Good day and welcome to the Logitech's First Quarter Fiscal 2019 Financial Results Conference Call. At this time, all participants are in listen-only mode. We will be conducting a question-and-answer session and instructions will follow at that time. [Operator Instructions] This call is being recorded for replay purposes and may not be reproduced in full or in part without written authorization from Logitech. I would like to now introduce your host for today's call Mr. Ben Lu, Vice President of Investor Relations.

Thank you, Kim, and welcome to the Logitech conference call to discuss the company's financial results for the first quarter of fiscal year 2019. The press release, our prepared remarks and slides, as well as a live webcast of this call are available online at the Investor Relations page of our Web site, logitech.com. During the course of this call, we may make forward-looking statements including forward-looking statements with respect to future operating results that are being made under the Safe Harbor of the Securities Litigation Reform Act of 1995. The forward-looking statements involve risks and uncertainties and actual results could differ materially as noted in our quarterly and other filings with the SEC. The company undertakes no obligation to update or revise any forward-looking statements as a result of new developments or otherwise. Please note that today’s call will include results reported on a non-GAAP basis, except as otherwise noted. Non-GAAP reporting is provided to help you better understand our business; however, non-GAAP financial results are not meant to be considered in isolation from or as a substitute for or superior to GAAP results. Non-GAAP measures have inherent limitations and should be used only in conjunction with Logitech's consolidated financial statements prepared in accordance with GAAP. Our press release and slides provide a reconciliation between GAAP and non-GAAP numbers and are posted on our Investor Relations Web site. We encourage listeners to review these items. Unless noted otherwise, comparisons between periods are year-over-year and in constant currency. This call is being recorded and will be available for replay on the Investor Relations page of the Logitech Web site. Joining us today from California are Bracken Darrell, President and Chief Executive Officer and Vincent Palette, Chief Financial Officer. I’ll now turn the call over to Bracken.

Thanks Ben and thanks all of you for joining us especially those in Switzerland who have decided to join us in spite of the fact you got a big holiday tomorrow. When I started in 2012, there were a lot of people who told me you need to go private to do what you need to do, but didn't think we need to do that in order to change ourselves. Admitting that because I love being a public company. Public companies are sometimes criticized or being only short-term or quarterly focus. For us, the rhythm of closing and reporting every three months creates something different. It drives a heartbeat inside Logitech to keep the short and nimble, but never impacts our focus on long-term valuation creation that's the key to everything we are doing. As a public company, the first quarter is a key quarter. A good year usually starts with a good first quarter and this was a very good first quarter. Our sales increased 12%, our operating profits grew 41%. I want to focus you on our -- and I use the terms I did or we did at the analyst and investor day. Our newest, our coolest and our oldest business for just a minute. As you know, we are doubling down on two key businesses, video collaboration, our newest major business and gaming our coolest major business. And this doubling down is paying off, both businesses grew over 60% this quarter. Video collaboration continued to benefit from both our increased resource and sales and our increased resources and engineering. Gaming was our biggest business this quarter, bigger than mainstream phoning devices and bigger than keyboards and combos. What about our oldest business, well, we will not stop innovating in our oldest businesses. Phoning devices and keyboards…

Thanks Bracken. As you mentioned we had a very strong start to the year. Sales grew 12% in constant currency, 15% in U.S. dollars. ASTRO contributed five points to our company's growth and showed strong growth year-over-year building value into a quite asset is a capability that we are steadily and quietly developing. Non-GAAP operating income increased 41% to a better than expected $61 million and non-GAAP EPS reached $0.34 compared to $0.24 a year ago. In Q1, our gross margin reached 37.4% which included a one-time benefit of approximately 60 basis points from a legal settlement with our prior supplier for distribution center in the Americas. We remain comfortable with managing our business within our gross margin target range of 35% to 37% as we balance various factors like logistics and supply chain cost pressure, currency exchange volatility or even tariff uncertainties with our overall efforts on maintaining ASP trends, taking cost out and freeing up the gross profit dollars to reinvest throughout the organization. I know many of you are wondering about the impact of the new China to U.S. tariffs on our business. Let me share with you what we know so far. The first one of tariff has had a relatively immaterial impact on our products sold in the U.S. It's too early to assess the effect from the second proposed run of tariffs. In the event, this new proposed tariffs are implemented, we are currently investigating various mitigating action such as pricing, trade classification of products, or making adjustments to our overall supply chain including manufacturing. Let me come back to our Q1 P&L. Our non-GAAP operating expenses increased 9% or 6% excluding our acquisition compared with U.S. dollar sales growth of 15%. R&D spending increased 12%, sales and marketing expense rose 11%, both to…

Thanks Vincent. It's a great start to the year, but there is so much more to come. We shared our vision many times about a multi-brand, multi-category company, a vision we are methodically marching towards. We'll focus on secular growing markets, innovating with design and engineering into our existing categories at the same time. And at the same time we're also always on the lookout for and innovating to meet exciting consumer and technology trends whether that's internally, organically or through tuck-in acquisitions. In fact, we just announced today that we'd agreed and I'm excited to announce it here to acquire Blue Microphone, the top player in the microphone space. Microphones are used by gamers as they stream and podcasters as they podcast and performers on stage. It's a category we've been interested in for a while, we're very familiar with because of our webcam business and we couldn't be more excited about the terrific team brand of business that we've brought into the Logitech franchise. Given our strong Q1, we're raising our outlook for fiscal year 2019 for both net sales and operating income. We're increasing our net sales growth to 9% to 11% from high single digits and non-GAAP operating income to $325 million to $335 million from $310 million to $320 million. Now with that Vincent and I are very ready to take your questions. Operator, please queue them up.

[Operator Instructions] Your first question comes from Asiya Merchant from Citigroup. Your line is open.

Hello, there.

Hi, Bracken. Hi, Vincent. Hi, Ben. Congratulations on a great quarter.

Thank you.

I want to ask you about the acquisition, if you can provide some more guidance, I mean it's one of your larger acquisitions that you've done. You guys are building the capability to integrate these acquisitions rather well given your prior experience with Jaybird and ASTRO. But, just in terms of this category, while ASTRO was pretty well known, the impact to gaming et cetera, maybe you can help us understand like how you think about this category, from a growth perspective. Also maybe about the margins, how does that compare to your other product portfolio and how we should think about the growth going forward into fiscal '20 as you guys integrate through?

Yes. Vincent and I can tag team a little bit. First of all, we've been looking, I mentioned it in the opening, we've been looking at this business for a while in fact, we've been quietly working on products in this space. I've mentioned it several times. I can't imagine us doing an acquisition where we weren't already working internally on the category and small teams trying to develop products that were competitive in the space. And occasion but we're always looking on the outside in these so-called seeds to see if there's something we could bring in that could either accelerate or differentiate what we're up to. And this is a poster child for that just a spectacular example of where we could bring in really, I mean it's really difficult to say who the exact leader in space is because it can be defined different ways. But really I would say the leader in the space, the conceptual leader and the product leader in that space into our franchise. They look a lot like the UE business when we first bought it many years ago, Ultimate Ears. They're both in the professional space, but then they expanded into consumer. They have done a great job with both design and engineering and product development. The team itself has been stable and they're strong and we really like them and we think culturally they fit extremely well. They are even located in the same city as the original UE custom business. So it's super exciting and I'm not disclosing any surprising market insight here. If you've got kids or if you're [indiscernible] and you get a little hustle on the side yourself, you may well be podcasting or somebody in your house is. And if you're not podcasting, you might be somebody probably streaming, somebody you know is streaming themselves playing games on either YouYube or Twitch. And that's right at the heart of what this business is about and we're very familiar with it because our web cams work's exact same way. And we've been developing that business for a while. You saw it grew 13% this quarter down what many people would say why in the world are webcams growing? Well, that's why. Now, the other thing you need is great mic. And so -- we are super excited about it. I think the long-term prospects are good and the margins are also very good. I'll let Vince respond to that further.

Yes. I can do two things. One is still going to be about the team. We rounded team, of all the business, we've acquired I think that's the most mature business team we've had. And from an integration perspective, we do what we've learned on how to do, which is integrating the backhand, helping them from manufacturing to China expansion and really helping them to really focus on what matters which is developing the brand and developing the product portfolio. So that's our approach, the deal expect to close at the end of the summer. Bracken mentioned it's a growing business, it's a profitable business and the margins is in line to the margins we have across our portfolio on average where they spend.

Great. Thank you. And if I can just have a follow-up on the organic growth, a lot of investors tend to focus on organic ASTRO, maybe you can correct me, I mean you guys have done a lot with the ASTRO once you purchase, you guys have expanded it to more of the mid-market niche pricing tier. How should we -- what is the real organic growth kind of perhaps slightly decelerating from where it was in the fourth quarter of last fiscal -- of the March basically the March quarter. How should we read into that? And then as you lapse the ASTRO acquisition in this quarter how should we think about gaming growth going forward.

