PLT - Earnings call transcript Q3 2018

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Operator

Good afternoon. My name is Giles and I will be your conference operator today. At this time, I would like to welcome everyone to the Plantronics Q3 FY'18 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions]. [Operator of may Manager your Relations, Investor Zelver, begin you conference. Will

Will Zelver

Plantronics' and of conference welcome Giles financial fiscal everyone XXXX. quarter Thanks third to results the call year for

and Joe detailed CFO. of and information the harbor Reform are presented includes Litigation President today made Vice today The Burton, Act discussed Private statements, me Plantronics' Senior Securities are and Joining of provisions CEO; forward-looking Pam and under Strayer, President safe Plantronics' XXXX. materials which the uncertainties in and are and The today's Relations related our website Investor XX-Q, The statements are section conference the most to XX-K corporate our risks at today's complete such recent set related call release. press investor.plantronics.com. on of of available investor to

of be call, we today's metrics. specified, other providing non-GAAP remainder will unless For only the

Joe. related GAAP on share the available $XXX.X other XXXX with non-GAAP compensation compared million charges with net our share of third of in turn Please quarter share third with I dilutive stock-based quarter year. of The in the to impact U.S. year. available $X.XX these have the revenues earnings to earnings quarter of in release of were the information and the prior reconciled We compared to sheet, and GAAP call, be the XXXX the the fiscal quarterly per securities, And with for with our on $XXX.X call compared associated third website. regulation. the for which in impacts million full quarter conclusion prior earnings was of $X.XX with for press the the of between fiscal diluted and Investor along for website. press Non-GAAP will tax loss recording restructuring year. $X.XX call per year measures non-GAAP both results Plantronics' our refer GAAP now will metric year changes Plantronics' third in section After analyst difference fiscal release. the share tax consists our diluted that, were $X.XX our of net of are today's any in GAAP fiscal effect over the per reconciliation and our for earnings the Relations prior per all

Joe Burton

much, very joining opportunity thanks afternoon, this wanted today. to take minutes Good Thanks spend before few a Will. for everyone open for and to we us Q&A. I

I product First, I wanted how latest launches. thrilled am to our say with

gaming middle stereo well. we're a market and in this refresh in of products, While holiday had the products season we the still of our did new consumer

More importantly, XXXX our and enterprise headset line, has than with black the portfolio been XXXX XXXX wire exceptional. Voyager revenues. received quarter second our of record to led ever. The consecutive the our new enterprise we've has this Along and is rest of stronger reception product to the

This Pro, data software-as-a-service based inside quarter, offering. almost additional businesses XXX our purchased Plantronics Manager

Lastly, on the the our solid. Solution been has on Habitat side, Soundscaping product progress

and there's installations pilot others global pipeline the coming a telecom as have for strong well several provider large at We as and quarters. a Microsoft

our continued importantly market. in greater and I've a worked understand to these and our I've Plantronics the views impact with world traveling quarter, concerns future. last and the success and partners communications channel have understand customers. on on the Over importantly meeting challenges their we've most can the how exchanged alliance meetings In to their

things learned. I've few a of the Here's

headset core quarter. become contact to has led predicted vendor in center has business. bit more our last over corded strength landscape more As the the a clear This

the versus move user are often forward, desk right increasingly whether how make vendors, and than the on a This around perhaps Next desk many these In but in decisions of clients creates us. unified deployment once biggest were that environments, few communications much team the looking to continued for Companies phones attach most a forward. ago timing, which even traditional mobile the laptop rate is quarter but is unified communications The of not a inside phone the to given long-term advanced that's considerations headset in are on now telephone premises and great news higher collaboration devices. question and their needs. configurations. business-critical move cloud is deployments deployments, is and years of several soft a to for

deployments very makes it core between distinction However, blurry. the UC and

that unifiers In business products our fact, Voyager multiple becoming are devices. connect say communications to in Savvy and to ability to you could the due almost their

the fully determine of of to in multidevice, us not definitions attached can devices. As headsets to are these multivendor in QX multiple PCs deployments, core I to we mentioned classic or are which serving UC last fiscal and Therefore, year, anymore. longer well back the no phones

