Corsair Gaming Reports Q2 2024 Financial Results, 100 People Getting Fired

[TheLostSwede]

Corsair Gaming, Inc. (Nasdaq: CRSR) ("Corsair" or the "Company"), a leading global provider and innovator of high-performance products for gamers, streamers, content-creators, and gaming PC builders, today announced financial results for the second quarter ended June 30, 2024, and its updated financial outlook for the full year 2024.

Second Quarter 2024 Select Financial Metrics

• Net revenue was $261.3 million compared to $325.4 million in the second quarter of 2023, a decrease of 19.7%. Gaming Components and Systems segment net revenue was $167.1 million compared to $246.7 million in the second quarter of 2023, while Gamer and Creator Peripherals segment net revenue was $94.2 million compared to $78.8 million in the second quarter of 2023.
• Net loss attributable to common shareholders was $29.6 million, or a net loss of $0.28 per diluted share, compared to net income of $1.1 million, or a net income of $0.01 per diluted share, in the second quarter of 2023.
• Adjusted net loss was $6.8 million, or an adjusted net loss of $0.07 per diluted share, compared to adjusted net income of $9.8 million, or an adjusted net income of $0.09 per diluted share, in the second quarter of 2023.
• Adjusted EBITDA was a loss of $1.2 million, compared to adjusted EBITDA of $17.8 million in the second quarter of 2023.
• Cash and restricted cash was $94.6 million as of June 30, 2024.

First Half 2024 Select Financial Metrics

• Net revenue was $598.6 million compared to $679.4 million in the first six months of 2023, a decrease of 11.9%. Gaming Components and Systems segment net revenue was $397.4 million compared to $511.7 million in the first six months of 2023, while Gamer and Creator Peripherals segment net revenue was $201.2 million compared to $167.7 million in the first six months of 2023.
• Net loss attributable to common shareholders was $42.1 million, or a net loss of $0.41 per diluted share, compared to net income of $43 thousand, or a net income of $0.00 per diluted share, in the first six months of 2023.
• Adjusted net income was $2.7 million, or an adjusted net income of $0.03 per diluted share, compared to adjusted net income of $21.8 million, or an adjusted net income of $0.20 per diluted share, in the first six months of 2023.
• Adjusted EBITDA was $16.8 million, compared to adjusted EBITDA of $38.3 million in the first six months of 2023.

Andy Paul, Chief Executive Officer of Corsair, stated, "Clearly we are disappointed by our Q2 2024 results, which were driven by a softer-than-expected self-built PC market. The surge of activity during the COVID lock-down period, where the number of gaming PCs that were built approximately doubled from the prior year, and headset sales almost tripled, which we believe means that the installed base of gaming hardware is now at an all-time high. Even with this surge, we now are seeing the market for headsets, which is usually the entry point for first-time gaming hardware purchases, almost twice the size of the market before COVID lock-downs. We believe this shows the gaming market is continuing to grow.

"For the self-built PC market, where our components and memory product lines are used, we see the market a little softer than it was pre COVID, but we believe it is still at a healthy level. We are expecting an 'echo' of the COVID surge to occur as we move into a natural refresh cycle, which based on prior cycles is typically a 3 to 5 year period. This is very dependent on consumer spending power, inflation, and of course new games and the timing of new graphics hardware. Our expectation last year was that this coming refresh surge would happen in 2024 through 2026, 3 to 5 years after the COVID lock-down. It now appears that is more likely going to start a little later than expected, since we expect to see new GPUs from NVIDIA launching around the end of 2024, with many highly anticipated games expected to launch in late 2024 and 2025, notably Call of Duty: Black Ops 6 later this year and Grand Theft Auto VI in 2025. This will affect our sales of products in our Gaming Components and Systems segment and we have reforecast this accordingly. For Q2 2024, we did see some adjustments downwards of our channel inventory in our Memory product line, meaning that the sales out of our channel were ahead of our sales in by approximately 15%.

"In our Gamer and Creator Peripherals segment, we are seeing strong growth. While the market for those products is showing slight improvement, we also continue to launch products in new categories. Notably, this year we launched teleprompters, PC controllers and mobile controllers, as well as many other innovative new products in our existing categories. We also announced our entry into the Sim racing market, with our own designed products, which we recently showcased at Computex. We remain interested in the Sim racing brand Fanatec, owned by ENDOR AG. Although we were disappointed to see the company file for insolvency, we intend to continue exploring a potential acquisition. Such acquisition would likely be within the framework of the pending insolvency proceedings, and as a result, we cannot provide any assurance our bid will be successful. Q2 2024 was another good quarter for this segment as it grew by 19.6% YoY, which is the third successive quarter of strong, high-teens to 20% growth. We intend to continue to grow the Gamer and Creator Peripherals segment organically, as well as with strategic acquisitions. We believe this business has the potential to become larger than our traditional components business within a few years. For our Gaming Components and Systems segment, which includes our memory business, we continue to dominate the market with leading market share in most categories. We intend to continue that trend, while running these businesses as efficiently as we can from a cost standpoint, while we wait for the market to recover and return to growth."