Yes. So maybe I'll take that one. So in terms of organic growth the way you would report if you take all of us to the reported number is 7%. I do want to point out that we have more than tripled the size of ASTRO since we have acquired and that's called the organic growth, right? So if you just take the ASTRO last year as the baseline and then grow everything when double digit organic growth from a quarter-over-quarter perspective that organic growth is actually improving. And I think the real dynamic in our non-ASTRO portfolio is to isolate mobile speaker and what are we doing with mobile speaker, right sizing it for the market opportunities and also ahead of us maybe other things that will happen there. The organic growth excluding mobile speaker is actually extremely strong and we've seen it in gaming, in video collaboration and even in our PC peripherals where we've had very, very solid growth.

And the organic growth in our existing gaming business excluding ASTRO was very strong.

Extremely strong. So from that perspective, we feel pretty good. In terms of guidance overall, so we've raised the guidance as you know we're not going to re-break it by category when we guide. But if you compare to the numbers we've said by markets that, I'd say at this point in time, the PC peripheral what you call creativity and productivity the gaming and the video collaboration will do better. And then the music category, send to home, category will do under the overall guidance, but it's a portfolio play and we still have three quarters to go before we can talk about the annual number.

Great. Thank you very much.

Thank you.

Your next question comes from Joern Iffert from UBS. Your line is open.

How are you?

Hi thanks. Thanks for taking my questions. The first one would be on the wireless speakers segment and can you please clarify what was the sales through? And then, I recognize that the wording has maybe changed a little bit. I remember there was some inventory clearance ahead of new product launches. Now it seems that investments are slowing down because the end-market is deteriorating. Can you help us what are your plans for new product launches into the second half and also what is expected, growth rate -- wireless speakers? And question would be on EMEA, I think for currencies, if I'm not totally wrong, like for like sales force was around 3%. And do you expect an up tick here already in the next couple of quarters. And if so why? And then the last question would be on new growth areas? I know it's a quite broad question, but it's something where you are confident the demand for years, you have third or fourth growth pillar on your portfolio in addition to gaming, video collaboration? Thanks very much.

Well, you covered a lot and very quickly. We'll see if we can remember the question. So first of all, let me go to your wireless speaker question which was what's going on there? Okay. As we mentioned before there are a couple of things going on there. One is the -- as we said we're resetting the channel for change and really the growth expectations for that category. And so we took a lot of channel into the last quarter some more this quarter. And then you mentioned that we mentioned I think Vincent did in the last call that we always have new product development in the pipeline. And we do. We haven't disclosed anything. We're not announcing anything today. We don't have a timing that we're going to give you but we always do and you can be sure that we do. The second one, let me jump down to your Europe question. Yes, Europe, we don't like flat sales in Europe any more than you do with dollar basis actually up 7%. But what we feel really good about we're doing over there. We've structurally changed a few things inside the company which is part of a longer term plan. And we are excited about -- super excited about the teams doing that and the process we're under going to do that. And I think we're going to be in a good -- really good place on the other side of what we're up to. So I'm excited about that.

On that one if I can add, I would say, it's the first half versus second half story on, and will improve as we progress through the year.

You had two more questions, I apologies, I can't…

I think you addressed, the first two, which is on mobile speaker, Bose is channel and its cost structure as we align to a lower gross market. On EMEA, we talked about it and then the next one is, reading about the new growth drivers and area?

Yes. You know us. Okay, so you know that whatever we're talking about today is by no means everything we are working. That's not the model that we have here. So we're always working on new category of new ideas, new areas that we can drive for further growth. And we intend the mission of this company is to serially expand into new categories over time. Now, rarely are we going do multiple categories a year, I wouldn't even guarantee it will do one year. But I can promise you that we're always looking at new spaces that we can grow in. While we aggressively use design and engineering to innovate and build the businesses we're in to try to get to leadership or either a top or top two. So it's a diversified portfolio play. It will be more diversified over time and that will -- that's our strategy and we're super excited about where we've gotten to but much -- you know only as good as what we're going to do next. And that's why you're asking the question. So we're focused on that too.

All right. Thanks. If I may come back to why the speaker -- can you share with us the sales through and growth rates for Q1 and also what to expect for the full year?

Overall like in Q1, your sales through continue to be somewhat flattish. I would say is a much better than the selling number you see and so it's part of the discussion we've had, a part of it this is channel management another one is overall investment and cost structure. In term of the overall growth for the year, I would say you should expect a continued decline in Q2 and then improving in the second half.

Thanks very much.

All right.

Your next question comes from Scott McConnell, DA Davidson. Your line is open.

Hello there.

Hi. Good morning.

Welcome to the team.

You are welcome.

Yes. Thank you. Thanks for taking my question. So you touched on this a bit. But regarding the Battle Royale game format and the emergence of eSports, what gives you confident that those are sustainable trends and not fads? And second, how you are seeing Fortnight in particular, increasing the total addressable market for gaming accessories including headsets by expanding the demographic for game players including -- maybe younger kids and girls?

Yes. Well, it's hard to predict any single game whether it's a fad, it's going to go up and then eventually go down. But what I think the most important thing here is the secular trend that's been happening now for, I would say -- really it's been happening for 10 plus years. It's really taken off the last five years. And we saw it -- actually when I started here, when Vince and I started here a few years ago, we thought there would be more games like this that would come in explode. And then, probably flatten or decline and then something else would replace it. Really didn't see any of that for the -- to be honest as excited as it was about gaming in general. I was a little disappointed because I thought that would spike interest in the gaming business and the gaming category and bring more people into the franchise at an accelerating rate. That's exactly what Fortnight has done. So it finally happened. I would say it would be shocking if it didn't happen again. So I'm sure it will happen. Fortnight is a really compelling game as you know, I had dinner in New York last weekend when I went to the Overwatch finals with a friend of mine and his 10-year-old son who had been -- who really got into gaming because of Fortnight. And we talked for a while about all his friends coming in the gaming. And he was having a debate with his dad about why I couldn't have a PC, so he's using our headsets with our PC. So I think that Battle Royale format is very compelling especially since it's not really working with other people at the same time that you're playing 100 Hunger Games kind of. And I think there will be -- there are others and there will be more. But beyond that the secular growth of gaming should just continue for a very long time as I said in the opening.

Great. Thanks.

Thank you. Next question.

Your next question comes from Jürgen Wagner from Mainfirst Bank. Your line is open.

Hi, Jürgen.

Hi, Jürgen. Jürgen Wagner: Yes. Hi, good afternoon. Thank you for taking the question. Actually I have two on your gross margin. You mentioned the 60 basis points one of positive. And you also mentioned the benefit of [F6] [ph] and cost cutting. How much faster latitude and your PC peripherals was quite stronger than you expected. You said that and where there any special events or promotions that drove that growth?

I will jump into this. First, I will let Vincent take the -- and answer the gross margin. I mean that was pretty much a normal quarter -- a normal Q1 for us in PC peripherals. Now in Q1, one of the fun things is Q1 has several big events in China that some of you may not be aware of Brand Day. And in Q2, Q3 you see Singles Day come, but that's not in Q1. So you've got a couple of big events that the Chinese market has which is good but they're not big enough to really fundamentally change the number. In my mind, yes, we did have a Q1; we're excited about how we started the year in PC peripherals and stay tuned.

I can talk about the gross margin. We normally done what exactly [indiscernible] impact, but this quarter, the main currency impacting was the euro -- euro overseas, U.S. dollars exchange rate was 117 this quarter versus 110 a year ago, so 7% favorable delta. In the past we've shared that when we had a one point time, two, three years ago a 20% decline. We saw about a 3 points impact. So around 7% would be around one point. The other FX, of course, around other currencies. So it's not a perfect answer, but gives you some idea to model. As we go into the next quarter, last year the euro was 117 actually and we currently have a spot way at 116. So that effects in fact going into Q2 should be much more moderate. Jürgen Wagner: Okay. And the cost initiatives? Cost containment?

Yes. So we continue to as you know walking on our overall cost structure, it's an ongoing process right as we design new products to introduce them at better margin at the margin of the prior product and designing was a cost element. So we continue to work on that enables us to deliver the margin that you've seen. Across the margin, there's a lot of levers right. So I'm working on all of those levers is important and having a good handle on cost savings to match cost pressure from logistics or supply chain cost for example is a must. Jürgen Wagner: Okay. Thank you.

Thank you.

Your next question comes from Michael Foeth, Vontobel. Your line is open.

Hi, Michael.

Hi, Michael.

