UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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(Exact name of Registrant as Specified in Its Charter)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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. ☐
Item 2.02 Results of Operations and Financial Condition
On May 10, 2023, Corsair Gaming, Inc. (“Corsair” or the “Company”) issued a press release announcing certain of its financial results for the fiscal quarter ended March 31, 2023. The full text of the press release is furnished pursuant to Item 2.02 as Exhibit 99.1 to this Current Report on Form 8-K. A presentation regarding the Company's fiscal quarter ended March 31, 2023 is furnished pursuant to Item 2.02 as Exhibit 99.2 hereto.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number |
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Description |
99.1 |
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99.2 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
The information in this Current Report on Form 8-K and Exhibit 99.1 and Exhibit 99.2 attached hereto shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained herein and in the accompanying exhibits shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by Corsair Gaming, Inc., whether made before or after the date hereof, regardless of any general incorporation language in such filing.
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CORSAIR GAMING, INC. |
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Date: May 10, 2023 |
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By: |
/s/ Michael G. Potter |
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Michael G. Potter |
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Chief Financial Officer (Authorized Officer, Principal Financial Officer and Principal Accounting Officer) |
2
Exhibit 99.1
Corsair Gaming Reports First Quarter 2023 Financial Results
Milpitas, CA, May 10, 2023 – Corsair Gaming, Inc. (Nasdaq: CRSR) (“Corsair” or the “Company”), a leading global provider and innovator of high-performance gear for gamers, streamers, content-creators, and gaming PC builders, today announced financial results for the first quarter ended March 31, 2023.
First Quarter 2023 Select Financial Metrics
Andy Paul, Chief Executive Officer of Corsair, stated, “We are off to a strong start to 2023 with a 33% improvement in adjusted EBITDA compared to the year ago period. We are thrilled to see that enthusiast-level consumers continue to build new gaming PCs at a rate significantly above pre-pandemic levels. Recent third party data shows that Corsair continues to gain and hold leading market share positions in most of our categories of components used in those builds. The broader market for gaming peripherals is also holding up at a level significantly above pre-pandemic levels, although slightly behind 2022 levels, most notably in Europe. During 2023 we started to ship many new innovative products, including our FLEX OLED bendable monitor, engineered in partnership with LG. With lower priced GPUs coming to market and exciting new game titles being released this year, we are confident that the gaming market will continue to grow off the higher recent levels and we believe that Corsair can continue to gain market share in many of the new categories we are entering.”
Michael G. Potter, Chief Financial Officer of Corsair, stated, “We were able to build off the good start to the year and continue to improve our financial strength and flexibility. Gross margins increased 30 basis points compared to Q1 2022 as we benefited from lower freight expenses. We are also starting to see the benefit of cost actions we took last year with operating expenses down almost 10% year-over-year. Our working capital position also improved in Q1 reflecting the positive impact of our inventory reduction efforts in 2022, and we reduced debt by $10 million, while preserving capital to invest further in growth.”
Financial Outlook
The Company reiterated its outlook for the full year 2023 for revenue to be flat to slightly up in a softer economic environment as compared to 2022. Corsair continues to expect an improvement for the full year 2023 in adjusted EBITDA led by an improvement in margin, normalized shipping costs and continued tight operating expense controls.
Certain non-GAAP measures included in our financial outlook were not reconciled to the comparable GAAP financial measures because the GAAP measures are not accessible on a forward-looking basis. We are unable to reconcile these forward-looking non-GAAP financial measures to the most directly comparable GAAP measures without unreasonable efforts because we are currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures for these periods but would not impact the non-GAAP measures. Such items may include stock-based compensation charges, depreciation and amortization, and other items. The unavailable information could have a significant impact on our GAAP financial results.
The foregoing forward-looking statements reflect our expectations as of today's date. Given the number of risk factors, uncertainties and assumptions discussed below, actual results may differ materially. We do not intend to update our financial outlook until our next quarterly results announcement.
Recent Developments
Conference Call and Webcast Information
Corsair will host a conference call to discuss the first quarter 2023 financial results today at 2:00 p.m. Pacific Time. The conference call will be accessible on Corsair’s Investor Relations website at https://ir.corsair.com, or by dialing 1-877-407-0784 (USA) or 1-201-689-8560 (International) with conference ID 13737369. A replay will be available approximately 3 hours after the live call ends on Corsair's Investor Relations website, or through May 17, 2023 by dialing 1-844-512-2921 (USA) or 1-412-317-6671 (International), with passcode 13737369.
