Logitech International S.A. (LOGI) on Q3 2022 Results - Earnings Call Transcript
Nicole Kenyon: Great. I’m going to start. Thank you everyone for joining Logitech's Q3 Fiscal '22 Earnings Call. This call includes forward-looking statements, including with respect to future operating results and business outlook under the Safe Harbor of the Private Securities Litigation Reform Act of 1995. We are making these statements based on our views only as of today. Our actual results could differ materially due to a number of risks and uncertainties, including those mentioned in our earnings materials and SEC filings. We undertake no obligation to update or revise any of these statements. We will also discuss non-GAAP financial results. You will find a reconciliation between non-GAAP to GAAP results and information about our use of non-GAAP measures in our press release and in our SEC filings. These materials as well as our prepared remarks and slides accompanying these are available on the IR page of our Web site. We encourage you to review these materials carefully. Unless otherwise noted, comparisons between periods are year-over-year and in constant currency and sales are net sales. This call is being recorded and will be available for replay on our Web site. And with that, I'll turn the call over to Bracken. Bracken Darrell: Thank you so much, Nicole. I’m excited about this quarter's strong performance and our ability to raise our full year outlook on top of last year -- our last year's exceptional revenue growth. We have a strong foundation heading into next fiscal year. We also continue to gain share in the majority of our categories this quarter, reinforcing that we've got an innovation engine that is really working well. The company's performance reflects the broad strength of our capabilities, especially of that innovation engine, but also reflects our diverse portfolio and leading positions in growing markets. Our focus on operational execution continues to help us navigate the industry-wide supply chain challenges. And our investments in design and go-to-market are setting us up for the next chapters of growth in the coming years. I've always said that picking good markets is a key to success. So, I want to speak just a moment about the market trends. We've always focused on identifying fast growing categories where we can develop a leadership position, leveraging our set of powerful capabilities. Today, and over the last few years, Logitech has focused our design centered innovation engine on some of the world's most exciting secular trends, video everywhere. Gaming is a social phenomenon, hybrid work, and the explosion of creators on all digital platforms. We are well-positioned with each of these macro trends to keep growing strongly as they grow and evolve over the next decade. And I said up front, we have an innovation engine that's mature and continues to strengthen. Our design lead innovation capability is powerful, delivering diverse product offerings and a robust pipeline for the future. We've been methodical. We've segmented our markets, we've understood customer needs, and we've reorganized our teams to create new products. And more recently, we've increased our marketing efforts to drive preference for our brand. With this consistent approach, we've established leadership positions in most of our key categories. And as we have for years continued to grow market share. Now let me briefly step into those categories. In creativity & productivity, we hit our biggest quarter ever, driven by another strong performance in mice and keyboards. Hybrid work is driving and even accelerating demand for these products. We are the market leaders in these categories and we're innovating as a leader should, developing upgrade opportunities that offer more value and have higher price points, unlocking new dimensions of advantage that cater to today's consumers, like sustainability and lifestyle, and always staying ahead of what's happening in the category. I'm so excited about the reception of our newest offerings. From the latest MX portfolio to the sexy pop keys lineup. There's really something for everyone. Yet only a small percentage of people have the optimal workplace setup. Let me repeat that, few people have the optimal products set at their desks. In fact, even our market penetration, our oldest category, mice is still an opportunity. Imagine how many don't have ergonomic mice or keyboards but actually need them. How many people don't have a cool keyboard and don't yet even know that pop keys exists? And how many of even those of you on this call, don't yet have the amazing MX Master and MX keys on your home desk and office and probably would love it. And we continue to expand our product offerings to address underserved customer segments. And like the recently announced M650 Wireless Mouse that has a left-handed mouse option. We continued our strong momentum in gaming, even after having exceptional revenue growth last year. We've been telling you that gaming is no longer a fringe hobby for a small group of customers for a long time. According to Newzoo, there are now 3 billion gamers worldwide. And whether you game for fun or competitively, our peripherals improve your experience. As the number of gamers grows, we see more and more opportunities for customer segmentation and product innovation to meet a broader set of market needs. Our gaming motto is that life is more fun when you play. And we believe this applies across the gaming community from pro to social gamers. As one example of our continued innovation, our recently launched G435 gaming headset was certainly designed with competitive gamers in mind. But it's also good for any gamer who just wants to connect with other players. It's extremely lightweight with an ultra-fast connection, and it's made of recycled plastic. In video collaboration, we're starting to see some increased activity in our office reopenings and hybrid work planning. Video collaboration sales improved this quarter, nearly equaling last year's high levels that when sales more than tripled. We delivered 24% quarter-over-quarter growth, and conference cams grew double digits year-over-year. Video has become the de facto tool for replacing in-person meetings and audio only conference calls. Smaller conference rooms are more vital than ever. But in fact, all meeting spaces will need video. Our mission is to develop video collaboration tools that can make remote participants feel like they can participate equally or even better than those in the room. This year has been another year when operations has been tested for many companies globally. Our operations team continued their strong execution in the face of ongoing industry wide supply chain challenges. As we mentioned last quarter, we continue to be impacted by higher logistics costs and prolonged delays and challenges with component availability. However, our active supply chain management, long-term supplier relationships and our wholly-owned production facility continue to help us remain competitive. With an eye on the future, it's really important for us that we continue our focus on sustainability at the heart of our business. We're very pleased that we were recognized for the second consecutive year for leadership on the Dow Jones Sustainability Europe Index or DJSI. We were ranked number 12 worldwide in the Computer Peripherals and Office Electronics Industry for ESG. We're taking strong action, including going carbon neutral, which we achieved in 2021 and setting us on a direct path to be climate positive beyond 2030 by capturing more carbon than we create. We are carbon labeling our products with the amount of carbon created by their production, distribution, use and end of life, the so-called Scope 1, 2 and 3. So, we're including everything. In addition, we're moving to recycle plastics throughout our products, which are now in 65% of our mice and keyboard product lines. Now let me turn the call over to Nate for further comments on our performance this quarter. Nate, good morning. Nate Olmstead: Hey, good morning, Bracken. Thank you. We delivered solid financial results in Q3 with record sales in key categories as we navigated a challenging supply chain environment. As Bracken mentioned, we gained share in the majority of our categories while investing for long-term growth. Our total company top line declined 2% in constant currency with impressive double-digit growth in Keyboards & Combos, strong single-digit growth in pointing devices and gaming and double-digit sequential growth in video collaboration. I'm pleased with our top line results and we had supply to fulfill most of the demand in the quarter. We had insufficient stock for some products, including Keyboards and Gaming Wheels. Industry-wide supply availability, logistics disruptions and cost increases negatively impacted our Q3 top line growth by about 3 to 4 points and gross margins by approximately 2 percentage points. Despite these headwinds, we are increasing our sales and profit outlook and now project to grow net sales for the full fiscal year. I'll cover our outlook in more detail later in the call. In our Creativity & Productivity categories, pointing devices grew 8% and Keyboards & Combos grew 29% driven by continued demand from hybrid work trends. We also saw strong growth in our B2B channel and high-end MX product lines. Although webcam sales decreased by 12%, they are still triple where they were 2 years ago, and we grew market share by more than 10 points over the last 3 months. Q3 video collaboration sales declined 1% after growing more than 200% in Q3 last year, and quarter-over-quarter sales increased 24%. Similar to the first half of the year, conference room cameras and systems led the category performance growing double digits year-over-year. Gaming grew 8%, off of our 73% growth last year, and with better supply and gaming wheels, the category would have grown double digits this quarter. It's been another excellent quarter for gaming with strong growth and share gains primarily enabled by an innovative product lineup and solid marketing execution. The tablet accessories category declined 37% in Q3, however, excluding Japan, where we had a large education order in the same period last year, tablet accessories sales grew 21%. Our tablet categories still more than double the size it was 2 years ago and our strong product portfolio help drive 5 points of share gain in the quarter. Our music categories declined as expected in Q3, down 29% including mobile speakers down 22%. We regularly review our portfolio and redirect resources to new opportunities and along those lines, we've made a decision to cease future product launches under the Jaybird brand. We remain committed however, to developing wireless audio products such as Logitech Zone Wireless and UE FITS. Q3 non-GAAP gross margin was 40.6%, down as anticipated from last year's elevated levels and remained within our target range. Higher freight costs reduced gross margin about 2 points year-over-year and quarter-over-quarter. We expect those headwinds to remain factors in Q4 and they are included in our profit outlook. Turning to expenses in the quarter, we executed our plan to strategically invest to grow our business over the long-term. Our Q3 non-GAAP operating expenses increased 30% to $361 million. The increase was largely driven by investment in marketing, sales coverage and product development. Rounding out the P&L, our Q3 operating profit decreased 37% to $302 million, and operating margins were 18.5%, down about 10 points. Compared to 2 years ago, however, profits nearly doubled and margins are up 1.7 points. Q3 cash flow from operations was positive $377 million. We spent $116 million on share repurchases and ended the quarter with a cash balance of approximately $1.4 billion. Our cash balance is flat with Q3 last year, even as we have returned $450 million to shareholders through dividends and share repurchases year-to-date, more than double the amount of the first three quarters last year. Our Q3 cash conversion cycle was 56 days up from an exceptionally low 15 days last year. The primary driver of the change in our cash conversion cycle is higher inventory days, impacted by industry-wide supply chain disruptions such as port delays, as well as demand forecast fluctuations for some of our products. We also continue to leverage our balance sheet to strategically purchase hard to find and long lead time components to assure supply availability and maintain competitive advantage. Looking ahead, we are increasing our fiscal '22 constant currency sales outlook to growth of 2% to 5%, up from our prior outlook, a flat sales growth and constant currency plus or minus 5%. We are also increasing our non-GAAP operating profit outlook to $850 million to $900 million, up from our prior outlook of $800 million to $850 million. And with that, we can open the line for your questions. A - Nicole Kenyon: The first question come from Asiya from Citi. Asiya Merchant. Asiya Merchant: Hey, good morning, gentlemen. And, Nicole, congratulations on a well-executed quarter. Some of the questions that we've heard from investors, as you guys report these segments and look across your portfolio, what gives you like some confidence about future years' outlook and the fact that this wasn't just some ASP benefit that's benefiting, like, for example, your creativity & productivity portfolio. And then I have a question on gross margins as well. Bracken Darrell: The other day, we -- across all of our categories, these are not new trends for us as we've talked about many times, we mentioned in the script, again we've had -- it's been very long-term growth, the secular trends underneath this are very, very strong. And I don't see any reason why any of these trends will continue. In mice and keyboards, I said this in the opening of the call, it just continues to blow my mind that if I can guarantee you that if we took picture to everybody -- everybody's workspace on this call, and we didn't have to analyze them very carefully. We took a quick glance, I'll bet there's maybe 20% of people here have optimal setup and you follow us. So, what we do? So, there's just opportunity across the board, Asiya. Asiya Merchant: Okay. And then on gross margins, Nate, you talked about the impact of higher freight costs that were impacting the second half margins. Are we to assume that 2% impact continues in the fourth quarter? And when do you see -- do you see any light at the end of the tunnel for these higher freight costs? Nate Olmstead: Yes. I mean, yes, I think in Q4 I expect similar supply cost challenges -- supply chain cost challenges. And in terms of the timing of when those were released, it's a great question. I think there's really two elements to this Asiya. There's predictability and there's also cost. And the predictability of supply -- in the supply chain really industry-wide has not been to normal levels. So, you're getting more delays as things come in both on ocean and on air. But that lower predictability is causing us to use more airfreight more expedited supply measure channels to try to improve the predictability, right, and to make sure that things are in stock, you can see the demand has remained pretty resilient in a lot of these categories. And so, we've increased the use of air freight to try to overcome some of those predictability challenges that we see on the ocean. So that's one reason why the costs are higher and I think they'll remain higher in Q4. And the other reason, of course, is industry, right, just the rates being higher. They're up 3x to 4x year-over-year both on ocean and air. I think that we could see some relief on both predictability and cost in our next fiscal year, but probably not till the back half. But we'll keep a close eye on that and an update as we go. But I don't see any short-term release on those pressures. And we're operating under that assumption that these are going to be with us for a few quarters still. Asiya Merchant: Okay. And will that be offset, I mean, I think the way the supply chains and then you guys were backing on to your media spend that benefited you in fiscal '21. So, is the delta there just incremental media spend on a year-on-year basis? Nate Olmstead: You're talking about year-over-year gross