Corsair Gaming, Inc.

Good morning and welcome to the Coursera Gaming second quarter 2021 earnings conference call. As a reminder, today's call is being recorded and your participation implies consent to such recording. At this time, all participants are in 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 now like to turn the call over to Ronald Van Veen, 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 Cockpit Scroll for the second quarter ending June 30, 2021. On the call today, we have Corsair CEO Andy Paul, CFO Michael Potter. Before we begin, allow me to provide a 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 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 findings. 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 Q2 2021 numbers are preliminary. This conference call will be available for replay via webcast through the Corsair's investor relations website at ir.corsair.com. Andy will begin with our second quarter business highlights. And Michael will then take you through a review of the financials before we proceed to Q&A. With that, I'll now turn the call over to Andy.

Thank you, Ronald, and welcome to our Q2 21 earnings call. Well, overall, I'm very pleased with our Q2 performance, where we delivered net revenue growth of 24% to $473 million today. as well as 24% gross profit growth to $130 million, which is our best second quarter ever. Our results highlight the strength of the underlying fundamentals of our business as gamers continue to purchase and upgrade their gear, even as entertainment outside of the home and travel began to open back up. We experience growth in every category, despite key component shortages in the market, such as graphics cards for enthusiastable gaming PCs, as well as semiconductor shortages, logistics issues, and port delays. We are now at a $2 billion run rate compared to our 2019 revenue of $1.1 billion, which speaks to the strong momentum in our business. We therefore are continuing to expand our resources and invest heavily in R&D, marketing, and infrastructure. We're extremely excited by the recent launch of our first camera, which has received an overwhelmingly positive response from the creator community. We've launched over 75 new products so far this year, which is just an astounding pace of innovation. Our new Elgato camera, called FaceCam, is designed specifically for streamers and content creators and outputs uncompressed 1080p video at 60 frames a second, which is, of course, significantly higher quality than a standard webcam. It has many features similar to a DLSR camera with software that controls contrast, white balance, zoom, et cetera. And all those settings can be stored in the camera, again, unlike a standard webcam. FaceCam also features a multi-layer coated lens and a high-end Sony camera. We also introduced our 7000 series full tower case, which allows for multiple radiators so that an ultimate gaming PC can be built for maximum performance. And the Virtuoso RGB XT, our new flagship gaming headset, offering incredible sound and impeccable clarity now includes Bluetooth as well as our proprietary Slipstream low-latency wireless connection. NPD data continues to show year-over-year growth in the gaming peripherals market with recent data showing keyboard and mice growing faster than headsets. We believe this is further evidence to support our conviction that as gamers spend more time playing games and improving their skills, they will want to upgrade to better gear that is designed specifically for gaming. We continue to observe that the market for gaming gear is at an early stage of evolution. The average annual growth pre-COVID for PC gaming peripherals have been running at about 24% per year in the US and a similar rate in Western Europe, where we're able to collect detailed market data. Now, in 2020, with lockdown, this increased to approximately 80%. These growth numbers are substantially higher than either the increase in new gamers to the market or the rate of growth in video game software. So what we believe is happening is that after people learn to play PC games for a while and get good at them, they start to want better specialized gaming gear. And because the market is still at an early stage and the penetration is so low, that's why we are seeing such high growth rates in gaming hardware due to the low base. If we look at gaming headsets, which is the most widely purchased peripheral, then only 20% of gamers playing premium games in the U.S., have bought those in the last three years, which is roughly the refresh cycle, with the other 80% yet to come to the market. So our belief is that the situation in 2020 and early 21, where gamers clearly spent more time in their homes learning to play games better, that should establish a higher base of consumers ready to step up and upgrade their gaming setup, which includes peripherals as well as gaming PCs. Headsets tend to be the first peripheral that gamers buy to make the game more immersive, but as skill improves, the next purchase tends to be high-performance gaming mice and keyboards. The market for gaming PCs and laptops in the last 12 months has been phenomenal, one of the fastest growing consumer electronics categories, according to NPD. High-end graphics cards were very difficult to buy in the last six months, And we believe there is a large number of gaming enthusiasts who are in the wings waiting to build a new PC on top of the elevated numbers of people that actually did build a new gaming rig. In creator peripherals, we continue to be the market leader in video capture cards and lighting. Our Wave microphone, which we launched last year, has gained significant market share quickly. Our Stream Deck has now become the standard for home broadcasting, and we now have several apps from third parties that can use Stream Deck. Turning now to our outlook for the year, the guidance for the fall year of 2021 remains unchanged from Q1, with total revenue in the range of $1.9 billion to $2.1 billion, representing growth of 11.6% to 23.4%, adjusted operating income in the range of $235 to $255 million, and adjusted EBITDA in the range of $245 to $265 million. 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.