Good morning, everyone, and thank you everyone for joining Logitech's Q2 fiscal 2022 earnings call. This call includes forward-looking statements, including with respect to future operating results and business outlook under the safe harbor of the Private Securities Litigation Reform Act of 1995. We're making these statements based on our views only as of today. Our actual results could differ materially due to a number of risks and uncertainties, including those mentioned in our earnings materials and SEC filings, including our most recent annual and quarterly reports. We undertake no obligation to update or revise any of these statements. We will also discuss non-GAAP financial results. You will find a reconciliation between non-GAAP and GAAP results and information about the use of non-GAAP measures in our press release and in our SEC filings. These materials as well as our prepared remarks, slides, and a webcast of this call are available on the IR page of our website. We encourage you to review these materials carefully. Unless noted otherwise, comparisons between periods are year-over-year and in constant currency, and sales or net sales. This call is being recorded and will be available for replay on our website. With that, I'll turn the call over to Bracken. Thank you, Nicole, and thank you for that gripping and surprising summary of the safe harbor provisions. This month we celebrated our 40th anniversary here at Logitech. We've grown from a Swiss software startup that found a niche in computer mice to a design company with leading market share across many categories, and we're growing share in the majority of our key product categories, including the original category of the mouse. I mention our 40th anniversary, not really to look back, but as a prelude to looking into the future. Just as the PC growth trend supported our 30 years around the PC growth period, a collection of long-term trends will support our strong growth for many years ahead. Gaming will grow to become the biggest collection of sports in the world one day from both a participant and a spectator standpoint. Video collaboration will almost totally replace audio-only collaboration. Almost everyone will create content as well as watch each other's content. The mouse and the keyboard, those original categories, will keep growing as more people work, create, and learn at a desk or a table, where they can move away from that tiny screen on the phone and be comfortable for hours at a time. I love Logitech's position in this landscape of long-term market trends. Gaming, video collaboration, streamers and creators, and our workspace product categories, we are ideally positioned to grow in all of them. That's the long-term outlook, but let's look more near-term. Most organizations are settling into new ways of working, hybrid. The evidence is overwhelming that employees prefer working from home two to three days a week. Many employers have embraced this reality, and a large share of the rest have at least accepted it. Companies across all industries are adjusting their offices, planning redesigns, or relocating to accommodate this shift. Many companies, including Logitech, are reshaping offices to support hybrid work practices and enable more places for meeting, for collaborating, and for creating together, while still continuing to have dedicated workspaces for those who prefer or need it. The days of the simple, "I work in the office and then I go home" are over for so many of us. It used to be your workplace was the office. We've entered the next era where your workplace is your workspace, wherever that is. Traditional office desk, hot desk, home office, kitchen table, conference room, your child's room or a coffee shop. The variety of workspace is growing. In that world, with people distributed across so many places, the video-enabled spaces in the office must grow, too. Conference rooms, huddle rooms, collaboration spaces, all will need video and must continue to grow. What an amazing opportunity this is for Logitech. We offer solutions for all of those, wherever your workspace is, and most of us will need more than one. When we're not working, we wanna create, connect, and just play. Humanity has always had the need to create new things and connect to each other. Now, most people create in the digital world. Digital creation has been growing strongly for many years, and not surprisingly, it surged during the pandemic. That surge continues. The total number of hours watched across all streaming platforms, including Twitch, YouTube, and Facebook, increased 20% year-on-year this past quarter, from 7.5 billion hours to nine billion hours in Q2 of 2021. That's 20% on top of the incredible growth we already saw last year. With those trends in mind, let's examine our performance in Q2 of this year. Last year, we reported tremendous Q2 growth of 73%, accelerated by the pandemic. On top of that substantially larger base, we not only sustained that growth, we actually grew again this quarter. We delivered record sales, double-digit sell-through across all regions, and grew market share across almost all of our revenue. I believe we're innovating better than any time in the 40-year history of the company too. Design, engineering, and sustainability. Our PC peripherals categories remain very strong with double-digit sales growth in pointing devices and PC keyboards and combos. Here's one example or two examples of how our design-centered approach is so powerful. On the one hand, this quarter, we launched MX Keys Mini and Mini for the Mac. These keyboards were designed as a result of the input and requests of the creative community. The new keyboard offers the best features of popular standard-sized MX Keys, which is a larger keyboard that's sitting in front of me, but in a minimal wireless keyboard. I'm using it right now, and it's absolutely awesome. It's right here. It will likely skew 30 or 35 and older. On the other hand, just go look at our website and type in later, ideally, so you don't you keep listening to me for now. Type in POP Keys in the search bar. You'll see a line of mechanical keyboards with replaceable emoji keys with very colorful, that's just launching in China. It's so fun and so cool. It's perfect for Gen Z. It will skew strongly under 30 and female. Our gaming category had another strong quarter with market share growth in PC, console, and simulation gaming, all of them. Underlying sell-through grew double digits in this category as well. Our tablet category is more than double the size it was two years ago, and our portfolio is stronger than ever. Education and online learning are a strong and growing opportunity, not just for K-12, but as universities democratize learning with online courses and the adoption of numerous learning platforms grows in popularity. Remote teaching has become easier, and there is much more we can do to help educators to lead their classes are both in person and when students are at home. Organizations worldwide continue to reestablish ways of working remote, on-premise, and hybrid, people are indeed using more and more video. According to market research firm Frost & Sullivan, out of the nearly 90 million meeting rooms worldwide, only about 8% are video-enabled. According to them, that's one-eleventh of the total rooms out there. We're working to change that and help our customers evolve with the