Logitech International (LOGI) 23 Jan 242024 Q3 Earnings call transcript

Good morning, and good afternoon. Welcome to Logitech's video call to discuss our financial results for the Third Quarter of Fiscal Year 2024.

Joining us today are Hanneke Faber, our CEO; and Chuck Boynton, our CFO.

During this call, we will make forward-looking statements, including with respect to future operating results under the safe harbor of the Private Securities Litigation Reform Act of 1995. We're making these statements based on our views only as of today.

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

call letter We as all our non-GAAP replay our and recorded of also currency constant and Unless and are a These you about will forward-looking will and discuss SEC. our use these filings factors this reconciliation are Investor the periods on can available and Relations Hanneke? our for I'll now of being as and our website. in carefully. our to our call and materials between with find be at that you available page statements could a the GAAP turn net materials financial noted the between and the encourage non-GAAP in webcast otherwise, in and sales. comparisons of website. This over results Hanneke. shareholder impact information non-GAAP a and We year-over-year well measures financial results is review results, to release press call

very you, for to welcome, and everyone. excited Nate, first I'm Logitech. earnings be my here call Thank at today

noticed we new as a our have covered quarterly introduced call. of commentary previously this you've includes document that to material, that at letter would the shareholder been our comprehensive a earnings is This review of of Now part letter. the intended probably a quarter, be results beginning and

opening brief will after Q&A. today, So directly remarks, we move into

this Now let's move on quarter. to

operational the financial quarter, really exceptional quarter. product generation. margins the proud healthy the cash the really delivered innovation, and resulting and the solid prudent the I gains, gross team results am throughout in and third Our in flow management share of discipline

be promotional a will disciplined work not is Our our gradual but tightly of margin. return to growth, all operating managing increase which course, be That line in top we we by of tremendous will and satisfied, teams until spend drove our XX% costs a process. execution,

look we delighted am positioning. forward, Logitech's with I As

work, video disruptive AI advantage Our designed us. take is And and portfolio will gaming to opportunities like conferencing, trends hybrid provide for additional content in creation. of indisputable technologies

way a cash-generative back balance consistent, that strong demonstrated have sheet. excellence and highly P&L builds our to growth, work very a disciplined we As we operational

future with This months introduces joined scale, I employees, across drives a coupled on our an last am and innovation I discipline, day products visiting the multiple Logitech's really about at with me, X that shareholders. market when new I've engine exciting and our spent as as partners, for global one. time been categories. a It's customers leadership optimistic

an on provide We then. Analyst strategy later this will more be hosting spring, and our detailed a with perspective to approach capital I'll our Investor and Day allocation you and

will forward at seeing discuss Chuck? the then event. let again. provide all I turn And me year we Thanks our you for numbers. Additionally, to really look fiscal to outlook XXXX. it that Chuck to

Thank Thank call joining you, us on Hanneke. you today. for all the

to press this seen detailed really in stand quarter You've financial the out. release that X letter, shareholder our metrics like but I'd and highlight results

year-over-year expected due lower in costs, promotional specifically gross our reduced to activities, XX.X% than America. and margins better of product First, were logistics North

spoken we've our several operations. focus Second, on driving quarters lean for about

our reduced was inventory. quarter, year-over-year And seventh XX% down hitting on-hand we consecutive the this with X.X%. For quarter, it turns inventory

in and cycle This cash in million improvement our flow, the QX, conversion cash strong one operating of ever. delivered an was driven $XXX margins. operating by finally, And of we best

our We outlook are year. full updating the for

to from now $X expecting $X.XX to $X.XX billion billion, are up revenues billion of We billion. $X.X

fiscal One XXXX. final note to year $XXX income between $XXX is operating Our million, expected $XXX million million to and from be $XXX up regarding million.

net well last fiscal see 'XX declines our outlook, you in our at you our If quarters the the will have of look as as X midpoint moderated. sales

not of do sales an a we curve the number to may With the of anticipate has are our while declines Nate, of to that point ahead net there and impact of for fiscal in all headwinds the improved, uncertainties impressive inflection work 'XX, Thank this sales our rate slope and on hard that, net you let's throughout move fiscal execution. Q&A. employees Looking our 'XX. to

we'll Instructions] Samik [Operator And that, with Chatterjee start at JPMorgan. with

you that congrats of Chuck, there bit for you're more Maybe out of start of if follow-up. here. shouldn't are us in for I there's thinking declines, on why just ending you moderate headwinds And have improvement terms close -- fiscal mean, headwinds the -- obviously, into any but to been or your comment quick I the back 'XX. to What you're sort thinking the robust of? just of results about carry just this Maybe those a with declines pace And flesh a the in growth?

