SEC Filing | Corsair Gaming, Inc.

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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

☐	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.

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

		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

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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.

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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

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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

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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

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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

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	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

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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: