CRSR - Earnings call transcript Q2 2024

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Operator

Good afternoon and welcome to Corsair Gaming's Second Quarter 2024 Earnings Conference Call.

As a reminder, today's call is being recorded and your participation implies consent to such recording. [Operator Instructions] With that, I would like to turn the call over to Ronald Van Veen, Corsair's Vice President of Finance and Investor Relations. Thank you. Sir, please go ahead.

Ronald Van Veen

you. Thank and call joining ended for XXXX. everyone, financial for June you conference results the thank afternoon, us for Corsair's XX, Good second quarter

the our from the CEO, Michael will our Michael On the Andy quarter. we financials review and and Potter. highlights Paul; CFO, Corsair review will then today, call outlook. Andy have

We have for time will any then questions.

to a portion Before we forward-looking the the statements. Q&A of This our are call, forward-looking future company, statements begin, allow therefore expected related disclaimer me of results forward-looking call, regarding to include the provide may but including statements.

results materially preliminary. Today's are other measures. remarks XX-Q Note to that and may uncertainties Our are our to projections has actual risks non-GAAP references financial risks SEC filings. been statements forward-looking in differ and subject due of to release our number numbers that The will until are our these uncertainties. include filed, and also described from earnings

GAAP non-GAAP market Additional is closed between the turn information, that, the including today. after provided the reconciliation to With financial to I'll financial release issued Andy. over in now information press we call the information

Andrew Paul

Ronald, of this you, year revenue is lowest always us and quarter call. to exception. welcome the earnings Thank our and no year QX is for the everyone

gaming with pressure XX% self-built to and was full flat in Two third-party self-built double wireless tripled Creator gaming cases last used self-built roughly best-selling gaming lengthened like the horizon, but This headset on on components new segment, which saw showed year. We quarter the market of is which like market lockdown, cycles and be expected. KXX X-year dynamics is peripherals, headsets economic to market are which in builds. We for third-party of and an not where hold are revenue the hardware anticipated we to causing X demand incredibly this a conditions. story. in the segments, Also have showed PC on XX- X roughly getting best drop segment. To on high-priced data may think the technology soon and for released to these be components X through increased like a items good levels. Refresh ASP activity some cycle quickly X- Prime However, gaming years also according this here than to XXXX, and current macroeconomic conditions, lens the to Day. PCs many been XX which have or systems months growth the trends new keyboard see business months complex indicator channel see looking exciting acting refresh a that it's moved very a pre-COVID XX-month approximately are reach. refresh There like now Duty: VI for in gaming supplies, makes now games upgrades to that went weighing emerged where footprint year-on-year highly consumers from pre-COVID Theft the and to market, expand July launched U.S. while a on systems to top XX% others components market more COVID a of some and yet, Grand our and can Call was are and used which power be to put XX% dip market segment see current years market, PC pushed approximately having is the altogether the to is cards, while gaming products size with on used cycle data approximately is different inventory and keyboard, expected a year-on-year business in market of of up from this Gamer more refresh year-on-year. We've and exciting approximately Ops the on, of Black QX. The doubled. to off we We on our trends to to became weaker We and lengthening on GPU includes have over led cycles clearly have be now which PCs. recent caused which In X data caution XX now third-party with some that, to fact our view and reduction is the it $X,XXX-plus games surge during historical the helpful lockdowns, the this that consumers the our activity. Auto X-year X

As quite sales Prime the before result, appear as drop. Day year. categories our sales in with July were successful to Prime immediate a in preview, last overperforming compared And a to months day quick most

the market, games new hardware that see the all-time gaming new rise gaming installed is and an of of base Looking continue at Gaming high. pack are gaming airs technology and corner. post-COVID at the view exciting incredibly we an AI to overall generation-by-generation around

customize able playing space before, we within and the looked make gamer's generation XXXX seeing very with expect third new next devices piece to growth to segment, adaptive growth. successive up revenue mentioned has use GPU never hardware and quarter fact, every XX.X% ability. I our into looking good Peripherals is settings cards high-teens Creator the more X gaming months. In a we This as to the of of see to are as move their year-over-year. Gamer able And hardware percentage into we'll more technology In exciting. AI to gaming continues be to

