Nate Olmstead : I take the first one. Yes, and then I can hit the second one, too. I mean, the outlook for Q4 really implies typical seasonality, Joern, Q3 to Q4. So Q3 was weaker than expected. And off of that, you would get sort of a normal mid-20% decline sequentially into Q4. So that’s what is what the guidance really implies. We’ve got one quarter left, but the full year guidance basically implies that for the fourth quarter. And then on the freight cost, the benefit we got this quarter was that we didn’t use air freight to the same level by long ways versus last year. We were chasing a lot of supply last year. It’s not the case this year. So we were able to reduce our air freight. So we got some year-over-year benefit there.
We’re still — and ocean rates are getting — are coming down, but they’re still higher than what they were pre-pandemic. They’ve come down month-on-month, starting to look more positive there, but still have a ways to go before we get back to pre-pandemic levels.
Joern Iffert : Okay. And then maybe the last question, if I may, on your OpEx. When we look in 2024, I mean, after you take — take out $250 million OpEx in fiscal year 2023, is this now enough? Is this done? Are you lean enough, for example, to cope with a flattish 2024? Is this for you feel good about? Is there more to come now in the next couple of quarters regarding your plans?
Nate Olmstead : I want to clarify real quick, Bracken. I’m not sure if you said 250, but I said 215, 1-5.
Joern Iffert : 15, yes, yes. Thanks.
Nate Olmstead : Okay. I wanted to make sure that you heard that clearly. Bracken, sorry, did you have a comment?
Bracken Darrell : Yes, 215. And we’re going to keep up with the OpEx, Joern. We’re not letting up. When we look at the top line, we feel like we need to take — we’re going to continue to take more out. And so you can count on that we’ll keep aggressively taking it out. We’re going to respond to market conditions, and you see what they are. So you can imagine how we feel about our cost.
Joern Iffert: Okay. Thank you.
Nate Melihercik: Thanks, Joern. Okay. Our next question is from Andreas Müller at ZKB. Hi, Andreas.
Bracken Darrell: Hi, Andreas.
Andreas Müller: Yes. Hi, everybody. Hope you are well. I have two questions. One is, really, can you say something about the Chinese sales in the quarter? And do you expect that the impact from the lifted restrictions going forward, is that the benefit or not? And then, probably, also the status. I mean, you mentioned something in your own production facility. Are you completely 100% operational right now? And what’s there the status basically?
Bracken Darrell: I’ll answer the first one. You wan to take the first one, Nate? Chinese sale.
Nate Olmstead: Yes. On China sales, I mean, China, unfortunately, was negatively impacted this quarter from a sales standpoint due to the infections, the rising infections. I think we probably had about a 1 point headwind this quarter, Andreas, from sales in December that didn’t occur. I think longer term, I mean, I think it’s a positive. It’s potentially a positive. But like I mentioned earlier, I mean, I think COVID is just unpredictable. And hopefully, this was sort of a one-time event, but I think that’s not for me to know with certainty. So — but I think it’s a positive to see a more open position by the government. I do, but to — way ahead in this quarter.
Bracken Darrell: Yes, I’ll add to that. I do think — I think, opening — China opening is positive. And I think you asked about our production facility related to that. Right now, our production is still exposed, because Lunar New Year. So that’s one of the things that has given — gave us a little pause was what happens during Lunar Year. Everybody comes home, how many come back. And I’d say, we’ll see. I mean, I think we’ll manage whatever it is. But that is what it is. But I’m actually — I hear so many negative headlines about China. I feel like the optimist in the room on that for sure. I feel good about China. I think as China opens, it’s going to be good for us. It’s our second biggest market. It’s always been a good market.
As long as I’ve been here, it’s been good. We’ve had very few times we had a long period of slow growth there. So I’m excited about China. We’ve got great market shares. We’ve got a great brand there, and we’re really learning a lot about the Chinese consumer there. So I’m optimistic.
Nate Melihercik: Thanks, Andreas.
Andreas Müller: Okay. Then I have another question about your priorities. When you go through your portfolio, do you see a need for changing some priorities for some categories with the downturn, maybe to earmark also a category as non-strategic one more besides a mobile speaker and earnings buds, for example?
Bracken Darrell: Yes. We’ve kind of done that, and we always redo it, and we do it on a very regular basis. So, as you mentioned, we picked out a couple of categories that we said were non-strategic, which means we’re reducing our investment, and we’ve stayed true to that. I don’t see any immediate changes in our current — the last time we updated you, but we’ll update you again at the Analyst Investor Day. I think our portfolio, I’m really excited about that kind of 80% of our portfolio that we’ve angled forward and put our investment into. We’re gaining market share across those. We’re investing aggressively from an engineering standpoint into them. And yet, we’re managing costs really well across the company in the middle of this current economic kind of storm. And so I think that bodes well for the future. But we’ll update you again regularly. We’ll keep you updated on where we’re deemphasizing categories.
Andreas Müller: Okay. Thank you very much.
Bracken Darrell: Thanks, Andreas
Nate Melihercik: Thanks. Our next question is from George Wang at Barclays. Hey, George.
Bracken Darrell: Hi, George.