About Corsair Gaming, Inc.
CORSAIR (Nasdaq: CRSR) is a leading global developer and manufacturer of high-performance gear and technology for gamers, content creators, and PC enthusiasts. From award-winning PC components and peripherals, to premium streaming equipment and smart ambient lighting, CORSAIR delivers a full ecosystem of products that work together to enable everyone, from casual gamers to committed professionals, to perform at their very best. Corsair also sells gear under its Elgato brand, which provides premium studio equipment and accessories for content creators, SCUF Gaming brand, which builds custom-designed controllers for competitive gamers and ORIGIN PC brand, a builder of custom gaming and workstation desktop PCs.
Forward Looking Statements
Except for the historical information contained herein, the matters set forth in this press release are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, Corsair’s expectations regarding market headwinds and tailwinds, its belief that the self-built gaming PC market will continue to improve, its expectations regarding 2023, including lower priced graphics processing units, new game releases, its ability to continue to release innovative and what it believes to be industry leading products, whether cost actions will benefit margins and its estimated full year 2023 net revenue, adjusted operating income and adjusted EBITDA. Forward-looking statements are based on our management’s beliefs, as well as assumptions made by, and information currently available to them. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. Factors which may cause actual results to differ materially from current expectations include, but are not limited to: current macroeconomic conditions, including the impacts of high inflation and risk of recession on demand for our products; the lingering impacts and future outbreaks of the COVID-19 pandemic and its impacts on our operations and the operations of our manufacturers, retailers and other partners, as well as its impacts on the economy overall, including capital markets; our ability to build and maintain the strength of our brand among gaming and streaming enthusiasts and our ability to continuously develop and successfully market new gear and improvements to existing gear; the introduction and success of new third-party high-performance computer hardware, particularly graphics processing units and central processing units as well as sophisticated new video games; fluctuations in operating results; the risk that we are not able to compete with competitors and/or that the gaming industry, including streaming and esports, does not grow as expected or declines; the loss or inability to attract and retain key management; the impact of global instability, such as the war between Russia and Ukraine, and any sanctions or other geopolitical tensions that may result therefrom; delays or disruptions at our or third-parties’ manufacturing and distribution facilities; currency exchange rate fluctuations or international trade disputes resulting in our gear becoming relatively more expensive to
our overseas customers or resulting in an increase in our manufacturing costs; general economic conditions that adversely effect, among other things, the financial markets and consumer confidence and spending; and the other factors described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) and our subsequent filings with the SEC. Copies of each filing may be obtained from us or the SEC. All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to update forward-looking statements to reflect future events or circumstances. Our results for the quarter ended March 31, 2023 are also not necessarily indicative of our operating results for any future periods.
Use and Reconciliation of Non-GAAP Financial Measures
To supplement the financial results presented in accordance with GAAP, this earnings release presents certain non-GAAP financial information, including adjusted operating income (loss), adjusted net income (loss), adjusted net income (loss) per diluted share and adjusted EBITDA. These are important financial performance measures for us, but are not financial measures as defined by GAAP. The presentation of this non-GAAP financial information is not intended to be considered in isolation of or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We use adjusted operating income (loss), adjusted net income (loss), adjusted net income (loss) per share and adjusted EBITDA to evaluate our operating performance and trends and make planning decisions. We believe that these non-GAAP financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses and other items that we exclude in such non-GAAP measures. Accordingly, we believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to the key financial metrics used by our management in our financial and operational decision-making. We also present these non-GAAP financial measures because we believe investors, analysts and rating agencies consider it useful in measuring our ability to meet our debt service obligations.
Our use of these terms may vary from that of others in our industry. These non-GAAP financial measures should not be considered as an alternative to net revenue, operating income (loss), net income (loss), cash provided by operating activities, or any other measures derived in accordance with GAAP as measures of operating performance or liquidity. Reconciliations of these measures to the most directly comparable GAAP financial measures are presented in the attached schedules.
We calculate these non-GAAP financial measures as follows:
We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view these non-GAAP financial measures in conjunction with the related GAAP financial measures.
