Logitech International S.A.

Good afternoon and good evening. Welcome to Logitech's video call to discuss our financial results for the third quarter of our fiscal year 2026. Joining us today are Hanukkah Faber, our CEO, and Mateo Anversa, our CFO. During this call, we will make forward-looking statements, including discussions of our outlook, strategy, and guidance. We're making these statements based on our views only as of today. Our actual results could differ materially as a result of many factors. Additional information concerning those factors is available in our most recent annual report on Form 10-K and any subsequent reports on Forms 10-Q and 8-K, which you can find on the SEC's website and the Investor Relations section of our website. We undertake no obligation to update or revise any of these forward-looking statements except as required by law. We will also discuss non-GAAP financial results. You can find a reconciliation between GAAP and non-GAAP results and information about our use of non-GAAP measures and factors that could impact our financial results and forward-looking statements in our press release and in our filings with the SEC. These materials, as well as the shareholder letter and a webcast of this call, are all available at the investor relations page of our website. We encourage you to review these materials carefully. Unless noted otherwise, references to net sales growth are in constant currency, and comparisons between periods are year over year. This call is being recorded and will be available for a replay on our website. I will now turn the call over to Hanukkah.

Thank you, Nate, and welcome, everyone. During the third quarter, we delivered another period of very strong financial performance. With the exception of pandemic peaks, we drove record non-GAAP operating income and earnings per share. Very strong non-GAAP gross margins once again underscored the quality of our portfolio, the strength of our brand and innovation, and our unique operating discipline. And top-line growth of plus 6% in U.S. dollars and 4% in constant currency was broad-based across regions, channels, and categories. The strong third quarter results were driven by our strategic priorities. First, superior products and innovation. At the end of September, we launched the MX Master 4, the next generation of our flagship mouse. It is selling at record levels. It sold more units in the first month following launch than any other personal workspace mouse in Logitech's history. In gaming, we delivered winning news across price bands. The premium Pro X Super Lite 2 mouse was a top-performing new product in the quarter, boosting the Pro line. We also had strong demand for the new entry-level China for China G3116 gaming keyboard, which helped drive market share gains in China. And AI now plays a critical role when it comes to superior video and audio innovation. We are well beyond AI proofs of concepts and experiments. We are shipping AI products globally at scale. In the third quarter, those included both AI-powered devices like the RallyBoard 65, the Sight video conferencing camera and the Zone 2 wireless headsets, and AI-enabling devices like the SpotSensor. And just last week, we announced a Rally AI camera and a Rally AI Pro, our smart new video conferencing solutions for large rooms like boardrooms, auditoriums, and classrooms. None of those products are AI for the sake of AI. These are products that solve real user needs, and that shows in their popularity in the market. Our second strategic priority driving results was doubling down on B2B. Logitech for business demand significantly outpaced B2C demand in the third quarter, driven by strength in video collaboration and our education vertical. Third, we executed with excellence around the world. The December quarter was the first in fiscal year 26, with positive year-over-year net sales growth and increased demand across all three of our major geographies. Around the world, it was great to see our teams excel with great holiday in-store execution and terrific social-first digital brand-building campaigns. Finally, our performance underscores our unique operational excellence. Product cost reduction, targeted pricing actions, and FX offset tariff headwinds and strategic promotions, and drove a very strong non-GAAP gross margin of 43.5%. Importantly, we continue to drive manufacturing diversification. As we committed, we successfully reduced the percentage of U.S. products manufactured in China from 40% last April to less than 10% by the end of December 2025. And we maintained strong cost discipline across the company, highlighted by non-GAAP general and administrative expenses, which were down 7% in the absolute year over year. Now, looking ahead, we live in a dynamic world, but there is still so much opportunity for Logitech to grow. One of the opportunities I am excited about lies in leveraging the existing global PC footprint to drive continued growth. Consider that of the 1.5 billion plus PCs in use today around the world, less than half of those have a mouse attached, and less than 30% of existing PCs have an external keyboard. Taken together, that PC-installed base represents over 1.8 billion opportunities to add peripherals and upgrade users to enjoy vastly superior productivity and comfort. We warmly welcome, obviously, the tens of millions of new PCs that are sold each quarter, but we believe the existing base remains the far greater prize. So with that, Matteo, I'll hand it over to you to cover the financials in a bit more detail.

