Good morning, and good afternoon. Welcome to Logitech's video call to discuss our financial results for the third quarter of fiscal year 2024. Joining us today are Hanneke Faber, our CEO, and Chuck Boynton, our CFO. During this call, we will make forward-looking statements, including with respect to future operating results, under the safe harbor of the Private Securities Litigation Reform Act of 1995. We're making these statements based on our views only as of today. Our actual results could differ materially. We undertake no obligation to update or revise any of these statements. We will also discuss our non-GAAP financial results, and you can find a reconciliation between GAAP and non-GAAP results and information about our use of non-GAAP measures and factors that could impact our financial results and forward-looking statements in our press release and in our filings with the SEC. These materials, as well as a shareholder letter and a webcast of this call, are all available at the investor relations 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 net sales. This call is being recorded and will be available for a replay on our website. I'll now turn the call over to Hanneke. Hanneke? Thank you, Nate, and welcome everyone. I'm very excited to be here today for my first earnings call at Logitech. Now, you've probably noticed that this quarter we introduced a new document as part of our earnings material, a shareholder letter. This letter is intended to be a comprehensive review of our quarterly results and includes commentary that previously would have been covered at the beginning of the call. So today, after brief opening remarks, we will move directly into Q&A. Now, let's move on to this quarter. Our team delivered really solid results in the third quarter, and I am proud of the product innovation, the share gains, the operational discipline, and the prudent financial management throughout the quarter, resulting in really healthy gross margins and exceptional cash flow generation. Our disciplined execution, tightly managing costs and promotional spend, drove a 22% increase in our operating margin. That is tremendous work by all of our teams. But we will not be satisfied, of course, until we return to top-line growth, which will be a gradual process. As we look forward, I am delighted with Logitech's positioning. Our portfolio is designed to take advantage of indisputable trends in hybrid work, video conferencing, gaming, and content creation. And disruptive technologies like AI will provide additional opportunities for us. As we work our way back to growth, we have demonstrated consistent, disciplined, operational excellence that builds a highly cash-generative P&L and a very strong balance sheet. This discipline, coupled with an innovation engine that introduces new products at a global scale, drives our market leadership across multiple categories. I've spent the last two months visiting with our employees, partners, customers, and shareholders. It's been a really exciting time for me, and I am as optimistic about Logitech's future as when I joined on day one. We will be hosting an analyst and investor day later this spring, and I'll provide you with a more detailed perspective on our strategy and our approach to capital allocation then. Additionally, we will then provide our outlook for fiscal year 2025. I really look forward to seeing you all at that event. Thanks again, and let me turn it to Chuck to discuss the numbers. Chuck? Thank you, Hanneke. Thank you all for joining us on the call today. You've seen our detailed financial results in the press release and shareholder letter, but I'd like to highlight three metrics this quarter that really stand out. First, our gross margins of 42.3% were better than expected year-over-year due to lower product and logistics costs, reduced promotional activities, specifically in North America. Second, we've spoken for several quarters about our focus on driving lean operations. For the seventh consecutive quarter, we reduced on-hand inventory, and this quarter it was down 44% year-over-year, with our inventory turns hitting 6.5. And finally, in Q3, we delivered $443 million of operating cash flow, one of our best ever. This was driven by an improvement in the cash conversion cycle and strong operating margins. We are updating our outlook for the full year. We are now expecting revenues of $4.2 billion-$4.25 billion, up from $4 billion-$4.15 billion. Our operating income is expected to be between $610 million and $660 million, up from $525 million-$575 million. One final note regarding fiscal year 2025. If you look at our last four quarters, as well as the midpoint of our fiscal Q4 2024 outlook, you will see the declines in our net sales have moderated. Looking ahead to fiscal 2025, we do not anticipate an inflection point in the slope of this curve. While the rate of our net sales declines has improved, there are a number of headwinds and uncertainties that may impact our net sales throughout fiscal 2025. Thank you to all of our employees for the hard work and impressive execution. With that, Nate, let's move on to Q&A. Great. As a reminder, please raise your hand if you are interested in asking a question, and come off video when called upon, so we can see you. With that, we'll start with Samik Chatterjee at JP Morgan. Hi, guys. Hope you can hear me. Thank you. Thanks for the call, and congrats on the robust results here. Maybe just to, Chuck, just to start with your ending comment there about the headwinds you're thinking of for fiscal 25, maybe just flesh that out a bit more for us in terms of, I mean, obviously, there's been an improvement in the pace of declines or you moderate those declines, but why shouldn't the slope sort of carry you back into growth? What are the headwinds you're thinking of? And I have a quick follow-up. Thank you. Yeah, that's a really good question. You know, we thought very, very hard about, you know, what next year's gonna look like. And if you look at the fundamentals of our business, they're very strong right now. We feel really good about the execution. You know, if you look at this last quarter in Q3, a lot of it was driven by really strong discipline on pricing and promotional activity. The baseline business in Q3, outside of the promotional windows, was a little softer