margins? Asiya Merchant: Yes. Nate Olmstead: Yes, the two biggest factors year-over-year would be the return to some level of promotion. We're still not back to levels that we were 2 years ago. But some increase in promotion as we've been talking about doing and then also the higher logistics costs. Those would be the two biggest drivers year-over-year. Asiya Merchant: Okay. Thank you. Bracken Darrell: Asiya. Nate Olmstead: Thank you. The next question comes from Alex Duval. Bracken Darrell: Hi, Alex. Alexander Duval: Yes, hi, everyone. Thank you so much for the question. Firstly, I just wanted to clarify, some investors been asking, obviously, you beat consensus today by around $70 million on EBIT. But then, implicitly, you've only upgraded your full year guide by around $50 million. So, people just wanting to understand is that just prudence given some of these moving parts you've just been talking about? Or is any sort of change in fundamentals? And then secondly, more a philosophical question. Obviously, we're in this period of very hard year-on-year comps. But as we start to move forward a few quarters, those comps will ease very materially and we'll start to see comps in the single digits. You've obviously articulated a model of 8% to 10% constant FX growth in the longer term. So, should we be expecting you to hit those kind of growth rates at that point in time? How should we be thinking about that transition as you get out of this period of very challenging comps? Many thanks. Bracken Darrell: Yes, let me jump in on the second one and then I will hand the first one back to you Nate. On the second question, which is a good one. I invite you very cordially, all of you to our Analyst Investor Day, that's coming up on March 3 and we will be talking about exactly that topic. And we'll be thrilled to have you there. And, Nate, you want to talk a little bit about why we set the guidance where we did kind of our general feeling about it? Nate Olmstead: Yes. Yes, it's a good catch there, Alex. I mean, I think, sequentially, if I look at the guidance, really, the top line sort of indicates at the high end something a little bit better than typical seasonality into low end, something a little bit worse than typical seasonality. And then from a profit standpoint, as I just mentioned to Asiya's question, I think similar headwinds on gross margin pressure. I think currency could be a little bit more of a headwind sequentially than what we had here with interest rate volatility and, of course, the volatility in the market overall right now. So, I think there's some potential for incremental cost pressure, impacting margins, and of course, as you get down to the lower end on the revenue guide, you've got some additional unfavorable operating leverage in the model as well and so I took that into account. But I just think we're in a period right now, our business like most operates its best in a really predictable environment. We can get our supply chain in a predictable state, we can have great matching of supply and demand. I just don't think we're quite there yet across the industry and across all the markets, but it's really encouraging to see some of the categories continuing to grow despite the tough comps. So, I feel great about that and I think the underlying demand trends over the long-term look really solid. Alexander Duval: Many thanks. It's very helpful. Bracken Darrell: Thank you, Alex. Nicole Kenyon: The next question comes from Loop Capital, Ananda. Nate Olmstead: Hey, Ananda. Bracken Darrell: Hi, Ananda. Ananda Baruah: Hey, yes, thanks to call. Yes, good morning, guys and Happy New Year. Bracken Darrell: Happy New Year. Ananda Baruah: Bracken, to your point, you guys look great, you look super crisp. And I'm doing this on an iPad. And I get to compare and contrast because I'm staring at me and I'm staring at you and I think I need to go out and get a new webcam. Bracken Darrell: Oh, actually you might need the new Litra Glow Light that we just launched. Ananda Baruah: Was that what you do right behind you, do you guys have this pro lighting situation going on? Bracken Darrell: No, no it's very beautiful. Looks like a webcam, but it's a light we just launched it. So, it's available. Ananda Baruah: I'm going to -- I'm actually going to take . Thanks. Thanks for the heads up on that. I guess you just -- so a couple things, if I could. So, with the strong revenue performance this quarter, again, anything -- any structural context that might be useful for us are interesting for us to be aware of? I guess, I'll just start there and have a couple quick follow-ups. Bracken Darrell: I'll jump in on that and Nate you can add anything you'd like. I think the most important structural comment I'd make is, it's -- this is playing out about the way we thought it would. We are really excited that at the end of the day, the growth in number of workspaces, the need for conference rooms of video, the incredible long-term growth of gaming, and the equally or maybe more incredible long-term growth of streaming creating, those structural secular trend moves are happening. And they're -- as we go through the pandemic, they've continued to happen, and wherever you think we are in the pandemic now, they continue to happen. So, it's exciting. I think it just validates our long-term thesis, but these are great long-term trends to ride. And by the way, we're not going to stop there. We're going to keep launching new categories and getting behind other new trends over time. Ananda Baruah: That was actually one of my follow-up. So maybe we'll just go there. Are there new categories that you guys are getting excited about? Or maybe already excited about? Bracken Darrell: Yes, there are. I mean, I think -- just as an example, we're always working on new categories. We the concept of Cs , which we haven't talked about in the last few quarters because there's been so much demand in our existing products. We're always working on them. A lot of them don't make it out the door, and some make it out the door in a very quiet way and we quietly pack it back away. So, when one gets some publicity, it means we're really excited about it. And I mentioned electrical lights as an example. I mean, I think being in the lighting business makes a lot of sense for us. It's a super -- this one, for example, is super easy product to use. So, yes, I'm excited about some new categories will be coming over time for sure. Ananda Baruah: Okay, awesome. And I guess just last one for me, I'll see you before. Are you seeing any legitimate impact yet from new competitors? Bracken Darrell: Yes, we've had new competitors in serially or continuously as long as I've been here. I think we had in the webcam category, we had a lot of new competitors, and a lot of them have kind of receded back out again, or at least they've reduced their efforts there, others will stay. But Nate always says the same thing and I've always felt, which is great -- competition comes with great markets. And we're in great markets. So, I would say it really suggests we pick the right places, and we love our innovation engine. And we built a commercial engine now, we can deliver to both enterprises and consumers. So, we're super optimistic for the future, and we feel are very competitive. Ananda Baruah: It's -- and I -- I'm probably going to miss one. But off the top of my head, I think specifically of, Microsoft and HP and those are deep pocket folks and they're new for them. So, they're probably not quite as committed as you guys are. It's a new category for those guys in a strategic sense. But they do have deep pockets. And so, I think of those guys, but I mean, Bracken, is that to say that you guys don't seem like you're really seeing material impact yet. And not necessarily to the business, but like not really seeing them in the marketplace kind of structurally in the way that you guys operate. Bracken Darrell: Yes, I think we -- the competitors you mentioned and other competitors have been in the market and they're going to be in the market and we know they're going to keep investing and we expect it. And so, we're going to keep investing and to keep