we'll forward market BXB core. versus UC about Going less about talk the enterprise increasingly headset and

meetings get voice a to headsets is for seeing and and the I'm remote video need of and desk recognized. the video, Next, UCaaS and to the for and lot richness usage a In of and analytics need of conversations improve the and premises, being is on client, experience recognized. phones being increasingly, insights fidelity deployments, all video these great soft

is resonating and vision our We invest analytics, intelligent to continue in data need are on with how software, this overarching around we customers. Soundscaping insights seeing strongly that insights reflected with I spot is headsets, and as our innovate along offering believe others.

info posted please website Relations on package refer our on Investor @investor.Plantronics.com. For to quarterly our this, more

road. farther to reflects say of upcoming sharing I'll well, we down comments few to that, make to Pam innovation, forward looking solutions exciting Finally, to more our a roadmap the it a as once needless am with over you With I more Pam? turn get little

Pamela Strayer

afternoon, everyone. Thanks Joe. Good

and tax code impact make tax passage future. Jobs Act, today competitive. pleased modernize tax and up Q&A, with wanted discuss the Overall, an of reform the I are American business the open for final we to U.S. will we Before our the cut and in of give more businesses overview which on the and

shift to profitability rate the that long-term be beneficial expect We tax will system our corporate build. tax overall lowering to our lower territorial U.S. by tax and

which In States shareholder addition, choose best matter it us provides excess opportunities world. the the amongst make drive future in flexibility they competing company. invest and for We here allows capital invest to the in we for opportunity the decisions United the us where welcome no with to investment to are where growth the

GAAP XXXX some specifics, on near new results future. tax of as for and the of rate the year impact reduction approximately to we held As our quarterly is charge. tax the guidance for the The provisions subject by as unremitted XXXX our on the maybe the quarter effective in comprised our sometimes We're impact rules result legislation, $X.XX $XX as equivalents earnings. interpretation ended for and in that of tax from was from charge that GAAP third have to quarter in other fiscal The we treasury non-GAAP today, and to of clarified for taxes the XX% new said, rates reduced non-GAAP has differ cash current of maybe toll well tax of between our that owed legislation is company a company's may Of interpretations year the as estimates tax assumptions the year XX%. legislation of offshore. the includes of reform, cash issued down rate This developing the million new With estimated are provisional XX.X% total U.S. although due to of balance estimating current XXXX the quarter fiscal clarifying XXXX. in December, the some to rate referred fiscal estimate of recorded foreign made among the in and our the and EPS million, issued our mechanics $XX results increased X% fiscal a in year impact. by of year tax periods. effective for things, In guidance this to date both the a for our non-GAAP and

tax the based on foreign is capital, buildings of balance investment the as working and such While equipment. bill

due change $XX million additional will XXXX, period the in lesser first paid issued. million with next different interpretation will toll in As $XX four over a mentioned provisional years $X that and of million charge approximately respectively. our $XX the charge may of million over installment is guidance $XX earlier, with the or eight-year $X maybe we an and pay be to With calendar the through XXXX year July, pay million, and annually years million

reduced tax tax existing have with and as position tax using rate. deferred net new tax deferred lower revalued asset rate by expense estimates. assets was GAAP our lower we a liability million increased Finally, a revaluation further our $X This

We are utilize for exploring currently how our best available to capital. different strategies

made, open I'd the have committed decisions been best and the long-term. maximizing no the of shareholder that, Although in interest to to acting like are for shareholder call value questions. over our With we

Operator

roster. Q&A the compile to moment a just for pause We'll instructions] [Operator

Your is line from first your Capital. Dave, question comes from Dave King of the line Roth open.

Dave King

to to anything bookings that there guess on starting help or you is be significant guess I from that, sound revenue with I on front? beginning first conversation like to And Pro, be share what it's had afternoon. products? already to Manager early anticipating on extent that Plantronics it then revenue Good customers Joe to what are what front, is on that or Thanks. extent standardize can but to thanks?

