GN Store Nord A/S Capital Markets Day Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Veronika Dubajova - Citigroup Inc. - Analyst : Amazing. And Scott, thank you for the presentation. Three ones, I will promise there quick. One, obviously, unusual for you to be launching all of the entire portfolio into the VA. Just curious what your expectations are for the market share momentum that you can hope to achieve there? And longer term, what do you think is yours is a realistic VA market share target for you? Can it be the 17 that you have everywhere else? Or do we need to adjust that in one way or another. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2024 / 9:00AM, GN.CO - GN Store Nord A/S Capital Markets Day Second, can you talk about your exposure to managed care in the U.S. and whether you're over or under indexed relative to your broader market share and maybe some of the opportunities that might be emerging in the market from the decisions that some of your competitors have taken? And my final question is just congrats on the Specsavers expansion. Just maybe talk to us a little bit about the margin profile of a business like that or Costco and how that feeds through to the P&L, both from a gross margin and EBIT margin perspective?

Question: Unidentified Participant - - Analyst : It's Oliver (inaudible) from (inaudible). Two questions. The first one is about the huge potential of the frontline workers. So how to create awareness for the market for these workers? So using headsets in smart is definitely less intuitive than it is in the office for sure. And do you work already together with some retailers to explore these options? So that's number one. Number two is about the market share you described the 35% in value term volume terms, 50% in value sorry, 50% yes. How to think about the total addressable market because some parts of markets will not be addressable for us just because of price or also some users will continue to use the consumer headsets. So where do you think the ceiling is. Obviously, it's 100, but in realistic terms, it's much lower. Unidentified Company Representative - GN Store Nord A/S I think maybe to answer the question about market share first and then the frontline work. So the market share we described, the 50% and 33% relates to the certified part of the market. So those 20% penetration in knowledge workers. So when we talk about that knowledge market share, we're excluding the consumer segment and we're excluding the nonuse segment. If we think about frontline workers, yes, I think it's an opportunity not just for us. Of course, it's an opportunity, in particular for our alliance partners and Microsoft, who are very keen to extend the sale of licenses beyond, let's say, the office to the frontline worker. It's an opportunity for our channel partners to be able to drive that market forward. And actually, it's an opportunity for our customers as well to drive greater efficiency and productivity. So for certain, we'll be working closely with Microsoft with our channel partners to see how we can develop and unlock the category.

Question: Unidentified Participant - - Analyst : It's very hard for me, but I will just make it one, which is obviously a very different profile in terms of growth rate going forward, much more depends on some frontline workers, much more dependency on video. Just curious how you're thinking about that impact of that on the margin profile. As call center comes down, as knowledge workers kind of stabilize and we get growth from these new segments, what does that imply for profitability, both on gross margin and EBIT margin for any one of 3 to answer (inaudible).

Question: Unidentified Participant - - Analyst : So you talked about innovation to premiumize the product assortment as a way of improving profitability, but you also mentioned that more was needed to restore margins in the consumer part. Can you talk about that? And secondly, can you remind us of the DTC share of revenue in the gaming part. And to what extent that you are able to replicate this in the consumer part.

Question: Unidentified Participant - - Analyst : A couple of questions. So first, when we think about that overall 5% growth that you're seeing for the gaming business -- for the gaming market. How do you see the different categories, so headsets, mice, keyboards and the likes? What are, say, accretive? What are dilutive to that overall figure. And maybe also what -- how you see opportunities that you've not yet exploited, so that could be a simulation. Are those faster-growing categories? So that's the first question. And then the second question is on the gross margin, and I don't know whether it's a question for you. It's a question for Soren. But when we look at the gross margin today for the combined gaming and consumer business, it's around 30%, a little bit below. You have some fairly similar sized competitors Corsair, Turtle Beach that are mid-30s targeting high 30s already this year. You have a Logitech that's even higher. Any structural reasons why you shouldn't be in that range? What's the time line to get to that range? That's the questions.

Question: Unidentified Participant - - Analyst : I just have one. So lots of interesting technology that you're showing and lots of innovation you can do in software. How well positioned are you to actually get the full leverage out of these opportunities? And from a capability perspective, do you have the people that you need, especially on the AI and software side?

Question: Unidentified Participant - - Analyst : You talked about this partnering philosophy and in particular, this joint development partnerships that I'm guessing you at least historically ever had, particularly on the audio side, on the manufacturing side there. What are the opportunities to do something similar on the hearing side, so actually leveraging external manufacturing partners more? Also in the product development.

Question: Veronika Dubajova - Citigroup Inc. - Analyst : Two questions for me, please. The first one is just on the rationale for continuing to develop your own chipset for the hearing aid business, what your thoughts are there. And longer term, as you fast forward in the industry, do you think that's a trend that continues? And then my second question, and apologies, it is on hearing again, but obviously, we've heard a lot from your competitors about integrating sensors. And so I'd love to understand how important that as a technology for you guys.

Question: Unidentified Participant - - Analyst : Just a question on the hearing aid side. We have seen in recent years at least that there has been higher -- a little bit higher fluctuations in volume growth. And in this situation, supply has probably have a larger meaning. How do you think you're positioned not just as GN as one but also compared to competitors in respect to supply time to the customers?

Question: Veronika Dubajova - Citigroup Inc. - Analyst : Just curious on the 150 components suppliers. How much more can you trim that list down? And I guess maybe a bigger picture question for all 3 of you. As you've gone through this One-GN integration process, what has been the biggest surprise on the supply chain, maybe positive and negative? So 2.

Question: Veronika Dubajova - Citigroup Inc. - Analyst : Two questions. One is actually on the top line guidance and the 5% to 8% that you've expressed. Just curious how different this is from the guidance or how differently constructed it is from the guidance you've given in the past. I think the historical guidance assumption was always normal macro. I'm curious what you've allowed for in this 5% to 8% range and how you're thinking about the risks, both to the downside and the upside. And then my second question, to push a little bit on David's point, but Soren, if I look at your pie chart on disposals, it's half completed. Where is the other half? And when do we get there?