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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 001-39533

 

Corsair Gaming, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

82-2335306

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

 

47100 Bayside Pkwy

Fremont, CA 94538

(Address of principal executive offices and zip code)

 

(510) 657-8747

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

 

CRSR

 

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes     No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  

As of July 22, 2021, the registrant had 93,806,697 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


Table of Contents

 

 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

2

Item 1.

Financial Statements (Unaudited)

2

 

Condensed Combined Consolidated Statements of Operations - Three and Six Months Ended June 30, 2021 and June 30, 2020

2

 

Condensed Combined Consolidated Statements of Comprehensive Income - Three and Six Months Ended June 30, 2021 and June 30, 2020

3

 

Condensed Combined Consolidated Balance Sheets - As of June 30, 2021 and December 31, 2020

4

 

Condensed Combined Consolidated Statements of Shareholder’s Equity - Three and Six Months Ended June 30, 2021 and June 30, 2020

5

 

Condensed Combined Consolidated Statements of Cash Flows - Six Months Ended June 30, 2021 and June 30, 2020

7

 

Notes to Condensed Combined Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

36

PART II.

OTHER INFORMATION

37

Item 1.

Legal Proceedings

37

Item 1A.

Risk Factors

37

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

67

Item 3.

Defaults Upon Senior Securities

67

Item 4.

Mine Safety Disclosures

67

Item 5.

Other Information

67

Item 6.

Exhibits

68

Signatures

69

 

 

 

i


Table of Contents

 

 

NOTE ABOUT FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (the Exchange Act) that reflect our current views with respect to, among other things, our operations and financial performance. These forward-looking statements are included throughout this Quarterly Report and relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. We have used the words “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “foreseeable,” “future,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “will” and similar terms and phrases to identify the forward-looking statements.

 

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on management’s current expectations and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond our control, including, for example, the COVID-19 pandemic. We believe that these factors include but are not limited to those described under Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

 

 

 

 

 

  

1


Table of Contents

 

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

Corsair Gaming, Inc.

Condensed Combined Consolidated Statements of Operations

(Unaudited, in thousands, except per share amounts)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

$

472,903

 

 

$

380,407

 

 

$

1,002,317

 

 

$

688,925

 

Cost of revenue

 

 

342,552

 

 

 

275,343

 

 

 

711,638

 

 

 

505,239

 

Gross profit

 

 

130,351

 

 

 

105,064

 

 

 

290,679

 

 

 

183,686

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales, general and administrative

 

 

80,169

 

 

 

56,827

 

 

 

158,022

 

 

 

110,556

 

Product development

 

 

15,469

 

 

 

11,827

 

 

 

30,655

 

 

 

23,383

 

Total operating expenses

 

 

95,638

 

 

 

68,654

 

 

 

188,677

 

 

 

133,939

 

Operating income

 

 

34,713

 

 

 

36,410

 

 

 

102,002

 

 

 

49,747

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(4,508

)

 

 

(9,572

)

 

 

(9,454

)

 

 

(18,946

)

Other (expense) income, net

 

 

(175

)

 

 

11

 

 

 

(2,600

)

 

 

(52

)

Total other expense, net

 

 

(4,683

)

 

 

(9,561

)

 

 

(12,054

)

 

 

(18,998

)

Income before income taxes

 

 

30,030

 

 

 

26,849

 

 

 

89,948

 

 

 

30,749

 

Income tax expense

 

 

(2,285

)

 

 

(4,249

)

 

 

(15,480

)

 

 

(6,932

)

Net income

 

$

27,745

 

 

$

22,600

 

 

$

74,468

 

 

$

23,817

 

Net income per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.30

 

 

$

0.27

 

 

$

0.81

 

 

$

0.28

 

Diluted

 

$

0.28

 

 

$

0.26

 

 

$

0.74

 

 

$

0.28

 

Weighted-average shares used to compute net income per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

92,792

 

 

 

84,098

 

 

 

92,374

 

 

 

84,089

 

Diluted

 

 

100,074

 

 

 

86,333

 

 

 

100,145

 

 

 

86,201

 

 

The accompanying notes are an integral part of these condensed combined consolidated financial statements

2


Table of Contents

 

 

Corsair Gaming, Inc.

