00:00Honestly, it's not that much of a concern for us. The vast majority of our portfolio.
00:05Our peripherals does not use the memory that's in short supply.
00:10Only a small part of our portfolio, video conferencing, and only a portion of that.
00:15Uses those chips. And we've anticipated the shortages. So we don't see.
00:20Impact on availability for us in the quarter we're in.
00:25Next two. So well into our next fiscal year. The cost may be a little higher, but.
00:30We have a team that has proven to mitigate cost pressures really, really well.
00:35Through cost reductions and through targeted pricing.
00:38Well, Hanukkah, what about Hanukkah? What about the.
00:40Other side of things? Because again, it's not just your own things.
00:43It's PCs have become more expensive.
00:45Have you seen a pullback in consumers of buying PCs and therefore the need for some of your equipment?
00:50Because of higher costs.
00:52Yeah, I think let's. No. So certainly.
00:55There are some concerns about PC pricing, but this is a great time for us when you cannot.
01:00Afford a new PC, you still want to be more productive or you want to game with better.
01:05Performance. So that's a great time to buy a new MX master for.
01:10A new SuperStrike mouse.
01:12The installed base of PCs around the world is more.
01:15More than a hundred, more than a billion and a half PCs, less than half of those people use.
01:20A mouse less than a third use an external keyboard.
01:23This is a great time for us to.
01:25Upgrade those people and continue to grow.
01:27And I think we've proven that quarter after quarter after quarter.
01:30Hanukkah, Matt Miller here with Danny.
01:32What's your take on the dollar drop?
01:35How is that affecting your business as you manufacture in China?
01:40China, as well as other Asian countries.
01:43Are you seeing costs rise?
01:45Due to the dollar drop.
01:47So for us, FX has actually been.
01:50A little bit of a tailwind.
01:52We report in dollars.
01:53Our biggest business is here in the United States.
01:55But we're incredibly diversified.
01:58The U.S. is less than 30%.
02:00We're in 150% of our business.
02:00We're in 150 countries.
02:02We also make and manufacture in 60%.
02:05It's a really diversified business and actually reporting in dollars there.
02:10It requires a little bit of a help.
02:12Hanukkah, I know just speaking of your international business.
02:15You had said previously only about 10% of your U.S. products will be sourced from China.
02:19That was your goal for the end of.
02:202025.
02:21Did you make it there?
02:22How is that progressing?
02:24Yeah.
02:25I'm very pleased to report we made it there.
02:26So in April at Liberation Day, 40% of the U.S.
02:30Of our products bound for the U.S. came from China.
02:33By the end of December, that was actually.
02:35Less than 10%.
02:36And we now have a really resilient.
02:40manufacturing footprint of China, plus five other countries.
02:44We.
02:45We still see, though, tariffs on all of those countries.
02:48I think Taiwan, Malaysia, Switzerland.
02:50Vietnam, Mexico, Thailand.
02:52Maybe I added one there.
02:54What is.
02:55Your hope for tariff negotiations?
02:58Obviously, we have the USMCA that's going to.
03:00Come up again.
03:00And how much have you been able to pass on to consumers?
03:05In terms of tariffs.
03:07Yeah.
03:08So we always hope, you know.
03:10For free trade, but all of that said, you know, this is a level playing field for anyone.
03:15Playing in the United States, and I think our teams have done a great job offsetting those tariffs.
03:20You see our gross margins in the quarter, 43.5%, near all-time high.
03:25And our operating income was actually a record in the quarter.
03:29So.
03:30We've done a great job offsetting that through manufacturing diversification.
03:35As well as a modest targeted price increase in the United States.
03:39Do you think.
03:40You think you can raise prices further, Hanukkah, is a consumer and also enterprise clients.
03:45Are they are they willing and able to pay more?
03:47Yeah, I don't think there's a need for us at the moment.
03:50Certainly not on the consumer side.
03:52All right.
03:53So in terms of.
03:55What you've passed on so far, you say it's modest.
03:58I'm looking at the.
04:00Mice you sell, I need a new one, a G502 gaming mouse for sure.
04:05What kind of tariffs am I paying if I if I buy that mouse and would.
04:10You consider joining a suit against the U.S. in order to get those tariffs refund.
04:15Pending the Supreme Court decision.
04:19So for.
04:20First of all, thank you for needing a new mouse and I would highly recommend the Super
04:24Strike if you're a game.
04:25I'm a gamer and some gamers it's coming out next week.
04:27Some gamers call it cheating.
04:30Because it is so good and so fast.
04:32So that's a great mouse to.
04:35Choose that's a whole new product.
04:38So the.
04:40Tariff costs is built into that and on the suit, we'll see where that.
04:45Goes I, you know, just to show our biases, I should say Matt and I are.
04:50Both using Logitech mouse, mice here and you know, we have them.
04:55All over the set Hanako, which, which also brings me just to where the enterprise client.
05:00Is we've seen businesses at this point of angst, whether it's trying.
05:05To cut back on spending because they want to put that into AI or using these tech.
05:10Advancements in order to find efficiencies.
05:12How has that translated into what.
05:15You're seeing of sentiment of enterprise clients.
05:17Is it healthy?
05:18Are they slowing down?
05:20Is it something completely different?
05:23Yeah.
05:23So actually we're seeing really.
05:25Healthy business sentiment about 40% of our businesses B2B and.
05:30Demand into quarter was double digit there.
05:32Um, actually well ahead of B2C demand.
05:34So.
05:35Companies around the world are doing well and therefore they're investing.
05:40In technology and in their people and our products, whether it's the mouse.
05:45Thank you for having that on set there, um, but very much also video conferencing where we're.
05:50The global leader, um, that's still a huge opportunity for us going forward, less than 20%.
05:55Of global meeting rooms and companies and institutions are video enabled.
05:59So we're.
06:00Seeing really healthy investments there as well.
06:02Uh, we got.
06:04Disappointing.
06:05Disappointing, uh, news from Amazon as well as, uh, ASML.
06:10In terms of firing.
06:11Staff.
06:12I wonder if it's.
06:14Because of.
06:15a boost in AI productivity or just a shrinking bureaucracy that tends to be a.
06:20Trend right now, how has AI contributed to your productivity at.
06:25Logitech and what are your plans for employees?
06:28Yeah, so and.
06:30AI is a real tailwind for us.
06:31I would say first in our products, we're well beyond proofs of.
06:35Concepts or little experiments, we're shipping AI enabled products around the world at.
06:40Scale, so whether that's the site video conferencing camera zone to wireless heads.
06:45It's our new rally AI cameras that were just announced last week.
06:49We are.
06:50Building AI enabled products and we're shipping them to more than 100 countries.
06:55So you can only do that when your workforce has AI deeply.
07:00Embedded in their workflows, we track that pretty rigorously.
07:0575% of all our employees now are heavy users.
07:1085% of our engineers and designers are.
07:13So it is really helpful.
07:15Developing productivity, but the way that I think about that is we got to grow fast.
07:20So we had a good quarter, you know, 6% growth in U.S. dollars, 4% current.
07:25But we'd like to take that to high single digits with the resources.
07:30And AI can enable us to have those resources that we have.
07:35Do more.
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