, globally period unique transitioning we're out shutdowns.

portfolio in And at those differently. obviously come to a again, in that is I'll in so the lockdown things are by product, still different see They better, little They've come of are it geographies. time. geography, We different bit. that because went that back time a growing maybe have, and I categories transition doing those like places out are category, having by that love all by that the this, the diversification we this a in into

think, up the with this think But the So well disappointed the I And held important environment. quarter, P&L really, thing. I in really be, to well. continues this of continue manage shape that volumes. Obviously, we a pretty diversification to we're

We continue a to standpoint. share from do market well

I think, a very do manage priorities generation. long-term job our in invest with to good well and OpEx, continue continue cash and to We

our deliver the things changed. quarter business strong And the of I is lots think in diversification environment. good again, us to being macro to So key challenging a really able haven't in what's

Okay. That's into over VC, VC? was to I wanted the touch clarification. mentioned you did that when enterprise concentrated helpful. last any super quick in segments was other Just it That's it weakness, it follow-up demand spill for very or besides just was me. mostly

Yeah.

we and So it and and keyboards much Video it areas also see and in Collaboration, keyboards, is CNP, proxy mice for two and keyboards mice also a VC in keyboards. traditional in mice see BXB. good our pretty all and BXB, we mice biggest it, because it's but

you. Thank Okay.

way, say, people like the conference By cams. weren't They should not I it's buying any were.

suddenly It was down we mid-single digits. So go didn't terribly negative.

digits – after double but before. up that So was being

you, All right. Thank guys.

Thank you, Erik.

Thanks, Erik.

up be Angelov of Adam will Bank from America. Next

Adam. Hey,

Hey, Adam.

Hi, there.

I just channel the situation. check inventory So on to wanted

we go division. if could maybe So, by

sell-through that, that Gaming different Thanks. then year, thought increases one, And as we quarter. match Is could sell-in great? the and mentioned kind is just by maybe, versus would if specifics the on about levels, if are inventory can think potentially increases? further And And calendar the as if process be the promotion thinking a I prolonged reasonable forward? add there of the share sell-through sign was already? your levels could that positive XXXX, that period division, price you any so going in on you second maybe you – price perhaps are at other there you

the second. I'll the take first, you let take and I'll Nate,

Yeah.

which think probably we trends with think down we applied I continue talking in I ago, overall moment be good – shape. the conservative our to being It's the Same year-over-year, visibility sorts of think consistent is I a pretty should well. see to I as them mean, cautious about were customers, that think, challenges in I and channel around restocking. business.

on shape. a cautious being is in channel So little reordering, the but good

– Gaming Bracken more those was promotional one holiday period. was be As more that of this seemed to areas mentioned,

lots in too, in so side, on there some on a something of you Adam. some What add Bracken, I'll there, for inflation? And just to function quickly I'll of with a But pricing want lot things, what happens we let and elements Bracken. to So then you'd there. progress It's reducing consider. jump currency, really the make the happens with levels inventory us did of of say that?

Yes, something imagine more be can't definitive. doesn't I even I mean, raising change, if us price I'll further.

those I we of won't or basis going need eventually points XXX would are XXX basis to think to. suggest that drop that points headwinds

knows. something again. heading if go, But all don't price heading need think keeps in think direction we to raise is keeps as to the long radically currently again, think direction going change Now, I I we who the in inflation don't as it's would it and

channel. the asked on I had inventory Then remarks. you Yes. side, too, about Again, Bracken in mentioned his it, think,

Third good we've We'll inventory center our think to quarter. sequentially. we'll be all I levels. distribution it good that to made hurry do It's reduced consecutive expect quarter progress where sell, this reduce be and fresh into continues inventory able focus us. we for to there And big that Not a I so. those more in the to normalize a continue quarter but fourth

Thank Right. you.

Thanks, Adam

from Joern Next UBS. on the line will afternoon, be Good Joern.

Joern Hey,

Joern Hey,

this for destocking, Russia when a for sales-through China? please morning. first would how questions. seems down targeting one-third or your quite categories, consumer key indication, It your sharp you're QX. single-digit and Because you on really think deceleration. saying about which demand it? should be us Is only for one-third Hi. Good we was seems mid taking one-third is this being is guiding in Yes. it weakness ex around QX outlook, my get sales Can XX%. one And of a the rough implied Thanks down

So color can more some if here you provide would be appreciated. definitely

that areas. these start with costs, on which of growth be, questions. XXXX? levels they the came strong the [ph] please, scenario Do your freight a for a just couple the very to And down be focusing to to will question Thanks. this earnings contributor second to would you Maybe pre-COVID in feel two

last the take question. I’ll

first the take Yes, I then second implies typical QX QX. QX for hit I I the to Joern, can one. too. and seasonality, one, the really outlook mean,

decline you And sequentially off weaker was of normal sort QX. of mid-XX% than into get QX that, So would a expected.

one So really the that's year full left, but implies. got implies for what basically what the the We've guidance fourth guidance quarter. is that quarter

the was on use last by then And the freight a air of not this year. chasing case We freight this we the quarter benefit level lot to cost, same that got were we didn't the supply versus It's ways year. last year. long

So able reduce we air freight. our were to

and still some to get are than So coming they're are we starting We're they ocean pre-pandemic year-over-year to back we have were benefit but look go come a before ways They've but still there. still down, down more what -- pre-pandemic. -- month-on-month, levels. to got getting there, higher positive rates

Is OpEx. Okay. question, then I out after we may, OpEx take on million done? your to last now your look now to the with enough, year -- you come is good XXXX? mean, in take I this for cope example, in XXXX, Is you XXXX, lean a this When fiscal more plans? flattish the for you Are in regarding maybe if enough? next feel of couple about? there quarters And this $XXX Is

if Bracken. real I but I said to X-X. I'm not clarify you XXX, said quick, sure want XXX,

Thanks. yes. yes, XX,

you Bracken, I to you have that sure make sorry, wanted Okay. heard a clearly. did comment? that

up. -- take to keep going we like When at take not to top to to Yes, we up we feel OpEx, the We're Joern. going And letting line, we're look need with XXX. out. continue we're more the

they to you out. conditions, can We're are. that on keep what so count we'll aggressively see market going to taking you respond And and it

So imagine our how cost. we you can about feel

you. Thank Okay.

Joern. Thanks,

Okay.

Our at Hi, Andreas. ZKB. next Andreas from Müller question is

Hi, Andreas.

or you expect two well. everybody. something forward, you from One Hi, the is sales really, that have can benefit that do impact the are about not? quarter? the Hope you questions. lifted Chinese restrictions And I in the the say Yes. going is,

And operational right Are own also I something XXX% facility. mentioned the production And status. you then, there you probably, mean, in the completely your status now? what's basically?

the one. answer first I’ll

You wan to Nate? take the first sale. Chinese one,

rising Yes. sales, this from I infections, standpoint On quarter China the unfortunately, to China, sales impacted a was infections. mean, negatively the due

that Andreas, occur. probably quarter, headwind I from think X didn't about sales we point December had this a in

longer think a I positive. mean, it's think term, I I

but event, this for I I with earlier, I not COVID was mean, think me It's And like potentially a sort of is mentioned positive. a one-time unpredictable. that's I certainty. But just hopefully, to know think

open I a way this positive I more quarter. but see but to ahead the -- government. it's to -- by do, in a think position So

to asked related our you I now, that. Yes, Year. think positive. I production I'll And that. -- opening -- production China facility our add is still do New exposed, think, is Right I about think Lunar to opening because

a So But back. pause that's is one was say, come think I'd given we'll mean, gave Lunar many Everybody it has And is. the manage comes little we'll us of is. things that Year. see. happens I home, what that how I whatever what it during --

But China. I'm China. like many for about about -- the feel feel I on sure. in I so I negative that hear optimist good actually headlines the room

a good it's to It's been opens, It's market. good China market. always second be going biggest as think I for us. our

been slow long here, We've it's very had of period there. we As as times few long I've had growth been good. a

lot and about really about we're I'm excited China. learning We've brand consumer got a there, there. great market the Chinese a So great We've got shares.

