My name is Eric Woodring. I Lead the Hardware Research coverage here at Morgan Stanley. I am delighted to be joined by Hanneke Faber, first time here at the Morgan Stanley TMT Conference. It is great to have you here. Thank you so much for.
Thank you, and thanks for having me.
Of course. So, before we begin, I need to mention that important disclosures can be found at Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. So obviously, a lot of change taking place at Logitech. You joined the company late last year. You have a ton of experience running businesses at scale, both B2B, B2C. You most recently were at Unilever, but now you are here at Logitech. So if we can start, just talk to us about what drew you to this opportunity, kind of the initial impressions you have, what has Logitech done successfully, and what is the opportunity set that you see going forward?
Yeah. So what drew me to the opportunity? Super grateful to be here. This is a company that has created fantastic value for over a decade. So that certainly was a draw.
Mm-hmm.
Since I started on December 1st, a lot of the things that I've seen, I'm super excited about, and are really great strengths. So I'll start from the way the company is architected for growth. You know, the three major segments that we play in, video conferencing on the B2B side, personal workspace, and gaming, all long-term have the macros in their favor. So we play in really good growth spaces. And then in terms of, you know, the capabilities, what I've really found are super strong: design.
Mm-hmm.
Engineering. This is what we do. We make great products.
Yep.
There's some great people out there. A nice balance between B2C and B2B, which I think is an advantage. Then this is a real operations powerhouse. And when I say operations, I don't just mean manufacturing, which we're really good at.
Mm-hmm.
But the entire supply chain, as well as to go to market. This is a company that's in more than 100 countries with a great chain to go to market. So those are all great. I also think there's some opportunities, of course.
Mm-hmm.
After three months. Maybe a few to touch on. The brand, it's actually a really strong brand. The Logitech brand has, you know, fantastic awareness, over 90% in most markets. It's known for being reliable, trusted, easy to use, good value. All of those are really important. But is it really a sexy brand? It probably can be a little cooler and sexier. So, building it into an iconic brand over time, I think, is an opportunity. The global footprint is a huge asset. But if you dig into the details, there's also huge differences in terms of share of wallet that we capture by country.
If we could take every country to the median, I'm not even talking the highest share of wallet, that's an easy another $1 billion in sales. So again, an opportunity. The whole B2B side of the business, I would call us, not maybe children, but we're teenagers in that business. We're performing really well, but lots of opportunity going forward. Maybe the final thing, you know, really pristine balance sheet.
Mm-hmm.
which provides opportunities for M&A going forward.
Okay. Perfect. And where do you or how will you leverage your past experiences to affect change at Logitech?
Yeah. So maybe going back to this nice mix between consumer and B2B.
Mm-hmm.
and then brand. I think those are, are there three spaces that I'm, you know, without sounding arrogant, that I'm pretty experienced in maybe. You know, run really big consumer businesses at Procter & Gamble and Unilever successfully. I've built some pretty exciting brands from maybe a little ho-hum, think Head & Shoulders 20 years ago. Became really sexy. 15 years of double-digit growth on a billion-dollar brand.
Mm-hmm.
More recently, Hellmann's Make Taste, Not Waste grew the brand from $1 billion to $3 billion in four years. So brand building is something I'm good at. The consumer side is something I'm good at. But what people maybe don't realize is B2B and digital also played really important roles in my career.
Mm-hmm.
We can talk more about that. But certainly, in running the Unilever Global Foods business, a $20 billion business, 40% was B2B.
Okay.
So, that's. I'm no stranger to that. I had a stint for four years building Ahold Delhaize's e-commerce business. So, again, tech also, not a complete stranger. So, but this is a different challenge, and I'm sure there's a lot to learn, but super excited to be here.
No, that's great. That's great. So you mentioned the three end markets: personal workspace, video conferencing, gaming. I don't want to phrase the question as, "What segments are you most excited about?" I don't want to think that you're not excited about any one. So let's just make sure that's clear. But how do you think about those growth drivers as you look forward between these three segments? And, you know, as we think about those, which ones are most ripe for kind of innovation or change, as you kind of talked about some of the initiatives that you'd have going forward?
