Corsair Gaming (CRSR) 13 Feb 242023 Q4 Earnings call transcript

Good afternoon, and welcome to the Corsair Gaming Fourth Quarter and Full Year 2023 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 now like to turn the call over to Ronald van Veen, Corsair's Vice President of Finance and Investor Relations. Thank you, sir. Please begin.

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

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

will have then time We for any questions.

the related may me regarding results company forward-looking materially the call, results to including due Before include future disclaimer statements. call, may projections the statements a we Q&A to begin, our that numbers are of of risks has provide and number uncertainties include to to forward-looking statements allow expected are differ forward-looking these that earnings portion risks statements.Our our This until our from been therefore non-GAAP other filed, remarks forward-looking Today's in references subject measures. release filings. SEC our to uncertainties. a financial and of XX-K Note The also will and are preliminary. described and are actual

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

call. Thank welcome, our everyone, you, Ronald, to and earnings

Peripherals full in a towards we of a the our in the of led revenue by strength rebound X% solid end challenging year. growth For year, achieved in continued market, and economic Components strong the business

of during grew that of last the XX%. comp. pandemic XXXX, quarters return difficult 'XX lapping The in was office people by end the to a first of we the making quarter XXXX But three generally before surge work, QX

saw peripherals much growth XX% XXXX. QX launches inventory.For consumer from discounting by adjusted Peripheral competitors heavy and better clear in to from good further in from held bounced we of in and we well through we As This inventories excess much us EBITDA progress we calls, back in back Financially, allowed previous to and noted good gaming holiday And of period. was make to saw addition, by end create a normal. year, during year-on-year. up us we XXXX, spending to the our expect gains the our the with our we in in doubling segment $XX million, segment, some product XXXX back plus that earnings grew

Some of products categories.Some PC controller, as are headsets product and new and also increased we margins products but multiple to compelling will this XXXX new notable launch come from launched steadily feature-rich latest our our our increasing continue in high-performance new our mice include in revenue, higher-growth of keyboards.

a of We comes either mirror, create call. behind broadcast also content Elgato or video an easier camera facecam kind to display which it complete which [ for do people first positive a creators, man or Teleprompter and received a with response DLSR Elgato to for any can content a make ] two-way our you its to

the have expected the and and and base Marketplace opened marketplace creators than creators for XX% our marketplace Stream have better with including Stream both application Stream we area This base accounts and to users model we are our our is models, of addition about in-house doing growing installed popular from limited launching also new with very launched of is third-party buy a from new hundreds on Starfield, Deck edition Deck This programmers expanding installed a plug-ins to Stream our us. who already allows Another ecosystem.In Deck apps of co-branded excited fast-growing website. partnered Deck.

a to will continue new popular the made have revenue we to moves meaningful operational stream hardware mass of already very critical gain Deck and a driving from must-have efficiency. sales make several applications, As a new will applications.We our create this item, increase Stream our

opportunities of time, many warehouse factory and of facility new expanded the with give the changes strong production production teams and hub Coast. This in to way to will same to moved we our add development marketplace.Lastly, is is in to and Corsair's collaborating SCUF capacity we to I report in largely Drop added an follows personalized This in of in pleased for a At our successful our production the do headquartered, provides and an All shipments maximize also advantage which facility controllers. to allowed capable a integration located our peripherals close Atlanta.Our am controllers today new our completion in on expensive the and UK. these in year, distribution to we which Taiwan, us East our the full currently move of our Corsair's site and support SCUF us year, will delivering have same This to channel can sales the SCUF growth. actively we leverage have opportunities. strategic the facility now the gaming Taiwan. there shipping the to in undergone Atlanta us they long-term Miami our to ORIGIN has factory Atlanta of support expansion acquisition During production where and state-of-the-art competitive begun is facility global warehousing, complete, the

moving overall the forward. acquisitions to contribute to and our done years. profit over more We've about seven Drop expect growth We revenue significantly

is part M&A our growth of strategy. So

and to which be to be are the demand that over Components since forward similar segment surge new XXXX, will we XXXX. years.Looking is to active in consolidation that in to in our & few expect will launch XXXX be with if mid-cycle the big expect the likely to Gaming continue view to and right We is line next Systems we GPU happen opportunities GPUs next the exist, year last

products to more expect growth, Creator about launched that For we're the and new Gamer we Peripheral segment, recently we and especially that launch. from significant

a market the next the from now consumer a years. in surge we the entering in enter years the EBITDA phase XXXX, our shelter new occurred billion gains to on gaming me the refresh This, during the new In controllers.We enter to our spending and cycle expected SIM overall please be over of for allow Potter, margins.Let will home at mobile growth now addition, two categories that Michael product as percentage should we racing drive call $X turn few plus go to our Michael, financials. double-digit with over details market to us CFO, share revenue ahead. expect

the from clearly for more demand profitable developed resumed, peripherals GAAP basis. Andy, afternoon, a doubled basis on We line and with Growth expectations. and turn good products. in our Overall, on Thanks, non-GAAP year our adjusted new than our EBITDA, EPS tripled everyone. in benefited and we a

to levels our benefited from improved categories, including recent industry in report more product activities that the we promotional some channel to reduced warehouses, added launches.This an and should we've players target to I'm be expected, our As pleased from in tailwind inventory, regard for in and other inventory returned and both we're of levels. actually some with light XXXX. us

on this with bid outlook profitability to demand products, in momentum strong for improved in new expect a XXXX and our positive adjusted growth We EBITDA. continued

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

European due to in compared year which markets full revenues XX.X% million $X,XXX.X in $X,XXX.X our to XXXX contributed revenue of QX from level XXXX, the back XXXX, is to For XXXX. increased X.X% million prior QX to only net XX.X% the Asia of X.X% in we the the of the our while conflict in particularly largely softness was APAC China the was QX. weaker expected the region start to revenues, than Ukraine, during market QX the in market.The year,

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

revenue in year during XXXX, year which million million segment year $XXX.X of contributed Peripheral QX $XXX.X full compared Gaming compared Gamer Memory Creator increased in from million XXXX. compared the was to to the with to the & The in with Overall was Systems Components $XXX.X of Systems QX XXXX increased from products compared to in for margin revenue revenue quarter billion the full reflecting XXXX. fourth full $XXX.X Gross XXXX, million. $XXX.X profit $XXX.X $XX.X was memory increasing the million $XXX.X quarter. quarter, of from the million Components net the and gross XXXX.For million For segment million for full the QX to QX in in to XXXX, products XX.X% XX.X% flat in to $XXX.X contributed Gaming million relatively higher net $XXX.X & QX revenue current million $XXX.X million year $X.XX XXXX revenue XXXX. segment

products planned airfreight and segment Stream Andy $XX.X full QX costs more new $XXX.X success Components popular margin was get to lines $XXX.X the we increased in and XX.X% basis to compared to $XX.X was profit XXXX. The million headwinds. mix XXXX. profit QX up was cost Systems some million XXXX, We had million high continue our Webcams.Overall in gross Gamer XXXX. was further Deck than was segment XX.X%, to compared to use the for XX.X% full XXX in to introductions those product improvements compared margin profit year QX XXXX market. impacted in benefit the $XX.X like in by gross to for million gross negatively from demand XXXX.Gross XX.X% freight Gross to and Gaming in million & products million mentioned, as compared to and QX compared points reflecting Peripheral Creator The for new QX to and both $XX.X year

million in income diluted QX income doubled $X.XX quarter $XX.X of Fourth an $X.X from million XXXX. to $XX.X share net million million than million million the to leadership in for was both $X.XX $XX.X for Fourth income per $XX.X $X.XX $XX.X GAAP significant quarter $X.XX QX $XX.X from as XXXX.For or gross On net area QX year fourth compared continue income Our to to million XXXX QX in $XX.X in million were compared of the support income XXXX. to increased fourth was in quarter $XX.X QX operating net million operating the million per more XXXX, of SG&A compared share to XX.X% or diluted segment attributable adjusted fourth improved common or to while net XXXX. compared and share X% another to in in XXXX. This to year $XX.X new QX $X.XX $XX.X income compared improved of as XX.X% was diluted operating per million to income compared adjusted shareholders were $XX.X million, share R&D from were expenses full quarter $XX.X products we diluted invest Memory $XX.X per Components XXXX margins full category segments. in up diluted per the million to or $X.XX share or XXXX. expenses Peripheral share to XXXX QX in per as $XX.X million improvement XXXX.Fourth quarter adjusted in Products million basis, this in quarter our in adjusted or XXXX,

EBITDA million Finally, to fourth $XX.X we compared quarter to increased adjusted million $XX XXXX. QX for

million million to the XXXX, negative start Drop we neutral more XXXX. in million But expect full about integration for grow. adjusted the in $X again it year For the negative QX, year us, and to EBITDA totaling from million with year. doubled $XX.X about then the was $XX.X behind to $X than be slowly

Turning sheet capital including now position business balance, doing We cash a of support plan revolver with pursue ended are debt quarters. sheet; $XXX opportunities excellent in organic our continue and on reduced further to opportunities working ended so fully coming our a and capital million.We a financial and the QX available. balance align over position balance QX fully to growth we and face undrawn our million our strong an of value strategic and outside with working debt fit $XXX.X goals. restricted $XXX to at million cash to remains QX there with remain position if We a with strong and in

million total full range range financial $XX range the in the For outlook $X.XX $X.X billion, to adjusted of of of in to $XXX our expect cautious revenue optimism.We adjusted $XXX operating to billion $XXX million. income of outlook, XXXX, million terms year the and the EBITDA reflects in in our million

diluted approximately have the Assuming effective in same to the to of XXXX tax shares. using interest an approximately we balances approximately we outstanding XXX net million and cash of million We're for million average XXXX, expense of to and $X XX% quarter. per weighted XX% maintain debt expect full XXX shares rate year

to top outlook, for around growth the In end pattern seasonal expect year-over-year XXXX terms the follow of first the to half with XXXX specifics to in a majority our our more compared the second guidance typical revenue.We be of revenue half flat expect to XXXX. of year, only the up of slightly at the we

forward carry XXXX, of We operating XXXX from our tight and into the margins we improvements to expect continue control expenses. will

EBITDA year-over-year a every to percent So in environment, on year-over-year flat improve. expect quarter. we EBITDA revenue we Even expect to expand

expect approximately under we game Creator year.Drilling product back of XXXX continues. strong growth for be to to compensation and We stock-based historical $XX from from as half of and in level CapEx to come and expect expect the million we our revenues, segments, to spending lineup X% segment its down momentum the Peripheral expense of our our Gamer first releases

of the typical to X% to amid from the revenue refresh so Components growth range. the hardware are cycle, the in & expect minus top segment plus our We end X% bottom Systems

and segment across grow year-over-year expect Peripheral We revenue Creator the to Gamer range. expected sales entire

coming the which for that the saw another continues prices memory if time We increase in also expected, years should be for first QX, positive as year. two in

our margins double to open that, questions. please up be Operator, XXXX expect for the you the will get our adjusted call which call we happy Finally, digits, EBITDA near-term is to goal.With good to step Q&A. closer for we're a open to

[Operator the line comes question Our Stifel. Instructions] of first Crum from Drew with

mid-teens I noted If you for 'XX for your The that you're that's have would category increase does gaming accurate, and then in at business follow-up. gainer share compare a a sources clip. And a are assuming expectations So growth recovery what imply to the guidance a Corsair? peripheral market. your of grows how the

say gaming drivers COVID. of. if we're pre-pandemic, growth. go underlying of was it's got the place. that know some peripheral in Yeah. to with historically, you difficult of Well, expect certainly, We share growing the combination we pretty But a be. obviously could market gain, to And do all of a market little XX%. that market at which to are the still confident surge, It's XX% small And deal obviously, back we've what

difficult it's that to so be. could what And forecast

this the space we've own there's market it's I our we're share eventually so white share, of probably to let's is models, which to in forecast. return same But combination that just going be and say growth year, expect the because what mean, We it's obviously, huge. growth to back going gain market numbers our to going not got but a

SIM meaningful you the racing business Andy, a product do new the of mobile categories that on year? And the this referenced, and impact controllers part have

into those meaningful in not our We that would are if have, haven't built really in -- so models but possible they any built way.

-- margin. year midpoint if represents talk year-on-year of quickly company. And gross as expected the Corsair, It a for nice it. least about range looks Okay, would then for real got year last like versus driving Can and Michael, the XX%, public this the just approach a on is a and peak here increase? which, I'm what's you step-up at accurate

Yeah.

closer we compared it's recovery average most lot of We the part, a quite historical we beginning to where the at to in the Peripherals low year, our part the and For segment. are. the were normally year ended

to our the we the in margins Essentially just So getting growth a 'XX, momentum 'XX. end compared up. that through Components story, continuing then started pull the XXXX. overall continue the towards segment expecting And to of I'm should

Our question George comes the line next Wang Barclays. from of with

quick two have I ones. Just

looking long-term by model, obviously, upward to just kind your nice see Firstly, a of trajectory. at

Just of to would the what on be and long-term kind you any curious model? cadence get to targeting timeframe thoughts

mean as a returns because, market market share last this get I gain details We've depends a the in as obviously, as combination this of not that. how of we Well, and long-term and question, growth. said much we lot growth going of not guidance, to from share fast well market I'm the said our A decades. how models the growth the like is to years, on few market

we of of new to more words, really also how The cadence regional year. expect going upward mentioned some traction gain look helps. be to what Asia. is very steady in to that personalization. get other a into there we we momentum And growth, hopefully, as a and margins, we continuous similar move So customization this In and margins expansion some upward

a follow-up. I just have great. Okay, quick

the to couple see In next growth level of to nice double-digit the years. Peripherals, terms of rebounding it's over

cycle sort getting underway refresh new COVID of the from kind just of of kind as refresh. Just the

click maybe you can that. Just double on

seeing Just the macro rebound of think in the of Corsair? top terms what you sort kind consumer enjoy do can obviously, from you of additional health on standpoint strong Peripherals and of are the and how of industry share by gains also,

Yeah.

So if up, XX% significantly XXXX was you was XXXX in after look the even compared with pandemic, think, -- I the XX% or at clearly, first last from though year, the year still XXXX. surge

it And more So surge. was same. the the the market was but during was it XXXX than less of bigger, was

in of 'XX inventory clearing the a at discounts. happened there of lot some things of continued was out that Now was

a be Now little discounting when go of it you've less talking when got that the industry-wide.So than a down. the ASPs lot those if therefore, is I'm TAM happens, discounts about going, should stops.

more there more reports, there's revenue ASP so recovery And on it drives industry are up. units, meaning that we're that on recovery seeing on than

we seen. the then were and a Black encouraged not So but Christmas, reasonable -- Day, move the there pretty through Prime that prices. around year, pretty first that's we've at activity as of Friday lot thing And we activity by

do over Friday lend we Black without having So to discount we pretty and good in could on results. because had it

COVID decline. market bigger sort first decline definitely So but the than a surge. a from thing.The is recovering of was Again, that's the since much before it

Peripherals, of for know right us, at center we number for going points keyboards. we've right? on is Now One that products some key on a launched gravity the in the Peripherals, especially that is things we've got really price of

is to launching we rolling thing further or be further we're customization. going that, second mentioned, The out as

XX% either sort such SCUF personalized paddles that graphics the to sold rest Peripherals, And on as customized switches our thing. was of to of quite or features starting or were some the did know, way, do with As the and year, thing and we strategic.And other about with the the were the consumers year. in you products same may of acquisition around we're middle going of with last

we with Drops. about four months So huge company Drop same think ago, specializing bought the happened And there. in a this thing we just opportunity edition they're there's limited

take And low Those factory that that a we we main things was premium. so for to key expect the so our to get of happen. out could fairly are at thing cost sorted the us advantage

with Creutz [Operator of Instructions] from Cowen. Our comes question next Doug line the TD

back we Day Just two low your you for let's revenue gave future. wondered, XX%. go basically if of Obviously, guidance into guidance of, say, longer-term teens you X% an kind had and Analyst is years, this out to year the

You talked about being mid-cycle.

Just wondering two gave appropriate. how things you line longer year to how guidance that -- expecting this feel years with you what that ago up guidance and changed have you're no

Just whatever that great. color you can would be give around

Yeah.

growth. all after So be do a more high. wouldn't that years the as to why, year. then think. this I normal, to of now details, we going obviously for got pandemic. years that think get happened going pandemic white per we're that a now after to through it's gaming pandemic drivers. refresh the it's four buying and the got once exactly don't not that the with [ we've space see earlier, do think And see situation start started, started ] much quite after gaming We've get But don't there's then upgrading.So we or see going history back in And to I is people amount We gives year. fact a the generationally [indiscernible] talked it me, the we're XX% think, that. entry-level growth -- Peripherals, of I the you We the right? that four or growing back new rate expect and I I We're them what interest this consumer markets. XX% we obviously, to when And with cycle. pullback, think we'll to lot surprise to we're and was is But about of lot. I said pretty the We've pretty inflation. think Belgian deal have of immediate given sort back hangover of and a now So sort inflationary in on what normal with trough we know during still to why Belgium that's that

a ironed once market better So we'll think to growth. I gets that out, get

Now things some share. in got market to for are we've that. lot And do opportunity the in of there's grow our think interim, an I a that now favor really

Our Instructions] the question [Operator Macquarie. next line of Lee Aaron with comes from

like So and the out know the to any you on your for talked marketplace still strategy days, that those looking should and but Drop. Stream we And major color about a advance really few any for? we're of I early look initiatives year Deck just through your milestones

I they're pretty early. still mean Yeah.

let's -- first the first. think marketplace I talk about

We signed launched a XX% already very just early account months for marketplace lot have about have that installed So stages. We a of four it of up base ago. downloads. and the

X.X just far. so mentioned we million think downloads I

So pay next that the to started rollout have to showcase some there, you we've -- are that for. products already

free it's [ as And sure Stream can you was possible. from past Deck plug-ins of Stream plug-ins.And for once as course, aid. thinking so kind is subscription We getting is useful models thing. many of streaming launched of as try launched, paid the When can But about then a to move and there, you that see go move sort it start think now and to make people Deck the ] that how to wide open want the a opportunity. was I we

were for creator now was that streaming case. sorts general the use use -- even and so all office that spaces cases. incremental creators in main of We're content use cases And seeing

don't expect now customized retail, looking together. going next we'll second we've is into integration, the to the to on just it to be starting happening in products we're go working metrics.This of things it, some experiment everyone's our generate the we're few our that is there's going year, from months. very huge to next the expansion. So two website. On the any revenue. revenue And is start we that's everyone Drop with But keep year channels, And thing but them through that's posted really so to. significant some finished we as going the into quickly forward Drop on products, One putting the and Drop, taking

So sort all largely complete, and to initial had get together, setup. working the I of as the are Obviously, integration said. is these do everybody we've which

on So keep we'll come go as and more the everybody posted that, to year. we through

Instructions] would [Operator this questions the back time. There turn are closing over further I Andy CEO, no like comments. to at to for floor Paul,

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

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

today's concludes This teleconference.

your disconnect time. may You lines you this participation. your at Thank for