new ways of working, because it's simply a must to have videos in the rooms of the future. The lack of video access creates a terrible experience for remote attendees who've experienced the benefits of face-to-face video interaction over the last year. Every IT decision-maker is thinking about this. Thoughtful reformatting of the way companies work as they go hybrid is a watershed moment for many of these departments. Because for the first time, the structure of offices and the technology in the rooms, the primary role of these departments will be a driver of the cultural evolution of every company. It isn't surprising company IT departments are making careful, broadly aligned, and systematic steps here. We're investing in building out solutions for these IT leaders and investing deeply in this area. Next, I want to touch on the impact of the well-discussed supply chain industry challenges that have been headline news globally. While we've managed these global supply chain challenges well throughout the pandemic, Logitech is not immune to their effects. We continue to proactively manage our supply chain, but expect ongoing headwinds from higher logistics costs and prolonged delays and challenges with component availability. We do believe our long-term supplier relationships, as well as our wholly owned production facility, should help us remain competitive in the current unprecedented supply chain environment. Before I close and hand it over to Nate, let me give a quick sustainability update. We recently raised our climate goals. We announced that we will be carbon neutral this year and have plans to be climate positive in 10 years. That, at that point, we'll be taking more carbon out of the environment than we generate. These are industry-leading commitments. We're addressing our carbon footprint across the entire value chain, designing our products for sustainability, using renewable energy at 92% right now in our facilities, and supporting third-party certified carbon removal projects. We're excited about the long-term trends that are driving growth in our business. These trends drove our business pre-pandemic, accelerated during the pandemic, and will be a driving force for years to come. Our long-term strategy remains unchanged. The current market trends play to our strengths, and we are doubling down to become even stronger. Now, let me turn the call over to Nate for further comments on our business performance this quarter. Nate? All right. Thanks, Bracken. We delivered a solid quarter and continue to execute well on a number of fronts. In Q2 and for the first half of the year, we grew the top line, maintained strong gross margins, gained share in most categories, and returned record levels of cash to shareholders. We are confirming our full-year outlook despite unprecedented supply chain industry challenges. Turning to the Q2 results, our total company top line grew 2% in constant currency with strong momentum in our pointing devices and keyboard categories, both growing double digits. Webcam sales decreased this quarter by 9% after more than tripling last year. We gained share in all three categories, and each has good long-term growth potential, driven by hybrid work and greater category awareness. Q2 video collaboration sales declined 4%, but sell-through grew double digits in all regions. Net sales for Americas and Asia Pacific grew year-over-year, while EMEA net sales declined versus the prior year, they grew sequentially, and EMEA sales more than doubled versus two years ago. Gaming grew 9% against 84% growth last year and delivered impressive share gains across PC gaming, simulation, and console headsets. It's been an excellent first half for gaming, enabled by a very strong lineup of innovative products, solid marketing execution, and our position as the leader in the fastest-growing categories like wireless mice and keyboards. Sales in our tablet accessories category declined 3% in Q2, but excluding Japan, where we had a large education order in Q2 through Q4 last year, sales grew more than 30%. Importantly, our tablet category is still more than double the size it was two years ago, and our portfolio is stronger than ever, as demonstrated by 6 points of share gain in the quarter. Our music categories declined as expected in Q2, down 14% overall, including mobile speakers down 11%. Q2 non-GAAP gross margin remains strong at 42%, although down 370 basis points versus last year's elevated levels. We anticipated that gross margins would be down from last year. As we look out to the rest of this fiscal year, I expect gross margins to be lower than current levels for three primary reasons. First, we expect our promotional spending will continue to increase, although still remain below historical levels. Second, we will continue to invest in retail point-of-sales marketing, which was significantly curtailed last year due to store closures and broad-based supply shortages. Lastly, while we continue to manage our supply chain, we expect to be impacted by industry-wide component and freight cost increases. Turning to expenses, we executed our plan to strategically invest to grow our business over the long term. Our non-GAAP operating expenses increased 52% in Q2 to $337 million. The increase was largely driven by investment in marketing, sales coverage, and product development. As a percentage of sales, OpEx was higher than Q2 of last year, but still down versus Q2 of two years ago, highlighting our significantly increased scale as a company. Rounding out the P&L, our Q2 operating profit decreased 40% to $211 million, and operating margins were 16.2% of sales, down about 12 percentage points versus the prior year and up about 4 points versus two years ago. Cash flow from operations was -$63 million in Q2. We returned significant cash to shareholders with $120 million of share repurchases, paid an annual dividend of $159 million, and ended the quarter with a cash balance of approximately $1.1 billion. At the end of September, our inventory was $828 million, up $433 million from last year. While our inventory turns were 3.7 x versus an unusually high 7 x in Q2 a year ago. Historically, our Q2 cash flows tend to be positive, but they were negative this quarter as inventory turns were slower due to longer transit times and our continued strategic use of the balance sheet to secure long lead time components for key product categories. I expect to see positive cash flow generation in the second half, but given that logistics bottlenecks and supply dynamics will remain challenging for at least the rest of this year, our cash from operations will be lower than our initial outlook. This dynamic should be temporary, and as lead times and transit times improve, cash flow will rebound due to reduced working capital. Our Q2 cash conversion cycle was 69 days, up from an exceptionally low 19 days last year and up from 43 days two years ago. The primary driver of the change in our cash conversion cycle is higher inventory days, which are up about 25 days versus pre-COVID Q2 levels. Looking ahead, we are tracking to our plan of sustaining the increased revenue scale from last year and investing to build a larger, faster-growing and more profitable company for the long term. We are confirming our fiscal year 2022 outlook of flat sales growth in constant currency ±5% and maintaining our fiscal year 2022 non-GAAP operating