10-Q
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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, 2023

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.)

 

115 N. McCarthy Boulevard

Milpitas, CA 95035

(Address of Principal Executive Offices and zip code)

 

 

(510) 657-8747

(Registrant’s Telephone Number, Including Area Code)

 

 

 

Not Applicable

(Former name, former address and former fiscal year,

if changed since last report)

 

 

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, a 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 April 26, 2023, the registrant had 102,060,218 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 Consolidated Statements of Operations - Three Months Ended March 31, 2023 and March 31, 2022

2

Condensed Consolidated Statements of Comprehensive Loss - Three Months Ended March 31, 2023 and March 31, 2022

3

Condensed Consolidated Balance Sheets - As of March 31, 2023 and December 31, 2022

4

 

Condensed Consolidated Statements of Shareholder’s Equity - Three Months Ended March 31, 2023 and March 31, 2022

5

Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2023 and March 31, 2022

6

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

32

PART II.

OTHER INFORMATION

33

Item 1.

Legal Proceedings

33

Item 1A.

Risk Factors

33

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

33

Item 3.

Defaults Upon Senior Securities

33

Item 4.

Mine Safety Disclosures

33

Item 5.

Other Information

33

Item 6.

Exhibits

34

Signatures

35

 

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 the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022. 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 Consolidated Statements of Operations

(Unaudited, in thousands, except per share amounts)

 

 

 

Three Months Ended
March 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Net revenue

 

$

353,964

 

 

$

380,691

 

Cost of revenue

 

 

268,560

 

 

 

289,935

 

Gross profit

 

 

85,404

 

 

 

90,756

 

Operating expenses:

 

 

 

 

 

 

Sales, general and administrative

 

 

67,529

 

 

 

76,131

 

Product development

 

 

16,838

 

 

 

17,110

 

Total operating expenses

 

 

84,367

 

 

 

93,241

 

Operating income (loss)

 

 

1,037

 

 

 

(2,485

)

Other (expense) income:

 

 

 

 

 

 

Interest expense, net

 

 

(2,828

)

 

 

(1,279

)

Other expense, net

 

 

(496

)

 

 

(499

)

Total other expense, net

 

 

(3,324

)

 

 

(1,778

)

Loss before income taxes

 

 

(2,287

)

 

 

(4,263

)

Income tax benefit

 

 

639

 

 

 

983

 

Net loss

 

 

(1,648

)

 

 

(3,280

)

Less: Net income (loss) attributable to noncontrolling interest

 

 

364

 

 

 

(407

)

Net loss attributable to Corsair Gaming, Inc.

 

$

(2,012

)

 

$

(2,873

)

 

 

 

 

 

 

 

Calculation of net loss per share attributable to common stockholders of Corsair Gaming, Inc.:

 

 

 

 

 

 

Net loss attributable to Corsair Gaming, Inc.

 

$

(2,012

)

 

$

(2,873

)

Change in redemption value of redeemable noncontrolling interest

 

 

958

 

 

 

(2,261

)

Net loss attributable to common stockholders of Corsair Gaming, Inc.

 

$

(1,054

)

 

$

(5,134

)

 

 

 

 

 

 

 

Net loss per share attributable to common stockholders of Corsair Gaming, Inc.:

 

 

 

 

 

 

Basic

 

$

(0.01

)

 

$

(0.05

)

Diluted

 

$

(0.01

)

 

$

(0.05

)

Weighted-average common shares outstanding:

 

 

 

 

 

 

Basic

 

 

101,685

 

 

 

95,275

 

Diluted

 

 

101,685

 

 

 

95,275

 

 

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

 

2


Table of Contents

 

 

Corsair Gaming, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited, in thousands)

 

 

 

Three Months Ended
March 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Net loss

 

$

(1,648

)

 

$

(3,280

)

Other comprehensive gain (loss):

 

 

 

 

 

 

   Foreign currency translation adjustments, net of tax (expense) benefit of $(18) and $151 for the three months ended March 31, 2023 and 2022, respectively

 

 

1,667

 

 

 

(2,258

)

   Unrealized foreign exchange loss from long-term intercompany loans, net of tax (expense) benefit of $(127) and $19 for the three months ended March 31, 2023 and 2022, respectively

 

 

(26

)

 

 

(95

)

Comprehensive loss

 

 

(7

)

 

 

(5,633

)

Less: Comprehensive income (loss) attributable to noncontrolling interest

 

 

400

 

 

 

(606

)

Comprehensive loss attributable to Corsair Gaming, Inc.

