Logitech International S A : Transcript

Company Name: Logitech International SA Company Ticker: LOGN SW Equity

Date: 2021-03-01

Analyst and Investor Day

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Company Participants

Unidentified Speaker

Other Participants

Analyst

Unidentified Participant

Presentation

Operator

Hi, good morning to those in the US and good afternoon to those listening in from Europe. Thank you all for joining us today. Even if it is only virtually, I know we are missing together and we have put together a great analyst day for everyone.We have Bracken give you an update on our strategy and outlook, followed by presentations from several of our senior leaders. You've heard Prakash before in our past analyst days and he will discuss the truly amazing things he has done across the organization scale up and meet the unprecedented level of demand this past year.

Bloomberg Transcript

At the same time. He will also tell you what his team has been doing around sustainability and how Logitech is marching toward carbon neutrality. Then we'll have our two sales lead us Quinn and Erica describe what we have done to transform and build out our global retail and e-tail organization and our global enterprise sales team. We'll take a short break afterwards before (inaudible) will come on and talk about the investments that we're making in marketing and in building out our brand equity and awareness.

I'm sure some of you are wondering where all our OpEx dollars are going. And for those of you who have not seen a recent Super Bowl ad will show you that clip as well. And finally, as I'm sure every investor is waiting for and they will close out our presentation with our fiscal year 2022 guidance and provide an update on our long-term model. This will be followed by Q&A with Bracken and, Nate.

Now let me read through the forward-looking statements. The press release as well as a live webcast of our presentation, is available online at ir.logitech.com during the course of these presentations, we may make forward-looking statements under the Safe Harbor of the Private Securities Litigation Reform Act of 1995. Including with respect to future operating results.

Our actual results could differ materially including due to factors that are set forth in Logitech's Quarterly Report on Form 10-Q for the quarter ended December 31, 2020 and

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Company Name: Logitech International SA Company Ticker: LOGN SW Equity

Date: 2021-03-01

subsequent filings. The company undertakes no obligation to update or revise any forward-looking statements as a result of new developments or otherwise. Today's presentation will include non-GAAP financial results.

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Non-GAAP financial results should not 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 earnings press release include the non-GAAP measures and reconciliation to GAAP measures.

This information is also posted on our Investor Relations website, we encourage you to review these items, unless noted otherwise comparisons between periods are year-over-year and in constant currency and sales or net sales. These presentations are being recorded and will be available for replay on the Investor Relations page of the Logitech website.

And with that, let me introduce our Chairperson, (inaudible) Becker who wanted to say a little help from the UK.

Unidentified Speaker

Hey, thanks, Ben. Hi, everyone.

Bloomberg Transcript

Welcome, the [ph]avenue group see and, [ph]Wendy and I am Logitech's Chairperson, I want to thank you all for joining us today for our Annual Analyst and Investor Day. Normally we would be doing this in person but like so many companies this year we are hosting our Analyst Day virtually and over video.

I am with you today from Oxford, England via my Logitech Brio webcam. As you will have seen Logitech keeps going from strength to strength, reminding us all of the power of our global multi-regional, multi category, multi-brand direction.

So actually a global Virtual Analyst Investor Day feels sign kind of appropriate. Today Bracken in the team will give you an update on what we've done so far and what we're planning to deliver over the years ahead. I know I speak for the Board, when I say that we couldn't be more excited about the many growth opportunities. Facing Logitech we believe strongly in the direction of the company for our shareholders as well as the impact, we will have on the environment and the societies in which we operate.

Thank you so much for joining us. I hope you enjoy listening to our presentation. I hope we can see you in person again soon and I hope in [ph]telone you too are enjoying a Logitech Brio webcam and with that I'd like to hand it over to Bracken.

Unidentified Participant

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Company Name: Logitech International SA Company Ticker: LOGN SW Equity

Date: 2021-03-01

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Thank you, Wendy. Thanks so much for joining us from Oxford and of course we do have more Brio webcams available now, for those who need them. If you haven't seen our advertising, you might be wondering what's behind this idea defying the large over the past, and why is the title of our Annual Investor Day.

While [ph]Heidi Arkansas, our CMO will show you a little bit later the advertising this relates to, but we thought it captures a bit of what we're trying to do with Logitech in general. Opportunity often sits at the nexus of the past in the future a past has what approach and a future that requires a new one at Logitech, we've often define the old way to enable long-term growth let me start by telling you how we begun to think about we really do for users.

We enable people to pursue their passions, to create, achieve and enjoy more and connect people to each other. If that's what we do, Where do we do it, in which categories but we actually don't start with categories we start by looking at long-term trends that are affecting the world those trends that might give new opportunities for how people pursue their patients or connect others.

Our where to play choices those categories in which we compete, have been unfolding for 9 years and they relate directly to long-term

Unidentified Speaker

Bloomberg Transcript

Secular trends affecting all of us. I learned a long time ago that the best way to grow long-term is to harness long-term trends secular trends operate like tailwinds we started with the office we watched as laptops cannibalised desktops, iPads cannibalised laptops and desktops. As Starbucks became populated with workers and students. We decided we needed to be part of the movement out of the office into other places to work not that we felt the offices would close and everyone to move out. But to the office would become one of many places people would work and work would happen all over.

So, our first secular trend was office to anywhere. Our second trend, when belief was video calls with simply replace almost all your calls. This was beginning to seem obvious now but it wasn't six or seven years ago. Our third trend was really a stretch a few years ago we believed and still believe the gaming would move from your basement or your child's better to become the biggest collection of sports in the world. That looks like a good call to me, so far. And the last major secular trend we focused on was that people would look beyond companies like Disney and Netflix and the BBC and find their entertainment content created by regular people like you and me and our kids.

This was the so-called democratisation of content creation in each case, we believed these trends would drive growth in categories we're already in or that we can jump into. Those secular trends have been are tailwind for the past eight years. And here are the results that follow our sales grew at or near double digits. Our profits grew much faster and our stock price followed. In fact, the value of Logitech has doubled, every 2.5 years since April 1, 2013 and that was pre-pandemic during the pandemic, we've grown even faster.

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Company Name: Logitech International SA Company Ticker: LOGN SW Equity

Date: 2021-03-01

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In fact, we've more than doubled in one year instead of the 2.5-year rate. Our top line growth will be up over 60% this year. Our profit up over 180% and the pandemic didn't slow us down in new products or our quest to be more environmentally responsible we launched 40 new products this year. This year we will remove 64,000 tons of carbon there would have been put into the year, if not for our carbon reduction programs so the big question on people's minds now, when they think about us is this. Is this pandemic year a one-time lift that will,

Grow up subside and fall back to normal. This is a big wave like a title ways. So we'll just go down. No this year of exceptional growth just raises the long-term water level like a permanent tied. Let me get into each category briefly. As I said, either earlier, each of our business sits a tailwind created by secular trend. Let's examine where each category was pre-COVID and what COVID has done for that category long-term let's start with CMP.

Our creativity and productivity business think mouse and keyboard mainly was mainly a refresh business. There were 1.4 billion PCs out there, some percentage and some percentage the users of those PCs decided they needed a new keyboard. Our new mouse every year.

It was a small percentage, but we offered great reasons to upgrade and when you came into the store we sold a lot of you but are you went online to buy, but most people never knew about the MX MASTER 2 for the Ergo trackball or our new high-end curved keyboard they are amazing but we didn't have the scale to justify the advertising to really drive that awareness.

Bloomberg Transcript

Well, hi, is this whole picture changed post pandemic first we've moved from PCs to workspaces and there are a lot more workspaces that even PCs now. You have one permanently in your home now, maybe more. And in fact, you also, we'll probably have one in the office post pandemic. So there is a larger scale that will able us to have more places to sell upgrades into and more volume to be able to deliver the scale to communicate off.

Maybe we'll be able to make you aware of the superior ergonomic mouse or keyboard or flow which is software program the Ruche their MX products or just a more beautiful product because now. These products are part of your home decor. Let's go a little bit deeper. Hybrid Work world, the cost of this expanded workspace we're headed into it right now, and we believe there could double in numbers from between pre-pandemic and post-pandemic.

For example, in the US, less than a quarter of people worked really worked both at home and in the office and by our surveys that number will go to at least two- thirds. That means companies will need to be sure you have a great mouse and a great keyboard in both places. For the additional workspaces are only part of the story. While the increase in workspaces is inevitable. two other factors are also really interesting one is the rate of refreshment for upgrade you could

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