All right. Good morning, good afternoon, everyone and welcome to Logitech's Video Call to discuss our Financial Results for the Fourth Quarter and Full Fiscal Year of 2022. Joining us today on the call are Bracken Darrell, our President and CEO; and Nate Olmstead, our CFO. During this call we will make forward-looking statements including with respect to future operating results under the Safe Harbor of the Private Securities Litigation Re Act of 1995. We are making these statements based on our views only as of today. Actual results could differ materially. And we undertake no obligation to update or revise any of these statements. We will also discuss non-GAAP financial results. And you can find a reconciliation between these non-GAAP and GAAP results and information about our use of non-GAAP measures and factors that could impact our financial results in our press release and in our filings with the SEC including our most recent annual and quarterly reports and subsequent filings. These materials as well as our prepared remarks and slides and a webcast of this call are all available at the Investor Relations page of our website. We do encourage you to review these materials carefully. And unless otherwise noted, comparisons between periods are year-over-year and in constant currency. Sales are net sales. And finally this call is being recorded and will be available for a replay on our website. With that, I will now turn the call over to Bracken. Good morning, Bracken.

Good morning, Nate and good morning, Nate and Nate. And thanks to all of you for joining us. I am so excited about the year that Logitech has had and our team's strong performance, despite a backdrop perhaps best defined as unpredictable and certainly challenging. In spite of this headwind, our teams delivered an outstanding fourth quarter and overall a tremendous fiscal year 2022. Coming off a 74% net sales growth in the previous year, we challenged ourselves to continue the momentum and we did it. We posted our 9th consecutive year of growth, delivered strong growth in key categories like C&P and gaming, saw market share gains across our portfolio and geographies, and continued to invest in the future, using our strong gross profits to invest in key strategic areas like marketing and product development. Nate now will go deeper into the financial details for the fourth quarter and for the fiscal year in just a minute. But I wanted to start by offering a bit of perspective on the macroeconomic environment, world events and overall state of the global business as we head into our new fiscal year. As I talk to other CEOs, we generally agree that there is uncertainty about how the US and global economies will perform but we'll leave the predictions about that out of this call. But what is the backdrop to our thinking? I see a certain set of conditions that most of you will be familiar with inflation, war in the Ukraine, COVID lockdowns, changes to monetary policy, supply chain disruptions. These challenges are not just possibilities of course. They are happening. No business leadership team operating globally could dismiss them. We at Logitech talk about possible impact regularly. And the truth is that all businesses including ours operate in this…

Thanks, Bracken. We delivered solid financial results in Q4 and for fiscal year 2022 in an environment that was often quite challenging. I'll spend a few minutes on the quarter and then provide some context and texture to our full year results. Q4 was our toughest compare for the year as we grew 108% one year ago. In Q4 this year, net sales were down 17% to about $1.2 billion, although impressively we saw continued growth in pointing devices, keyboards and combos and gaming. Gross margins were essentially flat sequentially despite ongoing cost pressures and incremental currency headwinds. We remain disciplined with promotions, while still gaining share in many categories and we work to reduce our reliance on air freight. Looking ahead to the first half of fiscal year 2023 margins could come down further due to ongoing cost increases unfavorable currency rates and higher levels of air freight as we expedite to recover from supply disruptions due to the China COVID lockdowns. Profit was down for the quarter as was cash flow from operations both as expected. For fiscal year 2022, we turned in our ninth consecutive year of growth with net sales in constant currency up 4%. As mentioned earlier, C&P and gaming performed particularly well over the course of the year. Overall gross margin was 41.7%, within our long-term guidance of 39% to 44%. In fiscal year 2021, we experienced an unusually low level of promotional and in-store marketing investment and as expected and planned for an increase -- and we expected and planned for an increase in such spend this year. Higher promotional and retail marketing investment and increased logistics and component costs proved out as margin headwinds. For example, the cost of ocean freight is up about five times versus fiscal year 2020. Operating profit…

Thank you, Nate. In closing, this year we sustained our scale, delivered record sales on top of last year's 74% sales growth. We delivered many accomplishments, a ninth consecutive year of growth, strong growth in key categories and market share gains across the portfolio. We also beat our original profit target by over $100 million. Despite strong year-over-year results, our focus is on the long-term. We're riding secular growth trends in hybrid work video collaboration esports and digital content creation. We'll continue to deliver against those with agility, operational excellence and a diverse innovative portfolio. I'm super excited for the future. Before I open the call to Q&A, I want to thank all of our employees and partners for continuing to deliver terrific results, while navigating a really dynamic and at times challenging market environment. Your hard work continues to pay off, and I'm really proud of both Q4 and the entire fiscal year 2022. Thanks to you all. Nate, we can open the line for questions.