Congratulations. Good quarter. My first question would be the -- what explain exactly the relative weakness in Europe in the first quarter which category in particular and the second question would be -- with respect to your operating income guidance, which increased $15 million, I guess, that can't all be from Blue mics, so how much does Blue mic contribute to the margin to the guidance increase and how is from the rest of the business?

I will let Vincent jump into the second because he is pointing at me telling, he wants that question. That's the secret behind here. We point at each other. So, Europe, I mean the other day, it's not really -- obviously, Blue is, in Europe like they were and fulfill. I would say generally we have done a couple of things in Europe, one we are moderating our promotion activity in Europe and so far so good I would say we will probably try to keep that up. And that's a kind of sign wave, a wave you go through. And so we're doing that. I think that's probably having a dampening effect across the region. But overall, I think we're doing several things change structurally which I don't really want to totally share, but they're not anything -- a secret for any particular reason except their people involved and we're excited about the changes we're making there. And I think we'll see a really good impact over the next year or two and then probably as we go through the year.

Definitely, I think we'll see improved productivity in Europe as we drive those change. And the growth rate by category in Europe is kind of at a lower level similar than what you've seen on a global basis -- here a very strong PC gaming and weaker mobile speaker. In terms of Blue microphone as I said a growing business, very strong gross margin although slightly better than our current corporate average. So we're very excited about that, to date has been run with positive EBITDA. We are acquiring it, really frankly to develop that business. We think there's a good growth potential here and we're going to invest to make sure we can capture that growth opportunities. So, into the overall guidance we will close the business by the end of the summer. We will contribute about 1 point to the top-line and/or slightly accretive to the gross margin. And then, we plan to invest to grow very minimal contribution to the bottom-line in FY'19.

So the majority of the guidance increase is actually from -- is actually organic?

Yes.

Organic and operational performance coming out of Q1.

That's correct. It's organic. All organic.

Yes, correct.

Okay. Excellent. Thank you.

Okay. Thanks Michael.

Your next question comes from Paul Coster from JPMorgan. Your line is open.

Hi, Paul.

Hi, Paul.

Hi, Bracken. Hi, Vincent. So this is Paul Chang on for Coster. Thanks for taking my questions. So first up another impressive quarter for video collaboration, are you seeing some increasing competition given the growth numbers you're putting up and the nice margins. I mean you've been on a very nice run here. It looks like you're on track at 40% growth again for the fourth consecutive year, which is pretty impressive. So how should we think about kind of the growth in the out years?

Yes. Thanks Paul. So, Paul we said hi. And here the video collaboration, it's a monster opportunity. So it's not an opportunity just for us. It's an opportunity for video conferencing companies that make cloud based services as an opportunity for other people to do hardware like we do, it's an opportunity for everything in between. For the cost of a chair too in a room you can video enable it and a small fraction of all the rooms out there video enabled. Sorry to do that advertisement, but I know some of you are not on a video call on a regular basis and I encourage you to at least give us a call and see if we can help you. Yes. The long-term secular turn is great, but the competition keeps pouring in all the time. And we are used to that. That's the business we're in every category we play in. That's the business we're going to be in here. And so we see new competitors come in a lot. And it just makes us better. Competition also drives market growth. And so I think as you see more people come into this space probably the growth will get even stronger. And we will have to be better. And that's why we're investing both on the sales side and on the engineering side. So I think the long-term potential here is really great.

Okay, great. And then, my second question is, can you quantify the impact of your value your channel provides. I mean you have a couple of recent used cases including Jaybird and ASTRO. So how much of that growth would you say you drove out of their respective businesses by kind of expanding to your large channel. I know there's some channel overlap when you do, do these acquisitions.

I understand the question.

Yes.

I understand the question. I can't answer it. It's a very difficult. It's a really hard one for us to answer. I would say generally speaking we're more global than anybody we're going to buy. So over time which doesn't usually happen overnight and hasn't in the case of either over the last few acquisitions. We will get growth expansion which is one for the channel expansion which is great and it drives a sustainable growth curve this long-term. Within an existing market, our ability to sell better than the thing that the people that we buy depends, I'd say in some cases we maybe we happened to go to other cases maybe we won't. I think it remains to be seen with the microphone whether it will be better at it than they are. I think it will certainly long-term I think we'll have the potential to go into new channels with development that they're not in new countries and things and we've got a portfolio we can connect more directly to those products. So I think that we bring a lot on the synergy side of bringing things to market for a small company like Blue Microphone, ASTRO, Jaybird any of them. It's one of the synergies that we really bring to save. We also bring a lot potentially to the other end of the equation which is the cost side and the innovation side. On the cost side obviously we make 140 million product. We sell 140 million products a year. To make 140 million products a year in our factory and we buy another 50% of our stuff from other people. So we really have a lot of scale relative to any small company. And our innovation engine is quite good. And as we've been emphasizing design, so we feel like we can help a small business in several different ways to grow. And that's why we are really excited about bringing things like Blue Microphone in.

Great. Thank you.

Thank you. See you Paul.

Your next question is from Guenther Hollfelder from Baader Helvea. Your line is open.

Hey, Guenther.

Hey, Guenther.

Hi. Thank you. Just one on the gross margin side. I mean, is it possible to also to quantify the impact from product mix. Given the strength in gaming and the weakness in mobile speakers?

Yes. That's actually -- it's relatively material. We have different dynamics again in the portfolio play, right? So, you have maybe lower than average gross margin mobile speaker being down, but you have tablets also lower being up. You have gaming being up, PC being up and [indiscernible] within it. So our product mix overall when you do the normal rate and mix analysis, it's relatively flat.

Okay. And then, in terms of currency tailwinds, you mentioned, it's basically a management of the gross margin by promotion to drive growth basically if I compare to the first quarter last year.

Yes. You bring the good, right. If you take currency actually for full year, right, it's favorable in the first half and then depending on where it is versus today's spot, so it would be unfavorable in the second half. For the full year, we've assume I just think that euro to U.S. the exchange rate similar to last year of 115 exchange rate, which right now we are operating under. So, it's a good assumption. And then, it really comes down to data which is improved cost structure to a portion of it, which would be reinvested into promo and other activities to drive the growth.

And follow-up on Blue Microphones, it continue to close the 1 pp of what you're expecting for this fiscal year. What sort of sales growth this would mean for Blue Microphones?

The business has been growing before we bought them and we expect them to continue to grow. So the one point includes that growth and I don't think we'll disclose more at this point in time.

Okay. And last question, can you provide a little bit more color regarding Europe. Also in terms of the improvement you're expecting in the second half, this is a broad base or are you targeting special product categories with your actions?

I would say it's broad based and we could probably start to dig in if we wanted to talk to that level at the country levels and things like that. But it's relatively broad based. And I'm really excited about what we're up to. And it's part of -- it's part of the -- it's actually part of playing offense. We started some of you might remember back in January, I said we really took a hard look at it, Vincent and I have been together for five years. And we asked ourselves, what do we do different for the next five years? And this is part of that. We really reorganized the way we're thinking about regions long-term and we've put in place new leadership, we're bringing some synergies and really significantly improved processes from one country -- from one region to another. And so that's a very broad based thing we got. Leadership changes as well. And if I just step beyond that we also talked about that we went through -- a word restructuring has to be used, but we think of it as a realignment, which is another effort to say play offense, really get ahead of the next round of changes we need to drive long-term growth and that's affecting Europe as well. So a lot of things in there. And look I'm optimistic that we're going to have a good business in Europe long-term and across the company.

Okay. Last one restructuring charges, any thing more to expect here basically booked in the first quarter?

As I said still a few areas we are reviewing and optimizing. I don't know the output out of it, but if we feel we need to do a little more, we will as we filed our 8-K, you can see that we put an estimated range for the year $10 million to $15 million.

Okay, great. Thank you.

Thank you very much.

Your next question comes from Ananda Baruah from Loop Capital. Your line is open.

Hi, Ananda.

Hey, guys. How are you?

Good.

Awesome. Congratulations on strong results and very crisp execution. Hey, just a couple for me. Both regards to gaming and video collaboration, Bracken much like you talk to some of what the specific kind of catalysts dynamics in video collaboration have been. And actually, I think he spoke to this for speakers also, are those have been driving sort of increased adoption. Could you do the same? This is sort of what you're seeing below the covers for gaming that you've seen maybe over the last -- certainly the last quarter, but even the last couple of quarters, kind of the squiggles that you guys are picking up on the really, really continuing to drive broader adoption, those have been really helpful. And then, anything additional in video collaboration in same regard to what you mentioned on the call with regards to like podcast -- podcasting et cetera? And then, I have one quick follow-up?

