Morgan Stanley 25th European Technology, Media & Telecom Conference

Nov 12, 2025

All right. Why don't we get started here? Let me just take out my pen. Perfect. Just good afternoon, everyone. Welcome to the first day of the Euro TMT Conference. My name is Eric Wedering. I cover US IT hardware, based out of New York. Let me just quickly read the disclaimer. Morgan Stanley Research disclosures can be found at the Morgan Stanley Research Disclosure website, www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. I am delighted to be joined today by Matteo Anversa, Logitech CFO. This is actually the first time we've been together at this conference, ever. It has been a little over a year since you've been at the firm, obviously held a number of CFO positions previously, across kind of tech and automotive, but excited to have you here. So, thanks for joining us. Eric, thank you so much. You guys always do a great job. Cool. This conference is a pleasure to be here. Beautiful. I figured what we'd do is maybe start short term, review the quarter, some of the dynamics there, and then work longer term beyond that. Maybe the most appropriate place to start is, you know, a quick overview of the September quarter, kind of highlights and how that quarter informs your view on the December quarter. I would just ask, you know, any trends you'd call out, whether that's by customer, by segment, just as it relates to your December quarter. Yeah, sure. Let me just start at a high level. What I really liked about the second quarter is a couple of things. First of all, demand was extremely strong. For demand, I mean sell-through was very broad-based, both in terms of products, in terms of regions. We saw the majority of our product lines having really double-digit growth in sell-through in the quarter, and the rest really was high single digits. Very good, broad-based strength in demand across all the product spectrum. On an original standpoint, sell-through was actually very good. You know, Asia-Pacific was up double digit. Europe was also double digit. North America was, you know, slightly up, flattish. We can talk more about that. Overall, demand was good. On how this translated into the net sales, there were a couple of, I think, important dynamics to call out. If I look at the regions, Asia-Pacific continues to be a strong source of growth for us, up double digit, primarily driven by China, primarily driven by gaming. Mm-hmm. Gaming in China remains extremely, extremely strong. Europe did well and hopping the, you know, low, low single digit in line with market, driven by personal workspace and, and also video conferencing. North America, that's where we saw a slight net sales decline year over year. Really the dynamic that happened, while video conferencing was good, we saw some softness on the consumer side, primarily in gaming where we saw a, call it roughly a mid-single digit market decline in gaming in the quarter. With that being said, look, to the second part of your question, I think we are, you know, cautiously optimistic as we get into the holiday season, for, you know, a couple of reasons. The trend, particularly both in the person and, and consumer in general, in North America improved throughout the second quarter. The latter part of the second quarter was a little better than the first part. That is encouraging. Throughout the second quarter, we saw sell-through outpacing sell-in, which is generally a good indicator. There is more room in the channel. We saw also some new releases of gaming to take, Battlefield 6 has been doing pretty well, good comments from what we read. That really plays in the sweet spot for us, for our gaming product. As we always do during this time of the year, through our LogiWork and LogiPlay event that happened in September, we have some fantastic products. If you have not tried it, you should. both on the gaming side and on the personal workspace, new mice, SuperStrike, more precise with haptic feedback, the Superlight mouse, which is basically 50 grams also, so very light, a new set of wheels. I think we are overall, I think, encouraged by the trend that we saw in the second half of the second quarter. We are looking at the holiday season with, cautiously optimistic. Okay. I think that's the rundown. Yeah. Perfect. You mentioned it, so I want to dig into it, which is just kind of the views on the U.S. consumer. You know, maybe the question's almost about how you think about demand elasticity of the U.S. consumer because of tariffs and higher prices. How did they respond? How did you have to make changes through the quarter? 