PLT - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to Poly Q2 Fiscal Year 2020 Conference Call. At this time, all participants’ lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference call is being recorded. [Operator Instructions] Thank you.

to conference like speaker to now Mr. today, would hand over the your I of Investor Head Iburg, Mike Relations. ahead, go Please sir.

Mike Iburg

year is Thank and Vice you, Relations. President the fiscal and for results And CFO. conference My operator. Welcome are Chuck to second Poly’s joining me CEO; quarter Joe of and Iburg, President Head Mike financial today call XXXX. Investor name Burton, of Executive Boynton,

forward-looking Private statements, Harbor information Litigation which our made are and The today release earnings XX-K presented XXXX. Safe the discussed detailed today’s XX-Q, under and to and of provisions Act presentation. includes of risks uncertainties Securities and Reform the in the such recent press are That most related statements

QX the earnings available investor.poly.com. same Throughout discussed presentation the will is page FY front Unless This comparisons today today’s Relations to we from be XXXX otherwise refer remarks, presentation. website on will our to of prior the Investor specific all year. at and noted, our quarter slides

between comparisons on our You the materials on future today Investor measures. results, measures planning results the that on website non-GAAP – with of applicable management provided periods. should measures the refer posted our provide additional forecast explanation These the a Relations basis uses nearest are to at meaningful and financial reported discussed in as previously current along call, non-GAAP to this and GAAP to of for for materials the those measures These an reconciliations indicators investor.poly.com. we are website

call I’ll turn the that, Joe. to now With over

Joe Burton

everyone and thank you, today. Mike, us Thanks, joining for

at We to provide strategy, and will XXth, that know New review our everyone update. York host and City. let November plan to wanted I in begin, partnerships financial an Day Investor offices I we corporate a products our Before on

bit usual. As shorter this a seem a than call may result,

and open predicted, as endpoints For and cloud, dynamics out unified we’ve mobile workers. communication move for to to the industry, These market couple the the the solutions of been are collaboration. that the from we communications market affecting driving past move rise simplify years, offices of three improve demand transitions describing can the playing on-premises the in intelligent

continues couple results quarters. last we more that quarter, significant a our for would issues to Poly affect of As highlighted undergo transformation, several

deeper results continued product market. aging China line, today the than gaming While of softening trade predicted, an the Skype-to-Teams and impact reflect the a video tensions transition,

products our position aggressively through leadership we issues, work announced are we have As to these new very to core that our across manage a series excited markets. reaffirm of

just company’s largest In have history. our months, the portfolio the past few refresh announced in we

number Additionally, This with This our time to solutions we expanded wave partners. Poly. of potential enhance we exciting offer and to Poly value the innovative and the significantly significantly the market the bring of products alliance we our is new partners. of showcase key for strategic an

in scientific this and As breadth endpoints. unified of Polycom Today, the operational acumen Polycom focus in could and on created combines acquired are deep the transitions industry, for technical we’ve past, reshaping we opportunity, motion the we which capture horizon. because these and are dramatically noted services we and demand new Poly, customer major see full of creating communications of the the these dynamics To with the Plantronics. market excellence

combined portfolio two expertise to recently industry-leading refresh deliver leaders Our innovation. the announced leverages of these technology

encouraged already for are early days are these our company, building. by we the still momentum integrated While we are

points the acquisition provide proof announcements recent this some strategic tangible of first Our benefits deliver. of will the

from We category, combined the of line small feedback video the Within solutions. we X video customers and large alike. announced Studio

These managed and designed closely teams well to in attach video to in built Studio self-contained, our as products The to video video cloud are We’re room bars are and natively Microsoft market with to alliance any remotely as as function. we’ll platforms Zoom, solution. interoperate be PC requiring standards-based X the time. with partners to completely these new and bring no record solutions such

push we a to video user and meeting artificial experience, feel collaborative, solutions more smartphone. all meetings improve that as and the wrapped that and As natural and to these interface as dramatically intelligence make incorporate a intuitive machine learning use breakthroughs in easy

requirements Combined This software the with to functionality individual built to the and us and can upgrades, tailor as full portfolio a allows the we evolve, needs. enhance so Poly new entirely video Studio now through continue progresses software-driven continually on GXXXX, endpoints technology have of an to experience corporate and we platform.

to industry-leading room With the these experiences board delivers new now everything portfolio the and from our room huddle in-between. products, video

at category, VVX customers. Within the offer When line now our phones yesterday refreshed phones small we year, released for for businesses enterprise or large desktop of family the new CCX teams. medium-sized as voice combined last and with announced just well Microsoft we Ignite, as Microsoft

easy we with by deployment Trio the with remote phone working sets coupled capabilities or means their SMBs, case. both business feature for advanced provider points choice. for price phone, Additionally, wireless every of the their have on introduced use we endpoint businesses The XXXX of ideal DXXX conference management and service and for combination own, designed DECT the

enterprise Savi Within additions we headsets, popular to announced new wireless family. several our

are offer to and in-office noise wearing headsets decked With Series, the first and on new professionals at cancellation the offer now styles focus mobile office Savi employees UC the more job active to hand. help with we for

features with with broadest battery quality, while the extended continue We the enterprise. all industry-leading to offering audio noise cancellation headsets and including of life, deliver ergonomics, for range active advanced superior headsets

our strategic view We important opportunities as new these to offerings us for strengthen relationships.

of to technology, available to designed of range opportunities lives expand partners’ the showcase them. are users, the solutions and Our our our simplify end

our few the delivering how of highlights of we’re Let through partners. walk me for you a

where app announced a your we When We a size, any of laptop this element the believe to video device management deployments own critical pure is family Studio they are need the and bring natively remote approach. the noted at Zoomtopia, standalone without we connected capabilities rather capable zoom critical X running the of than of a were for device.

X size. Studio accounts partners in succeed mind, GXXXX with designed to UC these Our of allowing were any and requirements in our

Studio announced teams. versions new the with will X specifically UC for to natively of to and running the no for PC. a continues the and optimized we on Ignite, teams native to management IT Studio be is designed Zoom, capable of adoption deployments. Similar with partners Microsoft of XXX At works it device need how XXX as Microsoft cost and it run our This to lower functionality the critical solutions, enterprise

our of provider solution premier the With lineup native our position video from and comprehensive as headset teams. end-to-end reinforced devices, we phone Microsoft

certified in the next few become over ship As these products quarters. volume and

to growth in XXXX. FY to instrumental return this be our expect We in

conjunction the CloudFuel, Last week, legacy announced with of to in designed and systems we simplify the XxX communication on-premises launch to program from solutions. transitioning accelerate process cloud-based and of ScanSource, a

provide what Before fiscal want us has top-line difficult been context I turn year. this on Chuck, to a environment the to some I call over for

on we impacted macro on our we to As our products, by aging outlined Microsoft be I the Teams video August earlier Xth issues. and today, and call continue touched earnings transition

refresh debt our channel proactively of reduction taking on and with dynamics will product the a of number These As December transitions, we in inventory we’re a these our and a reduction. management for prioritizing and change the cash of our include sales completion manage a business. cost quarter, in to leadership prepare actions focus comprehensive upcoming and portfolio the organization navigate

reduction We short-term a expect our material the inventory results. will on have impact

the However, long-term that are we we’re with quarter performance. and will product announcements, our partnership taking confident recent combined other this actions benefit

nearing of yesterday’s industry-leading full recently our we announcement are products a announced our difficult Teams, with history. endpoints of a new coupled With period end Microsoft the of optimized for we believe in portfolio

continue the more balance color just XXXX. in revenue but a the on stronger challenging, future and will But want to than firmly that growth the headwinds, believe provide near-term emphasize expect profitability of remain will that the to financials Poly ever. We recover Chuck potential moment. I fiscal XXXX despite is to fiscal for and in I

the market In to discussed transitions will created of these coming terms truer and what are we in we the years. over partnership We when are than iceberg of summary, the just ever. tip the believe today Poly product bring market Poly announcements

a opportunities, on to compatible, allow first just are our major add innovative that solutions of for step us not products but forward market on value capitalize new The focusing partners. is round these while and will

more turn that, I’ll to the in With call detail. over results our discuss Chuck financial to

Chuck Boynton

Joe. Thanks,

will walk you financials, As in numbers I’ll the year, through I find can the with the reference prior unless to period referencing additional page noted. same where along be specific be the deck I otherwise the earnings comparisons details presentation information. All in the the

by breakdown each our year-over-year. revenues quarter. and was outlined, consumer earnings call. revenue of the were Joe of Slide quarter’s on we consistent last our declined million XX% headwinds with was as net our XX% Consumer down geography. the non-GAAP in shows down categories Overall, XX highlighted the $XXX performance As headset revenue product

consumer our endpoints Within year. make grew. of we services our our and declined business, to review of the strategic if business expect last close end to to enterprise it headsets, video we a are headsets calendar consummate The would transaction, legacy able quarter, voice while progress. and continues at Similar UC

in headsets a driven On by sharply were while video lower legacy enterprise rebounded declines basis, sequential products.

that headsets have new while in nice growth. a are replaced like UC seen We are Studio seeing the being products and pronounced decline upgraded products and

negative expenses benefit was The of impact EBITDA million top-line operating $X negative, FX a which impact was of $X a approximately approximately for $X offset million by million. to

XX, with to programs Turning the as to to mix long-term margin down XX consistent points time expect and the improve We geographic financial were margins over impacted pricing margins product model. portfolio with our gross Slide new do basis XX.X% profile.

$XX variable Operating down favorable to compensation expenses rates. synergies, FX due were and lower million, cost primarily

to continue This quarter. but Going or saw target rate $XX below expect quarter line operating points margins business, XX%. expenses to of declined be to XX% Operating XXX run we the manage XX.X% above million. will forward, basis this operating the our to with in in expenses we the was results

the XX, per to bringing EBITDA Slide in to quarter, earnings trailing EBITDA $X.XX. diluted Non-GAAP was adjusted adjusted million. $XX XX-months our million share $XXX Moving was

we our and in million investments. repaid target $XXX corporate revolver. ended includes debt of $XX right $XXX of million our This XX, with Slide to quarter million which and undrawn of liquidity, on Moving roughly $XXX million is the cash

in from the quarter outflows Cash $XX sequentially integration, step begun from to was operations have million as improving restructuring down. flow

navigate to business order are taking prepare reduce transitions it’s this the to time. As Joe for inventory significant and touched current earlier, environment prudent consideration, at on the we the careful ahead. macro After across channel actions believe in product we

to quarter guidance $XX we have into material on are and results expect will impact December we incorporated channel the our is full-year result, the action a inventory and million. As today. third quarter This a in reduce providing by approximately

year. fiscal do of will We now our reach of EBITDA weeks. net expect Day in we XXXX not more the our we fiscal Given of on guidance, times to detail ratio in at a three target couple the which the a we by this believe will in impact achieve Investor end leverage cover

Once source the of our and to integration payments stabilization we and and expect becomes working margins and capital a cash is improve continue stabilizes channel while complete, to off taper restructuring cash. generation

guidance. to Turning

fiscal GAAP channel we For inventory million. approximately million, to million revenue $XXX $XXX $XX QX, net of including reduction of expect a

Adjusted We to to revenue $XXX the million of EPS $XX in the to $X.XX. expected Non-GAAP be million. expected is EBITDA is to million $X.XX expect non-GAAP of range $XX of million. be in to range $XXX

EPS to revenue to GAAP $X.XX million non-GAAP billion. Adjusted Looking billion $XXX $X.XX expect billion, million. $X.XX revenue year of we to of XXXX, net EBITDA $X.XX Non-GAAP billion to $XXX $X.XX. at $X.XX of of fiscal

half the contemplate Our associated or second reductions. other cost does divestiture consumer outlook not

to say the to committed long-term model. want are we that we Finally, financial

term drive the can that than been confident has products more the and new are with sustainable While cost difficult continued we profitable growth. we reductions, expected short

to With turn call Operator? open for the the up that, to it I’ll back Q&A. operator

Operator

[Operator line from of Daryanani question Amit Your from first comes Instructions] Evercore. the

Amit Daryanani

two taking I my for me, guess if Thanks I may. Yes. from question, guys.

walk if I reduction the First at EBITDA up, on – math I year reducing just guys importantly, top-line versus at how the detrimental is million recover through are EBITDA midpoint, Chuck, severe? forward think about prior you fiscal And midpoint the the $XXX but the million guide, as you go or do the full margins so $XXX the by are XXXX? beyond so guide. through why they about you us go your Could on

Chuck Boynton

we QX this you. the both products. we’re legacy weakness experienced quarter, Certainly, with that past Amit, continued seeing thank Effectively, in what and specifically is had

are So, of directly new the being growth here in future, Studio, the into And phones, few strong the slew a specifically, we that future. and will we’re have that We’ve that legacy in in the UC we products we XXXX coming near but of experiencing some released desk out release did softness. of QX, think in the already conferencing not equipment, materially products see but improve and QX whole in with fiscal are updated, that the all them releases coming a and out. video

Amit Daryanani

channel? the just And conviction question that this the of you inventory the Got you be doing maybe to you then to Joe, guess how the it that be sold versus gives I reduction I written right it’s getting need could just are off? that should could what channel discounted Is it. talk or exactly And essentially more to And would what inventory set reductions the what’s getting things right channel little $XX confidence be, bit number be million now? confident severe? a with is if with or or follow-up perhaps you have about do the last

