Corsair Gaming, Inc.

Good afternoon and welcome to the Corsair's Gaming Fourth Quarter and Full Year 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 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 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 afternoon, everyone, and thank you for joining us for Corsair's Financial Results Conference Call for the fourth quarter and full year ended December 31, 2023. On the call today, we have Corsair CEO Andy Paul and CFO Michael Potter. Andy will review highlights for the quarter. Michael will then review the financials and our 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. Our actual results may differ from the territory of our projections due to a number of risks and uncertainties. The risks and insurgencies set forward with these statements are subject to, are described in their earnings release and other SEC filings. Note that until our 10-K has been filed, these numbers are preliminary. 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 we issued after the market closed today. With that, I'll now turn the call over to Andy.

Thank you, Ronald, and welcome everyone to our earnings call. For the full year, we achieved solid revenue growth of 6% in a challenging economic market led by continued strength in our components business and a strong rebound in peripherals towards the end of the year. The first quarter of 2023 was lapping the end of the pandemic surge in Q1-22 and before people generally return to office work, making that a difficult comp. But during the last three quarters of 2023, we grew by 11%. As we noted in previous earnings calls, through much of 2023, our growth in peripherals was held back by heavy discounting from our competitors to clear up excess inventory. By the end of the year, we saw inventories back to normal, and in addition, we saw good consumer spending during the holiday period. This plus some good product launches from us allowed us to make much better progress in our gaming and creative peripherals segment, and we grew that segment in Q4 by 16% year on year. Financially, we bounced back well from 2022 with adjusted EBITDA doubling to $95 million, and we expect further gains in 2024. Some of this will come from increased revenue, but our margins are also steadily increasing as we continue to launch compelling products in our higher growth product categories. Some of our notable new high-performance products launched in 2023 include our latest PC controller, new feature-rich headsets, and multiple new Mycen keyboards. We also received a positive response to our first-of-its-kind Elgato teleprompter for content creators, 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 to make it easier for people to create broadcast content or do a video call. Another area we are very excited about is our expanding Stream Deck ecosystem. In addition to launching new models, including a co-branded limited edition model with Starfield, we launched a fast-growing application marketplace for our popular Stream Deck. This new marketplace allows our growing installed base of Stream Deck users to buy apps and plugins from both our in-house creators and from hundreds of third-party programmers and creators who have also partnered with us. This is doing better than expected and already 35% of the Stream Deck installed base have opened accounts on the Marketplace website. As we continue to gain a critical mass of applications, this will make our already popular Stream Deck a must-have item, driving new hardware sales, and will create a very meaningful new revenue stream from the applications. We have made several moves to increase our operational efficiency. During the year, we moved production of many of our SCUF controllers to our factory in Taiwan. This allowed us to close an expensive factory located in the UK. At the same time, we expanded our Atlanta facility where SCUF is headquartered, and we have added a warehouse and shipping hub there to support shipments to the East Coast. This year, we will move our origin production site, currently in Miami, to the new facility in Atlanta. Our Atlanta facility has also undergone an expansion to add capacity for production and warehousing, which provides us with the strategic opportunities to support Corsair's long-term growth. This follows the successful completion of our state-of-the-art facility in Taiwan, which is now in full production and capable of delivering personalized gaming peripherals in the same way they can do today on SCUF controllers. All these changes will give us a strong competitive advantage in the marketplace. Lastly, I am pleased to report our integration of our drop acquisition is largely complete and our teams have begun actively collaborating to leverage Corsair's global sales and distribution channel and to maximize new development opportunities. We expect drop to contribute more significantly to our overall revenue and profit growth moving forward. We've done about seven acquisitions over the years, so M&A is part of our growth strategy. We expect to be active in 2024 if the right opportunities exist, which is in line with our view that consolidation will continue to happen over the next few years. Looking forward to 2024, we expect that the gaming components and systems segment will be similar to last year since we are in mid-cycle for new GPUs, and the next big GPU launch and demand surge is likely to be 2025. For the gamer and creator peripheral segment, we expect significant growth, especially from new products that we recently launched and more that we're about to launch. In addition, we will be entering two new product categories in 2024, sim racing and mobile controllers. We expect the overall gaming market to now enter a new growth phase as we enter a refresh cycle from the surge of consumer spending that occurred during the shelter-at-home years. This plus our expected market share gains should allow us in the next few years to drive our revenue to over $2 billion with double-digit percentage EBITDA margins. Let me now turn the call over to our CFO, Michael Potter, for details on the financials. Michael, please go ahead.