Yeah. Yeah. All of the above. So that's probably not the answer you were looking for. But if I take them one by one, the video conferencing and headset space, which we also call B2B, is very exciting in the mid- to long-term. So, only 15% of global meeting rooms are less than 15, actually, we think, is video-enabled today.
Mm-hmm.
We think eventually every room will be video-enabled. So the total addressable market is large, and really under-penetrated at the moment. We play with our Rally Bars, and other products with a really competitive offering. It's outstanding quality. It plays with MS Teams, with Zoom, and with Google. And it's great value. So, we've grown share in that business. And as the market comes out of its post-COVID doldrums, that's one area I'm really excited about. Then second, gaming. Gaming, of course, also has been a market that's grown really fast over the last decade.
Yeah.
And the market, I would say, has gone mainstream.
Mm-hmm.
So 10 years ago, who was gaming? It was your 15-year-old son, and really not very few others. Today, 40% of gamers are women. And older cohorts are also have kept gaming.
They're growing up.
Yes.
Yeah.
So it's a much more mainstream market. Gaming is gonna be in the Olympics. I mean, how mainstream can you be? So it is a far bigger market than it was a decade ago, but there's still lots of room for upsides. The growth rates may go down a little bit from the 20s. That's not gonna happen, but it's off a much larger base.
Yeah.
Our attach rates are still low. Like in gaming, mice, we're by far the leader, but it's only a 12% attach rate.
Mm-hmm.
So lots of upside there. So that's gaming. And then finally, personal workspace. You know, that's our more traditional business: keyboards, mice, webcams. You might think, "Oh my God, you've been in that forever. Is there upside there?" Well, we've grown 10 points of share in that in the last few years. And I think what the team has done beautifully is really segmenting that market out and growing that way. So for a user like you, I would call you an advanced user. I'm guessing now. But you know, financial analysts, coders, people that use architecture software, you're an advanced user. You don't want a basic mouse or a basic keyboard. You need our MX line, which is super premium priced and is doing really, really well.
For people that have problems with their wrists or their arms or just want more health and wellness, we have an ergonomic line, also premium priced, growing really fast. Identifying those segments, premiumizing the market, and driving more penetration has really grown that category in which we have leading shares. So, so I guess, yes, I am excited about all three. I'm sorry.
No, that's good. That's good. And maybe let's take that conversation a step further and talk about, you know, potential adjacencies or new end markets that you view as compelling or areas of opportunity for Logitech. Obviously, a very strong brand. It is almost a luxury brand within what would otherwise be a commoditized market, so to speak. How do you think about doubling down on kind of the existing categories that you have versus entering new markets or verticals?
Yeah. I like how you say luxury brand. That's what we're trying to be. I, I think there's a lot of space for us to grow in design-led, software-enabled hardware. That is our sweet spot, and that's where we will grow in, in two big spaces: work and play. There is a lot more opportunity to grow in those spaces. I think probably what you have in mind is, you know, what about services? What about software? Software like software as a service is not really our sweet spot.
Yep.
So if I were a betting man, I don't think that scenario that we'll prioritize. Services, though, are important in the B2B space. So our video conferencing customers expect great services from us. It's, again, an area, that we're relatively new to, but we have a pretty nice order book, of services, coming. It's not material to our overall results, but certainly an area for growth in the future.
Okay. And maybe another question building on this is, you know, there's a number of large, let's call them traditional hardware vendors that are trying to lean into end markets like peripherals, like gaming, like VC. Obviously, you talked about the share gains that you've had in your traditional end market. You've told us that gaming is a more competitive market. It always has been. How do you think about the competitive landscape and the intensity of the competitive landscape? And is competition like, is it a zero-sum game, or can it be a TAM expander in a certain way?
Yeah. Again, I would always start from, you know, making the pie bigger.
Okay.
Across our three segments, there's a lot of room for all of us to making the pie bigger. We are super respectful of competition. You know, I only the paranoid survives. So I look at all of them all the time saying gaming, that remains the most competitive space. But that keeps us honest as well. Product superiority is incredibly important to this organization. We are all over that, making sure both our existing workhorse products and our new products are absolutely superior in that consumer experience. And this is what we live or die for. So some of the big guys who do this on the side.
