Corsair Gaming Inc at TD Cowen Technology, Media & Telecom Conference Transcript

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

Question: Doug Creutz - TD Cowen - Analyst : Thanks, Michael. So as I was sort of reviewing for this. I was sort of thinking about the trajectory the company since Corsair went public in late 2020. And it's been a very unusual period where when you went public, we were pre-pandemic. It's hard to keep product on store shelves. Shipping costs were very high, right. And then about nine months later, people started coming out of their houses. Supply is catching up with demand and suddenly now you go from not enough product on store shelves to at least at an industry level, there was too much product on store shelves. As you plan for discounting, margins go down. Are we now finally at a position where things have normalized and we can start to see what the real underlying dynamics of the business look like you think?

Question: Doug Creutz - TD Cowen - Analyst : Back in early '22, you held an Analyst Day and you suggested that the growth potential based on historical trends and projected trends and your ability to take market share on the top line could be in the low double digits or potentially even low teens. Do you think we're now at a point, again, sort of in the market condition where that longer-term trajectory can start to assert itself?

Question: Doug Creutz - TD Cowen - Analyst : Great. Your guidance this year is for an EBITDA margin of 7%, which is right about where you were pre-pandemic in 2019. The revenue has grown quite a bit. Your gross margins today are comparably higher than they were in 2019, both in components and peripherals, but that's been offset by an uptick in the OpEx base as a percent of revenue gone from about 15% to 20%. Can you talk about the drivers of that raise in the OpEx percent of revenue and whether there's leverage to get that back down to where it was pre-pandemic?

Question: Doug Creutz - TD Cowen - Analyst : You mentioned, if there's severe recession, we've always thought of gaming as being at least somewhat macro resistant. Although not completely, this is a very difficult economy to figure out depending on what sort of data you look at Sony selling every PS5 they can ship into the market. So they are clearly in demand for gaming. How much for you guys would you say macro isn't a headwind right now and sort of how you think about that when you're forecasting your business?

Question: Doug Creutz - TD Cowen - Analyst : Talking about things that could be a tailwind up until pretty recently, we'd had a pretty soft market for AAA game releases going back to at least early '22, if not further. But this year and especially this last few weeks, we're seeing some pretty big titles in the market and obviously, we have Diablo coming out in next week, which is going to be a massive PC title. We've got Starfield coming out, I think in September, which should be very big on PC, how much of a lift can games like that give to your business?

Question: Doug Creutz - TD Cowen - Analyst : Or keyboard smashed into the desk.

Question: Doug Creutz - TD Cowen - Analyst : They are very nice, yeah. You talked about GPUs and one of the issues you had earlier was that there's no GPU availability at any kind of a reasonable price that's used a lot. And I saw that NVIDIA actually announced the 4060 series, which looks like a relatively cheap GPU, although it doesn't seem like they got a great reception. But can you just talk about what's the situation in terms of GPU availability and how that's helping your business?

Question: Doug Creutz - TD Cowen - Analyst : I had a client ask me if there's going to be like an AI demand for GPUs, the way there was in crypto and that any chance that that could be an issue or is it just apples and oranges?

Question: Doug Creutz - TD Cowen - Analyst : Another potential tailwind I would think is you mentioned your SCUF controller business earlier. Obviously PS5s are finally in stock and they basically were selling 2 million a quarter, now they're selling 6 million a quarter. Are you seeing that translate into any uplift for that business?

Question: Doug Creutz - TD Cowen - Analyst : Makes sense. Just generally, if you think about the other parts, your peripherals business, where do you see the most opportunity to drive growth and take share?

Question: Doug Creutz - TD Cowen - Analyst : How about your Elgato business? Obviously, you acquired that several years ago. I think that's been a really nice success for you. What kind of replacement cycle have you seen for that business given that there were a lot of people who jumped into streaming again sort of in 2020, 2021?

Question: Doug Creutz - TD Cowen - Analyst : Can you talk a bit about what the overall M&A landscape looks right now? Obviously, you have done some acquisitions that have really helped your business. I think there'd be some interesting opportunities given the challenges in the market that we've seen over the last 12, 18 months. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 31, 2023 / 6:00PM, CRSR.OQ - Corsair Gaming Inc at TD Cowen Technology, Media & Telecom Conference And you have quite a healthy balance sheet right now with almost 20 million cash and roughly zero net debt. So can you talk about how you're looking at that right now?

Question: Doug Creutz - TD Cowen - Analyst : Happy to take a question or two from the audience if anybody has one. Otherwise, I'll keep asking. Can you talk a bit about just your ability to gain market share. I mean, it's been I think from your deck, your memory share has gone from around 40% in 2018 to north of 70%. And in components, you've gone from the mid-30s into the mid-40s in the US. Who are you taking share from? And are you seeing similar dynamics outside the US or is there more opportunity there?

Question: Doug Creutz - TD Cowen - Analyst : All right. Well, I think we're out of time. So Michael, thank you very much.