I know they are going to place POs this quarter, next quarter and more and more in the future, but at the same time, they take a pause. They want to get their workforce back to the office so that it will be used for those conference rooms.
Chuck Boynton: And I would say generally, video grew this quarter sequentially. The year-over-year comps are still a little bit difficult, but we saw video growth this quarter. And so, I think we’re feeling that our products are great and the market is there. It’s just a matter of when, not if.
Guy Gecht: Exactly.
Chuck Boynton: And we can’t predict that, but I like our position there.
Guy Gecht: Absolutely.
Juergen Wagner: Okay, good. Thank you.
Nate Melihercik: Our next question is from Ananda Baruah at Loop Capital.
Ananda Baruah: Yes. Hey, thanks guys. Thanks for taking the question. Hey, Guy, Epi printer, Epi printer
Guy Gecht: Thank you. Just saying.
Guy Gecht: Appreciate that.
Ananda Baruah: Yep. There’s the shout-out. So, I guess better demand you guys saw. Any view on what the drivers of the stronger demand were throughout the quarter?
Chuck Boynton: A couple of key things. The consumer is still quite strong. The consumer has really held us through the soft part on the enterprise, but we are seeing the enterprise come back. We just mentioned on the last question, we saw video grow quarter-over-quarter and the enterprise selling of mice, keyboards, webcams, has been quite strong. So, the enterprise maybe has some signs of life, but the consumer has really been incredible. Year-over-year growth in pointing devices, primarily mice, I mean, that is – it’s one of the few categories that we’ve seen year-over-year growth. Overall, 9% decline topline, but growth in mice. And if you look at Europe, Europe has been quite strong. The European market has really – that team and that market has been a really important point of strength for us this quarter. US market, so-so. Asia is still lagging behind. But I would say, a couple of categories and a couple of regions have really delivered a great quarter for us.
Ananda Baruah: And Europe, has Europe been both consumer and enterprise?
Chuck Boynton: Yes.
Ananda Baruah: Interesting. What, like, I guess as you guys think through the rest of the fiscal year, I mean, and look, even more broadly, kind of calendar 2024, if you’re willing, what do you see as the most important kind of, I don’t know, like tension points in either direction for your business that could swing things – well, actually, let me just ask it that way, okay? Like, what do you see as the most important tension points for your business? Sounds like kind of inventory, channel inventory, you’re going to lean on a little bit more, but maybe in addition to that, we should be thinking of.
Chuck Boynton: Well, I think the two I would say is how Q3 ends, both from a promo and volume standpoint. It’s our biggest quarter of the year. This will really be a telltale sign for the company. And the second would be the return of video in a more meaningful way. And I just can’t tell if that’s one quarter or five quarters or when that inflection point will be. But overall, those are the two things I would point to as inflection points.
Ananda Baruah: Yes, that’s super helpful. Chuck. I’m sorry, go ahead. Sorry, Guy.
Guy Gecht: No, I’d just add to the – just geographically, I think Europe is essentially on the verge of growth. We want to see that, and we have high hopes for the Americas to come back to this. We like to see stabilization in Asia. China is our second largest market. So, hopefully, that will start to bottom and go back. So, if we start to get all of that, definitely things that are playing well for us.
Ananda Baruah: And Chuck – well, and Guy as well, to the dynamic with video conferencing, Guy, you had talked to this, and Chuck just mentioned it, is really the decision – like everybody’s sort of – it sounds like everybody is – not everybody, sounds like folks are largely on board that there’s going to be some hybrid work model, but it also seems like it’s unclear still what that will look like. And so, is that really kind of the sticking point for folks deciding which rooms they want to video-enable in enterprise? Is that really what we’re waiting for? Is it something other than that?
Guy Gecht: Say the people I meet, and I meet quite a few customers in the last 90 days. They know where they want the video enabled, and in most of the rooms, they want it. I would say here in Logitech, kind of living large, we have almost every room video-enabled and it’s often coming to play. Two, three people go to a meeting and says, okay, let’s ping this person working from home today, and let’s call this customer and let’s see if they have a few minutes and get them on a video. What you used to do on the cellphone now becoming a quick video conference. So, that is happening and people are planning for this. You just see the same people also at the same time saying, hey, I need to get my workforce. Yes, we announced the policy of two, three days in the office, whatever the policy.
Now we need to see people do that and use those rooms. We are not standing still, by the way. We are going to expand our portfolio. You’re going to hear more about actually enabling those companies to do a great job in attracting, making this very attractive place for people to come and collaborate inside the corporate and outside the corporate. So, stay tuned on that. And I think it’s just a matter of time when they come back and says, okay, now the priority is back. Let’s get video enabled, modernize all those video conferencing.
Chuck Boynton: And then, Ananda, I would add to that. I think that’s super well said, Guy. The backdrop is quite interesting. We sold this past quarter $152 million worth of video conferencing solutions. That’s not a small number. We have number one market share there. It’s not – none of the players are really doing better or a lot worse than we are. The market is just kind of sideways. The backdrop and the why is, companies are being cautious. Global conditions are unsettled. Interest rates are high. Ours are somewhat discretionary spending. And so, I think companies are prioritizing other areas right now. As the things Guy mentioned, when those settle out, I think we’re going to see this become a priority again, once they have their model of back to work and hybrid settled out.
I think this is a – to me, this is a – again, it’s a when, not an if. But I think the backdrop is cautious corporate spending on these categories broadly. We have number one market share. We have great solutions, and I think the pendulum will swing back, but it’s still a great business today. High margins, $150 million a quarter. I mean, I feel good about the fundamentals. It’s just, we’re not seeing the growth rates that we’d like to see.
Ananda Baruah: That’s really helpful, guys. Appreciate it. Thanks a lot.
Nate Melihercik: Our next question is from Michael Foeth at Vontobel.