Mm-hmm.
You know, again, we respect them terribly, but this is what we do for a living.
Yep. Yep. Yep. Okay. Let's talk about your distribution footprint because obviously, we highlighted B2B and B2C experience. You obviously have a growing B2B business.
Mm-hmm.
You have a smaller D2C business. So let's put this all together and say you've historically, you've done most of your the large majority of sales through resellers. D2C, B2B becoming a more significant part of your distribution footprint. Well, you know, how are you thinking about the distribution footprint of Logitech going forward? Again, leveraging your background, what are some changes that you could make, or what do you wanna lean into to again, kind of put your footprint on this company as you go forward?
Yeah. Yeah. Great question. So on the B2C side, I think Logitech actually does a great job in traditional bricks-and-mortar retail.
Mm-hmm.
So I've been to a lot of stores in the last three months around the world, whether it's Best Buy here in the U.S., Walmart actually, real opportunity, but also MediaMarkt, Saturn in Europe, and others. Logitech does a really great job there. They call it, "Look like a leader." And boy, do we look like a leader in most of those stores. You don't find anyone else in our categories. And that is still a very large part of our business. So, traditional bricks-and-mortar retail, two thumbs up.
Mm-hmm.
Online retail, of course, Amazon and others, JD.com in China, very large part of our business as well. And we do a good job. We can probably do even better there. But those two are very important in B2C. Direct, so Logitech.com, it's interesting, hasn't in the past been a priority or has been seen by the company as a little bit more like a marketing site, which I think is an under-leveraged opportunity. So we're gonna put a little bit more priority there. Again, probably wouldn't be material, certainly not in the next few years because we start from a pretty small base. But the growth rates there will be high with a little bit more TLC on DTC. And then on the B2B side, of course, a very different go-to-market muscle. We sell through the channel, through distributors and resellers.
But we do have an increasingly strong high-touch sales route as well. And I, you know, that is really important, being close to those top customers. I was at Baker Hughes in Houston this past week. One of our customers just built a huge new gleaming office tower completely decked out in Logitech. You know, love seeing that. That's an example of a high-touch big customer.
Yeah.
As I look forward, again, we're relatively new to that B2B sales motion. So a couple of opportunities I see there to build the capability. One is obviously to work with our partners, Microsoft, especially, and their global experience centers where, again, Logitech looks great.
Mm-hmm.
So, selling with them. And the second is what I would call digital selling. So, replacing some of the feet on the street, which B2B historically needs many feet on the street, by digital methods. And we did that very effectively at Unilever. Again, a little different business, selling food to food service outlets. But in a place like China, pre-COVID, we sold to 100,000 B2B customers. We then used COVID to digitize the sales motion with lead generation, with CRM, with e-fulfillment. Post-COVID, we were selling to 500,000 outlets without adding a single sales rep.
Mm-hmm.
That's the kind of thing I'd love to do here as well because, again, so much opportunity in B2B.
Cool. Let's talk about the, the balance sheet. So, $1.4 billion of net and gross cash, no debt. How, how should we all be thinking about your capital allocation priorities, and M&A especially? You know, again, the old management team not necessarily overly focused on M&A, but is, is there a different approach that you guys might wanna take? How do you think about anything transformational? Is it baked into that kind of 8%-10% long-term guide? I realize that's like seven questions in one, but however you wanna answer that is great. But.
Yes. Yeah. And keep me honest here. But, well, let me first say, again, a really pristine balance sheet, but also very responsible use of capital. You know, Chuck and Nate and the team have done an incredible job, and I don't intend to change much there.
Mm-hmm.
So the top priorities are to pay good dividends and to increase that every year. Then, of course, investing into our own business. Then M&A, which we can talk about. And then we'll return to shareholders via share buybacks the rest. And, and again, we've been very consistent in doing that, and I don't see a big change in that model. In terms of M&A, really too early for me to talk about, you know, what are we gonna do. But we do have the firepower.
Mm-hmm. Mm-hmm.
