Corsair Gaming Inc at DA Davidson Consumer Growth Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Franco Granda - D.A. Davidson Companies - Analyst : Obviously consumer interest as of late has been centered around the events happening in Ukraine and Russia. And a little more recent, but still at top of people's minds, the inflation -- the topic of inflation. So perhaps I was hoping, Thi, you could walk us through your thoughts and what the company's position on those two topics are.

Question: Franco Granda - D.A. Davidson Companies - Analyst : Absolutely. And then another topic that's on top of people's minds today, especially given your business, is really the impact of the supply-chain constraints. They've been going on for 18 months now. And can you remind us what the current status of your supply chain is and perhaps what the status of the supply-demand environment for your products are?

Question: Franco Granda - D.A. Davidson Companies - Analyst : Yeah, we can.

Question: Franco Granda - D.A. Davidson Companies - Analyst : And that brings up a really good point. I think this year, 2022, has got to be one of the best years for the GPU market when it comes -- as it comes to GPU releases, right? We have AMD introducing RDNA 2, Intel coming out with their brand-new GPUs, possibly the RTX 4000 Series coming out later this year. How do you expect the increased supply from these new SKUs impacting some of these prices? And perhaps does that mean that the supply-demand dynamic will be balanced enough where gamers will actually be able to get their hands on GPUs?

Question: Franco Granda - D.A. Davidson Companies - Analyst : No, that makes total sense. And then one of the interesting points that you brought up in your Analyst Day was that despite the fact that GPUs have been difficult to get a hold of, but at MSRP prices, your TAM has grown. Can you perhaps talk about what some of these drivers for the TAM growth have been over the past 18 months?

Question: Franco Granda - D.A. Davidson Companies - Analyst : Yeah. And then something we've been hearing from our end is that the source of the supply constraints, the tightest areas of the supply were at the trailing edge, the more mature nodes. As a result, we saw a lot of companies using some of the new designs for their products. So as you went along last year and you redesigned some of your products, did that mean that you essentially ended up upgrading your gear, your products? And then did that accelerate, I guess, the pace of acceleration or innovation for your products?

Question: Franco Granda - D.A. Davidson Companies - Analyst : Absolutely. And then so the refresh or upgrade cycle for a lot of gaming peripherals and gaming accessories has usually been two to three years. Now that we are essentially two years into the pandemic, (multiple speakers) think about that, it should be the time when people started upgrading their accessories, especially the ones that bought and right when the stay home orders were first placed. Do you think -- or I guess are you seeing on your end some of these upgrades starting to come in? Or do you think it's going to be more of a gradual upgrade cycle from here on out?

Question: Franco Granda - D.A. Davidson Companies - Analyst : And then taking a step back and I guess looking more ahead, during your Analyst Day, you talked about several new growth areas: monitors, controllers and the like. I guess at a personal level to that, which ones are you most excited about for Corsair? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 10, 2022 / 6:15PM, CRSR.OQ - Corsair Gaming Inc at DA Davidson Consumer Growth Conference (Virtual)

Question: Franco Granda - D.A. Davidson Companies - Analyst : Yeah, and as a personal anecdote, right now my lighting is and Elgato Light and then I have my stream picked up right here. With all the lights behind me, you can really see them. But yeah, that's really useful even for non-streamers like me. So I imagine a lot of people get into the market like that and then upgrade and maybe even become creators like that.

Question: Franco Granda - D.A. Davidson Companies - Analyst : Yeah, absolutely. And I think it's one of the best in the market and rightfully so. And then I was looking into -- digging into a little bit of your software opportunity. During your Analyst Day, you talked about iCUE and how much that helps you retain people and perhaps even encourage people to go more deeper into the platform, right, of purchasing more iCUE-enabled products. So I suppose what is your strategy around this, around iCUE, and then software in general as a part of your services solutions? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 10, 2022 / 6:15PM, CRSR.OQ - Corsair Gaming Inc at DA Davidson Consumer Growth Conference (Virtual)

Question: Franco Granda - D.A. Davidson Companies - Analyst : Yeah, no, and then totally, I'd see more and more iCUE popping up, just the logo in the box that someone notches. And the proliferation is there. And then even then, you are expanding your own market. You recently introduced the LC100 lights with -- they're very interesting, the first of the kind that I have seen. So innovation, it's getting you a long way there. And then another area that I was particularly interested in was the controller market with SCUF. The platform holders themselves, in my view, you are in the best position there in the market, especially at the console side of things. Perhaps I'm a bit biased, I just got my new SCUF in the mail the other day, but balancing social media really shows your dominance in the space. I guess for you, what are some of the initiatives that you're deploying here at SCUF?

Question: Franco Granda - D.A. Davidson Companies - Analyst : Yeah, I know that RGB, everything is a bit of a meme in the gaming world. But people love it, right? People still buy it. And interestingly, my setup has no less than 10 RGB products, so I can feel that. I did want to put you up on the services revenue and the services opportunity that you have. And then you acquired Gamer Sensei 1.5 years ago here. Can you speak to some of the learnings that you've had since you acquired them, trying to grow this services business? And then what do you think needs to be done for something like this to really take off in this market?

Question: Franco Granda - D.A. Davidson Companies - Analyst : Yeah, absolutely. And from a gamer standpoint, it makes sense. You look at me with a full-time job nowadays, I can't dedicate as much time as to practicing as I would like to. So a service like this makes sense. And then -- so let's go a little bit into the numbers here. And I'm putting you guys on the spot. You guys, during your Analyst Day, you gave a pretty optimistic goal of $3.5 billion for revenues by 2026. Can you perhaps walk us through what you need to do to be successful and reach this target? And perhaps how much of a wiggle room is there for one or two things to not really take off?

Question: Franco Granda - D.A. Davidson Companies - Analyst : Absolutely. And while I have you here, one of the other points that you brought up in your Analyst Day was that now you're at the point where financial leverage has come down significantly over the past couple years. So I guess does that change your capital deployment strategy? And how should we think about that?

Question: Franco Granda - D.A. Davidson Companies - Analyst : Absolutely. And speaking about M&A opportunities and whatnot, you are obviously seeing tremendous growth within the gaming market and this is your bread and butter. But how do you view growth outside of gaming? And then perhaps how does M&A fit into that strategy?

Question: Franco Granda - D.A. Davidson Companies - Analyst : Absolutely. And then so I was thinking that the natural question would be how big are you willing to go in terms of M&A? But I guess a more interesting perspective would be how little are you willing to go and really grow that out? So I guess how niche are you really willing to go into some of these new markets that you're looking into? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 10, 2022 / 6:15PM, CRSR.OQ - Corsair Gaming Inc at DA Davidson Consumer Growth Conference (Virtual)

Question: Franco Granda - D.A. Davidson Companies - Analyst : Yeah, absolutely. And I think one of your points has always been around brand awareness. So when you introduce some of these more niche products that carry the Corsair logo, I think people are interested already and would be willing to look into getting a foot pedal for gaming or even playing music.

Question: Franco Granda - D.A. Davidson Companies - Analyst : With that, I know that we are running up on time here. So I wanted to thank you all very much for attending. Thank you, Thi, thank you, Michael, for being here. If you guys have any closing remarks, please go ahead. Otherwise, I think we are good here.

Question: Franco Granda - D.A. Davidson Companies - Analyst : Okay. Thank you, Thi and Michael. Thank you so much, everyone. And we'll keep looking forward to our next set.