Q3 2022 Logitech International SA Earnings Presentation

Quarter strong performance and our ability to raise our full year outlook on top of last year.

Last year's exceptional revenue growth.

We have a strong foundation heading into next fiscal year. We also continued to gain share in the majority of our categories. This quarter reinforcing that we've got an innovation engine is really working well.

<unk> performance reflects the broad strength of our capabilities, especially 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 setting us up for them by 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 to.

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 as a social phenomenon.

<unk> 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 upfront we have an innovation engine that is mature and continues to strengthen.

Our design led innovation capabilities 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.

And creativity and productivity, we had 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're the market leaders in these categories and we're innovating as a leader should do.

Developing upgrade opportunities to 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 <unk> portfolio to the sexy pop keys lineup, there's really something for everyone.

A small percentage of people have the optimal workplace setup.

Let me repeat that few people have the optimal product set at their desks in fact, even our market penetration of our oldest category mice is still an opportunity.

Imagine how many don't have ergonomic mice 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 <unk> Master and Amex keys on your home desk in office and probably would love it.

We continued to expand our product offerings to address underserved customer segments.

Like the recently announced <unk> hundred 50 wireless mouse that has a left haven't 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 new Zoo. There are now 3 billion gamers worldwide.

And whether you gain for fun or competitively or peripherals prove 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 are.

Our gaming motto is that life is more funnel when you play.

We believe this applies across the gaming community from CRO to social gamers.

As one example of our continued innovation, our recently launched <unk> $4 35 gaming headset with certainly designed with competitive competitive gamers.

But it's also good for any gamer, who just want to connect with other players it's extremely lightweight with an ultrafast connection and it's made of recycled plastic.

And video collaboration we're starting to see some increased activity in our office reopening and hybrid work planning.

Video collaboration sales improved this quarter nearly equaling last year's high levels.

Sales more than tripled we.

We delivered 24% quarter over quarter growth in 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, a 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 persistence 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 operation team continued their strong execution in the face of ongoing industry wide supply chain challenges.

As we mentioned last quarter, we continued 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 in 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 of the Dow Jones sustainability, Europe index or D. J S.

We were ranked number 12 worldwide in the computer peripherals and office electronics industry for ESG.

We're taking strong action, including growing carbon neutral, which we achieved in 2021 and.

Setting us on a direct path to be climate positive beyond 2030 by capturing more carbon that 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 scopes, one two and three so we are including everything.

In addition were moving to recycled 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.

Good morning.

Hey, good morning, Brandon Thank you.

We delivered solid financial results in Q3 with record sales in key categories as we navigate in 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, and combos strong single digit growth in pointing devices and gaming and double digit sequential growth in video collaboration.

I am pleased with our top line results and we have supply to fulfill most of the demand in the quarter, we had insufficient stock for some products, including keyboards and gaming.

Industry wide supply availability logistics disruptions and cost increases negatively impacted our Q3 top line growth by about three to four points and gross margins by approximately two 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.

And our creativity and productivity categories, pointing devices grew 8% in keyboards, and combos grew 29% driven by continued demand for hybrid work trends.

We also saw strong growth in our <unk> channel and high end Amex product lines.

Although <unk> sales decreased by 12% they are still triple where they were two years ago, and we grew market share by more than 10 points over the last three 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 in gaming. We are 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 category is still more than double the size. It was two years ago and our strong product portfolio helped drive five 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 <unk> brand. We remain committed however to developing wireless audio products, such as largest excellent wireless and <unk>.

Q3, non-GAAP gross margin was 46% down as anticipated from last year's elevated levels and remained within our target range.

Higher freight costs reduced gross margin about two points year over year and quarter over quarter we.

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 two years ago. However profit nearly doubled and margins are up one seven 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 balances 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 at 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 <unk>.

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 defined and long lead time components to assure supply availability and maintain competitive advantage.

Looking ahead, we are increasing our fiscal 'twenty, two constant currency sales outlook to growth of 2% to 5%.

Up from our prior outlook of flat sales growth in constant currency plus or minus 5%.

We are also increasing our non-GAAP operating profit outlook to $850 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.

The first question can come from RCM from Citi.

Good morning, gentlemen.

Paul Congratulations on a well executed quarter.

I had a question that we've heard from investors.

As you guys report these segments.

And you look across your portfolio.

Ladies and confidence about.

No.

Future years outlook and the fact that this wasn't just.

Some <unk> benefit.

Benefit benefiting like for example, your creativity and productivity portfolio.

And then I have a question on gross margins as well.

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 together.

It's been very long term growth of secular trends underneath this are very very strong.

I don't see any reason why any of these trends will continue.

In mice and keyboards.

This in the opening of the call. It just continues to blow my mind.

I can guarantee you that if we if we took pictures everybody everybody's workspace on this call.

We didn't have to analyze it very carefully we took a quick glance, albeit there may be maybe 20% of the people here have set up a new followers.

So you know what we do.

So there is just opportunity across the board.

Okay, and then on gross margins, maybe you talked about the impact of higher freight costs that were impacting the second half margins are we doing in that 2% impact continues in the fourth quarter and when do you.

Is there any light at the end of the tunnel for these higher freight costs.

Yes, yes, I think in Q4, I expect similar supply cost challenges supply chain cost challenges.

And in terms of the timing of Windows as it relates it's a great question.

I think theres really two elements to this austere theres predictability and Theres also cost and the predictability of supply chain the supply chain.

Industry wide has not been to normal levels, so youre getting more delays as things come in both on ocean and on air, but that lower predictability is causing us to use more airframe more expedited supply measure.

Channel to try to improve the predictability and to make sure that things are in stock you can see the demand has remained pretty resilient and a lot of these categories and so.

We've increased the use of airfreight to try to overcome some of those predictability challenges that we see on the ocean. So thats. One reason why the costs are higher and why I think they will remain higher in Q4 and the other reason of course is industry right just the rates being higher they're up three to four times year over year, both on Ocean and.

And air.

I think that we could see some relief on both predictability and cost in our next fiscal year, but probably not until the back half.

But we'll keep a close eye on that and update you as we go but I don't see any short term.

<unk>.

Release on those pressures and we're operating under that assumption.

We're going to be with us for a few cornerstone.

Okay and will that be offset I mean, I think the way there.

Our supply chain and then you guys went backing onto their media spend that benefited you in fiscal 'twenty. One so is the delta there just incremental media spend on a year on year basis.

You are talking about year over year gross margin, yes, yes.

The two biggest factors year over year with visa.

Return to some level of promotion, we're still not back to levels that we were two years ago.

Some increase in promotion as we've been talking about doing and then also the higher logistics cost doesn't mean, the two biggest drivers year over year.

Okay. Thank you.

Gotcha.

Thank you. The next question comes from Alex Duval.

Alex.

Yes, hi, everyone. Thank you so much for the question Firstly, just wanted to clarify and some investors have been asking obviously.

The consensus today by around 70 million on EBIT, but then implicit NEVA.

Upgraded.

Your full year guide by around 50 million.

People just wanting to understand is that just prudence.

Given some of these meeting policy just been talking about.

Or is there any sort of change in fundamentals and then secondly, more of a philosophical question. Obviously, we're in this period, a very hard year on year.

But as we start to move forward a few quarters.

Those comps will ease very materially.

C pumps 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 may. Thanks, Let me, let me jump in.

One of them ahead, but first I'd like to unit.

And 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 three we'll be talking about exactly that topic.

And we'll be thrilled to have you there.

Want to talk a little bit about why we set the guidance, where we did kind of our general feeling about it yeah.

Yes, I think 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 <unk> question I think similar headwinds on gross margin pressure.

I think currency it could be a little bit more of a headwind sequentially than what we had here.

This rate volatility and of course, the volatility in the market overall right now so.

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 have 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 very predictable environment. We can we can get our supply chain and 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 markets, but it's really encouraging to see some of the categories continuing to grow despite the tough comps.

So feel great about that and I think the underlying demand trends over the long term look really solid.

Many thanks, that's very helpful. Thank you Alex.

The next question comes from loop capital Amanda.

Hi, Ananda, yes, thanks, Nicole yes, good morning, guys.

Happy New year and are rapidly a point you guys look Greg you look Super Chris.

I'm doing this on an iPad and I get to.

They're in contrast, because I'm staring at me and Im staring at year end, I think I need to go out and get a new webcam.

You might need the new.

Ledger glow light that we just launched.

So.

You guys had this pro lighting situations no no no. It's a very beautiful looks like a webcam, but it's allowed US we just launched it so it's available I'm going to say I'm actually going to take our reorders.

Thanks.

Yeah. Thanks, Thanks for that.

As you up on that.

I guess, yes.

So a couple of things if I could so with with the strong revenue performance this quarter.

Anything any 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 I have a couple of quick follow ups.

I'll jump in on that you can add anything you'd like I think I think the most important structural comment I'd make is.

This is playing out about the way we thought it would.

We're really excited that that at the end of the day the growth in number of Workspaces for need for copper terms of video.

The incredible long term growth of gaming in the B.

Equally or maybe more incredible larger growth, Australia, creating those structural secular trend moves are happening and they are as we go through the pandemic they've continued to happen in wherever you think we are independent data. So it's exciting I think just validates our long term thesis, but these are great long term sense for us, but we're not going to stop there we're going to keep watching new category.

Getting by other new trends over time.

And that was actually one of my one of my follow ups. So maybe we'll just go there.

Are there any categories that you guys are getting excited about.

Or maybe already excited about yes, there are I mean, I think just as an exit we're always working on new categories.

It's expensive to <unk>, which we haven't talked about in the last few quarters, because there's been so much demand our existing products.

We're always working on a lot of them don't make it out the door and so make it out the door to a very quiet way slightly put back to back away. So when one gets some publicity. It means we're really excited about it but I missed some electrical lights. As example, I mean, I think being in the lighting business makes a lot of sense for us.

Super This one for example, a super easy product to use.

So yes im excited about some of the failures will be coming over time for sure.

Okay Awesome and I guess, just last one from me I'll see it before are you seeing any.

Regalia impact yet from from new competitors.

Yes, we've had new competitors.

Cereal are continuously as long as I've been here I think we have in the webcam category, we had a lot of new competitors in a lot of them have.

Kind of receded back out again or at least reduce their efforts there others will stay.

They'd always says the same thing that 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, where we can we can deliver to both enterprise and consumer so we're super optimistic for the future and that we feel are very competitive.

Yes.

Probably again in this one but off the top my head I think specifically at Microsoft and HP and has a deep pocket.

And there are new for them, so they're probably not quite as committed as you guys are looking the category for those guys in a strategic sense, but they do have.

They do have deep pockets and so I think as those guys, but EMEA bracket is that to say that you guys don't seem like youre really seeing material impact yet.

And then just thinking of the business, but not really seeing them in the marketplace kind of structurally in the way that.

Yes.

And the way that you guys operate.

The competitors, you mentioned and other competitors have been in the market and they're going to be in the market. We know theyre going to keep investing than we expected and so we're going to keep investing and keep driving that keep growing but all I can say is we're growing market share across all of our key categories vast majority. So I feel good about the innovation engine and we've got good stuff coming.

Awesome. Thank you guys. Thank you Amanda Thanks, a lot.

Thank you next question from J P Morgan Paul Cheng Paul.

Hey, good morning, guys good morning.

Nice quarter.

First off on VC, you called out strong video camera system spend anything you want to comp by region.

Our particular vertical and how the initial trend has been in the kind of the first month of the year.

I'm starting to see more people return to the office.

I would say in terms of.

Within the video cover segment webcam decline, but boy they declined off with incredibly high base, but they are really high.

Cover scans are growing double digits, that's a great story.

Think thats, even though I would say probably most people on this call a degree of rolling into the beginning of the big floor of the office.

Arts to warm up again and there are people actually do start to go back I think.

Implementation plans for video conferencing.

Grow a lot more so I think I feel really good about that that you want to add anything.

Yes, I think regionally Americas was.

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 I think we mentioned last quarter 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 and 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 installed base is growing and.

Craig This is future opportunity there so theres still a lot of interest in web Cam, but last year. It was such a hot category and I think.

And a little bit more reasonable this year, but I also think that has good potential in the future as offices reopen I think we'll see more video at the desk and I don't think we've quite seen that yet.

And I would say that we are good at driving mix within categories.

We 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 wellhead. So now that we've got we're in a period, where we're going to the mixed story will will go the other way a little bit on webcams, but then were set up to see what we can do with the category.

Got it and then on competition, given your cash and ability upon.

Inventory are you seeing some market share in that respect in DC and I guess across other segments as well.

Sure I'll go ahead Ryan.

We continue to gain share in the VC.

Think having a great balance sheet as an advantage.

We 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 component shortages, but I think generally speaking we've really we've got a much improved state now hope it stays that way.

Yes, it's hard to know Paul well listen as you well to what our competitors say about their supply them in 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 has been a challenge for us to get 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 in 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.

Well listen to what others have to say I think also.

Several of the market trends are really playing to our favor.

Strength in kind of the look of gaming there's been some strength in the higher price fans, which is.

Sweet spot for us and it's a little bit been a little bit weaker than 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 thats been beneficial from a market share standpoint.

Last question is the pace X is on track to be.

Up pretty strong this year I guess, the big step up last year, so as we think about.

The out years should we assume kind of the pace of Opex flows or is it.

More kind of think about it in terms of percentage of sales at 25% 26% range.

Yes, I mean I think.

We won't be increasing opex at the same growth rates this year and less revenue grows that those rates I think we will 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 was 74% revenue growth just far ahead of what our ability wise 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 in the future youre going to see opex much form.

Great much closer to what you would expect relative to revenue.

Alright, thanks, guys.

Thanks, Paul Thanks, Tom next question is from UBS, Jan and me on the call.

Yes, hi.

Hey, Greg Good morning made thanks for taking my questions. The first one would be break on the statement you made.

At the beginning of the call that let's say reorganized team to drive innovation market prospects executive us reorganized and recently.

We're constantly returning.

For example, our CMP business, we reorganized a few years ago actually around.

Different segmentation approach and I think thats been super effective.

It's unlocked some openings for us for example, ergonomics general lifestyle category. So I think I think we partly attribute pop keys in Pompe mouse these new kind of lifestyle mice.

Include their mechanical with their beautiful phone.

We're really focused on GNC, partly.

That's partly because of where we've organized now, but we're not going to stop so continuing to stay really close to the customer and organize around that has been one of ours.

And we probably got two different payout.

Our businesses right now theyre going to reorganize again as we go into the next year. So we see opportunities. This is a very fluid market lots of lots of customer and consumer insight and customer insight on the business side.