Investor Relations Contact:
Ronald van Veen ir@corsair.com 510-578-1407 |
Media Contact:
David Ross david.ross@corsair.com +44 11 8208 0542 |
Corsair Gaming, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)
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Three Months Ended |
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2023 |
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2022 |
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Net revenue |
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$ |
353,964 |
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$ |
380,691 |
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Cost of revenue |
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268,560 |
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289,935 |
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Gross profit |
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85,404 |
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90,756 |
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Operating expenses: |
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Sales, general and administrative |
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67,529 |
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76,131 |
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Product development |
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16,838 |
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17,110 |
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Total operating expenses |
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84,367 |
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93,241 |
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Operating income (loss) |
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1,037 |
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(2,485 |
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Other (expense) income: |
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Interest expense |
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(2,828 |
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(1,279 |
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Other expense, net |
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(496 |
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(499 |
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Total other expense, net |
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(3,324 |
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(1,778 |
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Loss before income taxes |
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(2,287 |
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(4,263 |
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Income tax benefit |
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639 |
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983 |
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Net loss |
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(1,648 |
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(3,280 |
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Less: Net income (loss) attributable to noncontrolling interest |
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364 |
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(407 |
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Net loss attributable to Corsair Gaming, Inc. |
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$ |
(2,012 |
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$ |
(2,873 |
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Calculation of net loss per share attributable to common stockholders of Corsair Gaming, Inc.: |
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Net loss attributable to Corsair Gaming, Inc. |
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$ |
(2,012 |
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$ |
(2,873 |
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Change in redemption value of redeemable noncontrolling interest |
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958 |
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(2,261 |
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Net loss attributable to common stockholders of Corsair Gaming, Inc. |
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$ |
(1,054 |
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$ |
(5,134 |
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Net loss per share attributable to common stockholders of Corsair Gaming, Inc.: |
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Basic |
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$ |
(0.01 |
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$ |
(0.05 |
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Diluted |
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$ |
(0.01 |
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$ |
(0.05 |
) |
Weighted-average common shares outstanding: |
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Basic |
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101,685 |
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95,275 |
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Diluted |
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101,685 |
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95,275 |
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Corsair Gaming, Inc.
Segment Information
(Unaudited, in thousands, except percentages)
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Three Months Ended March 31, |
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2023 |
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2022 |
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Net revenue: |
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Gamer and Creator Peripherals |
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$ |
88,942 |
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$ |
134,148 |
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Gaming Components and Systems |
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265,022 |
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246,543 |
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Total Net revenue |
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$ |
353,964 |
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$ |
380,691 |
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Gross Profit: |
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Gamer and Creator Peripherals |
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$ |
26,648 |
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$ |
43,057 |
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Gaming Components and Systems |
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58,756 |
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47,699 |
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Total Gross Profit |
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$ |
85,404 |
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$ |
90,756 |
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Gross Margin: |
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Gamer and Creator Peripherals |
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30.0 |
% |
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32.1 |
% |
Gaming Components and Systems |
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22.2 |
% |
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19.3 |
% |
Total Gross Margin |
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24.1 |
% |
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23.8 |
% |
Corsair Gaming, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
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March 31, |
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December 31, |
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Assets |
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Current assets: |
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Cash and restricted cash |
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$ |
181,819 |
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$ |
153,827 |
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Accounts receivable, net |
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220,992 |
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235,656 |
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Inventories |
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188,481 |
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192,717 |
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Prepaid expenses and other current assets |
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41,678 |
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40,593 |
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Total current assets |
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632,970 |
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622,793 |
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Restricted cash, noncurrent |
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234 |
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233 |
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Property and equipment, net |
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34,128 |
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34,927 |
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Goodwill |
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348,210 |
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347,747 |
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Intangibles assets, net |
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207,082 |
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216,255 |
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Other assets |
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74,701 |
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|
75,290 |
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Total assets |
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$ |
1,297,325 |
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$ |
1,297,245 |
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Liabilities |
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Current liabilities: |
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Debt maturing within one year, net |
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$ |
8,372 |
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$ |
6,495 |
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Accounts payable |
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188,035 |
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172,033 |
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Other liabilities and accrued expenses |
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152,485 |
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164,470 |
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Total current liabilities |
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348,892 |
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|
342,998 |
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Long-term debt, net |
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220,390 |
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|
232,170 |
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Deferred tax liabilities |
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|
17,680 |
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|
18,054 |
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Other liabilities, noncurrent |
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46,054 |
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|
48,589 |
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Total liabilities |
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633,016 |
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|
641,811 |
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Temporary equity |
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Redeemable noncontrolling interest |
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20,646 |
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|
21,367 |
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Permanent equity |
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Corsair Gaming, Inc. stockholders’ equity: |
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Common stock and additional paid-in capital |
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602,378 |
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593,496 |
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Retained earnings |
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36,169 |
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37,223 |
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Accumulated other comprehensive loss |
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(5,276 |
) |
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(6,881 |
) |
Total Corsair Gaming, Inc. stockholders' equity |
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633,271 |
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623,838 |
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Nonredeemable noncontrolling interest |
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10,392 |
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|
10,229 |
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Total permanent equity |
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643,663 |
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|
634,067 |
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Total liabilities, temporary equity and permanent equity |
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$ |
1,297,325 |
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$ |
1,297,245 |
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Corsair Gaming, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
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Three Months Ended |
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2023 |
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2022 |
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Cash flows from operating activities: |
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Net loss |
|
$ |
(1,648 |
) |
|
$ |
(3,280 |
) |
Adjustments to reconcile net loss to |
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Stock-based compensation |
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7,246 |
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5,147 |
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Depreciation |
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2,897 |
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|
2,604 |
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Amortization |
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9,741 |
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|
|
10,138 |
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Deferred income taxes |
|
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(2,209 |
) |
|
|
(4,078 |
) |
Other |
|
|
128 |
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|
653 |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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14,623 |
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|
54,434 |
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Inventories |
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4,672 |
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(662 |
) |
Prepaid expenses and other assets |
|
|
(1,077 |
) |
|
|
(8,147 |
) |
Accounts payable |
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18,156 |
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|
(35,308 |
) |
Other liabilities and accrued expenses |
|
|
(10,703 |
) |
|
|
(27,607 |
) |
Net cash provided by (used in) operating activities |
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41,826 |
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|
(6,106 |
) |
Cash flows from investing activities: |
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Acquisition of business, net of cash acquired |
|
|
— |
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(19,534 |
) |
Purchase of property and equipment |
|
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(4,677 |
) |
|
|
(4,365 |
) |
Net cash used in investing activities |
|
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(4,677 |
) |
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|
(23,899 |
) |
Cash flows from financing activities: |
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Repayment of debt |
|
|
(10,000 |
) |
|
|
(1,250 |
) |
Borrowing from line of credit |
|
|
— |
|
|
|
293,000 |
|
Repayment of line of credit |
|
|
— |
|
|
|
(293,000 |
) |
Payment of other offering costs |
|
|
(497 |
) |
|
|
— |
|
Payment of contingent consideration |
|
|
(950 |
) |
|
|
(292 |
) |
Proceeds from issuance of shares through employee |
|
|
2,117 |
|
|
|
523 |
|
Payment of taxes related to net share settlement of equity awards |
|
|
(556 |
) |
|
|
(887 |
) |
Net cash used in financing activities |
|
|
(9,886 |
) |
|
|
(1,906 |
) |
Effect of exchange rate changes on cash |
|
|
730 |
|
|
|
(1,484 |
) |
Net increase (decrease) in cash and restricted cash |
|
|
27,993 |
|
|
|
(33,395 |
) |
Cash and restricted cash at the beginning of the period |
|
|
154,060 |
|
|
|
65,380 |
|
Cash and restricted cash at the end of the period |
|
$ |
182,053 |
|
|
$ |
31,985 |
|
Corsair Gaming, Inc.