Okay, thank you, Annika, and thank you all for joining us on the call today. So the team delivered another solid quarter, demonstrating continued focus on profitability and growth. Non-GAAP operating income reached $312 million, reflecting a 17% year-over-year increase alongside a 220 basis point expansion in profitability. Our strong P&L performance, combined with disciplined management of working capital, resulted in an exceptional cash flow generation of approximately 500 million, a 30% year-over-year increase. Now let me walk you through the key financial highlights for the third quarter. So net sales were 1.4 billion, up 4% year-over-year in constant currency, And this growth was driven by strong demand and represents our eighth quarter of consecutive top-line growth. Now, more specifically, personal workspace net sales increased 7%, with 9% growth in point-in devices, fueled by the launch of our MX Master 4, as well as double-digit growth in tablet accessories. Video collaboration and sales grew 8% with a double-digit growth in EMEA and Asia-Pacific, driven by continuous sales strength of our AI-enabled RallyBoard 65. And as we indicated in the past, the B2B nature of this business tends to be lumpy quarter-to-quarter, but the long-term trajectory of the business has very strong momentum. Gaming net sales grew 2%, driven by double-digit growth in Asia-Pacific, while Americas and EMEA declined single digits due to the market contraction. Geographically, Asia-Pacific led the way with a 15% year-over-year growth, driven by double-digit growth in gaming, video collaboration, and tablet accessories. INEA grew 2% due to double-digit growth in video conferencing, as well as solid growth in keyboards and combos. And the Americas reversed the negative trend of the past couple of quarters, with the U.S. returning to modest growth, with point-in devices up double digits, offset by gaming. On the profitability side, our non-GAAP gross margin rate was 43.5%, up 30 basis points from the prior year. We were able to expand the gross margin rate despite a challenging tariff environment, and similar to last quarter, the negative impact of tariffs was entirely offset by our pricing actions and continued manufacturing diversification efforts. product cost reduction and favorable foreign exchange, more than offset increased promotional activity in the core. We also maintained strong operating expense discipline. Non-GAAP operating expense was $306 million, a decline of 2% year-over-year, and this decrease was primarily driven by a reduction in GNA as a result of the measures that we implemented to mitigate the impact of tariffs. Now, it is important to note that if we normalize for the bad debt expense we recorded in the prior year period, non-GAAP operating expenses would have increased approximately 2%, while delivering a 70 basis points of leverage. And finally, cash flow. Cash flow was extremely strong in the third quarter. We generated approximately $500 million of operating cash flow, one and a half times operating income, thanks to efficient inventory management, strong collections, and profitable growth. Our cash conversion cycle improved by 18%, down to a highly efficient 27 days. We maintained a very strong balance sheet, ending the quarter with a cash balance of $1.8 billion. Now, as we look ahead, we are closely monitoring external dynamics, including geopolitics, tariffs, and the consumer confidence. While the backdrop is mixed, we believe Logitech is exceptionally well positioned, and this confidence is reflected in the outlook that we are providing for the coming fiscal quarter. Net sales in the fourth quarter are expected to grow 3-5% year-over-year in constant currency, with a gross margin rate of approximately 43-44%, and non-GAAP operating income is expected to be between $155 and $165 million, up 20% year-over-year at the midpoint. As a result, We expect to close fiscal year 26 above the long-term model targets for non-GAAP gross margin and non-GAAP operating margin that we outlined at our Analyst and Investor Day last year. Our performance underscores the durability of our model and our consistent ability to convert profit into cash and generate companion returns on invested capital. As we transition into the new calendar year, we remain confident in our ability to execute at a high level as the environment evolves. I want to thank all our teams across the globe for their dedication and flexibility. And with that, we can open the call to questions.