business, Yes. really they're feel We going That's is the very look execution. now. you year a right We very about thought our to of strong really good look fundamentals And good hard next what at the question. about like. if

you pricing activity. discipline of promotional If really at quarter in on and driven strong this QX, look lot by was a last it

in overall was business what with would than pricing baseline incredibly year thought. outside we little QX look of midpoint The have rate X% in was great would you of The of were the run And promotional a strong a the pace our promotional windows discipline, but soft. little outlook into for the windows if forward softer the QX. decline indicate the business QX, a

high a our little outlook bit would Now QX. imply growth of of in the end

it's East a taking there's look The globally, you uncertainty rate Europe? year. so or or cautious we're be -- next whether the If situation Middle U.S.? into And just will in China there next approach to so much year, in around macro cuts

a we great business, this as profitable, we're is confident look margins. out, strong And

year given it headwinds if is next situation. just what look don't the As look overall Hanneke to people market, makes want too have optimistic be to think in just geopolitical her at going when. like that we said comment in if But you the not It's get -- about overall sense. we these

the if where base, look you days I you customer opportunities? it's know early couple at of faster enterprise to about please? sort are more across but them role, can. next as as if and which Hanneke, sort share Where I you to particularly of think in the growth we your versus the consumer, in on years, see the looked at return other? bigger that, And do than likely segment thoughts of you your Just customer

see Yes, opportunities you, to when our sure. base. it And Samik. nice to I it's customer everywhere comes meet

U.S. retail. or in just store in after So really, in Asia. in period, And we're you execution strong whether or in Europe that great store was the here the holiday really over saw it

online there's We e-retail grown BXB. lot our then, a And also with customers. have of course,

the we're to And newer is gargantuan. there but opportunity the BXB business,

yet great BXB that are corporate comes value enabled as back, with that video. rooms that spending So are And think for we're I fantastic, products that with many meeting segment. positioned easy-to-use, really not well

So opportunity us, little everywhere. BXB bullish newer is quite but to I'm a on that.

Wang next at is Barclays. question Our George from

ones. X Just quick

on can just it And XQ modeling of Firstly, for margin. outlook The of thought then quarter and to going kind sort talk and XX%, curious going 'XX. forward long-term gross any as model strong kind December of of thoughts relates kind a was the to in FY on of about of any you kind margin forward. XX% kind of

stronger right XX%. model. the Yes. to we we somewhere XX% expected range. Thank XX.X% XX% the you, quarter the was had past George. XX% in gross We to is had long-term This than believe No to our change margins, expected,

year-over-year, was So you we were really it look the kind overall, results pleasantly real roughly drivers, for of the line. if at surprised quarter. The in

we Year-over-year, driven getting If job we industry the operations or costs costs lower in costs. you Logistics the and about expansion. And product pretty big pricing then, by that execution, side, and sorry, that's great margin led Americas of in of look on shipping driver. it improvement. at participants is line. down. the And certainly primarily freight saw couple factors. -- all promotions course, XXX One, on roughly good basis benefited a a to great primary the quarter-over-quarter And point was with did really

mix benefit and we on costs, forecasted. product So I'd overall higher lower shipping XXX by promotional basis margins offset about led spend bit that call it to little and a had points

Yes. Got it.

I gaming to of than quarters. for kind very follow-up, seems couple strong, last of better a want Just expected the if just I on quick the double-click being can.

of you maybe can color if you kind are Just kind doing pass better, give maybe more not. can of out the within gaming And a bit gaming headsets, mice just particular what peripherals. on areas keyboards, gaming little any for

traditionally gaming of in refresh other PC-related the kind the Just cycle us peripherals. showed because versus

all that COVID So the drive maybe higher. you refreshing seeing results are could kind started maybe potentially of the cohorts

click curious the if can of category. Just double on you kind gaming

Hanneke. first, go can I certainly. Yes,

how in simulation many gaming, the categories. Overall covers as we So discounted. quarter. a particular was in go-to-market steering good really, promoted different saw know, We impressive, and strength wheels, you really our

were the you If what contrast teams products they very channels. ago, promoted and to which disciplined that a year in

mentioned, with segment, position keyboards gained revenue. Hanneke to mice really, that really and we really and strong PC strong. was share. we As better better The led margins a That have retail really, in PC segment, some

The bit product was of a was really holiday. the we AXX little Console just the off kind new released that at out of that end that's really, a exciting. have

competitive. in So simulation, category. is incredibly looks very, but parts, console to areas new Console, It's strong. But the But see Anything bright we strong, higher competitive on as want the a help you that Hanneke? and maybe quite feel we it products. like didn't very Other the we the the will very sales side. margins future mice quite on way with generate not add although

No.

about audiences, again, females older continues with focused as way optimistic explode term, a long male gaming used gaming to connect that but on think socially. growing I'm I to narrow pretty to as big with It gaming super people be more a gaming younger with category.

execution category space. and strong really in our our look macros So good that strong in all I the we then and think where are with favor innovation,

Our next Merchant at Asiya is Citi. from question

into the We're in as little peripherals. some PC to your maybe little kind of little on feel of would Maybe model Both into you was top at us headwinds, side, things dial terms have see line If event take kind -- just get out the you the could through seems laid last on bit better bit. gross bit PC around time? I the a growth talk it you understand well on stuff. recovery. a back about to And can are like macro growth. margins it of a as but the turned that there starting the analyst target what

Yes.

Asiya.

So if term first. long-term the about long model, I'll you talk think

do long-term of to on One I would to an us And M&A couple years, couple of us over of that target more key the away, but financial a more years. expect XX% next I tenet expect getting model will to the X% been right couple of to important there We've And that in is over have to X% be we years. the not part M&A. next XX% So light growth. would last growth. of back do

key footprint. of office ability rationalization and Another growth get our tenet return to to of growth to is higher corporate levels the of

at the look what's North XX%. past vacancies American you in If happened approached have this headlines quarter,

so like and is still estate that will installed ours, cycle how new be their will There is there to they base want deployments an of be greenfield are installed enormous, grow. will modern footprint real that And to tech upgrade corporates base looking TAM at overall relatively small. and rooms. The the outfit

to it enabled. over So years, every XX if year that X what's It's makes going say sense video be to room happen or X you years. conference perfect out hard will just look

like think It's I another unclear is cycle that Hanneke this So look will when. not mentioned, deployment if like. thing what

companies happen, think mandatory in more to side. future potential a IT more employee the like the economy improve confidence to things controlling room office I rate on spend and they're budgets, they're versus things BXB needs discretionary going side, lastly, on AI spend, carefully then prioritizing CapEx cuts, fit-outs their maybe cybersecurity the but like absolutely little so looking bit, like are ours at IT And corporate and and productivity are and the

though The is quite now Consumer strong. right

our overall, hit longer-term to I and enterprise, positioning. of rationalization sprinkled think good I feel as there then BXB office in M&A really And a little so But about overall, well. bit rates, the

about gross that, bit if little good feel the gross that think midpoint And a I range, talk you about XX%. of of XX%, could you then guys to kind are XX% even getting at in target also your know obviously the of just about really margins you to when margins

we were at to really this that past Well, close midpoint quarter XX.X%.

couple good this quarter. did really feel and I about So quarter. quarter this last have We of one-timers a

down impressive inventory achieved. the We that at quarter-over-quarter overall $XX than look drove inventory. decrease more inventory in you we if So reductions million

again [ And down, inventory. that you quarter come ] as inventories happen. things inventory, to reduce because When good have with effectively, reserve saw you less releases E&O like this things we

will expect with And bit Suez a We not saw down. so grow we actually come don't there recur. could that the benefits inventories in They Canal little to QX challenges.

we overall, look margins our it's trough there's absorption. where at think you But less will if in quarter, be overhead so QX,

And quarter-over-quarter additional challenges. it's So a a this freight of headwind then bit compare. have also on little a we

overall, end of maybe So in I target low think we'll have the range QX. that

I average it high possible. low be would over operating expect It's it at overall to And end? in on that the next Will be end year. possible, model is

of consumer depend a from and sentiment I So enterprise it how just a lot standpoint demand will think unfolds standpoint. on year next

Morgan Stanley. at Our question next Woodring from is Erik

working Maybe start, just because gross impressive. had maybe question about the being And we see you XX% range. they so is guess in I to to with were Hanneke -- I'm again, nice Chuck, first pick going you. the to forward on time. we talked looking quarter, XX% if last margins to my for them

You XX%. more obviously did than

So your of quarter. that costs, of think that outperformed foresee expectations it comes because that -- to pick was on kind I'm XX just have the there trying component that a to necessarily ago? something didn't would on when ahead days lock I guess I generally, XX days that you where you

as I than loss look just to seen was mix. how leverage, have gross And consumer weave materially in, understand fiscal so where promotions, BXB if generally trying And the mix your actually more delta I'm the revenue expectations we margin fourth we could the little quarter, and biggest outperformed? between bit despite expansion historically you less to of a

then much so that And start we and down a follow-up. Maybe I I'll think why gross should have about coming sequentially? margins so with

Really, really good Erik. Yes, question.