Joe Burton

that, let me on start Joe. this is Yes, Amit,

things. So couple of

out. of first we’re discounting flow work to little be we over really like, as would products kind the than out put normal to we weeks sell-out quarters, out, bit the that right built – They way. to million we thought of at going forward. are feel good these do to that which in products These of we we little thought. a through just stronger. the flush channel forward we need fine, is us like of products excessive amount going couple a $XX we if going are a than broadly the look that, albeit to in inventory but the in feel than we of all, inventory the you is math couple Unfortunately, through kind channel next still inventory as channel slower are going channel, taking So the do selling these of was not a of We more the a of

line can we’ve hold customers Other shorten time. bit, the up a that this responsive to does to channel can more pulled in less able demand actually our our of actually a as we manufacturing shorten is in reason supply frankly, we together up spike lot Mexico, be and over little be as

this So, number. the we right think is

Amit Daryanani

Got get queue. you. it. the back I’ll in Thank And

Chuck Boynton

Amit. Thanks,

Operator

Cowen. from next from is The Silverstein question Paul

Paul Silverstein

Hey, Thanks guys. taking the for questions.

now, the I million all what First off, way, relative but I’ll you for it the didn’t at follow-ups. total of million like you’re ask but what if can million, guiding of and previously, couple you this the drives of which about give can third answer $XXX And looks I know guidance if is I our recognized I’ve looked the a $XXX $XXX question, question piece that it’s shortfall you to the got were where quarter number, industry that? don’t for And parts portion the where then shortfall.

Chuck Boynton

you. Sure, Paul. Thank

and into we’ve the phones and channel headsets somewhat effectively So and is – in secondarily and we’re is QX, $XX that board launch video that conferencing. the then is million conferencing is in is that terms will we and into across to in of new inventory, primarily directly whole of the to volume products desk concentrated video say start phones and in lowered transition amount and more I’d the Skype-to-Teams remaining QX. it suite audio related the that audio ship production of desk the And at go

Paul Silverstein

appreciate I that.

go? It and terms good, the is there and smaller, as the your much How us are The here’s in not platforms at of expected for as remind just this commentary. apologize, referenced room do it. the to unit this How but question. much new If platforms, you Does is uptake Joe marketplace? How of many you my now video you Appreciate sounds that related? what how here, less video demand the a – I there? macro into conferencing company-specific? had like, apologies. question there on quite and video, the me more I much much you the and weakness how is larger But platforms okay expensive pretty Chuck, particular. of being of new to these Thanks. but And or going responding hoped. the also just see apply platforms – you looking you would expect, many have one or huddle in this, the already new be Can remind to weakness I guess, And that uptake is of prominent? platforms trust

Joe Burton

ask Yes. Great a I’ll as Paul. the if of can. question, take I that feel free as much to And missing possibly just piece, I’m follow-up.

market about. is and experienced that, we we broadly well. reasons We’ve So, the speaking, some think talked for once weakness alive the again,

tensions product macro somewhat I which headset trade aging in aging bit and We’re But a the let’s China softening video zero getting line then interrelated. on product an impacted market. of and line, Skype-to-Teams are are gaming two, video Skype-to-Teams by transition, guess transition, course, the first

video USB announced So the be all, is ramping the nicely. product been and to Studio since lineup, Studio first product, for product, it’s of a is of that’s which now or our quarters which so, we’ve new allow, market there out but probably been is or several our really in February clear,

said Although, be to won’t the before it we’ve material earliest. our always QX revenues fiscal at

in So, market. with ramp its still the satisfied

products. the we The our next that at Studio we week variant Ignite, support and this native then with XXX two Zoom announced at products product Microsoft on Microsoft the and Zoomtopia Studio announced XXX

standards these that the run on the natively video based interoperate system – there. video are also app So product and the any the bars that Teams out run app, run Zoom with

upon depending Fantastic the but the to write actually them have analysts, XXX. start products separate last weeks. mid-December product. shipping Those over ups standard on in the by January, been those industry announced a video So, couple early of

QX. on revenues, until no probably So our material fiscal really clearly, effect

out. So products a those bit are

for a again is product product software. platform about matters video Once been shares and same side, the of we’ve same that quarters. couple GXXXX shares the our hardware, talking last The

news So video we’re our our the that it Teams also entire based and interoperability. video standards through the will get to great line need native The building refresh Zoom, native products. is we

We the through. will take a have and or next already announced little for it either over them shipping those them month or so, but we’re transition while all to

and portfolio We filling releases going market, couple native little CCX think well, a we as into are our and Teams video announced, we products should the back the and fully to we’re as quarters aging winning think starts bit. is in they in channel, of get product video Between a to new phones with headset on of and new now then, that out. have a a that built the couple Is between the having weakness products, then address trickling which new live little that helpful? ones the

Paul Silverstein

launch Guys I’m revenue respect at some update us commentary you revenue of you’re is. had platforms terms from quantifying was quarter? and in to It where new this think all both the initial in give at where I wrong, as quarter correct you Can quarter. in if the with me last offered some the video that

Chuck Boynton

Sure.

disclose indicator great have number, but don’t our we out the is the sales specific quarter-over-quarter doubled. almost So,

channel, how the for next shipping really are about great products in is the selling the important December. a feel we it’s which indicator good indicator So, through and leading really really, that

Paul Silverstein

it quarter, second initial doubled in So, launch if quarter. comment? then Chuck, Is that the remember again the in to past the relative this quarter, and yet quarter the doubled preceding it correctly, I

Chuck Boynton

revenue doubling. Last had about talked quarter, we

product out, – sales didn’t last about a brand quarter. quarter we this So still was it new because talk a

more way a a number the prior very have doubled would it because out. it in quarters, than So sale small was

gaining nice through in CDW channel and Now, actually products markets others. like real share the accounts we’re and in selling seeing some the

Paul Silverstein

the pass appreciate you. Thank I’ll on. I right. All response. it

Operator

is from question Meta next Morgan Stanley. from Marshall The

Meta Marshall

me is kind within And there? Paul’s and down million Great. new from the on correction? other Have products. million, is just if Maybe of, million QX for second outside maybe maybe it on transition. somebody was been channel of from that kind imply from they Sales of first guide for just, the company, put the and kind are into this take is a we of a Head question quarter company, $XX SVOD question then million $XX impact an whether or just piggybacking accompanying question of $XX inventory That inventory of the and $XXX top-line would million $XX starting

wait have expected of wouldn’t those I’m of so maybe guess made pent-up So, wondering as revenue would kind there it for would of I be you on them some in lot products. to prior a why some there it’s like So, you’ve have QX, you that I a just them particularly demand new been out? to products have that like, announcements, and where coming for have worse lot out, gets to long of had

So, those are my two. Thanks.

Joe Burton

easy, question, Hi, Joe. a sales on and is Yes. Meta. This which minute. is numbers let lead Chuck here then off take the relatively I’ll the in

part the clear, of real So, all, company. Sales the first of yes, has to be of Head the

a identified Head yet. not have of Sales We permanent

We have in strong candidates pipeline. several the

make there an the over with when hire working we a appropriate. and external the We’re we’ll firm think few is time weeks next

meantime, driving sales. I’m personally the In

lead, reporting So, three, theater me. the to folks a operations other of sales and couple are

to run had sales person to me intend time. permanently, driving I great the that end my the While want get right is at quarters that. third This in career on for I’ve in time to a reporting multiple sales I don’t sales

forward working that correctly more them sales. question. And to is then come to really product during comfortable within drive a And and all answer short transitions. on Chuck. certainly, run it I’m the of Hopefully, the with ahead, can back let Go if these look sales numbers I’ll move always out helps. So, Chuck very our you

Chuck Boynton

Great. Meta. you, Thank

would And did just a revenue. QX QX, of we for guide you million. $XXX the So, the run ago midpoint math, the if be year $XXX million

will that we of some huge amount it’s into The QX QX. XXX volumes not are of process. in have – channel having consumer consumer year-over-year. higher is news ramping relatively in of recognizing news some video lot is revenue consumer, the a our reduction. bad be in new products is but that Studio forecast, We’ve The $XX new market. about under So, drop XXX, in in of QX, the but and constraints. the to A far as so we’d the and but again, supply like we are supply new the included a reduction a that review given is much we as material A selling strategic QX, start portion allocation the great that million don’t coming in and the in

So, is is, $XX then we not as at sure the But portion we those actual expect phones as consumer. look of though kind will I’m it and a down new recover. model. And exact of desk certifications, year-over-year, is that that million, revenues your big we get the Teams

Meta Marshall

you. Thank it. Got

Operator

Greg question Sidoti & Company. Next is from Burns from

Greg Burns

this question a than little flow. just Yes, is were on weaker The capital cash flow build. result to the expecting. cash we as Working a a continues quarter

Just how working do start we you? – and Thanks. looking become we turnaround a capital source see you’re of build that, at cash the for should to when

Chuck Boynton

Greg. Hey,

question I the the think was about It together, if But how I around the heard I build, think flows. most capital of do piece what was you cash can statement working were little saying. it of we faint. a

million So, we flow strong cash operations. had $XX than quarter, We outlook. cash a a generated from better little our of pretty

free Our was cash million. flow $XX

well. as able in we our long-term. by than inventory expected went even that Both expect little improve million. of AR, lower little significantly a while went $XX and those the cash we capital bit. were million. quite that up up $XX use then debt little will is was long-term sell-through so bit a I our had increased a We down We believe, That because our did to frankly working approximately increase pay to

Inventory we in of we expect source our stabilized. We it will QX is is not QX, cash a inventory quarter. working in plan, probably biggest that expect much flow materially. reduction cash our generation but the So, inventory revenue to reduce standpoint, channel think from the will be – this do materially significantly QX, improve again, of but improve because channel on-hand capital do to AR free in once a

question, that AR If total that is not, improve. overall will the you we your because could it should answers but it, turns little Greg. Hopefully, go a maybe up, the repeat metric So, faint. believe balance

Greg Burns

guess it aging focused here you lot on the video got Yes. No, and I yes, product portfolio. a

Can in China just quarter got that of the any the… bit here quarter. that reason China? mention is maybe, little and on the a update what’s on going did you and up for If last You with worse come that did part us

Joe Burton

macro of I been things. would tensions, couple et say We’ve One trade China is has cetera. highlighted a difficult.

We the sales did been sell We with margins China because China-only – China called in product services G-XXX. product okay that reasonable it’s business quantities did didn’t modest. a have that a last China. product a Product launch quarter in fourth here, that have. We announce limited have four made the out we

in So, the expect we leading around near-term. to China very but that indicators the were and for has market really a turn been difficult somewhat positive, us don’t

Greg Burns

care of update us quarter, And that? to on I Okay. do you guess last you put number on a the revenue China, in kind

Chuck Boynton

quarter. last with line in roughly It’s

Greg Burns

thank right, you. All Okay.

Mike Iburg

Greg. Thanks,

Operator

from is Eller The next the from Fargo. Wells David question

David Eller

wounds of years. get you could was from additional visibility or just for your the transaction Polycom talk in a into Chuck, about expectation or you self-inflicted some Hey, could I think just question. good out announced, about for months, some and when projections. you’d you And to a that? view the couple in quarters other visibility I the self-inflicted been afternoon. of transitional talk transition into called Thank if if also quarter? wondered seat of in then Any you But factors, call you’ve kind the the out but on couple the also was business? taking wounds the

Chuck Boynton

inventory obvious been quarter are visibility built a last say, struggling this quarter We’ve and it’s quarters. we now and the – So, taking have bit, I would it we’ve difficult in channel been down. two

down. go up. those to want inventories Our We gone have

little make the We last So, did I highlight change would quarter. say, challenging organization. than did the integration leadership has a integration We expected. a more we sales been challenges sales in

improve not visibility, but great. I’d it expect has do improving, but say, to So, we been,

early of indicators I and they’ve the on is, work done go-to-market these and are all are partners. Joe our great of say of strong quite business. very new improving ability with proud team would our we’re products the launching focused the I the very, and to forecast What

have forward quarters And bullish expect and still will improve. talking we tough XX. that We of to our about think on so XXXX us, but certainly Day, look a November we visibility that we’re couple of we XXXX at Analyst ahead

David Eller

then wounds on that product of China self-inflicted Teams And outside the transition quarter and aging the the and Okay. line? thoughts in the any were

Joe Burton

bit talked overhang, I overhang our there issues are being think broadly, some I about that been to we and due and but sell-out thought. the products and the goes thought, I powerful – little time it a frankly, that becomes we have ago, positive little new this than think that there Teams products materially, we not talked we as even significant a than when when market. more those we might soon products, faster as at we are really quarter. or transition going so detriment the and being quarter from has weaker be aging old think a a in primarily integration Maybe, a Interestingly,

so stimulate that and aging would the some would frankly, things. normal than I But another wrong no, or guess the just might huge Unfortunately, on we’re side integration of stuff, I here. CASM one other that for was some bit the quarter no some we as we maybe, thought products not discounting quite stimulate much of related did as like. little a demand note to only

little and that’s material. So, we money always have no, we nothing shouldn’t painful. a But have given may away

David Eller

harsh? margins in the of the Could a $XXX guidance, EBITDA $XXX million? revenue you finer could question to then to why down reduction earlier revenue, million, guidance coming Okay. you somewhere back the that the put are again, And point on $XXX so and then go just decremental million, on

Chuck Boynton

when less of products being products. is, Certainly, you have there is fewer from standpoint, manufactured, happening. couple a that are margin One a overhead absorbed there’s into being things

factor. one is that So

The the second adjusting and are the the given so tied the there is out margin of that there but would products. volumes. most of mentioned Joe inventory the EBITDA is of to as be other reduction to as as some clear aged channel That effectively, the to discounting well, reality age lower products in items well

David Eller

in segments, talk there quarter. rates about is just the slide one an the each or revenue? give no finer could in that FY then versus any on point business could by what’s And last long-term this could guidance on your outlook those growth on change an the you you you outlook And quarter And line has then in XXXX for like this slide the a But of also for us markets? put Okay. deck, on end implied update changes year.

Chuck Boynton

A Day. little Analyst bit. This about at we to talk significantly slide, intend

may Joe XXXX. about to of going in add in here, then each while And talking plan categories. do want detail into fiscal but we some color also the So,

of that key in our So is a topic weeks. two part

Joe Burton

at looking add of quarters may as quarters, said, would again, we are these as I in – next of growth slide the in compete and thing growth for growth rates. couple Once shifted those over couple ability reasonable. them think I next when and the those rates up all this couple we’ve product add line which we of, of more our is but these rates. point, our a couple Chuck three weeks, down only obviously, still announced mean we color have get a fully, or a or we’ll refresh to a all the market industry Yes. essentially point are

Now, come we in worse, ourselves see Day. the we with do exact a color we new and little which do But for the kind think will rates think very on ones products the of on better are a based whatnot, geography more compete comfortably growth to position a little at these will do which overall. ones Analyst to

David Eller

that’s XXXX in line embedded business by guidance? outlook then the And

Chuck Boynton

that cover along audio short-term growth video in UC and I then phones strong challenged secondarily, and and and the in detail most see then strong XXXX. XXXX desk having earlier, conferencing. Studio having being the certainly we’ll growth, mentioned headsets So, both we

David Eller

for Great. questions. the taking Thank you

Mike Iburg

David. Thanks,

Operator

Northland The is Michael Capital Latimore next from Markets. from question

Vijay Devar

Hi, on for Yes. you the this rest release plan fiscal of Thanks for my products is additional Vijay Devar for this What question. Mike Latimore. year? taking to

Joe Burton

fully didn’t I understand, Vijay. Sorry,

Vijay Devar

release products are the of fiscal going this The year. you to rest

Joe Burton

understand they? as now. are Which Once So, Vijay. things. I again, couple thanks, we a of –

by industry. Plantronics target product the this calendar year, with a for have the us, at Polycom this things every Poly, excited the major even product environment we refreshed I end will tough product, and refreshed of major major one So am every top-line for so on really year every far that of

recap. Quick

We’ve USB our the last Over the We’ve VVX put headsets. GXXXX, very many Studio have the we video new we many, about or earlier, product. year refreshed our out that’s ramping of put product. put of and flagship We out talking phones. obviously line modular so, out were XX nicely our

So, or year merger. all of of the the first those we’ve already executed on over so

run next interoperate Teams and Zoom, out video systems Over these that bars months, Studio we’ve are video products. few the our putting we’ll and Microsoft with natively and X be standards-based fantastic announced

way you So, if in and them industry at I written really and every be been to look expect about agrees. far, I out go think market what’s the so these leaders

to out designed still premium ones or the And that several line for dedicated general on headsets one updated fabulous our Microsoft it’s also Teams, one. either especially my phone Other phones, which got we’ve good desk CCX new I market and announced products phones, headsets specific Teams. are that Microsoft are new are come a for

we Anyway look and single out product you in little think of above plug and Analyst the feel is cases, refreshed products for to Day every will bit have above market, to it, majority a we available you want for for talked we a most about or at touch these see at Analyst vast even the the yourself. be and demos, of Day and

Vijay Devar

look do of Cisco on the will be And great. quarters? in or tailwind will tailwind you That’s quarter or – challenge a it in a how So, a it next be the the couple I the Teams, environments? you give that quarter? should Could that subsequent from December is a mean Avaya the for be when and comment demand will we Microsoft, at

Joe Burton

Yes, you bet.

Teams as first, both there. their and change center, we of ago, I latest the the headsets, Cisco a it’s just Even for real though and weeks have and with are longer products. industry and both as in Let me with Avaya communications great of website them. Avaya – then but tested integrated a a fully couple of a the Cisco also on number headsets sell in Avaya they fair Cisco part. went compatible. few know and our and go unified products answer. with No take fully Cisco contact up still into particular partners continue interoperable to some to be since the We most

remain well. alive and So, those partnerships

On are compatible with the with with four our Microsoft compatible that and participate headsets of side, all that with across are we conferencing Teams. compatible Teams compatible desk major are Teams phones Teams, Teams, enterprise video enterprise product that’s that lines, phones

the done our products take We front roadmap in compatible very To and all development during way. has Those headset be transition. our Skype-to-Teams our clear, well business out were whole the on good. testing,

our bit business. Microsoft fell Teams big wonderful headset phones with little just our that do It’s was the and on frame interesting I was we an it a frankly, and with we So, products video behind the of a bet part it. time and

customers to be but out. not products have were first-to-market; decided solutions got are early we’ve be with the demanded thought getting but ways really out could we and best-to-market. our We decided wanted to to deserved. products, all back have coming There would there have, set out Those we Teams announced it and we

in phones Teams QX continue mixed video. be in think to quarter, of headset there have QX actually quarter will certified be we’re website we XX a out Teams we before beginning volume see products that we I out best on a QX the will QX, right and full ship on will those and now. Hope because having the get with be side, and Microsoft effect to helps. tough portfolio. the the on really headsets

Vijay Devar

definitely. Yes,

Mike Iburg

I take think one more we’ll question.