income outlook of $800 million-$850 million. We are well positioned in the market, and this outlook reflects our focus on driving long-term growth. With that, let me hand it back to Bracken. Thank you, Nate. Our consistent operational execution and ability to capitalize on long-term trends like hybrid work, video everywhere, gaming and content creation continue to drive our performance. These trends that drove our performance pre-COVID and accelerated during COVID continue to position us really well for the future as well. As I said at the top of the call, we may have started 40 years ago as only a mouse company, but we're far from that now. Our portfolio today is diverse, our pipeline of upcoming products is strong, and we continue to build our capability in world-class design and sustainable innovation. Many of our employees listen to this call, and at this point, I want to thank each one of you for the hard work throughout this quarter and the last year and a half. I'm confident about this year and super excited about the years to come. Now, Nate and I are ready for your questions. As a reminder, you can chat with me if you like to ask a question. With that, I will have Asiya Merchant from Citi ask the first question. Yes. Hello, Asiya. Oh, hey. For some reason, I can't start the video. It seems like the host has disabled it, so I'm just gonna ask on audio. One for Bracken, one for Nate. Bracken, you know, you're talking about long-term growth. You guys obviously had a very robust outlook. It seems like some of your competitors, HP and Dell, seem to buy into the idea that peripherals are indeed a very attractive category and should see growth. In the face of this, we're seeing some normalization. We're seeing some normalization here with sell-in versus sell-through. Are you expecting as we exit the year and when your sell-in and sell-through kind of normalize, hopefully, that we should start to see growth which is more in line with your target model? You know, relative to what investors are concerned about, that there will be this period of sustained low single digit or flattish growth given the extraordinary growth that we've seen during the pandemic. I have a question for Nate as well. Okay. You know, I think the reality is that, you know, I've got a chart in front of me that actually looks back over the last couple of years of growth, and the numbers are astonishing. You have to remember that they really reset a base for us. For example, if I'll just take the mouse and keyboard categories. You know, we've really now just got these multiple extra workspaces, all of us, and now they're upgradable. You know, our business pre-pandemic was really just an upgrade, mostly an upgrade business. Now we're at the upgrade businesses for multiple places, some in the office, some at home, and companies wanna standardize. Yeah, I believe as we go into the next year and the year after that and the year after that, we're gonna see long-term growth in these categories. I think it will start to, as you call it, normalize. I'm really excited about it. I think we're in a really good position. The other thing I'd say is, we're not sitting on our chair waiting for the market to happen. Most of our categories, we're the market leader, and we're making it happen. We have the best innovation engine in the history of the company, I believe right now. That's why we're gaining share in a huge percentage of our categories. It's, you know, I think we can make this happen rather than watch it happen. As it relates to video collaboration, Bracken, it seems like, you know, even to get to the low end of your guide, 10%-25%, I think that was shared at the analyst event, you know, you're gonna have to see some strong growth. I know there is some sell-in, sell-through dynamics that are going on there, but should we even expect as reported video collaboration sales to be in that range, or are we still gonna go through this period of sell-in, sell-through dynamics in the back half of this fiscal year for you guys? I think from a trust standpoint, we're in pretty good shape, but I think we could end up falling below that range that we gave at the beginning of the year. You know, I think it just depends. I mean, one of the things I think we're seeing is that there's a longer period of decision-making happening in a lot of companies about how to restructure their offices. You know, and that's probably delaying their purchases and really how they're gonna set up video inside the office. I think that's possible. The good news, though, is we're really diverse. We've got a great, strong, diverse portfolio. You know, this has been the story for us for as long as I've been here, especially the last five years. You know, when one thing's, you know, performing a little above what we thought, the other one's sometimes low and vice versa. Right now, if you look at our pointing device, keyboard, and combo business and gaming, all of them are performing above kind of what we thought right now. I'm convinced that the mix of these will continue to give us really strong growth for the year. Great. Just for Nate- Yeah. I'm sorry, go ahead, Nate. No, no. Go ahead. Just for Nate about inventory levels, significant discounting if this demand slows. I mean, do you guys have elevated inventory at this point? I know some of that is just strategic buying, given everybody else can't, you know, get the components they need. What gives you confidence that, you know, you're not gonna lead to an environment where there will be significant discounting? All right. I mean, I think Bracken hit all the right points on your earlier question. I just think on the sell-through, the sell-in and sell-through dynamic. You remember last year, our sell-in was greater than sell-through on the growth rates. Really all you're seeing is normalization of that this year with kind of the reverse taking place, totally expected. A lot of that just has to do with sort of last year. There was really no promotion taking place. There was very little marketing taking place, you know, MDF-type marketing, retail marketing. This year we're doing those things as we've communicated. That's the primary driver that you're seeing there, Asiya, not a surprise and not a concern. Probably will normalize as we get out into next year, but we'll see, you know, as the situation unfolds. In terms of inventory, again, I think as we've communicated, I mean, I think our strategy is working quite well. I think if you look at our share gains, as Bracken mentioned, really across the board, we've been gaining share. That's actually something we didn't do last year. We had pockets of share loss last year in web cameras and in many areas where we were short. I think the bets we've made on components and on finished goods and inventory replenishment have been playing out well. The other thing I would say is on inventory, and again, I've said this before, is that the places where we are making inventory bets are in our fastest-selling, longest product life cycle, places where we have high market share. We're making those bets very strategically and very thoughtfully. Again, we have number one or number two position in really most of these categories. I feel really good about our ability to. I feel great actually about having this inventory available as we're in this type of environment. Great. Thank you. Thanks. Can I add one