But firepower doesn't mean I wanna be trigger happy.
Okay.
We're gonna be really strategic at looking at potential targets. Will they make a difference? Do they have good gross margins? Are they truly synergistic to the stuff we know how to do? Because if there's one thing I learned over my career and I've done a lot of acquisitions, it's easy to do the deal. It's much harder to then make it work.
Mm-hmm.
We'll be really prudent.
Culture matters.
Yes. Absolutely. We'll be really prudent.
And maybe just a second question there on in terms of your dividend, you know, historically, it has tracked EPS growth. You do have a lot of excess cash. You generate a lot of cash. Is there an argument that you can grow that dividend faster and make it a bigger payout? Is, again, I know you talked about dividends as a priority, but how do we think about that balance?
Yeah. I think what the growth rates over the years have been pretty much in line with what our investors were expecting. Do we have flexibility? Probably. So it's something we can think about.
Okay. Perfect. And then last question before we kinda get into some of the questions I'd normally ask Chuck, but you're in the hot seat, so.
He's there.
You know, a big theme, obviously, at this conference.
Mm-hmm.
It's Generative AI. It was the same thing last year. So I have to at least ask you one related question, which is, what changes about your business in a world where AI gains traction in not just consumer, but in the enterprise landscape? Is this a driver for Logitech? How should we think about not just how it could enable your business, but where you're investing in that type of technology?
Yeah. Great question. Of course, we see it as an opportunity. The framework for us is really three things. The first one is internally, which I'm not gonna talk about much, but of course, it's making our own, especially software engineers, more productive. We're rolling that out across the company. I expect productivity in the G and the A on SG&A. More exciting, I think, on the product side. We see two big areas of opportunity, and we're already acting on them. The first one is in generative AI and large language models and translating that into software that really delights our consumers.
One example that's already out there and, in fact, has been out there since last fall, we have Smart Actions software, which sits in all of our products. I hope you guys are using it in our mice, in our keyboards, and everything. You can download and make your own smart actions to be more productive, so shortcuts. One smart action that we built in there and that anyone can use is called Reply with ChatGPT.
Mm-hmm.
Lo and behold, that is now by far the most popular smart action, in fact, nine times as popular as any of the other existing smart actions that had been there for a long time. We're building on that with many other, AI-inspired, smart actions. That's on the GenAI large language models. On the Edge AI and machine learning, also very interesting. That's more in the space of audio and video improvements in our products. I'll give you one example, which is a new headset that we've just launched, the Zone Wireless 2 headset. I don't know if you ever owned a phone with people who are at airports. Super annoying.
I'm usually the one in the airport.
Oh, you're the even more annoying. So imagine, you know, we're on the phone, you're at an airport, and you, you know, I hear all your announcements because most headphones have noise canceling, but only on my side.
Right. Right.
Now, we've let loose Machine Learning on this new headset, and it can recognize not just my background noise, but also yours on the other side. So it cancels that, and we have a perfect audio experience thanks to the Machine Learning that's being used in the development of that product. That's just one example. We have others already out in the market.
Okay.
Both improving and really step-changing audio and video quality, and we're super excited about that.
Perfect. I can think of nothing better than taking earnings calls at an airport and having the announcements over the back of that distracting me.
You need Zone Wireless 2. Yeah.
That's perfect. All right. So let's transition into the numbers and start with kind of near-term and work our way out into the future. So, you know, I note you just reported December quarter earnings. It feels like it was just yesterday, but it was a handful of weeks ago. You know, the year-over-year declines in the business are improving. You've talked about kind of uneven demand trends, some promo periods that were important for you guys. Can you maybe just expand on that and talk about trends, you know, from the quarter and into how we should be thinking about kind of the near-term, what you're seeing?
Yeah. I, I think our results, first of all, they were good results for Q3. So, massive gross margin improvement, more than 400 basis points, really good improvements on the bottom line. But we have not yet turned the corner on growing the top line.
Mm-hmm.
Mainly due to the macro market environment. So I think the second thing we said at earnings is, you know, we don't wanna get ahead of ourselves on predicting some sort of V-shaped recovery on that top line because there are a lot of uncertainties in the market. You know, GDP, we're in more than 100 countries, right? So GDP growth remains a little uneven. Inflation is still a little stickier than we would like. And even just now, consumer confidence is still below 2021. And I don't know, yesterday, Michigan, the University of Michigan, which has this large consumer confidence model, it actually came down versus last month.
Mm-hmm.
Not everything is, you know, certain and rosy yet.
Mm-hmm.
Which is why we said, you know, we don't think there's an inflection point. It's gonna take a little while. We are very optimistic on our growth spaces in the mid to long term.
Mm-hmm.
Growth is not a matter of if. It's a matter of when.
Right. Okay. And you know, the mastermind of kind of the channel enhancements that you guys are making is sitting out here to my right, but I'm gonna ask you the question, which is, you know, it seems like it's taken a bit of like a step function change in terms of importance for you guys in managing the linearity of the business. What actions are you really taking to really improve there? What are you doing that's kind of different?
Yeah. I, you know, you get what you measure.
Mm-hmm.
I think Chuck and his finance team have done a great job bringing more operational discipline and measurements into the business, specifically on inventory.
Yeah.
and on cash, by the way. So I fully intend for us to continue to do that. And again, I know that very well from my old business. If you don't look at it, of course, your sales teams around the world are not gonna do linearity because, you know, it may not be in their best personal.
Yeah.
Checkbook interest. So we are going to measure linearity and not stuff the channel at the end of the quarter. That's absolutely the plan. And that is leading us to much healthier business. And you see that in the inventory turns.
Yep.
I mean, we had a record high, I think, in Q3. That might be a little too high, actually.
Mm-hmm.
But somewhere between 5 and 6 is probably the right number on inventory turns.
Okay. And I know I don't wanna preempt anything because I know you're gonna have an event later this year. Obviously, you didn't formally guide fiscal 2025. You know, you talked about still a kind of a cautious environment, uncertainty in the market. As CEO of this business, what are some of the signals that you're watching that not only just make you more cautious? Again, we talked about interest rates and inflation, but where you could see some of that unlocking of spend potentially, whether it's on the B2B side or the B2B side. What are some of the signals that you guys are watching for?
Yeah. I, I think some of them are not very different from all the other 13 firesides you've done this week.
Mm-hmm.
But, you know, GDP, unemployment, consumer sentiment, really important for our business, inflation, PC sales, which is a popular topic, I imagine, at this conference as well. Specifically for us, office vacancies are also an important metric. And again, we saw those in Q3 at a record high in the U.S. And as I go around and speak to B2B customers, our high-touch customers, many of them are still figuring out, you know, which of my 10 offices am I keeping, which floors am I keeping. And until they have figured out what is the footprint, they're not gonna invest in video conferencing, for example.
Yeah.
But once they have, you know, then I think we're super well positioned to then furnish those.
Right.
New offices.
Okay. Perfect. Perfect. You know, historically, I guess we've thought about gaming maybe being the first business to recover, just, you know, generally, customers that are more willing to spend than in other segments. Is there a way that we should be thinking about, again, broadly speaking, not specific to any quarter or year, but like stack ranking those segments that you think would be first to recover versus last?
Yeah. So of course, everything spiked in COVID.
Mm-hmm.
So now the question is what recovers first indeed. I think you're right. We think the gaming refreshment cycle is probably the shortest of our segments, you know, 3 years and a bit maybe. So we should be coming up on that. In personal workspace, probably a little longer, maybe 4. And then in video conferencing, probably a little more, maybe 5-7.
Okay. Okay.
Yeah.
Perfect. And then, again, you get all these questions. You're lucky here, which is gross margins. And so, you know, you've exceeded 42%. And this is why I talked about it being a luxury company or a luxury brand within a commoditized market. One of the top questions I get is, you know, you sell mice and keyboards. How are you generating 42% gross margins? And so you've exceeded that for two consecutive quarters. You did guide fiscal 4Q margins kind of down a bit, 38%-40%. Can we just talk about the different puts and takes on that line item? What was maybe temporary the last few quarters that.
