Release Date: February 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Corsair Gaming Inc (CRSR, Financial) reported strong Q4 revenue of $414 million and adjusted EBITDA of $33 million, indicating robust financial performance.
- The integration of the Fanatec sim racing company is progressing well, expected to drive positive revenue and EBITDA growth.
- The gaming and creative business grew by 20% year-on-year, with the Fanatec acquisition accelerating growth in Q4.
- The Elgato product line, particularly the Stream Deck, is performing exceptionally well, creating a new category in the market.
- Corsair's partnerships with major brands like Activision and Apple have increased brand awareness and sales volumes.
Negative Points
- Full-year 2024 net revenue decreased to $1,316.4 million from $1,459.9 million in 2023, indicating a decline in overall sales.
- The gaming components and systems segment saw a decrease in revenue, contributing $244.1 million in Q4 2024 compared to $280.5 million in Q4 2023.
- Fourth-quarter GAAP operating income dropped to $5.9 million from $12.1 million in Q4 2023, reflecting reduced profitability.
- Net income attributable to common shareholders was only $1.3 million in Q4 2024, a significant drop from $6.2 million in Q4 2023.
- The company faces challenges from tariffs, although mitigation strategies are in place, which could impact future costs and pricing.
Q & A Highlights
Q: Is the Fanatec acquisition on track to be completed by the second quarter, and what are the expectations for its growth in 2025?
A: Andrew Paul, CEO, stated that the integration is largely complete, focusing on customer service and system integration. The potential for expansion is promising, with plans to engage with retail and sim rig builders. The wholesale channel and retailers are excited about the opportunity.
Q: How have partnerships with companies like Activision and Apple impacted Corsair's business?
A: Thi La, President and COO, noted that the partnership with Activision has increased website traffic and excitement around product launches. The Apple partnership yielded positive results during the holiday season, enhancing brand value and sales.
Q: Can you provide more details on the expected revenue growth and the impact of the GPU refresh?
A: Andrew Paul explained that there is significant pent-up demand for the new GPU refresh, particularly for the 50 series cards. The refresh is expected to drive growth over the next two years, with gradual volume increases as more affordable models are released.
Q: What are the expectations for margin improvement in 2025, and how will it be achieved?
A: Andrew Paul mentioned that Corsair aims for mid-20s gross margins in components. Improved market conditions and stable inventory demand are expected to help achieve these targets. Margin improvements are anticipated to contribute significantly to EBITDA growth in 2025.
Q: How is Corsair positioned regarding tariffs, and could this be a competitive advantage?
A: Andrew Paul and Thi La indicated that Corsair has been mitigating tariff impacts for years by adjusting supply chains. They feel well-positioned compared to competitors, with no significant impact expected from potential new tariffs.
Q: How might NVIDIA's AI services business impact Corsair's components sales?
A: Andrew Paul noted that while Corsair does not target data centers, there is interest in building workstations with standard graphics cards for AI model experimentation, which could drive some demand.
Q: Have any recent games spurred purchases of peripherals or components?
A: Andrew Paul stated that while there hasn't been a major new game driving sales, peripheral sales remain strong. Anticipation for GTA 6 is high, expected to impact sales when released.
Q: What is the outlook for Corsair's liquidity and debt reduction in 2025?
A: Michael Potter, CFO, highlighted that Corsair expects excellent liquidity through 2025, with plans to continue reducing debt and maintaining flexibility for opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