Alright, I understand thanks, and the next question would be please on your capacity planning I mean, this year production sites in China, and also versus third party suppliers.

What are your plans in terms of capacity expansion for the next one to two years. What are you reserving here to your suppliers. What are you doing in your own production side.

Let me, let me jump into that.

It's a little bit of a hard question to answer we have lots of different production sites and then we have lots of different component supplier of course like everybody.

The main focus we've had in our supply chain.

It's really been locations. So we've tried to distribute our manufacturing to be places. So we've moved.

More production than ever in China, but we have a lot more production than ever out of China. So we have China production in southeast Asia in multiple countries now and we really stepped that up for a couple of reasons. One was during the tariff period, but then we've decided to really continue to ramp that up and make sure we're well positioned for whatever could happen down the road.

In terms of production planning.

The expansion of our ability to produce ourselves.

These factors, there's 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 factories. So we're going to keep their capability.

Thanks, and the last question please on R&D spend.

Can you give us somewhat similarity how much of the R&D is going proportion in the existing segments, let's say it has and how much of the R&D is going into.

Into new categories that you have a rough idea.

Well I would say the vast majority of it goes to existing businesses, we've got big strong vibrant opportunities in all four of those large secular trend areas. So the vest.

Super vast majority goes into that but we have a seat program, where we're always investing in small teams to really create pilot programs against new categories and Thats ongoing all the time Super exciting always thought I've got a couple of products in my desk from the electric load came out of that and sometimes that results in M&A.

We figure out we've learned enough about category that we feel confident that we won't be in and we grow outlook.

Thompson's organic.

Mike.

Like are.

<unk>, if you haven't seen the products, it's really amazing automatically.

Customized cheerier in 59 seconds I don't know if you've ever talked about those call, but its pretty amazing product. That's in market now in a small way selling direct to consumer as we continue to learn how to bring this thing to market.

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 Belfast.

And then and in small ways, we can keep pivoting and understanding the customer need better until we get them right and then launch them like electric below.

Alright, Thank you very much.

Thanks Robert.

The next question comes from Eric <unk> from Morgan Stanley Please Eric Eric.

Hey, guys good morning.

Congrats on your quarter here.

Sorry about that let me get my Logitech.

I can get my largest headcount are up and running.

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-19 beneficiaries see some challenges in the near term, obviously, you're bucking that trend and so.

Just love your high level thoughts on why you think that is why logitech.

Has been able to do that relative to other pre eminent company. So let's call. It and then I have a follow up.

Without knowing exactly which companies you're referring to I think.

Our belief.

I think so.

I think its turned out to be true our belief was that what COVID-19 really did wasn't to drive a onetime surprise in our categories, but was to accelerate what was already happening.

And the cool thing about that is.

Let's just take through our PC peripherals categories. If you have more workspaces, especially workspaces that have more dimensions mattering to you what does that mean like.

When you have a product in the office and you have a mouse and keyboard and it looks like everybody else's wells and keyboard. So you might not care as much as a whole.

Suddenly you have a mouse or keyboard was actually part of your home decor I don't know about you, but I didn't even believe it or not I don't even have a home office that had a permanent.

PC on it or backlog before.

And so now I do a lot of people.

And the interesting thing is that that's just an increase in the installed base converts took us something in the office.

On top of that what I got for the home.

And even me was a scrambled I got what was available nearby as I was walking out the door on March 6th or seventh or whenever it was and I think there are a lot of us out there like that and so.

And then 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 haven't upgraded and experience really is better and I think and were.

Focused on upgrading people over time, so there's more spaces and theres a constant opportunity for upgrading especially as we keep innovating.

Awesome sorry go ahead.

I think I think the way to maybe think about that too is just existing trends that got stronger versus some new trend that got created that maybe I wouldn't call. It a fad, but reminded you spend more short lift and I think in cases, where something new has been created.

It's sticky right we've been doing this now for two years peoples.

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 were already and I'm thinking a lot about like video that.

That was a trend before but it has gotten a lot stronger than we've gotten up the adoption curve. We're a lot more people have gotten comfortable with it and they actually prefer it and so I think that's that's what's perhaps different than many of our categories are really in all of our categories. I think is set.

They were existing trends before that had good growth.

Characteristics and all of those I think have gotten stronger.

No that's very helpful color.

Maybe as a follow up and this is more of a near term comment.

But curious on your.

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 at 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 or was that something else.

But once the drug quarter, but I think.

Actually we continue to be a little frustrated we couldnt get better supply needs.

Some areas, we really just couldn't get as much as we need it from a component standpoint and.

And logistics continue to be a challenge so actually it could have been even a little stronger where you want to add anything.

Right.

No I mean, I think it was actually kind of as expected and a lot of ways.

We went into the quarter, knowing that we would be tightened some areas and.

It was really I think we recovered well recovered kind of late in some places to the linearity in Europe . For example was pretty backend loaded, but I think we got there on time to be on shelf for most of it but that was the place where we'd probably add some some more revenue if we couldn't supply it.

Okay Super and 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 Thats. It from me thanks guys.

And then 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.

We go into Q4 again, it's always.

It really matters.

At the SKU level Eric.

And where the demand is and where our suppliers 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 to fill that but I was happy with the strength of the demand in the categories.

Awesome. Thanks, guys. Thank you.

Next question from Stifel Juergen Wagner.

Oregon.

Yes, hi.

Thanks for letting me on.

Yes, when I look at what your gaming competitors in the U S reported <unk>.

Recently, you must have gained a lot of payoffs in gaming.

How should we model revenue growth based on that high market share in gaming.

And then you talked a lot about supply demand for you on your supply side, but also in Europe .

Markets, how would you see I mean, you said March still difficult, but further down calendar 'twenty two.

Or would you see supply demand trending.

<unk>.

Sure Let me, let me answer the first one Scott.

I think in the gaming business, we did gain share we've been gaining share.

We love our innovation engine leather team.

In that business.

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 John <unk> Who's our CMO.

CNBC.

Reporter and anchor and he he.

He opened loophole really with a lot of insight I think you said you know my kids are now when I was growing up obviously listen to music with my friends and talk you said now my kids are getting on playing games, putting the headphones on and talking to their friends.

That's a really big difference from where even restarted in gaming, we sold as kind of social with only a moment narrow gamers now it's broader than 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 the <unk> hundred 35 minutes.

<unk> talked about the slight and colorful beautiful.

It doesn't.

It looks like part of what you bought aware if youre, a 17 year old girl instead of the.

The stereotype of avoiding a base for playing games.

Hey, Juergen I'd also add on share.

In.

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 with marketing investment to drive awareness and preference for our brand.

And I, usually look at share over three months trends rather than one months.

As an example, I think we lost some share in gaming frankly during the holiday.

Season in the fall.

December are a bit in November because we werent 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 three months and again, we were gaining some share but I can see you in November and 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.

Youre asking about gaming I will give you. An example in traditional mice and keyboards as Bracken mentioned that Amex series.

Those products, both Amex keys, and Amex Master three have $4 seven.

Stars on Amazon over 10000 reviews, each 86% five 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.

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 that is so it starts with having a great product and I think we are.

<unk> done very good job of doing that but we have a lot more to do to drive the awareness Tonight.

That's a big focus.

And the supply chain.

Sorry.

Supply chain.

Oh, Yes, Canadian I'm, sorry can you ask the question, we didn't quite get that.

Yes, I mean, how do you see supply demand for your product shaping you said you were still in short supply for.

Hello, mice and keyboards.

Mostly on keyboards and also on gaming meals were probably the biggest source parts sore spots I think a bit on <unk>, maybe as well I think we did see good good strength in the BW channel, even though I think by and large offices, if not sort of reopened to capacity I mean I'm looking at your office, there, it's probably a handful or at other times.

So I think we've seen some pickup in demand on <unk> and that's put some pressure on certain products, but.

I think these are we're still really kind of thinking about most of these headwinds as sort of being with us for a while and so we're taking steps.

To try and secure supply for some of those things that that have been tough defined using the balance sheet there.

And battling through it.

I don't know Brad can you add anything on the supply side I think look we still got tight spots.

The component availability.

So in conductors in particular in fact, we're probably going to stay with us for a while so we've we've decided we've got to live with that and we're going to do the best we can to work around that as we've done in the past and as we go into next year I think that we can expect that for a while now I think I'll come back to Lauren's question on that to you about R&D one of the things that we have been investing in R&D on a second sourcing absolutely. 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 ensuring supply by second sourcing so.

I think positively.

As availability improves in the industry on somebody on some of the semiconductors, we 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 sources.

Okay.

Thank you. Thank you Aaron hope that office fills up soon.

Yes, we'll see not so much I guess.

Just a friendly reminder, similar chart or raise your hand, if you have already passed the question. The next question comes from Serge.

Please go ahead Sir.

Yes, good morning, everybody good morning, Nicole good morning, gentlemen.

Well I would have first VC question, you mentioned that you have seen.

Less webcams.

Net sales from VC, but more room solution is just to start with the transition to the enterprise channel or is it only that had very limited in supply for more of a consumer oriented products can be seen probably you cannot you also on direct sales on supply chain companies, where you're moving currently and especially when they.

I'm on the web Cam ICU still some products are lagging available 10 to 20 tool or available soon.

Asian or other products, if you could give us more flavor here.

Let me start on that you can finish.

I wouldn't interpret the mix of sales stronger sales in copper scans and the lower sales of webcams as anything more than that.

They're both really stroke.

The insurance I think we're seeing that as I mentioned earlier I think we're seeing the early days before the office here, where people are starting to rethink their footprints and nobody else is needed.

How many.

Meeting rooms, do you need how much good evening, a knee, which we think is going to be everywhere over time and then.

Even people restructuring officers on therapy people closing options of opening other ones. It is going to be there's going be a lot of turmoil. So I think we're seeing the early days before and that has a lot of video conference room enablement and it ahead of us and we're Super excited about this but you are starting to see the double digit growth and you'll have the wolfcamp.

Remember, while it's down versus year ago, It's way way way up versus 2020. So those are pretty heady numbers as they've said, they're actually flat in units. So it is actually not down at all so I would say they both look pretty strong for the year is years ahead in terms of the number of people really using video and this is just the future we're in.

And that you want to take the risk of that question.

But now I can't remember.

Yes.

Okay.

In the enterprise channel how are we doing again.

Many of our sales force.

Procurement companies and additional debt.

I mean listen we're continuing to build out the enterprise sales capability direct sales inside sales.

And 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.

And our pipeline metrics farming.

Those types of things.

I think on <unk> point, it's interesting on the Wolfcamp a year ago, We had 400 headquarters with 400%, 500% growth on web cameras within <unk> huge.

So.

I think again I'll just make the point I think video at the desk in the office is something that didn't really exist a lot pre pandemic and I think will exist.

In the future not 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.

We've really seen.

All of that take off yet don't know when that will happen surge I think that it's a good opportunity for us in FY 'twenty, three and 'twenty four.

But video everywhere in the office and at home.

Good trend and so I don't really know that I have much more to add for you on that on the coverage.

We're still making investments in it.

And Thats really a global investment bank.

I don't know Bracken anything you'd add retail alone.

We're a different company than we were three years ago, we've really expanded our coverage directly into the largest enterprises, we still have a ways to go to where we feel like we're operating at a 100%, but I feel very very good about the trend line, we're on our way.

Okay. Propylene. In addition, I have noticed that you have launched let's take select.

So service contracts one year two years.

Can you give us what.

What's the success of or did you already signed the contract with our customers or at.

What is happening there what is incremental going forward give us some.

If we gave them.

If we gave you a growth rates quarter over quarter, you're just be so excited but theyre on a very very small base.

Sure.

What does this mean for lunch at negative going forward no I think I think it's very exciting immuno as 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 their cases to customers in the office.

We think we can bring.

Services to them.

We're getting now when they buy our products and then extend those services over time, so famous recurring revenue for us.

A better experience for them and so we're excited about its early days I don't want to overstate it where it is now but I am optimistic for the future.

It's going to be exciting, we'll talk more about the analyst Investor day, we're feeling in March. So I invite you serves to come Youre more IP to China.

And then probably the last one I had the impression that the promotional activities are quite low in the quarter also because of the liquidity that appears didnt have enough products in that channel. So they were not even in a position to make any promos. So what to expect now going into the January to March towards it because this is a typical promotional.

Especially before the vouchers in 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 what does this mean quarter over quarter.

You want to take that one yeah.

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 promotions from competitors during the holiday, but that's not atypical.

Im not sure what we have seen yet in January surge, but.

So for us at the company level.

Not really.

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 relying less on promotions to drive the top line to drive the business, so much and best in market and drive the awareness and I think thats, a healthier way to grow over the long term.

Both on the short term and long term that's our strategy.

Okay last one and thanks Phil.

Microsoft wants to acquire a Activision Blizzard what does this mean for logistics because you will have for example, the call of duty line in mice and keyboards I belief.

But still is it an opportunity first few or more of a threat or whether you just said.

Reached where the first impression.

From DSA.

I wouldn't say, it's a threat.

That's the gaming content business and gaming content business drives our business. So.

The better and stronger and the innovation is in gaming the more content created that people are attracted to the bigger our business will be over the long term.

I think Microsoft at Activision Blizzard have already been two big leaders and super exciting to see them.

Centrally coming together.

Whether they do or they do gaming is going to keep growing with great culture.

Inevitable.

Okay, Oh, Yes go ahead.

Thanks very much. Thank you. Thanks, so much thanks Serge.

The next question is from.

Z K B from Andreas Muller, Yes, Andrew I'll address we are missing you were wondering when you were here tomorrow.

Hello.

Just.

The video.

I just got a couple of questions.

One the <unk>.

If you have any cecos huni experience about this climate pledge friendly selection people too.

Choose initial such as soon.

Is that really driving demand here.

Can you share here.

Yeah, Steve let's take them one at a time, so I'll answer that one the.

The answer is no. We don't have any any data right now that would say that.

Of.

We're getting big sales out of our our climate.

Policies and practices, which I think really our 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.

As a growing certainly among younger people.

Lindsay.

And also the gym.

Just a general interest and understanding that we need to do something about the climate now and so we believe this it's not only the right thing to do but it will be the right thing to do for the business and I think that's going to prove out over the next several years.

Okay.

And then further on.

You have been able to pass on prices.

Anything you can say two quarters at least.

If I remember right I mean, that's also fit the strategy.

Look we expect going forward.

I want to same kind of fixes in place that you can spin.

Awesome price increases or with the peak on this a demand the supply is more in line.

Yes.

<unk> started that Nathan I'll hand, it off to you.

I think the best way to increase prices as the lower promotion.

Nate mentioned are the promotion practices, we've had the last several quarters and we hope to continue those rights through a downward.

