And 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 overall about 400 basis points benefit on product and shipping costs, lower promotional spend led to higher margins and offset a little bit by mix that we had forecasted.
George Wang: Got it. Just a quick follow-up, if I can. I just want to double-click on the gaming seems very strong, kind of being better-than-expected for the last couple of quarters. Just maybe you can give more color just on the gaming peripherals. And kind of maybe if you can pass out within gaming kind of for any particular areas are doing a little bit better, mice keyboards, gaming headsets, no one now. Just because the gaming traditionally kind of short is the refresh cycle versus other 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.
Chuck Boynton: Yes, certainly. I can go first, Hanneke. So the gaming, as you know, covers many different categories. We saw particular strength in simulation in 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, 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 that we have a new product out that’s really, really exciting. The A50 that was released kind of just at the end of the holiday.
So we didn’t quite see the sales on the console side. It’s a very, very competitive category. But 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, maybe not quite as strong, but will help on the way with new products. Anything you want to add, Hanneke?
Hanneke Faber : Now 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.
Nate Melihercik: Our next question is from Asiya Merchant at Citi.
Asiya Merchant: If you could just dial into a little bit on the growth stuff. 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 on the — maybe you feel a little bit better about the PC peripherals. And what would it take to kind of 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?
Chuck Boynton: 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% to 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 will be an important part of getting back to that 8% to 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, North American vacancies have approached 20%. And so 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 going to happen over one year or two years. So I think this is another thing like Hanneke mentioned, if not when, it’s unclear what that deployment cycle will look like. And then lastly, on the B2B side, 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 more confidence in the future on the corporate side.
The consumer 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.
Asiya Merchant: And 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% to 44%.
Chuck Boynton: Well, we were really close to that midpoint this past quarter at 42.3%. So, I feel really good about this quarter and last quarter. We did have a couple of one-timers this quarter. So, if you look overall at the impressive inventory reductions that we achieved. We drove down inventory 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 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 think overall, we’ll have 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. Will it be at the high-end? It’s possible, low-end is possible. So I think a lot of it will just depend on how next year unfolds from a consumer sentiment standpoint and enterprise demand standpoint.
Nate Melihercik: Our next question is from Erik Woodring at Morgan Stanley.
Erik Woodring: Maybe if we start, Chuck, I’m going to pick on gross margins again, just because they were so impressive. And I guess maybe my question is, last quarter, we had talked about them being in the 38% to 39% range. You obviously did more than 42%. So, I guess where — was there something that outperformed your expectations that you didn’t necessarily foresee 90 days ago? I’m just trying to pick up on that because as I would think that generally, when it comes to component costs, you kind of have a lock on that 90-days ahead of the quarter. And 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, as we look to the fiscal fourth quarter, we have historically generally seen gross margin expansion despite the loss of revenue leverage, less promotions, a little bit more B2B mix than consumer mix.