'Cause you talked about that linearity improving. Was that pricing driven? Just talk about all the factors as you think about the health of the U.S. consumer, because that seems like a kind of swing factor relative to other markets. Yes. Yes. I can, maybe to back up to your point, so for, you know, for everybody to understand, the outlook that we provided for the third quarter has revenue up in constant currency 1-4%. And we said gross margin rate between 42-43%. The assumption underneath this outlook is, first of all, I think it is a pretty, you know, balanced construct taking into account on one side the underlying strength of the business that we continue to see as we have seen in the first half of the year, but at the same time, also the litany of uncertainties that we are facing in the world today. I think that is a pretty fair balance of the two components. and really we are expecting Asia-Pacific to continue to do well and grow double digit year over year in constant currency in the, in the third quarter. Europe continues to do what we saw in the first half of the year. Really, to your point, the bookends of our outlook are centered around what happens in the U.S., right, with the consumer. The low end of the outlook assumes that we continue to see North America trending, you know, slightly down year over year, like we have seen in the first half of the year, and that we have to promote a little bit more to stimulate demand. That is where the 42% gross margin rate comes into play. The high end of the outlook, conversely, assumes that we have a good holiday season, North America turns around, so flattish to slightly positive, and we have to promote a little less. That is the 43% on the gross margin rate. Really, these are the bookends of the outlook. In terms of your question on elasticity, I say it is a little, you know, difficult to give you one number because it really varies by product line and price points. At a high level, as expected, what we have seen is really very limited elasticity in B2B and very limited elasticity on the mid to high end of the pricing points of our products. On the other side, we have seen more elasticity impact at the low end and within the product categories in gaming, right? That's kind of the point. I think overall numbers came in as we were expecting. This is really thanks to the very meticulous work that we have done basically, you know, since November, since the new administration was announced. When it was clear that tariffs were coming to play, we really looked at price points by price points, SKU by SKU, and we tried to, you know, deliver a price increase that was, in a way, we thought, swallowable by the consumer. In aggregate, numbers came in as expected, but these are kind of the different dynamics that I can tell you. Okay. And then maybe last one on the holidays is, can you talk us through what you're hearing from retailers, whether that is willingness to take on new inventory, how they've thought through Prime Day, 11/11 in China, channel inventory levels, just any incremental color you can share just from that side of things. On the channel inventory, we're happy where we are. I think we entered the holiday season with the weeks on hand in the range where we wanted the weeks on hand to be. Overall, healthy. I think, as I said earlier, the fact that overall across the business, sell-through outpaced a little bit sell-in in the second quarter, that's generally good because that means that there is a little bit more room. You know, 11/11, early to say because we'll see the results in a couple of weeks. Overall, we are pretty optimistic. We had 6/18, which was the prior big day in China where we saw strong double-digit growth. We launched new products in China thanks to our execution on the China for China strategy. There is no reason to believe that it won't be equally successful. and, for the rest, I think it's a little bit early to say. We'll have to see what happens with Black Friday and Christmas. Okay. I think we, as I said, we are cautiously optimistic. Okay. Let's, let's touch first on international markets. So, EMEA and, and especially APAC, it's been a real area of strength for Logitech. I guess a simple question is what's working for you in these international markets? And maybe the follow-up to that is just maybe compare and contrast that with the U.S. I'll ask about China separately because obviously it's its own unique market, but just compare and contrast what's working internationally and how does that compare to the U.S.? Yeah. I think for the U.S., and we start maybe with a negative, I would call it more a market situation that we saw happening in the consumer side in the second quarter. In terms of execution in Europe, you're absolutely right. Europe has been a bright spot for us now, at least since I joined the company, so almost a year and a half ago. It's really blocking and tackling and hardcore execution by Yelcin, our leader in Europe, and the team. If you go to MediaMarkt, and there is a beautiful one here in Barcelona, you can clearly see it. We really, Logitech looks like a leader. They've done a fantastic job with the e-tailers and retailers to make us look like a leader where people can go in, test the product, they can try it compared to competition, and really have a sense of the entire Logitech portfolio. The displays are great. In the gaming side, very similar story, right? You go in, we have play days where, you know, families can get in, try the simulators in conjunction with the big Formula One racing events. It is really a fantastic execution by the team. I think that's why we keep, you know, keep growing pretty nicely in Europe. China, which is the other big international market for us, I think we are starting to see the positive impact of the China for China strategy that we launched exactly, you know, in September of last year, if I recall correctly. If you, you know, rewind the tape a little bit, as you may recall, Eric, we saw some share pressure in China in calendar year 2024. We decided to create a cross-functional team, which is