Corsair Gaming, Inc.

Good afternoon and welcome to the Corsair Gaming 3rd Quarter 2023 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, Coursera'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 Coursera's Financial Results Conference Call for the third quarter ended September 30th, 2023. On the call today, we have Corsair CEO Andy Paul and CFO Michael Potter. Andy will review highlights from the quarter. Michael will then review the financials and their outlook. 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. 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 remark 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 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 earnings call. The key takeaways for Q3 are, first, we achieved strong revenue and profit growth with Q3 revenue growth of 16.5% and adjusted net income growth of 75.7% on a year-on-year basis. Second, we continue to drive gross margin expansion. We're seeing an uplift in ASP and margin from new products, along with a return to a healthier industry level and more normal promotional practices across the industry. Third, the full slate of major new titles being released continues to drive new demand from gamers for both our peripherals and systems. New popular releases like Starfield, Diablo 4, Baldur's Gate, and Cyberpunk serve as positive catalysts given the increased hardware requirements needed to run these games at maximum settings. Overall, we're pleased with our progress and the momentum we're building. Now, let me take a few minutes to expand on these points. First, our strong growth in Q3. While we're seeing that consumer markets in general are softer in 2023, we can see that gaming hardware, the spending is close to 2022, and far elevated compared to pre-pandemic periods. In fact, roughly 50% higher for both gaming peripherals and components compared to 2019. At this point, we are beating the market with growth, and that reflects the momentum we are getting from our new product launches. A recent survey from DFC Intelligence found that 84% of PC enthusiasts and gamers who built PC systems in 2020 within the high-speed segment plan to either build or buy new PCs over the next 24 months. This agrees with our observations. We believe that the pandemic added a significant number of gamers who started to spend on competitive hardware to enhance their gameplay. We believe that these new competitive gamers and hardware enthusiasts will continue to spend over the next decade. Secondly, we continue to drive gross margin expansion led by an uplift in ASP and margin from new products, a return to a healthier entry level and more normal promotional practices across the industry. Close margins this quarter were 24.6% compared to 23% in Q3 last year. Thirdly, we've been very active on the new product front over the past few months. We recently launched several new keyboards in our K70 line that use our own switches and also released high-performance wireless and wired headsets. Our new H80 Max headset features more radios to connect to more devices, and our new wired Virtuoso Pro open-back headset has been well-received for its excellent sound characteristics. And we recently brought to market our new PC controller, the SCUF Envision. This is a console-style controller with thumbsticks organized in a PS5 arrangement, but with significant enhancements designed for PC players. While many PC gamers like to use console controllers for certain games, they do not then have the same number of inputs available using a keyboard and mouse. With the Scuf Envision, we have added 11 additional inputs which are fully programmable. This is a game changer for PC gamers and we were sold out immediately on launch day. We're also very excited about the recent launch of our Elgato Marketplace. This marketplace allows our growing installed base of Stream Deck users to buy apps and plugins from not only our in-house creators, but from over 200 third-party programmers and creators who have partnered with us. We believe this will enrich the experience for Stream Deck users, which will in turn help to accelerate the unit sales and installed base of Stream Deck hardware. This also drives a completely new revenue stream for us. We also recently launched our Elgato teleprompter, which comes complete with a display and a two-way mirror, behind which you can mount either an Elgato face cam or any DLSR camera. This allows streamers or anyone doing a video call to maintain eye contact with people while looking at content or a script. Priced at $279, this product was also sold out in the first few days of launch. With regard to Q3 inventory, we have a healthy level of inventory in the channel at this point and feel good about our position entry to Q4. We expect all aspects of the gaming hardware market to resume growth again, on top of the elevated level of activity that we're now seeing compared to pre-pandemic. We will start to take our new drop products to the Corsair channel in 2024, and we expect that our new recent product launches will have a positive effect on market share in Q4 of this year, as well as in 2024. Let me now turn the call over to our CFO, Michael Potter, for details on the financials.