than what we would have thought. The promotional windows were incredibly strong, with great pricing discipline, but the overall pace of the run rate business was a little soft. And if you look forward into, into Q4, the midpoint of our outlook, for the year would indicate a 1% decline in Q4. Now, the high end of our outlook would imply a little bit of growth in Q4. If you look into next year, there's just so much uncertainty around, you know, will there be rate cuts in the U.S.? The macro situation globally, whether it's in China or Middle East or Europe. And so we're taking a cautious approach to next year, and as we look out, you know, we're confident this is a great business, you know, profitable, strong margins. As Hanneke said, and her comment, it makes sense. It's if not when. But if you just look at the overall market, we just think that we don't wanna be have people get too optimistic about what next year's gonna look like, given these overall headwinds and the geopolitical situation. Hanneke, if I can, I know it's early days in your role, but as you've sort of looked at across the customer base, particularly if you look at them as enterprise versus consumer, and you think about the sort of next couple of years, where do you see the bigger opportunities? Where are we more likely to return to growth, in which customer segment faster than the other? Just share your thoughts on that, please. Thank you. Yeah, sure. It's nice to meet you, Samik. I see opportunities everywhere, when it comes to our customer base. We're really, really strong in retail, and you saw that over the holiday period. Just great execution in store after store, whether it was here in the U.S. or in Europe or in Asia. We also have grown online a lot with our e-retail customers. And then, of course, there's B2B, and we're newer to the B2B business, but the opportunity there is gargantuan. You know, so many meeting rooms that are not yet enabled with video. And as that corporate spending comes back, I think we're really well-positioned with products that are fantastic, easy to use, great value, for that B2B segment. So, opportunity everywhere. B2B is a little newer to us, but I'm quite bullish on that. I'll leave it there. Thank you. Thanks for the questions. Our next question is from George Wang at Barclays. Hey, thank you for taking my call. Just two quick ones. Firstly, can you talk about kind of gross margin? You know, the December quarter was super strong, and any thoughts on kind of outlook going forward, you know, for Q1 and FY 25? And then kind of as it relates to sort of a long-term model of 39%-44%, just curious, kind of any, you know, thoughts on kind of modeling for the margin going forward? Yeah. Thank you, George. No change to our long-term model. We believe the 39%-44% is the right range. This past quarter was stronger than we'd expected, you know, 42.3% gross margins. We'd expected somewhere in the 38%-39%, so we were really pleasantly surprised at the results for the quarter. The real drivers, if you look overall, you know, kind of year-over-year, it was roughly in line. If you look at it, or sorry, quarter-over-quarter, it was roughly in line. Year-over-year, we saw, you know, pretty good margin expansion. That's really driven by a couple factors. One, we did a great job on the operations side, getting product costs down. Logistics costs certainly benefited all the industry participants with lower shipping and freight costs. You know, that was the big primary driver. Then, of course, the great execution, primarily in Americas on pricing and promotions, led to about 100 basis point improvement. So I'd call it, you know, overall about 400 basis points of benefit on product and shipping costs. A lower promotional spend led to higher margins, and offset a little bit by mix that we had forecasted. Got it. Thank you. Yeah, just a quick follow-up if I can. I just want to double-click on the gaming. Seems very strong, kind of has been better than expected for the last couple quarters. Just, maybe you can give more color just on the gaming peripherals, and kind of maybe, you know, if you can parse out within gaming, kind of for any particular areas are doing a bit better, you know, mice, keyboards, you know, gaming headsets, you know, whatnot. Just, just, you know, because the gaming traditionally kind of shortest the refresh cycle versus other, you know, PC-related peripherals. So maybe you are seeing kind of the COVID cohorts that started refreshing, maybe could potentially drive the results higher. Just curious if you can kind of double-click on the gaming category. Yeah, certainly. I can go first, Hanneke. So, you know, gaming, as you know, covers many different categories. We saw particular strength in simulation and our steering wheels, a really, really good quarter. Overall, go-to-market was impressive, how we promoted and discounted. If you contrast that to a year ago, the teams were very disciplined in what products they promoted and which channels. As Hanneke mentioned, you know, retail was really, really strong. That led to better margins and better revenue. The PC segment, we have a really, really strong position with mice and keyboards in that PC segment. We gained some share. Console was a little bit off. We have a new product out that's really, really exciting. The A50 that was released kinda just at the end of the holidays, so we didn't quite see the sales on the console side. That's a very, very competitive category. But, you know, we feel like the future looks bright in console, although it is very competitive. But the areas that we generate higher margins, mice and simulation, incredibly strong. Other parts, you know, maybe not quite as strong, but will help on the way with new products. Anything you want to add, Hanneke? No, I think long term, again, I'm super optimistic about gaming as a big growing category. It used to be focused on pretty narrow audiences, younger male, but that continues to explode with more females gaming, with older people gaming, with gaming as a way to connect socially. So, a category where all the macros are in favor, and then with our strong execution and our strong innovation, I think we look really good in that space. Great, thank you. I will go back to the queue. Our next question is from Asiya Merchant at Citi. Morning, Asiya. Great, thank