Thank you, Mateo. We will now move to the Q&A portion of the call. Please be sure to use the raise hand option if you have a question, and please unmute and ensure your camera is on before asking. Our first question comes from Asya with Citi. Asya?

Great. Good morning. Good afternoon, rather. Well, you know, there's just so much macro factors. I mean, obviously memory affecting PC demand. Hanuka, you talked about the installed base. Just if you can walk us through, you know, what gives you this confidence relative to your long-term target model that you guys have laid out about the growth looking ahead, not just through March, but, you know, you're now approaching the end of fiscal 26 into fiscal 27. Just some commentary that you could share on that. And one for materials as well, while I can, just on the gross margins. I mean, they just continue to upside, representing really strong execution here. Just as you think ahead, Given the macro backdrop and concerns around consumer spending, how should we think about gross margins going forward? Thank you.

Yeah, thanks. Thank you so much. You know, overall, it's too early to discuss fiscal 27, but I would say we're really encouraged by the momentum of the business around the world. This year, as Mateo said, we're going to deliver at the high end of our long-term model. And we're expecting that our team will continue to deliver with excellence. This is a company for all seasons. A lot of things were thrown at us this year. We expect that we can continue to work well in the year ahead. That said, let us touch actually on memory and on PC potential. Okay. So, overall, what I would say is we don't believe we will be materially affected by both of those factors. And let us unpeel that a little bit. In terms of memory availability, the vast majority of our portfolio is not impacted by the current type memory availability. We simply don't use those chips in most of our portfolio. Only our video conferencing products and only a portion of our video conferencing products are impacted by the memory availability issues. And we believe we are mitigating those impacts, in fact. So from a supply point of view, we've seen this coming, and we've taken proactive steps to ensure supply. So we don't foresee a supply impact in Q4, nor in the first half of our next fiscal year from the memory availability issues. There may be a modest cost impact, but as you've seen, we're really good at mitigating cost impacts through cost reductions and through targeted pricing if needed. So that's on memory. On PCs, yes. You know, you've seen our great personal workspace results again this quarter. High single-digit growths. We share 120 basis points in PWS. And we believe our peripherals business in general continues to have excellent growth opportunities, whatever the environment. Our data shows that if you take out the two years of COVID, which were crazy, over a 10-year period, we grow 300 to 500 basis points ahead of PC sales. And why is that? It's because the peripheral market is relatively immature. Around the world, on that big installed base of 1.5 billion PCs plus, less than half of people use a mouse, less than 30% use an external keyboard. And they're basically leaving productivity and comfort on the table. So that installed base opportunity combined with trading up people who are in the category, is a far bigger opportunity, like far bigger opportunity for us than just attaching to new PCs, which, of course, we'll continue to do. But our growth over the years has come from penetrating that installed base of PCs. So that's what we will continue to do, and we're confident that we can continue to grow the peripherals business as we have. Sorry, it's a bit of a lengthy answer, but I know it's on many people's minds. So thanks for asking.

Maybe I will address your gross margin question. So, first of all, let me say I appreciate your comments, also on behalf of the team, because I really agree with you. I think the team has done a fantastic job. If you take a step back and we use just the midpoint of the outlook that we provided today for the fourth quarter, That implies that we will close the year with a gross margin rate around 43.5%, which is pretty much flat, to fiscal year 25. And so the ability of the team to deliver this outstanding result, in spite of all the tariff environment that we discussed throughout the fiscal year, I think is pretty remarkable. And so I think the... It's way too early to talk about fiscal year 27, but I think the foundation of this gross margin and our ability to maintain the gross margin to this level, I think the foundation is there. And what I mean for foundation, really I'm referring to a couple of key aspects. Number one, our fantastic brand and the privacy and power that this gives us. Number two, the continuous work that the team has been doing on innovation. We've talked a little bit in the prepared remarks, another tremendously successful launch with the MX Master 4, just as an example. So that's really the engine of the company. And third, the continuous work that we are doing every year on product cost reduction through value engineering and supplier negotiation. So that really, to me, is the foundation of what we are doing, and that's here to stay. With that being said, obviously, we are all seeing commodity prices going up. We are seeing cost of components going up. So we will have to factor all these components when we discuss in the next earnings call about 27. But I think the foundation and the execution of the team is there, and that's what you can count on us on deliver also next year.