slight to from market, success Gamer with of our which growth. segment overall new benefiting as drive well We Creator We combined as the entering with strategic in parts and the long-term a continue improvement the market, grow are our to will organically acquisitions. Peripherals intend

as year new products alone, expect we launched many This than well years. become business existing larger We categories. mobile this and innovative will the controllers few traditional within teleprompters, other components business in PC controllers as our a

press we We the also file can company in today's brand we racing And entry noted in Sim this with though we announced Endor recently the were as owned market at interested we our Sim earnings AG. release, to are hopeful see the insolvency, disappointed we for recently which we racing Fanatec, products remain COMPUTEX. Separately, acquire into by showcased that still company.

businesses. Moving to memory components on and our

to Gamer We continue we standpoint, and efficiently while to businesses intend while dominate can that in return to for benefit GPUs share we to as continued market trend recover growth. Overall, cycle to from year refresh these most a our We when a are the Creator segment. the from in long-term about our positioned as excited fundamentals new lead. remain wait the strong and market strong growth later leading Peripherals market continue this to launch We're with categories. we running continue and core strong cost we and

CFO, now to over Potter, on our financials. the turn details Let call the go me please Michael Michael, for ahead.

Michael Potter

Thanks, Andy, and afternoon, everyone. good

base due inventory been and This demand profitability quarter impact on paid adjusted. the due an and also our that a was as components operating we for lower-than-expected to sold. being revenue challenging gaming the systems cash we our cost This had significant have not not where the high-end lower-than-expected impact yet to leading market, in had has It share. yet on particularly a market

partially reduced normal revenue, expect the better product half were measures to due of impact with the To seasonality continue continue align to and discussed, Andy better we operating However, and implemented additional sales reduce in second our new needed short introductions. a term. to cost-saving near-term July we in the mitigate to as lower expenses levels we'll

revenue was $XXX.X In to terms million net of $XXX.X XXXX million QX QX the XXXX. in specifics, compared

QX the XX% X first compared of in period. year to our XX.X% million in QX of contributed in was revenues to XXXX of compared XXXX, For XX.X% the was million European the APAC markets QX XXXX net from XXXX, XX.X% months QX ago $XXX.X XXXX. region while revenue $XXX.X revenues our

Turning our in compared of to the million The to and segment revenue during second net $XX.X $XX.X XXXX. now Gamer QX quarter contributed million Creator Peripheral segments.

to $XXX.X during months first second from million Products $XXX.X $XX.X the of Gaming QX compared of in million For X Components $XXX.X revenue QX gamer segment XXXX. contributed $XXX.X million in million & The of in the XXXX. Memory the was for $XXX.X months revenue XXXX segment quarter contributed first to peripheral X million XXXX. million creator and net Systems compared XXXX, XQ

believe Gaming in while profit Products decreased from XX.X% first to segment Gross XXXX volumes. XX.X% the the million QX million. Overall Systems revenue gross $XX.X $XX.X margin sales continued and Systems compared million revenue For & $XXX.X in million compared compared was the reflecting million volume. from X to XX.X% Gamer XXXX. in profit the segment first for XXXX. Gross to XXXX, QX million of the the compared $XXX.X was Components we're to business to $XX.X volume in to reflecting XX.X% from QX second revenue costs segment gross months of to $XX.X Creator to We're XXXX. months X% X% to of $XX.X XXXX, $XXX.X from higher the decreased QX continues. The first a XXXX. Overall fixed million level track in the to margin in million Gross XXXX, QX months $XXX.X for of compared and $XXX.X XXXX, improvements, gross further in and XXXX. in million profit months QX $XX.X X Gross on & Gaming X $XXX.X compared decreasing X to this profit was compared Components in first XX.X% impact over was decreased see million lower-than-expected was rebound lower allocated in million quarter in million with sales margin margin the pleased Peripherals XX.X% to lower Memory

XX.X% margin for XXXX. in segment second in Our compared this Products XX.X% Memory QX to were quarter gross the

to quarter $XX.X XXXX. expenses compared million in were $XX Second million SG&A QX

million This our and expenses of product XXXX. Sim line controllers $XX.X areas, new racing. support $XX.X mobile our including in compared Second to quarter in QX and investments expanded R&D were million reflects

already products XXXX. We expect R&D in launched QX we new to the given in have number of decrease

the are external approximately reduction XXXX. in XXXX. XXX operating quarter and $XX.X which support operating XXXX Creator to lower expenses, while segment and in to second million remain additional second operating cost expenses loss demands additional reduce and of our including QX expense was As R&D $X.X for executing half employees we committed operating July, savings GAAP on marketing. GAAP million of controlling in compared loss operating the has took We will Gamer expenses in some higher color, continuing in Peripherals will growth of the to and action of which

million million compared XXXX. $XX to Second was million for in adjusted to QX adjusted income the of half $XX.X loss Adjusted of the was $X.X in operating XXXX. operating XXXX compared million operating income of half quarter $XX.X first first

per per $X.X an quarter $X.XX adjusted $X.XX or Second share or to share quarter an million $X.X diluted to net basis, compared income loss was adjusted to in million common or QX $X.XX net shareholders second of was per per or income as million attributable diluted loss million XXXX. share XXXX. diluted compared On share in net $XX.X $X.XX of $X.X net QX

of For XXXX. the share $X.X share in first compared per $XX.X per $X.XX months $X.XX or months of million net or the diluted X income XXXX, adjusted million was to X first

Finally, loss adjusted of a $X.X of for XXXX. was QX compared second a $XX.X million million to quarter EBITDA gain

$XX.X months period. of X million was EBITDA to $XX.X compared first the ago in year XXXX, the million For adjusted

our QX of $XX.X a cash to balance now Turning restricted cash balance, ended including million. with We sheet.

fund expanding to to cash continue our portfolio. a of balance development sheet maintain We the sufficient product healthy with

demand. flexible We expect concentrated to which selling based additional has that in we longer inventory, during will we reduce in XXXX. We we stronger excellent in of working refresh $XXX themselves. and which remain the as rate QX the fully revolver ordered also face expect a on of third particular, components allowing it ended to QX inventory million million us the rest $XXX.X half, to available. QX traditionally on value that cash. In second half and with the to This second opportunities into expect generate cash as we set remains anticipate and inventory expected move we liquidity quarter Overall, technology is our capital higher further XXXX, inventory into be debt and present at turning for and XXXX undrawn

the of adjusted Operator, range range $XX $XX adjusted and open are In of happy softness updating to $XX open in the the terms to $XX million expect please in of revenue the million up million. With to we're now to will call call billion reflect you Q&A? in million now discussed range EBITDA We total year billion; earlier. market $X.XX income the for to the of for we $X.XX that, XXXX, outlook previous questions. operating the our Andy full

Operator

first Wang Our Barclays. question George Instructions] [Operator comes from with

Dong Wang

on PC for DIY components. the memory Firstly, self-built just

it X recovery refresh delay? about of Can years, guys kind color just can X think further should are next you about for Just in expecting the a are be the or downside Or quite data but you on in terms GPU of months. forecast the X order? potential historical how of do bit short you talked now give still the pushed and out presence you you horizon? maybe refresh guys in on You talk the relatively potential be should more Or little kind are you macro? to given seeing confident given

Andrew Paul

Yes.

the all partners say year around information either of on will come So to on One early is privy next X share. standard the cards, this market cards The that. of is from agreeing. I confidential our the is, market buzz release or new things we're I'd What late out that very obviously, year. kind that can't the

So that's there. out

will Now buying that X months graphics or every up now activity? of or years, Clearly, cards. -- NVIDIA what terms AMD do has -- in new XX launched every years X until the or

