Q2 2025 Corsair Gaming Inc Earnings Call

Greetings and welcome to course a gaming second quarter so 2025 earnings conference call.

At this time, all participants are in a listen-only mode.

A question and answer session will follow the formal presentation.

if anyone should require operator assistance during the conference, please press star and then zero on your telephone keypad,

As a reminder, this conference is being recorded.

I'd now like to turn the conference over to your host with the David. Pasquali was investor relations. Thank you. And you may proceed, sir.

Thank you, operator. Good afternoon, everyone, and thank you for joining us for corsair's financial results conference call for the second quarter and a June 30th 2025.

On the call today we have, of course, their CEO Tila and CFO Michael Potter.

T will review highlights from the quarter. Michael will then review the financials and our Outlook, we will then have time for any questions.

Additional information, including reconciliation between non-gaap financial information to the Gap. Financial information is provided in the press release. We issued after the market closed today,

With that, let me now turn the call over to corsair's CEO Tela. Please go ahead t.

Thank you, David, and thank you all for joining us today. Q2 2025 was a strong quarter for Corsair. We delivered 23% year-over-year revenue growth with total revenue of $320 million and EBITDA of $8.1 million, exceeding consensus expectations on both the top and bottom line. Gross profit increased 36% year-over-year with improved margin performance across our portfolio due to favorable mix, channel execution, and continued operational discipline. What stood out this quarter was the strength across both our gaming components and system segments, where we grew revenue 30% year-over-year, and our gamer and creator peripheral segment, where we grew revenue 9% year-over-year.

Supported by successful new product launches, and according to third-party analysts, Corsair gained market share in both the keyboard and headset categories.

We saw a meaningful increase in system upgrades and new builds driven by excitement around the launch of the latest powerful GPUs from Nvidia and AMD. This was coupled with the release of graphically intensive games like Doom: The Dark Ages and Elder Scrolls for Remastered, which required a high-performance graphics card and our Catalyst for PC enthusiasts to upgrade their hardware.

To get an enriched gameplay experience.

Spending was concentrated in components as expected, particularly power supplies, Cooling, and memory as Gamers, sought to leverage, new GPU capabilities, such as real-time rate tracing, AI rendering and generative, AI support.

We expect peripherals to follow this, upgrade cycle fueled by upcoming releases like Witcher 3 remaster Battlefield 6 and the highly anticipated GTA 6.

This multi-stage. Refresh cycle is well, aligned with our product roadmap across hardware and software.

Business, which continues to lead in the creative space.

Demand for our award-winning stream deck and popular video capture products remains strong, particularly with the rise of new content driven by the Nintendo Switch, set to launch late Q2.

We were also excited by the positive Market responds to our FaceCam 4K and the video capture 4ks, both of which launched at the perfect time to deliver pro-grade 4K 60 video resolution at a more accessible price point and better availability.

We believe these Solutions will expand our leadership position.

Another Q2 highlights was our presence at computex 2025, where we showcased several next-gen Technologies and earned multiple Awards 1 of the most exciting was the launch of our virtual stream deck. Integration embedded, into our simar Elite gaming mouse and the Zenon etched companion display.

Feature allows user to display a fully interactive software stream deck directly on the user's monitor enabling instant access to near unlimited powerful shortcuts for gamers and creators.

You can expect to see more cross-brand text Synergy in upcoming launches to demonstrate the strength of our ecosystem. As we focused on leveraging, our IP and platforms to add value for customers and accelerate Revenue growth.

In the gaming category, we introduced the maker 75 DIY keyboard family, which combines custom-built flexibility with gaming, great performance.

Integrated with the course their web app for seamless online personalization maker 75 was honored with both a red dot best of the best. And if design award

On the system side we announced the launch of our origin, PC AI workstation. 300 a compact 4.4 L system powered by AMD. Ryzen AI Max 300 series.

This product is designed for quite efficiency. Supports local llms creative workloads. And AI development straight out from the box.

Small. But powerful platform expands our reach into AI native applications and offers professionals creators and developers a compelling. New productivity solution.

We expect AI to be a major long-term Catalyst across every aspect of our business, from both our own operation, efficiency to all of our product categories.

We are taking a thoughtful approach and integrating functionality where it is most compelling for our consumers.

We also began ramping distribution of the desirable fanatic branded Sim Racing Products in late Q2 through our strategic Channel partners,

Response was very encouraging and positional as well, in 1 of the fastest growing categories.

Finally, I want to touch on tariffs.