driving, keep growing. All I can say is we're growing market share across all our key categories, vast majority. So, I feel good about innovation engine, and we've got good stuff coming. Ananda Baruah: Awesome. Thank you, guys. Bracken Darrell: Thank you, Ananda. Ananda Baruah: Thanks a lot. Nicole Kenyon: Thank you. Next question is from JP Morgan, Paul Chung. Paul? Nate Olmstead: Hey, Paul. Bracken Darrell: Hey, Paul. Paul Chung: Hey, good morning, guys. Bracken Darrell: Good morning. Paul Chung: Nice quarter. So first up on VC, you called out strong video camera and systems demand . Anything you want to call it by region, or particular vertical and how the initial trends been in the kind of the first month in the year as you start to see more people return to the office? Bracken Darrell: I would say in terms of within the Video Conference segment, webcams have declined. But boy, they've climbed off an incredibly high base, they're really high. Conference cams are growing double-digit. That's a great story. I think that's even though I would say probably most people on this call would agree, we are only in the beginning of the big saw of the office, as it starts to warm up again in there. And people actually do start to go back, I think the implementation plans for video conferencing you're going to grow a lot more. So, I think, I feel really good about that. Do you want add anything, Nate? Nate Olmstead: Yes, I think regionally, Americas was kind of the strongest of the three regions, although EMEA actually had a much better quarter, this quarter than it did last quarter, Paul. I think we mentioned last quarter that EMEA was a little bit soft and so we’ve seen some increased activity out there. And then from a product standpoint, as Bracken said, I think it's impressive when you look even at something like web cameras, we're pretty much selling the same number of units as we did a year ago. Some of the mix is a little bit lower, this is more on the PC side than in the business. But we're selling kind of the equivalent number of units as we were a year ago, which is great because that means the install base is growing and it creates such future opportunity there. So, there's still a lot of interest in webcam. But last year, it was such a hot category. And I think it's been a little bit more reasonable this year. But I also think that has good potential in the future as offices reopened. I think we'll see more video at the desk and I don't think we've quite seen that yet. Bracken Darrell: And I would say, Nate, that we're good at driving mix within categories. And we actually drove really good mix last year, but it wasn't us, it was the fact that we just couldn't make enough. We didn't have supply at the low end. Nate Olmstead: Yes. Bracken Darrell: So, I think now that we've got -- we're going to have a period, we're going to have the mix story will go the other way a little bit on webcams, but then we're set up to see what we can do with the category after that. Paul Chung: Got you. And then on competition, given your cash and ability to find inventory, are you seeing some market share in that respective VC, I guess across other segments as well? Bracken Darrell: We gain share -- go ahead, Bracken. Bracken Darrell: Yes, I was going to say we continue to gain share in VC. And I think having a great balance sheet is an advantage. So, we'll continue to try to make sure that we're well-positioned with components going forward. We still have -- we're not immune to what's happening out there. So, we still have some bonus shortages. But I think generally speaking, we've really -- we got a much-improved state now, hope it stays that way. Nate Olmstead: Yes. It's hard to know, Paul, I mean, we'll listen as you will to what our competitors say about their supply, I mean, the market share indicates that we did pretty well. As I mentioned, there were some categories where we just didn't have enough supply gaming wheels. It’s been a challenge for us to get back to the levels that we want to be from a stock standpoint. And so, I actually think we'll probably lose a little bit of share there just based on availability kind of like what happened a year ago with web cameras, and then I think we can recover that share with better supply. But we'll listen to what others have to say. I think also, several other market trends are really playing to our favor, some strength in kind of the high -- if I look at gaming, there's been some strength in the higher price bands, which is a sweet spot for us. And it's a little bit -- been a little bit weaker in the entry price bands, where we also play a lot. But the market trend is towards wireless and places where we're strong. And so, I think that's been beneficial from a market share standpoint. Paul Chung: Thanks. And last question is the pace of OpEx is on track to be up pretty strong this year against a big step-up last year. So, as we think about the out year, should we assume kind of the pace of OpEx slows? Or is it more kind of think about it in terms of percentage of sales in that 25% to 26% range? Thanks. Bracken Darrell: Nate, can you take? Nate Olmstead: Yes, I mean, I think we won't be increasing OpEx same growth rates this year, unless revenue grows at those rates. I think we'll probably see more alignment between revenue and OpEx in the future, Paul. This was really a year we had to catch up on some investments last year with 74% revenue growth, just far ahead of what our ability was to really invest wisely into the business. And so, taking the opportunity this year to do that, to set ourselves up, which we think for some good long-term growth opportunities. But I would say out into the future, you're going to see OpEx much more -- at a rate much closer to what you would expect relative to revenue. Paul Chung: Great. Thanks, guys. Bracken Darrell: Thank you. Thanks, Paul. Nicole Kenyon: Thanks, Paul. Next question is from UBS. Joern, are you on the call? Bracken Darrell: Hi, Joern. Joern Iffert: Yes. Hi. Nate Olmstead: Good morning. Joern Iffert: Good. Morning, Bracken. Bracken Darrell: Good morning. Joern Iffert: Good morning, Nate. Thanks for taking my questions. The first one would be, Bracken, on the statement you made at the beginning of the call, that Logitech reorganized teams to drive innovation market prospects. What exactly was reorganized recently? Bracken Darrell: We are constantly returning, the -- for example, in our C&P business we were reorganized a few years ago actually around different segmentation approach. And I think that's been super effective. It's unlocked some openings for us, for example, in ergonomics, general lifestyle categories. I think we partly attribute pop keys and pop mouse, these new kind of lifestyle mice that include their mechanical that they're beautiful and fun, really focused on Gen Z. We partly -- that was -- that's probably because the way we reorganized now. But we're not going to stop. So, continuing to stay really close to customer and organize around that has been one of our, I would say, strengths. And we probably got two different -- two of our businesses right now they're reorganized again as we go into the next year. So, we see opportunities. This is a very fluid market, lots of consumer insight and customer insight on the business side. Joern Iffert: Right. Understand. Thanks. And the next question will be please on your capacity planning. I mean, this year production site in China, and also with your third-party suppliers. I mean, what are your plans in terms of capacity expansion for the next 1 or 2 years? What are you reserving here to your suppliers? What are you doing in your own production side? Bracken Darrell: Yes, let me jump into that, Nate. Nate Olmstead: Yes. Bracken Darrell: It's a little bit of a hard question to answer. We have a lots of different production sites and then we have lots of different component suppliers, of course, like everybody. The main focus we've had in our supply chain is really been location. So, we've tried to distribute our manufacturing into new places. So, we've moved -- we have more production than ever in China, but we have a lot more production than