Spend more of our time and investment and trying to drive demand. The other way, which is to build our brand is Jules builds long term expansion capability for the business.

More efficiently I think.

In terms of direct price increases or even decreases.

Related to.

Sure.

Cost I think when Theres, a broad cost impact that hits the whole industry. You do eventually see price increases that broad cost increase is only just begun we've mentioned and we've talked about in the last call. We've done some selective price increases now and we will keep an eye on that if inflation looks like it's here to stay we're pretty good at raising prices when we need to be.

We have a history of doing the during our 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 will see where it goes.

Okay.

And then maybe my last press releases on <unk>, how much revenue.

So in the last quarter for example, and also.

Thank you.

We had some charges.

Defending this business basically.

We were able to see some some challenges going forward.

Yes, I can take that one.

Really the revenue is.

It's about $5 million a quarter. So it really was not material at all.

And in terms of the charges, yes, we have that.

We had some things that hit in cost of goods and also some things that hidden GAAP opex in terms of cost of goods, we had about.

$8 million.

<unk> and other inventory.

Write offs related to products that we decided not to launch our products, we decided not to launch that and that hit us this quarter about $8 million and cost of goods.

Theres also some about $8 million, which is down in Opex, which is GAAP only for us this quarter.

Little bit of restructuring a little bit of contract cancellation things like that.

Okay. Thank you.

Great.

The next question comes from da Davidson framework are narrow.

Hi, good morning, everyone and thanks for letting me ask a couple of questions here.

So I have one product and one big picture question.

So Brian as you mentioned earlier your recently introduced pop Keith as part of your efforts to really capture a broader market.

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 meta versus yes.

And so some type of farm is this a trend you'll be trying to capitalize on perhaps on marketing materials or even some type of product introductions.

Yeah, So Keith yes, the traction has been good.

People are super excited about that we launched a first in China.

It's done really well and I think as we expand as we're expanding that around the world, but recessions.

Reception has been very strong.

Not only the number is good but also the anecdotes are good I always know when I have people reach out to me, especially people who won't even though on a product that we've just announced and asking if they can get it.

It's usually a very good sign and Thats a product we've had I'd also add lighter globe brought it up a couple of times on this call the highest preorders we've ever had.

After that one tons of people writing me about so we'll see where we go with.

The meta versus.

Is here and I think it's going to keep growing.

We've been working and we see the VR and AR space quietly for years over five years plus.

It doesn't have to be the RNA are completely to be part of what most people are describing as a <unk>, but the vetiver scope turbine is 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 and we're very excited about it.

I think it's.

It's a potential creator for us.

And everybody's going to standard products marketing everything that's wrong.

Okay.

Thanks Frank.

Last question comes from Tristan.

Sure.

Hello.

Hello, everybody and also congratulations from my side quite a nice price this morning.

Just quickly I see you want to close you said that.

You want to going forward to rely less on promotion and invest more in brand building brand equity.

Your defied logic campaign that started if I'm not mistaken about a year ago as Youll marketing search already led to any measurable improvements say on guarded unguarded brand awareness price perception also relative positioning of your friends.

Yes.

We have we have kpis, we are measuring now and so it's a little early for us to give too much insight into the problems.

Probably if you ask a six months from now we will give you a better answer while we do have is a little more anecdotal, but somewhat data driven it looks pretty promising.

Sure Brett.

The biologic campaign does seem to have a direct effect on brand awareness, especially among the younger consumer set which we are really targeting there trying to bring them into the fold.

We historically were under under.

Underdeveloped in kind of this 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're spending a lot of marketing money on gaming and the gaming business.

Our brand definitely has elevated significantly over the past few years it looks like the ROI on that spending is very high.

And we're going to keep investing there and also the direct product category spending that we do whether it's digital online internet spending real kind of ongoing almost like a sales engine activity what people call marketing is marketing is classified as marketing.

That is also very measurable return on AD spend ratios you may be familiar with and we're seeing great pockets of investment there so across the board, we see opportunity and we're going to keep monitoring measuring it and making sure we're spending the right amount for what we're getting back.

Very clear thanks, Thank you.

Thanks, that's the end of our questions. Thank you everyone Bakken any comments no.

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 is going to be an exciting time ahead as things start to fall out.

And we're going to be ready to innovate left right and center and grow right into all of these long term secular trends we've been part of.

They're not going to let up thanks. So much. Thanks for all of you talked to you in a quarter.

Thank you.

Okay.

[music].

Okay.

[music].

Okay.

Hi, good morning to those in the U S and good afternoon to those listening in from Europe . Thank you all for joining us today, even if it is only virtually I know, we all miss being together and we have put together a great analyst day for everyone will have Bracken give you an update on our strategy and outlook followed by presentations from several of our senior leaders you have heard of <unk>.

For in our past analyst days and he will discuss the truly amazing things. He has done across the organization scale up and meet the unprecedented level of demand. This past year at the same time. He will also tell you what his team has been doing around sustainability and how large tech is marching towards carbon neutrality.

And then we will have our two sales leaders Quinn and Erica describe what we have done to transform and build out our global retail and E tail organization and our global enterprise sales team.

We'll take a short break afterwards before Heidi will come on and talk about the investment that we're making in marketing and in building out our brand equity and awareness I'm sure. Some of you are wondering where all our opex dollars are going and for those of you who have not seen a recent Super Bowl that will show you that clip as well.

And finally as I'm sure every investor is waiting for ne will close out our presentation with our fiscal year 2022 guidance and provide an update on our long term model. This will be followed by Q&A with Bracken and Nate now let me read through the forward looking statements.

The press release as well as a live webcast of our presentation is available online at IR dialogues Tech Dot com. During the course of these presentations we may make forward looking statements under the Safe Harbor of the private Securities Litigation Reform Act of 995, including with respect to future operating results. Our actual results could differ materially including due to factors that are set forth in <unk> quarterly report on form.

10-Q for the quarter ended December 31, 2020, and subsequent filings the company undertakes no obligation to update or revise any forward looking statements as a result of new developments or otherwise today's presentation will include non-GAAP financial results non-GAAP financial results should not be considered in isolation from or as a substitute for or superior to GAAP results.

non-GAAP measures have inherent limitations and should be used only in conjunction with <unk> consolidated financial statements prepared in accordance with GAAP. Our earnings press release include the non-GAAP measures and reconciliation to GAAP measures. This information is also posted on our Investor Relations website. We encourage you to review these items unless noted otherwise comparisons between periods are year over.

A year and in constant currency and sales our net sales. These presentations are being recorded and will be available for replay on the investor Relations page of the Logitech website.

And with that let me introduce our chairperson when he Becker, who wanted to say a little Hello from the U K.

Hey, Thanks Ben.

Hi, everyone welcome.

Great.

I am Wednesday, Becker and I am Logitech chairperson I want to thank you all for joining us today for our annual analyst and Investor day, nor.

Normally we wouldn't be doing this in person, but like so many companies. This year, we are hosting our analyst day in virtually and over video.

I am with you today from Oxford, England via my Logitech Ria webcam.

As you will have seen logitech keeps going from strength to strength reminding us all of the power of our global multi regional multi category multi brand direction.

So actually a global virtual analyst Investor day sales time kind of appropriate.

Today, Bracken and the team will give you an update on what we've done so far and what we're planning to deliver over the years ahead.

I know I speak for the board when I say that we couldn't be more excited about the many growth opportunities facing logitech.

We believe strongly in the direction of the company for our shareholders.

As well as the impact we will have on the environment.

And the societies in which we operate.

Thank you so much for joining us I hope you enjoy listening to our presentation I hope we can see you in person again soon and I hope. It tell then you too are enjoying a logitech webcam.

And with that I'd like to hand, it over to Bracken.

Thank you Wendy thanks, so much for joining us from Oxford and of course, we do have more brio webcams available now for those who need them.

If you haven't seen our advertising you might be wondering what's behind this idea defying the logic of the past and why is the title of our annual Investor day, well highly Arkansas, our CMO will show you a little bit later the advertising this relates to but we thought it captures a bit of what we're trying to do with logitech in general.

Opportunity often sits at the Nexus of the past and the future of pasta has one approach and a future that requires a new one.

But large deck, we've often defied the old way to enable long term growth.

Let me start by telling you how we begun to think about what we really do for users.

We enable people to pursue their passions to create achieve and enjoy more and connect people to each other.

If that's what we do where do we do it in which categories.

Well, we actually don't start with categories. We start by looking at long term trends that are affecting the world those trends that might give new opportunities for how people pursue their passions or connect to others.

Our where to play choices those categories in which we compete have been unfolding for nine years.

And they relate directly to long term secular trends affecting all of us.

I learned a long time ago that the best way to grow long term is to harness long term trends.

Secular trends operate like tailwind.

We started with the office, we watched as laptops Cannibalized desktops.

Ipads, Cannibalized laptops and desktops.

Starbucks became populated with workers and students.

We decided we needed to be part of the movement out of the office into other places to work.

Not that we felt the offices would close and everyone would move out but to the office would become one of many places people would work.

And work would happen all over so our first secular trend was office to anywhere.

Our second trend when belief with video calls with simply replace almost all audio calls.

This one is beginning to seem obvious now, but it wasn't six or seven years ago.

Our third trend was really a stretch a few years ago, we believed and still believe the gaming would move from your basement or your child's bedroom.

To become the biggest collection of sports in the World.

That looks like a good call to me so far in the last major secular trend. We focused on was that people would look beyond companies like Disney and Netflix and the BBC and.

And find their entertainment content created by regular people like you and me and our kids.

This was the so-called democratization of content creation.

In each case, we believe these trends will drive growth in categories. We were already in our that we could jump into.

Those secular trends had been our tailwind for the past eight years.

And here are the results that followed.

Our sales grew at or near double digits, our profits grew much faster.

And our stock price followed in fact, the value of Logitech has doubled every two and a half years since April one 2013.

And that was pre pandemic.

During the pandemic, we have grown even faster in fact, we have more than doubled in one year instead of the two and a half year rate.

Our top line growth will be up over 60% this year, our profit up over 180%.

And the pandemic didn't slow us down and new products or our quest to be more environmentally responsible.

We launched 40 new products this year.

This year, we will remove 64000 tons of carbon there would have been put into the year, if not for our carbon reduction programs.

So the big question on People's Minds now when they think about us is this.

As this pandemic year, a onetime lift that will live on.

Go up the subside and fall back to normal is this a big wave like a tidal wave that will just go down.

No. This year of exceptional growth just raises the long term water level like a permanent tide, let me get into each category briefly.

As I said either earlier each of our businesses sits at a tailwind created by secular trend.

Let's examine where each carrier was pre COVID-19 and what Covid has done for that category long term.

Let's start with CMP.

Our creativity and productivity business.

Mice and keyboards, mainly was mainly a refresh business.

There were $1 4 billion Pcs out there some percentage and some percentage of the users of those Pcs decided they needed a new keyboard.

<unk> mouth every year.

It was a small percentage, but we offer great reasons to upgrade and when you came into the store we sold a lot of you.

But are you went online to buy but most people never knew about the amex master too or.

Or the Ergo trackball.

Or our new high end curved keyboard they are amazing but.

But we didn't have the scale to justify the advertising to really drive that awareness.

Well how has this whole picture changed post pandemic.

First we've moved from Pcs to Workspaces.

And there are a lot more workspace, even Pcs now.

Do you have one permanently in your home now maybe more.

And in fact, you also will probably have one in the office post pandemic.

So there is a larger scale that will able us to have more places to sell upgrades into and more volume to be able to deliver the scale to communicate off of.

Maybe we will be able to make you aware of the superior ergonomic mouse.

Our keyboard or.

Our flow, which is a software program that they're amex products or just a more beautiful product because now these products are part of your home decor.

Let's go a little bit deeper.

The hybrid work world because of this expanded workspace.

We're headed into it right now and we believe that it could double in numbers between pre pandemic and post pandemic for example in the U S less than a quarter of people worked really worked both at home and in the office.

By our surveys that number will go to at least two thirds.

That means companies will need to be sure you have a great mouse and agree great keyboard in both places.

But the additional workspace are only part of the story.

While the increase in Workspaces is inevitable.

Other factors are also really interesting.

What is the rate of refreshment.

Upgrade you can see now we have more scale and can afford to tell more people about our best in class products.

There are more reasons to upgrade then people know about today and believe me, we're providing more and more compelling offerings.

Oh.

And as usual, we can grow market share when I arrived at Logitech I always told that we already have for example, a 42% share in <unk> for the U S. So we would need to find other places to grow.

But I knew that the best positioned to gain market share from his leadership position more innovation more awareness more distribution.

We've gained share up over 55% today and I see no reason why we can't continue that so we have three ways to grow our growing number of workspaces, a potential up accelerated upgrade cycle and continued share gains.

Now, let's talk about video collaboration pre Covid when it came to conference cameras customers wanted more because they wanted more video rooms.

Post pandemic.

They don't want more they need more more rooms, a lot more rooms, maybe every room.

Were also used to video now.

When we go back to working in the office there will be people in the office and people at home how can we not be video enabled in both places.

Pre pandemic the webcam was a niche it was a niche for remote workers.

They had to have won because they worked alone in their homes and needed a connected people.

They were they were a niche and I bet very few of you did video calls pre COVID-19 on your PC or your Mac, but post pandemic. The webcam is essential we are all about remote workers and office workers.

And we're now hooked on video and we need better video now that we're looking at this mirror five times a minute instead of five times a day.

And here are two confirming leading indicators are that both zoom and teams have at least tripled in fiscal year 'twenty, one in one way or the other.

Which can be viewed as a signal of what's coming for our business on some level.

Gaming.

We already felt gaming.

Headed toward the biggest collection of sports in the World.

During the pandemic the league of Legends finals with watch live by more people than the Super Bowl I repeat during the pandemic. The league of legends five what was watched live by more people than the Super Bowl over 1 billion people watched the entire legal legends tournament as it unfolded to get to that final Travis Scott.

Performed live in a video game as a virtual character.

Gaming has moved into the popular culture, a K pop band made up of virtual characters had 20 million views yet it does not exist in the real world and fashion brands and I mean big name fashion brands have begun collaborations with gaming teams.

Gaming leagues game.

Gaming is like all the big sports did before it becoming a mainstream part of our culture.

Finally streaming.

Streaming pre Covid was growing very fast you know it I know it if you've got kids you know there are preoccupied with it on Facebook Linkedin and more.

So what will it be post COVID-19 .

A lot bigger there are 64% more users during the pandemic and the network effect of seeing more people, creating more content will simply be get more in a more drives more phenomenon.

But as exciting as our categories are and they are super exciting our capabilities are more exciting.