Joe Burton

Yeah. Thanks for Hi Dave. much very question. the

on a we've total almost new over Manager quarter, XXX Manager somewhere already, enterprises bringing this just Pro well in our enterprises As added XXX XXX we said to altogether, Pro.

more the on guidance We'll talk for probably how it's about to Manager said, a model think our a a you revenue more Pro on now As quarter have little early about side. when we from little FY'XX.

to have increasingly, the headset and whether analysis from understand training more usage ability we a business shifting cases, is Unified for the agents that and industry-leading many reports looking with to the customers. really our Unified our IT optimal have conversational In conversation. the lab it assets they with talk the can deployed begin even Communications but insights, when outcome data we where headset. generate patterns been customers, The the conversations and the their of have conversational understand to for innovations However, from around Communications can actually we the we lead actually

about ingredients we compelling our with Pro. on a customers. but and outstanding finding that the are of Manager I insights to really that's to order claiming set all them, are So differentiator the that more standardizing wouldn't conversations being in one just out able result it of get of customers data enterprise have and we team that an is Clearly headsets that do a of for certainly us believe sales resonates side. say on have that Plantronics they created

Dave King

Okay.

that So helps.

differently, at that you the been think? mid-XXs Has gains seen a past the asking to we've that's So quarters? do is on couple over then you low contributed it side do kind think contributor the UC of percentage maybe that material all to

Joe Burton

off taking and couple strong. of We're Clearly a going the Dave. in things There's broadening. is on market Communications seeing general Unified market the

growth we booster the talked past, we've generally bit if Unified of the much more products. too. really an We quickly as I model SaaS then broad deployment a icing Communications a lets deploy about out been helping think that We was As rocket on anything we'd maturation a in of the a the a and of that think has cake, industry people cake. wish got us but whole it industry. that differentiator as say the And the on is that's is UCaaS

Dave King

more Okay. of color. seemingly And you know, side have do by to think help you in how you instructions able side. as consumer I market low much of might declines [estomatite], then that mono there, importantly, do a you I side? and little coming XX% about declines driven that bottom stereo XX%, drop is find When we market stereo you the bit, low there That's product we think the is great do guess on versus, be And may sort but share thanks? that about think do then how don't think what more

Joe Burton

sure on go I'm consumer will well. as in chime Pam so start Yeah, I'll and ahead then and

our both as So, been on couple disciplined increase last and over we've last product more We've said products. a working of taken margins also better to through the placing the we've approach selectively to year. the more introductions consumer much quarters, over side

broadly the to this that or market give had we a about enormous new albeit well, miniaturization will product holiday be through that sure on take. see in number cycle selective very is we on refreshing the refresh topline line lower and did niches the believe improvement performance and and We're industrial in are acoustic outlets product we design a wireless season product stereo We and the our and I paid ourselves and year. products -- While business some over for. frankly going where that will be halfway margin coming consumer placing Plantronics make is continue market a our growing

are believe minus clarity past bottom, divestiture. essentially in with finding clarity said margins? -- increased year-over-year -- we We're on we the going what minus is Pam about we point we're this at expect flat Now that I the that forward

Pamela Strayer

add Absolutely. you jump a look I'll we mono. on and stayed little for instance, on Mono for in bit consumer. color quarter minute flat comparison, also when in at there year-over-year more this

we that category. well in So, still quite are doing

In to we on has continue margins addition, nice and our premium category mono those. in work

still So good as there as a we quarter that's and in the many this business had see declines past.

some news. good that's So

Dave King

lastly that? then Okay. you of it maybe as the I as me, do or repatriate level do debt for of look in That likewise, now think to you so Pam tax or cash, is guess much that helps. well, leverage how optimal $XXX plan And much we about to some of sort then million for do and cash? I do guess reform, assuming with and overseas and plan redeploy you you the that what's how of call what

Pamela Strayer

Yeah.

in So, U.S. the I'll start cash cash balances. million got here $XXX the million currently offshore. in have We We've $XX with

is since majority some them and have that and opportunities cash to issued we looking where at found offshore reform investment U.S. the was been the tax pull those spending if reside could So back and investments time here. we how we

