Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Corsair Gaming Inc (CRSR, Financial) anticipates a surge in high-end gaming PC builds in early 2025, driven by expected new GPU launches from NVIDIA.
- The company has shown 17% growth in its gaming peripherals segment year-to-date, outperforming market trends.
- Corsair Gaming Inc (CRSR) has launched several new products, including the Virtuoso Max headset and small form factor keyboards, which have received positive market feedback.
- The acquisition of Fanatec is expected to add approximately $20 million to Q4 2024 revenue and positions Corsair Gaming Inc (CRSR) in the growing sim racing market.
- Corsair Gaming Inc (CRSR) has been selected as the exclusive launch partner for the Call of Duty Black Ops Six title, enhancing its brand visibility and market reach.
Negative Points
- Corsair Gaming Inc (CRSR) reported a decrease in net revenue for Q3 2024 compared to Q3 2023, with a notable decline in the gaming components and systems segment.
- The company experienced a GAAP operating loss of $20.9 million in Q3 2024, compared to a smaller loss in the same quarter of the previous year.
- Gross margins decreased in the gaming components and systems segment, impacting overall profitability.
- Corsair Gaming Inc (CRSR) has revised its full-year 2024 adjusted EBITDA expectations downward, reflecting challenges in achieving previous financial targets.
- The company is facing a shift towards lower-margin products as consumers defer building higher-end systems, affecting overall gross profit.
Q & A Highlights
Q: Can you elaborate on the EBITDA margin improvement plan and any specific measures to enhance profitability?
A: Andy Paul, CEO: We anticipate a big year with game and technology launches driving sales of higher-margin products. Our peripheral business, which has higher margins, continues to grow and now contributes more to our gross margin than our components and memory segments. Michael Potter, CFO: We've adjusted our operating expenses to align with lower revenue levels, so as revenue increases, more gross profit will contribute to the bottom line.
Q: How has consumer demand changed compared to three months ago, and what are your thoughts on the upcoming GPU refresh?
A: Andy Paul, CEO: We saw record sales during Amazon Prime Day, indicating strong consumer interest in gaming gear. Retailers are now more confident, leading to better bookings for the holiday season and Q1. We expect a lot of refreshes as peripherals and graphics cards become outdated.
Q: Regarding your updated guidance, how much of the change is due to Q3 performance versus Q4 expectations?
A: Michael Potter, CFO: Most of the change is due to a Q3 shortfall, particularly in gross margin percentage for components and systems. There is some conservatism in Q4 numbers, but the main impact was from Q3.
Q: Can you update us on the Stream Deck marketplace and its potential as a revenue stream in 2025?
A: Andy Paul, CEO: The marketplace has over a million accounts and drives hardware sales. While software sales revenue is currently insignificant, we expect it to grow as we introduce more compelling apps.
Q: What are your expectations for the components and memory business in 2025, especially with the new GPU launch?
A: Andy Paul, CEO: We expect a rebound as the market stabilizes post-COVID. The upcoming GPU launch should drive upgrades from older series, leading to more consistent growth.
Q: How is your channel inventory positioned for the holidays, and what are your expectations?
A: Andy Paul, CEO: We were under-inventoried mid-year, but retailers are now leaning in, expecting a strong holiday season. The anticipated NVIDIA GPU launch is also driving confidence in the market.
Q: Beyond product refresh cycles, what gives you confidence in underlying industry demand?
A: Andy Paul, CEO: The Sim Racing market is growing, and we plan to leverage our complete system offerings. Our Elgato and peripheral segments are also expanding with new products and market opportunities.
Q: What are your product development plans for 2025, and which categories will you focus on?
A: Andy Paul, CEO: We are focusing on Sim Racing, professional broadcast solutions, and expanding our peripheral offerings. We aim to deliver complete solutions and capitalize on market growth opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