Thank you very much.

Okay, our next question comes from Jorn from UBS. Jorn?

And hello, everybody. Hi, Jorn. I would ask two questions, if it's okay, and then I go back in the queue. The first one is, I mean, you elaborated on your resilience in more volatile PC markets, but do you have some data for the attachment rates on mice and keyboards where this has stood five to ten years ago? just to compare a little bit the trend changes of rising attachment rates, which potentially was helpful for the PC unit outperformance. And the second question would be, please, on gaming. Isn't this a little bit concerning that the US and Europe is now seeing declining gaming markets? Gaming is one of your key growth drivers. what are you doing against this strategically for the next 12 months to bring this back to growth and also if you somewhat details was pc gaming down or was it manager my simulation and headsets and so some more details here would be appreciated thanks a lot for this let me take the gaming question first and then maybe you take the attached question in the tail if that's okay so on gaming um

First of all, another quarter of good global Logitech gaming growth, 2% up. Demand was higher than that. And as you saw, that's really driven by our outstanding performance in the world's biggest gaming market, China. We gained past three months' share across gaming mice and keyboards in China. That's the first time since I can remember and since I've been here, so that's great. We delivered strong double-digit gaming growth there in terms of net sales. And I think what's important, and that's important for the rest of the world as well, is we're winning at the top end with Pro. And we're winning at the entry level. With the China for China innovation, the most important one that came out this quarter was the G316 keyboard, mechanical keyboard for gaming. That's doing very well as well. So it's important that we cover both ends of the market. In the U.S. and Europe, we held share in a declining market, indeed, in the quarter. What's good to see there is that our U.S. share stabilized after a couple of quarters where share was a little soft as we took pricing, first implementing it and then getting the consumer to get used to it. So it's good to see it stabilize. And the other good thing there is that we're seeing great growth on the top end of our business, so both pro and sim growing double digits in the U.S. and Europe. Now, to your question on the gaming market, you know, the markets in the U.S. and Europe have been pretty soft. We believe that's temporary, and we can discuss the causes, but they're probably part economics, part game release related. And in that context, we think we've prepared ourselves really well for the year ahead. So when it comes to economics, there clearly is a bit of a K-shaped economy there. You know, when I meet gamers in the U.S. and Europe, they are a little more choiceful in terms of what they spent money on. So what we've done for the year ahead is really thoughtfully designed our portfolio to win at the top end, because there's a lot of gamers who do have money, but also to win at the entry level, just like we've done in China already. So that is one. And then second, in terms of gaming title releases, again, they've been a bit more muted in the West than they have been in China. And gamers in the U.S. and Europe that I speak to are saying, you know, well, I'll just wait and see a little bit until GTA 6 and some other new releases come out. So they're sitting on their money. But fortunately, our business, again, doesn't depend on a single game alone. And for big existing games, whether it's Call of Duty or League of Legends or Valorant, You need the best gear. So we're excited. Super Strike is coming out, starts shipping here in a couple of weeks. That is a step change in competitive performance for FPS games, existing FPS games. And, again, I think that will position us really well to continue to game share whatever the market does in gaming. Again, sorry, a bit lengthy, but I know it's on many people's minds.

So let me start. Overall, if we look at, take about 10 years worth of data and you normalize for COVID, generally the sale of our peripherals outpace PC sales by about 300 to 500 basis points on average. So, with that being said, though, I go back to Annika's point. The biggest opportunity for us is really on the install-based, where of all the PC out there, less than half have a mouse and less than a third have a keyboard. And that's really where... In a way, the focus has been. And actually, if you go back in history, the vast majority of our sales really comes from increasing the attach rate to the install base versus new PCs. Though, to Hanneke's point in her prepared remarks, we also like, obviously, the new PC sales. But that's where the focus is.