I working brought looking it that been we've of aside So, the capital at over be from bulk time. and some offshore, back could think

ways in to capital this structure it. access any our paying structure to We that we're always our capital and change today. As you more big have know, a cash without now tax for looking on improve

some to mentioned debt, at that capital. need expense, would interest would want we on but look is we impacting consider. tax we us to So, about not that be would new the very that's what with thoughtful in clearly obvious much. we There do you The we that's -- options, limitations rules something too

impact. small pretty So

our might of an strategy always M&A some that buyback option takes course there be course, is Of share as well. board and

at right the we're So, the do and thing, to those. long-term of the our for all return want of shareholders. growth for looking company We long-term

in disclosing more expect not to tell anything be you today, the we're able quarter to So, I next but call.

Dave King

Okay.

leverage kind have you guess hand-in-hand I that the let's if or levels are just with level think on do you more about have? did Okay. that That the helps. one you cash buyback, accelerate say you front, the you with of still going comfortable debt of your is

Pamela Strayer

I is pretty way the debt comfortable am with the leverage it today.

me I think we're all. in good shape and that doesn’t at worry

Dave King

Perfect.

luck the Okay. questions Thanks good the rest for taking my of year. and all with

Joe Burton

Thanks Okay. Dave.

Operator

Your next comes Greg, is your Burns line Sidoti. the open. question line from Greg from of

Greg Burns

Good afternoon.

or of characterize the of driven being I how a just the market? what terms In you're handful of more kind in UC you it broad-based in of market, Is the would guess a projects it by strength large expansion is seeing? demand

Joe Burton

Greg, question great a for It's thanks asking.

It It medium-sized is is and make So, few a UC demand. don't deals a quarter hit few of virtually two hit. small they a seeing that's deals or actually clear, do one overly large be not quite but broad-based but way whole just bit the the a quite too, they to quarter. deals, little we It's we're every both, lumpy.

which mentioned at our at several as UC leaders past walking comes it to have been there business bit that and I and as our -- in the get put a side made it seeing Unified we on in a sometimes is and that that desktop a or different we it people So, Communications stack headset of when tablet even They few less that and interesting or see USB actually USB years pivot flavors probably have they're or We're as phones lot seems comments full telling laptop ago. and customers people five with the in a they're a with are next-generation. that out have trying that The this getting headset, is and I'm I future is back a also us the more UC opening really though, full to Communications service proof. a floor well. what Unified USB broader. the be really to predicted and mentioned than Communications therefore quite have or I salespeople to Unified think a in talking point it eight lumpy I port likely thing one is is the was a my

a telephone, a it's So, PC. plus a tablet, plus

side quite as So, growth proofing the type even considering people in on strong UC broad. either many moved but is cases, have really future it we're to seeing or it a mechanism, UC if are

Greg Burns

of percent consumer gaming? Thanks. What is Okay.

Pamela Strayer

percentage. Yeah below ground XX% because overall, we quite It but total. this it's small it's did quarter well pretty year-over-year in did grow of a down

Joe Burton

around there Yeah Yeah. right.

Greg Burns

mobile And Okay. of just versus business split can this consumer? What on give the percent mono that us I guess you of side is stereo?

Pamela Strayer

lot Yeah, a probably over what our we detail from and is of it's mono resilient total because say up of will back out recently, consumer XX% rest here, been don't still give but it's that the quite I there. into loans

Greg Burns

All or that to one then need on earbud lot to headsets coming Yeah. of market. of one stereo just And seeing in out to factor a consumer type last feel form be to business, side the have of truly you competitive you right. something your factor round we're Okay. Is the market portfolio? the wireless

Joe Burton

not something our until on. now. that recently, same of were just we performance question. few there and price felt a wanted great we time wireless just was -- prototypes littered stores the lit at people a their to as quite name with true actually put are early or you of most CES At to products them way was say making very was them showing a ratio It's and samples of

see can quality a no but expect that them, find wireless solving could where this we can user, problem product a we I actually for think formula if right price time. have certainly the and at really true at the forward, Going a Plantronics you than announcements

Greg Burns

Okay. Thank you.