Okay. On gaining I think it's -- if you think about it, when you play a PC game, you need a mouse, you need a keyboard, you need a headset. If you're going to stream it, just stretch over to the other category, you need some kind of microphone, it could be in your headset, if you're not going to use a headset, you can use your microphone, some kind is good enough to pick up the sound. So these long-term trends are there. It's a very global phenomenon. We're seeing the -- you can kind of track just like in -- in music you can track streaming, you can kind of track the growth of eSports around the world and see how strong this is happening and how broad it's happening. I was just looking at something in Japan today and it's amazing how strongly eSports is driving the gaming industry in Japan and it's also happening in Latin America. It's happening in Taiwan. It's happening of course very well in China and Germany and the Nordics. It's everywhere. It is really everywhere. It's happening in Russia. This is one of the very few global phenomena that is kind of a take-off mode all over the world at the same time and looks like it's not going to slow down. It's probably going down in age as well. You've got kids who are under the age of 14, when we -- when I started here, I would have said gosh, this really starts to pick up steam at 13 or 14 now it's moving down, I would say probably down to 10, 11, I don't know exactly, but I wouldn't be surprised. So it's very broad, very deep. And I think it's going to have a really long growth curve.

Okay, go ahead. Sorry about that.

I don't have much out on video collaboration. I think I said as much as I will probably take for today except, I'll just say video collaboration and broadcasting, I think are two completely different things. One is about communicating point to point with somebody real-time. And the other one is about creating. And I think the world of creators is on the rise. It's going to be -- that'll be a very long-term secular growth of people who want to create things for other people. We all see it every day. But that's also at very early days. So broadcasting is part of that and a microphone is a piece of that as is the Web cam.

My second question, this is regard to the microphone acquisition and really your entrance into that category, sort of been a holistic way. Would you like us to think of this and so do like potential for being kind of a mini-mega category. I say mini-mega because it probably can't be in biggest gaming. Well, maybe it could be as big as gaming. So what's the context in which you'd like us to think, sort of that one inside of the portfolio with regards to breadth and depth potential.

I think I don't know, you can think about it, as I think you can assess it for yourselves. I'll tell you how I think about it. I think we're a company of an increasing number of categories with growth potential. Some will grow long-term and be very big and powerful. Others will be -- will grow for a little while and then will probably stabilize, others might even shrink and in some ways the shrinking business can be a beautiful business by the way if it's part of a portfolio where you can manage it for invest or maximizing profitability investing in other places. So I think the microphone business is really interesting. I do -- I don't want to miss. I don't want to reach out into future and try to predict how big it will be relative to other categories except to say, I love great products, I love great teams, I love great brands and this has all that. And the dynamics of a world where more and more people are getting in front of a camera of some kind and trying to put something out for other people either live or recorded is a good secular trend for a microphone.

Are you able to yet discern. I guess you just announcing it today. So it's not yet closed but from what you had access to due diligence, are you able to yet discern what you'll have from an IP perspective, allows you to accomplish what you like over the next -- for whatever timeframe would be sensible to -- to be able to get a sense or is this a big enough category where you might say hey like in the past that are going to [indiscernible] this room potentially for doing additional acquisitions to build the IP portfolio?

The cool thing about this business is that it started like our UE business -- this one in particular in 1995. So you could imagine how much know-how and product development and expertise they developed over that very long timeframe. And as a result, when we posted this today, I don't think I've ever got so many comments from people either directly in my e-mail or on the various places showing up today on how excited they are that we're part of it and how impressed they are with Blue already. Not us, with Blue Microphone. So they're bringing a lot to the table. And I hope that we can add something to. We have a lot of capability in that space as well. But I think they bring a lot with them.

That's awesome. Really helpful. Really appreciate it. Thanks a lot.

Thanks Ananda. Thanks a lot.

There are no further questions at this time. I turn the call back over to Mr. Lu.

Okay. I'll just finish up real quickly. I'll go back to something I said kind of midstream of these questions, as Q&A. We're playing offense. We are just going to play offense. A lot of people probably wonder why in the world did you announce any kind of restructuring to-date, it's because we're playing offense. We're not here to try to make things a little bit better all the time. We're building a long-term sustainable growth company in more and more categories. And part of that is, we're going to realign them when we think it makes sense and it does right now. And we're going to continue to systematically enter new categories. And we're super excited about what we're doing. So thanks a lot for all the questions and engagement and we'll talk to you next quarter.

This concludes today's conference call. You may now disconnect.