optimistic. So I'm

Andreas. Thanks,

for priorities. I you Then category a one about portfolio, with buds, earnings a go need priorities see your maybe for example? more also categories as speaker your the another through besides for and you some do mobile Okay. non-strategic changing downturn, some to a have earmark question When

on we do kind of always done We've that, regular it, and very Yes. redo and we a basis. it

out we're non-strategic, stayed were said a categories mentioned, couple our reducing means we that picked you we which true to as we've of and that. investment, So,

you, update we'll any time in at see the the our Analyst again last -- but immediate Day. current don't you updated Investor I changes we

of I investment think and into. I'm really portfolio excited put our kind portfolio, XX% our forward angled that that we've of our about

them. current really across gaining costs of into middle the We're standpoint well engineering the aggressively market company investing yet, share And in managing across We're economic this storm. we're an of from those. kind

And regularly. so We'll deemphasizing keep I think the categories. that you update well future. where for again we're updated you But on bodes we'll

Okay. Thank you very much.

Andreas Thanks,

Thanks.

from George. is Wang question next George Barclays. at Hey, Our

Hi, George.

Hey, Bracken. Yeah.

the you of innovation First apply consumer more guys kind the the the And from force? can go-to-market there color question terms consolidation of you vertical learning's kind BXB of latest applying of is are sales to maybe to in in give vertical? how just BXB terms

side Okay. really something itself into that lend now. consumer because right we're in think our Well, I vertical We've say, our I – to the first, taken BXB too is the doesn't consumer strength first to six possibly leverage much company. muscle, the unlearn trying BXB would be which could or during BXB about new in how of have we're a And as five to that years our as the building business. much now excited we I'm is And there. we potential

that upside execution class we is think a in to in really to do how that's think, go the long but become engine BXB. I space, here be, a great have way We first I

the in think resources I We've the got And days plans, capacity. it's really step into step, right in putting everything process right we're BXB. compensation got stronger to by that So process, early in by We've place place. path. become still

us asking about that. keep So

I can of we of and the think improve hot areas of our spots the performance. improve, think where it's one we our more as business I

the of unpack can cycle the do kind base headwind delayed, that upgrade there? refresh/kind think macro, going kind you more temporal do further, just be bit how a in the this refresh or you little you economy Maybe base installed of of of you it's terms a it's to if against going Do think think to play installed will out? slow

and desktop keyboard? the You're about the on side, mice talking

Yeah.

gaming PC across well? mostly Just also the as the portfolio, the installed base on and on

world at ours for you every slowdown in. is products, probably the I the base it's are world, category think, long whether ours. new if installed almost think delay you our I refresh goes including personal we're if to or that required they it's going it time, a of are across on for think workspace dramatic a kind – certainly But in – of there's video, look can the

that the can sure not Video office, in example, I'm the – So on for – Collaboration. you

a While video many short lasting term, not hard in right it's where that feels to we there imagine to world because hybrid delay, may like a imagine enable doing now, is time, there hard so the you're all it like be really much long are really it's really to rooms.

So that. Yeah, know see. was in long We'll don't I be be think that's like kind how go quarter, it that. – I think, I'm can that could could there – some a I but pretty this on It on. there delay of looks positive

in of if side, central stuff on would to so what call need, a what really we is I is workspace don't do Everybody quite have the desktop front exactly it sitting yet. you even guess with this And don't realize this some On them. XX% of in front now. you of you

time. to if it's it's upgrade very become maybe homes optimist, this, more really coming, then and will think things. our as cycle lives think too central you're part I our And away imagine continue for an it but So of started, that I and can stay a going long on already from is I'll far you and

cycle Yes. I And good be I upgrade bit? accelerate. even strong could think upgrade of But slowed cycle the there's So regardless, No. stopped? a could a be it it down think us. Will little ahead

market share I'd Yeah, categories? there this color kind differentiation you my terms sustain that any the seems for of bit give It the Can gains? to levers in gains little may. the recent and across I if of market is in -- and key encouraging. sort largely last impact a of to have like industry. super squeeze to current kind share question, They're you more guys outgrowing Is the of

quarter We think we of which actually new last that of investment. it's a years and the on fewer Numbers means whole design, reflection We're XX story, that or -- user kind And don't launched of tell XX bigger. putting the ago in trying the announced I But approach. our focusing had or action. really the XX nine announced matured middle started do of kind really we've of reflection. products, to it's We a course.

