Q1 2021 Corsair Gaming Inc Earnings Call
Good morning, and welcome to cars there of gaming first quarter 2021 earnings conference call.
As a reminder, today's call is being recorded and your participation implies consent to such recordings at this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press the pound zero on your telephone keypad with that I would like to turn the call over to Ronald the envy of course, Theres, Vice President of Finance and Investor Relations. Thank you Sir please begin.
Thank you good morning, everyone and thank you for joining us for per share financial results Conference call first quarter, ending March 31 2021.
On the call today, many of our CEO, Andy Paul The CFO, Michael Bob before we begin allow me to provide the disclaimer regarding forward looking statements. This call, including the Q&A portion of the call May include forward looking statements related to the expected future results of our company and are therefore forward looking statements our actual.
The results may differ materially from our projections due to a number of risks and uncertainties. The risks and uncertainties. The forward looking statements are subject to are described in the earnings release all of our SEC filings.
Today's remarks will also include references to non-GAAP financial measures of.
Additional information, including reconciliation between non-GAAP financial information to the GAAP financial information is provided in the press release.
I would also like to remind everyone that until our 10-Q is on file the Q1 2021 numbers are preliminary.
This conference call will be available for replay via webcast through the <unk> Investor Relations website.
The Corsair soft call.
Andy will begin with our first quarter business highlights.
Our updated 2021 outlook and Michael will then take you through a review of the financials before we proceed the Q&A with the.
I'll now turn it over the call to Andy.
Thanks, Ronald and welcome to the Q.
2021 earnings call.
Well, we are delighted with the Q1 results, which exceeded our expectations as we continue to see elevated levels of gaming activity and the conversion of casual game is the committed gamers, who spend money on new guess.
During Q1, we delivered net revenue growth of 71, 6%.
Two $529 4 million.
Which is our second strongest quarterly performance surpassed only by our record Q4 2020.
Adjusted EBITDA of nearly tripled growing 196, 6%.
So the vessel of $84 million.
And adjusted earnings of 58 cents per diluted share.
Which was up from 45 cents per share of the Q1 2020.
We saw continued growth on buying and building $2000 plus gaming Pcs.
Which we believe in the cake expected heavy PC game, playing over the next few years and subsequent the accessory purchases.
Q1 had some of that's what I'll say your shipment mix is of high margin products.
Leading to record high gross margins in both of those segments.
39, 1% on gaming.
Segment, and 25, 9% component segment.
Well, we are pleased to see evidence of we can achieve these levels.
Caution not to expect these margins in every subsequent quarter.
However, it certainly underscores the strong conviction of the margins will increase over time as we continue to bring out hiseq of products and become more dominant in the market.
We're also very pleased the season in Q1, we were the number one market share position in every gaming components category the.
NPD moms of the U S, which is our largest market.
We saw massive growth year over year in both of the financial segments.
But most notably in gaming and creative peripherals.
The market continues to grow strongly and I'll get on branded streaming products continue to outgrow the overall segment.
The gaming of and create a peripheral segment has more than doubled in revenue from.
Q1, 2020 of nearly tripled from Q1 2019.
Yes.
In creative triples, we continue to be the market leader.
<unk> kept the cards and lighting.
Why is the microphone launched last year has gained significant market share very quickly.
Stream day.
<unk> will become the standard for home broadcast of the themselves over the last three quarters has exploded.
On the gaming peripherals, we launched several new keyboards and mice with the most notable being on new 60% cable the case 65.
Which has been sold out ever since we launched it in March.
Yes.
The gaming systems and components, we continued to gain share in almost every category.
On a new full thousands of appliance sales the series of gaming PC cases.
Just drive up market share in the U S to 28% of <unk>.
9% lead of newest competitor.
Over 40% of our gaming case sales on a small cases, meaning that they are shipped with an IQ control of installs.
This further.
Sales of IQ RGB accessories.
<unk> gaming continue to upgrade of modify the gaming PC.
Oh of course at one <unk>, how good with liquid cooled ryzen CPU in CX 30, 80 graphics.
The season, the Edison Award from Tom's hub with.