To me why.

Because these capabilities. We are building are the fuel for each category.

Investors tend to view us as a company made of categories.

But we see ourselves as more than that we see ourselves as a company made of capabilities that can be deployed into those categories.

Capabilities that will allow us to scale and entered into more and more categories.

While we pick the right places.

The capabilities that enable us to win.

And the coolest thing about them is that by building our capabilities to win and gain more advantage in existing businesses, we create the key ingredients to enter and win new ones.

So we can enter new categories like.

Like keyboards.

22 years ago like gaming.

Eight years ago like video collaboration five or six years ago.

Like streaming.

A couple of years ago.

And with our long term secular trend approach these long term categories keep growing.

Yes, they help us build more capabilities for us to enter new categories. It's a virtuous circle.

CMP gave birth to webcams.

Webcams to conference Cams CN.

<unk> Pizza gaming CMP and gaming to stream labs, and microphones and more and more.

So what are those capabilities.

Therefore, we talk about most.

But we have more.

Operations design engineering go to market and marketing.

We will save the others for another day, but let me briefly explain these.

And we will then go deeper on a few.

Just after I finish.

Our <unk> will walk you through the operations and sustainability.

Part of our business, it's a core value of logitech and capability.

He will tell you our remarkable story of flexibility and cost of capability and time to market of cost savings and responsiveness of innovation and innovation.

He will not tell you what I'll tell you now.

This has been our secret weapon for years.

Giving us better cost better innovation, and a remarkable ability to adapt and.

I know you probably won't say that in my opinion, we have an unmatched capability here versus other companies.

Another strong capability is our design.

We've won so many awards now including being named one of the top nine most innovative companies and design along with Nike.

This is a strength, but clear strengths now and we're moving ahead from designed 1.1 to two point out to three point, though.

You don't need to know what that means what would it generally means though.

As we are improving that are designed to experience to include design for cost.

To include design for sustainability.

And it moves we're going to take that design and we are going to turn it around put it into the inside and redesign our own processes overtime, making our employees more engaged more creative more productive and our internal processes more efficient design has a lot of legs to it.

Hardware engineering has been a long term strength for logitech, our ability to create compelling new hardware has been a key engine of growth for as long as the company has existed.

And it's the reason why so many people find us super high quality and innovative.

But we're also building out our software capability. This year alone our number of software engineers continued to grow very rapidly because we deployed software across all of our different businesses. We.

We will say that topic and our budding service business for another day.

You'll hear from Quinn, Lou and Eric Gladden today, they run two different go to market capabilities for Logitech, both of which are growing quickly Eric.

Eric runs our global operation for video collaboration and the one that interfaces, the most with our BBB and enterprise customers.

This organization runs a classic enterprise sales motion and marketing and it's Super exciting.

<unk> runs our global business for the rest of our portfolio, which is mostly consumer products we.

We've globalized this team from China, Asia Pacific Asia Pacific and Europe , Middle East Africa, and now the whole world just with them during the pandemic period.

And this brings everything together so that we can share best practices faster align processes around the world and be better and faster and execution.

The combination of these two strong sales capabilities.

As a force that will give us the potential to have breakthrough growth in the years ahead.

Hi, D. Our CMO I mentioned earlier it will take you through our marketing we've been ramping up this capability for years and we're starting to hit our stride.

This investment is all about creating higher gross margin more loyalty and more growth make no mistake more growth in it.

A typical large textile it's got to be authentic and it's got to be honest.

The most valuable aspect of our business lies in our capabilities and in our people.

We can apply these capabilities to our existing businesses and to new ones, we choose to enter.

And as we strengthen them they strength in every one of our categories and our potential to win in new categories.

Even though many are competitive strengths, we have so much upside to improve in each one of these capabilities.

I want to close on two values the most important to values of our company.

Those values or the environment and to quality.

Environmental sustainability is not a new thing for us.

Our first sustainability report came out before I arrived almost nine years ago.

We've been working on running our business on a renewable sources of energy for years across all of our sites for example.

But the last two years, we've really accelerated our efforts.

In 2019, we joined the Paris accord.

In 2020, we announced carbon labeling of all of our products over the next several years showing the end to end carbon impact from the component to their manufacturing to the transportation to the product and use with users to the end of life.

We announced the big move in 2020 into recycled plastics and we have a lot more announcements ahead of us.

Our goal is to become a leading company in this space.

And we are beginning to be regarded as such.

We will relentlessly go after this because every member of our leadership team and most of the people throughout our company hold this as a personal core value as a company core value.

From a quality standpoint, we look at our impact on employees and the community at large as well across underrepresented groups.

We want to build an inclusive culture of belonging for all employees inside Logitech, but also expected of our suppliers and our partner base and even the communities in which we live.

As a company specific to addressing racism and bias, we are committed to driving action and expect them to be held accountable.

This year, we made a diversity pledge laying out seven commitments to diversity action for our products to our employees to our procurement practice and even our customer base.

We are so much more to do we have very strong momentum.

The environment and our quality our top values for us, we're moving fast and we are totally committed the exciting.

The reality is that both of these values are not only the right thing to do but they are the right things to do for our business.

Clearly convinced they will enable growth in our business as we embed them strategically through every element of our company.

And with that let me hand, the stage over to per cash to talk about operations and sustainability.

Thank you.

Hello, Good morning, I am precautionary Chondroma head up global operations, and sustainability I plan to share a bit about both operations and sustainability today.

As you know our operations as diverse global and very resilient, we have a track record over the number of years delivering sustainable profitable growth.

We do that by managing our brand our portfolio of brands greatest categories and many of that comes from making high quality products that go on to win design awards, but more importantly, delight, our consumers, but really at the core of this is our operations and starting with our suppliers we have several thousands of components.

Key suppliers globally.

Many of them are global.

And our manufacturing is global we have a large volume capability, making almost pipe products every second both in our own factory, but also outside.

Our global distribution.

Over 80 countries and we just shipped last year, a 200000 cubic feet volume through many complex modes of logistics.

And shipping it to many countries and through all of this we reach millions of consumers millions of consumers through diverse channels direct distribution b to b and dot com, but most of all we operate a highly leveraged operation that is both cost optimized design for cost and enables growth.

Now, let me talk to you a little bit about what we've done last few years, we managed through many challenging headwinds as you know about the market trends recently, there is a rapid shift to retail.

We have more and more enterprise customers Erica is going to talk more about this our products are.

Rapid launch of our products are faster and faster.

And the globalization of trade, especially with China, but also Brexit and a lot more all of these were headwinds for our operations. In addition, we've had some disruption disruptions.

It's likely Covid shutdown factories in March April last year, but then we also encountered rolling retail shutdowns port closures logistics and lot more global factory shutdowns.

Meanwhile, you've probably heard of all the semiconductor shortages in Nebraska.

Causing disruptions to supply and we had freight capacity issue is more importantly freight capacity when to PPE and vaccines.

Actually they probably lowered the industrial capacity, but it has impacted us and over the last couple of years. I think you also know that we've had Paris, which.

In our base now we've been doing a lot of things with respect to actually managing.

The U S China tariffs.

And all the while there are some seminal turns that Brian talked about earlier that hit us last year and with major demand surge that actually we were able to try to keep up with and these were some of the headwinds and so the question is how did we do against these headwinds.

So we delivered incredible results despite COVID-19 .

Almost 80% in growth and net sales in Q3 ramping from a full shutdown in March.

Nearly twice our peak volume during our busiest holiday quarter, our of our house teams performed miracles everyday.

We increased our modes of transport, we increased air rail fastball, <unk> and various traditional mortgage by almost two times as well as what we have done in the last two and a half quarters and in addition to this we added a lot of direct to consumer capabilities direct to customer capabilities, our dotcom capabilities were improved to handle.

The volume of orders, we experienced during the last few quarters and we are now able to actually serve our customers even better we have new E comm centers.

Warehousing, we're using cross docking at our ports and being able to ship factory to customer three times. The volume that we did before all of this while adding new freight partners freight lanes and while Covid is still raising our team has actually stood up and performed as our factory teams did the same.

The increased manufacturing capacity almost 400% increase in some cases, our production lines that.

That we had and that's not to be confused with.

Revenue and since the number of production lines that we added and we did a lot of that through 30% of that being automated so our team, especially our robotics team has kept the speed on while we kept up hiring factory labor now.

Now on top of all of this with travel restrictions and Covid protocols, we certainly know how to.

Our process and we have shipped nearly 40, new products on top of our existing demand.

So what is our advantage you're probably thinking how are we really different.

We have three key advantages in our operational capabilities, our speed and analytics horsepower are manufacturing knowhow and flexibility our supply chain DNA first we are actually starting with supply chain analytics and horsepower, we have perfected the speed at which we.

Analyze complex disruptions super quickly in hours driving decisions, we now know how to read our supply due to our long longstanding sourcing relationships, we have with many of our suppliers and this helped to drive strategic alignment with our suppliers.

We've developed a corporate playbook that allows us and helps us react very very quickly to shutdown risk, bringing back capacity dual sourcing mitigating this quickly and most importantly next our manufacturing knowhow coupled with this.

You know that we have an own manufacturing factory.

Our own factory and it allows us to perfect. The know how of our products, but also control of various aspects of our engineering and operations.

Our in House factory operations team.

Actually it's built automation expertise and this has allowed us to flex up without adding labor at a fraction of the cost and we've done this with a lot of production scaling expertise over the years as you know we exited the OEM business and then we manage to manage some of the declining categories and growing categories. We know how to move things in.

And ordered the factories and we've done this even as recently at this status will be more things in and out of China. So we have the ability through our manufacturing knowhow to scale up and scale down quickly. So lastly, let me talk about our supply chain DNA, we manage a complex portfolio as I said earlier, our team is truly global.

And our team is diverse and this actually helps us bring our diverse perspectives and make sure that we're making great positions and perhaps most important in Nepal.

<unk> flat and adaptive teams. This is part of our culture. This is our secret sauce, our people and our mindset. This really allows us to make faster decisions as a management team due to a flat structure, we sweat the details.

We also empowered our people so that we're able to make these quick decisions.

Really two fellows summing up our operations capabilities are a competitive differentiator for us help us deliver despite market conditions.

So with this I want to transition and talk about something that is core to us something that bracken introduced in the top of the meeting here today.

We care about sustainability.

Something that we care about personally the same focus we put on operations, we're incredibly focused on sustainability.

Talk to you last time about our focus here, how we are driving in a pervasive manner. We are on the sustainability journey and let me talk to you a little bit about base, our climate actions just to recap.

Our three reduce renew and restore so.

So we plan to achieve.

Net zero.

Carbon in line with the Paris Accord in 2019, we're using the design for sustainability principles to reduce carbon to support this one five degree centigrade one.

And this is supported by the science based target initiative.

We're also going to achieve 100% renewable electricity toward our operations by 2030.

And what we are not able to reduce immediately we will invest in for us climate impacted areas through offsets to neutralize the carbon in the atmosphere.

All of these actions.

Will align to key United Nations goals, and you'll see them listed here. So how have we been doing we've actually made quite a bit of progress.

On our climate Plaids.

Our pledge is to reduce.

Net carbon emissions to zero by 2050, you can see here the black line, which shows a declining footprint.

<unk> footprint, all the way down to net zero by 2050 and that net emissions is the net of the growth that we're going to see.

Induced by carbon emissions and we're going to do this through design for sustainability efforts, where fundamentally redesigning all our product to reduce carbon from one generation to the other.

We're not stopping there we're reducing carbon in our operations every day and what we are unable to reduce were going to ultimately focus on offsetting them.

As a design company. This is our core focus by 2030, we need to be halfway there and also put in place a 100% renewable electricity. So what's our progress so far.

We have removed to date in FY 'twenty 164000 tons.

Off carbon so that 6% of our 2019 carbon footprint.

Just to put this in equal in terms Thats the same as 156 miles driven and an automobile or taking about 12000 gasoline cars off roads.

In 2019, we also commented to RG 100, using renewable electricity in our operations.

We're already at 88%, we're going to get to 100% much sooner, but we're not stopping there we're advocating our partners to use renewable electricity.

So let me talk to you in a little bit about our efforts on design for sustainability.

Designed for sustainability DFS and chart as part of all what we do designing products from the ground up so two years ago, we invested in designing our products using recycled plastics.

We worked with Rebased, where electronics waste created a new class of recycled resins.

But we started engineering into our new products and also our existing products.

This major innovation breakthrough has actually made us use this as a standard across all our products and.

And today I'm happy to report that <unk> million dollars devices will use PCR by 2021, and 50% of mice and keyboard portfolio, our largest portfolio will have PCR and then seven.

7000 tons of Virgin plastic that we intend to remove as a result of this and I'm almost 11000 tonnes of carbon removal.

We're just getting started on establishing sort of circular supply chains, we're working on more.

Our PCR recycled plastic progress is a good example of where we've taken waste and turned it into raw materials and really driving that circular supply chain.

Acknowledgements reporting and as a result of all of this.

Have been nominated by sustained analytics as number two of 145 Tech companies, which is at the 96% time. We were also listed on the top 2000, most influential companies to shape sustainability for our future and recently, we were named to the Dow Jones sustainability index for Europe .

One of two companies in all of Europe , and many more with Morgan Stanley <unk> FTSE for good so the acknowledgements are coming in.

Talk to you about something that I am super passionate about that we've actually talked about externally and we announced this last year.

So I wanted to talk to you about carbon transparency, we've spent years developing lifecycle analysis capability to estimate.

Carbon impact across the lifecycle of a product from material sourcing manufacturing distribution consumer use all the way to end of life of the face of a product to.

To support the integrity of these calculations, we collaborated with ire few Hamburg and independent decorative authorize verifier to validate these numbers.

We voluntarily disclosing the product footprint of our of our products.

And will provide access to the methodology and the protocols up right.

We are the first consumer electronics company to do so.

And the reason we are really doing this as you walk into any grocery store pick a packaged food retail store.

And ill flip it to the Bakken you know what the calories or you make a decision for yourself.

Youre consuming we believe carbon is the new gallery.

And with that in mind, we've designed a new carbon impact logo, which is shown here.

<unk> global Labor will be Mart and displayed on our packaging with the carbon number and we've used the letter C with the downward arrow really visualizing our intent to reduce the carbon impact across the full lifecycle of each product.

The icon is really not that important it's the transparency of the carbon impact number encompassed by the SEC that is important.

So what you see here 784.

Carbon dioxide equivalent that you see on pro wireless gaming mice.

Is the equivalent of one gallon of gas when you drive one gallon worth of gas in a gasoline car.

And doing this by being carbon transparent, we intend to empower and collaborate with consumers and.

Informing the purchasing choices they make we invite other companies to join us in driving this positive change by providing full transparency on their products.

It will take an industry wide effort to make this truly different.

And so we are here to lend them, our expertise and are really happy to share our learnings and knowhow.

So lastly, I wanted to talk to you about why does this matter to you as financial folks in this room why does it matter to you wireless sustainability matter to you consumers used to want to buy a sustainable products.

Now they demanded ever.

Every consumer survey via Ron has confirmed that consumers want more sustainable products and are willing to make that a point of purchase decision.

Secondly, ESG investments generate better returns take any sustainable company comparator your favorite growth index, they simply provide better returns so.

So climate risk is coming.

Just in the recent past you saw the risk of icy cold climate events in the United States on various operations climate risk is fundamentally just enlist mantras.

Lastly, I want to say brands that embrace sustainability will thrive in the long term.

Even more than we can imagine today.

This is why sustainability as a focus to us.

And I Hope you ask every one of your portfolio companies to pay attention to focus on sustainability reduce carbon.

And most of our lost them to embrace carbon labeling you can make a difference.

Thank you.

With that I want to hand off to Glen.

Thank you Okay Hello, everybody. This is Clinton.

I'm, calling in from China, Our Shanghai Office, and I think Theres a lot of the office, where you can actually work in the office now while the two places.

I've been working now for last year for the past 10 years before joining logitech I used to work for Pepsico for 16 years.

That 12 years I was agenda manager for some of the Pepsi Bottler operations in China.

I joined Logitech as ahead of China 10 years ago, and then my role got expanded into Asia Pacific.

Seven years ago and.

In my role was extended into EMEA as few years ago.

Last January Alex gave them the opportunity to lead our global team.

So it's been a year into our journey.

Last January we basically combine the three sales region.

Together into one global multi functional commercial team.

And we have four very similar strategies going forward. One is really to move from push to pull that means we're going to reduce the levels of our pricing promotions reduced gross to net so we can shift more resources into consumer marketing, where we are.

He can build a lot more brand awareness for each of our categories.

The second one is really by separating the sea with more <unk>.

Dedication with a dedicated team we're able to focus a lot more to grow in CMT in gaming.

In streaming.

Yes.

Also from a channel perspective.

We have various degrees of.

Performance is our execution capability around the world just as an example in China, we're very strong in E tail in Europe .

The U S. We're very strong in retail now we have the opportunity to elevate our channel execution around the world to the same standard so to excel in multiple channels for our categories and also we have a big opportunity to continue to grow in number.

Sure market, but also we have tremendous opportunity in the emerging markets and China, which I'll show you later.

One year into the journey I think we really seen the benefit of a one global organization. So aligned strategies and also elevated execution around the world and also we've really seen the benefits of our global initiatives and programs, where we can really drive the scale.

And really.

Elevated our performance around the world.

There's still a lot to do but so far we are pretty happy with just a one year journey, where we are today.

One of our big objective as well commercial organization to really make sure that we continue to grow in a sustainable way in each of our core categories.

Bracken mentioned earlier, we're really seeing that the secular trends category continue to going in the right direction for sure.

And we believe as the organization some of the consumer trends like work from home learning from home video everywhere and esports are here to stay.

We are in the right position to capture this growth as a commercial organization around the world.

And also.

As the leader for most of our categories, we have a very big opportunity and actually we've been proving we can do it is really to reinvent our mid and high end portfolio, where we can really drive the ASP and really grow the market.

As well as gaining market share.

And also over the past two to three years, we've been really focusing on bringing more new consumers.

The consumer choosing logitech as a lifestyle choices and I'll give you a few examples of that later in my presentation.

Thirdly is.

We also have gained a lot of experiences over the past three years in terms of.

Segmenting, our consumer segment, even more granular.

For example in gaming is not really just about generic gamers, we're targeting anymore, but really looking at <unk>.

Pro gamers core gamers, and social gamers, and we have different marketing campaigns or programs targeting as those different consumers ACO same thing with our <unk> portfolio. So we have.

Also give you a couple of examples on that later.

And also we have tremendous opportunity to get around the world because it flower category. Some of the channels, we have not been fully penetrated and there's a lot of market. Some of our categories and also have not been really established because of our presence in those markets.

Organization, we really believing our category.

Category strategy as we move forward.

And one of.

Our key strategy and a good example of how we are able to spend more marketing to drive growth is in the gaming area.

Over the past five.

Five years, especially in Asia Pacific Asia Pacific and EMEA, we have really invested consistently behind our esports platform. We have built extensive.

Network of partners with our gaming titles. So we saw professional teams.

Professional leagues and also global and local Influencers, we're able to develop a lot of campaign with our partners at <unk>.

Take those campaigns and executed with our.

Our retail and E tail customers around the world.

And as a result, we've been able to really increase our market share as you can see here.

In PC gaming and we have a number of low share in Asia Pacific and also in EMEA and number two in EMR.

In 2020 was a very big year for Logitech in esports as you can see on the right side first we were for the first time ever a large tag was recognized as esports commercial partner of the year.

And.

Globally and also on the bottom chart you can see from our esport brand reach perspective, largely hit ranked number one among some big consumer brands in the world and we're very proud of that and there is a big achievement for the organization.

And it's.

Now something you can.

In a year.

By investing behind our esports platform over the past five years, we have really being able to drive growth with our partners around the world.

Another.

As I mentioned earlier, a large tech have a very strong high end.

Portfolio.

<unk> re innovate our high end innovation.

And as a result, we'll have put marketing integrated marketing behind our high end portfolio two of the good examples that can show you here. One is the next slide for our CMP as other world is the wireless.

Four.

For our PC gaming category.

Over the past few years, especially in Asia Pacific and EMEA again way being investing consistently behind those two.

Yes.

Category and for CMP for <unk>.

Able to double almost double our mix within that category and for wireless that we have taken the mix of wireless in our PC gaming to more than 40%.

After a three or four years of consistently investing in marketing.

Those two initiatives.

Tremendous result, because of it we're really driving higher ASP fab.

Faster refresh cycles and also we are really driving the market growth.

For the category.

We will continue to do this this is something that we replicated from Asia into EMEA and we're now taking that globally over the past year, we've seen a lot of strong.

Returns.

Around the world.

Another.

Good example, I want to show you is our focus around the lifestyle consumers again. This journey, we started in Asia Pacific.

Where we partner with a lot of the big name consumer brands.

In the World and for example, you can see some of the good example here.

We have partnered with Disney and Marvel in South Asia, we partner with.

In Korea, <unk> legal alleging TDA in China. We also partnered with Lance brands in China as a result, we've seen.

A lot more new younger consumer female consumer coming into our category.

There has been a tremendous success for us in Asia and EMEA.

Now I think we will be pushing and driving this.

Initiatives, even harder on a global basis.

And with that I want to show you a video.

What we have done recently in Europe .

Okay.

Sure.

Okay.

Yes.

Okay.

Yeah.

Yes.

Yes.

Yes.

Yes.

Yes.

Yes.

Okay.

Yes.

[music].

Yes.

[music].

And of course I mean.

The best marketing campaign in the world won't be very effective if we cannot lend them with our customers around the world and with that I think I'm very happy to report that we have very strong capability around the world with our channels, especially on the detailed front.

We started our journey building our E mail capability in China in Asia Pacific, We replicated that in Europe and also now.

In Americas, and we have built a very strong strategic relationship.

With our E tail partners like Amazon located dot com and Alibaba.

<unk> and.

We have taken that capability now too.

Retail dot com last year, especially given COVID-19 and really helping our retailers transitioning into their online business and also we are taking that capability to our direct to consumer business.

We have built.

Bill extensive capability around the E tail upfront with a lot of innovation and we're being recognized as one.

The best partners really working with our <unk> around the world to grow the category two really big.

Build a very sustainable growth with our partners around the world as you can see even before our call that we have been driving.

Big increase in the mix.

Online sales now reaching more than 40% globally.

FY 'twenty FY 19.

Around 30%.

Of course.

Last year during cold at the speed has really.

Pick that up and we believe that trend is going to continue and it's not really going to be evolution is going to be a revolution in terms of how big this business is.

Because of our competitive advantage in this channel we really believe we will continue to drive and lead the growth.

For all of our categories.

E Mail.

And of course retail is still a very big part of large types of business and.

This is <unk>.

Our traditional spring.

Many of our markets, especially in Europe in the U S will have done really well with our retail partners around the world, but all of the past two to three years, we have been able to even to elevate our partnership.

With our retail customers, we have brought a lot of very strong strategic initiatives.

To build category growth and drive the ASP.

In the channel.

Some of the key program, we brought into the retail channel, including category management, we're really helping our retailers to upscale SP as a category.

And category growth and also we brought in significant point of sale innovation, we bring traffic.

Two our retailers with strong retail payment program, especially last year as I mentioned earlier.

During the call that we really supported our.

Retailers.

The effort to go online towards Omnichannel and.

And that has been very successful with the kind of lockdown, we have seen last year during colder for the physical stores, we still was able to drive more than 20% growth in the retail channel.

We have covenants postcode debt with our store reopening we will continue to drive growth in this very critical channel.

For us globally I want to share the last.

A key strategic.

Opportunity for us is really on.

Our global footprint, if you look at the right side you can see.

More than almost 80% of large tech business coming from the mature market today.

On average our consumers in the metro market spend about $3 $8 four launched type product per cab basis.

I still we see.

Best practices, we're seeing around the world, we see still see a huge opportunity.

In the mature markets.

But however, we also have the benefit of looking at our footprint in the emerging markets, where the consumers are only spending 16.

Per cap.

And that's in all the emerging markets and China.

More than two third of the world population and looking at our precedence and looking at the income level and looking at.

The COVID-19 pandemic has increased the PCE penetration in emerging market. We believe we have a huge opportunity in the emerging market as well so as part of our key strategy, we're continuing to invest behind our metro market and also we're going to invest behind China.

In emerging market in a much more aggressive way.

This is a huge opportunity for logitech as we're moving into the next three to five years. So in summary, a one year into our journey.

Sure.

Organization, we feel pretty good.

Obviously, that's still a lot to do but we feel we are well positioned to really drive growth or sustained growth for logitech for sure.

Especially at <unk>.

We can grow with CMP gaming and streaming much more aggressively and we will be able to elevate ourselves and marketing capability around the world even faster.

Im sure we will and we are already doing a lot of the best practice sharing around the world, but I think more will be built and more will be shared.

And more success will be share around the world as well.

Of course as I, just mentioned, we will be able to drive much more aggressive global expansion.

So in summary, thank you very much for this opportunity to share with you our strategy as a commercial organization and also some of the good example of what we achieved over the past year now I'm going to hand, it over to Erika Chris is going to talk about that's exciting opportunities we have.

AC.

Thank you very much.

Okay.

Thank you Quinn.

Hi, My name is Erica Gladden and I'm responsible for the go to market enterprise business, specifically focused on video collaboration.

I spend time with customers and partners everyday the challenges they are facing from the effects of COVID-19 are critically important to their companies.

Their resilience determination optimism and innovation in the face of these challenges is inspiring.

These businesses institutions and organizations planned to provide business continuity, while dealing with some of the most significant changes to operating models and business and.

And video has become an essential service that enables them all.

The go to market Enterprise group at Logitech is inspired and ready to assist companies to define their what's next we are ready to partner with them for technology solutions that can help meet their business needs.

As Bracken shared earlier the changes in working models created by COVID-19 are not temporary we believe the hybrid work models that have been evolving since the early 19 seventies and at warp speed. This year will be the new normal and we can help.

We recently conducted a study with customers across multiple industries and customer segments in both the global and local settings to better understand our customers' worries.

And what I'm about to tell you as noncontroversial from the larger employer businesses to the local proprietors. It was clear their top priorities, we're maintaining business continuity employee engagement and wellbeing the student experience and productivity.

Technical decisions included some form of cloud and hardware solutions focused on video 50.

58% of those survey now have remote asset management solutions included in their plans because they believe it is an essential component of their business strategy.

From my office I have been able to meet our customers and partners in their time zones and experience their needs as we help them to meet their requirements and support their employees' needs.

It is expected that most places will have a phased return to office approach that will result in a hybrid work schedule.

Pending on your location in the World. The hybrid concept of your office is going to be the new normal.

But one thing is definite the environment has changed businesses and schools will use their space differently and video is critical to ensure a seamless approach.

Companies are now considering collaborative spaces and hot desks to accommodate the hybrid working model for workers when they're in the office and when they're home.

Logitech technology addresses these challenges whether its video collaboration solutions and the office personnel collaboration solutions in the home or both we.

We can help our customers be productive engaged and connected with our solutions.

To meet the needs of our customers and deliver solutions. We have developed a lifecycle model you've likely heard it said about logitech that the mouse dealt this house, while it's true for us in the enterprise organization to our business is built out of Logitech strong heritage of customer first innovation and serve.

Its delivery.

And it all starts with a strong foundation of services that ensures every time a customer chooses logitech. They are the best in class support they expect it is job one for us once they enter the house of Logitech, we're focused on delivering the best possible experience for them.

Customers Express interest as a result of our lead generation efforts or because they've come to rely on the logitech brand. They give us insights into the secular trends that are driving growth for them and shaping the strategy for us customer first is really about understanding and putting the insights of our customers forefront in our approach.

<unk>.

Our customer engagement model is designed to assure customer solutions leveraging the services they've chosen for their environments.

We are committed to every customer experience being one that positively impacts their business.

Together with our partner ecosystem. We believe we have the correct route to market model to address their interests priorities and ideas to grow their businesses.

And so we've organized ourselves in a land and expand sales motion to provide a consistent experience we want our teams to be in a position to dedicate focus and attention on our existing customers as well as our new customers. We are convinced this focus positions us as a trusted advisor so customers can explore the best collaboration.

<unk> for their businesses their institutions for their organization.

I briefly spoke about our routes to market, but let's talk about how we scale and meet market demands in partnership with our channel.

Our partner ecosystem is one of the most important ways. We go to market with a cloud providers distributors service providers solution integrators direct market resellers or value added resellers.

<unk> partners make a difference in the customer experience their expertise assists, our customers with deployment of solutions that meet their needs and the needs of their employees.

And listen it's not a secret that market is accelerating and growing how we address the total addressable market with our customers is also important.

So we're looking at segmenting, our markets to inform where we invest develop and grow.

Let's start with our foundational customers.

Our foundational customer segment includes businesses with more than 500 full time employees, our customer segmentation continues with our corporate customers or companies and institutions with more than 5000 full time employees. We also see the opportunity to lead with our global customers those companies or organizations with more than 10.

Full time employees.

