Corsair Gaming, Inc.

Good afternoon and welcome to the Corsair Gaming's fourth 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 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 star zero on your telephone keypad. With that, I would now like to turn the call over to Mr. Ronald Van Veen, Corsair's Vice President of Finance and Investor Relations. Thank you, sir. Please begin.

Thank you. Good afternoon, everyone, and thank you for joining us for Corsair's Financial Results Conference Call for the fourth quarter ending December 31st, 2021. On the call today, we have our CEO, Annie Paul, and CFO, Michael Pollard. 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 files. 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 10-K is on file, the Q4 2021 numbers are preliminary. This conference call will be available for replay via webcast through Corsair's Investor Relations website at ir.corsair.com. And we'll begin with our fourth quarter business highlights and a discussion on what we're seeing in the markets And Michael will then take you through a review of the financials and our outlook before we proceed to Q&A. With that, I'll now turn the call over to Andy.

Thank you, Ronald, and welcome everyone to our Q4 2021 earnings call. We're pleased to report that for the fourth quarter, revenues were $510.6 million at the high end of our guidance, resulting in a record $1.9 billion for 2021. 11.8% growth over 2020. Gross profit for the quarter came in at 121.8 million and a record 513.9 million for the year. We accomplished this as the world started to move towards a post-pandemic environment, and by the second half of 21, outside entertainment had mostly opened back up and shelter-at-home guidelines had generally been relaxed. Throughout 2021 and continuing today, We continue to be in a challenging supply chain environment. And based on feedback from our customers, we believe that the market for self-built gaming PCs continues to be constrained by the shortage of high-performance graphics cards. Michael will walk through more of our financial results in greater detail later in our call and address some of the questions we received at our investor day related to 2021 and short-term business conditions, which we were unable to address at the time. It was our first ever investor day as a public company, and we received quite a bit of positive feedback. If you've not yet had a chance to listen to the recording, I'd encourage you to do so. I'll now take a moment to recap some of the highlights of our investor day. We outlined three pillars of our growth strategy, which I'll quickly repeat now. Firstly, the gaming and creator market continues to grow quickly. and gaming hardware is growing much faster than gaming software revenue as consumers start to become more competitive and want to buy better PCs and peripherals. The creator market is exploding as video interaction becomes the norm. Secondly, we continue to take market share in most categories. This was highlighted by the fact that in the markets we track from external sources, we have number one market share in almost every category of components that we sell, that allow gamers to build high-performance gaming PCs. And we're in the top three in almost every peripheral category. Thirdly, that we continue to enter new categories by both organic development and by acquisitions. And in the last 18 months, we have entered three large new markets, microphones and cameras for content creators, and monitors for both gamers and content creators. We also showed our internal goals of reaching $3.5 billion of revenue by 2026. During 2021, we launched 141 new products, and we have increased our number of product lines to 30. We have several examples of how new products and innovative marketing is helping us grow our direct-to-consumer business. In November, we kicked off our Corsair Collections product line with the Flavor Rush series of our K65 RGB 60% mechanical gaming keyboard. This was a fun, colorful, custom, and limited release, providing unique and deeper personalization for our most engaged customers. The 60% keyboard has been quite a success in the market since we released it early last year, and the Corsair collections are exclusive to our Corsair web store in North America. In December, we introduced our long-awaited PlayStation 5 controllers, the Scuf Reflex series. With price points ranging from $199 to $259, the Reflex, Reflex Pro, and Reflex FPS use our patented remappable paddles, and these adjustable controls give players the edge in most competitive games. The customer demand was simply incredible, and we saw our initial launch stock sell out in minutes. The Reflex series of controllers are currently available exclusively on our SCUF website. And in our overall retail channel, we launched our new line of DDR5 memory products, as well as gaming systems using DDR5. DDR5 is the latest technology standard for DRAM, and we are currently shipping kits with speeds up to 6400 megahertz. Both Intel and AMD are supporting this interface on the latest processors, which helps dramatically improve system performance. Overall, demand has remained strong for gaming components and gaming peripherals. In fact, recent market data shows consumer demand for peripherals at close to the elevated 2020 work from home levels. As I mentioned before, the semiconductor shortage has caused graphics cards to be in very short supply compared to demand. and has driven market pricing of certain graphics cards to 150 to 200% of normal MSRP. This has caused gaming enthusiasts to hold back on building new high-end gaming PCs that use our components. By our estimate, approximately 10% of the natural demand for our components and memory products in our gaming components segment was held back in 2021. We believe this should cause a bubble of pent-up demand, which will be released as GPUs return to normal numbers RP in 2022. So in closing, after the extraordinary growth in 2020 caused by gamers spending more time at home gaming and the large growth in the creator economy, we're pleased to see that after lockdowns and shelter at home were lifted, our Q4 21 net revenues were within about 8% of Q4 20. Despite the ongoing logistical and supply chain challenges impacting markets, including the lack of availability of reasonably priced GPUs in the retail channel, we experienced healthy growth over 2020 in both our operating segments. Our gaming and creative peripherals segment grew 20% year over year, demonstrating the underlying secular growth trends in the overall gaming, esports, content creator, and streaming hardware and services market. We remain focused on expanding our presence in the market and are well positioned to continue to gain market share. We remain pleased with our fiscal year 21 results and the positive momentum we have retained in the overall business in 2022, which provides us confidence in achieving our full year and longer term outlook. We have an exciting growth potential and plenty of market share to capture. 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.