Corsair Gaming, Inc. (CRSR) reported mixed financial performance for the second quarter of 2024. The company faced weaker-than-expected results due to declining demand for high-end components and systems. gaming, with net sales decreasing to $261.3 million compared to $325.4 million in the same quarter last year. Despite this, the peripheral segment for gamers and creators showed some stability, with a growth of 20% compared to last year, thanks to the launch of successful products. Corsair Gaming expects a stronger second half of the year thanks to seasonal trends and new product introductions, including a focus on the SIM racing market and the launch of new GPU cards.
Main results
- Corsair Gaming’s net income in the second quarter of 2024 fell to $261.3 million from $325.4 million in the second quarter of 2023.
- The Gamer & Creator Peripherals segment grew by around 20% year-over-year, while the Gaming Components and Systems segment saw a 15% decline.
- The company has announced cost-cutting measures, including cutting about 100 employees and reducing external spending.
- Corsair Gaming revised its full-year guidance to 2024, forecasting revenue between $1.25 billion and $1.35 billion and adjusted EBITDA between $60 million and $75 million.
- Interest has been expressed in acquiring Fanatec’s SIM racing brand, and the company plans to launch SIM racing products in the future.
Company prospects
- Estimated growth in the peripheral segment for gamers and creators over time.
- Plans to acquire smaller peripheral companies and industry enthusiasts.
- Forecast of normal seasonal growth in the third and fourth quarters.
- Confidence in meeting demand and sustaining growth.
Bearish highlights
- Demand for high-end gaming components and systems is declining.
- Extending update cycles affects gaming components and system segments.
- GAAP operating loss in the second quarter of 2024 was $24.7 million, a significant increase from a loss of $2.7 million in the second quarter of 2023.
Bull market highlights
- Successful product launches drive growth in the peripheral segment for gamers and creators.
- Liquidity is expected to remain good for the remainder of 2024.
- Gross margin in the peripheral segment is expected to be around 40%.
- Positive reception of SIM racing products and focus on the SIM racing market.
Shortcomings
- The adjusted operating loss in the second quarter of 2024 was $3.8 million, compared to a profit of $15.9 million in the second quarter of 2023.
- Net loss attributable to common shareholders in the second quarter of 2024 was $29.6 million, compared to net income of $1.1 million in the second quarter of 2023.
Highlights from the questions and answers
- The company expects the second half of 2024 to be stronger than the first, following seasonal trends.
- Inventories and new products are sufficient to support future demand.
- An increase in promotional activities is expected during the holiday sales season.
- The partnership with TD SYNNEX is focused on the B2B group, especially for Elgato systems and equipment.
- Management acknowledges competition from new brands in the Chinese market, but notes that major manufacturers are managing to increase ASPs.
Corsair Gaming remains optimistic about its long-term prospects, especially thanks to the expected growth of the peripheral segment and the launch of new GPU cards. The company’s strategic moves, including partnerships and potential acquisitions, aim to strengthen its market position despite the current challenges. The focus on cost-saving measures and operational efficiency underlines its commitment to navigate the competitive landscape and grow stronger in the coming times.
Insights from InvestingPro
Corsair Gaming, Inc. (CRSR) faces a challenging market, as reflected in its Q2 2024 earnings report To provide additional context on the company’s health and market position, here are some insights based on real-time data and InvestingPro suggestion. .
InvestingPro data highlights a market capitalization of $665 million, indicating the company’s size in the competitive gaming sector. Despite recent setbacks, the company’s revenue for the last twelve months, in the first quarter of 2024, reached $1.443 billion, recording a growth of 7.03%, in line with its ability to recover the peripheral segment for to gamers and creators.
However, a top tip from InvestingPro points out that analysts have revised down earnings for the coming period, which could dampen expectations for the immediate future. This is particularly relevant as the company seeks to recover from a net loss attributable to common shareholders in the second quarter of 2024 of $29.6 million. In addition, the stock price movement is quite volatile and is currently trading near 52-week lows, which could be a concern for potential investors.
On the bright side, another tip from InvestingPro suggests that the stock is in oversold territory according to the RSI, which could indicate a potential rebound opportunity for investors who believe in the company’s long-term prospects. Additionally, the company’s liquid assets exceed short-term liabilities, which is a positive sign for its liquidity and ability to invest in growth opportunities, such as the SIM racing market and new GPU cards.
For those interested in a more in-depth analysis, there are 12 other InvestingPro recommendations, which can provide insights into Corsair Gaming’s financial and market performance. These tips are accessible through the platform InvestingPro.
Corsair Gaming’s focus on strategic initiatives and new product launches is commendable, but investors should keep an eye on the company’s ability to turn around its financial performance and capitalize on expected growth in the gaming peripherals segment.
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