Operator

next line from Your your comes question Coster is Paul the open. JPMorgan. Paul, from of line

Paul Chung

is Paul thanks. for Hi my questions. This taking Thanks on Coster. for Chung

So just decline and on how if could UC core now legacy of on the of comment call legacy is some more growth industry side, the or replaced the being know of puts but there, enterprise I business this quarter, function the is business? driving by much a shrinking, that been on or takes in centers you you've

Joe Burton

Paul, for will thanks much the certainly so question. I Yeah,

about in because UC headsets to on opening which, earlier but used future order some talked hooked occasionally are determine I can't comments, As phones precise headsets UC broad number, which is my on me very very, remarks we a proof. and based in let core to get seeing. to get very, We what down give

all, negative we did revenues. recorded core couple of contact our about vendor some in quarters that of a the impact space particular back our First talk particular in and core center having on a in confusion

We the degree is space there centers in center time. have ridiculous we talked contact the looking strength at particular in out of a this vendor contact core a again. death bit seem recorded at about, the seen the somewhat we're when Clearly and clarify business proportionally to of that you completely

of exist, and service but deployment So yes, robust and box automated seeing self-service contact centers. we're

a there. we So, see problem real don't

degree. instead a in we seeing some office to of that headsets headsets general deployment, Unified being do deployed Communications Now think purpose certainly core you're

on either that As laptop. can a the is system talked before, I Communications be now because about Unified

a standard Unified too. headsets to But moving increasingly be some the allowing Communications deployed a of there that you're support to port telephones headset. or course UC next-generation USB of So

you with together our erosion, quarter any see don't can contact is second we don't at add overall it any the all we What time. determine in centers. just of row really see is enterprise a margins We share. expanding see same record in So, when loss meaningful we

Paul Chung

Yeah, it's great.

broad-based. quarters call past So, market or was of share two can any or there know and But you industry out I particularly have strong, the been regions mentioned you are verticals gains? kind it

Joe Burton

particular all the all just But is to that perhaps On in the in we're out. hearing relative call well is to seems count our fully. and no, this participating market pretty not voice broad-based, regions, stronger nothing particularly -- you're reason it's Communications nothing call really out. Verticals, enthusiasm broad slightly in where regions, Europe of across be the market strong in all share yet to Regionally generally side, Unified verticals. a to going part

Paul Chung

given we year thinking 'XX? Okay. about And are continue lastly, rates and this are how growth You you to workforce think low, most -- and likely peeking. momentum how unemployment are is then turnover that and should in expect options fiscal particular about enterprise

fiscal for get just 'XX outlook, your to year thanks? So sense a

Joe Burton

see Two I'll Pam wants go things, and then on. if to

that still is First the We time is all, long Communications. we on Unified for of that true. we Unified were this lot still Communications thought in still innings a in runway cycle. be we've of a of believe said early that There

our Now going call growth specifically model, something talk going forward. we're earnings at about to that to think I the next

Pamela Strayer

and Yeah, CAGR a enterprise expectation for X%. five-year enterprise put we would grow year total as last category out

but we So reasonable estimate that's this at point, update still it quarter. next will a

Paul Chung

Thank you.

Joe Burton

Yeah. Thanks Paul.

Operator

next comes Latimore your from the instructions] Your open. line question Northland is of Mike, line Mike Capital. [Operator from

Mike Latimore

Great. Thanks Great a quarter. lot.

target does same? those the the around long-term to tax or say, are lower at thinking your With operating margins that change all stay so rate,

Pamela Strayer

that KPI operating hold maturate income and a the we Mike. The question accountable is ourselves margin. That's good operating

still So XX% next points We're be couple changing. tax earnings year. income that XX% line and revenues. that the at of we'll to operating will looking help not between of net The we're driving on gain

Mike Latimore

And it. in general trend enterprise that quarter Got the you business, as on think March about up how down the color Okay. then any should flat?

Pamela Strayer

of is going little in a QX bit always revenues a enterprise QX. from down quarter to seasonality of there It's bit a Yeah, typically.