And with Logitech rich heritage satisfying the needs of consumers and companies. We will continue to make our products available through logitech dot com and web scale partners alike.

But this market has changed in the past video is reserved for just the corner office in fact logitech looked at the market as just this corner office here with conference room peripherals and cameras, but.

But when we think about the needs of customers, whether foundational corporate or global offices anywhere whether working in the office building.

Your favorite coffee shop.

The Sky and.

And even the home office, it's clear we can help our customers and their employees with video solutions that make their work experience seamless regardless of where in the world their offices.

So where we previously looked at the market as just offices with meeting rooms. We are clear. This market has been redefined and logitech video and personal collaborations solutions helped to meet the market demand.

How do we know.

Our customers and partners are telling us customers all over the world and all of the market segments. We have identified have chosen logitech solutions to meet their needs.

Pembina pipeline company in Calgary, Alberta, Canada said, the Logitech rally system with exactly what we're looking for Theyre seeing value and consistency of the meeting room solutions across their company.

Japan Radio and Indonesia Port Corporation in Japan, and Indonesia, respectively are using Logitech video and personal collaboration solutions to ensure their employees can work flexibly anywhere in the world and every day.

Rico, one of our valued partners has given us feedback of the highest regard highlighting our pace of innovation and the importance of putting the experience the customer first and our innovation process and.

In France, Veolia and Sicily are both integrating logitech video and personal collaboration solutions to create efficiencies in their businesses be it cost savings or employee productivity for teams working remotely and in the office.

And with the recent launch of our latest portfolio of products, starting with our appliance based solution Rally Bar service now credited the product performance as an ideal solution for their meeting rooms.

For us we're convinced the hybrid experience brings the office to where the work is being done and logitech is proud to be the partner that institutions and enterprises and organizations choose to enable how they work how they teach and how they innovate.

I'll quote bracken here.

Whether youre videoing with your mom on the next block or your Rover on Mars.

Larger tech connect to the world and beyond.

We're going to take a short break here and youll be hearing from highly next.

There will now be a 10 minute break during the break we will play a recent fireside chat between Bracken, Darrell and Eric Yuan founder and CEO of zoom.

You've been such an amazing partner for Logitech and its just such a great job and I haven't seen you personally and physically since December 2019, but we had lunch together, but welcome to our fireside chat.

Thank you right now were really completely added to our lineup with rally bar Rally bar Mini and then roommate can turn any of our products into a an appliance. So we've really tried to jump into the appliance came in a big way.

What's your view of innovation in general in the video industry, and where do you think the gaps are and what's really work.

Yes.

Okay Thats great question first of all I wouldn't see a video industry is not a something like a brand new industry.

Everywhere, it's booming.

Booming overall I think that user experience is number one I'm pretty sure next five to 10 years almost anywhere anytime any device one fleet.

You would see video is going to be every day.

And what do you what do you think is still missing in the video industry. What's the innovation is still lacking.

I think there were things make sure all of those are new use cases, so we can support them well and nobody has thought about that and we can't have a wedding ceremony or those kind of online clean cooking class a slight outward fully embraced the new use cases, that's all something very important.

So I agree with you I think these these explosion of used cases for video is one of the most exciting things that's really started to to expand during the pandemic and we can name any number of them. What do you think the future of work itself is going to be like after we get through this I think is the first of all I think.

There are all uncertainties as of the date bought a Wednesday.

I know is that we are not in games will go back to the traditional we all needed to drive office.

And I'll have to get it again I do not think that it will be the mainstream in the future.

The delay to be hybrid.

Meaning either employees may decide when to do it at home when you go to office.

Florida can decide maybe this week that will all go back to the office next week that we also get a home I think is that would be very unlikely to hybrid.

The future workplace.

Hybrid is going to be the future yes.

You and I've talked about this in.

We absolutely share that view that it'll be a hybrid world.

I think.

What are the what are the things one of the comments that some people have raised about the about the video culture. The video work culture is what impact it might be having on sustainability do you have a view on that.

Yes, yes, so Ryan I think to date.

I think.

Today's.

<unk> used to be I needed to be there, but I need a July median by now all.

Maybe tomorrow have a constantly meeting I need to fly.

I really do not think that's a sustainable on any thoughts like that.

In our climate change I think media.

Barry.

Plus more and more innovations and even negative media communication better than face to face meeting Magna net deposits of the years.

Scott when he first came into the company I remember his first presentation. He said.

He said I don't want video meetings to be as good as physical meetings I believe they can be better.

And I told him last night actually that has stuck with me now ever since and I kept thinking you know he's right.

So many things you can get so many things in the context of a video meeting.

<unk> reality structure that you can have in the Cisco meeting you told me something several times when we've met another thing I can never forget you said I I only really travel twice a year.

And can you tell that story, because I think it's so interesting.

Yes, I remember that we had launched it together I think around Christmas time and 2019.

Yes, I think that's why the syndicates and the plus.

Working so hard to meet the video community some better on the left hand backs, Delaware opened are sort of bumping along right media outlet so listen tunnel work.

Also I feel like.

It's not a provocative I.

How can we at least the one customers I realize if I could sell their history.

I realized Wow, if I use zoom I can meet its still book estimates all of the work within one day I feel like my productivity is much better by a lot of emission of Jetblue. So that's the reason why since they were years ago I decided.

<unk> twice a year.

<unk>. So the reason why I think the feedback was very positive and so what's the well itself.

So Eric if I could just ask you you know you.

You know we're launching these three new products two appliance products from one that turns anything we haven't toured appliance product. What are you. Most excited about with those I think first of all I wouldn't see a look at it.

<unk> inhibition speed.

Im so impressed not only individual launch one product or two products.

And it seemed high.

Yes people and launch the product we are already working again.

Already goes through the certification test we know it works so well no like you lost them seeing constant and then you didn't read upon honest several months or quarters, partly Lady and plus it's open powerful zoom.

Zoom meetings about on other calls as well I think from end user perspective, I'm pretty sure and the customers like it.

So Eric how do you think your customers will react to our launch of rally bar rally bar mini and roommate.

I think first of all I think we.

Being a customer for a long time, I'm very happy and listen to our customers very likely they have a similar accident. The reason why Sino yogurt in todays world. We are thinking about doing back office a lot of the companies are planning was the future workplace look like was the copper look like what's the future working from.

Whole home look like that's why Youll devices at the street to appliances also the room meet I think Peter whereabouts.

And our new requests, but anyway is perfect clarity.

Expertise on hardware design, all the leading quality it is zoom sulfur and with all the software I think our customer really like it.

So what's next for you guys Eric.

You've continued to bring zoom from what could have been convinced of video conferencing into the next world of Videoconferencing, where do you go next and how might logitech fit into that.

First of all our when we started the vision is to build a killer App video conferencing app.

I think we are moving towards.

The chapter two of our innovation journey, which is to become a platform.

And of course, one of the foundations meeting and as I mentioned earlier regarding to embrace all kinds of use cases novel <unk> notable business, but also for consumers and all of the used cases for <unk>.

And then as sulfur and o'clock and you've items weighed on our hardware on sopra Hanmi integration I think that together, we can make a video Arabic grid.

<unk> already very easy to use in breast all kinds of new use cases fundamentally and we believe someday in the future anywhere just one Pete.

Slightly this better than is needed new likely we did not see each other prolonged client I want to give a big a hard Brexit you will assume intimacy.

So maybe integrate very well into our logitech.

Right.

That is something we are shooting for.

Thank you so much Eric it's been a really an honor and a pleasure to have you on this fireside chat great luck in the future and look forward to working together.

And thank you and your leadership and the large tech. We're early on in June was a very small part of our company. We are already became accretive ordinary actually appreciated Paul Opponency I truly believe again, we can't Ele me to foster.

More the bringing the best solutions and.

So the world. Thank you.

Okay.

Yes.

Sure.

Yes.

Yes.

Okay.

Yes.

[music].

Hello, My name is Heidi, Arkansas, and Im the Chief marketing officer at Logitech.

And that's my title would suggest I'm here today to talk about marketing.

It was four years ago at the same presentation that I spoke about developing marketing as a core capability to support Logitech Scott and.

And over the past four years, that's what we've been working to build as we move from a push to a pull approach.

We built the capability with three core pillars that support all of our brands and the breadth of product categories and audiences.

First is the team capabilities, the marketing skills to creative production digital expertise and supporting technology infrastructure.

Two is the campaigns and content developed by those teams utilizing data and insights.

And third is the in market execution with our integrated approach across paid owned and earned media and in conjunction with channel partners.

Having internal teams allows them to be engaged from the early design phases and gain in depth of understanding that they can really bring to the work that's developed in support of product experiences.

This capability has enabled us to significantly up level and expand the content created with campaigns designed to talk to specific target audiences.

We've also been working to develop digital tools to make buying our products easier and support people through thereby journey.

The workspace configure right on Logitech Dot Com is an example of this and an approach that we're working to expand across categories and brands.

Our global campaigns, you really come to life at the country level, they leveraged across multiple channels Activations, Ron in conjunction with channel partners, both online and in store.

We're also working to drive greater engagement at the brand level and.

In May last year, we launched what we call the make it more campaign in the U S, which was a response to be inspired by people who were continuing to work create learn and collaborate in challenging times and how logitech was playing a role in helping them do that.

We saw an hour Brian tracking that the campaign positively impacted people's emotional connection to the brand.

And so we are building on that with the recently launched campaign that we call define launching.

In the past 12 months, we've seen how products move from peripheral as the category name suggests to necessary and now we want the brand to become an essential part of People's lives, providing them with tools that enable them to pursue their passion purpose and the work they do.

But this is a campaign that's more than just about people surviving.

It's showcasing people doing inspirational work enabled by Logitech.

We're showcasing people doing extraordinary things things that may not have been possible just a few years ago. They define.

Industry genres, and what's gone before.

Whether it is launching a broadcast from their bedroom or starting movements that advance societal causes they are creative makers and dealers who are challenging the status quo and logitech is helping them in the work they do.

The campaign has three key objectives. The first is driving that stronger emotional connection with the brand, making you want to take essential in People's lives.

Secondly, it's about showing logistic as a brand that's aligned to our purpose one that enables people to create achieve and enjoyable.

Thirdly, it's about bringing new people to the brand, reaching new audiences and appealing, particularly the younger people who are not as familiar with logitech by partnering with talent, that's aligned with our focus areas and the values that they share.

We recently launched this campaign with an anthem spot in the Super Bowl and combined they don't announce X.

Someone who got his start on social media. He was the perfect creative innovative to carry the spot.

And we were able to use have yet to be released new songs to amplify that Bob let's take a look.

We stand in defiance.

[music].

Alright.

We can makers.

We have ground breakers.

We are the creators.

Screeners.

Consumers.

We defied expectations for sepsis.

Ms concessions.

We define with logic says we should look like.

Sounds like it can be like.

We define <unk>.

Algorithms and entire industries.

We defined a little voice to say no we can't.

With Aurora back that says Oh, yes, we will.

Right.

Because to create the future.

You must have by the logical.

Sure.

Most of the biologics.

Yeah.

Yes.

As an advertising event the superbowl is unparalleled with the commercials as much a part of the entertainment as the game. So it provided a significant exposure for the brand the media coverage of the commercials began several days in advance often continues after the game, which increases the total impact of the Super Bowl buy and provided significant impressions.

And reach and we saw it drives very positive sentiment for the brand, but our partnership with Lil NAS X doesn't end there. It's a broader relationship that payers seem with logitech as champions of empowering the ever growing creator community.

He will also appear in a new adds to the brand that will debut in the Grammy Awards on March 14th.

But we're just getting started with this campaign will launch in other markets in the coming months and we will build on that as a platform through which we tell stories of people enabled by logitech across audiences products and categories to compel people to the brand and ensure its long term relevant health and vitality.

Thank you.

Okay. Thanks, Heidi and congratulations to you and your team for the Great work this past year very well done.

By now you've heard about the consistency and strength of our strategy and execution and the strong financial results. They have delivered the.

The agenda for my presentation is similar to years past I'll give an update on the current year highlight some of our opportunities and investment priorities provide an outlook for next year and give an update to our long term model, let's jump in.

I'll start with an update to the current fiscal year, we are increasing our outlook for FY 'twenty, one by raising both topline and bottomline outlook to reflect the continued broad based demand strength across our portfolio.

We are increasing our full year revenue outlook to approximately 63% growth in constant currency up from our prior outlook of 57% to 60%.

This implies year over year constant currency growth in Q4 will be about 60%.

In addition, we are increasing our non-GAAP operating profit estimate to approximately $1 1 billion.

Up about $50 million from our prior outlook.

Now clearly you know that FY 'twenty, one has been an exceptionally strong year for logitech.

And there are many metrics, we could look at that would support this point.

Here's just one such data point that really puts this year in perspective.

Looking back and starting with FY 2016, as the base. We grew our operating profit on average more than 20% per year, and we doubled our profits over the past four years.

Now through the first three quarters of this year, we've more than doubled profits again. So in just three quarters, we've done what took us four years before.

Pretty remarkable and while we are experiencing a very healthy push from stronger demand. Our results are also driven by a very strong product lineup and crisp operational performance across the company.

But when you really peel back our performance this year and over the past several years you can see the same building blocks driving our financial results.

This is not an exhaustive list of our performance drivers. These elements are the foundation of what we believe will be strong sustained revenue and profit growth into the future.

Let me give just a few comments on each of them.

When it comes to market growth as Bracken mentioned, we try to pick categories with good strategic characteristics, and where we have or can develop the required capabilities to gain a leadership position.

Market share gains are the outcome of good strategies and execution and financially being a leader number one or number two is important for our profitability.

Adjacent markets referred to our ability to find new growth opportunities organically or inorganically that leverage our capabilities in design manufacturing marketing and go to market.

Good organic example of this is video collaboration.

A number of years ago, our strong web camera business began evolving through investment and innovation into the video collaboration category that is growing so nicely today.

Another important part of our story are the consistent margin improvements that we've delivered despite headwinds from various factors such as tariffs or increased competition.

Precaution Heidi talked about investments, we've made into automation and building our brand equity and these are two good examples of how we work to drive up the gross margins of our categories through lower production costs and greater customer preference for our products.

The last item on this list our investments into the business of course growth doesn't come for free.

And we as a company consistently invest for the long run.

Sustainable growth requires sustainable investment and you've heard today from several of our leaders about areas, where we are investing to expand our capabilities to create value over the long term now aside from choosing good categories and we have good secular growth categories. Today. Some additional growth catalysts include those listed here.

A combination of innovation from product management, and engineering and expansion of our capabilities in sales and marketing.

<unk> and the other presenters have touched on many of these already so I will not go through them.

