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 March 31, 2022

☐	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 April 28, 2022, the registrant had 95,399,909 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 Consolidated Statements of Operations - Three Months Ended March 31, 2022 and March 31, 2021	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) - Three Months Ended March 31, 2022 and March 31, 2021	3
	Condensed Consolidated Balance Sheets - As of March 31, 2022 and December 31, 2021	4
	Condensed Consolidated Statements of Shareholder’s Equity - Three Months Ended March 31, 2022 and March 31, 2021	5
	Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2022 and March 31, 2021	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	35
PART II.	OTHER INFORMATION	36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
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 Consolidated Statements of Operations

(Unaudited, in thousands, except per share amounts)

	Three Months Ended March 31,
	2022			2021

Net revenue	$	380,691		$	529,414
Cost of revenue		289,935			369,086
Gross profit		90,756			160,328
Operating expenses:
Sales, general and administrative		76,131			77,853
Product development		17,110			15,186
Total operating expenses		93,241			93,039
Operating income (loss)		(2,485	)		67,289
Other (expense) income:
Interest expense		(1,279	)		(4,946	)
Other expense, net		(499	)		(2,425	)
Total other expense, net		(1,778	)		(7,371	)
Income (loss) before income taxes		(4,263	)		59,918
Income tax benefit (expense)		983			(13,195	)
Net income (loss)		(3,280	)		46,723
Less: Net loss attributable to noncontrolling interests		(407	)		—
Net income (loss) attributable to Corsair Gaming, Inc.	$	(2,873	)	$	46,723

Calculation of net income (loss) per share attributable to common stockholders of Corsair Gaming, Inc.:
Net income (loss) attributable to Corsair Gaming, Inc.	$	(2,873	)	$	46,723
Change in redemption value of redeemable noncontrolling interests		(2,261	)		—
Net income (loss) attributable to common stockholders of Corsair Gaming, Inc.	$	(5,134	)	$	46,723

Net income (loss) per share attributable to common stockholders of Corsair Gaming, Inc.:
Basic	$	(0.05	)	$	0.51
Diluted	$	(0.05	)	$	0.47
Weighted-average common shares outstanding:
Basic		95,275			91,951
Diluted		95,275			100,211

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

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Corsair Gaming, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited, in thousands)

	Three Months Ended March 31,
	2022			2021

Net income (loss)	$	(3,280	)	$	46,723
Other comprehensive gain (loss):
Foreign currency translation adjustments, net of tax benefit of $151 and $0 for the three months ended March 31, 2022 and 2021, respectively		(2,258	)		165
Unrealized foreign exchange loss from long-term intercompany loans, net of tax benefit of $19 and $44 for the three months ended March 31, 2022 and 2021, respectively		(95	)		(224	)
Comprehensive income (loss)		(5,633	)		46,664
Less: Comprehensive loss attributable to noncontrolling interests		(606	)		—
Comprehensive income (loss) attributable to Corsair Gaming, Inc.	$	(5,027	)	$	46,664

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

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Corsair Gaming, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except per share amounts)

	March 31, 2022			December 31, 2021

Assets
Current assets:
Cash	$	29,049		$	62,415
Restricted cash		2,705			2,734
Accounts receivable, net		236,472			291,287
Inventories		300,423			298,315
Prepaid expenses and other current assets		57,877			51,024
Total current assets		626,526			705,775
Restricted cash, noncurrent		231			231
Property and equipment, net		19,607			16,819
Goodwill		348,424			317,054
Intangible assets, net		249,841			225,709
Other assets		74,796			71,808
Total assets	$	1,319,425		$	1,337,396
Liabilities
Current liabilities:
Debt maturing within one year	$	4,754		$	4,753
Accounts payable		203,454			236,120
Other liabilities and accrued expenses		176,556			205,874
Total current liabilities		384,764			446,747
Long-term debt		241,709			242,898
Deferred tax liabilities		29,241			25,700
Other liabilities, noncurrent		52,176			53,871
Total liabilities		707,890			769,216
Commitments and Contingencies (Note 9)
Temporary equity
Redeemable noncontrolling interests		19,424			—
Permanent equity
Corsair Gaming, Inc. stockholders’ equity:
Preferred stock, $0.0001 par value: 5,000 shares authorized, nil and nil shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		—			—
Common stock, $0.0001 par value: 300,000 shares authorized, 95,373 and 94,510 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		10			9
Additional paid-in capital		489,745			470,364
Retained earnings		93,013			98,147
Accumulated other comprehensive loss		(2,494	)		(340	)
Total Corsair Gaming, Inc. stockholders’ equity		580,274			568,180
Nonredeemable noncontrolling interests		11,837			—
Total permanent equity		592,111			568,180
Total liabilities, temporary equity and permanent equity	$	1,319,425		$	1,337,396

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

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Corsair Gaming, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited, in thousands)