in all categories. -- spending in total Meanwhile, engineering. four of the kept we've investing And that's across happening on XX% our in our certainly, years engineering over

feel it's going I So the investing market engine innovation the but to keep about very primary the BXB one. too, very, the is and opportunity, on only driver of good we're big and it's a side growth, there. not go here, The to

Bracken, thank you.

Maybe just one other.

mention to started the You go-to-market.

really or of share some numbers look good have Amazon think teams also continued Amazon, doing things on think categories. e-tail the around in In-house I be across been in analytics the I to at the impressive. and really have

the and team on So doing and see But good, their ratings look products, also George. to it think are those tip products, you analytics. with I your go-to-market that you have does what -- quite can I you think hat the to start around with at they're the the

Really agree with that.

Thank Great. you.

Thanks, George.

George. Thanks,

morning, Foeth Michael Good from is Vontobel. morning at this question final Our Michael.

Michael. Hi,

Hi. morning. Good you. Yes. Thank

Michael. Hi,

Two questions from my side.

color give sorry. the -- the If Prakash COO you CEO appointment of on more some could to position,

improvements to operations do you're the gaps side? And you of seeing need sorry, you What there? on what think sort fill

And the the second on question would thoughts economy. be creator your regarding

do position harness recession, developing dynamics into particular you you there go those and we opportunities? how As yourselves to see

can the this been entire hands world for We And make has just alongside on lot That's doing no been what my a a mistake, -- led you and for always see drive standpoint him an a on of he's and of and been sustainability recruited grown. the to Prakash, this And tremendous of up years. really be from from we're staff the and company, interesting part question. has But in grown point he's a heart environmental Prakash seven I right a -- head. He's you And from mean, the consulting here firm, out that the right to Prakash's better have team. leadership. and got Prakash standpoint. right

him But in the in him the for the execution company. for give operating I the only role, and cost structure the us larger is next company, think of of the not step overall but and to a also

the going changed this we're-- keep me very and And we're helping it structurally, very whole for the in And so -- he's team our for partner be for -- through scenes. going just structure, evolving evolved we've real another think is will We've going and quickly and quietly It the behind evolving. to a is forward. that. keep this CFO to

has cost the So company. think He overseeing worked overall of out. also as the overall strategy operating him responsibility of for M&A the

a big responsibility chunk got now. So he's of

move one. big Now there responsibility. on announce a are chunks Prakash, focus so others we want who of to don't I did have this huge today, it's only but

prospects is our going many so what had economy, are greater a recession things. the the creator forward, touching and On economy

calling think it's the one mice, that of ChatGPT to the cetera. including it's think It's the we unlock. drivers workspaces. in here keyboards, what that the of the quiet of new And of about, webcam, growth personal can things read et one quiet I stay, drivers of interest business. not world and I the all the of We're

I think all these economy. are that creator fuel for

is they jobs will do if to and creator I to deeper in will about those going thing end think if more that's to me get you I creator into think greater full-time up the already exciting -- this think Now, be alongside in going other jobs. that a economy recession, a to full-time I more selling directly. friends economy people But their they're the or keep that, weren't lot them economy. go the of trying And going think I in people are to

with we're Lots companies And that. experimenting of are.

the but of to more that in part I will there significant of I short through drive creator it. think and a more sales the be in economy, network and there will that of will going activity be It's kind of be term, and be not to probably of selling. more future, think the more

you. Thank

Thanks, Michael

Thanks, very much, Michael.

Thanks, everyone, joining. for thanks, and Michael,

Bracken. I think a and wrap, Nate that's

Great. Thanks, you. everyone. Thank

Great. you. Thank

Take care.