The gaming memory sub segment.
We also have of 30% of our shipments, which you IQ enabled again, which we believe drives additional IQ accessory purchases.
We had.
The record sales of prebuilt systems from both large and PC as well as the Corsair vengeance Pcs.
We also filled the stall shipping on homes wholesale one gaming PC with 30 series Nvidia GPU cards, but also with both Intel and AMD Cpus.
Yeah.
We increased the pace of new products launched two almost two per week in Q1.
We launched 29 new products.
Including five power supplies, eight case and related cooling products three El Gallo studio studio accessory products.
On your keyboards for you much the mouse pads.
Three high speed, so, let's say draw any of us into Greenfield prebuilt PC levels.
Yeah.
We will continue to expand in R&D and marketing to drive and executed on the roadmap.
R&D was up over 31% over Q1 2020.
Expect the growth.
We'll continue at a higher pace for the rest of the year.
We will continue to invest at a similar pace in front of marketing.
And you should expect us to continue the launched new high performance products of the blistering pace of.
On use these products gain market share.
During the quarter, we announced the acquisition of visuals by impulse.
The premium design platform for creators.
<unk> provides professional individualized designs for creators of streamers, who use the BLA overlays of alerts and wishes to customize the broadcast helped define the online persona and grow their fan bases.
Based on our strong Q1 results and positive outlook for gaming gear of the bonds.
We are raising our guidance for the full year 2021.
Total revenue in the range of $1 9 billion to $2 1 billion.
Representing growth of 11, 6% of 23, 4%.
Up from prior guidance of one eight to 195 billion.
Adjusted net operating income in the range of $235 billion the $255 million.
And adjusted EBITDA in the range of children from $45 million to $265 million.
As discussed before will be adding significant resources to the company. This year, both in marketing and R&D as well as infrastructure as we move towards a $2 billion revenue number.
Thank you for your time and continued support I'll now turn the call over to Michael to discuss our financial results for the quarter.
Thanks, Andy and good morning, everyone. During the first quarter, we delivered net revenue of $529 $4 million, an increase of 71, 6% compared to $308 5 million in Q1 2020.
The Gamer and creator peripheral segment more than doubled and provided $175 9 million of net revenue during the first quarter, an increase of 131, 9% from $75 $9 million in Q1 2020.
Driven by strong growth across all product categories in particular sales of our our our gatos branded streaming products.
The game room creator peripheral segment net revenue contributed 33, 2% of total net revenue an increase of 860 basis points from 24, 6% in Q1 2020.
The gaming components and system segment provided $353 $5 million of net revenue during the first quarter, an increase of 51, 9% from $232 $7 million in Q1, 2020, primarily driven by strong growth across all product categories as consumers.
The continued to buy and build gaming Pcs less than half of gross revenue came from memory products, which contributed $161 $9 million.
Gross profit in the first quarter more than doubled to a record $163 million an increase of 103, 9% from $78 $6 million in Q1, 2020, even beating last quarter was $153 8 million the increase over Q1 2000.
<unk> was primarily driven by increased revenues as well as the positive net margin impact from sales of higher margin products, including streaming gear.
Most profit margin increased by 480 basis points to 33% from 25, 5% in Q1 2020.
The gamer and create a peripheral segment gross profit was $68 $9 million, an increase of $46 $7 million from $22 1 million in Q1, 2020, primarily driven by an increase in revenue in the same periods.
Gross profit margin was 39, 1% compared to 29, 2% in Q1 2020. The increase in gross margin was driven largely by product mix for the two strong growth in sales of higher margin streaming products, coupled with less promotional activities.
We continue to see a mix shift as gamer and creator peripheral has contributed 43% of total gross profit in Q1 2021 as compared to 28, 2% in Q1 2020.
This is of great overall story and Formula for continued overall margin expansion as our fastest growing and highest margin segment also sits in our largest market.
The gaming components and systems segment gross profit was $91 $5 million, an increase of $35 million from $56 5 million in Q1, 2020, primarily driven by the increase in revenue in the same periods gross profit margin was 25, 9%.
Compared to 24, 3% in Q1 2020, primarily due to product mix.
