sair Gaming(CRSR) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the company's unaudited condensed consolidated financial statements for the period ended June 30, 2025 Condensed Consolidated Statements of Operations The company reported a 22.5% YoY net revenue increase to $320.1 million and a narrowed net loss for Q2 2025 Consolidated Statements of Operations Highlights (Three Months Ended June 30) | Financial Metric | 2025 (in thousands) | 2024 (in thousands) | YoY Change | |---|---|---|---| | Net revenue | $320,112 | $261,300 | +22.5% | | Gross profit | $85,871 | $63,085 | +36.1% | | Operating loss | $(16,923) | $(24,714) | Improved | | Net loss attributable to Corsair | $(20,862) | $(24,194) | Improved | | Diluted Net loss per share | $(0.16) | $(0.28) | Improved | Consolidated Statements of Operations Highlights (Six Months Ended June 30) | Financial Metric | 2025 (in thousands) | 2024 (in thousands) | YoY Change | |---|---|---|---| | Net revenue | $689,862 | $598,557 | +15.3% | | Gross profit | $188,233 | $149,724 | +25.7% | | Operating loss | $(19,186) | $(34,933) | Improved | | Net loss attributable to Corsair | $(31,321) | $(35,759) | Improved | | Diluted Net loss per share | $(0.26) | $(0.41) | Improved | Condensed Consolidated Balance Sheets Total assets stood at $1.22 billion as of June 30, 2025, with notable changes in inventories and long-term debt Key Balance Sheet Items (as of June 30, 2025 vs. Dec 31, 2024) | Balance Sheet Item | June 30, 2025 (in thousands) | Dec 31, 2024 (in thousands) | Change | |---|---|---|---| | Cash | $104,625 | $107,011 | -2.2% | | Accounts receivable, net | $179,233 | $218,648 | -18.0% | | Inventories | $295,627 | $259,979 | +13.7% | | Total Assets | $1,221,880 | $1,235,829 | -1.1% | | Accounts payable | $257,663 | $207,215 | +24.3% | | Long-term debt, net | $118,283 | $161,310 | -26.7% | | Total Liabilities | $606,709 | $616,377 | -1.6% | | Total Stockholders' Equity | $603,897 | $604,303 | -0.1% | Condensed Consolidated Statements of Cash Flows The company generated $48.9 million in operating cash flow for the first six months of 2025, a significant YoY improvement Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | |---|---|---| | Net cash provided by (used in) operating activities | $48,943 | $(44,779) | | Net cash used in investing activities | $(5,785) | $(16,398) | | Net cash used in financing activities | $(47,033) | $(22,142) | | Net decrease in cash and restricted cash | $(2,182) | $(83,977) | Notes to Condensed Consolidated Financial Statements Details significant accounting policies, the Fanatec acquisition, debt refinancing, and segment reporting - The company is organized into two reportable segments: Gamer and Creator Peripherals, and Gaming Components and Systems[26][32] - On September 19, 2024, Corsair acquired the Fanatec Business from Endor AG for a cash consideration of approximately $43.7 million, net of cash acquired, expanding its offerings in the sim racing market[40][41] - On June 30, 2025, Corsair entered into an Amended and Restated Credit Agreement, refinancing its debt with a new $125.0 million term loan and a $100.0 million revolving credit facility, both maturing in 2030[58] Net Revenue by Segment (Six Months Ended June 30) | Segment | 2025 (in thousands) | 2024 (in thousands) | YoY Change | |---|---|---|---| | Gamer and Creator Peripherals | $214,615 | $201,202 | +6.7% | | Gaming Components and Systems | $475,247 | $397,355 | +19.6% | | Total Net Revenue | $689,862 | $598,557 | +15.3% | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q2 2025 financial results, highlighting revenue growth, margin improvement, and operational factors Results of Operations Q2 2025 net revenue grew 22.5% YoY, driven by strong segment performance and improved gross margins - Net revenue increased by 22.5% for the three months ended June 30, 2025, driven by a 30.2% increase in the Gaming Components and Systems segment and an 8.9% increase in the Gamer and Creator Peripherals segment[122] - Gross margin for Q2 2025 increased by 270 bps to 26.8%, primarily due to a 130 bps improvement from product mix and a 130 bps improvement from lower inventory reserves[124] - SG&A expenses for Q2 2025 increased by $14.9 million (21.2%) YoY, mainly due to higher distribution costs, marketing, personnel-related costs, and stock-based compensation[126] - Interest expense decreased by 27.9% in Q2 2025 compared to Q2 2024, primarily due to a lower principal balance on the term loan and lower interest rates[131] Segment Results Both segments reported revenue growth and improved gross margins in Q2 2025, led by the Gaming Components and Systems segment Segment Net Revenue (Three Months Ended June 30, 2025 vs 2024) | Segment | 2025 (in thousands) | 2024 (in thousands) | YoY Change | |---|---|---|---| | Gamer and Creator Peripherals | $102,642 | $94,229 | +8.9% | | Gaming Components and Systems | $217,470 | $167,071 | +30.2% | | Total Net Revenue | $320,112 | $261,300 | +22.5% | Segment Gross Margin (Three Months Ended June 30, 2025 vs 2024) | Segment | 2025 Gross Margin | 2024 Gross Margin | Change (bps) | |---|---|---|---| | Gamer and Creator Peripherals | 40.0% | 37.9% | +210 bps | | Gaming Components and Systems | 20.6% | 16.4% | +420 bps | | Total Gross Margin | 26.8% | 24.1% | +270 bps | Liquidity and Capital Resources The company maintained a strong liquidity position, supported by operating cash flow and a recent debt refinancing - Principal sources of liquidity as of June 30, 2025, were $107.4 million in cash and restricted cash, and $99.8 million of borrowing capacity under the June 2030 Revolving Facility[149] - Net cash provided by operating activities for the first six months of 2025 was $48.9 million, a significant improvement from the $44.8 million used in the same period of 2024[153] - The company refinanced its credit agreement on June 30, 2025, resulting in a new $125.0 million term loan and a $100.0 million revolving facility, both maturing in 2030[160] Summary of Contractual Obligations as of June 30, 2025 | Obligation Type | Total (in thousands) | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | |---|---|---|---|---|---| | Debt principal and interest | $152,374 | $12,864 | $33,260 | $106,250 | $— | | Inventory-related purchase | $125,860 | $125,860 | $— | $— | $— | | Operating lease | $80,267 | $16,327 | $23,625 | $15,788 | $24,527 | | Other purchase | $12,872 | $11,266 | $1,606 | $— | $— | | Total | $371,373 | $166,317 | $58,491 | $122,038 | $24,527 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are related to variable interest rates and foreign currency fluctuations - The company is exposed to interest rate risk on its $125.0 million variable-rate term loan, where a hypothetical 100 basis point change would alter annual interest expense by approximately $1.2 million[170] - Foreign currency risk exists as approximately 20.1% of net revenue for the first six months of 2025 was denominated in foreign currencies, primarily the Euro, which the company hedges with forward contracts[171][172] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of the end of the quarter - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[177] - No material changes were made to the internal control over financial reporting during the quarter ended June 30, 2025[178] PART II. OTHER INFORMATION Legal Proceedings Current legal proceedings are not expected to have a material adverse effect on the company's financial condition - The company does not expect any current legal proceedings to have a material adverse effect on its business, results of operations, or financial condition[181] Risk Factors No material changes to previously disclosed risk factors were reported during the quarter - No material changes have occurred in the risk factors affecting the company since the last quarterly report[182] Exhibits Lists key exhibits filed with the report, including the amended credit agreement and officer certifications - Key exhibits filed include the Amended and Restated Credit Agreement dated June 30, 2025, and certifications by the Principal Executive Officer and Principal Financial Officer[188]