ever out of China. So, we have China, we have production in Southeast Asia and multiple countries now. And we really set it up for a couple reasons. One was during the tariff period, but then we've decided to really continue to ramp that up, because we want to make sure we are well-positioned for whatever could happen down the road. In terms of production planning, we've -- the expansion of our ability to produce ourselves or in other people's factories has always been a strength for us. We've been able to ramp up and ramp down pretty quickly and move things in and out of our own factory. So, we're going to keep that capability. Joern Iffert: Thanks. And the last question, please, on R&D spend. Can you give us some more clarity how much of the R&D is going proportionally in the existing segments, Logitech has and how much of the R&D is going into new categories that we have a rough idea? Bracken Darrell: Well, I would say the vast majority goes to our existing businesses. We've got big, strong, vibrant opportunities in all four of those large secular trend areas. So, the vast -- the super vast majority goes into that. But we have a seed program where we're always investing in on small teams to really create pilot programs against new categories. And that's ongoing all the time. Super exciting, always fun, I've got a couple products on my desk from that. Electric Glow came out of that. Sometimes that results in M&A, where we figure out, we've learned enough about a category that we feel confident that we want to be in it, then we go out look. Sometimes it's organic, like our UE FITS. If you haven't seen that product, it's really amazing, automatically fits -- customizes to your ear in 59 seconds. I don't know if ever talked about that on this call. But it's pretty amazing product. And it's in market now in a small way, selling direct to consumer as we continue to learn how to bring that thing to market. But, yes, we've always got products out there. But we don't -- we really measure our investment against the timeframe when it needs to -- when it might come out. And so, we try to fail early, fail fast. And then -- and in a small way, so we can keep pivoting and understanding the customer need better until we get them right and then launch them like Litra Glow. Joern Iffert: All right. Thank you very much. Bracken Darrell: Thank you. Thanks, Joern. Nicole Kenyon: Thank you. The next question comes from Erik Woodring from Morgan Stanley please. Bracken Darrell: Hi, Eric. Nate Olmstead: Hey, Eric. Erik Woodring: Guys, good morning. Congrats on your quarter here. Sorry about that. Let me get my Logitech camera up and running. So maybe this is just a high-level question. But we've seen a handful of companies that I think the market perhaps would have considered to be COVID beneficiaries. See some challenges in the near-term. Obviously, you're bucking that trend. And so -- would just love your high-level thoughts on why you think that is why Logitech has been able to do that relative to other preeminent companies, let's call it. And I have a follow-up. Bracken Darrell: Without knowing exactly which companies you're referring to, I think our belief and I think it's a -- I think it's turned out to be true. Our belief was that what COVID really did wasn't to drive a onetime surprise in our categories, but was to accelerate what was already happening. And so -- and the cool thing about that is, if you have -- let's just take our PC peripherals categories, if you have more workspaces, especially workspaces that have more dimensions of mattering to you, what does that mean? Like, when you have a product in the office and you have a mouse and a keyboard, it looks like everybody else's mouse and keyboard, so you might not care as much as at home. Or suddenly you have a mouse and a keyboard, it's actually part of your home decor. And I don't know about you, but I didn't even -- believe it or not, I didn't even have a home office that had a permanent PC on it, or backlog before. And so now I do and a lot of people. Now the interesting thing is that, that's just an increase in the installed base, because I still got something in the office. And on top of that, what I got for the home, and even me, was I scrambled. I got what was available nearby, as I was walking out the door on March 6, or 7 or whatever it was, I think there are a lot of us out there like that. And so -- and in to take it to people who both work in this business, most people don't even know what's out there. And so, the opportunity to continue to upgrade them is significant. So, I just think this -- the biggest difference between us and most businesses is it's a gift that keeps on giving. Once you have it, you can upgrade it, and the experience really is better. And I think -- and we're focused on upgrading people over time. So, there's more spaces and there's a constant opportunity for upgrading, especially as we keep innovating. Nate Olmstead: Yes. Erik Woodring: Awesome. Sorry about that, Nate. Nate Olmstead: I think the way to maybe think about that too is just existing trends that got stronger versus some new trend they got created that maybe I wouldn't call it a fab, but might have just been more short lived. And I think in cases where something new has been created, it's sticky, right? We've been doing this now for 2 years. People's way of working has changed, their ways of learning have changed, their ways of communicating have changed. And so, we've kind of gotten up the adoption curve on a number of trends that we're already thinking a lot about, like video, that was a trend before, but it's gotten a lot stronger. And we've gotten up the adoption curve where a lot more people have gotten comfortable with it, and they actually prefer it. And so, I think that's what's perhaps different in many of our categories or really in all of our categories, I think is that they were existing trends before that had good growth characteristics and all of those, I think have gotten stronger. Erik Woodring: That's really helpful color. Maybe as a follow-up and this is more of a near-term comment. Just a bit curious on your general ability to procure supply in the December quarter and whether that surprised to the upside relative to your expectations? Really just trying to get it. Obviously, it was an amazing quarter kind of what do you think led to that outperformance relative to perhaps prior expectations? And was that supply driven? Or was that something else? Bracken Darrell: It wasn’t one quarter, but I think -- actually we're -- we continue to be a little frustrated, we couldn't get better supply. As Nate said, we had some areas where we really just couldn't get as much as we need it from a component standpoint and logistics continue to be a challenge. So actually it could have been even a little stronger. Do you want to add anything to that, Nate? Nate Olmstead: I mean, I think it was actually kind of as expected in a lot of ways. I mean, we went into the quarter knowing that we would be -- tighten some areas and it was really -- I think we recovered well, we recovered kind of late in some places too. The linearity in Europe, for example, was pretty back end loaded. But I think we got there on time to be on shelf for most of it. But that was the place where we probably add some more revenue if we could have supplied it. Erik Woodring: Okay, super. Then just last one, just channel inventory levels. I know you guys have commented on that in the past. Just maybe relative to the end of the September quarter where do you think there might be opportunities for channel fill in the future? And that's it for me. Thanks, guys. Nate Olmstead: Yes, I think the channel is in good shape. Again, I think we're light in some areas. But in general, I think our availability metrics have improved a lot. But there's always places where we can do better, but I think the channel is in a good healthy place. And we go into Q4, again, it's always -- it really matters down at the SKU level, Erik. And where the demand is and where our supply is not only in terms of products, but also by country and by region. So, we're going to do our best in Q4 to try