GAAP to Non-GAAP Reconciliations
Non-GAAP Operating Income Reconciliations
(Unaudited, in thousands, except percentages)
|
|
Three Months Ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
|
|
|
|
|
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Operating Income (Loss) - GAAP |
|
$ |
1,037 |
|
|
$ |
(2,485 |
) |
Amortization |
|
|
9,741 |
|
|
|
10,138 |
|
Stock-based compensation |
|
|
7,246 |
|
|
|
5,147 |
|
Acquisition-related and integration-related costs |
|
|
140 |
|
|
|
243 |
|
Other |
|
|
— |
|
|
|
275 |
|
Adjusted Operating Income - Non-GAAP |
|
$ |
18,164 |
|
|
$ |
13,318 |
|
|
|
|
|
|
|
|
||
As a % of net revenue - GAAP |
|
|
0.3 |
% |
|
|
-0.7 |
% |
As a % of net revenue - Non-GAAP |
|
|
5.1 |
% |
|
|
3.5 |
% |
Non-GAAP Net Income and Net Income Per Share Reconciliations
(Unaudited, in thousands, except per share amounts)
|
|
Three Months Ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
|
|
|
|
|
||
Net loss attributable to common stockholders of Corsair Gaming, Inc. (1) |
|
$ |
(1,054 |
) |
|
$ |
(5,134 |
) |
Less: Change in redemption value of redeemable noncontrolling interest |
|
|
958 |
|
|
|
(2,261 |
) |
Net loss attributable to Corsair Gaming, Inc. |
|
|
(2,012 |
) |
|
|
(2,873 |
) |
Add: Net income (loss) attributable to noncontrolling interest |
|
|
364 |
|
|
|
(407 |
) |
Net Loss - GAAP |
|
|
(1,648 |
) |
|
|
(3,280 |
) |
Adjustments: |
|
|
|
|
|
|
||
Amortization |
|
|
9,741 |
|
|
|
10,138 |
|
Stock-based compensation |
|
|
7,246 |
|
|
|
5,147 |
|
Acquisition-related and integration-related costs |
|
|
140 |
|
|
|
243 |
|
Other |
|
|
— |
|
|
|
275 |
|
Non-GAAP income tax adjustment |
|
|
(3,550 |
) |
|
|
(3,349 |
) |
Adjusted Net Income - Non-GAAP |
|
$ |
11,929 |
|
|
$ |
9,174 |
|
|
|
|
|
|
|
|
||
Diluted net income (loss) per share: |
|
|
|
|
|
|
||
GAAP |
|
$ |
(0.01 |
) |
|
$ |
(0.05 |
) |
Adjusted, Non-GAAP |
|
$ |
0.11 |
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
||
Weighted-average common shares outstanding - Diluted: |
|
|
|
|
|
|
||
GAAP |
|
|
101,685 |
|
|
|
95,275 |
|
Add: Dilutive effect of stock options and RSUs |
|
|
4,147 |
|
|
|
5,015 |
|
Adjusted, Non-GAAP |
|
|
105,832 |
|
|
|
100,290 |
|
|
|
|
|
|
|
|
||
(1) Numerator for calculating net loss per share-GAAP |
|
|
|
|
|
|
||
Corsair Gaming, Inc.
GAAP to Non-GAAP Reconciliations
Adjusted EBITDA Reconciliations
(Unaudited, in thousands, except percentages)
|
|
Three Months Ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
|
|
|
|
|
||
Net loss - GAAP |
|
$ |
(1,648 |
) |
|
$ |
(3,280 |
) |
Amortization |
|
|
9,741 |
|
|
|
10,138 |
|
Stock-based compensation |
|
|
7,246 |
|
|
|
5,147 |
|
Depreciation |
|
|
2,897 |
|
|
|
2,604 |
|
Interest expense, net |
|
|
2,828 |
|
|
|
1,279 |
|
Acquisition-related and integration-related costs |
|
|
140 |
|
|
|
243 |
|
Other |
|
|
— |
|
|
|
275 |
|
Income tax benefit |
|
|
(639 |
) |
|
|
(983 |
) |
Adjusted EBITDA - Non-GAAP |
|
$ |
20,565 |
|
|
$ |
15,423 |
|
|
|
|
|
|
|
|
||
Adjusted EBITDA margin - Non-GAAP |
|
|
5.8 |
% |
|
|
4.1 |
% |
Q1 2023 FINANCIAL RESULTS May 10, 2023 Exhibit 99.2
DISCLAIMER Forward Looking Statements This presentation contains forward looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the Company's results may differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact could be deemed forward-looking statements, including, but not limited to: information or predictions concerning the Company's future financial performance, business plans and objectives, potential growth opportunities, potential pricing of products, potential market leadership, financing plans, competitive position, technological, industry or market trends and potential market opportunities. These statements are based on estimates and information available to the Company at the time of this presentation and are not guarantees of future performance. Actual results could differ materially from the Company's current expectations as a result of many factors, including, but not limited to: current macroeconomic conditions, including but not limited to the impacts of high inflation and the risk of a recession on consumer confidence and demand for our products; the lingering impacts and future outbreaks of the COVID-19 pandemic and its impacts on its operations and the operations of its manufacturers, retailers and other partners, as well as its lingering impacts on the economy overall, including capital markets; the Company’s ability to build and maintain the strength of its brand among gaming and streaming enthusiasts and its ability to continuously develop and successfully market new gear and improvements to existing gear; the introduction and success of new third-party high-performance computer hardware, particularly graphics processing units and central processing units, as well as sophisticated new video games; fluctuations in operating results; the risk that the Company is not able to compete with competitors and/or that the gaming industry, including streaming and eSports, does not grow as expected or declines; the loss or inability to attract and retain key management; the impact of global instability, such as the war between Russia and Ukraine, and any sanctions or other geopolitical tensions that may result therefrom; delays or disruptions at manufacturing and distribution facilities of the Company or third parties; currency exchange rate fluctuations or international trade disputes resulting in the Company’s gear becoming relatively more expensive to its overseas customers or resulting in an increase in the Company’s manufacturing costs; and the other factors described under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission ("SEC") and its subsequent filings with the SEC. The Company assumes no obligation, and does not intend, to update these forward-looking statements, except as required by law. Investors are urged to review in detail the risks and uncertainties outlined in Corsair’s SEC filings. You may get these SEC documents for free by visiting EDGAR on the SEC website at http://www.sec.gov. Non-GAAP Financial Measures Included in this presentation are certain non-GAAP financial measures, including Adjusted Operating Income (Loss), Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share, which are not recognized under the generally accepted accounting principles (“GAAP”) in the United States and designed to complement the financial information presented in accordance with GAAP in the United States because management believes such measures are useful to investors. The non-GAAP measures have limitations as analytical tools and you should not consider them in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP. The non-GAAP measures used by the Company may differ from the non-GAAP measures used by other companies. The Company urges you to review the reconciliation of its non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures set forth in the Appendix to this presentation, and not to rely on any single financial measure to evaluate the Company's business. Market & Industry Data This presentation also contains estimates and other statistical data made by independent parties and by the Company relating to the Company’s industry, the Company’s business and the market for the Company’s products and its future growth. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions, and estimates of the Company’s future performance and the future performance of the market for its products are necessarily subject to a high degree of uncertainty and risk.
Q1 2023 MARKET UPDATE
CORSAIR GAINING IN HEALTHY SELF-BUILT PC MARKET Self-Built PC market fueled by new GPUs and CPUs with more lower priced options soon to come. More people in major markets building gaming PCs now than pre-pandemic. Corsair has consistently gained market share in our core business over the past 3 years. Gaming Components and Memory Gaming Components and Memory
MARKET FOR CASUAL GAMERS AND CONTENT CREATORS RECOVERING, BUT STILL DISCOUNTING IN THE CHANNEL Market fueled by heavy discounting from competitors still reducing inventories. Corsair focusing on high end peripherals for enthusiasts, and our core business in gaming. Expect market growth in this category in 2H23. Gaming Peripherals Gaming Peripherals
LARGER MEMORY REQUIREMENTS BY GAMES IS DRIVING DEMAND FOR NEW BUILDS AND UPGRADES New popular PC games are increasingly utilizing more demanding PC hardware to play at the highest settings, especially memory. Popular titles such as Hogwarts Legacy (12M+ copies sold) require 32GB+ of memory to run at ultra settings and 4K on PC. The eagerly awaited Diablo 4 also requires a minimum of 32GB of memory to play at Ultra 4K detail settings for the best experience. 75% of PC gamers currently have 16GB or less of memory* in their PC. Source – *Steam Hardware survey March 2023 Hardware Requirements - Publisher Recommendations
KEY ANNOUNCEMENTS
HIGH PERFORMANCE, HIGH DENSITY DDR5 MEMORY Corsair in Q1 2023 introduced new high performance 32GB and 48GB Memory modules. These can be used in kits of 2 or 4 modules to provide up to 192GB of high-speed memory.
ELGATO x MARKETPLACE Stream Deck is a category-defining “smart keyboard” for intuitive control of ever evolving digital workflows. Via the Stream Deck SDK, the community is able to build integrations between Stream Deck and their favorite applications and tools. With the launch of the Elgato Marketplace, developers will be able to easily market and sell their creations to Elgato’s large and rapidly growing install base. We expect this new platform will lead to a virtuous cycle of further expansion of Stream Deck integrations, leading to more users, leading to a more attractive opportunity for developers.