Condensed Combined Consolidated Statements of Comprehensive Income

(Unaudited, in thousands)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

27,745

 

 

$

22,600

 

 

$

74,468

 

 

$

23,817

 

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Foreign currency translation adjustments, net of zero tax

 

 

481

 

 

 

5

 

 

 

646

 

 

 

(3,595

)

   Unrealized foreign exchange gain (loss) from long-term intercompany

       loans, net of tax benefit (expense) of $(12) and $43 for the three months

       ended June 30, 2021 and 2020, respectively and $32 and $104 for the

       six months ended June 30, 2021 and 2020, respectively

 

 

63

 

 

 

198

 

 

 

(161

)

 

 

(111

)

Comprehensive income

 

$

28,289

 

 

$

22,803

 

 

$

74,953

 

 

$

20,111

 

 

The accompanying notes are an integral part of these condensed combined consolidated financial statements

 

3


Table of Contents

 

 

 

Corsair Gaming, Inc.

Condensed Combined Consolidated Balance Sheets

(Unaudited, in thousands, except per share amounts)

 

 

 

June 30,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

134,572

 

 

$

129,543

 

Restricted cash

 

 

3,748

 

 

 

3,795

 

Accounts receivable, net

 

 

258,789

 

 

 

293,629

 

Inventories

 

 

273,399

 

 

 

226,007

 

Prepaid expenses and other current assets

 

 

61,465

 

 

 

37,997

 

Total current assets

 

 

731,973

 

 

 

690,971

 

Property and equipment, net

 

 

16,034

 

 

 

16,475

 

Goodwill

 

 

314,205

 

 

 

312,760

 

Intangible assets, net

 

 

243,711

 

 

 

259,317

 

Restricted cash, noncurrent

 

 

231

 

 

 

230

 

Other assets

 

 

72,250

 

 

 

34,362

 

TOTAL ASSETS

 

$

1,378,404

 

 

$

1,314,115

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

261,656

 

 

$

299,636

 

Other liabilities and accrued expenses

 

 

232,373

 

 

 

205,745

 

Total current liabilities

 

 

494,029

 

 

 

505,381

 

Debt, net

 

 

270,013

 

 

 

321,393

 

Deferred tax liabilities

 

 

30,983

 

 

 

29,752

 

Other liabilities, noncurrent

 

 

53,693

 

 

 

20,199

 

TOTAL LIABILITIES

 

 

848,718

 

 

 

876,725

 

Commitments and Contingencies (Note 9)

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value: 5,000 shares authorized, nil and nil shares issued

   and outstanding as of June 30, 2021 and December 31, 2020, respectively

 

 

 

 

 

 

Common stock, $0.0001 par value: 300,000 shares authorized, 93,790 and 91,935

   shares issued and outstanding as of June 30, 2021 and December 31, 2020,

   respectively

 

 

9

 

 

 

9

 

Additional paid-in capital

 

 

456,010

 

 

 

438,667

 

Retained earnings (accumulated deficit)

 

 

71,655

 

 

 

(2,813

)

Accumulated other comprehensive income

 

 

2,012

 

 

 

1,527

 

Total Stockholders’ Equity

 

 

529,686

 

 

 

437,390

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

1,378,404

 

 

$

1,314,115

 

 

 

The accompanying notes are an integral part of these condensed combined consolidated financial statements

 

4


Table of Contents

 

 

 

Corsair Gaming, Inc.

