Corsair Gaming, Inc. (CRSR) Bundle
Understanding Corsair Gaming, Inc. (CRSR) Revenue Streams
Understanding Corsair Gaming, Inc.’s Revenue Streams
As of September 30, 2024, the total net revenue for the company was $304,199,000, a decrease from $363,193,000 in the same quarter of 2023. For the nine months ended September 30, 2024, net revenue was $902,756,000, down from $1,042,589,000 in the prior year.
Breakdown of Primary Revenue Sources
The revenue streams are primarily divided into two segments:
- Gamer and Creator Peripherals
- Gaming Components and Systems
For the three months ended September 30, 2024, the revenue contribution was:
| Segment | Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Gamer and Creator Peripherals | $101,966 | 33.5% |
| Gaming Components and Systems | $202,233 | 66.5% |
| Total | $304,199 | 100% |
For the nine months ended September 30, 2024, the breakdown was:
| Segment | Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Gamer and Creator Peripherals | $303,168 | 33.6% |
| Gaming Components and Systems | $599,588 | 66.4% |
| Total | $902,756 | 100% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate shows a significant decline:
- Three months ended September 30, 2024: 16.2% decrease compared to the same period in 2023.
- Nine months ended September 30, 2024: 13.4% decrease compared to the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
The contribution of the segments to the overall revenue has shown contrasting trends. The Gamer and Creator Peripherals segment experienced an increase of 12.8% in the three months ended September 30, 2024, and 17.5% in the nine months ended September 30, 2024. Conversely, the Gaming Components and Systems segment saw a decrease of 25.9% and 23.6% for the same periods, respectively.
Analysis of Significant Changes in Revenue Streams
The decline in the Gaming Components and Systems segment was attributed to a mid-cycle for new GPU platforms, leading to a decrease in demand. Additionally, channel partners adjusted their inventory levels downward compared to the previous year, impacting revenue negatively.
The following table summarizes the net revenue by geographic region for the three months ended September 30, 2024:
| Region | Net Revenue (in thousands) |
|---|---|
| Americas | $156,110 |
| Europe and Middle East | $116,783 |
| Asia Pacific | $31,306 |
| Total | $304,199 |
Revenues from sales to customers in the United States represented 54.8% of total net revenue for the three months ended September 30, 2024.
Overall, the revenue analysis indicates significant challenges and shifts in demand across different segments, highlighting the importance of strategic adjustments moving forward.
A Deep Dive into Corsair Gaming, Inc. (CRSR) Profitability
A Deep Dive into Corsair Gaming, Inc.'s Profitability
Gross Profit: For the three months ended September 30, 2024, the gross profit was $69,661 thousand, down from $89,353 thousand in the same period of 2023. For the nine months ended September 30, 2024, the gross profit was $219,385 thousand, compared to $257,589 thousand for the nine months ended September 30, 2023.
Gross Margin: The gross margin for the three months ended September 30, 2024, was 22.9%, a decrease from 24.6% in 2023. The nine-month gross margin for 2024 was 24.3%, down from 24.7% in 2023.
| Period | Gross Profit (in $000s) | Gross Margin (%) |
|---|---|---|
| Q3 2024 | $69,661 | 22.9% |
| Q3 2023 | $89,353 | 24.6% |
| 9M 2024 | $219,385 | 24.3% |
| 9M 2023 | $257,589 | 24.7% |
Operating Profit: For the three months ended September 30, 2024, the operating loss was ($20,944) thousand, compared to an operating loss of ($758) thousand for the same period in 2023. For the nine months ended September 30, 2024, the operating loss was ($55,877) thousand, up from a loss of ($2,435) thousand in 2023.
Net Profit Margin: The net loss for the three months ended September 30, 2024, was ($51,586) thousand, resulting in a net profit margin of (16.9%). For the nine months ended September 30, 2024, the net loss was ($86,122) thousand, yielding a net profit margin of (9.6%).
| Period | Operating Profit (in $000s) | Net Profit (in $000s) | Net Profit Margin (%) |
|---|---|---|---|
| Q3 2024 | ($20,944) | ($51,586) | (16.9%) |
| Q3 2023 | ($758) | ($2,886) | (0.8%) |
| 9M 2024 | ($55,877) | ($86,122) | (9.6%) |
| 9M 2023 | ($2,435) | ($8,613) | (0.8%) |
Trends in Profitability: The profitability metrics indicate a downward trend in gross profit and margins, primarily attributed to increased costs and decreased sales in key segments. The operating losses have widened significantly, reflecting challenges in managing operational costs and market pressures.
Comparison with Industry Averages: Industry averages for gross margins in the gaming peripherals sector typically range from 25% to 30%. The company's gross margin of 22.9% for Q3 2024 is below this average, indicating potential inefficiencies or competitive pressures. The net profit margin also falls short of industry norms, which often hover around 5% to 10% for healthy companies within this niche.
Operational Efficiency Analysis: The increase in Sales, General and Administrative (SG&A) expenses for the nine months ended September 30, 2024, was $224,677 thousand compared to $211,482 thousand in 2023, representing a 6.2% increase. This rise in operational costs is a significant factor contributing to the overall operating loss. The cost of revenue also increased to $683,371 thousand for the nine months ended September 30, 2024, compared to $785,000 thousand in 2023, highlighting a need for improved cost management strategies.
| Period | SG&A Expenses (in $000s) | Cost of Revenue (in $000s) |
|---|---|---|
| 9M 2024 | $224,677 | $683,371 |
| 9M 2023 | $211,482 | $785,000 |
Debt vs. Equity: How Corsair Gaming, Inc. (CRSR) Finances Its Growth
Debt vs. Equity: How Corsair Gaming, Inc. Finances Its Growth
Debt Levels:
As of September 30, 2024, Corsair Gaming, Inc. reported total debt of $177.2 million. This includes $12.2 million in current liabilities due within one year and $164.9 million in long-term debt.
Debt-to-Equity Ratio:
The debt-to-equity ratio as of September 30, 2024, is approximately 0.30, calculated from total liabilities of $589.8 million and total equity of $598.5 million. This ratio is below the industry average of around 0.50, indicating a conservative approach to leveraging.
Recent Debt Issuances and Refinancing Activity:
On August 19, 2024, Corsair Gaming entered a Fourth Amendment to its Credit Agreement, transitioning its variable interest rate from the Bloomberg Short-Term Bank Yield Index (BSBY) to a forward-looking interest rate based on the Secured Overnight Financing Rate (SOFR). This amendment also increased the letter of credit sublimit from $15 million to $65 million. The effective interest rate for the term loan was approximately 6.3% for the three months ended September 30, 2024.
Balancing Debt Financing and Equity Funding:
Corsair Gaming utilizes a blend of debt and equity to finance its growth. The company has maintained an unused capacity of $100 million under its revolving credit facility, indicating a strategic reserve for operational flexibility. Additionally, the company issued common stock in connection with employee equity incentive plans, raising approximately $5.1 million in the nine months ended September 30, 2024.
| Financial Metric | Amount (in millions) |
|---|---|
| Total Debt | $177.2 |
| Current Liabilities | $12.2 |
| Long-Term Debt | $164.9 |
| Debt-to-Equity Ratio | 0.30 |
| Industry Average Debt-to-Equity Ratio | 0.50 |
| Unused Revolving Credit Facility | $100.0 |
| Proceeds from Equity Issuance | $5.1 |
| Effective Interest Rate (Term Loan) | 6.3% |
Assessing Corsair Gaming, Inc. (CRSR) Liquidity
Assessing Corsair Gaming, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 1.38, indicating a healthy liquidity position, as current assets of $648.2 million exceed current liabilities of $469.2 million.
Quick Ratio: The quick ratio stands at 0.82, suggesting that when excluding inventory, the company still maintains a reasonable level of liquid assets to cover short-term liabilities.
Analysis of Working Capital Trends
As of September 30, 2024, working capital is approximately $179 million, which shows a decline from $223 million a year earlier. This decrease is attributed to an increase in current liabilities, which rose significantly due to operational and financing activities.
| Period | Current Assets ($ millions) | Current Liabilities ($ millions) | Working Capital ($ millions) |
|---|---|---|---|
| September 30, 2024 | 648.2 | 469.2 | 179.0 |
| September 30, 2023 | 660.0 | 437.0 | 223.0 |
Cash Flow Statements Overview
Operating Cash Flow: For the nine months ended September 30, 2024, cash used in operating activities was ($19.7 million), a significant drop from $32.1 million provided in the same period in 2023. This change reflects a net loss of $86.1 million compared to $8.6 million in the previous year.
Investing Cash Flow: Cash used in investing activities was ($50.5 million) for the nine months ended September 30, 2024, primarily due to the acquisition of Fanatec for $43.1 million and capital expenditures of $8.4 million.
Financing Cash Flow: For the same period, cash used in financing activities totaled ($46.6 million), mostly from debt repayments of $21.3 million and purchasing additional ownership interest in iDisplay for $19.8 million.
| Cash Flow Type | 9 Months Ended September 30, 2024 ($ millions) | 9 Months Ended September 30, 2023 ($ millions) |
|---|---|---|
| Operating Activities | (19.7) | 32.1 |
| Investing Activities | (50.5) | (25.0) |
| Financing Activities | (46.6) | (13.2) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had cash and restricted cash totaling $61.6 million alongside $100 million available under its revolving credit facility. However, the net cash used in operations and significant cash outflows in investing and financing activities raise concerns about future liquidity, especially with a net loss reported.
Despite these challenges, the liquidity position remains supported by the available credit line and a relatively strong current ratio, though management may need to closely monitor cash flow trends and working capital management to ensure sufficient liquidity moving forward.
Is Corsair Gaming, Inc. (CRSR) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current price-to-earnings (P/E) ratio for Corsair Gaming, Inc. is approximately −18.90, indicating a negative earnings situation due to recent net losses.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio stands at 0.89, suggesting that the stock is trading below its book value, which may indicate an undervaluation based on asset valuation.
Enterprise Value-to-EBITDA (EV/EBITDA)
The enterprise value-to-EBITDA (EV/EBITDA) ratio is currently −7.15, reflecting the company's negative earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the past 12 months, the stock price has experienced significant volatility, starting at approximately $19.00 and declining to around $7.25 as of October 2024, representing a decrease of about 61.4%.
Dividend Yield and Payout Ratios
The company does not currently pay dividends, resulting in a dividend yield of 0%.
Analyst Consensus on Stock Valuation
Analysts have a consensus rating of Hold on the stock, with price targets averaging between $7.00 and $10.00.
Summary Table of Valuation Metrics
| Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | −18.90 |
| Price-to-Book (P/B) Ratio | 0.89 |
| Enterprise Value-to-EBITDA (EV/EBITDA) | −7.15 |
| Stock Price (12-month range) | $7.25 - $19.00 |
| Dividend Yield | 0% |
| Analyst Consensus Rating | Hold |
Key Risks Facing Corsair Gaming, Inc. (CRSR)
Key Risks Facing Corsair Gaming, Inc.
The financial health of Corsair Gaming, Inc. is influenced by various internal and external risk factors that can impact its operations and profitability. Below is an overview of the significant risks identified in their recent filings.
Industry Competition
The gaming peripherals market is highly competitive, with numerous established players and new entrants. For the three months ended September 30, 2024, net revenue decreased by 16.2% compared to the same period in 2023, largely due to a 25.9% decrease in sales for the Gaming Components and Systems segment. Increased promotional activities and pricing pressures have also contributed to a 6.7% decline in the gross margin for this segment.
Macroeconomic Conditions
Global macroeconomic challenges, including potential recessions and inflationary trends, pose risks to Corsair's financial performance. As of September 30, 2024, the company reported a net loss of $51.6 million for the quarter, compared to a loss of $2.9 million in the same period of the previous year. The ongoing geopolitical tensions, particularly in Eastern Europe and Asia, can disrupt supply chains and affect demand for gaming products.
Regulatory Changes
Changes in regulations impacting technology and consumer electronics can also pose risks. Corsair must comply with various international regulations, which could lead to increased costs or operational restrictions. The company is subject to income tax liabilities, with deferred tax assets being less likely to be realized due to cumulative loss positions.
Operational Risks
Operationally, Corsair faces risks related to inventory management and supply chain disruptions. As of September 30, 2024, total inventories stood at $293 million, which is an increase from $240 million on December 31, 2023. This increase in inventory levels can strain cash flows and indicate potential overproduction or decreased demand.
Financial Risks
Financially, Corsair has a significant amount of debt. As of September 30, 2024, the total principal balance outstanding on its Term Loan was $177.8 million. A hypothetical increase of 100 basis points in interest rates could increase annual interest expenses by approximately $1.7 million. Moreover, the company has experienced a decline in cash provided by operations, reporting a net cash used of $19.7 million for the nine months ended September 30, 2024.
Mitigation Strategies
Corsair has implemented several strategies to mitigate these risks. The company has a shelf-registration statement on file with the SEC, allowing it to offer securities and raise capital as needed. Additionally, Corsair is focusing on improving its product mix and reducing costs, particularly in its Gamer and Creator Peripherals segment, which has seen an increase in gross margin by 7.2% for the nine months ended September 30, 2024.
| Risk Factor | Description | Impact (Q3 2024) |
|---|---|---|
| Industry Competition | High competition leading to pricing pressures and decreased sales. | Net revenue decreased by 16.2% year-over-year. |
| Macroeconomic Conditions | Global economic instability affecting consumer spending. | Net loss of $51.6 million in Q3 2024. |
| Regulatory Changes | Compliance with evolving international regulations. | Risk of increased operational costs. |
| Operational Risks | Inventory management challenges and supply chain disruptions. | Inventories increased to $293 million. |
| Financial Risks | Significant debt load and interest rate fluctuations. | Total debt of $177.8 million. |
Future Growth Prospects for Corsair Gaming, Inc. (CRSR)
Future Growth Prospects for Corsair Gaming, Inc.
Analysis of Key Growth Drivers
Product innovations remain a critical growth driver for Corsair Gaming, Inc. The company has successfully launched several new products, particularly in the Gamer and Creator Peripherals segment, which saw a 12.8% and 17.5% revenue increase for the three and nine months ended September 30, 2024, respectively. This growth is attributed to the success of recent product launches and increased demand across various products in this segment.
Market expansions are also pivotal. The company has been actively pursuing strategic acquisitions, such as the recent purchase of Fanatec, finalized on September 19, 2024, for approximately $43.7 million. This acquisition enhances Corsair's product offerings in the sim racing market, integrating Fanatec’s established product line with Corsair's existing gaming technologies.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, Corsair reported net revenue of $902.8 million, a decrease of 13.4% compared to the previous year. Analysts project a rebound in revenue growth, particularly driven by the integration of newly acquired businesses and expected market recovery in the gaming sector. Earnings estimates suggest a potential recovery in the coming quarters, contingent on the successful launch of innovative products and stabilization in the gaming hardware market.
Strategic Initiatives or Partnerships that May Drive Future Growth
Corsair has engaged in numerous strategic initiatives aimed at driving future growth. The acquisition of Drop in July 2023 has already begun to contribute to revenues, providing a community-oriented e-commerce platform that aligns with Corsair’s brand. Additionally, partnerships with gaming developers and tech firms for co-marketing and product integration are expected to enhance brand visibility and customer engagement.
Competitive Advantages that Position the Company for Growth
Corsair Gaming's competitive advantages include its strong brand recognition and established reputation in the gaming community. The company’s diversified product portfolio, which includes high-performance peripherals, gaming systems, and components, positions it well against competitors. Furthermore, Corsair's commitment to product quality and innovation fosters customer loyalty, which is crucial in a competitive market.
Financial Summary Table
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Revenue | $304.2 million | $363.2 million | $902.8 million | $1,042.6 million |
| Gross Profit | $69.7 million | $89.4 million | $219.4 million | $257.6 million |
| Net Loss | $(51.6) million | $(2.9) million | $(86.1) million | $(8.6) million |
| Gross Margin | 22.9% | 24.6% | 24.3% | 24.7% |
Overall, Corsair Gaming, Inc. is positioned to leverage its strategic initiatives, product innovations, and competitive advantages to navigate future growth opportunities effectively.
Corsair Gaming, Inc. (CRSR) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Corsair Gaming, Inc. (CRSR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Corsair Gaming, Inc. (CRSR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Corsair Gaming, Inc. (CRSR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.