down, we -- the past reserves. inventory last So bring first this few you of you our this in down number all, When inventory quarters, brought significantly. release

down. some are on last quarter-over-quarter, there frankly, seen quite benefits the that levels of inventory we've So quarters, couple bringing

benefit and more are to real, has Those operations That team durable? work has is see reduce kind a product benefits those costs. year. durable. real The overall What been throughout onetime of great we'll done that to That company is that our in next nature. the

than on expected. real a product team Shipping So did such I great thank we that and Prakash and had a our Logistics, his team, costs, was job tailwind, better

Now that's reversing.

now with shipping you They're again, rates. So on what's back the look up happening material going at fairly ocean.

to We air. also expect because of these disruptions more to do have

outs, mentality. And while stock we we don't don't want have a customer-first to, we want

is The customer. first thing care of the take

So we customer take will of eat some satisfaction. margin care to

shipping, that that are shipping That's rates. going Is can't now our a last but of ocean where predict year? the QX. into I to things just headwind Is higher standpoint. a from air So throughout is going right a that transitory? reality

is straight And math. have that's then an trough just there you to impact. quarter, leverage the mentioned, And quarter peak a you overall that if

impact, QX the expansion. year. said because primarily last saw of poor was That a at look margin you you fairly you If last year,

I So in think and that year drove QX volume discounted we -- was over that ago. a a less

standpoint. past really And well we And just ground our had really so the quarter on our with Erik, were up plans and retailers planning talked last a the executed and just global We promotional from about few quarter gone that landed and the calls, pricing account in commercial set the our we great a had teams through e-tailers. on teams this such discipline. promotional

it'd more the deduct high Midpoint think be math XX% low QX, the So to margin, doable end shipping. at for range XX% that XX% the roughly you you gross what air do end, to is to I XX%. if it's is and

we're QX. a point on the kind I strong this for freight up of and us uncertainties these gives really set So think side But what in fiscal logistics are time. at pause

quarter more any Chuck. properly last fair. to think over then to XX the bought if is but Very this I years. know stock or Okay. back don't And this I posed you you Hanneke, quarter than

You to expectations. prior reduced CapEx relative also your

kind you to big And striving back realize guys allocation as is priorities? in the of macro you're to factor why are get your signaling not here. change So maybe a a capital growth,

CapEx maybe why or utilize product might be, more that you generate that's excess whether cash target into launches not why faster. to lean kind of whatever it you to and the into range not that expansion little or CapEx But to kind better easier, lean but maybe get help of back a growth

for about it think might you However, that's me. it? And

there. level. allocation capital a question really in talk little talk want and a our at about a more That's you higher good strategy Yes. detail I'll to Hanneke, maybe

into I discipline. that. read that. but CapEx, this not on That's itself is point would into all, CapEx down, operating read don't of just First at

efficiency We very are very, and spend. focused on driving

Growth invest model. capital allocation for top We will in how we is invest is growth. our our priority,

think And beginning quarter, set we and better better getting then the we the overall, and saw you buybacks, numbers of if -- in the of better. improving, cash the

we of so to saw more did buyback spending data buybacks our because quarters shareholders. is increase given the of we ever. when return next in, it one the year. don't to the how read capital $XXX And what a flow, will to that increase great quarter coming CapEx generated cash we operating up decided back of decided go We to best had. But million into cash And we we

We have very little done M&A.

investments have to will technology We definitely invest long-term in in drive heavily growth. We and invested the prioritize business.

as don't we're CapEx a being pulling So read reduction into -- back. the

Hanneke, high-level talk capital driving really strategy? the growth. operational to It's more focused allocation are do on discipline. about We you want

at the into And what me said. the year we right you mean, looking just confirm right sure. for next I future. make Yes, And just investments first those now. let we're CapEx will

we're this take on as back pulling don't CapEx. So

hasn't a only two, paying buybacks. our cash list right the of of that are top dividend. looking comes at always the thing long-term form of terms good the we really in to strategy, then shareholders capital definitely three, M&A when returning In changed number allocation and Number along, the

next Our is question Stifel. Jürgen from at Wagner

more first differently? that say Can you to be mentioned a need needs as would to addressed to as a already XX position do you you become or or active what what in Hanneke, thoughts, M&A priority. question follow-up, Logitech. now When Yes. again? you you would you are be at days second be my to share the can And you some

thank Jürgen, in. you. to Yes, Yes. days Very XX you. meet I'm nice

to it's about say little anything. So a anything early

say And line detail. for an much have positioned more out for planned portfolio few Investor the we'll so This in. we Day that upfront, you where I'll company, the top impressions. spaces impression. We're really well come growth I'll would a my be first future May with really give good is a is But with

gaming onboarded hybrid are capabilities. play good been product, neighborhoods in. I've video work, good and conferencing, I've So with impressed and all design have we engineering our and our so places, as our fantastic to Then

to and will going us forward. us allows innovate, That allow win that to

Another would continue really brand. probably definitely global opportunity. BXC. -- also a great, brings that with it something we'll a to few to make be. solid last an then to earlier. which in mix on finally, see and brand, BXB is And touched opportunity We company of we'll a want I've tech, thing is me nice the that to will. And pioneer We have and But sustainability if be an to to take from great iconic things really good this the been is brand impressed you that truly that

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next from Ananda Loop. at Baruah Our question is

Hanneke, welcome to the conversation. Yes.

the So the I long-term quick growth -- model. guess on on real just Chuck,

I you as M&A you guess the that. You -- question mentioned, contributor and to mentioned single I high digits. being think meaningful a said

is and question organic then the organic? quick over sort yet that you is, single digits [ guess And that I TBD. Can time? So the ] digits single Or of with that I M&A to high a in the is have high follow talk up.

Yes X% you. is is basically the Obviously, percent -- Yes, that growth XX% you -- thank from pre-pandemic. -- the pandemic really derived to historical That yes, rates if it's the growth. Ananda. number XX-ish

average kind the rate the for of those pre-pandemic. to got take really out. XX you that's years But So growth years

That scale. very you X%, distribution X% great if We're key channels look was included, these some it but at it at that in at, companies. We at to that averaged M&A. was we're years years, many range. technology. Some exploit what We it right XX%, the And find global good have importantly, XX% we acquisitions.

network we go plug into companies, So that them can our buy and technology. exploit

and iconic can good do have We that costs this really a mentioned, as an team operations product drive job. brand. Hanneke down And

I think machine we that great plug have this in. can companies So

accounts new. M&A, the of So the the brand horizon. strategy. X% that's formula to short-term is nothing planned Hanneke part is XX% there's But the We're in working for sure. on

and quarters said that part into very then we're whatnot. XX part organic. more model our be thoughts yes, M&A out, plus that. and is on we long-term it's So We excited now, quarters cautious part an very anytime soon. next A at nor executing we'll get But healthy model. today. going keeping is to was big very I and of rate roughly announcements are overall, and soon. focus. This But we the that is key right organic XX%, the It's a generating about long-term of XX% anytime M&A income. That growth is to gross of we of X the want rate, M&A model a or not back wouldn't financial predicted long-term on that year, Day good talk growth The is a about part to the expect XX% to that's financial that X about OpEx operating important just X are But is the margins couple we feel at executing today to and that. Analyst ago, today, any on of

clarification and fiscal When Got year, really And next I a have sounds so calendar a question. have super [ say quick it. 'XX. That I -- just ] helpful. follow-up 'XX you then not quickly, we're talking

Fiscal. 'XX sorry. year. this I'm X that's April starting of year, right Yes. -- Yes, fiscal next or

And the would share consider mentioned as in guess classically in you're been Hanneke have that mentioned an thinking are go it. closed AI that Any new there? what be for who the Got new can in remarks, think to that things this, opportunities, opportunity of And had the the incrementally company I'm that products to terms I it of doors there you historically categories, into about of value is, offered? market has really sort you company add may sort prepared for guys of you context could the it give I you wondering behind fit ecosystem which company.

language today. that happy One, I'm areas course, like underway at on lot that's whether that where company of using every leveraging Logitech in to ChatGPT and but because we're CoPilot, the our AI and supply is Really of take one well marketing, large productivity, X own that's stakes, internally ways other I it's here. of it's other Yes, models. a opportunity. table see and chain

about that in excited that well. there's come what's as mention they underway. The -- there, excited -- more little to again, I'm about I'm bit but already and X and our about that's our innovation. products out can things in they're tell you area So is And are a well I'll

have that video you which out the So sit is video right perfectly is business, is Sight, audio new on you side called like middle perfect. table. conferencing a TV we your producer in your product video your your That a the in perfect, conferencing one framed, get of and conferencing meeting the camera is of having a panoramic

So that I is love leverage AI to get And that. that done.

So that's video on conferencing. the

the you're And to have on myself, insight noise out cool. headsets, ton is headset noise at and leverages again, headset is, I is a also Then on consumer new just there's technology. headsets talking to ambient other sides, AI person AI, or and a here, airport you is hate that other outside on the an which the leveraging side, on, someone super wireless both zone canceled of this ambient this

product. So really great

The X last So examples. is product those one are our on software.

you we've repetitive or seen months where that can if tasks action. our users whether any your of with much the as in Reply simplifying you times is download goes far, you one mouse keyboard that, the X have software X smart the something features is #X a by automate products, What with of So other some that the last actions as it's X a called or our that, are ChatGPT, tasks. of is smart any repetitive called

So again, it and we more our consumers software, through shows how AI. can both help with our delight hardware

it's that. answer, that the for Sorry, our about from a bit opportunities innovation I'm lengthy a excited leverage we of but get can in the could products and growth we

No, Yes. that's helpful.

like that gain opportunities X suggestive to would market more the lines. taking those that just you stickiness opportunities, product something there, be or right me, of mentioned so potential share And along

Spot on.

is next from at Our Jörn question ABS. Iffert

your May Logitech first years, be, do you, the to you to be one would is forward? please, to and vision? now think Nice And right you growth categories to markets model Hanneke. could growth meet like, right over next X go Hanneke. the has segments example, to the be you which also look place when I the Or maintain healthcare, are going willing to for quickly you, X into end ask the you drive the necessary new to

playing we're think with in spaces. great really some I

in of space people do play that's big what the and So work life.

what give and exploring Within right now. that's gargantuan and some there we're in in verticals on good they play little that, our we harder? growth. So are spaces, Possibly, us we strategy work a could step

me for that in but early May. bit a So no, we'll yes on be to say back or

the Yes, sure. the quarter, one appreciate a little technical question, on more this. I please. second And then

which losses were bit Black losses? share course, of China short Or of little gaming and like mentioning some couple gains, is Is to Also the linked example, the stuff. this Cyber expectations. your of You mentioned share losses. Friday, was linked a a I were volumes think but season, you market weakness? macro other outside this promotion market that and for Monday, also to share keyboards market also

So linked is to mainly losses or macro? it also share

Yes.

standpoint I the quarter characterize think from and generally, would strength as share a a weakness. a I not

in. So and on And comes the in, all finally all reporting final data the balance, in final I we the yet, see dust not executed think when it's we coming need well. to settles

I or older had think key had on balance. NPIs we categories The it products new are will the we across may challenges show We way. gained and share categories. some product where on where introductions

on side, pretty the feel share I good. So

I was it weeks year promotional rate was ago, first was quarter. few in think, buy seeing this outside the that overall, challenged more run the on to far the we're consumer of And the of promotion. And a globally business windows. so looking as

-- hard is is to I right interest say So now, enterprise don't rates, consumer is confidence that is that okay it's it spending.

little kind the a it's think of above. of I

think a return? a But news products that bit the we on caution just QX will cut I lot sticky and into us and there's little there's not of news a a there's issue. when read bit would rates don't year think other going there. get think inflation customers next that I products. won't I gives I it's of macro that And -- into our every companies' and that out about I little uncertainty buying maybe say of translates our in day. And factors into share

the it's is pockets like doing there? you'd board of outside addressing. our share quite Anything, some Hanneke, across think I that add to well strong key we're and

said it well. think I you

at next ZKB. question Our from Müller is Andreas

this in see Hanneke, between Or see sustainably good both. you the you Is seasonal? to you there? inventories discuss already clients the gap sell-through, do your increasing sell-in maybe particularly and Can Americas?

chart we The you're this chart growth that revenue X%, sell-through We've more and it actually. Day. keep I meaningful earnings say, don't I'll to in strong saw to it shows Andreas. down that and yet through just our we'll Analyst sell-in. referring sell-through like And That revise it general. America was to at shows make data agreed deck in year, fairly

higher channel Americas down inventory. What's activity inventory sell-in less so be less. or flat. you and not go was at did driving at sell-through that look but built channel "Gee, can and must a selling say, up. We roughly how promotional And price actually. promoting have Oh, that is you

the delta efficient on less dollars, is and basis XXX expansion that's activity the points and promo gross So revenue the in net activity. promotional -- that margin just dollars in and of sell-through based is is

into to better we're the to you that So metric. view think, in more revise I chart little the changes a give going channel inventory, is, kind which of

want wouldn't read less you that started It's But oranges want and didn't chart replacing I apples I to didn't to something bit. we than it. I year pull So comparing a of a better with to little just too that give it without kind pull into ago. much. visibility.

into So during an to American overall saying did promo I on there will be than update I the activity coming May, other in period. great job read would that North driving not -- but that a holiday we

I impact Can also here? And efficiency, might for production on Okay. of materials, the costs question product my mentioned. details? but mean, were currency lower you was you give mean some helped. example, mentioned say have then were gross you Can the next Asian I weak, the something which what here more raw progress, margin

missed I first QX? very the part. Was Certainly. in margin gross it

And On on side Yes. products. the or on -- the production

Yes.