Great. Thanks, Bracken. Thanks, Nate. We'll start the Q&A portion of the call now. For our first question let's go with Alex Duval from Goldman Sachs. Alex, good to see you. Thanks.

Hey, Alex.

Hey, Alex.

Yes. Hi everyone and congrats on the strong results today for the quarter. Just had a couple of quick questions, firstly just to clarify on your updated full year guidance, it looks like you cited geopolitical events in Eastern Europe as the reason for the change. Just wanted to clarify if that's the only reason or is there any sort of big underlying change in terms of the drivers that you're seeing? For example, if we think about the COVID situation in China and lockdowns there. And secondly, some investors have been asking about, how important the PC data is, which perhaps indicates a little bit less growth in current periods than in prior periods and what that means for Logitech. So for example, to what extent do you think yearly PC unit growth is actually directly relevant to your company given that today you sort of beat expectations on keyboards and pointing devices how should we be thinking about that? Many thanks.

Let me take the second one and then, I'll let Nate…

Yeah. Sounds good.

… how relevant is PC growth. I think we disconnected from the PC market six or seven years ago. And so we really stopped considering it a key driver of our business. I guess, over the long term it would be but we really focus on the installed base. And the installed base expanded dramatically during COVID. So we've got a lot of workspaces to upgrade and enable. So we don't see it as particularly relevant.

Great. Yeah, I think on the guidance let me just highlight how I was thinking about this Alex. I think there's, always many things to consider. Some are very objective and easier to quantify and others are probably more subjective and harder to quantify. And I think that's the case right now as well. Direct sales in Russia and the Ukraine are certainly easier to quantify. Although, the follow-on effects that this conflict could have on European demand, oil prices, logistics, things like that are certainly less certain than the direct sales which is kind of what we talked about being about 2% of the overall company. I think more broadly, though, we have other challenges that we have to consider as well and monitor and track just like we do every year. I mean right now Bracken talked about those in his prepared remarks things like currency, logistics, disruptions, costs, inflation. You mentioned the China COVID shutdown. I think these are some really good examples of things that frankly are, just harder to quantify, but we have to monitor and track really closely. And that's what we do. I think it's also interesting. We don't know sometimes how some of these things will play out how they're intertwined. If I use as an example at the start of COVID, a little over two years ago, our initial perception of that was we have a big supply challenge. Our factory was shutdown. And a lot of our planning was around how do we, recover from that. And then quickly it turned into wow we have a lot of demand coming in as a result of this and we had to adapt to that. So I think today's environment really is very similar to that. There are a number of factors that we consider. And like I said, some are easier to quantify than others, but I think the reality is you just have to track the business regularly which of course we do, as Bracken said, adapt, change and operate and compete. So that's kind of how I think about guidance every time. And I think this year is no different.

Many thanks.

Thank you.

Thanks, Alex.

Next up Paul Chung from JPMorgan please.

Hey Paul.

Hi Paul.

Hey Hi. So, how's it going?

Great.