BUILD KITS A new initiative, allowing customers to skip the research and hunting for parts when building a new PC. Growing our self-built TAM by providing an easy out of the box solution for people who are interested in building a PC but without the experience to do it alone. Six different kits, with everything you need to build a fantastic new PC, Including processor, graphics card, memory etc. All kits are supported by in-depth tutorial build videos that show users step-by-step how to assemble their PC. “With its PC Build Kits, Corsair has essentially picked and laid everything out for me. The kits come with easy-to-follow, and mostly clear, step-by-step instructions and a video tutorial. All I needed to do was... build.” – TechRadar
iCUE: EXPANDING OUR RGB CONTROL SOFTWARE We continue to develop our iCUE software with engaging new features, adding MURALS, a new lighting profile creation interface. MURALS brings the Corsair product ecosystem together within iCUE, alongside partners Nanoleaf and Philips HUE, to easily control and sync lighting across a broad range of products from a single interface. Users can easily create new profiles, turning an image, a video, or even music, into an amazing lighting profile that extends across all their compatible products in seconds.
HS65 & HS55 WIRELESS HEADSETS Expanding our line-up of popular wireless gaming headsets, the HS65 and HS55 WIRELESS are lightweight, versatile and offer great gaming audio. Two wireless ways to connect via low-latency 2.4GHz wireless or Bluetooth®, offering the versatility to listen across all your systems and devices. The HS65 WIRELESS also offers advanced audio personalization with Sonarworks SoundID, for sound tailored to you. “I would recommend the HS65 Wireless to anyone looking for an affordable gaming headset with immersive surround sound and personalized sound profiles.” – TheGamer.com
NICKMERCS STRATEGIC PARTNERSHIP Corsair has announced a multi-year partnership with the world-famous gaming streamer Nick "NICKMERCS" Kolcheff. Nick is a well-known personality in the gaming community, with over 15 million followers and an average daily viewership of 60,000. Nick will exclusively play and stream using Corsair's high-performance gaming gear, SCUF controllers, Elgato streaming hardware, and gaming PCs from Origin PC. “Not only will I start rocking the best gear gaming has to offer, but I have a lot to say on what makes a truly elite product and gaming experience.” – NICKMERCS
FINANCIAL RESULTS CORSAIR CONFIDENTIAL
Q1 2023 RESULTS(1) Strong performance of components, with the components and systems segment growing 7.5% year over year, as the introduction of new GPUs and CPUs from NVIDIA, AMD and Intel positively impacted the self-built gaming PC market. The growth was offset by a soft peripheral market compared to Q1'22, particularly in Europe, however still well above pre-pandemic levels. Adjusted EBITDA up by a third as operating expenses reduced by almost 10% due to reduction in freight rates and implementation of cost controls. Gross margin up 30 bps as lower freight rates and tariffs costs have normalized to close to pre-pandemic levels. ($ in millions except EPS and percentages) Q1'22 Q1'23 % Y/Y Net Revenue $380.7 $354.0 -7.0% Gross Profit $90.8 $85.4 -5.9% Gross Profit Margin 23.8% 24.1% 30 bps Operating Income (Loss) ($2.5) $1.0 -141.7% Adjusted Operating Income $13.3 $18.2 36.4% Net Loss attributable to common stockholders ($5.1) ($1.1) -79.5% Loss per Share (Diluted) $(0.05) $(0.01) -80.0% Adjusted Net Income $9.2 $11.9 30.0% Adjusted Earnings per Share (Diluted) $0.09 $0.11 22.2% Adjusted EBITDA $15.4 $20.6 33.3% See appendix for reconciliation of non-GAAP metrics to most comparable GAAP metrics.