Yeah.
Won't repeat? And we'll start from there.
Yeah. Super. Yeah. Let me channel my inner Chuck on this question. But first of all, yes, we do have luxury gross margins, which is great. And that's driven, again, by high R&D spend.
Mm-hmm.
Great products. Our R&D spend is 6%-7%. Great products and a great brand, which also delivers moats. So that's great. They were very high in the last two quarters at over 42%. I think there's probably three things that, were tailwinds in those quarters that won't necessarily repeat. First of all, of course, the scale in Q3 helps you cover more overhead in that holiday quarter.
Mm-hmm.
Second, Red Sea, will have a bit of an impact on gross margins. What we're seeing is, it doesn't affect our entire global business.
Mm-hmm.
But it does affect the Asia to Europe shipping. And those ships have to go around Africa now. So that's a little bit more inventory.
Mm-hmm.
That's a bit more expensive as well. So that will affect gross margins. Again, not huge numbers, but it does affect it. And then we'll have some lower inventory releases as well. So, we've guided 38-40. And, we think, that's where we'll come out.
Perfect. And then, you know, as we think beyond next quarter and look out into fiscal 2025 and 2026 and 2027 and so on, you know, how should we be thinking about the gross margin opportunity with this business? Obviously, mix shift would help to determine that.
Mm-hmm.
But is this, you know, high 30, low 40? I know there's a long-term guide out there, but just any thoughts that you could share with us on how to think about the gross margin, kind of normalize longer term for this business?
Yeah. Yeah. I think there's two big impacts on our gross margin in the longer term. The one is mix, as you say. So video conferencing has significantly higher gross margins than our PWS and gaming businesses. So as if that grows faster, which would be the plan, that would have a positive effect on gross margin over time. And then the second piece is really promotions and pricing in the consumer side. You know, in a hotter competitive environment, you tend to spend a little bit more on promotions, and that affects that gross margin as well.
Okay. How about on the OPEX spending side? You know, you've targeted 25% of revenue to spend on OPEX. You've talked about maybe some opportunities to make the brand quote sexier. Just, is there an opportunity to be more efficient? Do you wanna perhaps lean more into spending to try to drive yourself out of this recovery faster? How do we think about the balancing of efficiencies versus kind of leaning into investments?
Yeah. I think 25% OPEX is about the right number. You know, maybe we'll be over a little bit in some years and under a little bit in some years, maybe, but it's about the right number. What I would like for our team to focus on is a shift within.
Mm-hmm.
With a little bit less on the G&A side.
Mm-hmm.
By simplifying, by leveraging Generative AI, for example, getting more productive so that we can reinvest in sales, marketing, and R&D. And we definitely have opportunities there.
So it's spending a similar amount but spending it differently.
Yeah.
Trying to be more efficient about it, leading into areas where you can benefit.
Absolutely.
Okay.
Yeah.
I'm gonna ask you what kind of one question for each segment, just obviously three key segments. So.
Mm-hmm.
So on the VC side, you know, you talked about the market recovery. You talked about office vacancies. You've also historically talked about innovation. Logitech Sight is an important product. I know you guys have highlighted. You know, what are you hearing from enterprise customers when it comes to demand in VC? Obviously, you talked about kind of TAM penetration and that opportunity going forward, but, like, how do we think about the right growth rate for VC? Because it did go through such a big kind of spike during COVID.
Yeah.
So how do we balance all of those into thinking about the growth of this business?
Yeah. Yeah. So again, there's a lot of things going on. So what we hear from our enterprise customers is many of them are trying to figure out now what's their office footprint. So that's really important. I think I said it, but I was at the two top customers that I was with just in the last couple of weeks, Baker Hughes out in Houston, Texas, a new, beautiful office building full of Logitech, fantastic.
And Sixt in Germany, the rental car company, their global headquarters, near Munich, again, full of Logitech. I think whenever these opportunities come up, and many more will come up over the years ahead, we are really well positioned to do big sales with these big customers. But, you know, that needs to play out company by company in their decisions. The other thing we're hearing from IT and workplace services buyers is that their budgets for this year are kind of flattish.