	Three Months Ended March 31, 2022
	Common Stock					Additional Paid-in			Retained			Accumulated Other Comprehensive			Total Corsair Gaming, Inc. Stockholders’			Nonredeemable Noncontrolling			Total Permanent
	Shares			Amount		Capital			Earnings			Loss			Equity			Interests			Equity

Balance as of December 31, 2021		94,510		$	9	$	470,364		$	98,147		$	(340	)	$	568,180		$	—		$	568,180
Issuance of common stock in relation to business acquisition		690			1		14,504			—			—			14,505			—			14,505
Noncontrolling interests from business combination		—			—		—			—			—			—			12,084			12,084
Net loss		—			—		—			(2,873	)		—			(2,873	)		(166	)		(3,039	)
Other comprehensive loss		—			—		—			—			(2,154	)		(2,154	)		(81	)		(2,235	)
Change in redemption value of redeemable NCI		—			—		—			(2,261	)		—			(2,261	)		—			(2,261	)
Issuance of common stock in connection with employee equity incentive plans		214			—		527			—			—			527			—			527
Shares withheld related to net share settlement		(41	)		—		(867	)		—			—			(867	)		—			(867	)
Stock-based compensation		—			—		5,217			—			—			5,217			—			5,217
Balance as of March 31, 2022		95,373		$	10	$	489,745		$	93,013		$	(2,494	)	$	580,274		$	11,837		$	592,111

	Three Months Ended March 31, 2021
	Common Stock				Additional Paid-in		Retained Earnings (Accumulated			Accumulated Other Comprehensive			Total Corsair Gaming, Inc. Stockholders’			Nonredeemable Noncontrolling		Total Permanent
	Shares		Amount		Capital		Deficit)			Income (Loss)			Equity			Interests		Equity

Balance as of December 31, 2020		91,935	$	9	$	438,667	$	(2,813	)	$	1,527		$	437,390		$	—	$	437,390
Net income		—		—		—		46,723			—			46,723			—		46,723
Other comprehensive loss		—		—		—		—			(59	)		(59	)		—		(59	)
Issuance of common stock in connection with employee equity incentive plans		152		—		577		—			—			577			—		577
Stock-based compensation		—		—		3,076		—			—			3,076			—		3,076
Balance as of March 31, 2021		92,087	$	9	$	442,320	$	43,910		$	1,468		$	487,707		$	—	$	487,707

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

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Corsair Gaming, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

	Three Months Ended March 31,
	2022			2021

Cash flows from operating activities:
Net income (loss)	$	(3,280	)	$	46,723
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Stock-based compensation		5,147			3,076
Depreciation		2,604			2,436
Amortization of intangible assets		10,138			8,702
Debt issuance costs amortization		86			537
Loss on debt extinguishment		—			439
Deferred income taxes		(4,078	)		(3,005	)
Other		567			1,316
Changes in operating assets and liabilities:
Accounts receivable		54,434			(13,416	)
Inventories		(662	)		(13,508	)
Prepaid expenses and other assets		(8,147	)		(4,419	)
Accounts payable		(35,308	)		(26,988	)
Other liabilities and accrued expenses		(27,607	)		25,875
Net cash provided by (used in) operating activities		(6,106	)		27,768
Cash flows from investing activities:
Acquisition of business, net of cash acquired		(19,534	)		(1,684	)
Payment of deferred contingent consideration		—			(4,353	)
Purchase of property and equipment		(4,365	)		(2,036	)
Net cash used in investing activities		(23,899	)		(8,073	)
Cash flows from financing activities:
Repayment of debt		(1,250	)		(28,000	)
Borrowing from line of credit		293,000			—
Repayment of line of credit		(293,000	)		—
Payment of contingent consideration		(292	)		—
Proceeds from issuance of shares through employee equity incentive plans		523			185
Payment of taxes related to net share settlement of equity awards		(887	)		—
Net cash used in financing activities		(1,906	)		(27,815	)
Effect of exchange rate changes on cash		(1,484	)		134
Net decrease in cash and restricted cash		(33,395	)		(7,986	)
Cash and restricted cash at the beginning of the period		65,380			133,568
Cash and restricted cash at the end of the period	$	31,985		$	125,582
Supplemental cash flow disclosures:
Cash paid for interest	$	1,207		$	3,961
Cash paid for income taxes		4,354			413
Supplemental schedule of non-cash investing and financing activities:
Equipment purchased and unpaid at period end	$	3,322		$	1,558
Right-of-use assets obtained in exchange for operating lease liabilities		633			3,817
Deferred and contingent purchase consideration related to business acquisitions		—			735

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

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Corsair Gaming, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Description of Business

Description of Business

Corsair Gaming, Inc., a Delaware corporation, together with its subsidiaries (collectively, “Corsair” the “Company”, “we”, “us”, or “our”), is a global provider and innovator of high-performance gear for gamers, streamers and content creators, many of which build their own PCs using our components.

Corsair is organized into two reportable segments: