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 September 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 October 21, 2021, the registrant had 94,343,994 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 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

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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 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

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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

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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

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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

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	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