Corsair Gaming Reports Fourth Quarter and Full Year 2022 Financial Results

MILPITAS, Calif.–(BUSINESS WIRE)–$CRSR—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 fourth quarter and full year ended December 31, 2022.

Fourth Quarter 2022 Select Financial Metrics

• Net revenue was $398.7 million compared to $311.8 million in the third quarter of 2022 and $510.6 million in the fourth quarter of 2021. Gamer and creator peripherals segment net revenue was $117.8 million compared to $96.8 million in the third quarter of 2022 and $176.9 million in the fourth quarter of 2021, while Gaming components and systems segment net revenue was $280.9 million compared to $214.9 million in the third quarter of 2022 and $333.7 million in the fourth quarter of 2021.
• Net income attributable to common shareholders was $12.5 million, or $0.12 per diluted share, compared to net loss of $8.9 million, or $0.09 per diluted share, in the third quarter of 2022 and net income of $24.7 million, or $0.25 per diluted share, in the fourth quarter of 2021.
• Adjusted net income was $20.7 million, or $0.20 per diluted share, compared to adjusted net income of $7.6 million, or $0.08 per diluted share in the third quarter of 2022 and adjusted net income of $34.7 million, or $0.35 per diluted share, in the fourth quarter of 2021.
• Adjusted EBITDA was $32.0 million, compared to $10.1 million in the third quarter of 2022, and $39.5 million in the fourth quarter of 2021.
• Cash and cash equivalents were $154.1 million as of December 31, 2022.

Full Year 2022 Select Financial Metrics

• Net revenue was $1,375.1 million compared to $1,904.1 million in 2021. Gamer and creator peripherals segment net revenue was $437.8 million compared to $647.2 million in 2021, while gaming components and systems segment net revenue was $937.3 million compared to $1,256.9 million in 2021.
• Net loss attributable to common shareholders was $60.9 million, or $0.63 per diluted share, compared to net income of $101.0 million, or $1.01 per diluted share, for the full year 2021.
• Adjusted net income was $18.4 million, or $0.18 per diluted share, compared to $144.9 million, or $1.45 per diluted share for the full year 2021.
• Adjusted EBITDA was $46.5 million, compared to $199.2 million for the full year 2021.

Definitions of the non-GAAP financial measures used in this press release and reconciliations of such measures to their nearest GAAP equivalents are included below under the heading “Use and Reconciliation of Non-GAAP Financial Measures.”

Andy Paul, Chief Executive Officer of Corsair, stated, “We are pleased with our fourth quarter results, and our current positive trajectory for the first half of 2023, following a challenging 2022, impacted by the Russia-Ukrainian conflict, high freight costs and large channel inventory adjustments. Q4 2022 holiday sales were strong in all market categories in both Europe and our overall retail sales out from the channel was substantially above pre-pandemic 2019 levels. We benefitted from an uptick in demand in the Gaming PC market fueled by new GPU and CPU launches from Nvidia, AMD and Intel at the end of 2022, with more expected to roll out in Q1 2023. Our enthusiast customers are now able to build faster, more powerful gaming PCs with more features for less than they could during the pandemic. Adding to this, 2023 is expected to bring a stronger slate of popular game releases compared to 2022.”

Michael G. Potter, Chief Financial Officer of Corsair, stated, “Q4 2022 tracked to the high end of our expectations and ended well with momentum carrying into Q1 2023. Shipping costs, which were a headwind for most of the year, declined over 70% in Q4 from the start of 2022. Supply chain lead times have continued to improve and are now at the same or similar levels as they were pre-pandemic. We have reduced inventory in our warehouses by approximately 23% and brought channel inventory to below target levels. We are hopeful that the broader industry’s inventory in the channel is also in a better position, which would lead to less discounting in 2023. We also took the opportunity to fortify our balance sheet in Q4, ending the year with a cash balance of $154 million, which includes the addition of approximately $81 million net proceeds from our November equity offering. Our $100 million working capital revolver remains undrawn and fully available.”

Financial Outlook

For the full year 2023, Corsair currently expects revenue to be flat to slightly up in a softer economic environment as compared to 2022, and does not expect its revenue to be affected by negative inventory trends in 2023. Corsair expects 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.

• Net revenue to be in the range of $1.35 billion to $1.55 billion.
• Adjusted operating income to be in the range of $75 million to $95 million.
• Adjusted EBITDA to be in the range of $90 million to $110 million.

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, inventory write-down charges 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

• Launched Stream Deck + a new addition to our award-winning lineup of tactile control interfaces. Stream Deck + expands the Stream Deck beyond streamers to enable a wide range of shortcuts and workflow improvements for creative professionals, production and beyond. With a combination of eight LCD keys, four push dials and a dynamic touch strip, Stream Deck + puts a new tier of control at the hands of Stream Deck users, and integrates seamlessly with Elgato software, namely Camera Hub, Control Center and the lauded Wave Link virtual mixer.
• Our world-first XENEON FLEX 45WQHD240 OLED Gaming Monitor launched in December to strong press interest and coverage, announcing the arrival of a whole new class of high-performance bendable gaming monitors created in close partnership with LG Display. With the ability to manually adjust the curvature of its 45 inch 21:9 aspect ratio panel from fully flat to up to 800R curvature, owners can set their own curve depending on whether they’re using the display for work, gaming or movies. The XENEON FLEX 45 also sets new standards for high-frame rate, low response time gaming monitors, offering a compelling specification that sets it apart from competing panels as the first available 240Hz OLED gaming monitor. We look forward to further expanding our range of gaming monitors, in continued partnership with LG, throughout 2023.
• Expanded the webcam product line with the launch of Elgato’s Facecam Pro, the first webcam to offer 4K capture at 60 frames per second. Boasting a large area Sony sensor, a wide-angle photographic lens with variable focus, a revolutionary image processor, and onboard flash memory, the premium plug-and-play webcam allows creators to produce Ultra High-Definition video without the need for an elaborate camera setup. This groundbreaking technology combined with Elgato’s powerful Camera Hub software makes Facecam Pro a benchmark in the global webcam industry, and a compelling choice for creators as they upgrade their production setup.
• Released the first of a several new 2022 product launches that will significantly improve the utility and build experience of our DIY products with a new line of RMx SHIFT power supplies. With a revolutionary side-mounted connector layout, RMx SHIFT power supplies make cable installation and routing, commonly the most negative aspects associated with building a DIY PC easier. Improvements such as this helps remove barriers to entry for customers considering building their first PC, and makes PC building accessible to a whole new group of customers. RMx SHIFT is also the first Corsair PSU to offer compatibility for ATX 3.0, a new industry power supply standard with native support for next-generation graphics cards, ensuring a future proof feature set for customers, and announcing Corsair’s arrival in the ATX 3.0 PSU space.
• Added iCUE Murals, a new major new lighting control feature, to the iCUE software suite. Many Corsair products utilize customizable lighting, typically controlled via iCUE software, and the ability to easily create unique and individual lighting profiles is important to our customers. iCUE Murals substantially improves the user experience and differentiates our ecosystem by providing a straightforward interface to arrange all of a customer’s RGB hardware on screen, and then create an amazing lighting profile for it from an image, a video, a GIF, or even music. Customers can also add and control ambient lighting products from iCUE partners Philips HUE and Nanoleaf, extending the iCUE ecosystem beyond Corsair products and controlling all a customer’s setup lighting in one place. In beta since November, iCUE Murals is now live to all Corsair iCUE users.

Conference Call and Webcast Information

Corsair will host a conference call to discuss the fourth quarter and full year 2022 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 13735468. A replay will be available approximately 3 hours after the live call ends on Corsair’s Investor Relations website, or through February 16, 2023 by dialing 1-844-512-2921 (USA) or 1-412-317-6671 (International), with passcode 13735468.

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 substantial progress, and the broader industry’s progress, to reduce inventory levels, its belief that the self-built gaming PC market will continue to improve, its expectations regarding 2023, including popular 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: the impact the COVID-19 pandemic, including the potential end of the pandemic and the cessation of pandemic-related restrictions, will have on demand for our products as well as its impact on our operations and the operations of our manufacturers, retailers and other partners, and its impact 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 filed with the Securities and Exchange Commission (“SEC”) on November 3, 2022, in our Annual Report on Form 10-K for the year ended December 31, 2022 to be filed with the 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 and year ended December 31, 2022 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:

• Adjusted operating income (loss), non-GAAP, is determined by adding back to GAAP operating income (loss), the impact from amortization, stock-based compensation, inventory reserve in excess of normal run rate to address overhang in the channel, restructuring costs, certain acquisition-related and integration-related costs, non-deferred offering costs, and other costs.
• Adjusted net income (loss), non-GAAP, is determined by adding back to GAAP net income (loss), the impact from amortization, stock-based compensation, inventory reserve in excess of normal run rate to address overhang in the channel, restructuring costs, certain acquisition-related and integration-related costs, asset impairment charge, non-deferred offering costs, loss on extinguishment of debt, and other costs, and the related tax effects of each of these adjustments.
• Adjusted net income (loss) per diluted share, non-GAAP, is determined by dividing adjusted net income, non-GAAP by the respective weighted average shares outstanding, inclusive of the impact of other dilutive securities.
• Adjusted EBITDA is determined by adding back to GAAP net income (loss), the impact from amortization, stock-based compensation, inventory reserve in excess of normal run rate to address overhang in the channel, depreciation, interest expense (including loss on extinguishment of debt), restructuring costs, certain acquisition-related and integration-related costs, asset impairment charge, non-deferred offering costs, tax expense (benefit), and other costs.

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.

Contacts

Investor Relations Contact:
Ronald van Veen
ir@corsair.com
510-578-1407

Media Contact:
David Ross
david.ross@corsair.com
+44 11 8208 0542

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