you for taking my questions. Good morning, everyone. If you could just dial into a little bit on the growth stuff, you know, I know, I understand there are macro headwinds, but it seems like on the PC side, things have turned around a little bit. We're starting to see some recovery. Maybe you can talk us through, you know, on the... Maybe you feel a little bit better about the PC peripherals, and what would it take to kinda get back into your kind of target model that was laid out at the analyst event last time, both in terms of gross margins as well as the top line growth? Thank you. Yeah, Asiya, great to see you. So if you think about the long-term model, I'll talk long term first. So we have a target long-term financial model of 8%-10% growth. One key tenet in there is M&A. We've been light on M&A the last couple of years. And I would expect us to do more over the next couple of years, not right away, but I would expect us to do more over the next couple of years, and that'll be an important part of getting back that 8%-10% growth. Another key tenet of our ability to return to growth and get to higher levels of growth is rationalization of the corporate office footprint. If you look at what's happened in the headlines this past quarter, you know, North American vacancies have approached 20%. And so, you know, corporates are still looking at their overall real estate footprint and how they want to outfit rooms. The TAM is enormous, the installed base is relatively small. There will be an upgrade cycle of that installed base to new, modern tech like ours, and there will be greenfield deployments that will grow. So if you look out 10 years, it makes perfect sense that every conference room will be video-enabled. It's just hard to say what's gonna happen over one year or two years. So I think this is another thing, like, like Hanneke mentioned, of if not when, it's unclear what that deployment cycle will look like. Lastly, on the, on the B2B side, you know, companies like ours are looking at their IT budgets, carefully controlling things like CapEx and spend. They're prioritizing things like AI and cybersecurity. Absolutely, employee productivity and office room fit outs are going to happen, but they're more discretionary IT spend versus mandatory, and so I think the economy needs to improve a little bit. Potential rate cuts, maybe, you know, more confidence in the future on the corporate side. The consumer right, right now is quite strong, and so I think overall I feel really good about our positioning, but overall, enterprise, B2B, office, rationalization, and then to hit the longer-term rates, a little bit of M&A sprinkled in there as well. Then when you think about gross margins also in that target range, I know you guys are obviously at 40%, feel really good about that. Just if you could talk a little bit about getting to kind of even the midpoint of your gross margins, of the 39%-44%. Thanks. Well, we were really close to that midpoint this past quarter at 42.3%, so I, I feel, you know, really good about this quarter and last quarter. We did have a couple one-timers this quarter, so if you look overall at the impressive inventory reductions that we achieved, we, we drove down inventory, you know, more than $80 million decrease quarter-over-quarter in inventory. When inventories come down, good things happen, and we saw that again this quarter with things like, you know, E&O releases, because effectively, as you reduce inventory, you have to reserve less inventory, and so we saw benefits there that will not recur. We don't expect inventories to come down. They could actually grow a little bit in Q4 with the Suez Canal challenges. But overall, if you look at where we think margins will be in Q4, it's our trough quarter, so there's less overhead absorption, so it's a little bit of a headwind on a quarter-over-quarter compare. And then we also have this additional freight challenges. So I, you know, I think overall, you know, we'll have, you know, maybe the low end of that target range in Q4, and I would expect it to be in that overall operating model on average over next year. You know, will it be at the high end? It's possible. Low end is possible. You know, so I think a lot of it will just depend on how next year unfolds from a consumer sentiment standpoint and enterprise demand standpoint. ... Great. Thank you. Our next question is from Erik Woodring at Morgan Stanley. Hey, good morning, guys. Thank you for taking my questions. Hanneke, nice to see you for the first time. Looking forward to working with you. Maybe if we start, Chuck, I'm gonna pick on gross margins again, just because they were so impressive. And I guess maybe my question is, you know, last quarter we had talked about them being in the 38%-39% range. You obviously did more than 42%. So I guess, you know, where... You know, was there something that outperformed your expectations that you didn't necessarily foresee 90 days ago? I'm just trying to pick on that because I would think that generally when it comes to component costs, you know, you kind of have a lock on that 90 days ahead of the quarter. So I'm just trying to understand where the biggest delta was between your expectations and how you actually materially outperformed? And if I could weave in, you know, as we look to the fiscal fourth quarter, you know, we have historically generally seen gross margin expansion despite the loss of revenue leverage. You know, less promotions, a little bit more B2B mix than consumer mix. And so why should we think about gross margins coming down so much sequentially? Maybe I'll start with that, and then I have a follow-up. Thanks. Yeah, Eric, you know, really, really good question. So first of all, this past... The last few quarters, we've brought our inventory down significantly. When you bring this inventory number down, you release reserves. So there are some benefits that we've seen quarter over quarter, the last couple of quarters, quite frankly, on bringing inventory levels down. Those are kind of more one-time in nature. What is durable? The great work that our operations team has done to reduce product costs. That has been a real, real benefit overall to the company, and that is durable. That we'll see those benefits throughout next year. So, you know, I thank our team. You know, Prakash