We continue to operate with flexibility across our supply chain, and we have successfully minimized impact to date. That said, depending on how the semiconductor tariffs ultimately plays out, we may need to consider pricing adjustment to protect margins.

Our goal remains The Shield, our customers as much as possible, while staying Nimble, and efficient.

Overall I'm proud of how our teams executed this quarter. We saw strength in core demand drove margin improvements and advanced our Innovation workmen up across Hardware.

Software and AI.

Looking ahead as the new CEO. My focus is Center on 3. Strategic priorities. First, we are accelerating our new product Innovation. Cadence to ensure we deliver high impact products for our customers.

Second, we will continue to focus on margin expansion drive, more business efficiency and expand synergies from our m&a, portfolio.

Third. We're focused on channel expansion particularly in underserved markets like Asia and Latin America, where our recent Investments are beginning to deliver strong returns year on year.

We are also seeing continual momentum in our direct to Consumer business and will scale that model to strengthen our customer engagement and margin performance.

With that, I will now turn it over to Michael to walk through the financials.

Despite external headwinds, we are focused on executing to our business strategy, growing revenue and increasing profitability. As we leverage our portfolio of leadership Brands, we are confident in our business fundamentals and remain firmly on track for continued growth. This year, with a healthy balance sheet to support our growth strategy. In terms of the specifics, Q2 2025 net, revenue increased, 23% to 320 million compared to 261.3 million in Q2. 20224 for the first 6 months of 2025 net revenue, increased 15.3% to 689.9 million from 598.6 million the year ago period.

European markets contributed 33.9% of our Q2 2025 revenues compared to 37.2% in q1, 2025 while the APAC region was 13.5% of our Q2 2025 revenues compared to 11.3% in q1, 2025.

Turning now to our segments.

The gamer and creative peripheral segment. Contributed 102.6 million of net revenue during the second quarter compared to 94.2 million in Q2. 20224 for the first 6 months of 2025 gamer and Creator peripheral segment, Revenue increased to 214.6 million compared to 200

1.2 million for the first 6 months of 2024.

The gaming components and system segments, contributed 217.5 million of net revenue. During the second quarter from 167.1 million in Q2 2024 memory products. Contributed 105 million in Q2 2025 compared to 81.824% of 2025 gaming and system. Segment Revenue increased to 475.2 million from 397.4 million in the first 6 months of 2024 with the revenue from memory products increasing to 246.1 million from 206.7 million.

Overall, the gross profit in the second quarter, increased 36.1% to 85.9 million compared to 63.124% and increased contribution from higher growth products and channels. Gross margin increased 270 basis points to 26.8% compared to 24.1% in Q2, 20224 overall growth profit increased to 188.2 million for the first 6 months of 2025 compared to 149.7 million in the first 6 months of 201.

24 gross profit in the gamer and Creator peripheral segment. Increased to 41.1 million compared to 35.7 million in Q2, 2024 gross, margin increased to 40% compared to 37.9% in Q2 2024.

The gaming components and systems segment grew, with profit increasing to $44.8 million compared to $27.4 million. In Q2 2025, our gross margin increased to 20.6%, compared to 16.4% in Q2 2024. Our memory products gross margins in this segment were 15.6% for the second quarter compared to 11.5% in Q2 2024.

Second quarter sg&a. Expenses were 85.3 million compared to 70.4 million in Q2 202244 in support of our higher Revenue.

Second quarter R&D expenses for 17.5 million, compared to 17.4 million in Q2. 20224 this reflects our continued investments in support of our expanded product line and new areas including Sim racing and product. Customization, we remain committed to controlling operating expenses. While supporting the company's long-term growth opportunities Gap. Operating loss improved to 16.9 million in the second quarter of 2025 compared to a gap. Operating loss of 24

.7 million in Q2 2024.

In the second quarter, the net loss attributable to common shareholders was $17 million, or $0.16 per diluted share, compared to a net loss of $29.6 million, or $0.28 per diluted share, in Q2 2024.

On an adjusted basis second quarter. Net income was 1.3 million or 1 cents per diluted share compared to an adjusted, net loss of 6.8 million or 7 cents per share in Q2 2024.

For the first 6 months of 2025 adjusted, net income was 13.6 million or 13 cents per diluted share compared to 2.7 million or 3 cents per share in the first 6 months of 2024.

Finally, second quarter, adjusted ibida was 8.1 million compared to a loss of 1.2 million for Q2, 20224, for the first 6 months of 2025 adjusted ibida increased.

83.4% to $30.8 million compared to $16.8 million a year ago. Period.

turning now, to our balance sheet,

We ended Q2 with a cash balance, including restricted cash of 107.5 million. We made an additional 24 million term loan repayment in Q2 and proactively refinanced. Our existing revolving and Term Loan credit facility ahead of schedule on favorable terms and conditions.

Overall, we continue to maintain a healthy balance sheet with sufficient cash to fund. The development of our expanding product portfolio. On growth plan, we ended Q2 with 125 million of debt at face value and our $100 million, working capital revolver remains undrawn and fully available.

Since just before our IPO almost 5 years ago to today we have reduced debt from approximately 550 million to the current 125 million face value. This is resulted in lower interest expense, and greater capacity to enter into a strategic transaction if needed.

We will continue to focus on growth as the main use of cash and we'll ALS maintain a buffer to be used as a resource while we navigate through the new tariffs. We also expect to continue to reduce debt over time.

So far we have focused on preserving gross profit for existing products while we were pursued. Our mitigation efforts we believe that we've mitigated or well mitigated the new country specific tariffs through these efforts. New products are being targeted at recovering to existing gross margin levels when they're released overall. The scope and structure of the expected semiconductor tariffs is not known yet. We have

Plan for the most likely scenarios and under those are mitigation would take several quarters. Once we know what these will be, we expect to update guidance in our normal quarterly, Cadence.

In terms of the full year, 2025 corsair's reaffirming the net revenue Outlook issued on February 12th, 2025 for net revenue to be in the range of 1.4 billion to 1.6 billion for the 4 year 2025, we intend to provide an updated adjusted, operating income and adjusted ibidi Outlook. Later this year, if macro factors, including the developments in global trade policy, such as implementation of additional potential countries, specific and sectoral, tariffs afford US a greater visibility on our operating results. We are mitigating additional tariff impacts, but there is a lag between the imposition of them and the results of our actions. So there will be a short-term impact as new tariffs are set.

With that. We're happy to open the call for questions. Operator, will you please open the call for Q&A?

Thank you very much.

At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star and then 1 on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star Keys. 1 moment, please while we while we pause for questions.

The first question comes from Aaron Lee from McQuarrie please proceed with your questions. Aaron.

Hey, good afternoon. Thanks for taking my question.

Um I guess maybe to start on fitech. Sounds like you're seeing really good progress there and you noted the strong sell through.

I guess. Can you just talk about what the next steps? Are that you're looking towards to continue that momentum?

Um, hi Aaron. How are you doing?

Thank you for joining us today.

with regards to Saint attack, we

and that was done uh, from a uh, an e-commerce perspective as well as the um

Uh supply chain. So we extract quite a bit of saving coming from that fund. Uh, the second phase was to extend the distribution to uh, limited Channel partners.

With regards to, uh, you know, products that we cannot reach consumers today in certain region. Now, the third step is to step up on road map and releasing new products and you will start to see some of the new products coming out toward Q4 of this year. We're very excited about that and then, um, continue to build up, availability. Um, and also, uh, there are some mitigation From aeric perspective that we can still do. Um, so that's going to be next uh, from the standpoint of expansion.

Got it. Thank you. And then maybe just a clarification on tariffs.

I just want to confirm does all your commentary in the press release, include the tariffs that went into effect today.

And then with regard to the big beautiful Bill, do you expect any benefits or impact from that? Thank you.

So um no terrorists. Um today if you mean the new ones that were talked about for the country specific terrorists that were announced a few days ago and went into effect today. Yes.

So because there's always news about tariffs or at least sound bites about terrorists every day. So the country specific ones. Yes, we've included that in, in our our discussions

The 1, big beautiful, bill. Um, there's some small tax benefits that will come to us. Um, other than that, nothing in particular, the that'll make a difference. Yeah.

What's not in it? Is that some

play out.

Okay, gotcha. Thank you.

Thank you.

Thank the question, please press star. And then 1, if you'd like to ask a question, please press star. And then 1, we will post to see if we have any further questions.

Thank you everyone for

There are no further questions. Um, I'd now like to hand the call back to Corsair's CEO, Thi La. Thank you.

Thank you everyone for joining us on the call today and for your continued support. If you have any follow-up questions, please contact our investor relations department. We look forward to updating you next quarter and thank you and have a good evening.

Thank you very much, ladies and gentlemen, that does conclude today's call. You may now disconnect your lines.