So I guess first up on BC, as we look forward after a very strong 2021 lapping a tough comp here in 1Q 2023 but should we still expect that 5% kind of 15% growth? And how do you see competition evolving with HP now getting into the mix here? And then I've got a follow-up…

Let me start and I'll let you jump in the latter half of this one Nate. First of all, we're still super bullish about BC. The underlying demand for conference cams was really strong and we grew double digits this year throughout the year and it looks good around the world. And we just love our product portfolio. We think we've got super cool things coming and we've got peripherals around that, that are also doing well and we're starting to offer services that are super early days. So we feel really, really good just in general. And it's hard to imagine companies going back into a higher environment. I was just in one yesterday. It's hard -- and they're on their way back in. It's hard to imagine those offices without upgrading and putting video, more video and different video and so it's coming. In terms of our growth expectations, I think we moderated our growth expectations for the year as you just saw. And that certainly had some impact on BC. But I think the thing that I'd really highlight is that because of the diversity of our portfolio, it's always played with us. We've always been lucky to have this diverse portfolio that range from consumer, direct consumer experience like gaming all the way into and now more and more in the office. And I think whatever direction we end up taking whether it gets even stronger in BC, which I think is possible or it's a little bit weaker than the 5%, 15% you mentioned, I'm kind of confident that our portfolio will play in our favor here. Do you want to add anything Nate?

Yeah. I'd like to highlight just I guess the strength of the performance in FY 2022 on conference cam. I mean, it grew double digit and net sales sell-through double digits. It actually grew sequentially throughout the year as well. And Americas was particularly strong and consistent in that sense. So like Bracken said, we're very -- you have different demand trends sometimes and the timing of those trends could be a little bit different by region. It takes some time to build the pipeline and to close deals. But again I think just looking out on a longer horizon, which is the way we think about planning the business and investing and feel very good about it.

Okay, great. And then on free cash flow, do you still expect that one-time kind of pro forma operating profit for the year? And when do you expect to see working capital investments, kind of, come down, some more harvesting and then your pace of buybacks has accelerated this year. Should we expect a similar pace in 2023 maybe see the bulk of free cash flow going to dividends and buybacks? And then lastly your inorganic opportunities, it's been a while since you've done quite a material acquisition. So just any thoughts there? Thanks.

Okay. Let me try to take those. So, I think -- that’s okay. You lost me again on the -- what was the first question? That was the one I was starting with.

Just operating costs.

Yeah. So just to clarify the one-time is on operating cash flow, not on free cash flow small adjustment there you got to net out the CapEx. I still think that's the right way to think about it. Cash, a lot of it is about timing and linearity even in a quarter and how you end the year and things like that. But I think that's the right way to think about it this year. Working capital, we've been very thoughtful and strategic about the use of the balance sheet in terms of supporting the business with working capital investments. And I think that's played out well for us and we'll continue to do that because it's not really the time to be managing to just-in-time inventory. There's enough uncertainty where it's helpful to be a little bit long in some areas and that's what we've done whether it's on the component side as lead times have gotten longer and there's been some shortages or we have categories like the one you mentioned, video collaboration strong margins. The cost of a stock out there is pretty high. And these are products that have long life cycles. And so it's made sense for us to make sure that we're invested in carrying appropriate levels of inventory, so that we can move quickly as demand changes. That said, there's obviously some things too that are leading to some higher levels of inventory relative to prepandemic for example, port delays and just overall supply change disruptions and so until those things resolve themselves, I don't really see us moving quickly to reduce inventory in our distribution centers or in manufacturing because again I think it's to our benefit just to be running a little bit higher than what we did before. But I think towards the end of the year, we'd probably see working capital levels come down a bit. But like so many things right now Paul, it's a little bit hard to see that far out and we'll manage it as such. But I like our position with the inventory. I think it's a good use of the balance sheet. On other uses of cash, yes, I mean probably, a similar strategy that we have always talked about. We actually do prioritize M&A where we see deals that make sense for us. And we've done several small deals which granted may not be the news headline that you're talking about, but I think they're very strategic and important for us. And whether it's the light that I'm using here at home or some of these other things, they're nice additions to the portfolio and a good use of the balance sheet as well. So, we'll continue to prioritize M&A where it makes sense and then take a balanced approach I would say with share repurchases and dividends.

Yes. Let me add that last one. I think, we're always in the market and Nate's right and we've done -- he mentioned several small deals. Another way up, the way I'm kind of thinking about it is I think, we've crossed a threshold here where our innovation engine is really strong. We don't need to go buy new things to go to deliver our long-term targets. We can do it without it. We do sometimes feel like we can accelerate things by buying small kind of ingredient plays that can help us really get off the ground faster on some innovation. And that's the kind of thing we've been doing in the last 1.5 years, two years and you haven't seen them, but they're built into what we're doing. But we're not going to stop looking at bigger things. If we see something that we think really makes sense, we'll do it.