led by Quinn, our commercial leader in China. The goal of the team was really to develop product for the Chinese market in China for China at the Chinese speed, right? Because you see in our industry, I saw in automotive, the speed in which the Chinese market operates, it's a step function of what we are used in our world. That's the goal of the team. I think they've done a fantastic job. We are launching and we launched new products. For example, upstairs we have one of our products, a mechanical keyboard, with new lights, very, very bright, very colorful, where, you know, the customers can replace the keys, right? That's a big trend in China. Quite frankly, we missed that. I think that really is what helped us, you know, stopping the decline in the share in gaming. Actually we're starting to see now share gains in person workspace, particularly on the higher end. That is really the execution of the China for China team. I really, Europe is commercial execution, China is the product, and also marketing. We are much more, marketing our product in social media, like TikTok and all this type of social media platforms. We are doing much more that today than before. I think these are the two, three things that we are doing differently. Can you talk about just on China specifically, maybe how you ensure that the gains that you're benefiting from this year are sustainable, especially in a market that can be hyper-competitive? Like I think there's a different value proposition that Logitech offers. Absolutely. How do you make sure nobody encroaches on that value proposition? That was the entire intent, right? We saw primarily the, of the China for China strategy. We saw primarily share pressure on the low end, and our intent was, okay, we need to develop this product so that we can protect our, you know, turf a little bit on the low end with the ultimate objective to see, not to see any negative impact on the mid to, to the high end where we play. It is important to remember Logitech is a fantastic brand. We are, our innovation, our quality, our, I, you know, brand that we tried also to make even more iconic, right? This has been a hot topic for Hanneke since she joined the company a couple of years ago. That provides a natural shield in a way, also in China, but having a product that we can fend off some of the low end Chinese brand in China is very important. It is not only important for China, but the intent then is we develop this product for China, then move them to other regions, for example, Europe, where we are starting to see also some low end B brand, Chinese brand popping up since they cannot come to the U.S. due to the tariffs. That is equally important both for China as well as in Europe. Right. Is there anyone, I want this to, the focus be Logitech, but is there anyone that's kind of coming for the higher end for you? Right? Again, the value prop is so different than, hey, here's a $10 mouse, right? We don't see it, but. No, the majority of the pressure that we had in China and the comment that I just made in Europe is primarily on the low end. Okay. And then maybe last kind of near-term question, just obviously it's a pretty uncertain world, a lot of moving pieces, you know, the guidance philosophy that you've taken of just kind of one quarter ahead, is that, is that the new normal? Is that kind of how we should expect? You can understand it because how are you gonna forecast for demand six months from now? but just would love just an updated view. As you know, I used to give total annual, I gave it on March 5th, I think it was, when we had investor day, and then a month later, liberation day happened and we had to withdraw it for all these reasons. I think, you know, for us, in order for us to be able, there are some complication aspects in our business, like the third quarter with the holiday season is the biggest quarter of the year. It makes it, you know, the cyclicality, it makes it in a normal environment already complicated to basically accurately look at a 12-month span. Then, you know, the current environment makes it basically impossible. That is why we decided to go and stay with one quarter at a time. I think we'll have to reassess what the situation is when we report the year-end financials in April, and we'll take a last shot over there. For sure, there has to be a modicum of stability in the environment in order for us to be able to go, you know, further ahead beyond three months. Fair enough. Okay. Let's maybe take a step back. One question that we get pretty often is just kind of the attachment or the tie that Logitech does or does not have to PC cycles, right? Because it is thought of, you're attaching a number of products to kind of a core compute device and PCs. We've been through a number of very solid quarters in PC refresh. You know, the market would have concerns about the PC market. I would argue Logitech has always outperformed the PC market. Just how do we think about PC refresh moving beyond Windows end of life, what that means for Logitech's PWS business? For us, I really tried, and we really tried as a team to look at data and see if we had a data-driven correlation between PC sales and our peripherals. I cannot stand here today and tell you, hey, if X happens on PC, Y happens to us. In general, if you look at the data we looked at, spend 10-15 