and his team did such a great job on product costs. Shipping and logistics, that was a real tailwind, better than we expected. Now, that's reversing. So, you know, you look at what's happening now with shipping rates, they're going back up again, fairly material on the ocean. We also expect, because of these disruptions, to have to do more air. While we don't want to, we don't want stock outs, we have a customer-first mentality. The first thing is take care of the customer, so we will eat some margin to take care of customer satisfaction. So air shipping, higher ocean rates, that's just a reality of where things are right now from a shipping standpoint. Is that transitory? Is that gonna last throughout the year? I can't predict, but that is a headwind going into Q4. And then the overall, you know, leverage that you mentioned, you know, that's just, you know, straight math, and if you have, you know, you know, peak quarter to trough quarter, there is an impact. If you look at the impact, you know, you said last year you saw margin expansion, that was primarily because of a fairly poor Q3 last year. So that was, I think, you know, that we over-discounted and drove less volume in Q3 a year ago, and our global commercial teams just really executed so well this past quarter in pricing discipline. And, Eric, we had talked about that on the last few calls. We were set up with our retailers and e-tailers. We had really gone through the promotional plans and the account planning, and our teams on the ground just landed such a great quarter from a pro- a promotional standpoint. So, you know, I think, you know, that, that 38%-40% gross margin, if you do the math and you deduct what is the range for, you know, for Q4, it's roughly 38%-40%. You know, midpoint to high end, you know, is doable. At the low end, it'd be more air shipping. So I think we're set up for a, a really strong, you know, fiscal Q4, but the- these uncertainties on the, on the freight and logistics side are what gives us kind of, you know, pause at this point in time. Okay, very fair. Thank you for that detail, Chuck. And then I don't know if this is properly posed to you or to Hanneke, but you bought back more stock this quarter than I think any quarter over the last 10 years. You also reduced CapEx relative to your prior expectations. So are you guys maybe signaling a change in your capital allocation priorities? And why not, you know, as you're kind of striving to get back to growth, realize the macro is a big factor here. But maybe why not, you know, utilize the excess cash you generated to lean into CapEx and, you know, whether that's more product launches or better expansion or whatever it might be. But, but why not kind of lean into that CapEx to, to, to maybe help get you back to that kind of target growth range, a little easier, faster, however you might think about it? That's it for me. Thank you so much. Yeah, that's a really good question there. I'll talk in a little more detail, Hanneke, and maybe you want to talk about our capital allocation strategy at a higher level. You know, first of all, on CapEx, I would not read into that. CapEx itself, at this point is down, but don't read into that. That's just operating discipline. We are very, very focused on driving, efficiency and spend. We will invest for growth. Growth is our top priority, is how we invest in our capital allocation model. And then overall, if you think of the buybacks, in the beginning of the quarter, we saw the cash numbers improving, getting better and better and better, and so what we did is we decided to increase the buyback, given how great of a cash quarter we had. We generated $443 million of operating cash flow, one of our best quarters ever. And when we saw that data coming in, we decided to increase the buybacks to return more capital to shareholders. But don't read into the CapEx spending, 'cause it will go back up next year. We've done very little M&A. We have invested heavily in the business. We will definitely invest and prioritize investments in technology to drive long-term growth. So don't read into the CapEx reduction as being a, "We're pulling back." We are focused on driving growth. It's really more operational discipline. Hanneke, do you wanna talk about the high-level capital allocation strategy? Yeah, sure. And let me first just confirm what you just said. I mean, you know, we will make the right CapEx investments into the future. And we're looking at those for next year right now. So don't take this as we're pulling back on CapEx. In terms of our long-term capital allocation strategy, that really hasn't changed. At the top of the list, paying a good dividend. Number two, M&A, when the right thing comes along, we are definitely always looking. And then only number three, returning cash to shareholders in the form of buybacks. Thank you, Erik. Great, our next question is from Jürgen Wagner at Stifel. Yeah, thank you for letting me on. And welcome. Hanneke, my first question would be to you now that you are 60 days at Logitech, can you say or can you share already some thoughts what, what needs to be addressed, or what you need to do differently? And, as a follow-up, you mentioned M&A as the second priority, when would you be in a position to become more active again? Yeah. Thank you. Yeah, Jürgen, thank you. Very nice to meet you. I'm 60 days in, so it's a little early to say anything about anything. And so I'll say upfront, we have an investor day planned for May, where we'll come out with much more detail. But I'll give you a few first impressions. This is a really good company, would be my top-line impression. We're really well-positioned for future growth with the spaces that the portfolio is in. So hybrid work, gaming, and video conferencing all are good places, good neighborhoods to play in. Then we have fantastic, and I've been so impressed, as I've onboarded with our product, our engineering, and our design capabilities. That allows us to innovate, and that will allow us to win going forward. Another few things that I've been impressed with is the brand, a really solid global brand. But that also brings me to an opportunity. We probably have an opportunity to make that brand truly iconic. Take it from good to great, if you will. And then finally, a nice mix of B2B and B2C. We touched on that