All right. Thanks a lot.

Thank you.

Thanks, Paul.

Thanks, Paul. [Operator Instructions] Next up is Asiya Merchant from Citi.

Hi, good morning everyone. Thank you for the opportunity and great results for the quarter. So I'm just going to focus on the outlook a little bit. You guys talk about the quantifiable impact from Russia and Ukraine. So just to clarify the guidance includes obviously, no sales from that. Kind of what gives you confidence here that, could it spread to other geos? And then as a follow-up, the long-term secular drivers that Bracken referred to the confidence that the underlying demand remains solid. I mean, are there indicators that you're watching that suggest that okay, this is kind of more geo-focused at this point, but the drivers outside of that region remained pretty strong across the portfolio, whether it's BC or gaming or keyboards and peripherals. And then just a clarification on gross margins, I think Nate said they would come down in the first half. Air freight was mentioned as one of them or ocean freight, I should say. But there is high levels of inventory right now that you guys are holding. So, could that provide some offset to just the rising freight costs here? Thank you.

Let me jump into part of that Nate, I'll let you answer the next one. Your question on Russia-Ukraine I think that's a definable problem that we feel like obviously, the conflict itself has borders. So, that makes it very easy for us to quantify. Everything else is -- every year we go into we always have some what will happen with dot, dot, dot. This year there are more what will happen with dot, dot, dots than normal. I would say you've got the tail end of several things that are caused by COVID and then maybe you can link them all to COVID, but you also got inflation and currency swings and that kind of thing. So, I think this feels a little bit like a normal year except that maybe there are more of them. But we're used to -- we've been doing that for 10 years. So, we're pretty good at adjusting and we're going to try to be really good at adjusting where we need to. And as Nate said, I think very appropriately it's amazing often things that start in one direction flip to the other. They might start being bad news and end up being good news or start being good news and end up being bad news. So, it's early in the year. We're super excited about our categories. You asked about the underlying things that give us confidence. It's really hard to look away. I tried to make this point in the opening. I mean it's really hard to look away from any of our four categories. I feel like there's anything that's very, very strong underlying dynamics long-term. Those underlying dynamics we don't see anything that's changed though. And while you can't really necessarily detect you can't predict a really short-term change the long-term changes feel really, really good. I mean long-term trends feel really, really good. And if anything it's just getting stronger. So, I guess that's as much as I'd say about that. Do you want to add anything Nate?

No, I think you covered the first part. I'll just clean up a little bit on the margin. So, I think similar to what I said at AID, I think first half margins will be lower than the second half. You mentioned the inventory. I mean that is part of the inventory strategy is you want to buy ahead of cost increases. So to the extent that costs have been rising I think holding a little bit more inventory has given us a short advantage. You can't buy a year's worth but we're a little bit long in some areas and we've probably avoided some cost increases or delayed some cost increases more appropriately. But from what we can see right now just with a little bit of pressure here from currency and some of the inflation that we're seeing, yes, I think the first half margins will be pressured a little bit. We're obviously doing our best to adapt to that and work our way around it whether it's with finding new suppliers, adjusting prices those types of things. Just like Bracken said, we go into every year and some things we have some visibility to and other things will change as the year goes along and we just have to keep operating and executing and we do a good job of that.

Okay. Thank you.

Thank you, Asiya.

Great. Next up is Erik Woodring from Morgan Stanley. Hey Erik.

Hey Erik. How are you?

Good morning guys. Good, good, how are you guys?

Good.

So, maybe I'll start at the top. And just to clarify obviously COVID and the lockdowns impacting China are having an impact across the Board. Maybe just a clarification question. When you talk about production or supply disruptions is that your own factory? Is that just general sourcing of components? Has there been any change in April versus the March quarter? Just trying to understand the pace at which maybe production in some of those bottlenecks might be loosening or becoming a tailwind for you this quarter? And then I have a follow-up.

Are you going to take that one Nate? I'm happy to.

Again very dynamic Eric. I would say we obviously as you know we have our own factory there that handles good portion of our production. We use a lot of partners. I think one of the things about a supply chain it is a chain. There are links all along. And that's one of the things that makes it very challenging and very much day-to-day is you just got to try to keep that whole chain strong. So, we'll see how China plays out. That is just one of those things we're going to have to monitor throughout the year. If this is -- I saw just in recent days that there's some signs that Beijing has maybe taken some stances towards lockdown. I have no idea what the Chinese government's long-term strategy is going to be on this. And frankly, on the short term, I think it's just one of those things when you're part of an operations team, you go chase supply, you work around it. There has been some things that have been to the positive recently with some reopening of some warehouses and some distribution. And I think that's all I can really say is we're just monitoring it and closely tracking it and then trying to work our way around it. But we will have to see how that plays out.

Erik, if I can just add. You probably feel like I tell our team too much, but I'm so impressed with [Technical Difficulty] our whole supply chain team in China. I think we've really outperformed kind of a competitive set every single time. And I'd say, it's a little bit of magic to me sometimes how in the world we've done that, but they continue to do it. And so I don't know exactly what we'll face in there, but I'm pretty optimistic about not seeing a major, major disruption of any kind. But I'm sure that we'll manage really well relative to everybody else.

No. And I would agree with you on the outperformance versus peers. I think you see that in the data. So definitely there. And then maybe as a follow-up, how should we think about any let's call it potential pricing actions you might need to take in international markets, just in light of a strengthening dollar, basically in order to help maintain profitability, or asked maybe more broadly, how is Logitech today thinking about managing its currency risk in light of this kind of challenging FX environment?

Yeah. Erik, I don't know if you were following us two years ago. I can't remember what year it was it was 2015 or 2016 when we saw a major currency swing, the dollar strengthened dramatically relative to Euro versus the Remnimbi stayed about the same. And we had the frac. And obviously, there's a delay in what you can do there, but you can one of the advantages we had then and we have an even bigger advantage there now is that we're the market share leader in most of our categories. And our market shares have grown since then dramatically. So I really like our position from a pricing standpoint to the extent that we feel like we need to do it. We're not going to be kind of casual about that though. Market share has its costs in both short term and long-term. And I saw pricing has cost short term and long term, you need to make sure you're always extracting the level of value that you should and not trying to get greedy. So I think we've already put through some pricing and I would suspect that we'll put through more, if the dynamics here look like they're going to stay the same. And I think we're in a position to do that because of the size of our business within the categories we're in.

I'd also point…

Okay. Yeah.

…Erik to the importance of the marketing investments we've been making to things like building up your brand, raising awareness for the value of the products goes hand in hand with your pricing strategies of course as well. So again, difficult to put a fine point and quantify that. But directionally, it's certainly helpful and that's consistent with our long-term strategy about how we think about investment and marketing and how we think about its relationship with our pricing.

All right. And maybe if I could just sneak in one last quick one with you Nate. If we think about kind of the midpoint of your revenue guide and how you guided operating income, you could get to a scenario where operating margins are down slightly year-over-year. Should we think about gross margins primarily driving that and you still being able to invest, or maybe just help me think about the trade-off of kind of gross margins versus OpEx as you think about the next 12 months? And that's it for me. So thanks, guys.

Well, I think, there's going to be ranges on both Erik. Again, we're looking out over a full year, so we will manage those. I mean, I don't think -- this won't be a year where I don't believe you'll see OpEx investment faster than revenue growth this year, like you have in the past couple of years, or at least last year. We didn't -- actually two years ago. But we'll see what happens with those pressures on the gross margin side. Like Bracken said, where it makes sense for us to be promotional, where it doesn't, how much we should be investing in marketing. I think what's really important is, we want to sustain investment in innovation and engineering, things that are key to capturing the value of the long-term opportunities that we have.

Great. Thank you, guys.

Thank you.

Appreciate it, Erik. Thank you. Next up Ananda with Loop Capital.

Hi, Ananda.

