Corsair Gaming, Inc.

Good afternoon and welcome to the Corsair Gaming first quarter 2022 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 you would like to enter the question queue, please press star 1 on your cell phone keypad. 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 Ronald Van Veen, Coursera's Vice President of Finance and Investor Relations. Thank you, sir. Please begin. Thank you.

Good afternoon, everyone. Thank you for joining us for Coursera's Financial Results Conference Call for the first quarter ending March 31st, 2022. On the call today, we have our CEO, Andy Cole, and CFO Michael Potter. Andy will review highlights from the first quarter and the business environment. Michael will then review the financials and our outlook, and we will then have time for any questions. 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 filings. Today's remarks will also include reference 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 be issued after the market close today. With that, I'll now turn the call over to Andy.

Thank you, Ronald, and welcome everyone to our Q1 2022 earnings call. While we faced headwinds in Q1 with inflation, the continued Russia and Ukraine conflict, and high freight costs, we continue to see positive underlying growth trends in the gaming hardware sector. During Q1, GPU cards, which are the most expensive item in a gaming PC, were still at a high premium, roughly 150% of MSRP. And even with this premium, we saw gaming PC build activity slightly higher than pre-pandemic and pre-GPU shortage levels. Our component segment grew by 6% in Q1 22 compared with Q1 20, the last Q1 before the pandemic and shelter at home. The surge of activity that we saw during the shelter-at-home period does not appear to have caused a large pull forward in builds, more so an entrance of new gamers building for the first time. We expect the GPU cards will be back to MSRP in the next few weeks, perhaps discounted below MSRP. We expect that with GPUs becoming available and reasonably priced, we will see a surge of activity in second half of 22 and 2023. We see a similar positive trend with peripherals. While the market appears to be generally down some 15% to 25% compared to last year's peak, it is still substantially above pre-pandemic levels. Our peripheral segment grew 77% from Q1 2020 to Q1 2022, and as we outlined in our Investor Day presentations, we think that the peripheral market will continue to drive 20% to 25% annual growth. We also believe that with our ever-expanding IQ control software and innovative new products pipeline, we will continue to take market share. Having said that, our Q1 2022 revenue was lower than expected. We are seeing the effects of inflation now, particularly in Europe, which coupled with the Russia-Ukraine war has dampened consumer demand. This in turn has caused channel inventory to be higher than optimal, and we are working through that adjustment. It's important to note that we don't think inflation will affect the committed gamers who want to constantly upgrade their gaming setups. We certainly expect that inflation will affect casual or impulse buying at the entry level, but that is not a huge part of our business since we cater mostly to the committed gamer sector. We are therefore reducing our revenue outlook for the year to between $1.6 and $1.8 billion, Michael will go through a complete outlook in more detail later on. Many of our product lines showed great progress in Q1. We saw compelling growth in our Stream Deck products, our systems group, and our SCUF controllers. The Stream Deck is a central control center for the creators and streamers. Some of the underlying hardware technology behind Stream Deck comes from a company in Taiwan called iDisplay. which we acquired a 51% share of in January of this year. And this will allow a much closer working relationship between our companies and accelerate our roadmap around products using their displays. Our systems group, which comprises of gaming platforms like Corsair One, Corsair Vengeance, and our origin division of custom gaming PCs, did very well over the last 12 months. And we see that sector as a growing opportunity since while the bulk of our business is targeted towards gamers who want to build their own PCs, there are many people who do not have the time or skill to do that. And within our systems group, we have very skilled custom PC builders who are expert at building amazing gaming PCs. We launched our new PS5 SCUF controller late last year. And ever since then, the demand has been phenomenal, causing us to be sold out repeatedly. With our ever-expanding IQ control software, and innovative new products pipeline, we will continue to take market share. In Q1, we made further gains in market share for our components and memory categories, and we continue to hold the number one spot in every major category. Our Elgato line of creative products continues to do well, and we are making good progress in our new categories, cameras and microphones. We believe that our extensive software suite for Elgato products is one of the key reasons that creators are enjoying our new products. While talking about innovation, I would like to touch on a few products we have introduced in the past few months. First, the MP600 Pro LPX solid state drive. This is a high performance storage expansion product designed for the PlayStation 5, which adds to our product portfolio in addressing the console market. Second, our Corsair IQ5000T RGB case. This is a high airflow case with three RGB cooling fans and lighting strips controlled by a pre-installed IQ controller. This is a perfect platform for building an amazing RGB system using the latest high-powered GPUs and CPUs. Finally, during the quarter, we launched our latest capture card, the HD60X. This card supports VRR, which stands for Variable Rate Refresh, a new feature that is built into both the PS5 and the Xbox Series X. It also supports 1440p at 60 frames per second, as well as 1080p at 60 frames per second. I'll now turn the call over to Michael to discuss our financial results for the quarter.