earlier. And the last thing would be, this company really is a sustainability pioneer in tech, which is great to see and something we'll definitely will want to continue to be. So I would say all of those things we'll want to keep and cherish, and leverage to drive growth going forward. There probably are a few things that I would change as well, but it may be too early to talk about those right now. When it comes to M&A, again, details much too early, but an important part of our capital allocation strategy. Okay. Thank you. Our next question is from Ananda Baruah at Loop. Oh, yeah, thanks. Thanks, guys. Yeah, good morning. Thanks for taking the questions. Hanneke, welcome to the conversation. Yeah, so I guess just real quick on the, Chuck, on the long-term growth model you mentioned, I think, I think you said high single digits. I guess the question, and you mentioned M&A as, as being a meaningful contributor to that. So I guess the question is, is that, is that high single digits organic? Can you talk to that yet over time, or is that high single digits with the M&A and, you know, sort of in the organic TBD? And- Yeah, I mean- Quick follow-up. Yeah, really, yeah. Thank you. That the 8%-10% is basically, that number is derived from the historical growth rates pre-pandemic. Obviously, the pandemic, if you, you know, it's 70-ish% growth, so you've got to kind of take those years out. But that's really the average growth rate for the 10 years pre-pandemic. You know, some years it was 4%, some years it was 14, but it averaged in that 8%-10% range. That included, importantly, many key acquisitions. We are very good at M&A. We find the right companies, we exploit that technology, and if you look at what we're great at, we have these global distribution channels at scale. So we can go buy companies, plug them into our network, and exploit that technology. We have an operations team that can drive product costs down and do a really good job, and as Hanneke mentioned, this iconic brand. So I think we have this great machine that can plug companies in. So the eight-10 counts M&A, that's part of the, of the formula, for sure. But you know, there's nothing planned in the short-term horizon. Hanneke's brand new, you know, we're working on the strategy, so I wouldn't expect any big announcements anytime soon, but it's an important part of the long-term growth rate, nor are we predicting to get back to that rate anytime soon. This is a long-term financial model. The part that we are executing on today is the gross margins of 39%-44%, keeping OpEx at roughly 25% and generating a very healthy operating income. That is right now, that's today. We feel very good about that. A couple of quarters ago, we said that was, you know, six or eight quarters out. We're very excited about executing on that part of the long-term financial model today. But overall, you know, growth is the focus. We just want to be cautious going into next year, and then we'll talk at Analyst Day more about the model and our thoughts on M&A and whatnot. But yes, eight-10 is not organic, it's organic plus M&A, and M&A is a key, key part of that. ... Got it. That's super helpful. And I have just a quick clarification quickly, then I have a quick follow-up question. When you say next year, we're talking fiscal 2025? Fiscal. So really, calendar 2024. Yeah, fiscal 2025, starting April 1st, of next year. That's right. Or this year- Got it Sorry. Yeah. Yeah. Got it. And you guys had mentioned in the prepared remarks, I think it, it may have been Hanneke who mentioned this, AI as an opportunity for the company. You know, any context you can give there, and I guess really what I'm wondering is, is, are there things that, you know, sort of you would consider to be incrementally new to the company in terms of value add for market share opportunities, new categories that you could go in, that you're thinking about, that, that sort of behind closed doors that classically fit into the ecosystem of products that the, the company is, has historically offered? Thanks. Yeah, I'm happy, happy to take that, because it's one of the other areas where, I see a lot of opportunity. Really two ways that we're leveraging AI at Logitech today. One, of course, is internally on productivity, like every other company, and that's table stakes, but it's well underway here. Whether that's in supply chain and marketing, using Copilot, ChatGPT, and our own large language models. So that's well underway. The area I'm more excited about is in our products and in our innovation. And again, there, there's-- I'll mention three things that I'm excited about and that are already out there, but they're-- they can tell you a little bit about what's to come as well. So on the video conferencing site side of the business, we have a new product out called Sight, which is a panoramic video conferencing camera that you sit right in the middle of your conferencing table. That one is like having a TV producer in your meeting, and you get perfectly framed, your audio is perfect, your video is perfect. So I love that, and that leverages AI to get that done. So that's on the video conferencing. Then on headsets, the Zone 2 wireless headsets, which is just out, again, also leverages AI technology. And here, the consumer insight is, and I hate this myself, you know, you're talking to someone, you have a headset on, that other person is at an airport or is outside, and there's a ton of ambient noise on the other side. Leveraging AI, this new headset cancels ambient noise on both sides, which is super cool. So a really great product. So those are two product examples. The last one is on our software. So, if you have any of our products, whether it's a mouse or a keyboard, you can download the software that goes with that. One of the features is called Smart Actions, where you automate some of your repetitive tasks. What we've seen in the last four or five months is that by far, the number one repetitive task that our users are simplifying is something called Reply with ChatGPT. 