years, normalize by COVID, roughly, you would expect peripherals to outpace PC sales by a couple of points. Take this with a grain of salt, right? We do not count on the PC sales to the good or to the bad. When we do our models, we are not counting on it. But overall, I think it's natural to think that if there is a refresh due to Windows 11 or whatever, that should be a natural tailwind for our personal workspace. It's also, I think, dependent on how the retailers are placing the product, right? If your, you know, peripherals are sitting relatively close to the laptops, then I think there is a more natural, you know, trend for a person to go buy it. If the peripherals are a couple of stands away, that's also more difficult. That's why probably the data is very, you know, convoluted. Overall, I think a refresh should be a tailwind. Okay. Generally, again, not necessarily a hard guide, but generally think about peripherals. Couple of points. A couple of points. Yeah. Yep. Okay. And then moving just to gaming, it's kind of a, it's one that I think probably has the strongest long-term growth as we think about willingness to spend, number of gamers entering the market. I was amazed by how big esports actually is globally. At the same time, I guess it can be fickle because it is very competitive, the market in general. How do we think about the gaming market if we look out a number of years and, you know, is there anything you're trying to do differently in gaming that you haven't done as we look out over that period? I think, I agree with you. Gaming is, is everybody's gaming right now. Like, even my wife, who's the most boring person ever, hopefully she's not gonna replace me. Like, it's like she's gaming. With the kids and, and I think there is a, that's a natural tailwind. Even in the U.S., the majority of the Americans, 45 or younger, spend more time gaming than going to restaurants and, and, and, going to movies. Gaming is a cheap form of entertainment. We are looking at, we are seeing this every day in China now, for quite some time. I think what I, in addition to the strength of the market, I think what Ujesh and the team, what they do so well is that we have products for the casual gamers like you and I, and products for the more sophisticated, you know, professional gamers. They partner extremely well with other companies, with, you know, for example, Nvidia, where we, together with them, we launched this AI Streamer, right? AI agent that streams the game live while you are gaming, if you're a professional gamer. We partner with McLaren to develop some of the high-end wheels. We really develop particularly the high-end products with the professional gamers. They are not only there in our stands, and you see their pictures, but they are really working with us on the product. I think that, that's really what, in my opinion, with the MPI and the new product that we, you know, obviously always introduce, that's a strength of our gaming team. It's both execution by Ujesh and the team and a natural tailwind. Even in the second quarter, where we had this bumpy, call it, gaming performance in the market in the U.S., when we look at demand and market, gaming grew double digit. Right. Okay. And then, just moving to the VC market, it's one I struggle with just big picture when I think about, most return to offices happened. You know, when I think about the prioritization of enterprises, where does VC spend come? You know, make me, talk me off the cliff and help me understand maybe what I'm not understanding because the VC business has been strong, even if you've kind of normalized the pricing. Yeah. Yeah. So VC for us, first half was up, net sales were up, high single digit year over year. So very strong. I think, for us, two things I would point out. One is, the fact that new ways of working are now part of the normal, right? The days of you as a worker having only one place, like the office, are well gone. We are seeing more and more companies calling back people into the office. It is very interesting. I cannot name the bank, but we had a few, Nate and I were in London yesterday. We met with several investors and we had really a case study. So this group said, hey, we struggled internally. Do we call everybody back to the office every day? We decided to go hybrid, but now we find ourselves where we have to shrink the square footage because we do not need all the spaces that we had pre-COVID. We need to change the way our offices look with much more conference rooms that need to be enabled, video enabled, because in the meetings, 99% of the time, a portion of the team is not there. It is at home, it is traveling. That is a natural tailwind for us and it is happening everywhere, Europe, North America, and, you know, Asia. For us, B2B is pretty small, so let us leave that aside. The second thing for us is the fact that with the strategy of doubling down in B2B, we want to start penetrating some of the verticals where we have been pretty much not very focused in the past. Education, healthcare, and the public sector. If you leave alone the public sector in the U.S. right now, if you look at education and healthcare, these two verticals are in total, they make almost $4 billion of, you know, of market size, growing, meeting cagers. That's a huge opportunity for us where our product already has