Gaming components and systems contributed 57% of the total gross profit in Q1 2021 as compared to 71, 8% in Q1 2020, our memory products margin in this segment was 21% for the quarter.
First quarter SG&A expenses were $77 $9 million, an increase of $24 1 million or 44, 9% compared to $53 $7 million in Q1, 2020, primarily driven by an increase in the outbound freight cost due to an increase in revenue.
And increased due to the expenses related to being a public company and an increase in personnel related expenses.
First quarter product development expenses were $15 $2 million, an increase of $3 6 million or 31, 4% compared to $11 6 million in Q1, 2020, primarily driven by an increase in personnel related expenses as we continue to focus on bringing an increasing number of <unk>.
Products to the market.
Operating income in the first quarter of 2021 was $67 $3 million, an increase of $54 million from $13 $3 million in Q1 2020.
Adjusted operating income in the first quarter of 2021 was $84 million, an increase of $55 $4 million or 221, 4% from $25 million in Q1, 2021st quarter net income was $46 $7 million or <unk> 47.
Per diluted share as compared to net income of $1 $2 million or <unk> <unk> per diluted share in Q1 2020.
First quarter adjusted net income was $58 2 million or <unk> 58 per diluted share as compared to adjusted net income of $11 $2 million or <unk> 13 per diluted share in Q1 2020.
Adjusted EBITDA for Q1, 2021 was $84 million, an increase of $53 $3 million or 196, 6% compared to $27 1 million for Q1 2020, bringing adjusted EBITDA margins of 15, 2% an increase.
<unk> of 640 basis points year over year.
Turning now to our balance sheet.
We were able to convert our strong financial performance in the first quarter into an opportunity to further strengthen our balance sheet, we reduced debt by an additional $28 million with face value now at $299 million and net debt of $177 $3 million, resulting in a net leverage ratio of well bill.
So one we did this while growing quickly and leaving sufficient resources to further accelerate growth in the future we expect.
To continue to reduce debt in 2021 subject to business conditions and the need for additional growth capital the $28 million that payoff will result in approximately $1 million in interest expense savings during the year as of March 31, 2021, we had $48 1 million capacity under our.
Our revolving credit facility total GAAP long term debt of <unk>.
$294 $3 million in cash excluding restricted cash of $121 6 million.
Our strong financial performance in 2020, and the debt pay down plans for 2021 resulted in S&P, increasing our corporate rating from B plus to double B minus on February 25, 2021 debt reduction is not as exciting as the new products of Andy just discussed, but it does give increased <unk>.
<unk> to our suppliers and customers that Coursera gaming continues to be of strong and reliable company to do business with.
It helps with our supply chain teams are working to overcome the different shortage and logistics challenges we face today.
The additional modeling details underlying our outlook remain the same as we discussed on our fourth quarter earnings call with the exception of the now reduce interest expense for ease of I'll repeat them.
We expect gross margin slightly improved year over year, and operating expense to increase as well to support our higher revenue level the need to continue to innovate on the larger scale and of full year of public company of costs.
Assuming no further debt Paydown, we now expect interest expense of approximately $4 $6 million per quarter as.
As noted we have already paid down $28 million of our debt this year and expect to pay down approximately an additional $72 million for a total of $100 million of debt reduction in 2021 subject to business conditions and any need for additional capital the $4 million patent trial win in Q1 2012.
The one is not in our outlook this amount could vary depending on what the judge rules is subject to appeal and the timing of recognition of the gain if any is uncertain at this time and.
And the effective tax rate of approximately 21% to 23% for 2021 and full year weighted average diluted shares outstanding of approximately 100 to 102 million shares.
Overall, we're pleased with the continued progress we've made on our strategic initiatives and performance of the business. We grew more than we expected in Q1 2021, and we are expecting growth in revenue in the adjusted operating income for 2021.
Where our competitors are expecting down compared to 2020, we believe that our supply and logistics constraints ease we will be able to increase market share as we are more fully stock in the channel with the full range of our products.
With that we're now happy to open the call for questions. Operator, we please open the line for Q&A.
Yes. Thank you.