9 times as much as any other smart action. So again, it, it shows how we can help, both through our hardware and our software, delight consumers more with AI. Sorry, it's a bit of a lengthy answer, but I'm excited about the opportunities for innovation that we can leverage in our products and the growth we could get from that. Yeah, no, that's helpful. So, that, like in the three you just mentioned right there, like, to me, that would be more suggestive of potential market share gain opportunities or product stickiness opportunities, something along those lines. Spot on. Got it. Great. Thanks, guys. Appreciate it. Our next question is from Joern Iffert at UBS. Hey, Joern. Yeah, hello, everybody, and nice to meet you, Hanneke. Thanks for taking my, my questions. The first one would be, please, to you, Hanneke. May I quickly ask you, when you look on the next three to five years, do you think the categories and the segments Logitech has right now is the right place to be to, to drive your growth vision? Or are you also willing to go into new end markets, like, for example, healthcare, which could be necessary to maintain the growth model going forward? I think we're playing in some really great spaces, so the big space of work and play, you know, that's what people do in life. So we play in some gargantuan spaces, and they give us good growth. Within that, are there verticals we could step on a little harder, possibly, and that's what we're exploring in our strategy work right now. So a bit early for me to say yes or no, but we'll be back on that in May. Yeah, sure, appreciate this. And then the second question, a little more technical one on the quarter, please. You were mentioning that outside the promotion season, which was Black Friday, Cyber Monday, volumes were a little bit short of your expectations. Is this linked to macro and market weakness, or is this linked to the market share losses? I think you also mentioned a couple of market share losses. Also gains, of course, but also some share losses, like gaming keyboards, for example, China and other stuff. So is this also linked to share losses or mainly macro? Yeah, I think generally, I would characterize the quarter from a share standpoint as a strength, not a weakness. So on balance, we executed well, and I think when the dust settles and the final reporting comes in, it's not all finally in yet, we need to see all the final data coming in. I think it'll show on balance, we gain share across key categories. The categories where we may had some challenges is where we had older products and NPIs, or new product introductions, are on the way. So I feel on the share side, pretty good. I think overall, you know, the consumer, as it was a year ago, was looking to buy on promotion, and the run rate business globally was more challenged outside of the promotional windows. And we're seeing that so far in the first few weeks of this quarter. So I don't, you know, it's hard to say, is that interest rates? Is it... You know, consumer confidence is okay right now. Is it enterprise spending? I think it's kind of all of the above. I think there's just a little bit of uncertainty out there, and that gives us a little bit of caution going into Q4 and into next year on when will that return. I think there's, you know, news about, you know, sticky inflation, and maybe rates won't get cut. There's a lot of, you know, macro factors that we read in the news every day, and I think that translates into our customers, you know, buying, you know, our products and other companies' products. But I would not say it's a share issue. I think our share is strong and is doing quite well across the board, outside of some key pockets that we're addressing. Anything, Hanneke, you'd like to add there or cover it? I think you said it well. Okay. Thank you, Joern. Thanks a lot. Mm. Our next question is from Andreas Müller at ZKB. Hey, Andreas. Yes. Hi, everybody. Hi, Hanneke. Good to see you both. Can you discuss maybe the gap between sell-in and sell-through, particularly in the Americas? Is this seasonal, or do you see your clients already increasing inventories sustainably there? Thanks, Andreas. The chart you're referring to in our earnings deck shows sell-through and sell-in, and I'll just say I don't like that chart in general. We've agreed to keep it through this year, and we'll revise it to make it more meaningful at Analyst Day. That data shows that America's sell-through was down 4%, yet we saw, you know, fairly strong revenue growth, actual, you know. And so you look at that and say, "Gee, how can sell-through be down but sell-in go up? Oh, you must have built channel inventory." We did not, actually. America's channel inventory was roughly flat. What's driving that is less promotional activity or selling at a higher price and promoting less. So the sell-through is in gross dollars, and the revenue is in net dollars, and that's just that delta of 700 basis points is the margin expansion based on less promotional activity and efficient promo activity. So we're going to revise that chart to give you a little more view into kind of the changes in channel inventory, which is, I think, the better metric. So I wouldn't read into that too much. It's kind of comparing apples and oranges a little bit, but we didn't want to pull it. You know, I started, you know, just less than a year ago. I didn't want to pull that chart without replacing it with something to give you better visibility. So there will be an update to that coming in May. But I would not read into that overall, other than saying, you know, we did a great job on driving North American promo activity during the holiday period. Okay, thanks. And then, my next question, on the gross margin progress, the lower product costs were mentioned. Can you give here some more details? I mean, you mentioned product production efficiency, but also, I mean, what was the impact of raw materials? For example, Asian currency were weak, which might have helped. Can you say something here? Certainly. I missed the very first part. Was it, was it gross margin in Q4? Yes, on the production side or- Yeah ... on the products, you know? Yeah. So we had about 200 basis points of benefit year-over-year on product costs. Quarter-over-quarter, it was roughly in line, but a year ago to this year, about 200 basis points of expansion. That should be durable and should translate into future quarters as well. 200 basis points year-over-year was logistics, ocean, air, freight, and then there was some other kind of noise between, you know, lower promo and mix. But overall, the freight side is going to come