And I think you were asking, do we know attach rates to new PCs in the past? We know what they are today. They're actually fairly low, somewhere between 9% and 14%, depending on the type of mouse or keyboard. So they're relatively low. We don't have that historical data, but given how low they are, you know, there was opportunity, obviously, going forward to go up, but they cannot have been that much lower in the past.

Thank you very much. Okay, our next question will come from Eric Woodbring with Morgan Stanley. Eric?

Hey, guys. Can you hear me okay? Perfect. Awesome. Thank you very much for taking my questions. I wanted to circle back on just a PC question, Hanukkah. The 3 to 500 basis points of outperformance versus PC sales, just a clarification, is that versus PC revenue or PC units? And the only reason I ask is if you look at, for example, IDC forecasts, The variability between PC sales, maybe Flattish versus PC units potentially down 5% to 10% would make a difference between, again, if we use that kind of historical context, the business growing versus declining. So just a clarification on that point. And if it is attached to PC sales, just how do we think about the attached to revenue when we think about it's kind of like an attached to the unit? I just want to get a better understanding of that. And then just a quick follow-up for you, Matteo. Thank you so much, guys.

Yeah, sure. Eric, what we refer to is unit sales. So that's the way we think about it. So that's all I can tell you.

Okay, totally fair. And then maybe, Hanukkah, just, again, on the PC peripheral kind of attached to the PC base. So I think that makes a ton of sense. On one hand, I guess I would say perhaps we can assume these devices might not have a peripheral for a reason, whatever that may be. So how do you convince that user that's, you know, underpenetrated – to get that mouse or to get that keyboard? What is it that Logitech will say or can do, whether that's incentivization, promotions, et cetera, that gets that user to say, you know what, I do need this. This is an awesome product. I need to buy it. Thank you so much, guys.

Yeah, what a great question. And it comes down to product superiority and real benefits for the user. So let me take the MX Master 4 as an example, which, again, is off to a fabulous start in terms of creating both new trial and up-trading existing mouse users. Why is that? It's very premium. It's a $120 mouse. It's an expensive mouse. But consumers, including in the U.S. and Europe, where they're being more choiceful, absolutely doesn't hesitate to go and buy one because, A, It clearly is superior versus what's out there in the market. The haptic feedback, the actions ring, the new software, the beautiful design, the aesthetics, clearly superior. It clearly answers a user need in terms of productivity. So when you use that MX Master 4, you're going to be faster, you're going to be more accurate and more productive. That's important both for users, by the way, and for B2B choosers, so the procurement people in businesses that are buying mice for their employees. And then marketing, of course, plays an important role as well. We did up marketing in the quarter. We're measuring that very tightly. The return on investment there is excellent, and I think we have a lot more opportunity to do more social-first digital marketing for our top superior products to drive that penetration. So it all starts from the superior product that really answers a user need. In the case of MX, the user need is productivity. In the case of gaming, it's performance. You're going to win that game. And in the case of a line like Ergo, it is comfort. You're not going to have that pain in your arm. So really important. And then in marketing, we're seeing really great results, so there's opportunity there going forward.

Thank you, guys.

Thanks, Eric.

Okay, our next question comes from Ananda with Loop Capital. Amanda?

Yeah, thanks, guys, for taking the questions. Good afternoon. Hi, Amanda. Hey, there. Two, if I could. So let me just ask another. This is a PC-related one. Do you think people are obviously... interested in the PC dynamic, the PC attached, because of the dynamics going on with memory, you know, in the PC market, and the impact you've already begun to see there. Do you think that this is one of those years where the company could see sort of growth above the average sort of few hundred basis points range that you guys typically have. I know in past years, when you've seen amplified growth above the PC market. There are times it's been a thought process. Maybe people aren't buying a PC, but they can do something to make their PC experience more enjoyable, dress up their PC experience. So just wanted to ask that question. And then I have a quick follow-up as well. Thanks.

