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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 September 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 October 21, 2021, the registrant had 94,343,994 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 Nine Months Ended September 30, 2021 and September 30, 2020

2

 

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

3

 

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

4

 

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

5

 

Condensed Combined Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2021 and September 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

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

$

391,121

 

 

$

457,103

 

 

$

1,393,438

 

 

$

1,146,028

 

Cost of revenue

 

 

289,759

 

 

 

329,159

 

 

 

1,001,397

 

 

 

834,398

 

Gross profit

 

 

101,362

 

 

 

127,944

 

 

 

392,041

 

 

 

311,630

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales, general and administrative

 

 

76,112

 

 

 

65,321

 

 

 

234,134

 

 

 

175,877

 

Product development

 

 

14,495

 

 

 

12,902

 

 

 

45,150

 

 

 

36,285

 

Total operating expenses

 

 

90,607

 

 

 

78,223

 

 

 

279,284

 

 

 

212,162

 

Operating income

 

 

10,755

 

 

 

49,721

 

 

 

112,757

 

 

 

99,468

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(7,202

)

 

 

(10,170

)

 

 

(16,656

)

 

 

(29,116

)

Other (expense) income, net

 

 

(1,402

)

 

 

23

 

 

 

(4,002

)

 

 

(29

)

Total other expense, net

 

 

(8,604

)

 

 

(10,147

)

 

 

(20,658

)

 

 

(29,145

)

Income before income taxes

 

 

2,151

 

 

 

39,574

 

 

 

92,099

 

 

 

70,323

 

Income tax expense

 

 

(374

)

 

 

(3,217

)

 

 

(15,854

)

 

 

(10,149

)

Net income

 

$

1,777

 

 

$

36,357

 

 

$

76,245

 

 

$

60,174

 

Net income per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.02

 

 

$

0.43

 

 

$

0.82

 

 

$

0.71

 

Diluted

 

$

0.02

 

 

$

0.40

 

 

$

0.76

 

 

$

0.69

 

Weighted-average shares used to compute net income per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

93,918

 

 

 

84,871

 

 

 

92,894

 

 

 

84,352

 

Diluted

 

 

100,041

 

 

 

90,084

 

 

 

100,116

 

 

 

87,499

 

 

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 (Loss)

(Unaudited, in thousands)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

1,777

 

 

$

36,357

 

 

$

76,245

 

 

$

60,174

 

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Foreign currency translation adjustments, net of zero tax

 

 

(1,943

)

 

 

2,378

 

 

 

(1,297

)

 

 

(1,217

)

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

       loans, net of tax benefit (expense) of $24 and $(128) for the three

       months ended September 30, 2021 and 2020, respectively and $56

       and $(24) for the nine months ended September 30, 2021 and 2020,

       respectively

 

 

(121

)

 

 

691

 

 

 

(282

)

 

 

580

 

Comprehensive income (loss)

 

$

(287

)

 

$

39,426

 

 

$

74,666

 

 

$

59,537

 

 

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)

 

 

 

September 30,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

71,922

 

 

$

129,543

 

Restricted cash

 

 

4,176

 

 

 

3,795

 

Accounts receivable, net

 

 

252,406

 

 

 

293,629

 

Inventories

 

 

331,938

 

 

 

226,007

 

Prepaid expenses and other current assets

 

 

47,682

 

 

 

37,997

 

Total current assets

 

 

708,124

 

 

 

690,971

 

Property and equipment, net

 

 

16,367

 

 

 

16,475

 

Goodwill

 

 

313,793

 

 

 

312,760

 

Intangible assets, net

 

 

234,141

 

 

 

259,317

 

Restricted cash, noncurrent

 

 

231

 

 

 

230

 

Other assets

 

 

69,033

 

 

 

34,362

 

TOTAL ASSETS

 

$

1,341,689

 

 

$

1,314,115

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

247,509

 

 

$

299,636

 

Debt maturing within one year

 

 

4,751

 

 

 

 

Other liabilities and accrued expenses

 

 

223,291

 

 

 

205,745

 

Total current liabilities

 

 

475,551

 

 

 

505,381

 

Long-term debt

 

 

244,087

 

 

 

321,393

 

Deferred tax liabilities

 

 

29,683

 

 

 

29,752

 

Other liabilities, noncurrent

 

 

55,353

 

 

 

20,199

 

TOTAL LIABILITIES

 

 

804,674

 

 

 

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 September 30, 2021 and December 31, 2020, respectively

 

 

 

 

 

 

Common stock, $0.0001 par value: 300,000 shares authorized, 94,186 and 91,935

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

   respectively

 

 

9

 

 

 

9

 

Additional paid-in capital

 

 

463,626

 

 

 

438,667

 

Retained earnings (accumulated deficit)

 

 

73,432

 

 

 

(2,813

)

Accumulated other comprehensive income (loss)

 

 

(52

)

 

 

1,527

 

Total Stockholders’ Equity

 

 

537,015

 

 

 

437,390

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

1,341,689

 

 

$

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 September 30, 2021

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Retained

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Income (Loss)

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of June 30, 2021

 

 

93,790

 

 

$

9

 

 

$

456,010

 

 

$

71,655

 

 

$

2,012

 

 

$

529,686

 

Issuance of common stock in

   connection with employee equity

   incentive plans

 

 

403

 

 

 

 

 

 

2,027

 

 

 

 

 

 

 

 

 

2,027

 

Shares withheld related to net share

   settlement

 

 

(7

)

 

 

 

 

 

(208

)

 

 

 

 

 

 

 

 

(208

)

Stock-based compensation

 

 

 

 

 

 

 

 

5,797

 

 

 

 

 

 

 

 

 

5,797

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,064

)

 

 

(2,064

)

Net income

 

 

 

 

 

 

 

 

 

 

 

1,777

 

 

 

 

 

 

1,777

 

Balance as of September 30, 2021

 

 

94,186

 

 

$

9

 

 

$

463,626

 

 

$

73,432

 

 

$

(52

)

 

$

537,015

 

 

 

 

Three Months Ended September 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 June 30, 2020

 

 

84,349

 

 

$

8

 

 

$

328,588

 

 

$

(82,213

)

 

$

(5,877

)

 

$

240,506

 

Issuance of common stock in

   connection with employee equity

   incentive plans

 

 

65

 

 

 

 

 

 

259

 

 

 

 

 

 

 

 

 

259

 

Issuance of common stock upon initial

   public offering, net of underwriting

   discounts and commissions and

   other offering costs

 

 

7,500

 

 

 

1

 

 

 

106,729

 

 

 

 

 

 

 

 

 

106,730

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,631

 

 

 

 

 

 

 

 

 

1,631

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,069

 

 

 

3,069

 

Net income

 

 

 

 

 

 

 

 

 

 

 

36,357

 

 

 

 

 

 

36,357

 

Balance as of September 30, 2020

 

 

91,914

 

 

$

9

 

 

$

437,207

 

 

$

(45,856

)

 

$

(2,808

)

 

$

388,552

 

 

 

 

Nine Months Ended September 30, 2021

 

 

 

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, 2020

 

 

91,935

 

 

$

9

 

 

$

438,667

 

 

$

(2,813

)

 

$

1,527

 

 

$

437,390

 

Issuance of common stock in

   connection with employee equity

   incentive plans

 

 

2,258

 

 

 

 

 

 

11,493

 

 

 

 

 

 

 

 

 

11,493

 

Shares withheld related to net share

   settlement

 

 

(7

)

 

 

 

 

 

(215

)

 

 

 

 

 

 

 

 

(215

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

13,681

 

 

 

 

 

 

 

 

 

13,681

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,579

)

 

 

(1,579

)

Net income

 

 

 

 

 

 

 

 

 

 

 

76,245

 

 

 

 

 

 

76,245

 

Balance as of September 30, 2021

 

 

94,186

 

 

$

9

 

 

$

463,626

 

 

$

73,432

 

 

$

(52

)

 

$

537,015

 

 

5


Table of Contents

 

 

 

 

Nine Months Ended September 30, 2020

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Retained

Earnings

(Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit)

 

 

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

 

 

315

 

 

 

 

 

 

1,224

 

 

 

 

 

 

 

 

 

1,224

 

Issuance of common stock upon initial

   public offering, net of underwriting

   discounts and commissions and

   other offering costs

 

 

7,500

 

 

 

1

 

 

 

106,729

 

 

 

 

 

 

 

 

 

106,730

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,286

 

 

 

 

 

 

 

 

 

4,286

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(637

)

 

 

(637

)

Net income

 

 

 

 

 

 

 

 

 

 

 

60,174