more point to that? You know, the implication of that is somehow we just, if we have extra inventory, we just burn it off by selling everything at a rock bottom discount. We just don't do that. That's not been our practice in the past. I can't imagine doing that in the future. All right. Fair enough. Thank you. The next question is with Paul Chung from JP Morgan. Hey, Paul. Hey, Paul. Hey, guys. Thanks for taking my questions. Just on VC, you know, we're starting to see some return on the, you know, increased investments over the past year. Can you talk about the reception of, you know, some of the new products you've released in VC and how those are trending, Tap, Logi Dock, Zone earbuds, et cetera? Yeah, I'll just jump in on that. Yeah, it's probably too early to really react to those. They're just brand new. You know, the sales cycles are a little longer in VC. Overall, I'd say I feel really good about our. Oops, my video is off for some reason. Overall, I feel really good about our innovation engine in video collaboration in the whole business. I mean, I think we continue to just have great products coming. Scribe is probably one of our newest products. It's the whiteboard for video, and that's been really exciting. The reception has been great. Actually, Logi Bolt, which is a more secure way to basically a secure software-enabled service that comes with our workspace equipment, has also been super well-received. Yeah, I feel really good about what we've already come out with and what's coming. Yeah, Paul, just to add on to that, too, as you heard, we had double-digit sell-through growth year-over-year in VC across all regions, which really, again, indicates very strong demand. I think as our installed base grows, I think the portfolio comment you made is really important. As our installed base grows, it just we're gonna keep working with those customers, being able to help them build out their conference room solutions more holistically than just with the camera, like Bracken mentioned, like Scribe and other products that go in there as well. I think good progress on the development side. That's been an area of key investment for us. If you look at the P&L and you look at the increases in R&D, a good chunk of that is going towards VC and building out that roadmap. Got you. Speaking of regions, what kinda drove the relative strength in Asia, you know, and what trends are you seeing emerge there? Any lead indicators for U.S. and Europe markets as well? You know, it's interesting. I mean, China was really the highlight there. Or Bracken, go ahead. Yeah. No, it's okay. Go ahead. Go ahead, Nate. I was gonna say, China was really the highlight in Asia, Paul. This is speaking at the total company level, as well actually for VC, but China was really the highlight. We had good strength down in other parts of Asia, too. I think the nice thing to see in China is obviously they have been in the pandemic the longest and have been out of it probably the longest, too. When we get on video calls now, it's always interesting to see groups of people in conference rooms and so forth. I think it's positive to see that, even in a large country like that, large market like that, where they've sort of transitioned to a different stage in the pandemic, we still see very strong demand across the portfolio. Okay. Yeah. Last question on guidance. So you've generated about 54% of operating profit in the first half already. That's typically in that 40% range historically. Are you keeping kind of a bigger cushion this year on supply chain and increase in promotions, if you could expand there? Thanks, guys. Yeah. Yeah, you're right, Paul. I mean, I think the second half of this year, obviously with Q3 being historically our biggest quarter of the year, I think it really is an unprecedented time. I think I am making sure that we can get through this quarter. I think, listen, Bracken mentioned, we're not immune to supply challenges. We have good stock and supply. Our channels are at good levels, but there are some products where we're chasing components and chasing supply. You know, I think demand during the holiday can be rather perishable. I mean, people are buying for the holiday, and so we need to make sure that we can fulfill all the demand that we see. Again, with the strong double-digit sell-through, that demand's pretty healthy. Thanks, guys. Thanks, Paul. Take care. Just adding to that, Paul, I guess, you know, the incremental margin thing that we're facing, like everyone else, is just incremental logistics costs, which have gone up even since Q1. They've gone up 2x-3 x on the ocean year-over-year. I think some of that's what I'm factoring in as I look into the back half of the year. We will be spending more on air freight. I've already approved a lot more air freight this quarter than what our initial plans were. We're using the P&L, and we're using the balance sheet to fulfill the demand that's out there. Okay, the next question is from Ananda Baruah from Loop Capital, please. Hello, Ananda. Hey. Thanks, guys. Good morning. Yeah, good to see you guys. Good morning. Thanks for taking the questions. You too. Yeah, good to see you too. Two, if I could. I guess the first is. I apologize if you guys spoke to this already. There's a couple things going on this morning. But could you, Bracken, both of you, Bracken, and Nate, speak to, you know, like over the last 90 days, you know, what you guys have seen that, you know, have been different from what you were anticipating? Just sort of, you know, sort of the things that are germane, you know, sort of to the running of the business or the things that are germane to, you know, to the key end markets or the key product areas. Then I have a follow-up as well. Sure. I'll take a first one and Nate, if I've left anything out, you can jump in. Yeah, I would say Nothing's really a major change, but I would say if there's a change, I think the supply chain challenges, especially in logistics, have gotten worse. You know, I think that's probably well covered in the media, and we're not immune to it, as we said at the beginning of the call. I think we've managed it really well so far, but it's certainly gotten more challenging to manage. Would you add anything else, Nate? I think that's probably been the biggest change. Yeah. Good. Cool. I mean, that's pretty good if nothing else, if that's the only one. I guess the second question is, you know, the specter of more folks coming into the spaces that you guys compete, and quite frankly, to some extent, to which you guys have helped evangelize. Or like, you know, sort of evangelize in the mainstream sense, you know, been part of that thrust. What is the right way? Well, what's the way that you guys would like, you know, folks in our community to think of the idea of increased competition, you know? I ask it that way because it, like, at least on the surface, it seems like, and HP is a good example from last week, but they're not the only ones. It seems like folks are kind of, you know, poking their heads around, dipping their toes in, and it's hard to discern, you know, from our vantage point, the context, you know, of what increased competition may look like. Anything you can talk to about that, you know, and the way that you would like us to sort of think of that and then Logi's positioning in the context of that. Thanks. Thank you, Ananda. We've always expected more competition in good categories, and we play in great categories. We've always expected new competition. That's why we've invested. We've been investing in innovation. We've been investing in our go-to-market. We're really excited about the capabilities we're building in both. You know, I think I feel really good about where we are. You know, I would, in a way, feel really awkward if we didn't have more competition because it would suggest something dark about the future of the category. I think these categories are super and, you know, great categories have great competitors. We love to compete. You wanna add anything, Nate? Yeah. I mean, I think one benefit of some of these competitors, Ananda, is just the awareness that they bring to the category as well, right? As they're trying to grow their business, they're gonna bring more awareness to categories where we are very strong and that, you know, we're passionate about. You know, I think keys to our success are to continue to segment the market, to identify, you know, specific customer needs, and then go address those with innovation and great design, of course. I think it doesn't change our strategy, it doesn't change our focus on execution, but I think to the extent it brings more awareness to some of these categories, I see that as a benefit. Yeah. I'll just double down on that. You know, I think you mentioned in the beginning, you said, you know, we've been out there kind of evangelizing this category in the beginning. It'll be nice to have more people evangelizing the category. I think it will drive higher growth. We're still at such a small fraction of rooms enabled in conference rooms, for example, you know, one-eleventh of the total rooms according to Gartner, so we're first. Yeah, I think this is. It's just a beginning. It's probably an indicator of how strong this market opportunity is. If you get legitimate sort of competition coming in, you know, however that shows up, but, you know, sort of that feels legitimate, do you feel that you can still prosper? Is there enough room for you to still prosper in the way that you've laid out your last Analyst Day, hit the growth goals, hit the profit goals? You know, we've been. Can I just jump in? I think jump in? I think all our competitors are legitimate, Ananda Baruah, though I think it's an important place to start. All right, we'll go ahead and let you go. Yeah. No, absolutely. You know, we've had legitimate competitors in almost all our categories for as long as we've been around. We started out as an OEM maker of mice and keyboards, and we were selling directly and competing directly with those players over time. We've expected the competition. They'll be great competitors. They'll make us better. We will invest in making sure that we are better. That's great. Thanks, guys. I appreciate it. Yeah. Let me just add a little to it. I mean, I don't build our models here internally assuming no competition. Obviously, you're seeing an increased investment in marketing and brand from us too. I mean, that goes directly to your point, which is that we expect competition. We think these categories have gotten stronger, and we will see more competition. The increased investments that we're making in brand, marketing, innovation, those are all part of our strategy to compete. Thanks, guys. Thank you. Thanks, Ananda. The next question is from Stifel, Juergen Wagner. Hey, Juergen. Hello, Juergen. Yeah. Hi. Thanks for letting me on. Absolutely. Yeah. Hi. Follow up on the inventory questions, I'm afraid. Can you split it up between finished goods and what are those key components you mentioned in your introductory remarks? What is the visibility you currently have on the Christmas business across your divisions? Let me take it on the inventory side. We are holding more components as a percentage of our mix than we have in the past. As I mentioned, I think that's a key part of the strategy. The other thing is that our in-transit inventory is higher too. As these port delays and shipping delays and things like that occur, more of our inventory sits in transit. You could think about that as finished goods, I guess, but it's not as productive because of these delays. That's the primary driver of the increased days of inventory that I mentioned in my prepared remarks, Juergen, is port delays. Things are taking weeks longer just in transit these days. Again, as that improves, I think it's not gonna happen in the near term, and that's why I made the adjustment to the cash flow outlook for this year. As those transit times improve, as the lead times for components improve, I do expect to see our days of inventory come back down to kind of more historical levels. I don't think it's gonna look like it did last year. Obviously, last year was very unusual because of the strength of the demand, and we were chasing supply the entire year. I do think days of inventory will come back down to our more historical levels. I think that's gonna take some time, and I don't expect it to be this year. Hmm. On the visibility into the Christmas quarter, I would say, you know, you know, Nate and I both feel like, you know, last year we set aside our view of the normal seasonality of the business because the strange year of the pandemic. I think we're in another year we've really set aside our normal view of seasonality and said, "Okay, this is another strange year," especially given the supply challenges, you know. I think when you put that together, I think our visibility's probably not what we'd normally love to have, but I think we've got a plan in place that we've got products, we've made strategic investments in inventory, and we feel good about where we are. I think we've recommitted to the guidance because we feel good about that. Do you have certain product categories where you have a better visibility at the moment? Do you wanna answer that, Nate, or how would you answer that? Well, I mean, I think we've always said video collaboration, you have a little bit more visibility because you can build a pipeline. You're working with enterprise customers. Certainly for the larger deals, you have more visibility to those. A lot of that business is more what one might call run rate, as well. Some better visibility on video collaboration, but, you know. Okay. It's still less than 20% of our overall sales is video collaboration, so. I would also say, you know, this is in a way that's not so different from the rest of our business we've never had, you know, we're kind of in the same visibility state we're normally in, you know, which is you go into the holiday, you know, it's always a little bit, well, will the shopping come? You know? It usually does, and I think it will this year. Okay. Agreed. Okay. Thank you. Okay. Thank you. Thanks, Juergen. Next question is from UBS, Joern Iffert. Joern. Hello, Joern. Hi there. Good to see you. Hi. Hi, Nate. Good to see you. I hope all is well. It is. Quickly, two, three questions, please. The first one is on your marketing spend. Sales being up slightly, marketing spend up around 65% or 66%. If I extrapolate this for the full year, it's maybe around $1 billion marketing and selling line being maybe then 80%-90% of sales historically for 16%-17% pre the crisis. Does it mean your growth is becoming more capital intensive, or is there room to streamline the marketing and selling expansion in the second half supporting the margin somewhat? This will be the first question, please, and I would have one or two follow-ups, please. You wanna take that? Yeah. One, Bracken, I can start on that one. You know- Yeah. What we're executing right now, yeah, is the strategy of shifting. You've seen our gross margins go up, and we're reinvesting some of that gross margin expansion into sales and marketing, Joern, to try to drive up the brand and the awareness, which provide us with long-term benefits, and I think long-term leverage as well. That's the strategy we're executing, same one that we talked about pre-pandemic as well, the shift from push to pull. You know, I think we were able to move more quickly on that because of the strength in the margins that we saw last year, and to put us in a great position to go execute that strategy aggressively this year. Bracken, you wanna add something? Yeah, you know, I guess I would just say, you know, when you look at our overall operating income, our operating margin, you know, really keep an eye on that. Our mission is, you know, we view that as a constraint. We're gonna deliver certain operating margins so that we're gonna invest back into marketing to the extent that we can drive stronger long-term growth. It's really performs. You know, marketing, building a marketing engine really takes time, but I'm excited about where we're headed, and we've got a great team in place, and we're really changing our approach. I think it'll be. We'll keep learning through it and making sure that the investments make sense and delivering that operating margin, that long-term operating margin we're committed to. Thank you for this, and then maybe a second and third question. The second question, to follow up here on your medium-term guidance. I mean, you increased the medium-term targets 8%-10% from 7%-9%, and before this reflects confidence, of course. Now maybe some things becoming more shaky. You mentioned video conferencing could be below your initial targets. I mean, how should we think about the base? I mean, what is the baseline from where you think you can grow 8%-10%? Is this coming down now, in the current environment? I would have a last technical question, please. Well, you know, long-term guide Long- Oh, sorry. Go ahead, Nate. You can start. Go ahead. I was gonna say, you know, we did, Joern, obviously confirmed the outlook for this year, so there's really no change in the base. As Bracken mentioned, there's a different mix of growth than what we initially thought at the start of this year. Again, that's not unusual, and I think it really highlights one of the benefits of our portfolio, is that it's diverse, and that there's good profit generation across that portfolio. We've been able to sustain the investment plan that we had despite the different mix of top-line revenues. Bracken, sorry. Yeah. The only thing I'll add to that, Nate, is that, you know, I think, you know, when you talk about that 8%-10% long-term guidance and our raise in our long-term view of our growth rate capability, you know, that really comes from the fact that both the categories are attractive for the long term and our innovation engine's attractive for the long term. Absolutely nothing's changed on either one of those. I feel really, really good about them. All right. Thanks for this. The last technical question. When you initiated your guidance in March, and then you updated it, I think, in April on non-GAAP EBIT. With this number, I mean, what is roughly the additional freight, logistic, component costs which have exceeded your budget? Are we speaking about $50 million, $100 million? Just to have a rough idea about this, what are the additional costs you are facing right now? Oh, boy. I don't think I can do the math that quickly. I will tell you. I'll give you something on that, though, Joern, which is this quarter, year-over-year, we had about a point hit to gross margins from increased freight costs, mostly from ocean. I can tell you in the quarter, that's kind of what we had. We'll probably see that throughout this year, I think. You know, we have actually reduced the amount of air freight we've used year-over-year, which was my expectation. The air freight rates have gone up such that we really haven't seen a real benefit from the reduction in air freight volume. At the same time, as we shifted things to the ocean, we've incurred some additional costs on freight there. It's all included in our P&L to date, and it's all included in our outlook, but it has been a headwind, you know, I think since March. All right. Thank you very much. Thank you, Joern. Take care. You too. Thanks. You got me there, Joern. I didn't have that one. All right. Okay, the next question is from ZKB from Andreas Müller. Yeah. Hey, Andreas. Hi, Andreas. How are you? Yes. Hi. Yes. Hi. I'm fine, thanks. Hope you're well too. Yeah. Two questions, if I may. One, I was wondering, you know, gaming, if you saw an effect in China, you know, from this gaming law that teenagers shouldn't be that long on online gaming. Have you seen an impact? I mean, China in general was good. That's the first question. The second, Andreas, why don't we stop you there? We'll answer that one, then you can ask the next one. Mm-hmm. The answer is, you know, our gaming business actually skews 18+. Not just skews, it's the vast majority of it's 18+. That law is for 18 and under. No, we haven't really seen a big effect on our business from that. Now you go to the second one. Probably, you know, these Chinese people spend the same time in front of a PC doing something else than gaming, isn't it? I think maybe just to add a little more color to that. I think. You know, if you're gonna play, you're gonna buy some peripherals. Unless you stop playing completely, you know, you're still gonna buy some gaming equipment, whatever that is, I think, Andreas, too. Just to add a little data to it, we did not have any slowdown in growth in China gaming. Actually had a very strong quarter, and growth was similar to last quarter year over year. Yep. Mm-hmm. The good growth behind the pointing devices, keyboards, and the combos, I mean, was that really still demand from the home office, or was it really back to the office demand that you know, the offices just had some sort of an investment cycle in these type of products? Well, I think it's a little bit of both. You know, we did see strong growth in the B2B part of our business, but also in the B2C part, and that's probably people. I think we're headed into a place where people. You know, we've got a bigger base now and people are upgrading. You know, I know just anecdotally, I talk to people now regularly that tell me they went out to buy an MX Master. They ask me what to buy. They had something from the pandemic. You know, our old business was really an upgrade business. As I said in the beginning of the call, I'm so excited about our innovation engine in this old category or these old categories called the mouse and keyboard. They are really alive and exciting again. You know, we just launched. I do encourage you to go look at POP Keys on our website. We might even make this category sexy, believe it or not. It's, I think the innovation engine there is part of the reason, and we believe we were pouring it on. Okay. Thank you very much. Thanks. I didn't get you excited about keyboards and mice being sexy, did I, Andreas? Yeah. As a reminder, chat me if you'd like to ask a question. The next one is from D.A. Davidson, Tom Forte. Yeah. Hey, Tom. Hey, Tom. Great. Thanks. One question and one follow-up. Okay. From a supply chain standpoint and a logistics standpoint, can you remind me to what extent you have control? I think you have some owned and operated assets in the manufacturing side. To what extent do you have influence on your supply chain and logistics, and to what extent, are you know, have less influence? We have our own manufacturing in China, and then we manage contract manufacturing in China and outside of China. We make about half of what we sell in that owned manufacturing. From a logistics standpoint, we really manage our logistics through the normal, you know, systems that are used broadly. All right. The constraints are primarily the components then? That's it. The constraint is not having the raw materials. It isn't that you don't have capacity or the ability. Increasingly, it seems like in Asia, you have to make the product, and then you have to deal oftentimes with plant shutdowns because they don't have, you know, electricity. Yeah. You have to store the product, then you get to ship the product. That's right. Sorry, Nate, you were gonna chime in? Well, I actually was gonna go where you're going to. I think, you know, this is a supply chain, right? There's links of it. I think what's really apparent as you look at what's happening globally across industries is just how those different links are owned by different people, right? Yes, it is to our advantage, I think, right now that we have our own factory and we control the purchasing for a lot of our components. In fact, we control the purchasing for a lot of our components even when we use a partner for manufacturing. I think that is to our benefit. You're right. I mean, throughout the supply chain, you're gonna hear stories about warehouse capacity being tight. You're certainly hearing stories about trucking capacity being tight. I mean, when we look out and see these pictures of ships and container ships stuck at port, it may not be that the problem is at the port itself, you know, with the cranes and such, but it could be with trucking. It can be with warehousing. There needs to be a place for these goods to go. I think that's why this is not a quick fix. That's why you're seeing things like President Biden jumping in and getting involved. Why we describe this as unprecedented? I mean, the supply chain is bottled up now in a few places, and it's gonna take some time for that to work out. It is to our advantage, I think, in this environment to have the factory, our own factory, and again, to manage and control a lot of the purchasing. Excellent. Thanks for clarifying that. For my follow-up question, I wanna talk about the demand side, in particular from gaming. It looks like you had very impressive growth on top of growth, and it was widespread across all your categories. Can you talk about demand for gaming? And if at all, for example, if consumers aren't able to get their hands again on the new Xbox and PlayStations this year, does that have any input? Does that just mean we'll have a better next 12 months? How should I think about that? Yeah, the demand was very broad across every segment, including simulation, you know, which is mostly steering wheels, console gaming, which is the one you just referred to, and PC gaming. You know, the console gaming part of our business is relatively small, so I'm not too concerned about whether they're constrained on the console buying side. I think we'll probably be okay regardless. It's exciting to see gaming so strong coming out of the pandemic, you know, or coming out of the worst of the pandemic. I think the console demand is just a big positive, and I think that tells you how strong gaming is in general, that people are still buying those next generation of Xbox and PlayStation. You wanna add anything, Nate? I think those are all the right points. I mean, you know, you gotta be on shelf to sell. I think, again, that's why that is part of our strategy, and I think part of the reasons why we've gained share. It'll be an interesting holiday, I think, for a lot of companies. I'm sure you've walked through your local stores or looked online, and then there's some tightness out there. I'm not speaking to Logitech, but I'm speaking across a lot of goods. Yeah. I think you know that is a big part of what firms have to do during the holiday here is make sure they can get on shelf. Yeah, I'm just hoping we're not celebrating the holiday in January. All right. Thanks for taking my question. Gift cards. Thanks. Gift cards, Tom. Okay. The next question is from Credit Suisse, Serge. Hey, Serge. Hey, Serge. Yes. Hi. Good morning or good afternoon. Depends where you are. You can't see me. Don't know why. Don't need to. Okay. I'm only a shadow, silver shadow. I will start with one question, the first one. Several questions, but the first one is, can you give us a feeling about the pre-order situations you have seen beginning of the month, beginning of the quarter? Has this been better or worse or equal to last year or so from a consumer perspective? Because you should have a very good visibility now because in two months Christmas is over. In addition, you pointed out several times investments into point of sales, more promos. This also should lead to higher sales. Of course, you have lower margins, but this has also to do with folks moving then at the end of the day, you know. Therefore, in addition, the sell-through was low, so the channel inventory seems to be quite clean now. Why don't you have more confidence going into next quarter also in relation to guidance? This would be my first question. I guess I'll start, and Nate, you can finish up. You know, I would say, you know, we do have confidence going into the rest of the year. Yeah, that's why we reconfirmed our guidance. You know, we grew, you know, double digit on all three of our four main categories. We feel, you know, the underlying sell-through. That's a very good indicator. We feel really good about that. Yeah, I agree with you, Serge. I think the channel is at a good level right now, broadly. Again, we do have tightness in some areas and, you know, don't need to go into which ones, I think. You know, we have some catching up to do in some spots that are big holiday items. Like I mentioned, we're planning on using air freight to cover those. We have a lot of work ahead of us, but we're prepared to have a good quarter. Do you believe that you can match the backlog you have for the current quarter because of the longer transit and lead times? Do we think we can deliver the backlog? Match the backlog. You're saying deliver the backlog. Do you think we can fulfill the backlog we have? Yes. I think we've kinda said from the beginning, you know, we're not immune to these supply chain challenges. You know, that's certainly a reality that we've lived with, and I think they're worse now than they were in the first half of the year. I feel good about where we are. I mean, in terms of really delivering what we need to for Q3 and Q4 to deliver our guidance, we're in a spot where we feel good about it. I do think we'll continue to have supply chain challenges. Okay. Probably another one to video collaboration. I'm a little puzzled, not sure what is limiting the growth