QX, in more would months. launch like they be that if XX So

So a that's delay.

is to Q-surge. cycle refresh we doubled, after thing be a look an component like? to has basically that by what that expect where second followed convinced We PC are the that business Now echo COVID, do refresh of the pretty cycle

PCs, market -- away occur that believe that's we echo don't build people not the [ think all gaming that number that into would people an those the the to market the that was no ]. which go same all For came which almost to ever to into upgrade, have previously existed, not mean to would came buy new is we and

people where that So is and new year. to into a strong next And a using get we're we have build pretty obviously, $X,XXX, the it's to at sure where much operate high these be cards higher once more going machines, cards are we refresh share. a graphics refresh, market end $X,XXX we

Dong Wang

Okay. Great.

the it's follow-up, second XX% peripheral on creator nice quickly a with Just if margins. year-over-year nice just growth almost may, I to see business,

the the how level space quarters? of Just mean, the over updates the in And it any next terms a consumer is? latest to ASP still in more it I to white curious from few do high peripherals? see up as sustainable you relates drive

Andrew Paul

Well, yes.

a question. this in So very And is take a actually, interesting I'll few parts. different

is business of peripheral what it overall the the pre-COVID. Firstly, size was twice

gamers that at the kind point, which look And of the buy. bellwether headsets, gaming Xx. XXXX. to you it's sold COVID The market, of headsets tripled the pre-COVID, at if XXXX the So is in of it's usually were so period the first number still this thing from

gear. there market people that's gaming number of that that's healthy So growing a getting buying and terms in into are of

the the Now is in bit. market this -- year seen last there what compared year, flat. has bifurcating relatively to little been a is market But that we've is general

low ASPs don't who participate The which low-end a ASPs, are, fair going know are of we And peripherals suppliers, up. from those the in. major ASPs at you those very there's so typically number really

so when by And a be it IPO a did something with as products, happy that expansion lot the expensive people better any are possible for features. to in I more while get this And talked pay for thought is that's lot they there extra we -- as I with skiing same was whether the seen we've enthusiast people golf, products have type about that a gaming features. more gear or been I think in of older

Operator

with question Sebastian next the comes from Baird. And Colin

Colin Sebastian

an see sides informing in of both I as that's years? comment. business. that if than of in gamer becoming maybe guess, terms the the you And peripheral that perhaps growth what next as maybe development walk could comment Andy, about think -- mean, follow-up. the you product a normalized rates Then the how us time, components intriguing you was over about in few have I I that's your dynamic and through the larger release segment maybe

Andrew Paul

pure me -- first share Yes. market been always thing, it, this the just have numbers. very let plan. high well, And we Well, growth very, look, math from our at has start of the

doing market we've long those X% other to seen PCs. $X,XXX peripherals $X,XXX, In is So this we've sort a building PC words, historically this the over right? seen been growth XX% we've market. a because But We've time, period. XX% the on for people gaming historically gaming market on growth seen and XX-year of

we're little a COVID back of Now explosion in been by side and that's bit the shaken it now obviously still. up on this

So dynamic. a sense market of that just the gives you

other of gaining and than In sort generational Z And X Gen thing. and gaming. gaming shifts the so millennials of seeing we're Gen more millennials, people words, more doing still more more than are

So a there's point entry the more headset always or and more people is keyboard. gaming. gaming a And

share we high white components. of we space terms very, a very market have in low in and very for us, In peripherals market have share

things that market means expect, grow more we market an will growth that what because peripherals, of we is a for have wouldn't already that, get So at few of of share. would realistically, much is And the double move above to or we But business question we and we and obviously more that size out acquisitions. extraordinary so of doing components this try where forward, as us slightly all the top have on share. With grow years. the space in we're be our to rate that it

a at and dollar can of run their absorb are enthusiast space. small we there's peripheral own. on So lot million all can more the in that much the they or we're companies in And around looking sub-hundred than general, the efficiently space that companies

plan. kind that's game So of the

point. segment think, segment. margin our expect will more I that grow gross components make our year, organic So peripheral than a combination at acquisitions, that. We're this already we'll from of we and This growth already

the products takes There's putting of we most more have. of so more in complicated. successful lot space and much R&D peripheral that's in. a where It And a resources the are the to lot marketing are obviously where we microcontrollers be

just acquisition So to gives and you that dollars both that allocating sense grow of dollars OpEx a we're where segment.

