Corsair Gaming Reports Q2 2022 Financial Results

Corsair Gaming, Inc. ("Corsair" or the "Company"), a leading global provider and innovator of high-performance gear for gamers and content creators, today announced financial results for the quarter ended June 30, 2022. Andy Paul, Chief Executive Officer of Corsair, stated, "Headwinds from Q1 persisted through Q2, which is seasonally the lowest quarter for us, with macro-economic headwinds affecting consumer spending on gaming gear, especially in Europe combined with global inflation, the continued Russia and Ukraine conflict, and high freight costs. This resulted in a buildup of inventory both in our warehouses as well as in the retail channel, thus causing our channel partners to delay ordering while they clear this stock.

Despite the challenging environment, we continue to see positive underlying growth trends in the gaming hardware sector, and we see spending levels significantly above pre -pandemic levels. We are also starting to see more enthusiasts building gaming PCs again as graphics cards are now more readily available at reasonable prices. We saw very positive signs during Amazon Prime week, with component activity significantly higher than in 2021, both in Europe as well as in the United States. While we are disappointed with the lower results in Q2, we are very pleased to see positive market activity recently and with our channel inventory moving back into line during Q2 and Q3 2022, we expect demand for our products to recover well as we finish the year and look forward to an exciting 2023."Second Quarter 2022 Highlights

• Net revenue was $283.9 million, in line with the Company's preliminary revenue provided on July 21, 2022. Net revenue was $380.7 million in the first quarter of 2022 and $472.9 million in the second quarter of 2021. The sequential and year-over-year declines reflect the adverse impact of macro-economic headwinds affecting consumer spending on gaming gear, especially in Europe, and a channel inventory correction.
• Gamer and creator peripherals segment revenue was $89.0 million compared to $134.1 million in the first quarter of 2022 and $155.2 million in the second quarter of 2021.
• Gaming components and systems segment revenue was $194.9 million compared to $246.5 million in the first quarter of 2022, and $317.7 million in the second quarter of 2021.
• Operating loss was $55.0 million compared to operating loss of $2.5 million in the first quarter of 2022 and operating income of $34.7 million in the second quarter of 2021.
• Net loss per diluted share was $0.62 compared to net loss per diluted share of $0.05 in the first quarter of 2022 and net income per diluted share of $0.28 in the second quarter of 2021.
• Adjusted EBITDA was a loss of $11.0 million compared to $15.4 million in the first quarter of 2022 and $51.6 million in the second quarter of 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."

Michael G. Potter, Chief Financial Officer of Corsair, stated, "We have already taken actions to adjust to the lower revenue level in the first half of 2022 and our expectations for the remainder of the year. We have proactively taken actions to reduce operating expenses and we have adjusted product ordering and took a $19.5 million reserve against potential inventory overhangs. We believe our business fundamentals remain strong with a positive long-term outlook, and we continue to believe the self-built gaming PC market will begin to accelerate in the second half of 2022. Despite the headwinds we have been facing, we have continued to invest in product development and have and will continue to release innovative and what we believe to be industry leading products."

Financial Outlook
For the full year 2022, we currently expect:

• Net revenue to be in the range of $1.35 billion to $1.45 billion.
• Adjusted operating income to be in the range of $35 million to $50 million.
• Adjusted EBITDA to be in the range of $50 million to $65 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

• Unveiled Corsair's innovative first gaming and streaming laptop, the CORSAIR VOYAGER a1600 AMD Advantage Edition. Combining a powerful AMD Ryzen 6000 Series processor, AMD Radeon RX 6800M mobile graphics with CORSAIR and Elgato's vast ecosystem of exclusive software and technologies, the CORSAIR VOYAGER a1600 AMD Advantage Edition laptop was designed for aspiring content creators, avid gamers, full-time streamers and more.
• Announced VENGEANCE RGB DDR5, the newest addition to Corsair's lineup of cutting-edge DDR5 memory optimized for the latest gaming PCs and workstations to deliver sensational DDR5 performance with stunning RGB style.
• Announced it is working with NVIDIA to integrate key features from NVIDIA Broadcast into CORSAIR iCUE, Elgato Wave Link, and Elgato Camera Hub software. For owners of NVIDIA GeForce RTX graphics cards, NVIDIA Broadcast AI effects enhance microphones and cameras in real-time to improve the gaming, streaming, and video conferencing experience, all controllable from CORSAIR and Elgato software interfaces.
• Expanded its CORSAIR XENEON family of gaming monitors with two new additions: the CORSAIR XENEON 32UHD144 and XENEON 32QHD240, with stunning UHD 4K resolution gaming or QHD at an incredibly smooth 240 Hz refresh rate, both monitors deliver the beautiful design, brilliant display, and innovative technologies.