Corsair Gaming, Inc.

Good morning and welcome to Corsair Gaming first quarter 2021 earnings conference call. As a reminder, today's call is being recorded and your participation applies cassette 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 pound zero on your telephone keypad. With that, I would like to turn the call over to Ronald VanVeer, Corsair's Vice President of Finance and Investor Relations. Thank you, sir. Please begin.

Thank you. Good morning, everyone, and thank you for joining us for Corsair's Financial Results Conference Call for the first quarter ending March 31st, 2021. On the call today, we have our CEO, Andy Paul, and CFO, Michael Potter. Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This call is 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 results may differ materially from our projections due to a number of risks and uncertainties. The risks and uncertainties that forward-looking statements are subject to are described in our earnings release and other SEC filings. Today's remarks will also include references to non-GAAP financial measures. 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 10Q is on file, the Q1 2021 numbers are preliminary. This conference call will be available for replay via webcast through Corsair's Investor Relations website at ir.corsair.com. Andy will begin with our first quarter business highlights and our updated 2021 outlook. And Michael will then take you through a review of the financials before we proceed to Q&A. With that, I'll now turn it over to call to Andy.

Thanks, Ronald, and welcome to our Q1 2021 earnings call. Well, we are delighted with our Q1 results, which exceeded our expectations as we continue to see elevated levels of gaming activity, and the conversion of casual gamers to committed gamers who spend money on new gear. During Q1, we delivered net revenue growth of 71.6% to $529.4 million, which is our second strongest quarterly performance, surpassed only by our record Q4 2020. Adjusted EBITDA nearly tripled, growing 196.6% to a record $80.4 million, and adjusted earnings of 58 cents per diluted share, which was up from 45 cents per share over Q1 2020. We saw continued growth on buying and building $2,000-plus gaming PCs, which we believe indicate expected heavy PC game playing over the next few years. and subsequent accessory purchases. Q1 had some advantageous shipment mixes of high margin products, leading to record high gross margins in both our segments, 39.1% on gaming segment and 25.9% in our component segment. While we are pleased to see evidence that we can achieve these levels, we caution not to expect these margins in every subsequent quarter. However, it certainly underscores our strong conviction that margins will increase over time as we continue to bring out high feature products and become more dominant in the market. We're also very pleased to see that in Q1, we were the number one market share position in every gaming components category that NVD monitors in the US, which is our largest market. We saw massive growth year over year in both of our financial segments. But most notably in gaming and creator peripherals where the market continues to grow strongly and our Elgato branded streaming products continue to outgrow the overall segment. The gamer and creator peripheral segment has more than doubled in revenue from Q1 2020 and nearly tripled from Q1 2019. In creative peripherals, we continue to be the market leader in video capture cards and lighting. Our Wave microphone, launched last year, has gained significant market share very quickly. Our Stream Deck has now become the standard for home broadcasting and sales over the last three quarters has exploded. On gaming peripherals, we launched several new keyboards and mice. with the most notable being our new 60% keyboard, the K65, which has been sold out ever since we launched it in March. For gaming systems and components, we continue to gain share in almost every category. Our new 4,000 and 5,000 series of gaming PC cases have helped us drive up market share in the US to 28%, a 9% lead over our nearest competitor. Over 40% of our gaming case sales are now smart cases, meaning that they are shipped with an IQ controller installed. This further drives sales of IQ RGB accessories as gamers continue to upgrade and modify their gaming PCs. Our Corsair One A200 with liquid-cooled Ryzen CPU and RTX 3080 graphics card received an editor's award from Tom's Hardware. In our gaming memory subsegment, we also have over 30% of our shipments which are IQ-enabled, again, which we believe drives additional IQ accessory purchases. We had record sales of pre-built systems from both Origin PC as well as our Corsair Vengeance PCs. We're also thrilled to start shipping our enhanced Corsair One gaming PC with 30 series Nvidia GPU cards and offered with both Intel and AMD CPUs. We increased our pace of new products launched to almost two per week in Q1. We launched 29 new products, including five power supplies, eight case and related cooling products, three Elgato Studio accessory products, four new keyboards, four new mice and mousepads, three high-speed solid-state drives, and two pre-built PC models. We will continue to expand in R&D and marketing to drive and execute on our roadmap. R&D was up over 31% over Q1 2020, and we expect that growth will continue at a higher pace for the rest of the year. We'll continue to invest at a similar pace in product marketing, and you should expect us to continue to launch new high-performance products at a blistering pace and use these products to gain market share. During the quarter, we announced the acquisition of Visuals by Impulse, the world's premium design platform for creators. provides professional and individualized designs for creators and streamers who use VBI overlays, alerts, and widgets to customize their broadcasts, help define their online persona, and grow their fan bases. Based on our strong Q1 results and positive outlook for gaming gear demand, we are raising our guidance for the fall year of 2021. Total revenue in the range of $1.9 billion to $2.1 billion, representing growth of 11.6% to 23.4%, up from prior guidance of $1.8 to $1.95 billion. Adjusted operating income in the range of $235 million to $255 million, and adjusted EBITDA in the range of $245 to $265 million. As discussed before, we'll 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.