Earnings call transcript: Corsair Gaming Q1 2025 sees revenue beat, EPS miss

Corsair Gaming Inc. (CRSR) reported its Q1 2025 earnings, revealing a mixed financial performance. The company posted a revenue of $396.8 million, surpassing the forecast of $366.2 million. However, it missed earnings per share (EPS) expectations, reporting $0.09 against a forecast of $0.11. The stock responded with a modest 1.74% increase in aftermarket trading, reaching $7.00. According to InvestingPro data, analysts maintain a moderate buy consensus, with 4 analysts recently revising their earnings expectations upward for the upcoming period.

Key Takeaways

• Corsair’s revenue exceeded forecasts by $30.6 million.
• EPS fell short by $0.02, raising profitability concerns.
• Stock price increased by 1.74% in aftermarket trading.
• Gross margin improved to 27.7% from 25.7% YoY.
• Strategic innovations include AI enhancements and Fanatec integration.

Company Performance

Corsair Gaming demonstrated robust revenue growth in Q1 2025, achieving a 10% year-over-year increase. The company’s strategic focus on innovative products and operational efficiency contributed to this growth, despite challenges in profitability as indicated by the EPS miss. InvestingPro analysis shows the company maintains a "Fair" overall financial health score of 2.01, with particularly strong performance in relative value and cash flow metrics. For deeper insights into Corsair’s financial health and more exclusive ProTips, subscribers can access the comprehensive Pro Research Report.

Financial Highlights

• Revenue: $396.8 million, up 10% YoY.
• Earnings per share: $0.09, missing the forecast by $0.02.
• Gross Margin: 27.7%, an improvement from 25.7% in Q1 2024.
• Adjusted Operating Income: $20.6 million, up from $15.4 million YoY.
• Cash Balance: $102.5 million with debt reduced to $149 million.

Earnings vs. Forecast

Corsair’s revenue of $396.8 million surpassed the forecast of $366.2 million by a significant margin, reflecting strong sales performance. However, the EPS of $0.09 fell short of the expected $0.11, indicating challenges in maintaining profitability.

Market Reaction

Following the earnings release, Corsair’s stock price increased by 1.74% in aftermarket trading, reflecting cautious optimism among investors. The stock remains within its 52-week range, with a high of $13.02 and a low of $5.60. InvestingPro analysis indicates that Corsair is currently trading below its Fair Value, with analyst price targets ranging from $11 to $13. The stock has shown significant volatility, with a beta of 1.7 and a 40% decline over the past year.

Outlook & Guidance

Corsair refrained from providing full-year 2025 guidance, citing uncertainties related to tariffs. The company remains optimistic about the hardware refresh cycle, particularly with NVIDIA’s 50 series GPUs, and continues to invest in AI and hardware innovations. According to InvestingPro forecasts, analysts expect revenue growth of 14% in FY2025, with the company projected to return to profitability. Get access to more exclusive insights and 6 additional ProTips with an InvestingPro subscription.

Executive Commentary

CEO Andy Paul emphasized the resilience of home entertainment during economic downturns, stating, "Home entertainment, like gaming or watching content at home, tends to be less affected during a recession." He also highlighted the potential of AI as a growth driver, asserting, "We believe AI will become a meaningful growth driver as it shapes the entire ecosystem from game creation to gameplay."

Risks and Challenges

• Tariff uncertainties impacting future guidance.
• Ongoing debt obligations, albeit reduced.
• Potential market saturation in key product categories.
• Supply chain complexities due to global trade dynamics.

Q&A

During the earnings call, analysts inquired about the impact of the hardware refresh cycle and potential recessionary effects. Management expressed confidence in GPU demand and highlighted the stability of home entertainment during economic challenges.

Full transcript - Corsair Gaming Inc (CRSR) Q1 2025:

Conference Operator: Afternoon, and welcome to Corsair Gaming’s First Quarter twenty twenty five 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. With that, I would now like to turn the call over to David Pasquale with Investor Relations.

Thank you, sir. Please begin.

David Pasquale, Investor Relations, Corsair: Good afternoon, everyone, and thank you for joining Coursera’s financial results conference call for the first quarter ended 03/31/2025. On the call today, we have Coursera’s CEO, Andy Paul Keith Law, Coursera’s President and future Chief Executive Officer of Coursera as of 07/01/2025 and CFO, Michael Potter. Andy will review highlights from the quarter, followed by Tee. Michael will then review the financials. 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 and A portion, may include forward looking statements related to the expected future results for our company and are therefore forward looking statements. Our actual results may differ materially from our projections due to a number of risks and uncertainties. The risks and uncertainties that forward looking statements are subject to are described in our earnings release and other SEC filings. Note that until our 10 Q 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 will now turn the call over to Corusere’s CEO, Andy Paul. Please go ahead, sir.

Andy Paul, CEO, Corsair: Thanks, David. Firstly, I’m pleased to report that we bet our revenue and earnings targets for q one with $370,000,000 of revenue, representing an approximate 10% growth over q one of last year. Margins and EBITDA were also on target, which Michael will cover in detail later. Our new Fanatec SIM racing operation helped growth in our gamer and creator peripheral segment and a rebound in our gaming component and systems segment signaled renewed energy in the core of our enthusiast space with new GPU cards shipping from NVIDIA. One of the key milestones this quarter was successful initial integration of Fanatec into Corsair.

This included seamless alignment across our website, ecommerce systems, ERP, supply chain, and customer support infrastructure. We’re already seeing the results. Consumers have responded enthusiastically to improve product availability, faster support, and a more streamlined experience. We’re excited to build on this momentum by shortly bringing Fanatec products to some of our specialist retailers, further expanding our presence in the enthusiast gaming space and driving incremental revenue. Clearly, one of the main topics of the day is tariffs and how they affect us.

And Thiela, who was recently announced as our new CEO, will address what we’re doing to mitigate any tariff impacts. But the headline is that we don’t source much for The US market from China, and so far, we saw very little effects in terms of our consumer base reducing demand. In q one, we have seen solid demand for our components and memory products as enthusiasts build new gaming PCs based on new high performance GPUs. As we have mentioned before, the new 50 series GPU cards are higher power than before, especially when overclocked. This means higher grade power supplies and cooling devices need to be used, which is where we specialize.

So we started the year in a good position. Looking forward, there are always multiple variables that can change. And, of course, we don’t know what exactly is gonna happen with tariffs given the fluid situation. However, we are encouraged with the more measured approach to tariffs on semiconductors and related products and would expect to end up at a place which would not meaningfully affect the consumer demand for building gaming PCs and buying peripherals. My belief, having watched many economic cycles over the years, is that home entertainment, like gaming or watching content at home, tends to be less affected during a recession than spending outside the home, as restaurants, bars, and other outside entertainment.

Having said that, any economic slowdown or recession that involves layoffs and prices generally going up will not likely induce any meaningful growth for our markets. The other thing we need to look at is how we fare compared to our competitors. In most of our categories, we are the largest supplier, and so we probably have more flexibility and likely would gain market share if large tariffs go into effect. As I mentioned, Tee will cover this in detail next. Lastly, I wanna touch on the growing impact of artificial intelligence across our business.

This is an exciting development with massive implications to our business and to gameplay. We’re already seeing early benefits. For example, Elgato is shipping AI enhanced tools like the AI prompter, and we integrated AI into Wavelink with AI acoustic. Our support teams are also using AI driven knowledge systems to deliver faster, more accurate service. This ultimately creates a better customer relationship, reduces sport costs, and builds brand strength.

We believe AI will become a meaningful growth driver as it shapes the entire ecosystem from game creation to gameplay. In summary, q one was a solid start to the year. With the successful Fanatec integration, strong product demands, an adaptable supply chain, and early wins in AI, Corseille is well positioned for continued growth and innovation in the coming years. We’re excited to what lies ahead. Let me now turn the call over to Tee La before Michael reviews our financials.

Tee, please go ahead.

Tee La, Future CEO (as of 07/01/2025), Corsair: Thank you, Andy. Corseille has a long history of navigating global trade dynamics with agility and efficiency. We’ve spent years building a flexible, multi location manufacturing strategy that allows us to quickly adapt to changes in the market and policy environment. Today, our products are manufactured in several countries, including The United States through a combination of our own factories and a network of trusted assembly subcontractors tailored to our diverse product lines. Thanks to our operational expertise and deep supplier relationships, we’ve consistently demonstrated the ability to ship production locations within just two to four quarters, an advantage that gives us tremendous resilience.

While The US represents roughly 45% of our total sales in q one twenty twenty five, only 19% of the products sold into that market are sourced from China, and this number is expected to drop during this year. This means that we are well positioned to continue serving US consumers cost effectively due to our fluid operation. Our experience and scale allow us to move faster than many smaller competitors, and we believe this environment creates a meaningful opportunity for us to capture share. We’re also encouraged by recent NPD Group data, which shows strong year over year growth in the components markets. These are areas where Corseo maintains a leadership position, and we’re confident in our ability to meet growing demand with minimal disruption.

Let me now turn the call over to Michael for a review. Michael?

Michael Potter, CFO, Corsair: Thank you, Andy and Tee. We’re very pleased with our first quarter performance, which highlights the continued progress we’re making across the business. One of the highlights this quarter was the expansion in margins. The increase in revenue from higher performance gear resulting from the high end GPU releases was coupled with our continued disciplined execution and focus on operational efficiency. This performance reflects the strength of our underlying business and our team’s ability to execute on a long term business model.

On the financial side, we made significant progress in further strengthening our balance sheet. We continue to actively reduce debt and improve our overall liquidity position. Taken together, these actions further enhance our financial flexibility and resilience, which takes on added importance in the current dynamic market environment. In terms of the specifics, Q1 twenty twenty five net revenue was $369,800,000 compared to $337,300,000 in Q1 twenty twenty four. European markets contributed 37.2% of our Q1 twenty twenty five revenues compared to 38% in Q4 twenty twenty four, while the APAC region was 11.3% of our Q1 twenty twenty five revenues compared to 9.1% in Q4 twenty twenty four.

Turning now to our segments. The Gamer and Creator Peripheral segment contributed $112,000,000 of net revenue during the first quarter compared to $107,000,000 in Q1 twenty twenty four. The Gaming Components and Systems segment contributed $257,800,000 of net revenue during the first quarter compared to $230,300,000 in Q1 twenty twenty four. Memory products contributed $141,100,000 in Q1 twenty twenty five compared to $124,900,000 in Q1 twenty twenty four. Overall gross profit in the first quarter was $102,400,000 compared to $86,600,000 in Q1 twenty twenty four, reflecting the continued growth in our Gaming and Creator Peripheral segment and some benefit from the initial integration of Fanatec.

Gross margin increased to 27.7% compared to 25.7% in Q1 twenty twenty four. While gross margin can fluctuate in any given quarter, we are pleased with the improvement in Q1, and this remains a focus for us longer term. Gross profit in the Gamer and Creator Peripheral segment was $46,400,000 compared to $43,600,000 in Q1 twenty twenty four. Gross margin improved to 41.5% compared to 40.8% in Q1 twenty twenty four. The Gaming Components and Systems segment gross profit was $55,900,000 compared to $43,000,000 in q one two thousand twenty four.

Gross margin was 21.7% compared to 18.7% in Q1 twenty twenty four. Our memory products gross margins in this segment were 16.9% for the first quarter compared to 14.5% in Q1 twenty twenty four. First quarter SG and A expenses decreased slightly as a percentage of total revenue to 23.5% or $87,000,000 compared to twenty three point eight percent or $80,200,000 in Q1 twenty twenty four. First quarter R and D expenses also decreased slightly as a percentage of total revenue to 4.8% or $17,600,000 compared to 4.9% or 16,600,000 in Q1 twenty twenty four. We continue to target investments in higher ROI innovations, including both hardware and software to enhance the customer experience and to create revenue opportunities for us.

GAAP operating loss in the first quarter of twenty twenty five was $2,300,000 compared to $10,200,000 in Q1 twenty twenty four. First quarter adjusted operating income was $20,600,000 compared to adjusted operating income of $15,400,000 in Q1 twenty twenty four. First quarter net loss attributable to common shareholders was $10,100,000 or $0.10 per diluted share as compared to net loss of $12,500,000 or $0.12 per diluted share in Q1 twenty twenty four. On an adjusted basis, first quarter net income was $12,300,000 or $0.11 per diluted share compared to an adjusted net income of $9,500,000 or $09 per share in Q1 twenty twenty four. Finally, our first quarter adjusted EBITDA was $22,600,000 compared to $18,000,000 for Q1 twenty twenty four.

We are pleased to start the year on a strong note and remain focused on further improvements longer term. Shortly after the end of the quarter, we finished the last and largest effort to move Fanatec fully into our base systems. That was successful and should help us better manage in the future. Although there are still some supply chain changes that are being made, we do expect integration expenses to be mostly behind us now. Turning now to our balance sheet.

We ended Q1 with a cash balance including restricted cash of $102,500,000 We invested in inventory in some categories we thought might help with any needed transitions, with inventory ending Q1 at $276,800,000 up $16,900,000 from the prior quarter. We ended Q1 with $149,000,000 of debt at face value, down $25,000,000 from the prior quarter, and our $100,000,000 working capital revolver remains undrawn and fully available. Overall, our liquidity remains excellent and allows us to pursue different strategies to support growth opportunities, including building inventory in strategic categories as I mentioned earlier. Finally, with regard to our outlook, as noted in our Q1 earnings release, given current uncertainty resulting from new tariffs and the possibility of additional tariffs and retaliatory actions taken in response to such tariffs, we are not reaffirming full year 2025 financial guidance, but intend to provide an update later in the year as visibility improves. With that, we’re now happy to open the call for questions.

Operator, will you please open up the call for q and a?

Conference Operator: Absolutely. We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. Again, that is star and then 1 to ask a question.

At this time, we will pause momentarily to assemble our roster. And your first question today will come from Aaron Lee with Macquarie. Please go ahead.

Aaron Lee, Analyst, Macquarie: Hey. Good afternoon. Thanks for taking my question. Appreciate all the color. Obviously, a lot going on in the world right now, inflation, tariffs, macro.

It sounds like everything is on track, but has anything changed in terms of your confidence in the hardware refresh cycle around the new NVIDIA GPUs? And can you talk a bit more about how Corsair has performed in past recessions and maybe any lessons you can apply going forward? Thanks.

Andy Paul, CEO, Corsair: Well, yeah, it’s a complicated question. So I think the one thing we’re mindful about is the two thirds of our revenue comes from people building gaming PCs, And the determining factor on whether they’re gonna build or not is gonna come down to the cost of the GPU and the CPU. And that’s why so much depends on the tariff level of semiconductors and what ends up being exempt. So you can imagine that if there was a 50% tariff on GPUs, that would be that would almost certainly impact demand. Now our current expectation or maybe it’s a hope is that some igniters are not gonna get heavily tariffed because we think that there’s a lot of people lobbying against this.

And I think there’s gonna be an understanding that it does take a long time to rebuild up a semiconductor base in The US. So early early signs though is that people are clearly building with 50 series cards from NVIDIA. That’s already started. Remember, they didn’t really start shipping until March. So we’ve only had a a small amount of activity.

But certainly, all the way through March, ’50 ’90 cards, are the high end cards, were essentially on allocation for the whole balance of q one.

Tee La, Future CEO (as of 07/01/2025), Corsair: Yeah.

Andy Paul, CEO, Corsair: We couldn’t get enough cards to make our high end systems. So, yeah, the refresh cycle is certainly starting, but there’s a lot of there’s a lot of factors that could could change how big it is. Recession. You asked about recession. And, you know, we don’t we don’t have a huge amount of historical data on that.

What I will say is that what what we have seen in general is that people tend to stay home in a recession and, you know, history shows that people resort to alcohol and watching TV and historically in recessions. And I think now it’s more playing video games and and watching Netflix. So so I think that, you know, we’d be in reasonable situation if people started tightening their pocketbooks.

Aaron Lee, Analyst, Macquarie: Gotcha. Thank you. That’s helpful. I wanted to dig into the segments as well. Growth in peripherals, 5% in the quarter.

Any drivers of that in particular you would call out? And conversely, strong growth in the component segment. Do you think any of that will pull forward demand from people buying ahead of tariffs? Or do you think momentum can continue to build from here? Thank you.

Andy Paul, CEO, Corsair: Yeah. So I think in the in the components area, no. I don’t think we saw that because the market was actually completely limited by the availability of cards. And really, the tariffs didn’t start kicking in till right at the end of the quarter. So in fact, early April.

So in terms of peripherals, main driver for the growth was clearly the Fanatec acquisition that went pretty much as planned. We’re pretty pretty happy with the way that’s going. Yeah. So those are the two segments.

Aaron Lee, Analyst, Macquarie: Okay. Appreciate it. Thank you.

Conference Operator: Again, if you have a question, please press star and then 1. Please stand by as we poll for questions. Seeing no further questions, this will conclude our question and answer session. I would like to turn the conference back over to Corsair’s CEO, Andy Paul, for any closing remarks.

Andy Paul, CEO, Corsair: Okay. Thank you, everyone, for joining us on the call today and for your continued support. If you have any follow-up questions, please contact our Investor Relations department, and we look forward to updating you next quarter. Thank you, and have a good evening.

Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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