If he would like to ask a question. Please press star one on your telephone keypad the car.
From ancient tone will indicate your line is in the question queue. You May press star two if he would like to remove your line from the Q and for of participants using speaker equipment. It may be necessary to pick up on your handset before pressing the star of he is our first question is from Matt Cabral with credit Suisse. Please proceed.
Yes, Thank you Andy.
Andy you talked 90 days ago of about a stronger first half the second half. During this year wondering if you can just update us on how we should think about the trends compared to just the the typical seasonality as we head into the second quarter, and then thinking about sort of the transition as you move from the first half into the back half of the year just your latest thoughts.
Yes.
We've given out.
Guidance of what we think is going to happen my best estimates.
All the signs that we see at the moment is that.
People are still spending a lot of time gaming.
And more importantly.
More people to start it.
Play games, and the more committed fashion of bi gear.
Now.
We expect that to continue in fact, what we're focused on now is really looking.
Past COVID-19 of pre COVID-19 and trying to compare the numbers that we're seeing now with 2019.
Comps. So you can see what the true growth is in the sector.
And it's pretty encouraging what's going on.
So obviously, we don't know for sure what's going to happen in the second half of the assumption is the 2020 was.
Fairly good acceleration of people migrating some of committed gaming.
I will have to see how that plays out in the second half so we've been somewhat conservative.
In our outlook thinking the it'll be.
The relatively.
Low growth in the second half, but so far clearly we're seeing.
Hello, Hi acceleration than we planned.
Got it and then from.
On the prepared remarks, it sounds like supply constraints are still an issue that youre seeing I guess wondering if you can update us on where youre feeling those of the most across the portfolio.
How the constraints look today versus where they were of 90 days ago.
I don't know if you just have a GAAP on why do you think you will finally be able to catch up to the demand from a supply chain standpoint.
Well, so I think the last part of the question.
It will depends on the supply and demand the.
The moment demand for consumer electronics goods is obviously the outstripping the supply capability of the semiconductor industry, So and if you listen to different.
Parts of the industry, the big guys, the TSMC and Intel et cetera.
Seeing this as the short term thing.
Now for US specifically the good news is.
We could of shifting even more so Q1 results as good of say al could've been higher.
It would have more supply.
So what are we doing with obviously, you've got a team of operations procure the people that are working hard to make sure we can get.
The supply we need.
At this point.
We have enough supply to meet the.
Plans, we have in the forecast, we were giving out but we'd like to get more.
That's for sure.
Whether or not demand in the second half overall will ease off on.
Yeah.
We don't know but.
Suddenly this is not of short term issues. So.
What we're doing about it.
As you sort of expect with true.
On to make sure we prioritize the high featured products.
The we know the less committed game is one of.
And for those products, we have the role of entry level that still have some of the.
The semiconductor controllers and the easing off of that.
<unk>.
And so that that's the.
Helps obviously with the product mix and that sort of thing, but that's what we're trying to sort of focus to supply.
Got it thank you.
Our next question is from Mario Lu with Barclays. Please proceed.
Great. Thanks for taking the questions.
One the first one on new products.
So you mentioned in your slides that up 43 million units sold in the past.
Phone lines as well as 84 product launches. So how important are these new launches each year in terms of revenue compare take this day and what would you say are the main gas youre still hoping of cell and your product portfolio.
Well, so first off obviously very company new products are important.
We haven't actually.
Looked at how many of those products of refresh the spend new segments, but there's quite a significant number of the products last year with the.
Ryan you segments and when you think about when you think of microphones for example.
Some of the lighting products, you've put out we didn't have those before the votes.
Incremental growth incremental revenue incremental Tam that we are addressing.
The certain amount of products, probably two thirds of the ones that we introduced at all of it we have to keep refreshing what we want to keep refreshing to make sure that we use the latest technology and supply of the latest features.
But yes, any tech company, making products like we do you've got to keep.
Bringing products out of we try and refreshed most of our product lines of the 18 months.
That's a little bit faster than the.
Inherent refresh rate the consumers are looking for.
But we want to make sure. We're ahead of the curve. So as soon as consumers are looking to refresh of upgrades.
The latest and greatest products available.
Got it. Thank you and then just one on Scott you mentioned that discussed was one of the drivers of peripherals outperforming.
I believe the Xbox controller currently is compatible with the Xbox series console.
But I believe the Playstation controller still isn't compatible folio of Playstation five.
So any any update you can provide.
On the Playstation five controllers, and just high level overview of that segment. Thanks.
Yeah, well the first thing is.
As you probably know we.
We have the license agreement with Microsoft Xbox.
And so.
It's a slightly different split between next books of <unk>, Florida. The words, we are of higher sales force. So it is of the majority of the revenue of scuff.
If you look at the installed base, it's one of them.
The 100 million units of the PSV.
This is a few million of PS five so still.
By far the majority of the demand comes from that segment.
Obviously working as fast we can get out of the <unk> five.
Lola.
We haven't released when that will be but I suspect, we'll be pretty early in the market compared to any of our competitors.
That makes sense. Thank you.
Our next question is from Rod Hall with Goldman Sachs. Please proceed.
Yeah, Hi, guys. Thanks for the question.
I wanted to just kind of come back to the guidance because when we.
When we calculate the implied Q2 through Q4.
<unk> revenue guide it just comes in line with consensus, which seems pretty conservative considering how significantly beat in Q1. So I'm just curious is.
The supply is the main reason you're being so conservative there or are you seeing some early signs that demand tailing offer.
What's kind of affecting that and coloring that guidance and then secondly, I wanted to come back to performance memory and see if you could quantify for us.
Just how big that was in the quarter and I'm also kind of curious about the margin there whether the supply is.
Issue is helping or hurting margins, what's going on with the performance memory.
Yeah.
Yes.
So we can.
Handle the first part of the question.
So I think in general as we've as we've approached 2021.
When we're not suggesting that theres going to be massive growth from 2020 because over.
Over the years, we've looked at the growth in gaming.
Get surges that.
Due to various things 2018 was fortnite surge of.
Of growth of 2020, obviously shelter at home helps so when we look over the shoulder we see the waves of growth.
That's the.
Drive the market relative on a steady linear growth and so that's how we expected 2020 on 2021 will look as we get through it.
We do not have any new information.
Point of suggest any different clearly we've got a fantastic Q1 result.
And so we're pretty optimistic.
But no reason yet to.
The get ahead of ourselves and suggests that there's going to be massive growth in the.
In the interest of the year.
But obviously the.
Could be.
Now this the the second thing on memory.
Lost Michael to give you the breakout.
As of the gross margin of memory I had mentioned in my remarks was 21% so thats.
Higher than are our total of like our average in the last few years, but sort of in line with performance last year memory chip pricing went up.
Starting at the end of last year through Q1 and that tends to help our margin when share prices are going up it hasn't quite hit the point, where it's impacting how much of memory people buy yet, but if it does get to expense of that starts to become a consideration people tend to have a set budget per per system per memory. So it was.
A good quarter for us for margin and performance, but obviously, Eric Amarin creator for frozen the rest of our components of drew mair.
<unk> in Q1.
Yeah, and I would say okay. Thank you.
The rod from a supply standpoint.
I think what's happening is we are starting to get a little more dominant we've got a very high market share in memory.
One of half the market.
Is is of course that now in the U S.
As you probably know of high <unk> as a friend of sold to HP.
So of that brand is to exit the market for the memory. So.
Some of this is just the fact, we've got a slightly more dominant position of the channel. The other thing is we are up to almost 35 set about shipments now of RGB.
IQ enabled memory and so while the difference so we already know the items and.
The standard so it really not shipping a lot of commodity memory at this point on that obviously allows some differential in margins.
Great. Okay. Thanks, a lot.
Our next question is from drew Crum with Stifel. Please proceed.
Okay. Thanks, Hey, guys. Good morning, Andy from past calls you've noted in the influx of new gamers to the business can you comment on what you saw on <unk> know theres been some concerns of.
<unk> reopen this is kind of slow.
Just based on your observations of the velocity of new of course, there are consumers continued or has it decelerated.