fulfill that, but I was happy with the strength of the demand and the categories. Erik Woodring: Awesome. Thanks, guys. Bracken Darrell: Thank you, Erik. Nicole Kenyon: The next question from Stifel, Jürgen Wagner. Bracken Darrell: Hi, Jürgen. Jürgen Wagner: Yes. Hi. Thanks for letting me on. Yes, when I look at what your gaming competitors in the U.S reported recently, you must have gained a lot of share are still gaining. Yes, how should we model revenue growth based on that higher market share in gaming? And then you talked a lot about supply demand for you on your supply side, but also in your end markets. How would you see? I mean, you said March still difficult, but further down calendar '22. How would you see supply demand trending? Thank you. Bracken Darrell: Yes, let me into the first and then I will . Nate Olmstead: Okay. Bracken Darrell: Yes, I think that in the gaming business we did gain share, we've been gaining share and we love our innovation engine, love our team in that business. And without getting into your modeling, I would just say, we're excited about what we're doing. I mean, I think we feel like we've got a group of people and a team that's really working well. And we continue to see opportunities that are actually broadening the definition of gaming today. I had an interview with Jon Fortt, who is a CNBC reporter and anchor and he opened the call really with a lot of insight. I think he said, my kids are now when I was growing up, I would sit and listen to music with my friends and talk. He said now my kids are getting on playing games, putting the headphones on and talking to their friends. And I think that's a really big difference from where even we started in gaming. We saw it as kind of social, but only among a narrow game reset. Now it's broader. And that broadening is a reflection of the market itself growing and expanding horizontally. And that opens more and more categories, more and more different kinds of products for those people like that G435 headset I talked about. It's light and colorful, beautiful and you could wear it. It doesn't -- it's a -- it looks like part of what you'd want to wear if you're a 17-year-old girl, instead of the stereotype of a boy in a basement playing games. Nate Olmstead: Hey, Jürgen, I will also add on share. We're been -- I don't want to overstate our focus on share. We want to get that share the right way, as Bracken said with innovation, with marketing investments to drive awareness and preference for our brand. But -- and I usually look at share over 3 months trends rather than 1 month. As an example, I think we lost some share in gaming, frankly, during the holiday season in probably December or bit November, because we weren't as price competitive as some others. But I think that was the right decision. We want to manage these businesses for the longer term. So, over the 3 months trend, again, we were gaining some share. But I can see in November and probably December that we lost some share, maybe in the U.S where we weren't as aggressive, but we're being very thoughtful about that as well. So, I think it's important to keep that in mind. Just as an example, you're asking about gaming, I'll give you an example in traditional mice and keyboards because Bracken mentioned the MX series. Those products, both the MX keys and the MX Master 3 have 4.7 stars on Amazon over 10,000 reviews each. 86% 5-star reviews on both of those products, which is exceptionally high. But those are just an example. We really have examples like that in tablet accessories, we have examples like that in gaming. So, it starts with having great innovation, great products. Obviously, we're investing more in the marketing capability to drive the awareness for those products because as I mentioned, or as Bracken mentioned on this call, we still have a lot of opportunity with just increasing the awareness of how nice these products are, and what a great experience it is. So, it starts with having a great product and I think we're done very good job of doing that. But we have a lot more to do to drive the awareness and I think that's a big focus. Jürgen Wagner: And supply chain. Nate Olmstead: Sorry? Jürgen Wagner: And the supply chain? Nate Olmstead: Sorry, can you just state the question on that one. Bracken Darrell: Yes, we didn't quite get that. Jürgen Wagner: Yes, I mean, how do you see supply demand for your product shaping? You said we were still in short supply for some of our mice and keyboards, but … Nate Olmstead: Mostly on keyboards and also on gaming wheels we're probably the biggest source parts. I think a bit on mice, maybe as well. I think we did see good strength in the B2B channel, even though I think by and large offices have not sort of reopened to capacity. I mean, I'm looking at your office there. It's probably been fuller at other times. So, I think we've seen some pickup in demand on B2B and that put some pressure on certain products. But I think these are -- we're still really kind of thinking about most of these headwinds. It's sort of been with us for a while. So, we're taking steps to try to secure supply for some of those things that have been tough to find, using the balance sheet there and battling through it. And I don't know, Bracken, you had anything on the supply situation? Bracken Darrell: No, I think, look, we've still got tight spots, and component availability in semiconductors, in particular. Nate Olmstead: Yes. Bracken Darrell: And are probably going to stay with us for a while. So, we've decided we got to live with that and we're going to do the best we can to work around it as we've done in the past. And as we go into next year, I think that's we can expect that for a while. Nate Olmstead: Yes. I think I'll come back to Jürgen question on that too about R&D. One of the things that we have been investing in R&D on a second sourcing. Bracken Darrell: Absolutely. Nate Olmstead: So, I think as Bracken laid out strategically how we think about where we want to invest in R&D, this year we have invested more of our R&D spend into existing products and insurance supply by second sourcing. So, I think positively as availability improves in the industry on some of the semiconductors, we'll probably see an increase in our R&D productivity, just because we will be able to shift more resources towards new innovation rather than second sourcing. Jürgen Wagner: Okay, good. Thank you. Bracken Darrell: Thank you, Jürgen. Hope that office fills up soon. Jürgen Wagner: Yes, we'll see. Not soon, I guess. Nicole Kenyon: It's a friendly reminder, send me a chat or raise your hand if you would like to ask a question. The next question comes from Serge, Credit Suisse please. Bracken Darrell: Hi, Serge. Serge Rotzer: Yes. Good morning, everybody. Good morning, Nicole. Good morning, gentlemen. Well, I would have first VC question. You mentioned that you have seen the less webcams, less headset sales in VC, but more room solution. Is it the start of the transition to the enterprise channel, or is it only that you have very limited in supply for more consumer-oriented products in VC? Probably you can update here also on direct sales on supply chain companies, where you're moving currently. And especially when I'm on the webcam, I see still some products are lagging available 2022 or available soon, like AudioStation or other products, if you could give us more flavor here? Bracken Darrell: Let me start, Nate, you can finish. Yes, I think I wouldn't interpret the mix of sales, the stronger sales in conference cams and the lower sales in webcams is anything more than they're both really strong. The conference rooms, I think we're seeing, as I mentioned earlier, I think we're seeing the early days that the thaw of the office, where people are going to -- are starting to rethink their footprints and how many offices need, how many meeting rooms do you need, how much video do need, which we think is going to be everywhere over time. And then even people restructuring offices, like there will be people closing offices and opening other ones. It's going to be -- there's going to be a lot of turmoil. So, I think we're seeing the early