sair Gaming(US:CRSR)2023-05-09 16:00Financial Performance - Net revenue for the three months ended March 31, 2023, decreased by $26.7 million or 7.0% compared to the same period last year, primarily due to decreased revenue in the gamer and peripherals segment [106]. - Net revenue for the three months ended March 31, 2023, was $353.964 million, a decrease of $26.7 million or 7.0% compared to $380.691 million in the same period last year [134]. - The gamer and creator peripherals segment saw a significant decline in net revenue, down $45.2 million or 33.7%, primarily due to a challenging macroeconomic environment [146]. - In contrast, the gaming components and systems segment experienced an increase in net revenue of $18.5 million or 7.5%, driven by higher demand for power supply units and cooling solutions [147]. Gross Margin and Profitability - Gross margin increased from 23.8% to 24.1% for the three months ended March 31, 2023, compared to the same period last year [106]. - Gross profit for the three months ended March 31, 2023, was $85.404 million, with a gross margin of 24.1%, an increase of 0.3% from 23.8% in the same period last year [136]. - The company expects gross margin to improve further in the remainder of 2023 due to enhancements in the supply chain environment [137]. Cash Flow and Liquidity - Cash and restricted cash totaled $182.1 million as of March 31, 2023, while the principal balance of the Term Loan was $230.0 million [107]. - Net cash provided by operating activities was $41.826 million for the three months ended March 31, 2023, compared to $(6.106) million in the same period last year [157]. - Cash used in investing activities decreased to $4.7 million in Q1 2023 from $23.9 million in Q1 2022, with the latter including a $19.5 million acquisition of iDisplay [160]. - Cash used in financing activities was $9.9 million in Q1 2023, primarily for debt repayment of $10.0 million, while in Q1 2022, it was $1.9 million, mainly for debt repayment of $1.3 million [161][162]. Market Trends and Product Development - The gaming market is expected to continue growing due to lower-priced GPUs and new game titles being released in 2023 [105]. - The company launched 125 new products in 2022 and began shipping innovative products like the FLEX OLED bendable monitor in Q1 2023 [105]. - The introduction of new high-performance computing hardware is anticipated to drive demand for gaming components and systems [112]. Customer Concentration - Amazon accounted for 25.8% of net revenue for the three months ended March 31, 2023, with the top ten customers representing approximately 51.5% of net revenue [114]. Economic and Operational Challenges - Global macroeconomic challenges, including inflation and supply chain constraints, adversely impacted net revenue and increased costs in 2022 [109]. - Seasonal sales trends indicate lower net revenue in the first and second quarters, with higher sales expected in the third and fourth quarters due to holiday shopping [116]. Debt and Interest Rates - As of March 31, 2023, the total principal outstanding of the Term Loan was $230.0 million, with an available capacity of $100 million under the Revolving Credit Facility [171]. - Interest expense increased by $1.5 million or 121.1% to $(2.828) million, primarily due to higher interest rates on the Term Loan [140]. - A hypothetical 100 basis point change in interest rates would result in a change to annual interest expense by approximately $2.3 million [183]. Foreign Currency Exposure - Approximately 15.7% of net revenue for Q1 2023 was denominated in foreign currencies, exposing the company to foreign currency exchange rate risks [184]. - The company entered into forward currency contracts with an outstanding notional principal amount of $25.3 million as of March 31, 2023, to mitigate currency fluctuations [185]. - The impact of changes in foreign currency rates, including gains or losses on forward currency contracts, was $(0.6) million for each of the three months ended March 31, 2023 and 2022 [186]. Internal Controls and Compliance - There were no changes in internal control over financial reporting that materially affected the company during the quarter ended March 31, 2023 [191]. - The company's disclosure controls and procedures were evaluated and deemed effective as of March 31, 2023 [190]. - The company intends to continue monitoring and upgrading internal controls as necessary [188].