mix. But benefit basis product had translate year-over-year basis roughly we it year XXX should basis should on about year, logistics, about as of promo XXX that of to year-over-year in between basis of into was lower expansion, benefit. will We're ago challenge. in the was freight then XXX ocean, and a QX, side, costs. QX. freight. FX it noise on to have a points about side quarters future freight there headwinds That the more were point year-over-year to was back. And then be And air, durable line be to come some going well. other points this overall, going So XXX is kind Quarter-over-quarter, points and

into look QX QX FX you QX As QX, is currently, roughly to and flat. to

-- impact. be should will there there no be currency So

QX the Of look we course, at on were world, from rates various to can line quarter-over-quarter, as pound and in and currencies the and here around year-over-year change. the sit the But and balance today euro roughly QX. you

going can the was increase G&A the OpEx the G&A, do that how R&D something progression was say expect actually here? impact last my onetime Then Okay. you nature? or question, you much forward? about And In in items, and

Certainly.

roughly to spend of revenue XX% So our OpEx. We OpEx want straightforward. model on fairly is our

are go-to build you costs the like market, G&A value Of course, those other on but development, prioritize things engineering, build in to and OpEx, Then product like term. you that efficient we and things want long health necessary spend. things are have that to want be

a overall that's as whole. model So the

what that in we were CEO overperformed had Now financially. this happened we the nature. And And underperforming. transition look ago, year then if costs really we have details year in were basically onetime a you of quarter, the overall,

things or much funding result, at above a variable and a the unfunded were sales commissions ago performance. given compensation plan lower year, year level. as we're above-plan This So like funded a

the overperformance so variable And comp continue on expect to so much. I wouldn't

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Kepler. at question Torsten is from next Our Sauter

strong Well, congratulations to another quarter.

Just In like Very glad fact, feels you, few in work with and meet right? a the faces. to you. with old Hanneke, good to happy it new very days,

you. Thank

if Actually, I may. I have questions, X little

you guidance see very cut level. Firstly, have very, I tax again one. a technical to a more low the

try an shed please on maybe give outlook you some there. also that? to Can light And

Certainly. Yes.

guide team Design the think the to you So design If Yes. at we've him right? I Head, departure a to I I Curtis, operation had your of just it maybe to may, considered running going to key respect with already, us the strategy can person, design, Alastair said forward? seen have Logitech

Certainly, second the and one. the one I'll can first take you take

we're for allows past increase larger And On basis amortization a proud in that side, have is reached have business tax We're incredible our Lausanne. that of overall, ] the had grown we Vaud, significantly deduction. Canton with the Switzerland. because the very we this we talent quarter of of in to headquartered [ where this the footprint agreement the tax and a

smaller we they're that increased work with -- quarter. great onetime the basically through the employee proud that, a U.S. onetime So with that the of base, saw that there. investment kind the in U.S. a past really as we benefit operations of a a to on done did nature. is phenomenal for reached and quarter. because agreement practice gone were much side, we've There's this. And team foreign government, work of and larger standard you larger couple are just Those have of and tax a our our they onetime with, a And in having other analyzed this items our deduction this of well in we've there's job kind tax

results repeat. So not if you look quarter, this will at those the

If on you tax to next XX% think where the low rate tax be structurally, standpoint, company is the year in GAAP the is going a range.

XXs on GAAP So the low side.

sort a low that's rate. And can GAAP be side I and for think the cash fairly change. But impact pay going tax that accruals. price of a rate plus year standpoint. teens, the non-GAAP of to from low we course, on share tax next XXs is the big has And that GAAP overall The

accruals, GAAP tax plus rate taxes the teens, cash paid low So XXs. non-GAAP is low

based This did onetime hard et based really work our cetera. quarter investment on our was that really team and Switzerland, the on a in

X% for guidance did non-GAAP, materials provide XX%. in this to So we the year,

-- non-GAAP, So about next on year the models design? want to do low the you count talk GAAP. overall, teens in though, XXs for would Hanneke, low I

Thanks point for role and special difference Logitech, the Design really, plays asking question. for at Yes. it's real of us. a a really

weeks. last in other a learned my decade, of design the fantastic over things Alastair, organization. I built one Now That's the first X

than And designers fantastic. at Logitech. more have they're internal XXX We

Global as in won in Award, really industry quarter, they team is So award. Design the Team Red and prestigious a actually, beyond which last a again, Dot the this

So culture have culture, think at I'm continue team no that's excel been I organization have thankful design. to designers. and of created going the Logitech. we the in that to we're the for with doubt the design I And

So asking. thanks for

at BNP. Our next Martin from question is Jungfleisch

the can of I me. hear And also strong you on numbers. hope congrats set

So maybe X questions.

side. on cost First the back one is coming

area in you webinar the year, few mentioned a R&D key you, remain December last out for innovations. and just also I think will at that a early you focus pointed

the have question the taken line Now been in X%. that magnitude if in remind or negative far and But the you that have website coming you so off R&D on just up quarters second as impacts seen just increasing any negative you this Should gaming the impact? would rough curves. keep costs also, if if this And any QX, China you could on in expect the routes expect China to exposure morning. wondering gaming. us we in is are then cost well? And have These

gaming comment us. that China morning. comment this didn't is from I market Yes, a the understand important for In China really the general,

an have Overall, consumers competition. were big China lots There's high end. low-end China's It's We brand iconic of a flat. in the pick brand at the roughly and our market. preferentially results

general, you anything add expectations. end. about talk on they so more a was very had better at Clearly, better we to brand OpEx? we preferentially, across market performed our high it's we want Asia quite before Do and But big a relative well in technology -- down choose So to China, it's challenging Asia. the But China competitive. actually, and

Yes. premium important, very competitive. China I Pro keeps market. business, our in super be so and A what there, all offering I'm in And to for like us it's over seeing honest, Mice terms Light we'll of so That especially. that any is

with And G&A reason sales and sales come to line. course, Great. of due onetime pay I And change, is G&A that just to trough quarter-over-quarter to And quarter. be and with because then sales transition quarter, variable marketing the I based on roughly expect on believe and the tied then, the would the expect you in the I costs would commissions you see and OpEx that commissions and to prior to seasonality the down. have quarter line sales has peak less marketing in normal you that question, engineering

roughly be XX% that estimating to So I be would overall, Day. Analyst in of total, should course, line. then, year, R&D But in next revenue in about of your And talk again, we'll roughly models. quarter-over-quarter at have

Chuck. Hanneke,

for Michael Foeth from last Vontobel. Our today question is at

X questions Just me. last for

The inventories. is first one on

shipments can reducing inventory reduction. give straight away. your or up Any question a that inventory that of and situation? is limitation in on there the made is obviously levels. the the bit you would related sort and where it Red You inventory need a delivery build more to would of My be job my if question supply you I'll then second great in whole specifics terms the chains ask that? And And to disruptions counter to Sea

in You positive, trajectory in shareholder trajectory the that little room depicted It a interpretation mentioned, terms where of looks bit letter. the you for it maybe suggest. slightly goes. not into that maybe Is as in to to your of It long-term your like would you're terms it growth. obviously, but leaves the for turn XXXX, positive growth that model as slightly go high but single-digit not expecting correct it fast

Certainly.

executing few and you say, quarters really the basis. Again, levels be down -- this again, our it's thank massive On because teams we've to really, operating capital between inventory such plan you improving is in X%. we on would linearity is stated on the higher we it and ROACE. That turns want an a quarter X.X to in an important annualized an for was I capital. inventory. metric. channel invested or employees such improving And inventory, paid drive have inventory return you ] our And have had said as if We model dividends, is Europe on inventory great less now on inventory. have return ROACE, side, That invested or the driven [ down number. X% want quarter We on-hand really just last and impressive for that our

into So to our now quarter. go going in again, trough we're

can to think importantly, but want we we're is room. We getting demands. I So Red because the on to We #X, don't do our way. to returns that SAT but Customer There to customers' with better, the down inventory will our diminishing point come there more QX inventory Is down. right come the is of challenges. more stock probably want do turns don't want we distribution centers that meet outs. in will Sea room? carry in

so and upper levels, or we're to I approaching I X% of the can think quartile. X% best-in-class that that targeting frontier hitting kind would X% say X% on So good, is of occasionally. But maybe we're efficient precautious to get point he inventory

Sea, relates Red adds it it the X weeks of to time. As about lead

be that a it's material. not as higher and to an cost. There air, will little So I impact mentioned earlier,

would Do as we bit expect last we I you... of inventory of the a was maybe part, a it bit increase, increase So little would little the -- an can into I inventory expect but keep Hanneke? QX. And flat, what get then

gradual The does and growth, leave it room for interpretation?

that you answer let I'll one.

started. go to we where back I'll

really is think a I of when, growth if. question not

uncertainties will But We there growth. to how much. of when out just on little back exact are many get and giving you there so numbers we're that a cautious

at Analyst will Day. We

and of view an our Day May, have and So Analyst about stay outlook. our talk middle And in tuned. we'll

the People out model, just overall, excited. And next I given it's great a think think to need but the a are year into cautious idea great uncertainties. we be I operating business, now cautious is getting looking going next year. like be into

Hanneke, And question last that, that's with our today.

look I teams really nice speaking they It's world your everyone. interest next been to Logitech. us Well, you thank meet care. continue you a huge you to all Take Thanks for Logitech for course, Thanks, the around quarter. do. Great. the everything guys to you, with guys. Nate. joining in thank of to And for forward

Thank you.