relevance. It requires some tweaks, but really it's more about getting the tools and the sales force to then get into these verticals. Since we started this focus on verticals, education has been great. Verticals have been growing double digit now for a few quarters, more to come. I think these are the two key areas. It is true what you're saying that the enterprise spend tends to be cyclical, tends to be lumpy. Do not expect every quarter for your modeling a high single digit growth on VC, because obviously enterprises have to focus on AI, have to focus on cyber, digitization. Overall, over the long run, A, with our products, B, with the market, and entering new verticals, that should be, we're bullish, should be a tailwind for the company. It sounds like what you're saying is maybe more of a penetration story rather than a replacement story. Is that a fair take? I think it's both. Okay. What you said is true. There are still the vast majority of the conference rooms worldwide are not video enabled. That should be not a replacement, just us getting in, right, into the door, right? That is a tailwind for us and also for our competitors. Generally these products, companies replacing, the replacement cycle is about five years. Now you are coming into a time post-COVID where the replacement is due, which also should give us a tailwind. Okay. Okay. With the use of AI and how AI is embedded now in the software of the product that we develop, the new generation of products are so much better than the old generation as a customer experience. Right. Okay. Let's kind of bring that together. We touched on each of the major segments, PWS, gaming, VC. You've outlined kind of this path long term to 7-10% long-term growth. You know, what's the timeline to getting there? What's the right formula to think about? Like, is there a certain type of mix we need to see for you to kind of sustain that level of growth? Obviously there's a little M&A in there and I'll touch on that, but just timeline and kind of what we need to see to get there. Yeah. In March, we said our long-term plan is to grow the company 7-10% and with OI between 15-18%. Profitability-wise, you may argue we are, you know, so far in the year, pretty good. And, so we are happy and we can talk about that, separate question. On the top line, if I exclude M&A, then organically we said 6-8%. Yep. I think there are three factors to consider. One, you know, personal workspace, video conferencing, so B2B and gaming play in three key markets where data is showing that these markets are poised to grow mid to high single digits. That already has a natural tailwind to the business. Second, we are planning to continue to gain at least a point of share annually, right, through focus on innovation, which we do very well, and really working on becoming an even more iconic brand than where we are today. Then the rest is entering the three verticals that I just said. That should give us, once we complete the work that we have to do, a natural one to two points incremental in the growth. That is your math. That is how you get to the 6-8%. Okay. Yeah. We are well ahead. The work is well underway now. Investor Day was in March. It looks like an eternity ago, but it was. Feels like it. March. The work is well underway. Good. Okay. Perfect. Let's turn to the cost side of things, and I would say from my perspective, one of the most impressive, if not the most impressive part of your performance has been your gross margin performance. Year to date, your gross margins are stronger than any other period outside of the 2021 COVID crazy period. What has been that biggest source of gross margin as we think about multiple years? Maybe that starts before you got to the firm, but what is the biggest tailwind that you've been benefiting from if we're to think about the core underlying drivers there? I think the credit really, the biggest credit goes to Sri and the operating team who have now for several quarters and a couple of years really have done a fantastic job in driving cost out of the product. It is really in two key areas, supplier negotiation and value engineering. Value engineering is a, you know, complicated term, but basically what this means, you take the product, you do it this way today, and now you think through how you can take cost out of your bill of material. What can you material substitution? What can you substitute of the product to make it more cost effective? That is, I think, driver number one. Then there are a couple of more high-level things that happened throughout the years. One is the mix, right? Even in the last quarter, when you look at the high-end products of our company, so the MX line, the Ergo line, wheels, the Pro line in gaming, they all grew double digits, right? That obviously drives the ASP, just selling price for the company higher, and that also helps margin. Positive mix. And then also business mix, depending on how far back you go, but, you know, pre-COVID, the B2B side, the VC side was probably like roughly 10% of the company. Right. Right? Today we are 40. So, split between consumer and enterprise is 60% consumer, 40% enterprise. Our, you know, stated target is over the long run, we would like to, be a little bit more balanced to make the split maybe 50/50. And, the margin on video conferencing equipment is accredited to the, average of the company. Right. Right? I really, I think these are the three key factors. Obviously, if you look at the last couple of quarters with tariffs being implemented, the fact that the team did a great job in driving 150 basis points of positive price in the second quarter, that also helped us offset the tariff impact. I think, you know, if you forget the noise of the tariffs and look at more longer term, I think operational, the work that Sri is doing, value engineering, supplier cost price negotiations, and the mix, that's the key reasons. Before I touch on tariffs quickly, just on the cost out, you know, we hear it, like maybe my question is how much more of that is there to go? I'd say it in the context of you guys have been very clear about how you wanna spend on OpEx. You've kind of given us an operating margin target. You can back into what you think gross margins are, and we're generally there, but you continue to see tailwinds from cost out. The question is kind of how much more is there to go on cost takeouts and is there anything to come after that? Look, every year is a little different, and you are never done. This is almost like continuous improvement, right? The way Sri and the team do it, every year they come in, basically at this time when we start thinking, okay, what's gonna happen, you know, the following fiscal year. We have a hopper of projects that the team has to work on to continue to drive the value engineering, so the product cost out, the cost out of the product. You are never done. Every year is a new year. We know what the hopper needs to be and how much needs to be in a way in the backlog of your savings every year to look at comfortably the following year, but you are never done. I think what is even more remarkable, I think in the current environment, is that the team that is doing this cost out work is the same identical team that has been working on the manufacturing diversification, which I am sure is gonna come next. That is what actually, in a way, in the second quarter surprised me a little bit to the positive, right? The gross margin rate was a little higher than what we telegraphed the street when we had the first quarter earnings call. I was not really expecting them to do such a good job considering how much work they had to do concurrently on driving the diversification of supply chain. Every year is a little different, but what you can count on is, every year we have a hopper of projects and we work relentlessly on it. Okay. So, so let's talk about that. I'm not gonna touch on tariffs because there's so much uncertainty. It's not, you know, I, I can ask you your, your strategy tied to tariffs, but we kind of know that already. The real question is the target is to get 90% of your U.S. product basically coming ex-China. Yep. by the end of this calendar year. November, December. and so maybe the question is just like, where do we go from there? Can you make it 100%? Is that a goal or is that ambitious to think about? No. Very good question. I, let me start. First of all, the credit goes again to the supply chain team. And quite frankly, also, you know, our predecessors who started this process back in 2018. That is what allowed us to be, in a way, so fast, right? Because the process was really already underway. We just accelerated it. Yep. Right? Once the second Trump administration came into office. You stated correctly, only 10% of the imports that will come into the United States after the end of the year will be coming from China. I think once we reach that and we are well on track to get that by the end of December, you're reaching a point where almost the juice is now worth the squeeze. Because what's left is lower, you know, volume product, number one. The other thing is, you know, China is a great place to be. If you exclude tariffs, take tariffs out of the picture completely, China is still a great place to produce the product, right? We want to be there both with our manufacturing side, but also with our supplier partners. Right. Because things may change. Having this flexibility of China plus five, we don't wanna lose it. That's what really allowed us in the tariff environment to deliver the gross margin that you were mentioning earlier. Right. Never say never. We have a very, I think, meticulous way of assessing where to go. There are a couple of things that need to happen. Number one, you need to have a good supplier ecosystem wherever you go. You need to have availability of labor, and then it needs to make sense cost-wise. Right. We apply the same three criteria no matter where we go. That's the process that we follow. I guess in, in kind of combining the two answers to the last questions, as you've moved out of China, we haven't seen gross margin degradation. One can assume that the cost of a product made in Malaysia, for example, is not materially different than China. It's a, you, when you start something new, you always have a little bit of higher cost just for ramping up the production. The beauty is that we know the majority of the partners that we use, they know us. We send sometimes our own teams in short-term assignment for a few months in the new site to make sure that things are done with our quality standard, with our efficiency standard. I agree with your statement. Cool. It's not easy. It's a lot of work. No, no, right. Exactly. Yes. Okay. Quickly touching on Opex before we do kind of capital allocation and whatnot, which is, you know, spending in 2024 was a little elevated. In 2025, it's normalized. Where, where does this go? Are we, are we, you know, is it right for us to think kind of Opex is 25% of revenue, set it and forget it? Like, is that simple? Is it that simplified? I think longer term, 24-26% is the right range. Okay. You said it right. Last year was a little on towards the higher end. This year is towards the lower end. What I really appreciated of the work that the team has done is that we proved that we are capable of flexing down cost or up cost depending on the environment that we are playing in. That is what the team proved, I think, in the first six months of this fiscal year. All the cost actions and austerity measures were primarily in G&A with the intent of saving money in G&A and then re-put the money back into the growth of the business, which is sales and marketing and R&D, right? The percentages, look, R&D is 6-7% of sales. That is where we want to be. That is the heart of the company. This is non-negotiable. sales and marketing call it between 15-16%, and then G&A is the rest. Right now, G&A is between 2 and 3, and I think overall we are in the right space. Okay. Perfect. Let's touch on capital allocation and really going back to that long-term growth question and touching on M&A. You know, for the time that I've known Logitech, it just hasn't been a major part of the story. When we heard it at Investor Day, it sounded like a bit of a change, like a tone change in that we want to make it a real part of the long-term growth algorithm. The question is three-part. How big are you willing to go? Is this strengthening the core or is this looking to add on adjacencies? Is there anything non-product there, like software or services or subscription or anything like that? We put some very, you know, specific boundaries, right? So you're absolutely right. M&A is part of the core strategy of the company and of the capital allocation strategy. Mm-hmm. Right? What we are interested in is really bolt-on opportunities, tuck-ins and bolt-ons that can expand our reach in work and play. It can be a technological, a company that, maybe something that we do not have that we can do organically, but if I buy, you know, someone, they can, we can do it faster. That would be a sweet spot for us. Really not large, not transformational. We are very comfortable with the organic growth trajectory of the company. We do not need a big transformational deal that are risky and they are always difficult. I, and also the other aspect is we want some, a company that allows us to go faster, right? Since you asked this question, you are in your next call, I think, you know, as Hanneke said, it is like they are not easy to find, right? Right. We are not in a hurry. We like the flexibility of the balance sheet. When we find something that fits this criteria, then we will execute it. Is there a story that we, or that, or that you'd be looking to tell in the future about monetizing Logitech's brand and kind of platform outside of product? Like, is there a subscription or services or streaming angle that you think that can become bigger, or is that just? Look, service, we're already working on it. Right, right. on the B2B side. On the B2B side. It is very small, but it's fantastic margin. It's not big enough yet to, you know, make the print of the pages at quarter end, but that's for sure a key focus for us. Yep. More to come on the rest. Okay. So we're about two minutes left. I just want to kind of ask you a last question. Just anything that I didn't hit on that I should hit on as it relates to the story, short, medium, long-term, or any message that you wanna leave all of us post touching on everything that we did? Yeah. No, great question. I tell you what I like of the company, and I think you and I spoke about it in the past. I like the simplicity of the story. We are a $4.5-$5 billion company that plays in markets that in aggregate is more than $20 billion. The organic growth potential for the company is immense, right? We are a company that we are market leader in the products that we do. Our continued focus on the 6-7% of net sales in R&D will allow us, through our extremely strong engineering team, to continue to really position the company to be even more market leader today than when we are. We have a team that, I think we've laid out a credible path to the 7-10% growth and 15-18% margin as we discussed earlier. Obviously we are not immune to the craziness that is happening around us, but we have a very experienced team that thrives, as demonstrated during COVID and even today during tariffs, right? Mm-hmm. As we said during the meeting, overall we are a very financially responsible company. We like the flexibility of our balance sheet, but at the same time we are a very investor-friendly franchise, right? We continue to, as part of the capital allocation strategy, we want to continue to increase the size of our dividend and then return money back to shareholders with share repurchases as we said during Investor Day. That is really the essence of the story. Perfect. Pretty simple story. We'll leave it there. Thank you very much, Matteo. All right, Eric, thank you so much. Thank you. As always. Thank you.