days of that thaw, and that has a lot of video conference room enablement in it ahead of us and we're super excited about that. So, you're starting to see that double-digit growth. On the other hand, on the webcam side, remember, while it's down versus year ago it's way, way, way up versus 2020. So those are pretty heavy numbers. As Nate said, they're actually flat in units. So, it's actually not down at all. So, I would say they both look pretty strong for the years ahead in terms of the number of people really using video. And this is just the future we're in. Nate, you want to take the rest of that question? Nate Olmstead: Well, now I can't remember the . On the enterprise channel, yes. Bracken Darrell: Yes, how are we doing enablement of our sales force. Nate Olmstead: Yes. Serge Rotzer: And procurement companies, in addition. Bracken Darrell: Yes. Nate Olmstead: Yes. I mean, we're -- listen, we are continuing to build out the enterprise sales capability, direct sales, inside sales. Also, I think the cross selling across the portfolio is another big area of focus for us. I think we're still kind of early days on some of these things. But we're starting to see better coverage, better pipeline metrics forming, those types of things. I just think on, Bracken's point, it's interesting on the webcams. A year ago, we had 400 -- we had quarters with 400%, 500% growth on web cameras with NBC . Huge. So, I think, again, I'll just make the point, I think video at the desk in the office, it's something that didn't really exist a lot pre-pandemic, and I think will exist in the future, not going to say post-pandemic, but just in the future as people come back into the office, I think you'll have more video there. And I think we've really seen all of that take off yet. Don't know when that'll happen, Serge. I think that it's good opportunity for us in FY '23 and '24. But video everywhere in the office and at home, good trend. And so, yes, I don't really know that I have much more to add for you on the coverage. It's still -- we're still making investments in it. And that's really a global investment, but I don’t know, Bracken, anything you'd add into that? Bracken Darrell: a long way. We are a different company than we were 3 years ago. We've really expanded our coverage directly into the largest enterprises. We still have ways to go where we feel like we're operating at 100% But I feel very, very good about the trend line. We're on our way. Nate Olmstead: Yes. Serge Rotzer: Okay, probably in addition, I have noticed that you have launched the Logitech Select. This is service contracts, 1 years and 3 years. Can you give us what's the success of or did you already signed the contract with the customers or what is happening there? What is incremental going forward? Give us some couple of … Bracken Darrell: If we gave you growth rates quarter-over-quarter, you just be so excited, but they're on a very, very small base. Serge Rotzer: Of course. But what does this mean for Logitech going forward? Bracken Darrell: No, I think it's very exciting. It's part of a long-term game plan we have, which is, first of all, we want to make sure that our users have everything they need. In that case, it's the customers in the office. And we think we can bring services to them that they aren't getting now, when they buy our products, and then extend those services out over time. So, the famous recurring revenue for us and a better experience for them. And so, we're excited about it. It's early days, I don't want to overstate it where it is now. But I'm optimistic for the future. And I think it's going to be exciting. We'll talk more about that at Analyst Investor Day, I have a feeling in March. So, I invite you, Serge, to come and hear more. Serge Rotzer: Happy to join, Bracken. And probably a last one, I had the impression that the promotional activities are quite low in the also because of availability that appears didn't have enough products and channels, so they were not even in position to make any promise. So, what do you expect now going into January to March quarter because this is a typical promotional quarter, especially with all the vouchers and cash the kids get from Christmas, and then it's really the fight. So, do you see more promotional activities now in the current quarter, or -- yes, what does this is mean quarter-over-quarter? Bracken Darrell: You want to take that or I … Nate Olmstead: Yes, I think Q3 promotional levels were kind of similar to Q2. You really have to go in and look by category. I think in gaming, we definitely did see some increased promotion from competitors during the holiday, but that's not atypical. Not sure what we've seen yet in January, Serge. But … Bracken Darrell: Yes. Nate Olmstead: … for us at the company level, it was not really a change Q2 to Q3. There wasn't really a margin impact from promotions changing at all there. Again, I think our strategy for the last few years and continues to be, let's try to rely less on promotion to drive the top line to drive the business and let's invest in marketing and drive the awareness, and I think that's a healthier way to grow over the long-term. So, both in the short-term and the long-term, that's our strategy. Serge Rotzer: Okay, last one, and then stop. Microsoft wants to acquire Activision Blizzard, what does this mean for Logitech as you have, for example, a call in mice and keyboards, I believe. But still is it an opportunity for you or more a threat? Or what are you -- what is the reach with the first impression you have from this acquisition? Bracken Darrell: Well, I certainly wouldn't say it's a threat. There -- that's the gaming content business and that gaming content business drives our business. So, the better and stronger the innovation is in gaming, the more content created that people are attracted to, the bigger our business will be over the long-term. So, I think Microsoft and Activision Blizzard have already been two big leaders in that and it's super exciting to see them potentially coming together. Whether they do or they don't, gaming is going to keep growing with great content. It's inevitable. Serge Rotzer: Okay. . Thanks so much. Nate Olmstead: Thanks, Serge. Bracken Darrell: Thank you. Thanks so much. Thanks, Serge. Serge Rotzer: Welcome. Nicole Kenyon: The next question is from ZKB from Andreas Mueller please. Nate Olmstead: Hey, Andreas. Bracken Darrell: Hi, Andreas. We are missing you. We are wondering when you're going to come on. Andreas Mueller: Yes. Hello. Just let me the video on. I've got a couple of questions, hi. Bracken Darrell: Great. Andreas Mueller: One is if you have any figures or any experience about this climate pledge friendly selection people can choose in e-shops such as Amazon. I mean, is that really driving demand here? Can you share here a bit what is it? Bracken Darrell: Yes. Let's take them one at a time. So, I'll answer that one. The answer is no, we don't have any data right now that would say that, that we have -- we're getting big sales out of our climate policies and practices, which I think really are leading edge and leading in the industry. So, we're doing it because we think it's the right thing to do. But we believe that that's going to be a brand builder and a business builder over time. There is a growing certainly among younger people, kind of Gen Z and also the Gen Y, there's just a general interest in and understanding that we need to do something about the climate now. And so, we believe it's not only the right thing to do, but it'll be the right thing to do for the business. And I think that's going to prove out over the next several years. Andreas Mueller: Okay. And then further on, you have been able to pass on prices, I believe in the last, say, two quarters at least. And if I remember, I mean that's also with the strategy. How -- what do you expect going forward is these are the same kind of factors in place that you can still pass on price increases, or would that be gone if, say, demand supply is more in line? Bracken Darrell: I'll start with that, Nate, then I'll hand it off to you. I think the best way to increase prices is to lower promotion. And