Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The gamer and creator segment showed strong growth with a 19.6% increase in revenue year over year.
- Corsair Gaming Inc (CRSR, Financial) launched successful new products, including the K65 wireless keyboard, which became a best-seller in the US.
- The company is expanding into new markets, such as Sim Racing, and is interested in acquiring the Sim Racing brand Fanatec.
- Corsair Gaming Inc (CRSR) has a strong market share in components and memory businesses, maintaining leadership in most categories.
- The company expects a strong second half of the year due to normal seasonality and new product introductions.
Negative Points
- Q2 2024 net revenue decreased to $261.3 million from $325.4 million in Q2 2023, reflecting a challenging quarter.
- The gaming components and systems segment experienced a significant year-on-year revenue drop of 32%.
- Gross margin decreased to 24.1% from 25.5% in Q2 2023, impacted by lower sales volumes and fixed costs.
- The company reported a GAAP operating loss of $24.7 million in Q2 2024, compared to a loss of $2.7 million in Q2 2023.
- Corsair Gaming Inc (CRSR) had to implement cost-saving measures, including reducing approximately 100 employees, to align with reduced sales levels.
Q & A Highlights
Q: Can you discuss the potential for further delays in the GPU refresh cycle and how confident you are about its timing?
A: Andy Paul, CEO: We are privy to confidential information from our partners, and the market buzz suggests new GPUs will launch either late this year or early next year. Historically, GPUs have been on an 18 to 24-month refresh cycle, but this has extended to about 30 months. We believe a strong refresh cycle is likely next year, as the market doubled during COVID, and we expect an echo of that surge.
Q: How sustainable is the 20% growth in the peripheral segment, and do you see opportunities to increase ASPs?
A: Andy Paul, CEO: The peripheral market is twice the size it was pre-COVID, and while the market has been flat this year, ASPs from major suppliers are generally increasing. We believe there is room for expansion as gamers are willing to pay more for products with additional features, similar to trends seen in other enthusiast markets.
Q: Can you elaborate on the potential for the gamer peripheral segment to become larger than the components segment?
A: Andy Paul, CEO: Historically, the gaming PC market has grown 5-10% annually, while peripherals have grown 15%. We have low market share in peripherals and high market share in components, providing significant growth potential in peripherals. We plan to grow this segment through organic growth and acquisitions, and we expect to generate more gross profit from peripherals than components this year.
Q: What are your expectations for Q3 and Q4, and how do you plan to support demand?
A: Michael Potter, CFO: We expect normal seasonality with the second half being stronger. We have inventory ready and new products to meet demand. We anticipate Q3 will accelerate off Q2, with Q4 being even larger, supported by sufficient inventory and new product introductions.
Q: Can you comment on the competitive environment and any irrational behavior from competitors?
A: Andy Paul, CEO: Major competitors have not behaved irrationally, though we see new brands from China offering low-cost peripherals. The market is bifurcating, with low-cost options and higher ASPs from major manufacturers like us, Logitech, and Razer.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