 

$

(407

)

 

$

(5,027

)

 

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

 

3


Table of Contents

 

 

Corsair Gaming, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except per share amounts)

 

 

 

March 31,
2023

 

 

December 31,
2022

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash

 

$

179,147

 

 

$

151,180

 

Restricted cash

 

 

2,672

 

 

 

2,647

 

Accounts receivable, net

 

 

220,992

 

 

 

235,656

 

Inventories

 

 

188,481

 

 

 

192,717

 

Prepaid expenses and other current assets

 

 

41,678

 

 

 

40,593

 

Total current assets

 

 

632,970

 

 

 

622,793

 

Restricted cash, noncurrent

 

 

234

 

 

 

233

 

Property and equipment, net

 

 

34,128

 

 

 

34,927

 

Goodwill

 

 

348,210

 

 

 

347,747

 

Intangible assets, net

 

 

207,082

 

 

 

216,255

 

Other assets

 

 

74,701

 

 

 

75,290

 

Total assets

 

$

1,297,325

 

 

$

1,297,245

 

Liabilities

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Debt maturing within one year, net

 

$

8,372

 

 

$

6,495

 

Accounts payable

 

 

188,035

 

 

 

172,033

 

Other liabilities and accrued expenses

 

 

152,485

 

 

 

164,470

 

Total current liabilities

 

 

348,892

 

 

 

342,998

 

Long-term debt, net

 

 

220,390

 

 

 

232,170

 

Deferred tax liabilities

 

 

17,680

 

 

 

18,054

 

Other liabilities, noncurrent

 

 

46,054

 

 

 

48,589

 

Total liabilities

 

 

633,016

 

 

 

641,811

 

Commitments and Contingencies (Note 9)

 

 

 

 

 

 

Temporary equity

 

 

 

 

 

 

Redeemable noncontrolling interest

 

 

20,646

 

 

 

21,367

 

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, 2023 and December 31, 2022, respectively

 

 

 

 

 

 

Common stock, $0.0001 par value: 300,000 shares authorized, 102,017 and 101,385 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

 

 

10

 

 

 

10

 

Additional paid-in capital

 

 

602,368

 

 

 

593,486

 

Retained earnings

 

 

36,169

 

 

 

37,223

 

Accumulated other comprehensive loss

 

 

(5,276

)

 

 

(6,881

)

Total Corsair Gaming, Inc. stockholders’ equity

 

 

633,271

 

 

 

623,838

 

Nonredeemable noncontrolling interest

 

 

10,392

 

 

 

10,229

 

Total permanent equity

 

 

643,663

 

 

 

634,067

 

Total liabilities, temporary equity and permanent equity

 

$

1,297,325

 

 

$

1,297,245

 

 

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

 

4


Table of Contents

 

 

Corsair Gaming, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited, in thousands)

 

 

 

 

Three Months Ended March 31, 2023

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Retained

 

 

Accumulated
Other
Comprehensive

 

 

Total Corsair Gaming, Inc.
Stockholders’

 

 

Nonredeemable
Noncontrolling

 

 

Total
Permanent

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Equity

 

 

Interest

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2022

 

 

101,385

 

 

$

10

 

 

$

593,486

 

 

$

37,223

 

 

$

(6,881

)

 

$

623,838

 

 

$

10,229

 

 

$

634,067

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

(2,012

)

 

 

 

 

 

(2,012

)

 

 

149

 

 

 

(1,863

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,605

 

 

 

1,605

 

 

 

14

 

 

 

1,619

 

Change in redemption value of redeemable noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

958

 

 

 

 

 

 

958

 

 

 

 

 

 

958

 

Issuance of common stock in connection with employee equity incentive plans

 

 

671

 

 

 

 

 

 

2,117

 

 

 

 

 

 

 

 

 

2,117

 

 

 

 

 

 

2,117

 

Shares withheld related to net share settlement

 

 

(39

)

 

 

 

 

 

(556

)

 

 

 

 

 

 

 

 

(556

)

 

 

 

 

 

(556

)

Stock-based compensation

 

 

 

 

 

 

 

 

7,321

 

 

 

 

 

 

 

 

 

7,321

 

 

 

 

 

 

7,321

 

Balance as of March 31, 2023

 

 

102,017

 

 

$

10

 

 

$

602,368

 

 

$

36,169

 

 

$

(5,276

)

 

$

633,271

 

 

$

10,392

 

 

$

643,663

 

 

 

 

 

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

 

 

Interest

 

 

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 interest 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 noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

(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

 

 

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

 

5


Table of Contents

 

 

Corsair Gaming, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

 

 

Three Months Ended
March 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(1,648

)

 

$

(3,280

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

   Stock-based compensation

 

 

7,246

 

 

 

5,147

 

   Depreciation

 

 

2,897

 

 

 

2,604

 

   Amortization

 

 

9,741

 

 

 

10,138

 

   Deferred income taxes

 

 

(2,209

)

 

 

(4,078

)

   Other

 

 

128

 

 

 

653

 

   Changes in operating assets and liabilities:

 

 

 

 

 

 

      Accounts receivable

 

 

14,623

 

 

 

54,434

 

      Inventories

 

 

4,672

 

 

 

(662

)

      Prepaid expenses and other assets

 

 

(1,077

)

 

 

(8,147

)

      Accounts payable

 

 

18,156

 

 

 

(35,308

)

      Other liabilities and accrued expenses

 

 

(10,703

)

 

 

(27,607

)

         Net cash provided by (used in) operating activities

 

 

41,826

 

 

 

(6,106

)

Cash flows from investing activities:

 

 

 

 

 

 

   Acquisition of business, net of cash acquired

 

 

 

 

 

(19,534

)

   Purchase of property and equipment

 

 

(4,677

)

 

 

(4,365

)

         Net cash used in investing activities

 

 

(4,677

)

 

 

(23,899

)

Cash flows from financing activities:

 

 

 

 

 

 

   Repayment of debt