Yeah. So it's too early for me to speculate on the year ahead. But I think you're right historically. Again, this is a company for all seasons. We can win in any environment. And in an environment where I take gaming, the price of gaming PCs is definitely up. But when I don't have money to get a faster CPU – I can buy a Super Strike mouse and improve my gaming speed and performance that way. So we've definitely seen that in the past, and we're, you know, going to make a plan to do that going forward as well.

Maybe, Amanda, for whatever it's worth, you know, too early to talk about next year, but if you look at the quarter that we just printed, if you look at personal workspace, actually in its totality, The growth in personal workspace in constant currency outpaced the growth of the company. So it was faster.

Good context. And the follow-up, this might be more for Matteo, but although you guys don't have material exposure to some of the components that are – that we're seeing the meaningful price increases in the memory chain. There's others as well. Do you think you could have seen some pull forward sales from folks who might not necessarily understand that you don't have material exposure to those components?

Not, I wouldn't, if your question, Ananda, is on the video conferencing being up 8% year over year in the quarter, I would not attribute that to a hoarding or anticipated buy due to the memory situation. I think we're all deals that the team has been tracking for quite some time. We are building the muscles, as we discussed during Investor Day. And I think through the growth that we had in video conferencing, by the way, the fact that overall B2B outpaced B2C in the quarter in terms of strength, thanks to education vertical that has been doing very well for us also this quarter, I think it's really execution by the team.

Yeah, I see a lot of customers. I didn't get a sense that they were hoarding ahead of any memory shortages in our video conferencing portfolio. Video conferencing, because it's 100% B2B basically, is a little choppier net sales-wise just because there's big deals one quarter that may not necessarily be in the next one. So I would look at that business over a little longer period than just quarter by quarter, but this was a really good one. you know, but take a little bit longer perspective on VC to really look at the health of it.

That's great. Thanks so much.

Okay, our next question comes from Joe Cardosa with JP Morgan. Joe, go ahead.

Thank you. Thanks for the questions. Maybe first one here, just wanted to follow up on the last comment, and maybe just not specific to video conferencing, but broad-based across the portfolio. Just because we're hearing some maybe more downstream from a PC perspective talking about pull forward of demand in the backdrop of kind of this rising memory cost environment. Just curious as it relates to Logitech's portfolio, and once again, broad-based, maybe not specific to video conferencing, and maybe you're attached here. Are you guys seeing any of the benefits from potential pull forward either this past quarter or the quarter that we're in itself? And then I have a follow-up.

No. I mean, again, you know, about 60% of our business is B2C, so the consumer is definitely not pulling things forward. But also on the B2B side where we're kind of half a personal workspace, half video conferencing, we really, I have not seen or heard of any pull forwards in our business.

Got it. Very clear. And then maybe just a follow up. You know, you talked about the reaching the 10 percent of U.S. products originating from China or less than 10 percent, I think, was the exact comments, which seems a bit better than what you guys were targeting. So now that we've reached that point, maybe can you touch on whether there's further headroom to reduce that? And as we think about the combination of ramping those other manufacturing sites, you know, those processes potentially maturing and the pricing actions you've already taken, any new thoughts on how you're thinking about the implications and margins from those actions? Yeah.

Yeah, so first part of your question, at this point I think we are happy where we are. The team has done a fantastic job. Our target was to limit the import from China into the U.S. to 10% by the end of December, and we are, as you correctly so pointed out, a little better than that. At this point, I think we are happy with the current landscape. We also, as always, want and cherish the flexibility because, you know, the tariff environment is pretty fluid, so we want to make sure that we have the appropriate flexibility to move things around, and that's the beauty of the China plus five strategy that Sri and the team implemented now for quite some time. I think on the gross margin side, If we look at what we've done in the second quarter, what we've done in the third, and also the outlook that we indicated today for the fourth, we are really happy where things played out. Basically, the positive impact of the price actions that we took in April in the U.S., combined with the diversification action that you just mentioned, were able to allow us to offset entirely the tariff impact. And I think we are, you know, we're in a good spot. And then we'll see, you know, we'll talk more once we close the year.

Understood. Thank you. Appreciate the call, guys. Yeah.

A reminder to please use the raise hand feature if you do have a question today. And with that, our next question goes to Didier with Bank of America. Didier?

Yeah. Thanks very much. A couple of quick ones, if I may. So, Can you give us a sense of the components of the personal workspace organic growth? So how much of that is volume versus price? Because the reason why I'm asking is because I think the question has been asked multiple times in different ways. If you've got a PC market next year, tablets down 10% because of higher memory prices, you're going to face very tough comps, effectively having raised prices this year to offset the tariff impact. So I guess the question is, if we've got a very tough PC market outlook in terms of 27 big decline in volumes, would you be happy to just take down pricing or would you be happy to just keep pricing to maintain your margins and potentially lose share?

So we don't break out the exact units versus price versus mix for the company or for PWS. But what I am comfortable in telling you is that, you know, the great PWS growth that we saw in the quarter was a combination of all three. So positive units, positive premiumization around the world, people trading up to the MX Master 4 and other premium products, and U.S. pricing. So it was a combination of all three. And in terms of, you know, I'm never happy to lose shares, so we're going to put the right plans in place to continue to grow and defend share. And I think you see that in the quarter as well. We're very intentional and strategic on when we need to promote on certain parts of the portfolio and very surgical. We're not just throwing promotions and deals across the market, but there's places in the quarter where we need a little more, and we do that intentionally and strategically.

To this point, you know, if you look at where we close the quarter in terms of gross margin rate versus what we were discussing three months ago, we are, you know, the higher end of the range. And this is really thanks to the diligent and very surgical promotional approach that Queen and the commercial team around the world are having to Anika's point. So.

Okay, perfectly clear. Thank you so much. Thank you.

Okay, and it looks like our final question will come from Martin with BMP. Martin?

Yeah. Hi, guys. Evening. Martin. Just two follow-ups, please. First one is, can you just walk us through what the main swing factor is for the Q3 constant currency guidance to reach the high end or the low end? Is that still... mainly the U.S. consumer? Is it mainly on the China sustainability? Is it gaming or the PC market slowdown? And then maybe attached to that, the sell-through was pretty strong but it's a sell-in and that was primarily in apec anemia um was that difference mainly due to promotional activity or was it some what was there also some inventory or restocking um in the channel that was that's my two questions yeah so let me let me take them then okay so let me start with the first one uh the uh the fourth quarter outlook

So our outlook contemplates a couple of things. So if you look at the midpoint, right, pretty much performance is in line with what we've done in the third quarter. And this applies in totality, and this applies also by the three different regions. So AP, we are expecting AP to continue to grow in the mid-teens, like we did in the third quarter. Low single-digit growth in EMEA. and flat to low single-digit growth in AMR. So that's the midpoint. On the high end, pretty much AP EMEA remains the same as within the third quarter. So the swing factor is, to your point, AMR. We have seen during the third quarter an acceleration of the momentum, particularly in the United States, and mostly towards the end of the third quarter. So the high end assumes that this momentum continues into the fourth, and AMR grows into the mid-single digit. So that's really the difference between the two. On your question on the sell-through, sell-in, so you have to keep in mind that sell-through is a gross number, right? So it does not include the impact of foreign exchange, and it does not include the impact of promotion, right? So when you look at a total company, Sell-through was up 10% year over year in the third quarter. You have a couple of points of foreign exchange, so call it 8% in constant currency. And then you have a couple of points coming from slightly higher promotional spend, as we anticipated getting into the holiday season, which is pretty normal. And then a slightly negative mix coming particularly from the high sales on tablet accessories, which is tied to some of the work that we have done on the education vertical. But that's your walk.

Okay. Great. Thanks. So there's no bigger inventory.

No big selling through. Yes, correct. No.

we're pretty happy actually yeah we're really happy happy with the inventories so um um you know really healthy channel inventory levels as we exit the holiday season and excellent own inventory turns so um although that looks pretty good great thanks this concludes the q a portion of the call i would now like to turn things back to hanukkah for closing remarks Great. Well, thank you all. It was great to see you. We look forward to seeing you in the follow-ups, and thank you for being with us for today. Have a great week.