But these are all areas of focus and increased investment over the past six months, because we believe they are key to our future growth.

As such we plan to continue and even expand these investments in FY 'twenty two.

So you've heard a lot about where we are investing and how our growth and margin expansion has created room for us to move faster on executing our strategic priorities.

But while we invest more aggressively we will remain true to our belief that managing risk is essential to long term success and the consistency of our performance.

On the right hand side of this slide you can see a few examples of actions we take that help us manage risk. For example, we have built a diversified portfolio and we actively manage our product life cycles to align resources with the more attractive categories and markets.

We're doing exactly that today by funding investments in areas like streaming and gaming with profits generated from slower growing categories like Bluetooth speakers.

Managing risk is often considered synonymous with being conservative or counter to growth.

There's some truth to that but in reality by managing your risk you actually increase your likelihood of success for long term growth.

Being diversified and avoiding significant losses, you can sustain investments while less diversified competitors have to pull back during periods of market softness.

So good risk management actually leads to more capacity to consistently invest in growth and stronger long term competitive position.

Moving now to capital allocation.

Our priorities are unchanged from prior years, we actively look for opportunities to strengthen our business through acquisitions and we have shown a balanced strategy of returning cash to shareholders through a growing dividend and share repurchases.

Our additional cash gives us the ability to quickly invest in manufacturing capacity and inventory for potential demand upside as well as funding additional variable expenses like marketing.

And while our M&A strategy hasn't changed we continue to look at targets that are small medium and large our higher cash balances today give us more flexibility on how we finance deals.

So when you put it altogether, here's our outlook for FY 'twenty to revenue and operating profit.

We expect sales to be up 5% to down 5% in constant currency off of our increased FY 'twenty one outlook.

So roughly flat sales at the midpoint of our guidance.

We expect our operating profit to be between $750 million to $800 million down about 30% at the midpoint versus this year.

Profits would be down as we expect gross margins to be lower next year with more normalized levels of promotional spend and recent retail store marketing investments.

In addition, we continue to invest in higher levels of sales coverage marketing R&D innovation and some areas of G&A.

These investments will be both fixed and variable in nature and are expected to fuel strong long term profitable growth for our company.

By category, we see creativity and productivity being down a little bit next year after growing about 50% this year.

We expect video collaboration momentum to continue and grow nicely off of a much higher base.

Gaming could be flat after growing approximately 60% in FY 'twenty, one, but we believe gaming has strong growth prospects long term.

The combined music categories are expected to be down about 5% to 15% as our largest music business. Bluetooth speakers continues to decline at levels similar to this year.

Blue microphones in retail headsets, however, should offset some of this decline in mobile speakers, but are still expected to slow significantly from their high growth in FY 'twenty one.

Now this next slide give some additional color on some of the factors positive and negative that we are considering in our FY 'twenty two outlook.

I think each of these tailwind in each of these headwinds are likely to occur to some degree for example, the first headwind a shift of consumer spending toward other categories seems likely as hopefully in person activities and travel become more common.

On the other hand, the shift towards hybrid work and growth in video looks likely to continue as well one reason, we give a range in our guidance is that the magnitude and timing of these competing forces are frankly hard to predict, especially as we get into the summer and back half of the year.

I am certain however that we will be busy and determined as we are every year to have definitely navigate the positive and negative forces and we are looking forward to the coming year.

Moving from FY 'twenty, two to our longer term financial model here you can see the significant improvements we are projecting to our P&L structure.

First on the top line, we are increasing from high single digit growth rates, two 8% to 10% growth in constant currency.

This new long term model suggests we can grow even faster than before on a revenue base that is 60% larger and the combination of our greater scale and growth rate creates a powerful compounding effect to drive our earnings potential.

Given our improved business mix and reduced promotional spend in some areas. We are raising our gross margin targets materially there.

There may be quarters, where we are outside these ranges negatively or positively, but we think we've structurally and significantly improved our margin profile over the longer term.

And operating margin ranges have also increased nicely from our prior model. This is of course driven by the combination of our increased sales volume and gross margin rates and incorporates our view that we will reinvest at higher levels as appropriate into the business for more attractive long term growth.

In summary, the overall message from our financial outlook is that FY 'twenty two will be a year of reinvestment, but we think the revenue gains. We have made this year are sustainable and our improved long term outlook reflects our belief that we are now a larger faster growing and significantly more profitable company.

Okay, so with that I'll hand things back over to <unk> for his closing remarks.

Thank you so much Nate I couldnt be more excited about where we are on April 9th I'll be celebrating my ninth year here on October 2nd we'll celebrate logistics 40th year.

I feel like my team is just at the beginning of growing logitech to what it can be we've been on a nearly decade long road to reinvent Logitech and I believe we've done that but as we continue to improve our strong capabilities and add more as we apply those strategically to our existing categories and a growing number of new ones. We have so much.

Potential to reinvent what large that could be again and again.

<unk> role is to enable people around the world to pursue their passions and connect to others to.

To create achieve and enjoy life more because we often say it.

And to enable all people and this amazingly diverse world we live in to be able to have the kinds of opportunities there were limited before.

To do that responsibly for the planet.

So excited about the road ahead. Thank you so much for attending today.

<unk> and I are now very ready for your questions.

Thank you and now we'll take our first question from Alex Duval from Goldman Sachs.

Yes, hi, many thanks for the question Alex.

Alex how are you doing hi, there could see many thanks.

Just one question if I may given today, given the higher long term gross margin assumption.

<unk> on that higher fiscal 'twenty revenue base than people thought and.

And given also you've upgraded your midterm growth.

Is it fair to assume that you will meet on EBIT margin assumption is rather conservative given the current EBIT margins still apps. Just wondering why you wouldn't be at a significantly greater margin level over time on an EBIT basis should we be viewing this in the context of the fact that you have.

Our guidance is it ultimately turned out to be quite conservative.

Just wanted to understand that given it would seem to imply a big uplift in areas like R&D and marketing.

Sure Yeah, Hey, Alex So I think I think your final comment there is the right way to think about it I think what the outlook reflects is that we're going to be investing.

At a faster rate relative to revenue in FY 'twenty, two and going forward than what you saw in FY 'twenty, one and FY 'twenty one was has been.

An exceptional year.

We've updated our FY 'twenty, one revenue growth outlook.

About 63% in constant currency and <unk>.

We have great opportunities, we think over the longer term and we need to be investing for those long term opportunities in the areas like you mentioned R&D and innovation.

<unk> go to market across both consumer and more business oriented channels. So it's really as you said at the end there I think we've taken up the operating margin.

Outlook for the long term model pretty significantly from 11% to 14% to 14% to 17% and when you combine that with the higher revenue base and the faster growth rate. That's also in that model I think it's pretty powerful earnings formula.

Great. Thanks, Thank you thank.

Thank you.

Thanks, <unk> merchant from Citigroup. Your line is now open.

Yeah, Hey, there.

Congratulations.

Thanks Ben.

Disabled my video.

We saw you know.

Okay.

Thank you and just feel a little bit on the gross margin upside.

Yes.

They did go into it but then we also talked a little bit about mid to high end portfolio expansion.

Certain markets and categories that haven't been penetrated yet if you can just kind of help us and then of course, the software mix getting a higher portion of your portfolio.

If you can kind of talk about in rank order, what's driving gross margin.

The mix shift is going to wait for more enterprise and gaming that typically carry higher margins versus.

Or.

If there is something else that.

Underpinning that and then also market share gain your outlook or fiscal 'twenty, two and then the midterm outlook, what's kind of factored in on the market share gains perspective versus the rising tide, that's lifting all boats in the category.

Thank you, yes sure okay. So on the gross margin side I'd say, the two largest factors.

On to the positive would be continued mix shifts so the areas of our business that are growing faster generally have higher margins gross margins not always the case.

Some of the categories that are growing fastest do have better margin profiles and the other one would be that we believe we can hold onto.

Some favorability on reduced levels of promotion that we've that we've seen this year. We don't think we can hold onto all of that but we think we can hold onto some of that and then we will be reinvesting back into marketing as we continue to drive our.

Push the pole strategy, where we build the brand equity drive up that awareness drive up the affinity for our products and our brand.

Which we think has a long term margin benefit as well so those would probably be the two most sustainable we believe long term margin.

Tailwind.

Your other question around market share.

And I think there's still a lot of opportunity for us to gain market share even in categories, where we've got 50% share.

To say Thats still says that one out of every two customers is choosing somebody else. So I think theres a lot of opportunity there for us and I think you'd get those share gains when you deliver a great innovation and differentiation relative to your competition and that's why and that is really a long term investment that requires that it's a long term investment in new product innovation is also a long term investment.

In marketing and brand Bracken anything you want to add to that yeah, No I would just.

Echo everything you said, how much is how much market share gains in the model, we really leave market share sort of as one of the floaters between what will really happen with the growth in the category and how much are we gaining market share. So I'd say it's assumed.

Some level of market share game, but if the category was a little stronger probably relatively flat. So I don't think market share it will be a big swing item for you.

Mhm.

Great and software driving some of that is there more to hear from you guys on the software and services.

Becoming a new category for you guys, well I wouldn't necessarily say, it's going to be a new category, we've got software and service.

Plans kind of built into everything we're doing we have software leaders now in every one of our major categories.

We're hiring software engineering on a very fast clip, but we don't really have anything explicitly that we're ready to talk about today, we'll do that probably the next analyst and Investor day will be ready to talk more about it yes, I would think I would think about software in particular right. Now is just something thats a product differentiator longer term, we may have more opportunities there to really create new categories and businesses, but if you just think about.

Again product differentiation things that we can do to make our.

Our products work better together, whether that's device configure ability in management I think those are important things that can drive up the willingness to pay if you will for products and help sustain higher margins.

Great. Thank you. Thank you thanks Assia.

Ananda Baruah from loop capital. Your line is now open hi, Ananda Ananda.

Hey, guys. Thanks.

Turning to the year on year.

I appreciate it.

There you go.

Hey, guys, great great contacts per day, and <unk> really appreciate it.

But the average I mean look the advertising you guys started the Super Bowl commercials, Theyre homerun like really really phenomenal.

Yes, great looking for as you tested bad like 10 seconds after the commercial side.

Yes, I need more of that because I'm looking forward to it.

Q2, if I could just on the.

The updated long term revenue growth, which looks great.

Given.

Given the structural tailwind to your key category gaining leadership position.

Why why wouldn't the growth be greater than 10% and the updated model just love to understand the push pulls there.

And then do you think at some point in time, you could grow into a greater than 10%.

Normalized.

Normalized.

<unk> growth profile, and then that you have a quick follow up.

I'll take that one.

The other day, our long term model is already an increase versus where we were so we went from upper single digits.

8% to 10%.

Could we could we at some point in the future be 10% plus and of course as possible.

No mistake, if we put an 8% to 10% we're going after 10% now going after and delivering are two different things than what we guide to a long term model. We try to give you something we're confident we can deliver.

Why wouldn't it be higher the farther you go in the future the less predictable everything is right. So at the end of the day.

We're building on what we think is the most likely case that we are confident we can deliver.

And we will see over time.

I'm Super excited about this business I didn't come for the long term long long term to deliver anything short of a very strong growth business. So that's reflected in the model and we'll keep updating.

And then just a quick follow up is.

With regards to the content creation.

Yes, Sir.

Business that you guys are looking to cultivate can you give us I guess any context would be helpful.

What aspect of the ecosystem might be exciting to you might be eligible.

Without giving us any you want to give away the.

Give away the whole thing here, but I think it would be helpful for us to deal with that you get a sense of how you guys are thinking about it.

You know because you've been we've known each other for a while how our conservative I am about letting the cat out of the bag so to speak too early.

What I can say is when you think about.

And if you have somebody in your home or your streaming content or credit card.

So if there is a series of peripherals that go into that and then there's the services like Xtreme labs that go over the top of that and so all of those are fair game.

I am Super Super excited about this category I think what gaming is too to kind of your child's.

The bedroom or are your basement.

Content creation is two everywhere I mean content creation has become like the biggest thing thats happening if you're under 30, I mean, almost everyone is a content creator when we say more and more people are gaming when we say more and more people are gaming.

True in a lot of people are now gaming much much more than we've ever done it.

You talked about content creation, it's hard to find people who arent.

So we think theres a lot of opportunity there, it's a long term opportunity I don't want to go.

Immediately assume that we're gonna be suddenly have a $1 billion business overnight.

This is very very big potential long term.

It could become one of your.

Sort of above medium categories. When you think about the portfolio of the company, yes, absolutely.

I wouldn't guarantee anything but that.

We wouldn't have called it out the way we have we didn't think it could be.

Hey, you know it or not.

On that category, one thing that's really attractive to it from my standpoint, as well as its kind of like gaming and that there is.

People want to look good they want a sound good they're doing this for fun, but some people are also doing it to return money to earn a living and so they have a real.

They care a lot about the performance of the product they care about its features and technology and I think that plays into our strengths because we arent innovative design oriented design oriented company. So like in the gaming space, where people are competing even if they're competing for fun, I think creativity and productivity and creating that content is something.

That has some of those characteristics as well so it's an attractive category in that sense I think a key Jamie I think what is not yet fully appreciate it and then I'll cede the floor is the degree to which.

Business development and cultivation and generation has actually moved online over the last 12 months.

And.

And maybe not so much in our community, but anything that small medium business the entrepreneurial.

Been a tremendous move over there if you go and take a look at whether it's communities are actually doing.

I couldn't agree more with you and Ed I was playing with the product last night that we may launch.

It just made me think gosh theres. So many tools that we should be using.

And our inside of our own company and people are starting to on the very edges of this and it's coming so there's going to be more and more of that inside businesses, we already see it and.

And our children's lives in many of your lives and so it's just going to be huge and it already is huge I mean, we showed 63% growth this year and.

And this whole streaming number and I don't think that's going to be.

Anything close to the peak of this peak is way ahead of us.

Excellent. Thanks, guys. Thank you.

<unk> from Kepler several your line is now open yes, hi, everybody alone.

No.

It's nice to see people today. This is great. We are in a video world. Thanks, Ben for letting them come on video.

Alright, thank you.

It sounds like you sound Amazing Delaware.

Okay. Thanks.

I have a couple of questions, but maybe I should I should start with a few questions on branding and strategy.

Strategy. Okay. Maybe can you give us can you give us a feel for the strength of the brand equity that you have right now across the various brands and also within consumer Tech come and how do you compare to these other brands.

In terms of brand awareness brand equity and so on.

How cool it would help fresh how even female all of the various brands and whether you need to upgrade okay. That's a wonderful question for an analyst and Investor day.

So first of all if I go through the various brands what are they today lodged the Logitech brand is is it's trustworthy it's high quality.