back. We're going to have more freight headwinds in Q4. That will be a challenge. And then on the FX side, year-over-year, it to Q3, it was about 100 basis points benefit. As you look into Q4- Q4 and Q3- Q4, currently, FX is roughly flat, so there will be, there should be no currency impact. Of course, rates can change, but as we sit here today and you look at the euro and the pound and you know the various currencies around the world, on balance, year-over-year and quarter-over-quarter, we're roughly in line from Q3- Q4. Okay. Then my last question, can you say something about the OpEx items, R&D, and G&A, here, and the expected progression going forward? In G&A, how much was the impact, or was the increase actually one time in nature? Certainly. So our OpEx model is fairly straightforward. We, we want to spend roughly 25% of our revenue on OpEx. Of course, in OpEx, we're going to prioritize things like engineering, product development, go-to-market, those are things that build health and build value long-term. Then you have things like G&A and other costs that are necessary, but you wanna be efficient on the spend. So that's the overall model as a whole. Now, if you look overall at the details of what's happened in the quarter, we had CEO transition costs that, that basically were one-time in nature, and then we have really overperformed this year, financially, and a year ago we were underperforming. So as a result, things like sales commissions and, and variable compensation a year ago were unfunded or, or funded at a, a much lower level. This year we're funding above plan, given the above-plan performance, and so I wouldn't expect the overperformance on variable comp to continue so much. So there are some one-timers, but overall, if you look at where OpEx as a percent of revenue, obviously in our peak quarter it looks very impressive. But our model really is 25%, approximately, of revenue, and it'll be a little higher likely in Q4 because it's our trough revenue quarter, so we're saying on average, it's that 25% range. But we, you know, I feel really good about where this year is shaping up from an investment standpoint, and again, prioritize investments on those things that grow shareholder value. Okay, thank you very much, and good luck. Thank you. Thank you. Our next question is from Torsten Sauter at Kepler. Hey, Torsten. Hi. Hi, everyone. Well, congratulations to another strong quarter. In fact, it feels like in the good old days, right? Just with a few new faces. Very glad to meet you, Hanneke, and very happy to work with you. Thank you. Thank you. Yeah, thank you. Actually, I have two little questions, if I may. Firstly, a more technical one. I see you have again cut the tax guidance to a very, very low level. Can you please shed some light on that and also maybe try to give an outlook there? And- Certainly. Yeah? Yeah. If I may, just to have it said already, we've seen the departure of your design head, Alastair Curtis. I think I had considered him a key person, right? So maybe can you guide us through the strategy with respect to running the design operation, the design team at Logitech going forward? Thank you. Certainly. I'll take the first one, and you can take the second one. On the tax side, we had reached agreement with the Canton of Vaud, where we're headquartered, this past quarter to increase the basis of the business overall that allows for a larger amortization, and a tax deduction. And this is because we have significantly grown our footprint in Switzerland. We're very proud of the incredible talent that we have in Lausanne. So with our increased investment and having a much larger employee base, we reached agreement with the government and they were really great to work with, and they're proud of our work we've done there. And because of that, there's kind of a one-time benefit that you saw this quarter. There's a couple other smaller items as well. On the US tax side, we have a one-time larger deduction in the US for foreign operations that basically is a standard kind of practice that we've gone through, analyzed this, and our tax team just did a phenomenal job in this past quarter. Those are one time in nature, so if you look at the results this quarter, those will not repeat. If you think structurally, where is the company next year on a tax standpoint? The GAAP tax rate is gonna be in the low 20% range, so low 20s on the GAAP side, and of course, that can change. The share price has a fairly big impact on the overall GAAP tax rate, but think low 20s from a GAAP standpoint. The non-GAAP side for next year is gonna be low teens, and that's sort of the cash tax rate that we pay plus accrual. So the non-GAAP tax rate is cash taxes paid plus accruals. Low teens GAAP, low twenties. This quarter was really a one time based on the really hard work that our team did and based on our investment in Switzerland, et cetera. So, we did provide guidance in the materials for this year, non-GAAP, 9%-11%. So, overall, though, I would, in the models for next year, count on the low teens non-GAAP, low twenties GAAP. Hanneke, you wanna talk about design? Yeah. Thanks for asking the question. Design plays a really, really special role at Logitech, and it's a real point of difference for us. Now, Alastair, over the last decade, built a fantastic design organization. That's one of the other things I learned in my first six weeks. We have more than 200 internal designers at Logitech, and they're fantastic. So actually, in the last quarter, they, as a team, won the global Red Dot Design Team Award, which is, again, in this, this industry and beyond, a really prestigious award. So, I'm thankful for the organization and the culture, the design culture that's been created at Logitech, and I think with the, with the team that we have of designers, I have no doubt we're gonna continue to excel in design. So, thanks for asking. Great. Thank you. Mm. Our next question is from Martin Jungfleisch at BNP. ... Yeah. Hi, everyone, thanks for taking my question. I hope you can hear me. And also congrats on the strong set of numbers. So maybe two questions. First one is on coming back on the cost side. I think at the webinar in early December last year, you mentioned that R&D will remain a key focus area for you, and you also just pointed out a few innovations. Now, in Q3, R&D