sair Gaming(US:CRSR)2023-11-06 16:00Financial Performance - Net revenue for the three months ended September 30, 2023, increased by 16.5% compared to the same period last year, driven by sales in the gaming components and systems segment [141]. - Gross margin improved from 23.0% to 24.6% for the three months ended September 30, 2023, and from 20.4% to 24.7% for the nine months ended September 30, 2023 [141]. - Net revenue increased by 16.5% for the three months ended September 30, 2023, compared to the same period last year, driven by a 26.9% increase in sales for gaming components and systems [176]. - Net revenue for the nine months ended September 30, 2023, increased by 6.8% to $1,042,589 thousand compared to $976,368 thousand for the same period last year, driven by a 19.5% increase in sales for gaming components and systems [197]. - The gamer and creator peripherals segment saw a revenue decline of 19.4% for the nine months ended September 30, 2023, primarily due to demand softness in a challenging macroeconomic environment [203]. Operating Expenses - SG&A expenses increased by 10.6% for the three months ended September 30, 2023, primarily due to higher personnel-related costs and the inclusion of Drop's post-acquisition expenses [179]. - Total operating expenses for the three months ended September 30, 2023, were $90,111 thousand, compared to $82,548 thousand in the same period last year [175]. - SG&A expenses decreased by 2.3% for the nine months ended September 30, 2023, primarily due to lower freight costs and reduced marketing expenses [213]. - Product development expenses decreased by 4.4% for the nine months ended September 30, 2023, totaling $48,542 thousand, primarily due to lower personnel-related costs [199]. - Product development expenses increased by 3.2% for the three months ended September 30, 2023, mainly due to higher personnel-related costs [214]. Cash Flow and Financing - Cash provided by operations was $32.1 million for the nine months ended September 30, 2023, compared to $45.1 million for the same period in 2022 [142]. - Net cash provided by operating activities for the nine months ended September 30, 2023, was $32,060 thousand, down from $45,142 thousand in the same period last year [207]. - Cash used in investing activities was $25,004 thousand for the nine months ended September 30, 2023, primarily for the Drop Acquisition and capital expenditures [208]. - Cash used in financing activities was $13,205 thousand for the nine months ended September 30, 2023, mainly for debt repayment and tax payments related to equity awards [209]. - The company refinanced its First Lien Credit Agreement, securing a total commitment of $350 million, which includes a $100 million revolving credit facility and a $250 million term loan facility [210]. Market and Product Development - The company launched 81 new products in the first nine months of 2023, including a new FLEX OLED bendable monitor and new Stream Deck products [140]. - The company expects continued growth in the gaming market due to lower-priced GPUs and new game titles being released [140]. - The company is focused on expanding into new markets and product categories through organic growth and acquisitions [140]. Interest and Tax - Interest expense, net for the three months ended September 30, 2023, was $(2,529) thousand, compared to $(2,734) thousand in the same period last year [181]. - Interest expense, net increased by 38.4% for the nine months ended September 30, 2023, primarily due to higher interest rates on the Term Loan, despite earning $5.2 million in interest income [200]. - Effective tax rates for the three months ended September 30, 2023, were 3.3%, down from 50.7% in the same period last year, while the nine-month effective tax rates increased to 26.0% from 15.6% [201]. - Income tax benefit for the three months ended September 30, 2023, was $97 thousand, with an effective tax rate of 3.3% [182]. Loss and Profit - Operating loss for the three months ended September 30, 2023, was $(758) thousand, an improvement from $(10,988) thousand in the same period last year [175]. - Net loss attributable to Corsair Gaming, Inc. for the three months ended September 30, 2023, was $(3,079) thousand, compared to $(6,211) thousand in the same period last year [175]. - Total gross profit for the Gamer and Creator Peripherals Segment was $89.4 million for the three months ended September 30, 2023, reflecting a gross margin increase of 5.1% for the nine-month period [220]. Risk Factors - The company is exposed to market risks primarily due to fluctuations in interest rates and foreign currency exchange rates [230]. - Approximately 16.4% of net revenue for the nine months ended September 30, 2023, was denominated in foreign currencies, primarily Euro, exposing the company to foreign exchange risks [250]. - The impact of foreign currency rate changes resulted in a loss of $(1.5) million for the nine months ended September 30, 2023, compared to a gain of $1.5 million in the same period of 2022 [250]. - A hypothetical ten percent change in exchange rates would increase or decrease gains or losses on foreign currency exchange by approximately $2.0 million for the nine months ended September 30, 2023 [250]. - The company entered into forward currency contracts with an outstanding notional principal amount of $32.1 million as of September 30, 2023, to mitigate currency fluctuations [250].