currently, you know. Is it the demand? Is it that it takes longer with the enterprise customers? Is it that you still are missing direct sales? Is it that you're not successful with the procurement companies of this world, that you come into this in their portfolio? How should I read the subscriber numbers I see from Teams and Zoom, which still show high growth, you know? Why can't I see this better in your numbers? Well, first of all, I think we, you know, mentioned we had a little bit of de-stocking and we grew 22% this quarter, so there is growth. I think- On sell-in, on sell-through. Yeah. On sell-through, yeah. The real long-term question is, you know, 'cause there's so much long-term potential growth, you know, at 8% penetration. You know, there's so much long-term potential. I think that's just a question of how does the decision-making happen? People, you know, making a decision for video enabling in all of your rooms is something that we did a long time ago, but not many companies have done yet. There's a lot of thinking to go through there, and people are also rethinking their formats and their footprints and things inside of offices. I know we are. I think both of those are in play. You wanna add anything, Nate? Well, I'd say, you know, Americas and Asia broadly did grow and both sell-through and net sales. EMEA again was the place where net sales slowed. If you just look at last year, and we mentioned this, and this will be true in the second half as well, and one reason why growth for the overall company and for VC, I think will be slower in the second half is the compares on VC last year are massive. A lot of that's in Europe, and it was exceptionally strong. I do think Europe has slowed down a bit on some of the decision-making and on some of the demand for video collaboration. Even there, we had double-digit growth in sell-through and EMEA. It hasn't, you know, ground to a halt, and it's still strong. I think someone mentioned earlier too about competitors coming in. I mean, I think they're seeing the same things that we are, is that this is a long-term growth category. I'm not really concerned about the changes in the demand profile from last year. I think we're in this for the long term, and we're investing as such. Yeah. Just to throw a data point out there, if you haven't looked at it, you know, video collaboration in Q2 of last year grew 150%. More than doubled. Don't get me wrong, I think you are doing a great job. That's not the point. Yeah. You have introduced quite many new products. You mentioned that these products will be available in winter, you know? Now winter is quite short, meanwhile with. Not only for the winter though. Yeah. What does this mean? Will this be an inflection point when you can ship then these new products? Do you believe that this can increase the pace then, or is it not that important? Well, I mean, I think we have availability now on most of our products. We'll keep that up. We are launching products now. We'll be launching products next year too. No, I don't think that's a particular inflection point. Okay. I hang back for the time being. Thank you so much. Okay. All right. Thank you. Thank you, Serge. Hello, Erik. Here. Hey, guys. How are you? Last question comes from Erik from Morgan Stanley. Thank you, guys. Hi, Erik. No. Hi. You know, if you go, you know, I’m based here in Manhattan. If you go to any local retailer, you’ll see, or at least I believe that Logitech has more shelf space than you have had historically. You might not see as many competitors on the shelf as maybe you have historically. Would you say that’s an accurate comment? Have you been able to gain shelf space with some of your retailers? You know, is that also what is contributing to some of the higher spending with retail point of sale? I will follow up. Thanks. Yeah, actually, I would say not. That's probably not a good characterization. You know, during the pandemic, we probably lost some shelf space. In webcams, for example, we lost a lot of shelf space because we just didn't have supply. You know, e-tailers and retailers really needed to bring in other people to fulfill the demand. Now we're back, and we're gaining the share back and probably gaining some shelf space back. But I don't think we've gone above where we were pre-pandemic. Yeah. You're muted, Erik. Unmuted. You're right. There you go. Thanks. Nate, this one's for you. Just, you know, as we think about, I know we're kind of throwing seasonality out the window to some degree, but when you think about the back half of the year from an OpEx perspective, you know, in some years, you've seen a sequential decline in OpEx from the holiday quarter into March. Should we generally be thinking about, you know, OpEx this year following that same trend? Again, you know, kind of throw seasonality out the window and, you know, it'll end up where it ends up, essentially. Thanks, guys. Thank you. Thanks. You know, Erik, so much more of our spend is variable now than what it was before, because a lot of it is marketing-oriented. Yeah, I kind of agree with you. I don't think there's really as much seasonality even to the spend this year. At least I'm not really looking at it that way. You know, we're making the investments based on long-term decisions and where we see opportunities. I think that's the way I'm thinking about it. Okay, great. Thank you. Thank you, Erik. Thanks a lot. I think that was our last question, if I'm reading you right, Nicole. It is. I think that's our last question. Oh, no. Serge is back with one. He couldn't resist before we hang up. You got to get off mute. He's on mute. Serge, you got to get off mute. Yes. Sorry. Now I'm back also with my cam. Now, probably quickly back to sales and marketing costs, you know. If I remember correctly, you mentioned that most of the incremental costs go to direct sales into collaboration and gaming. Is this still true, or can you give me a better feeling of where you are spending your money? Yeah, no, I don't think it goes just to direct sales and gaming. It's very broad. I mean, there's marketing, sales, and R&D or engineering across all of our categories, so it's pretty broad. Okay, probably last one. Currently, the M&A market is quite hot. We have seen HyperX. We have seen Turtle Beach. We have seen SteelSeries. What about you, Bracken? It's always hot for us. I mean, we're always looking at stuff. We've got things under evaluation right now. We've done things in the last year, several. Some of them are relative. Most of them are relatively small, so we didn't talk about them. We're always looking. You know, we're always in the market. It's a great strategic deployment, and we're gonna stay in the market in the M&A front for forever, you know. Okay, got it. Many thanks then. Enjoy the Christmas quarter. Thanks. All right. All right. Thanks, Serge. Okay. I think that brings us to a close. I wanna thank all of you. You know, you know, this has been quite a year this year and quite a year last year, but I'm super excited about the years to come. I mean, I know you can feel it in our tone, but we really feel like we've got our innovation engine humming. We've got a world that's really strange, and we're managing through it, I think, pretty well, and we'll keep proactively doing that. Thanks a lot for all your questions. They were great. We'll see you again next quarter. Thank you.