costs are up 9%. Should we expect this cost line to keep increasing in that magnitude in the coming quarters, as well? And then the second question is on the China gaming curbs. These rules have been taken off the website this morning. But just wondering if you have seen any negative impacts so far, or if you would expect any negative impacts? And also, if you could just remind us on the rough exposure that you have in China on gaming? Thank you. Yeah, I didn't understand the comment that the China comment from this morning. I'll. In general, China gaming is a really important market for us. We have an iconic brand, and the consumers in China preferentially pick our brand at the high end. There's lots of low-end competition. It's a big market. Overall, you know, China's results were roughly flat, so we had... You know, Asia was down in general, so more challenging across Asia. But China, actually, we performed, you know, quite well relative to our expectations. Clearly, you know, it's a big market, and it's very competitive, but preferentially they choose better technology and a better brand at the high end. Do you want to add anything on China before we talk about OpEx? Yeah. A very important, and, I like what I'm seeing in terms of our premium offering there, so the PRO Light mice for especially. And it's, you know, in any, in any business, China is super competitive. That keeps us honest. So we'll be all over that market. Great. And then on the OpEx question, I would expect engineering, quarter-over-quarter to be roughly in line with the prior quarter, and I would expect, G&A, and sales and marketing to come down. And the reason I believe that is because sales and marketing has variable commissions tied to sales, and with peak quarter to trough quarter, you have less commissions that you pay based on, on the sales change, just due to normal seasonality. And then, of course, the one-time transition costs that you see in the G&A line. So overall, R&D, quarter-over-quarter, should be roughly in line. And then, of course, next year, you know, we'll have to talk about that at Analyst Day. But again, in total, I would, you know, be estimating roughly 25% of revenue in your models. Perfect. Thank you. Thank you. Hanneke, Chuck, our last question for today is from Michael Foeth at Vontobel. Hey, Michael. Yes. Hi, good to see you all. Thanks for letting me on. Just two last questions from me. The first one is on inventories. You obviously made a great job in reducing the inventory levels. My question is where sort of is the limitation to that inventory reduction? And if you can give a bit more specifics on the whole Red Sea situation, any disruptions there in terms of your supply chains or deliveries, shipments, and the related inventory that you would need to build up to counter that? And then my second question would be, and I'll ask it straight away. You mentioned obviously in terms of gross for 2025, the trajectory that you depicted in your shareholder letter. It leaves a little bit room for interpretation in terms of where the trajectory goes. It looks like it would go slightly into the positive, but maybe not to that high single-digit growth. Is it correct that you're expecting it to turn slightly positive, but maybe not as fast as your long-term model suggests? Yeah, certainly. On the inventory side, you know, again, it was such an impressive quarter on inventory. We've stated now for the last few quarters that we wanna drive down on-hand inventory and channel inventory. I just want to thank our employees and our teams for executing on this plan because it's really, really paid massive dividends, improving linearity, improving return on invested capital. Again, if you have less inventory, you have higher return on invested capital, or, you know, ROIC, as you say in Europe, or ROACE. That is such an important metric, and we have driven down inventory levels. 6.5 turns in the quarter is a really great number. We said our operating model is between five and six. That would be on an annualized basis. So again, we're going to go in now into our trough quarter, so the turns will probably come down. I don't think inventory will come down in Q4 with the Red Sea challenges. Is there more room? There is more room. We can do better, but we're getting to that point of diminishing returns. Because importantly, we don't want stock outs. We want to carry inventory in our distribution centers to meet our customers' demands. Customer sat is number one, but we want to do that the right way. I think we're approaching that point of the efficient frontier on inventory levels, and we're targeting five-six. You know, Prakash is so good, maybe he can get to seven occasionally, but I would say, you know, six is kind of hitting that best in class or upper quartile. As it relates to the Red Sea, it adds about four weeks of lead time, so it's not that material. There will be an impact to air, as I mentioned earlier, and a little higher cost, so I would expect a little bit of inventory increase. Maybe we can keep it flat, but I would expect a little bit of inventory increase as we get into Q4. And then what was the last part, Hanneke? Do you... The- The gradual growth, and does it leave room for interpretation? I'll let you answer that one. Yeah, I'll go back to where we started. I think growth is really a question of when, not if. We will get back to growth, but there are so many uncertainties out there that we're just a little cautious on giving you exact numbers of when and how much. We will at Analyst Day. Yeah. So, you know, stay tuned, and I... You know, in middle of May, we'll have an Analyst Day and talk about our, our view and our outlook. I think the idea now is just, like, be cautious going into next year. People are getting excited, and I think overall, it's a great business, a great operating model, but we need to be cautious looking out into next year, given the uncertainties. All right. Thank you. Thanks a lot. With that, Hanneke, that's our last question today. Great! Well, thank you, Nate. Thanks, everyone. It's been really nice to meet you guys. Thanks for joining us, for your interest in Logitech, and of course, a huge thank you to all the Logitech teams around the world for everything they continue to do. I look forward to speaking with you guys next quarter. Take care.