Michael G. Potter, Chief Financial Officer of Corsair, stated, "We are executing on cost savings, and took additional action in July 2024, including the reduction of approximately 100 employees, and will reduce some external expenses which we anticipate will lower operating expenses in the second half of 2024. We remain committed to controlling operating expenses, while continuing to support growth in our Gamer and Creator Peripherals segment, which generally has higher operating expense demands for R&D and marketing. We continue to see inflation and high interest rates having a negative effect on high-value consumer purchases, and are seeing higher-than-average credit declines on system purchases. Adding to this, we had a 1% to 2% margin impact from fixed costs allocated over lower than expected volumes. We continue to maintain a healthy balance sheet, with sufficient cash to fund the development of our expanding product portfolio. We expect to further reduce inventory during the third quarter, as we move into the traditionally stronger second half, which we expect will also generate additional cash. Finally, we further reduced our channel inventory, ending the quarter in a healthy position, which will benefit us in the second half of 2024 as we focus on driving revenue growth and profitability."

Updated 2024 Financial Outlook
Corsair updated its financial outlook for the full year 2024. The Company continues to expect revenue to improve through 2024, with a further improvement in adjusted EBITDA led by an additional improvement in margin, stabilized shipping costs and continued tight operating expense controls.

• Net revenue to be in the range of $1.25 billion to $1.35 billion.
• Adjusted operating income to be in the range of $48 million to $63 million.
• Adjusted EBITDA to be in the range of $60 million to $75 million.

Certain non-GAAP measures included in our financial outlook were not reconciled to the comparable GAAP financial measures because the GAAP measures are not accessible on a forward-looking basis. We are unable to reconcile these forward-looking non-GAAP financial measures to the most directly comparable GAAP measures without unreasonable efforts because we are currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures for these periods but would not impact the non-GAAP measures. Such items may include stock-based compensation charges, amortization, and other items. The unavailable information could have a significant impact on our GAAP financial results.

The foregoing forward-looking statements reflect our expectations as of today's date. Given the number of risk factors, uncertainties and assumptions discussed below, actual results may differ materially. We do not intend to update our financial outlook until our next quarterly results announcement.

Recent Product Developments

• Entered Popular Sim Racing Category: Our initial launch includes a ground up designed sleek cockpit, constructed with a robust steel frame, and engineered to withstand the rigors of intense, high-octane racing.
• New Mobile Controller: The SCUF Nomad is an innovative iPhone Bluetooth controller providing a premium mobile gaming experience in a compact design that can be taken anywhere. SCUF + Nomad is accompanied by a free iOS companion app that does not require a paid subscription.
• Customization: Corsair Custom Lab is a personalized shopping experience where gamers can choose from multiple peripherals with customized matching patterns or themes.
• K65 achieves #1 Revenue position in the United States for Q2. Third party data shows the newly launched K65 wireless keyboard achieved the highest revenue in the gaming keyboard category for Q2.

View at TechPowerUp Main Site | Source

 

[stimpy88]

This is what happens when your prices are too high in a competitive market.

 

[rv8000]

This is what happens when your prices are too high in a competitive market.

And half their products being built out of paper. Their cases have some of the worst build quality Ive ever seen.

 

[P4-630]

This is what happens when AMD users can't use your memory.

 

[Philaphlous]

Rough year for Corsair.. I think I've bought maybe 1 or 2 items from them in my lifetime...Nothing really stood out to me as amazing...

 

[_roman_]

Some other unnamed hardware forum recommended me a Corsair RM750 Power Supply Unit.
That unit was faulty after 15 Months. Gladly I got 90 percent of my purchase price back after a lot of discussion.

No issues so far with my Enermax Revolution D.F. 750W.

The Corsair MP 600 Pro 1TB NVME SSD did not had any newer firmware updates a few months ago. The update software is only for windows and did not really look well maintained.

Personally I do believe there is any decent quality in this Corsair Brand with the few products I bought for myself or other people bought after my recommendation.

 

[bonehead123]

This is what happens when your prices are too high in a competitive market.

THIS, in addition to your execs living in luxury, while the little people at the bottom can barely keep their lights on...especially those 100 (& probably many more) who are losing their jobs for this very reason !

I've bought some of their stuff in the past, like coolers, ram, cases etc... which were reasonably priced and worked pretty well, but more recent products are definitely showing the signs of corner-cutting and margin-grubbing

 

[TheLostSwede]

Some other unnamed hardware forum recommended me a Corsair RM750 Power Supply Unit.
That unit was faulty after 15 Months. Gladly I got 90 percent of my purchase price back after a lot of discussion.

I've had a couple of their PSU's over the years, never any issues. Corsair are generally known for producing decent PSUs, except the low-end SKUs.

The Corsair MP 600 Pro 1TB NVME SSD did not had any newer firmware updates a few months ago. The update software is only for windows and did not really look well maintained.

That applies to 90% of SSDs on the market, just so you know. Most SSDs that use Phison controllers have a skinned version of the same update tool, so nothing strange there either.

Not trying to defend the company as such, but most of their products are not bad, however, the pricing usually is.

 

[FreedomEclipse]

I've had a couple of their PSU's over the years, never any issues. Corsair are generally known for producing decent PSUs, except the low-end SKUs.

Ive had a small number of their higher tier units go bad on me. one HX1050, two AX units. And probably about 5 CX/CX-M units. One had to be RMAd two or three times before I gave up and suggested replacing it with an EVGA GQ model. That was many years ago and the system is still running perfectly fine.


The problem with Corsair PSUs is its the OEMs problem. Corsair just deals with the customer service (and distribution) side of it. The HX1050 was made by CWT and AX860 were made by Seasonic. I think the CX/CX-M units were CWT as well.

My next build will use an RMx850 as that seems to be the most value for money option among the 850w units atm.

 

[Kaesar]

I love corsair, all their products, and do agree with a lot of what is being said by other users here. When you start to cut down a product with the intent to make your margin higher you cannot forget the essence of your product, and specially your brand. People remember corsair for the top of notch power supply, memory and coolers. Nowadays, you see a new watercooler release each semester and not only you can barely see the difference, it's becoming difficult to find reviews. Also, their naming, Capellix, PRO, XT, elite, all of the sudden corsair starts to mash them together to squeeze out a new release that most of the time feels like souless. At the same time, you can see Thermalright pushing good quality, high performing coolers, that cost a fraction of what corsair asks.
For their cases. Last week, I was just finishing my girlfriend new gaming PC, the metal around the GPU, near the IO was COMPLETELY bent, to set it straight I must have lost like 1 hour and was so scared, never saw anything like that. Also, I still think they look good, but do you guys remember 460X and, specially, 570X? I think that was prime corsair, build quality and looks. I have not seen a greater looking case than 570X.
I miss H100i V2 and 570X days. They are loosing their essence but I believe they can still achieve greatness if they take a close look at their past, their roots.

 

[Bwaze]

This is what happens if you're not catering to AI servers, AI service providers.

There is now a lot of money being spent on certain products, but I think the entire end customer sector will take a big hit because of it.

You want cheap GPU? Forget it, they're selling tons of "Deep Learning" workstations and servers, gamers need not apply. There are talks that RTX 50x0 generation might be a very limited release. You want storage, memory? AI sector buys that by the truckloads.

You're selling water cooling, trinkets for gaming computers? Tough luck, AI servers have absolutely no need of your products, and the whole home PC sector might take a hiatus until this normalizes.

 

[sethmatrix7]

When your coolers are 3x the price of an equivalent performance model, when you charge a premium on fans and mice that use junk software, and base your entire ecosystem around that junk software- this is what happens. People don't care enough about the Corsair label to pay a premium for something that isn't better than the growing competition.

 

[sLowEnd]

I've had a couple of their PSU's over the years, never any issues. Corsair are generally known for producing decent PSUs, except the low-end SKUs.

That applies to 90% of SSDs on the market, just so you know. Most SSDs that use Phison controllers have a skinned version of the same update tool, so nothing strange there either.

Not trying to defend the company as such, but most of their products are not bad, however, the pricing usually is.

We're fortunate to have Jon at the helm of their PSU development. It's a shame Corsair's other departments don't have someone similar running things.

 

[Caring1]

"only" a hundred people, and they won't be from the top end either.

 

[PerfectWave]

not to mention their ugly ICUE software.

 

[mechtech]

100 people getting fired or laid-off? There is a difference.

There stuff like PSUs are good, I think part of the issue is (well at least here in Canada) sometimes there are equal products for 20% less or more.

 

[TheLostSwede]

"only" a hundred people, and they won't be from the top end either.

One or two from the top, but yeah, mostly people that were doing things got laid off.

100 people getting fired or laid-off? There is a difference.

Laid off outside of the US, not sure in the US. Corsair doesn't tend to fire people though.

 

[brian111]

One or two from the top, but yeah, mostly people that were doing things got laid off.


Laid off outside of the US, not sure in the US. Corsair doesn't tend to fire people though.

"Laid off" inside the US also. While fired technically means terminated for cause, I think most would assume that it means the same as the former when you are talking about a cost cutting measure.