And then separately can you comment on M&A and your decision to accelerate debt Paydown, what does that portend to or suggest.
In terms of M&A opportunities that the business has.
<unk>.
Yeah. So look the terms of the gave us on consumers we've got the benefit now of having quite a few.
The social Potsdam by the usual suspects of news of J P O et cetera.
I think what we're seeing is the.
Although the gaming.
The continues to increase and I know the numbers are.
Getting around the 3 billion gaming from the world the more important number for us the firstly of those people that are actually paying money of any sort of role for the games or hardware.
And specifically for us how many people.
Playing games at a higher level, so as they start to buy gear.
As you probably know it's still a small fraction of the people who are.
Playing games two of <unk>.
Buying specialized gaming gear.
So we're nowhere near of any kind of saturation in fact quite the opposite of the vast majority of the people that are playing video games of bolt no.
This gaming gave at all so we still have a very untapped market.
And that's really what we've seen now looking over the shoulder over the last 12 months.
It's less of a factor of the more game is it coming into the market more of a factor that the game is that exist of playing more and starting to buy more geared.
Now the most encouraging part of that is the number of people in the PC gaming sector that of actually steps up to buy or build.
Gaming Pcs.
Because.
The other issue is if you.
The buying of 2000, plus gaming PC now Youre planning to play a lot of games not just in the next few months well into after COVID-19.
The shelter at home stops so that's the most encouraging thing we've seen and we had record sales in Q1.
All of our prebuilt gaming systems from origin and Corsair.
We had very very healthy growth in.
In the components business and that's directly tied to certainly for the products, we make steady sides of people building $2000 plus gaming Pcs.
That's a very different dynamic than somebody.
The parent buying of <unk>.
It's still of headsets for the kids because of the.
So I do think we're seeing of continued.
The long term growth as people get more and more into game gaming and especially of the PC gaming sector and decided to buy especially this gear you know may move from playing on the laptop two of dedicated high performance gaming PC.
And quickly on the M&A question and the debt Paydown.
No.
For the average smaller product oriented acquisitions worked on over the last few years. We currently have sufficient capital to execute on those type of acquisitions out of our cash flow, while still continuing to reduce that somewhat when it comes to a quarter by quarter of choice I mean, our debt is from an earlier stage in the company's history of slightly higher interest.
So it's an immediate return in terms of higher EPS via lower interest expense.
So we don't have anything.
The use of cash for I, usually choose to pay down debt and get that immediate benefit of <unk>.
Andy of the team came with a larger acquisition of I always the couch, what I say about what's kind of going in the future with the subject to business conditions and need for further growth capital. So we could fear more cash flow of acquisitions versus debt pay down because.
Because we're not committed to make any specific debt paydown.
Okay.
I'd add on that is the.
It is a small of acquisition that we've got a pretty good pipeline of of <unk>.
People were talking to the <unk>.
Smaller acquisitions, you know like I said, we can pay out of cash flow.
Think of acquisitions would takes the other with public would take some time to close of.
So yes.
We're not sort of staring into obviously, we had a massive cash.
Need in front of us, we won't be paying down debts of.
So there is nothing on the horizon.
Yeah, Okay. Thanks, guys.
As a reminder, the star one on your telephone keypad, if he would like to ask the question. Our next question is from Thomas Forte with D. A Davidson. Please proceed.
Great. Thanks for taking my question first off congrats on the excellent quarter.
One question on one follow up so from my first question I wanted to talk about.
Asked about kind of the pace of reopening and the demand for gaming I was curious if youre seeing anything geographically so locations of the globe that maybe you are still having a greater challenge with the pandemic versus perhaps of the U S, which is progressing with the inoculations are you seeing any very.
And demand for gaming.
On that regard.
Well we are.
For sure I mean I.
I think it's more to do with sort of seasonal pattern, so far I mean.
The the towards the end of the quarter Europe started to slow down a little bit, but that's quite normal.
The U S, which is now sort of ahead of the curve I think in terms of reopening we haven't seen any slowdown so I think thats the the.
The C. Any data, we really have it in front of us that sort of hand, the and people can understand what's going on.
Where I led the people on the streets and restaurants everybody's out for the Bell.
And we don't we don't see any effects so.
So that's the only thing I can I can really point to it's still.
Too early.
To comment on Q2 activity I remember last year the.
Locked down the sort of went into effect late March early April.
When people are really starting to be stuck at home and they're going to be that for a while so it's really too early the social a lot of conclusions.
But so far on the results we've seen yeah.
No obvious.
No obvious country that suddenly changing direction.
Excellent and then Andy I wanted to ask you as a longtime participant in the gaming industry.
Your high level thoughts were on the epic games versus Apple Court Battle Yeah.
[laughter], well, let them well, let them fight that outlets.
It's a complicated question of of.
Of how games get distributed.
I'm not going to comment on the.
Alright, thank you.
Yeah.
Our next question is from Tim Nolan with Macquarie. Please proceed.
Hey, guys. Thanks, This is Sean on for Tim.
My question is on DTC could you give us an update on you mentioned the goal of about 15% of DTC revenue by 2023 could you tell us where that's at now and any trends youre seeing around that area. Thanks.
Yeah, well we have.
We were well north of 10% now.
This is the first thing across our portfolio of companies.
Almost every week.
The acquisition we've done.
Over the last year has been.
Mostly direct to consumer.
The business. So that's that's helpful.
And then our own business.
We've really doubled down on so we hired a pretty.
New dedicated team Q4 last year.
The Liberty coming up the speed pretty quickly we've added a lot of infrastructure.
To keep track of customers and the.
Upsell and cross sell.
So yeah that's.
That's what's happening so it's already at a pretty pretty good pace.
And so I think we've set that target I think.
Pretty reasonable probably get the full 2023, as we said but.
Anyway, Yes, that's where it's at now well north of 10%.
Got it thanks.
And our final question is from Doug <unk> with Cowen and company. Please proceed.
Alright. Thanks.
Can you maybe comment on how the game of since the acquisition is going you've had it now for several months.
And just wanted to know if that's progressing according to what you had hoped.
Oh, Yeah, I mean, it's still.
Still early days I mean, we've had.
A few months to get to get the team sort of the integrated and figure out what we're going to do I think we've mentioned in previous calls the the main thing we're doing the game of sense is to really look at the it's higher.
Coaching roster.
And look at all the pricing structures.
Change sort of change how it works. So when we bought game of sense of they were operating in more of like an open table structure, where they had a platform where gamers in the coaches could get together.
The coaches considering the prices were going to move to a slightly different model.
More like you say the health club.
You book the lessons to the Health club on the Health club sets the prices and then we will.
Going to drastically reduce the number of coaches.
Obviously, we've got access with our influence of network to a lot of really good.
Coaches safe.
Same thing with the sponsors teams we have so we'll upgrade coaches.
Free upgrade prices a little bit on then we will set the pricing is.
We've got a lot more adept ambitious plans of doing not just one on one training with doing.
Camps and loss of clauses and that sort of thing so it'll be of I.
I think the time, we get into the middle of the year it'll be quite a different business than it was when we meet all of them.
Great. Thank you.
Yeah.
We have reached the end of our question and answer session I would like to turn the conference back over to Andy for closing comments.
Alright, Thank you well we've stated this before.
We're at the forefront of of massively growing market centered around gaming E sports and streaming.
We can see a clear path.
The strong growth in revenue and margin over the next few years.
Obviously helps in 2020 by shelter at home by.
By giving game has more time to play games and learn about how better and improve the gameplay.
We're not seeing any signs of trends reversing of shelter at home subsides in different parts of the world.
In fact in the U S, where most shops pubs and restaurants for the open we have not noticed any significant drop in demand.
Other than normal seasonal patterns.
On the country, we continue to see demand exceed the ability supply of many of the product lines due to the worldwide shortages of key semiconductors.
We remain focused and committed to gift gaming streamers the tools they need to play the best game.
Just the best content and have fun doing it thank.
Thank you for your interest in Corsair, and thanks for joining us on the call today.
Yes.
Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.
Okay.
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Yes.
Okay.
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