Mm-hmm.
which is okay. But their first priorities are AI, as well as cyber. So we're a little bit down the line, which is, again, another area of a little bit of uncertainty, which is why we're, we were a little cautious in our guidance.
Okay. And then gaming, again, was one. You know, these are two businesses that became giants for you guys, frankly, from being very small. And so.
Yeah.
Obviously, we've talked about, you know, there are secular drivers in gaming in terms of more people gaming, spending more time. You know, the prior management team talked a lot about Esports and the popularity of that globally. You know, is this still a business that you see as one of the, the primary growth drivers relative to the other segments? Is that how we should be thinking about it?
Yeah. Absolutely. So again, it's off a much larger base. We now have more of a $1 billion in gaming. So we, you know, that used to be tiny. So again, the growth rates may not be quite as high double digits as they've been, but it will still be a really important, growth driver for us. And again, those secular trends have remained. More women gaming, that's a great thing. More older people gaming, it's a great thing. Esports in the Olympics, esports everywhere, these are all great macro trends. And again, we've got some pretty cool products. I mean, I have to say, in my first three months, some of my favorite products are in the gaming space. Things like the driving wheel.
Mm-hmm.
$1,500 Pro Wheel, very nice.
Good morning.
But also the Pro Mouse, which is super light. You almost don't know that you're touching it. And gamers love that. It's as fast as a wired mouse but super light and wireless. So, that's the leading mouse amongst pro gamers. So really good innovation, really, really solid market growth projected ahead. So yeah, gaming will be really important for us for years to come.
Okay. And then personal workspaces, obviously, you know, it's been a historically very big B2C business.
Yeah.
Is there an opportunity, and again, because of that, you've actually outgrown the products that are attached to it, right, or that you attach to.
Yeah. Yeah.
Is there an opportunity in B2B to maybe accelerate this business? Like, how big of an opportunity should we be thinking about that for you going forward?
Yeah. It's a great question and a great opportunity indeed. So, we can't always tell, by the way, whether a mouse we sell is going to B2C or B2B because some of it goes through the channel where you can't.
Right.
Quite see. But certainly, as we have built this B2B selling capability through video conferencing and headsets, we can now start to create real larger solutions. I'll tell you a story about my own son. So he's 24. He's an electrical engineer at General Motors up in Detroit. So he considers himself, you know, an advanced tech person. And he this was before I even started. He didn't know I was taking his job.
He goes, "Oh my God, you know, I got a new I won't mention the brand, but I got a new laptop at work, and they gave me this crappy mouse that comes with it. What are they thinking?" That's our opportunity. Because of course, an advanced user like that needs an MX mouse, and an MX keyboard. With the selling capability we have in place now, that is something we have to take advantage of.
Right. Okay. So we add this all up. Obviously, these make up, you know, 90% of your sales. So when we think about these different segments, how should we be thinking about the long-term growth of this business? And again, I don't wanna get ahead of anything that you, you know, you have an event coming up, but just maybe big picture, let's add these three up. What should we be thinking for Logitech?
Yeah. It's a bit too early for me to say what exactly should we be thinking in terms of numbers. We'll do that at the Investor Day, which is on May 15th.
Perfect.
But again, I think the future is bright across all of those three segments. I'm super excited to be here.
Perfect. And so maybe, you know, we have a minute left, so I kinda wanna give you the dance floor to end it. Obviously, we've talked a lot about the business, both qualitatively and quantitatively. You're still relatively new here, but you clearly have a vision for this business that I imagine you'll expand on in a few short months. You know, what's the final message you wanna leave everybody that's sitting here about Logitech, about the path forward, why we should be excited?
Yeah. Well, I like actually something you said. This is a luxury brand in our space.
Mm-hmm.
I think that's a little underestimated by people. The high gross margin, the high R&D investment, the really strong brand in more than 100 countries across B2B and B2C.
Yeah.
This is a real asset. So, thank you for having the opportunity to talk about it.
No, cool. I guess the answer is stay tuned. We'll hear more.
Yeah.
Awesome. Thank you so much, Hanneke.
Thank you.