Operator

The Fahad Najam from you. question Thank next is Cowen. from

Fahad Najam

kind and thank want dynamics Microsoft recently and are you competitive on visit Zoom collaborating that seeing. to Hi. can question. Yes, you’re And I taking X) Cisco for comment on Teams. Meet, you my of the if invested in

like a very to wondering your I’m potentially thinking seems should competitive to from competitive how we it in are these in you that could new factor interesting present guys. partnerships beginning landscape collaboration that So, you guys? what affecting of to extent, marketplace headwinds about be developments the two outlook? you some And shifting

Joe Burton

question. Great Happy to go into it. Yes.

on-premises it of and compete taking to open the the we $XX to we think these market talked industry and notice on only when in want Poly and workers, to going three did rise mobile billion the together office So, communications about move literally be a the company we we to not the cloud, end, that. year turning communications were to the put and of moving transitions

product. occurring was on So, leadership of know out get frankly, Frankly, end. the we’re I the based I what Clearly, some and Zoom are the intend engineers; of surprised, these on decent a build a out company. period, of share predicted single to not And them know things happening. the going Meet, we they that the lion’s with execute we like business company there.

and at as in our later on is say again, to or go who likely To somebody knows the to on – reason yet of as with collaborating that going if meeting going We systems. is be what. you’ll point to on a be idea be probably anything, we of win Cisco day, day, or and one Cisco Microsoft this the this Zoom see proof we the once because announcement, see use kind Teams, different later you’re you’ll in to are the people

and What call, CVI. that Cisco endpoints this actually if that announced can each a saying building was together interoperability what are Microsoft industry a It’s Microsoft says market. least Microsoft and term, was those for really or and Cisco you’re a at last blog between video an published is cloud in call We you actually see today other.

and what years that they blog That’s they’ve it Pexip doing as in now they well. mentions doing been it the Poly with for Cisco, with that and it Frankly, same it with do was. are that BlueJeans this

it interoperability of basic all if we just encourage, really fully market industry, call, get just the us. that’s video is the grows support every in and can which obviously, on for we because great this using So, everybody and

Fahad Najam

push from wrong. could I’m what last maybe, piece least at I’m on how you I – from at If totally – of looking it and the in terms

reluctant example. and or of if less is, a their enterprise an less connect Teams So, you can could to be room shift upgrade would Cisco and extend me – device, be end would to value probably Teams prospectively a correct when looking the Cisco to device, for device end the can they devices meeting, Webex lifespan

that thing So, business? your be wouldn’t for a negative

Joe Burton

understand I unreasonable. thesis it’s your and so Microsoft, not

a thinking – I it way. thinking it So, reasonable in about about think you’re you’re

has going it’s go to has say, say, ironically, look forward, everything about experiences. at If everything native to you Microsoft all to has Zoom Cisco everything say,

should is interoperability. basic when Teams; Microsoft experience Teams so move Teams full getting the you a get you you get pushing than endpoint, to rather can a native

end-to-end Microsoft a there provider So, The bit; be a deal those in the out it’s solutions little native might there. for to of delayed going is big, native gets Well, market only big that solution. is be occasional Teams pushing a accounts Microsoft Poly. for

down where this the relative we’re – gets heading we boy, somebody has the already get market think that but still this, talking and very corner the by our we part new of equipment going might and through break fairly it we is about Cisco you’re that as as baked and aggressively that of case, stalled would I have good to Teams about is plans that growth get into feel transition. we be

Fahad Najam

us can us refresh? question model or If maybe, at your base appreciate try is, can can from in to last greatly your how one big long-term in, for quantify we some so I you squeeze installed video least I tell over revenue video answers. this the

Chuck Boynton

fingertips punt to I number on don’t going here. good I’m Fahad, honest, right be my have one, that a at I’ll because

Fahad Najam

much Appreciate it. your Thank answers. you for so

Chuck Boynton

Fahad. bet, You

Mike Iburg

you look office Okay, great day. New November our a you. all. forward of for seeing I would you Annual York Bye-bye. Thank our to thank Analyst in many Day. well, Have on XX at

Operator

for concludes Thank you. you Ladies participating. today’s and gentlemen, conference. Thank this

You may disconnect. now

Plantronics (POLY) 5 Nov 192020 Q2 Earnings call transcript