Condensed Combined Consolidated Statements of Stockholders’ Equity

(Unaudited, in thousands)

 

 

 

Three Months Ended June 30, 2021

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Retained

Earnings

(Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit)

 

 

Income

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of March 31, 2021

 

 

92,087

 

 

$

9

 

 

$

442,320

 

 

$

43,910

 

 

$

1,468

 

 

$

487,707

 

Issuance of common stock in

   connection with employee equity

   incentive plans

 

 

1,703

 

 

 

 

 

 

8,889

 

 

 

 

 

 

 

 

 

8,889

 

Taxes paid related to net share

   settlement of equity awards

 

 

 

 

 

 

 

 

(7

)

 

 

 

 

 

 

 

 

(7

)

Stock-based compensation

 

 

 

 

 

 

 

 

4,808

 

 

 

 

 

 

 

 

 

4,808

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

544

 

 

 

544

 

Net income

 

 

 

 

 

 

 

 

 

 

 

27,745

 

 

 

 

 

 

27,745

 

Balance as of June 30, 2021

 

 

93,790

 

 

$

9

 

 

$

456,010

 

 

$

71,655

 

 

$

2,012

 

 

$

529,686

 

 

 

 

Three Months Ended June 30, 2020

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Retained

Earnings

(Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit)

 

 

Income (Loss)

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of March 31, 2020

 

 

84,079

 

 

$

8

 

 

$

326,073

 

 

$

(104,813

)

 

$

(6,080

)

 

$

215,188

 

Issuance of common stock to directors

 

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock in

   connection with employee equity

   incentive plans

 

 

250

 

 

 

 

 

 

965

 

 

 

 

 

 

 

 

 

965

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,550

 

 

 

 

 

 

 

 

 

1,550

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

203

 

 

 

203

 

Net income

 

 

 

 

 

 

 

 

 

 

 

22,600

 

 

 

 

 

 

22,600

 

Balance as of June 30, 2020

 

 

84,349

 

 

$

8

 

 

$

328,588

 

 

$

(82,213

)

 

$

(5,877

)

 

$

240,506

 

 

 

 

Six Months Ended June 30, 2021

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Retained

Earnings

(Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit)

 

 

Income

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2020

 

 

91,935

 

 

$

9

 

 

$

438,667

 

 

$

(2,813

)

 

$

1,527

 

 

$

437,390

 

Issuance of common stock in

   connection with employee equity

   incentive plans

 

 

1,855

 

 

 

 

 

 

9,466

 

 

 

 

 

 

 

 

 

9,466

 

Taxes paid related to net share

   settlement of equity awards

 

 

 

 

 

 

 

 

(7

)

 

 

 

 

 

 

 

 

(7

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

7,884

 

 

 

 

 

 

 

 

 

7,884

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

485

 

 

 

485

 

Net income

 

 

 

 

 

 

 

 

 

 

 

74,468

 

 

 

 

 

 

74,468

 

Balance as of June 30, 2021

 

 

93,790

 

 

$

9

 

 

$

456,010

 

 

$

71,655

 

 

$

2,012

 

 

$

529,686

 

 

5


Table of Contents

 

 

 

 

Six Months Ended June 30, 2020

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Retained

Earnings

(Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit)

 

 

Income (Loss)

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2019

 

 

84,079

 

 

$

8

 

 

$

324,968

 

 

$

(106,030

)

 

$

(2,171

)

 

$

216,775

 

Issuance of common stock to directors

 

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock in

   connection with employee equity

   incentive plans

 

 

250

 

 

 

 

 

 

965

 

 

 

 

 

 

 

 

 

965

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,655

 

 

 

 

 

 

 

 

 

2,655

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,706

)

 

 

(3,706

)

Net income

 

 

 

 

 

 

 

 

 

 

 

23,817

 

 

 

 

 

 

23,817

 

Balance as of June 30, 2020

 

 

84,349

 

 

$

8

 

 

$

328,588

 

 

$

(82,213

)

 

$

(5,877

)

 

$

240,506

 

 

The accompanying notes are an integral part of these condensed combined consolidated financial statements

6


Table of Contents

 

 

Corsair Gaming, Inc.

Condensed Combined Consolidated Statements of Cash Flows

(Unaudited, in thousands)

 

 

 

Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities: