Andreas Mueller: Okay. Then my last question, can you say something about the OpEx items, R&D and G&A here? And do you expect the progression going forward? In G&A, how much was the impact or was the increase actually one-time in nature?
Chuck Boynton: Certainly. So, our OpEx model is fairly straightforward. We want to spend roughly 25% of our revenue on OpEx. Of course, in OpEx, we want 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 want to be efficient on the spend. So that’s the overall model as a whole. Now if you look overall, the details of what happened in the quarter, we had CEO transition costs 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 then variable compensation a year ago were unfunded or funded at 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 will 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 — 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.
Nate Melihercik: Our next question is from Torsten Sauter at Kepler.
Torsten Sauter: 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. 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.
Chuck Boynton: Certainly. Yes.
Torsten Sauter: And yes, 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 to the strategy with respect to running the design, operation to design team at Logitech going forward?
Chuck Boynton: 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 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 LASA. 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 — the 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 of other smaller items as well on the U.S. tax side, we have a one-time larger deduction in the U.S. for our foreign operations that basically is a standard kind of practice that we’ve gone through analyzed this.
And our tax teams 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 going to 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 I think low 20s from a GAAP standpoint. And the non-GAAP side for next year is going to be low teens, and that’s sort of the cash tax rate that we pay plus accruals. So the non-GAAP tax rate is cash taxes paid plus accruals, low teens GAAP, low 20s. 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% to 11%. So overall, though, I would — in the models for next year count on the low teens, non-GAAP, low 20s GAAP. Hanneke, do you want to talk about design?
Hanneke Faber : Yes. 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 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 team that we have of designers, I have no doubt we’re going to continue to excel in design. So thanks for asking.
Nate Melihercik: Our next question is from Martin Jungfleisch at BNP.
Martin Jungfleisch: I hope you can hear me. And also, congrats on the strong set of numbers. So maybe two questions. First one is 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 curves. These routes 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 in gaming.
Chuck Boynton: Yes, I didn’t understand the comment that the China comment from this morning. 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, China’s results were roughly flat. So, we had Asia was down in general, so more challenging across Asia. But China, actually, we performed quite well relative to our expectations. Clearly, 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?
Hanneke Faber : Very important, and I like what I’m seeing in terms of our premium offering there, so to pro-life mice for especially. And it’s in any business, China is super competitive. That keeps us honest, so we’ll be all over that market.
Chuck Boynton: 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, trough quarter, you have less commissions that you pay based 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, we’ll have to talk about that at Analyst Day. But again, in total, I would be estimating roughly 25% of revenue in your models.
Nate Melihercik: Hanneke, Chuck, our last question for today is from Michael Foeth at Vontobel.