Colin Sebastian

in at role indications your you're and driving play understanding are And of guess, this maybe terms QX, seeing perhaps the ability of shape to in Okay. year the Michael, point? versus looking meet from I this to I then, retail guess, the back will promotions then what QX demand what into demand, to around QX, growth, gather that that pathway you're sell-through able the

Michael Potter

to to XX and with continue first seasonal first half than half expect and bigger. numbers the accelerates half is have about QX we effect of So sort second the mean, QX say talked off back half, XX bigger Usually, normal roughly, of could you we've approximately. the the past. even same I then the in around QX

tends that we be pattern don't expect different We that particularly this to So see. the year. anything

certainly we supporting mean, In of ready now. comments, in terms growth, inventory have I my

a So it's have shortage not that there. we

well. market New sufficient products, get the to they support to and amounts whenever demand as

to So I second half think year. demand of an will don't it for the for support us issue the be

Operator

[Operator question comes Stifel. with Crum Drew Instructions] Our next from

Andrew Crum

the step line? in achieved is you peripheral 'XX? a XQ then Michael, in just back And down XQ? June, seen optimistic the the anything early to in segment, the Sims I too on you XX% the that read, have early So that And gross any racing launched you've for And follow-up. receptivity XQ products on versus margin -- for XX% in

Michael Potter

just terms talk and somewhere QX, margins in about we unit around Andy let is bit. just little of achievable. lower volumes. Sim racing things, XX% a the But normally, I'll have products

of to difference the similar quarter, A the bit was usually had up first cost less a in relatively which I mix years. from they it there's quarter, but is extreme So the well anything in previous But second absorption. as season QX. Prime but XX%. Promotional little passed activities haven't like indications just in will step data bit seen selling Christmas little the fixed they people that we during the mean, the abnormal. discount, weren't otherwise were

Sim like going it was that discounting normal was about racing more Andy the let on. So I'll product. talk

Andrew Paul

of Yes. the couple And we've spent our Drew, the what gaming years base I'll retooling technologies you peripherals. in most also, of tell last

are quite so today the to was trends looking And the keyboards really how of get X X different. back cost the or ago get the one structures from So when concentrated that right levels. were different on our to we keyboards we years things target could slightly of

the into company as this chassis. a brought think essentially know, racing, we first we loved out later. Everyone know, Fanatec to that's That's go as of I from production a also process showed So we're of trying And probably thing. Sim a the -- at in -- due not COMPUTEX the it. you Germany. prototype saw acquire you it, to

U.S., all year. in racing So the growing, there. This and cheaper next getting on we're on practice an this be success a Sim is success lot for strong, with But in track. going now is people's to take actually the and budgets the little like think of something And big Sim home people fundamentals the lot are market racing the a it's that stretched, where in And is to hobby. that into racing. at I a people bit that do where environment a year all rather to Drive car to than tracks there's FX Survive are

exciting So very market.

Andrew Crum

it. Got

'XX bearing GPUs? factored components GPUs 'XX lag timing products or early discuss your What is does Okay. on Or this the effect? did have calendar calendar the launching at any of And it late there into in the of the XQ? then a guidance not Or Is new for 'XX. you business, point? coincident sale matter? is does with the the And on launch your

Andrew Paul

then people people go complicated because buy much back see deal. that to the question. perhaps in happen, understand actually soon as what the is as I've of like, and make What until generation the tends seen wait out there's previous the lot a the of we future specs specs it's are buying cards a better what past and a and looks new And who the decisions. people It's then Yes.