On average if you go to the older audience, it's innovative.

Kind of cutting edge and its mail.

If you go to the younger audience.

It's reliable it's a good product, but it's not necessarily the most innovative so.

So what's our mission our mission is to move from being kind of what we are for the older audience, but we are for the younger audience.

And that's where we're headed so when you look at our advertising Youll see that reflected we are innovative we our products really are on the front edge and they are very trustworthy and a great value, but there are a lot more than that so I would say logitech is the brand we're going to need to move over the next several years and we will in the end, we're going to move it from being predominantly male too.

Very balanced.

You go to Logitech G. Its different story Logitech G is is considered very innovative among our target audience of younger gamers very innovative.

Cool.

I know that when we really want to keep moving it so that it stays there, but also becomes more and more balanced in terms of male female split the gaming business has been to male dominated and we're going to move it shifted over to cover more and more of the womens womens too.

I'll, probably stop there and so those are the two that I would really focus on we could talk about Astro and stream up and others, but the bottom line is we're going to move to a much more modern and innovative brand over overtime as we invest and thats great for the future. Because this is all about growing the business long term by investing in building the brands innovation and youth.

For us we're going to be fueling the bond with the brand over time and I'm excited about it.

Okay.

Can I ask another question of course, you can.

Thank you.

On the on the guidance is it correctly understood that the shortage of chipsets and components is explicitly reflected in the guidance Im asking since it's not mentioned on your slide with the headwinds Tonight.

And if so could you tell us what the outlook could be without such headwinds.

Well, yes, Youre right I didn't included on my sort of headwinds and tailwind slide Prakash mentioned, it a little bit in the one.

On one of his slides is something that he and his organization have been.

Working again.

To combat so yes, I would say its included in our guidance, but obviously there could be.

Improvements or or worsening of the situation as the year progresses, but like every year.

I think we have to battle those types of things and fight way through it but.

I can't really give you an alternate scenario I guess, if you will but I think we've included all of the information we have today in that outlook.

I think what you could say, we don't expect a big dampening effect in the business today.

To put supply the chipset supply was really crushed a few categories in the world like some of the car industry and things we've had challenges of chipset suppliers, but nowhere near that so we're not we're not planning for a big chipset shortage, but that would be big.

Big damper on our business and I don't think we'll get one.

Thank you. Thanks. Thank you.

Erik Woodring from Morgan Stanley . Your line is now open Hi, Eric.

Eric.

Good morning, or good afternoon, guys. Thank you very much for everything and for taking a few questions here.

The first question I just wanted to touch on was again your guidance on the Opex side.

I completely understand the narrative.

And love some of the branding initiatives that you've rolled out I just want to understand maybe from your guys perspective.

What are the incremental reinvestments.

Our variable versus fixed how would you go about kind of flexing that spend based upon how youre looking at your end markets.

Yeah, maybe I'll start with that and I'll ask a follow up thanks.

Sure.

Yes, I mean I did mentioned so these are fixed and variable same thing I mentioned in the Q.

Q3 earnings call as well.

I don't think I want to provide an exact split of that I would just say, it's pretty balanced I mean, some of these things even even things that are fixed obviously, we can we can backup on if we need to but were replacement beds for the long term and the structural growth categories.

That's true across the board things drew on gaming assurance dreaming creativity and productivity and in video collaboration on the variable side marketing is one thing that tends to be more variable than fixed.

But we intend to continue to invest in those things over the long term, but if we need to flex there's something we can do I have I think one thing Eric that helps me is we have a culture here of being very adaptive very nimble adjusting to changes in demand up and down that is true and operations. It's also true in our in our operating expenses. So I feel like we have a good handle on that.

And if we need to I feel like we we certainly can react and take steps if necessary, but given the long term optimism that I have.

Im certainly looking at FY, 'twenty, one and FY 'twenty two as investment years to go capture those.

Those growth opportunities Bracken anything you'd add no I'd just kind.

Kind of what if you didnt capture this if you think totally get this theme and what we presented today I'll try to be really clear about now we're bigger and we're predicting will grow faster there aren't too many situations, where you see that.

But we really believe in that we know the opportunities there it's up to us to execute well and investing in marketing is a key piece of that.

All of it's variable and some of it's fixed now on the other hand on the other side of that you know as I said, we are we're super good at flexing up and down as we have demonstrated this year and our ability to flex up on.

Manufacturing.

We're kind of the same way across the business. So we will adapt as we need to but make no mistake. We are in here for long term growth.

Awesome.

That's super helpful and then I guess maybe.

If we could touch on one other point Quinn made earlier.

He showed that chart of spending in developed markets versus emerging markets. Clearly there is an opportunity for you guys. There long term.

But what do you have to do differently to take emerging markets on the path to developed markets or what do you have to do differently going forward now that you're kind of pointing out this differential in kind of implying that there is a runway to grow that spanned in.

In some of those developed markets developing markets I think a couple of things you know I think one of them is that the cool thing about where the world has gone as it's made it a little easier for us because in the past you had to have a lot of freedom feed on the street.

To deliver against this very very labor intensive retail business.

As things have gone online as demonstrated by China.

Five or six years ago that things will go lives. So much more efficient so the bulk of the most important thing we need to be super efficient.

Creating and marketing of digital business in a digital world that sells mostly hardware into a place that is.

Underdeveloped so far so our ability to market digitally is the key and one of the reasons why we went to this global structure that <unk> talked about in Queens and charge off is that we're going to be able to move best practice, we're seeing in places like Latin America or in the middle East into places like Indonesia, or India, and there is just going to be there's a lot of opportunity there.

Because we've been structured before we love the entrepreneurial nature of our business, where we have three different regions and different countries within it but what are the things we traded off was the ability to really move fast and we saw one thing really working well in one part of the world and moving it to another and Quinn is a huge advocate of this so is erika and I am really optimistic that with this.

New structure as we get more and more mature we're going to be able to move those prospects pretty quickly. So one of them will be the ability of the market better digitally we're becoming I would say superb in China at this and we're moving that now around the world.

China moved first win.

Whats called the malls really collapsed in China, which you will still see in India.

A lot of the business moved from conventional retail online and 65, 70% of line, maybe more and I think that same thing is going to happen in the different and is already starting to happen in the different emerging markets around the world.

Eric if I add a little bit more to that if you think about the trends that <unk> talked a lot about or we've talked about.

They arent exclusive to more developed economies, so things like democratization of content is strong in emerging markets, maybe stronger than it is even in developed economies gain.

Gaming with the shift towards cloud gaming, it's reducing the upfront cost for gamers.

Bringing more people into that market and so there is some nice structural things I think that are also occurring in these in these trends that we're following and chasing.

That lead to new opportunities in emerging geographies, they arent just exclusive opportunities to the more.

Advanced economies.

I'll add one other thing I think one of the other cool thing system things like let's take video collaboration while the absolute price points for us with really high the absolute price point for our business.

In India, and Indonesia are still really low when you think about relative to jumping on a plane and going somewhere you can pay off.

Before installing a medium sized room with a single trip avoided so we've got opportunities across the board I think.

Sure we have a portfolio of products that really appeals to the people in that market and hits value price points, but is another key piece of this.

Okay Awesome. Thank you guys. Thank you.

<unk> from UBS. Your line is now open.

Hi, Brett.

And thanks for taking my questions, we have no choice, but we can avoid it.

That's not true I don't know.

Alright.

But look I mean, I think you highlighted plenty of opportunities you have in the future but.

But also making speaking a lot about risks that somebody can be disruptive to your business model here.

I think in your mind that maybe in vehicle aberration and I'm very happy and looking forward to hear your view 2000 high if you had a very strong bev can business.

I'm sure you would highlight we have huge penetration to go and then webcams were flying in terms of revenues from 400 to 302, and 150 million run rate because the technology changes also happening curious notebooks coming in with webcams.

Included don't just see the same riskier for vehicles Asian debt over the medium term behalf Tvs notebooks as much by the camera systems. They don't need a third party external contracting system and the same also for gaming tore asked here for example, virtual keyboards and something we see already an early stage in that some startup isn't it.

At this up at risk how.

How do you just us an offer with financial questions. Please if I may let me, let me take them in reverse order in terms of gaming you know where we've been since I've been here, we've been looking very carefully at everything that can disrupt the keyboard and mouse et cetera, we kind of live on the edge of that all the time I don't see anything right now that it looks like it's a big disruptor to the conventional keyboard, but if there is something.

I can guarantee you that we're already working on it or looking at it inside.

We're on the edge and the video collaboration business, where it's such a it's really difficult to compare this with a webcam business back in 2004, 2005, where it's such an infancy of video enablement and all of these rooms, it's really an amazing period in.

I think if you think about it maybe the best time for you to look at is like 1997, and webcams or something because we're so underpenetrated in offices compared to what we should be and will be once people get into this hybrid work model that there isn't extremely large growth.

Timeframe ahead of us and there will be certainly will be alternative formats for structures of cameras and you can bet that if those formats looked like they are taking hold will be there you know us we move fast and we are not going to let the market develop ahead of us, but right now I'm Super excited about portfolio, we have and what we have coming I think we're in a really good.

It's Bob.

And I'd just add to that if you want an argument for the investments that we keep talking about this is really one of them is that we have to continue to innovate and we have to leverage our even greater scale now to continue to push forward and provide more value to customers and so.

I think that's that's been true historically I think it's even more true now in some cases as you say and so that is the strategy.

It comes down to doing the basics really well too I think Eric you talked about a beautifully providing a very simple.

Buying experience with customers that support experience with customers products that are easy to set up and operate.

These are all things that I think logitech does very very well with kind of the consumer mindset that is so quarter, our company, where we can take that into the business and we can take that in the enterprise and provide a really differentiated experience. So we look to leverage those strengths and those capabilities and this and this.

Growing markets as well.

You had a fall all right. Many thanks for this.

Yes. It is on the financial and just better understand your medium term model, 8% to 10% Lake Charles has for Crow's dynamics and the details in terms of growth rates, you're assuming for the different categories changed for the medium term.

So what are you expecting EMEA collaboration.

Creativity and productivity yes.

Yes, we didn't provide really a longer term view in the long term model what our assumptions were around this category is needless to say I think all four of those are going to have growth opportunities.

Streaming and creating is probably the smallest one and some of the other ones. In fact now you've seen gaming it looks like it's going to be more than $1 billion, a share <unk>, probably more than $2 billion.

Video collaboration getting very close so those other categories are much larger, but I think those will certainly be strong contributors to the growth in the in the longer term.

Sure.

And then.

<unk> said were always looking for new new categories Adjacencies.

Things that we can do inorganically as well small medium and large so we've got we've got several levers there.

Yes.

I would add John we're not just looking we're doing and we've actually got things in development in the season.

And we will see you know you never know, what we're going to come up with but.

Sure.

But let's stay tuned.

I will thank.

Thank you.

Hi, Juergen Wagner from Stifel. Your line is now open.

Alright. Thank you that's so cool to have everybody on video now.

Yeah.

Yes indeed.

And you mentioned several times today that 'twenty, one 'twenty two will be investment years for you.

And how is your visibility on what you should grow again at your target rate.

One we've done M&A.

Sorry, what was the last question the last part of your question.

I raise it.

On any M&A.

Hey.

I mean now.

Scf become much larger how would your M&A strategy change Okay got it yeah, let me take the last one first on the M&A strategy really no change in the M&A strategy. We're still look at things that are small medium and large.

And we look across the company, including new businesses and new categories, but I think as Bracken mentioned I've mentioned, it's really about how do we take the capabilities. We have today and if you look for sources of synergy. If you will on M&A is taking today's capabilities and being able to apply them.

To any company that we are acquiring or with.

We believe we have good opportunities to build new capabilities or bring in new capabilities through the acquisition. That's also something of interest, but really no change in the strategy. We do have more cash on hand, now and so I think financing we have more options and flexibility than what we had a year ago, but otherwise no change at all on how and how we run our M&A processes.

Yeah, I'll just jump on the other question I guess when do we when do we expect to hit that long term model.

Make no mistake we are.

It's not going to be this year or we went to go where we did and will it be next year don't know yet next year is really interest you referenced for fiscal year 'twenty three.

Hard to call right now because there's such volatility and where we're sitting right now in windows, This pandemic and and all that stuff. What we know what we feel very confident that we've got a collection of categories tailwind and growth potential to deliver that long term model is it going to be two years from now three years from now we'll see Youll know certainly no by the time, we get to March.

Next year, but but we're off that were very optimistic we'll get there.

I'm Super excited about the growth potential.

Okay. Thank you and maybe a third one.

Sure.

About product life cycle to date, and how you manage those some how <unk> develops and.

Okay.

Enterprise and consumer have you read a lot about <unk>.

On the product.

Yeah.

I've cycles, especially in the consumer space.

Im stretching into a place that we don't have enough proved too to really that I can say, here's the data, but here's what I think I think on the on the on the <unk> side of the product lifecycle of a shorter because people.

<unk> tends to be a budget available people want to keep up with the latest technology generally so are our VC business. Our video collaboration business as a short relatively short product lifecycle from what we can see now and I don't think thats changing I think thats going to they're going to be a lot of innovation, there and I think people will keep upgrading rapidly on the consumer side.

Under a stretch a little bit here, but and I tried to suggest that earlier when I was presenting this I think there's a chance that the that we can accelerate the product lifecycle is there a little bit because first of all the relevance of the categories has gone up you know.

How many people have talked about their workplace set up in the last year, it's suddenly become top of mind again.

<unk> talked about like one of the tough things you think about that and yet when we look at our mix of what people have bought they really havent bought when they need it.

The truth is they're just now.

Not enough people have bought the high end of our range, whether it was or the really highly function products or the ergonomic products or the beautiful products that we have so we think we have a real upgrade opportunity there and that's part of what our marketing needs to help US do so we will see but I hope that I hope that we've accelerated the product.

Lifecycle that we can accelerate it further over the next couple of years, but we'll see.

Okay. Thank.

Thank you. Thank you thanks Darren.

Hi, Paul Chung from Jpmorgan. Your line is now open Hi, Paul Paul.

Oh, it looks like Youre going.

The earnings picture.

Alright.

<unk>.

Okay, all right good nice to see you guys you too.

So a couple of questions just on your increasing E tail.

<unk> can you kind of quantify the margin benefit relative to brick and mortar from.

E Commerce partners as well as your direct to consumer.

Also on that shift to E tail senior.

Visibility continues to increase whether it be from inventory management.

Shipping.

Can you expand on that.

Yes, Paul I would say.

It's hard to really make a general statement about E mail versus retail and profitability.

In some cases details more profitable.

In some cases, it's not and then.