Hey, yes. Thanks, guys. Good morning. Yes. Just two -- good morning, good morning. Good to see you guys. Just two quick ones for me, if I could. Going back to fiscal 2023 outlook, what, if anything, with regards to the collection of macro and supply chain and lockdowns, et cetera, would you guys consider to be incremental over the last 60 days or so since you gave your initial forecast that goes into your fiscal -- your sort of revised fiscal 2023 outlook? So just sort of what dynamics are incremental and what thinking might be incremental from 60 days ago.

Nate, do you want to take that one and I'll come afterward?

I mean, I think, the only thing that wasn't occurring 60 days ago, I guess, would be China COVID lockdowns. The threat of that I think was always out there and it could have been in China or anywhere and I think that's the environment we're in. I mean, frankly, Ananda, we don't know, I don't know what new variants may come out. I mean, it certainly seems like things are kind of trending to the positive. And I certainly hope that's the case. But it's just, we just don't know. But I think over the last 60 days, I don't think there's been any new -- we've learned more about each impact that's out there and we've adapted, to Bracken's point -- started to adapt, to Bracken's point. But probably China COVID lockdowns the only one that's incremental.

Okay, great. That's super helpful, actually. So, I guess, that also is to say that, you still feel like everything else is dimensioned for inside a responsible balance with regards to your initial expectations?

I wouldn't say nothing has changed. I think that's important. I mean, I think, I just want to stress this point again. There are many things to consider and we have to keep and track all of them. We're giving an outlook for a year, right? So it's a substantially long period of time that we're going to adapt, markets are going to change, based on the information that's contained in the trends in the business today. That's kind of what we've reflected in the outlook. But we will update it, as we always do, how we see things each quarter.

Well, that's super helpful. And, I guess, a quick follow-up. Nate, I think it may have been you who talked about, in the prepared remarks, gaining some traction in social gaming and like how incremental -- can you just give some context around that traction? And how incremental could that be to the segment over time, if you play it out?

Why don't I jump in there, Nate? I think, very incremental. I think, it's sort of a natural outcome of -- if you went back in the United States to when the NFL was started and when football became really popular, it was -- football was a boys sport and a men's advocation. Men watched it. And I think if you roll forward to today it's -- in the US, it's everybody's sport. There's as many people understood them and there are women playing now. That's a very big physical sport with men and women playing now, even more toward gaming. So, I think the natural evolution of what's happening in gaming is, it's becoming -- regardless of your identity, it's becoming more and more popular. And probably, I don't know exactly, but I bet the fastest-growing segment of it is the casual. I know it is for us the casual gamer the person really comes in to connect with other people, not just to go in and try to beat somebody else. And we're super excited about that. And I think that is incremental. I wouldn't say it's something that surprises us. We expect that to happen, but it's nice to see it happening as we launch products into those spaces. They're taking off which means we're really in the right place.

And when you guys smidge in -- going back to your prepared remarks back, I mean you guys say social, I think it was social platform gaming or some. I might have began the language wrong, but does something like that. What specific -- when you use that language social platform gaming, like what specifically are you doing? What specific sort of gaming applications are you guys describing when you use that language?

We certainly say social gamers. And so, there's a lot of platforms that are playing on a lot of different games they're playing on. Even things like Roblox, I mean I'll just give you an example, which isn't exactly gaming. We just this weekend, we had the first -- so this shows you how far away from gaming you can get the core gamers. We just had the first -- we just created the first big awards event in the metaverse, which was attended by over six million people so far. And that just didn't exist before. And that's all occurring with performances live by Liza, those of you who know, different performers live in a video format, in a cartoon based format. So it's kind of remarkable to see how far we've come. And you can only imagine how far this is going to go. So that social experience, which is happening in game are people really chatting and talking and going there to meet and playing games and the games are completely secondary to the social experience. That's really what we're referring to.

Appreciate that context.

Thanks, Ananda.

Thank you, Ananda.

Thanks, guys.

Thanks, Ananda Next up, Joern from UBS. Joern, good to see you.

Hey, Joern.

Hi, Bracken and hi, Nate. Hi, Nate. Good to see you and thanks for taking my questions. And the first one will be pleased on video conferencing. The year was a little bit falling short of your high expectations. There were COVID impacts. Now you also said maybe fiscal year 2023, we could be below the 5% to 15%. Despite some pent-up demand and COVID restrictions seems to ease and also business slides are likely becoming more expensive between Europe and Asia, the environment is becoming much better. So why should then grow in three four years? Why should video conferencing grow from this revenue line and it's not really growing on volumes maybe in fiscal year 2022 and 2023. And the second question if you allow me, in gaming can you give us an update on the gaming mice and keyboard business in the US, how this has developed in the last three, four, five months versus Europe? Thanks very much.

Yeah. Let me take the first one Nate. I'm going to -- we'll see if you can take the second one, which I'll come back. On the VC side, we said yes it could be below it could be above. So I don't think we meant to suggest that we're suddenly pessimistic about VC at all.

Okay.

We feel really good about. I'm sorry if I misled you in my introductory remarks. I'm not to answer one of the questions. I think it's I think as things fall out I do expect to see lots of video going into offices and things around the world. I think we're more clear eyed about what's happening to webcams. I think webcams are pretty stable but they're not going to -- we're not predicting a big growth, but that's a relatively smaller part of our overall VC business. But the conference cam market looks strong.

Yes. Thanks for clarifying that, Bracken. I didn't mean to imply that either Jorn. I mean certainly it was possible to be outside of that range but I think the distribution probably mostly fits within the range we gave.

Yes. And on the other question was on gaming mice in the US. Do you have those numbers off the top of your head Nate?

Was it gaming mice or was it?

Gaming mice yes.

Gaming mice and keyboards yes.

Yes. And your question is?

General trend versus Europe just the general trend versus Europe. We can also follow up later.

Maybe it's easier if we clean -- yes if we just follow up. I mean I have the data here. I don't really -- nothing jumps out at me, but we should say -- I'd say, the trend is still kind of stronger on the wireless side obviously than wired. I mean and that's kind of we're particularly strong as on wireless. So, I think that's been to our benefit from a share standpoint. But in terms of market trends, I mean both EMEA and Americas have seen pullbacks in gaming over the last several months. We talked about that previously. Asia frankly remains very strong. But also consider the comps that we're talking about as well. And I think the 17% growth this year and even growing this quarter against a year that was up 108% a year ago I think is great and our share performance has been really strong with some disciplined promo.

Thanks. And if you allow me one last question on the pricing. Just across many industries average price increases we are observing right now are in between 3%, 6%. Some are even higher. If I try to make the math on your increased cost maybe 200, 300 basis points of your total sales is this roughly, if you fully pass it on is you should think about your price increases have a magnitude on average of 3, 4 percentage points in fiscal year '23. Is this a fair starting point?

So, your question is our average price increase 3% to 4%?

Yes. For fiscal year '23, is it fair to assume?

I don't actually -- I mean I don't really think about it that way Joern because it's really category specific as Bracken said. We don't have sort of one number that we would apply everywhere. It's really different by categories. So, I'm sorry I don't think I can really confirm your estimate.

Well, we don't do it and a lot of businesses a lot of companies do this. We don't apply one price increase right across the board. We're very, very specific. We go for example we'll go 10% plus in some places and we'll stay completely flat in others. We tend to be pretty -- we try to stay very aggressive on the low-end because that tends to be the most price sensitive and then we'll more aggressively price in the high end of the middle.

All right. Thanks a lot.

Thank you, Joern.

Thanks, Joern. Next up Rob Sanders Deutsche Bank. Hey Rob.

Hey Rob.

Hey guys. And my first question is on China. I just wanted to understand your factory in Suzhou, if you've had any disruption how would that affect you if there was an extended lockdown, given that last time I remember it was something like 50% of your manufacturing out of that facility. And then I have a follow-up. Thanks.

Okay. I'll jump on that. So first of all, we have had disruptions from time to time. And in fact, the very early days at COVID I think the factory is close to two weeks. So we obviously can recover from those and it happens. If it happens again, we'll recover from it. It will be a timing problem more than anything else. We may lose some sales, but not too significant. So far we have not had a big issue there. We've had some component shortages of components that came out of the Shanghai area. But in terms of factory itself, it's done very, very well. We've got a fantastic factory team. We also have a very, very strong ability to move things in and out of our factory, which is not quite as dynamic as within a two-week period but I would say extraordinarily good. And so it gives me a lot of confidence if we went into something that was more protracted we'd find a way to manage through it with the best possible outcome. So I feel pretty bullish about where we are from a manufacturing standpoint. Your numbers are about right between 40% and 50% of our products are made in our own factory.