Nate mentioned are the promotion practices we've had in the last several quarters, and we hope to continue those right through right onward. And it's been more of our time and investment in trying to drive demand the other way, which is to build our brand, which builds long-term expansion capability for the business more efficiently, I think. In terms of direct price increases, or even decreases related to cost, I think when there's a broad cost impact that hits the whole industry, you do eventually see price increases, that broad cost increases only just begun. We've -- and Nate mentioned, and we've talked about in the last call, we've done some selected price increases now and we'll keep an eye on that, if inflation looks like it's here to stay. We're pretty good at raising prices and we need to be. We have a history of doing that during inflationary periods, or especially during currency changes in different parts of the world. So, I think we're prepared for that, and we're starting down that path. We'll see where it goes. Andreas Mueller: Then maybe my last question is on Jaybird. How much revenue was that, say, in the last quarter, for example, and also did you had some charges with ending this business basically? Or would you really see some charges going forward? Nate Olmstead: Yes, I can take that one. Really the revenue was about $5 million a quarter. So, it really was not material at all. And in terms of the charges, yes, we had some things that hit in cost of goods, and also some things that hit in GAAP OpEx. In terms of cost of goods, we had about $8 million of component and other inventory write-offs related to products, and we decided not to launch -- our product we decided not to launch. So that hit us this quarter about $8 million in cost of goods. There's also some -- about $8 million to hit down in OpEx, which is GAAP only for us this quarter, a little bit of restructuring, a little bit of contract cancellation, things like that. Andreas Mueller: Okay. Thank you very much. Bracken Darrell: Thanks, Andreas. Nicole Kenyon: The next question comes from D.A. Davidson, Franco Granada. Bracken Darrell: Hi, Franco. Franco Granada: Hi. Good morning, everyone. Thanks for letting me ask a couple questions here. So, I have one product and one big picture question. Bracken Darrell: Okay. Franco Granada: So, Bracken, as you mentioned earlier, you recently introduced your pop keys as part of your efforts to really capture a broader market. So, I was wondering what kind of traction are you getting there? And then secondly, with most headlines nowadays in gaming, it really revolving around this whole concept of the metaverse. Bracken Darrell: Yes. Franco Granada: And so, some shape or form, is this a trend you'll be trying to capitalize on, perhaps on marketing materials, or even some type of product introductions? Bracken Darrell: Yes, so pop keys, yes, the tracks has been good. I mean, I think people are super excited about that. We launched it first in China. It's done really well. And I think as we expand -- as we're expanding that around the world, the reception has been very strong. It's not only the numbers good, but also the anecdotes are good. I always know when I have people reach out to me, especially people I don't even know on a product that we've just announced and asking if they can get it. It's usually a very good sign and that's a product we've had that. I'd also add Litra Glow. I've brought it up a couple times on this call. It's the highest pre-orders we've ever had. And I think that one I've had tons of people writing me about, so we'll see where we go with that. The metaverse is here, and I think it's going to keep growing. And we've been working in the VC, the VR and AR space quietly for years, for 5 years plus. It doesn't have to be VR and AR completely to be part of what most people are describing as the metaverse, but the metaverse is going to turn in, it's going to keep growing, what we do online, what we do virtually. So, we're certainly going to be in the middle of that action. We're very excited about it. I think it's a potential creator for us in every way … Franco Granada: Appreciate it. Thanks. Bracken Darrell: … products, marketing everything. Franco Granada: Absolutely. Thanks. Nate Olmstead: Thanks, Franco. Nicole Kenyon: The last question comes from Torsten, Kepler. Bracken Darrell: Torsten, hello. Torsten Sauter: Yes. Hello, everybody and also congratulations from my side. Quite a nice surprise this morning. Now, just quickly, I see you want to close you said that you want to going forward rely less on promotion, invest more in brand building brand equity. Now your DEFY LOGIC campaign has started, if I'm not mistaken about a year ago, has your marketing search already led to any measurable improvements? Say unguarded brand awareness, price perception also relative positioning of your brands? Bracken Darrell: Yes, we’ve KPIs we're measuring now. And so, it's a little early for us to give too much insight into that. Probably if you ask us 6 months from now, we'll give you a better answer. What we do have is a little more anecdotal, but somewhat data driven. It looks pretty promising. I mean, I would say our brand the DEFY LOGIC campaign does seem to have a direct effect on brand awareness, especially among the younger consumer set, which we are really targeting there kind to bring them into the fold. We historically were underdeveloped in kind of the sub-30 group and that looks like it really affects them dramatically, which is great in terms of awareness and possible positive view of the brand, which was our goal. But it's not just the DEFY LOGIC campaign. We are spending a lot of marketing money on gaming. In the gaming business we’ve -- our brand definitely has elevated significantly over the past few years. It looks like the ROI on that spending is very high, and we are going to keep investing there. And also the direct product category spending that we do, we -- whether it's digital online Internet spending, real kind of ongoing -- almost like a sales engine activity that people call marketing and it is marketing, it's classified marketing. That is also very measurable with return on ad spend ratio you may be familiar with. And we are seeing great pockets of investment there. So, across the board, we see opportunity and we are going to keep monitoring, measuring it and making sure we are spending the right amount for what we're getting back. Torsten Sauter: Very clear. Thanks. Bracken Darrell: Thank you. Nate Olmstead: Thanks, Torsten. Nicole Kenyon: Thanks. That’s the end of our questions. Thank you everyone. Bracken, any comments? Bracken Darrell: No, it’s wonderful to be in 2022, and it feels like we really are probably at the beginning of the down slope of this pandemic. And we just see so many opportunities ahead for Logitech and for the world. It's like a really -- I think it's going to be an exciting time ahead as things start to fall out, and we are going to be ready to innovate left, right and center and grow right into all these long-term secular trends we've been part of and I think they are not going to let up. Thanks so much. Thanks for all of you. Talk to you in the quarter. Nate Olmstead: Thank you.LOGI Ratings Summary
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Logitech Shares Climb 4% Following Q4 Beat
Logitech (NASDAQ:LOGI) saw its stock surge over 4% pre-market today after the company announced fourth-quarter earnings and revenue that surpassed consensus estimates. The company reported earnings per share (EPS) of $0.99, well above the expected $0.68. Quarterly revenue also exceeded expectations, coming in at $1.01 billion—a 5% increase from the previous year and higher than the projected $957.77 million.
The company's non-GAAP operating profit saw a significant jump of 93% to $159 million, and the gross margin improved substantially by 730 basis points to 43.6%.
For the upcoming 12 months, Logitech set a sales growth target of 0%-2%, aiming for total sales between $4.3 billion and $4.4 billion. Additionally, the company forecasts its non-GAAP operating income to range from $685 million to $715 million.