Q1 2023 SEGMENT RESULTS Growth in components and systems segment is driven by the introduction of new GPU and CPU by NVIDIA, AMD and Intel, which prompted enthusiast-level PC gamers to upgrade and or build new gaming PCs. Additional lower cost, higher volume GPUs such as the 4070 and 4060 to be introduced during Q2'23. Components and systems segment gross margin expanded 290 bps due to lower freights and increased efficiencies. Gamer and Creator Peripherals market remains softer than last year, particularly in Europe, but well above pre-pandemic levels. Though there are signs the above normal promotional activity level in the market is easing, it continued to be elevated in Q1'23 as competitors clear their excess inventory, which impacted gross margin. Gaming Components and Systems ($ in millions except percentages) Q1'22 Q1'23 % Y/Y Net Revenue $246.5 $265.0 7.5% % of Total Net Revenue 64.8% 74.9% 1010 bps Gross Profit $47.7 $58.8 23.2% Gross Profit Margin 19.3% 22.2% 290 bps Gamer and Creator Peripherals ($ in millions except percentages) Q1'22 Q1'23 % Y/Y Net Revenue $134.1 $88.9 -33.7% % of Total Net Revenue 35.2% 25.1% -1010 bps Gross Profit $43.1 $26.6 -38.1% Gross Profit Margin 32.1% 30.0% -210 bps
STRONG ACTIVITY IN SELF-BUILT GAMING SYSTEMS, MARKET SOFTER FOR CASUAL PERIPHERALS PURCHASE 7.5% YoY Growth for Gaming Components and Systems driven by more demanding PC Gaming requirements and new GPUs and CPUs. Expect to resume growth in Gamer and Creator Peripherals during 2H 2023. Gaming Components and Systems Gamer and Creator Peripherals REVENUE BY SEGMENT +7.5% YoY
COST CONTROL AND MARGIN RECOVERY HAS DRIVEN EBITDA GROWTH See appendix for reconciliation of non-GAAP metrics to most comparable GAAP metrics.
FINANCIAL GUIDANCE FY2023(1) Given the number of risk factors, uncertainties and assumptions, many of which are discussed in slide 2, actual results may differ materially. We do not intend to update our financial outlook until our next quarterly results announcement. Estimates should not be viewed as a substitute for our full annual financial statement and are not necessarily indicative of the results to be expected for any future period. Certain non-GAAP measures included in our financial outlook were not reconciled to the comparable GAAP financial measures because the GAAP measures are not accessible on a forward-looking basis. We are unable to reconcile these forward-looking into non-GAAP measures to the most directly comparable GAAP measures without unreasonable effort because we are currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures for this period but would not impact the non-GAAP measures. Such items may include stock-based compensation charges, public offering related charges, depreciation and amortization, and other items. The unavailable information could have a significant impact on our GAAP financial results. Financial Metrics 2023 Guidance Net Revenues $1.35-1.55 billion Adjusted Operating Income $75-95 million Adjusted EBITDA $90-110 million
DEBT SUMMARY ($ in millions) March 31, 2023 Cash (Excluding restricted cash) $179.1 Term Loan (face value) $230.0 Total Debt $230.0 Net Debt $50.9
APPENDIX
USE OF NON-GAAP FINANCIAL MEASURES To supplement the financial results presented in accordance with GAAP, this presentation includes certain non-GAAP financial information, including Adjusted Operating Income (Loss), Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share. These are important financial performance measures for us but are not financial measures as defined by GAAP. The presentation of this non-GAAP financial information is not intended to be considered in isolation of or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures to evaluate our operating performance and trends and make planning decisions. We believe that these non-GAAP financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses and other items that we exclude in such non-GAAP financial measures. Accordingly, we believe that these non-GAAP financial provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to the key financial metrics used by our management in our financial and operational decision-making. We also present these non-GAAP financial measures because we believe investors, analysts and rating agencies consider them useful in measuring our ability to meet our debt service obligations. Our use of these terms may vary from that of others in our industry. These non-GAAP financial measures should not be considered as an alternative to revenues, operating income, net income, cash provided by operating activities or any other measures derived in accordance with GAAP as measures of operating performance or liquidity. Reconciliations of these measures to the most directly comparable GAAP financial measures are presented in the appendix. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view these non-GAAP financial measures in conjunction with the related GAAP financial measures.
GAAP TO NON-GAAP RECONCILIATIONS Non-GAAP Operating Income (Loss) Reconciliations (Unaudited, in thousands, except percentages)
GAAP TO NON-GAAP RECONCILIATIONS Non-GAAP Net Income (Loss) and Net Income (Loss) Per Share Reconciliations (Unaudited, in thousands, except per share amounts)
GAAP TO NON-GAAP RECONCILIATIONS Adjusted EBITDA Reconciliations (Unaudited, in thousands, except percentages)