I might just add a little bit to that Rob. I think it's always – it's a lot of little things. I mentioned in my prepared remarks, the increase in automation that we've done in our own factory. So that's certainly not going to protect us completely but it does reduce our exposure a little bit to labor. So to the extent that labor gets disrupted in a situation like this, I think that we could find ourselves competitively advantaged versus someone who hasn't made that investment in automation. So it's kind of the reason why I wanted to call that out is it gives you a little bit of protection. Depending on the severity of the lockdowns, the length of the lockdowns, there's different impacts that we would have. It's really around prioritizing too. We have a broad portfolio. And so if we get into a situation where we have to make some choices we'll make some choices. We'll prioritize certain products maybe even certain countries with supply. We're not having to do that right now. But if we get to that point we have some experience doing that.

Okay. And just for my follow-up, a lot of the investor base seems to have sell-through data from GFK, NPD. I just wondered if you could just give an indication how April is looking by region just so that we understand what the starting point, because I'm still not really clear whether you're assuming that the first half will be down and the second half will be up or something like that. I just to understand how you're thinking about the linearity of the year. Thank you.

Yes stepping back a little bit, we often talk about typical seasonality in our business. And I've been saying for a while the typical seasonality kind of got thrown out the window. And that's kind of been true for all of fiscal year 2021 really starting in our fiscal Q4 2020 when COVID began – the COVID period began The last couple of quarters have been more typical. Our Q3 was up 25% and our Q4 was down 25% sequentially, which isn't more in line with typical seasonality. So it could be an indicator that enough things are settling down. It's still a little bouncy by category, right, not as predictable. But for a diversified portfolio like ours, we're starting to see some of that seasonality reappear. So there's lots of ways. Again it's a full year ahead. But I think thinking about our business kind of probably returning to more typical seasonality is a good way to think about modeling it today and then we'll see how things evolve. One adjustment to that certainly that we all need to make is just that there's no sales in Russia and Ukraine right now and I mentioned that earlier. So there'll be some adjustment in Q1 to that seasonality as a result of that, but then my assumption right now is based on current trends that the back half of the year, kind of, looks fairly typical with what we saw pre-COVID.

Thanks a lot.

Thank you.

Thanks.

Thanks, Rob. All right. I think we've got time for one more question Adam Angelov, Bank of America.

Yes. Thanks, guys.

Go ahead, Adam.

Just a quick one for me. So I wanted to double check on your category assumptions for the year. You sort of touched on it already, but I just want to see if there's been any changes there? And then secondly, if you could just update us on the channel inventory situation of your products.

Yes. I would probably say no real update on the categories. All of them have some sales in Russia. So you might think about them all being equally impacted by that from a direct sales standpoint. And the channel inventories I would say like I mentioned back at AID I think they're in a good healthy shape. We're always a little bit short on something and a little bit long on something and I think that's kind of the way I would describe it now. The areas of probably the most tightness are still on C&P some of the mice and keyboards. We've got some component things that we're still trying to chase and clean up and the demand has been pretty healthy there. But we're working through those things. I'd say the channels at typical levels.

Right. Thank you.

Thank you.

Thanks, Adam. I think we're at the bottom of the hour. Bracken, Nate, I appreciate the update. Bracken, any final thoughts as we wrap here?

No, thank you so much. Thanks for everyone's questions. The engagement has been terrific. I know you do this for a living, but it's really stimulating for us. I always say I said this to Nate -- and Nate many times. I always learn when I go out on the road and meet with investors or with you and I always learn something about either about how people think about our business or what's going on in the world. So anyway thank you all for all the support during the year. It was a terrific year and we're really excited about the next year and the years after that. So look forward to a lot of more interesting and exciting calls a lot more learning. Thanks a lot.

Thanks, guys.

See you.