sair Gaming(CRSR) - 2021 Q2 - Quarterly Report

Financial Performance - Net revenue for the three months ended June 30, 2021, was $472.9 million, a 24.3% increase from $380.4 million in the same period of 2020[125] - Net income for the six months ended June 30, 2021, was $74.5 million, compared to $23.8 million for the same period in 2020, representing a significant increase[125] - Net revenue increased by $92.5 million, or 24.3%, for the three months ended June 30, 2021, compared to the same period last year, driven by a 40.9% growth in gamer and creator peripherals and a 17.6% growth in gaming components and systems[154] - For the six months ended June 30, 2021, net revenue increased by $313.4 million, or 45.5%, attributed to a 78.0% growth in gamer and creator peripherals and a 33.5% growth in gaming components and systems[155] - Total net revenue for the three months ended June 30, 2021, was $472.9 million, a 24.3% increase from $380.4 million in the same period last year[170] Sales and Market Trends - Direct-to-consumer sales are expected to continue increasing as a percentage of total net revenue due to acquisitions like SCUF and Origin[123] - Seasonal sales trends indicate that net revenue is typically lowest in the first and second quarters, with higher sales expected in the third and fourth quarters due to holiday shopping[132] - The introduction of new high-performance computing hardware is expected to drive demand for gaming components and systems[128] - The impact of COVID-19 has led to increased demand for gaming gear as more people seek home entertainment options[135] - The company experienced increased demand for its products due to a larger number of consumers gaming and working from home during the COVID-19 pandemic[156] Gross Profit and Margins - Gross profit for the three months ended June 30, 2021, was $130.4 million, with a gross margin of 27.6%, remaining flat compared to the same period last year[157] - Gross margin increased to 29.0% for the six months ended June 30, 2021, up from 26.7% for the same period last year, primarily due to improved product mix and increased sales volume[158] Expenses - Sales, General and Administrative (SG&A) expenses rose by $23.3 million, or 41.1%, for the three months ended June 30, 2021, mainly due to increased distribution costs and personnel-related expenses[160] - SG&A expenses increased by $47.5 million, or 42.9%, for the six months ended June 30, 2021, driven by higher distribution costs and personnel-related expenses[161] - Product development expenses increased by $3.6 million, or 30.8%, for the three months ended June 30, 2021, primarily due to higher personnel-related expenses[162] Cash Flow and Debt - Cash and restricted cash totaled $138.6 million as of June 30, 2021, with $270.0 million in long-term debt outstanding[179][180] - Net cash provided by operating activities for the six months ended June 30, 2021, was $59.4 million, down from $75.6 million in the same period last year[183] - Cash used in investing activities was $10.9 million for the six months ended June 30, 2021, primarily for capital equipment and the Origin acquisition[185] - Cash used in financing activities was $43.5 million for the six months ended June 30, 2021, mainly for debt repayment[188] - The company anticipates that existing cash balances and cash flow from operations will be sufficient to fund principal uses of cash for at least the next 12 months[181] Currency and Interest Rate Risks - Approximately 18.9% of net revenue for the six months ended June 30, 2021, was denominated in foreign currencies, exposing the company to foreign currency risk[210] - A hypothetical 100 basis point change in interest rates would result in a change to interest expense of approximately $0.2 million for the six months ended June 30, 2021[209] - The company recognized a foreign currency impact of $(2.6) million for the six months ended June 30, 2021, compared to $(0.1) million for the same period in 2020[210] - A hypothetical ten percent change in exchange rates would impact gains or losses on foreign currency exchange by approximately $1.7 million for the six months ended June 30, 2021[212] Internal Controls - As of June 30, 2021, the company's disclosure controls and procedures are effective at a reasonable assurance level[216] - There were no changes in internal control over financial reporting during the quarter ended June 30, 2021, that materially affected the internal control[217]