Year-over-year in QX. expect from down enterprise. slightly but down, we strong a not it's So, growth

Mike Latimore

Joe, then now, clear. different I want think times to mentioned like just but this you And three be Great.

little a initiative, it just little more desk of just seeing of ago, less, relative more bit is percent a of more the percent overall? but phones deployment you're the is net couple Unified to basically, years opportunity the Communications bit Communications is more more that but So pure deployment, phone maybe Unified soft

Pamela Strayer

their and for their all it out the and that really when winds the called three ago soft going Yeah, to -- for phone the provides on we a them a but maybe Interestingly, desk they're that it's It's to and phone of absolutely. we technology, on reason of to phone in out they're opening headset all Yeah, be system often an as a for talked frankly about it it is go think are thought the at is was years it an desk people PC also and four is we comments desk I tremendous not smartphone being client there away was desk, clients that their the up an unifier end. when user about in staying build on, like a interface either/or using all tablet. It going be software is lot. raised PC It's highly reliable. and it. I soft really happens were getting turns or all just the intelligent we opportunity

than So it's three four the predicted four us not though even industry years predicted or ago, it's years better ago. or for three industry a we we

Mike Latimore

then Okay. still to is predominate the of facing Communications kind with version is being hybrid, on-premise hybrid deployments, or the now? [duty] Great. And regard the Unified

Joe Burton

careful bit little Mike. a I be of little A and all to three want

still tends I say I would end at see some deployments the there, see. plus happening. I low-end probably you. starting is but high I what their of on-premise is see see I I end, not cloud to be seats. hybrid. you At that very the and meaning of some There of by XX,XXX end cloud, course, into on-prem them. probably substantially surprising what Those to plus a it see done dozens -- it then customers dip to the the of dozens going partners, not high to quarter talk seats of especially market visit all still to and to UCaaS. down deployments low at going way toe and the is deployments but those Of of XX,XXX are cloud still the -- tend on-prem

put hole. some together them cloud put a take the lash and and the create deployment cloud offices and -- Let's remote on on-premise them the then to in

of cloud still go idea top up you number which the I you see seats but the So, to very forward, ones continues that a at as the primarily at is visit. raise good on-prem

Mike Latimore

Got headset it. your from revenues contact comes And then how the much of center?

Joe Burton

specifically because a there precisely know is we that used are headset we don't headset we a that's again, or which out in deploying office don't -- on a know that the know core core don't in our really serve headset and environment. phone center those Once back moved that to soft as they general a headsets core is contact to have hardened contact we earlier certainly they're statement well Likewise, centers a as don't therefore that actually to. that my might us call UC definitions sitting

from but terribly important we chunk contact still but meaningful that know don't precisely know construct for a us. comes a as much center, of how I revenue, not So,

Mike Latimore

mentioned elaborate And a that couple or you I that? the then a know on quarters can ago, vendor that little a confusion just to Is one last or bit vendor few vendors contact -- in center you up. space clearing specific

Joe Burton

partner moment, that some reemerged felt. company announced public have a and us. great handful people some our had things on. When things first over were continue a were for to as that and the them I Clearly out friends to at but There over little course business the something or offering of That into at going pauses your an it with into Amazon confusion of good bankruptcy. that maybe contact Avaya to delighted quarter they and were and to. takes Amazon's may understand Amazon a where written probably be everybody partners while think We're in be hesitation bit. created they about a some offering, space, they away deeply not where time, build sits moves and were going impressive center anytime have people had listens a consider two up and

happened a confusion unique M&A us of the for well, probably three is but really moment. and quarters than as other nice. things situation half have half, in behind any numbers, things Couple ago contact causing now was be which in several we see to and just So, core where seems corded it industry that our is and the of more around that behind did two reflecting right center simultaneously we

Operator

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

Joe Burton

Thanks the materials out for for you don't of are questions. set Please today. Relations the Investor and and Giles to thank joining visit investor of any hesitate complete there us section reach follow-up if the everyone website

Operator

conference today's call. concludes This

You may now disconnect.

Plantronics (POLY) 30 Jan 182018 Q3 Earnings call transcript