Corsair Gaming, Inc.

Good afternoon and welcome to Corsair Gaming's third quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's prepared remarks, we will conduct a question and answer session. To ask a question at that time, please press star 1 on your telephone keypad. I would now like to turn the call over to David Pasquale with Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and thank you for joining us today. With me on the call are Thi La, our Chief Executive Officer, and Gordon Mattingly, our Chief Financial Officer. Before we begin, I'd like to remind you that today's discussion contains forward-looking statements, including but not limited to our guidance for the fourth quarter and full year 2026, potential future growth in certain product categories, and other statements that are not historical in nature, are predictive in nature, or depend upon or refer to future events or conditions. These four looking statements are based on our current assumptions and expectations. Actual results could differ materially. Please refer to the risk factors in our most recent annual report on Form 10-K filed with the SEC, our subsequent SEC filings, and today's earnings press release for a full discussion of the factors that could cause our actual results to differ. We undertake no obligation to update these forward-looking statements. Additionally, we will discuss certain non-GAAP financial measures today. Definitions and reconciliations to the most comparable GAAP measures are included in our earnings press release and the investor presentation posted to our investor relations website at ir.corsair.com. With that, I'd like to now turn the call over to Corsair's CEO Thi La. Thi, please go ahead.

Thank you, David, and good afternoon, everyone. We delivered third quarter results above the high end of our guidance in a dynamic market. Revenue was $367 million, up 6% from a year ago. Operating expenses increased by less than $1 million year over year, including the recently acquired track racer, and decreased slightly excluding it. That discipline, along with our diversified portfolio, helped adjust EBITDA growth 38% to $22.4 million. Non-GAAP earnings per share was $0.13, more than double the $0.06 a year ago. Memory left the quarter while pre-built systems grew in every category. Together, they more than offset continued industry-wide weakness in DIY components. We also maintain a disciplined approach to managing our balance sheet. We ended the quarter with $136.2 million in cash and restricted cash, which is nearly double the year-ago cash balance. That is after funding the Track Racer acquisition and partnership investments, and strategically building inventory to support expected holiday season demand. Let me now give you color on our segments. I will start with the gaming components and system segment. where revenue grew 7% led by memory. Memory revenue was a record for a third quarter at $167.3 million, up 43% year-over-year. Demand was strong, prices were higher, and we gained market share sequentially. Our supply chain execution made that possible. It reflects our operational know-how and the strength of our product portfolio. During the quarter, we built memory inventory by 37 million. We did that deliberately to be well positioned for the demand we expect in the fourth quarter. We feel good about our inventory position heading into the holiday season. Moving on to pre-built systems, we benefited from growth across all categories. Pursuers are upgrading their platforms. They want to run more advanced games and AI compute. DIY components remain soft. Higher memory prices continue to delay builds. We believe that demand is deferred, not lost. AI workstations under Corsair Pro family continue to gain momentum since their introduction in the second half of last year. These customers want local computing, protection of their data, and lower cloud token consumption. The enhanced security and Lower token consumption costs of local computing are a big focus for businesses of all sizes. We expect these capitalists to help drive Corsair demand as we move forward. To calibrate expectations, please note that the business is still in its early phase and is dealing with market-wide CPU, GPU, and memory shortages. We expect a more meaningful revenue contribution in the latter part of 2027 and beyond when semiconductor availability normalizes. Now turning to gamer and creator peripherals segment. Revenue grew 3% to $116.5 million. Growth in the quarter was affected by timing. Several new product launches moved from the third quarter into the beginning of the fourth. Logistics delays and the hub transition also led to a higher than planned backlog at quarter end. Those products are now arriving. Our hub transition is completed and we enter the fourth quarter with a healthy backlog. Accordingly, we expect double-digit growth in peripherals in the fourth quarter. Momentum also built ahead of the upcoming GTA 6 launch. We are seeing console gaming hardware demand reflected in sales of both SCUF controllers and Elgato products. We expect more than that to the holiday season based on pent-up demand for the evergreen GTA franchise. The SCUF Omega licensed controller also gives us broader premium offering for PlayStation 5. With Fanatec and Track Racer, we can now outfit a sim racer's complete setup. Fanatec supplies the electronics, Track Racer adds cockpits, seats and accessories, and we expect to begin seeing the benefit of integration in Q4. Both of our brands have direct-to-consumer businesses, which will help us access even more sim drivers. At October's Sim Racing Expo, Fanatec and Track Racer showed their products together and customers responded well. Fanatec launched Podium Pedal Sport, which brings premium pedal technology to a wider group of racers, Track Racer also shows its sim motorbike, which we expect to ship in the first quarter of 2027. It is a new category for us. It opens another popular sim sport to esports enthusiasts and gives our customers a new way to race. We were also very active on new product introductions, which we expect will drive growth over the coming quarters. We launched Pure Vector in our Sabre V3 Pro mice in October. This is a very exciting technology with a lot of potential. Developed with our partner Aimlabs on a patented algorithm and billions of proprietary data points, PureVector personalizes mouse sensitivity to each player's own biomechanics. In testing, it improved accuracy and aim speed by up to 33%. Pro players are already putting it to the test. Raptor of BNK FearX recently played on Pure Vector at the Demacia Cup Global Invitational. His team went on to win the event, and Raptor was also named MVP. Elgato separately entered mobile streaming and recording in October with the introduction of WaveGo. It's our first noise-canceling wireless microphone, and it converts between clip-on and handheld use. So creators get Elgato audio quality away from their desk. Social apps and short form video have made remote recording the default for a growing share of creators. WaveGo gives us a strong product to win share in this important growth market. Reflecting our momentum, Elgato Marketplace added more than 1 million new accounts year over year. New hardware launches brought many of those users in. and the wider Corsair ecosystem is pulling more of them onto the platform. Makers in our community are also using AI tools to ship digital products at an accelerating pace. This is the important flywheel model we have discussed in prior quarters and demonstrates both our progress and long-term potential for Corsair. We are also continuing to connect capabilities across our brands. You will recall we outlined this as a priority a few quarters back and we continue to execute on this initiative. In September, we launched Boxera. It pairs a premium Corsair USB RGB gaming microphone with Elgato's Wavelink software. This is a visually stunning device with high fidelity performance to match. Corsair's gamers get more control over their audio and Elgato's software reaches a wider audience. Looking ahead, Given the strong demand and capitalists I just detailed, we are raising our full-year outlook. The midpoint of our revenue guidance is increasing $36 million, and the midpoint of adjusted EBITDA is moving up $3 million. Gordon will take you through the details. For the fourth quarter, we expect double-digit growth in gaming peripherals and creator segment. In components and systems, we expect DIY demand to stay soft while memory prices remain high. We believe memory supply should remain adequate, and we expect to gain further share. Fourth quarter's adjusted EBITDA is anticipated to be below last year, mainly because we expect memory gross margin to return to a more normal level, but still about our historical average. As you will recall, last year's fourth quarter memory gross margin was unusually high. Memory prices rose very quickly ahead of inventory costs, resulting in rapid margin expansion. Overall, our priorities remain focused on expanding in sim racing, extending the Elgato and Stream Deck ecosystem, expanding Corsair Pro product lines, and deepening our direct-to-consumer relationships. We will also consider acquisitions that add to our existing businesses, provided the valuation, earnings contribution, and integration requirements fit our model. With that, I will turn it over to Gordon to take you through the financials. Gordon?