that. of a there's little So bit

the we're before just get the hesitation going to and is mean, where that come the got -- But You is the new on I in now, that's GPUs. this chips everyone's of because anticipating specs in to Everyone's technology it. from any pretty in situation move idea drive things tends used great the that market cards. most AI the out to

thing of are tend people and we there buy saw the Now case to during they people a first to is a do this lot the build. COVID, start

And Other some of spend doing months. builds these X -- a some weekend it. spent people people

So card. -- and tend a the in you thing put to last is graphics

So see a come yes, people of cases sort a good as it's and and there's that would out to get we we selling machine, then. time products expect for build towards the once me QX, okay, other of specs once some we now start the new decide, chance people before can to

Operator

[Operator next comes Creutz Doug from question Cowen. with Instructions] Our

Douglas Creutz

baking they the margins, Just X rest kind are years. in of about recovery the -- been elaborate Could lowest your looking on think and in I you you year? what for were margin at the Components maybe talk about Systems of and they've about that talk

Andrew Paul

But trends these that Michael earlier. supplies revenue and Well, mentioned some mean, I power overhead think products, are especially have we to move applies a to fixed X does in them of there's some the a demand. much down. and things. some in margins certain having to that of There's it the current this lower base, issues retool that with I cases we meet -- cases in yes, amount

products of clear-out old QX. So bit of little in inventory there's a

X would much X. in in would we seeing repeated I yes, and be we're I So QX margins to that not do the say, would expect better. I think

Michael Potter

we on products There's higher lower ASP a margin to and also margin make bit on us if higher for percent in little general a lower shift the lower ASP percent ASP products. of products the

closer the newer and buying that and to ASPs as the help cards should should So margins as move move pattern, the of end of we more again up well. year graphics driving start the the

Operator

last Aaron And Lee Macquarie. with from the comes question

Aaron Lee

conditions you the softer-than-expected environment. any comment the quick on a in on Have given you just irrationally, currently? one like first Maybe the competitors half? just Can looks what that market behave competitive seen

Andrew Paul

competitors that Well, just Prime somebody I we anything heavily, lot higher a to -- general will of and a there's mean, than didn't obviously, the showing from a major there's know say general, brands basis, economic in that worse market was, unemployment, new weaker we where little always definitely I there. see the but discounts a went insane. bit is Day factories in the China it China situation up is on

So And do quite that to Marketplace on especially prices. be at empty brands need of factories a see of there's fairly filled sort up. lot reduced up, Amazon we new showing

So I earlier this that's the headsets. main about thing bit is I'd talking sort ASPs little a of of where was say. But

seeing bifurcated. that the are somewhat We market is

do chunk So there's major a big are low-cost Logitech, to and of there cetera, ourselves, Razor, the very then raise in manufacturers, ASPs very, general, peripherals out now. pretty managing well. And et

Aaron Lee

you. then Got That's And helpful. a quick follow-up.

maybe geared announced your You recently is towards I a something products. partnership like with which imagine Elgato TD Synnex, peripherals,

about wrong mean your can I'm partnership talk can business? you just there, what if me that and correct but for it So

Andrew Paul

around It's our BXB Yes. really group.

group systems sell So out Elgato product actually, most systems, And we of TD are demand we've -- thing. group that things sort are Yes, we of CDW added universities last we're got that promising complete year. and Synnex, PC we a selling that where and the from small seeing broadcasters BXB adding most and the gear. lines

And so this together is the so channel can grow. putting just business that whole

Operator

to for remarks. our management the question-and-answer like would concludes over conference I any This closing back to session. turn

Andrew Paul

call joining thank Well, you, the support. today everyone, on for us and continued your for

quarter. you and look If to good updating you follow-up Investor a next we Thank our forward have you contact evening. questions, And please any department. Relations have

Operator

for Thank today joining call us you, the and everyone, on for your support. continued

a We Investor look have questions, quarter. forward you to Relations please good department. you Thank contact and you If updating our any have follow-up evening. next

Corsair Gaming (CRSR) 1 Aug 242024 Q2 Earnings call transcript