Prospectus Summary
PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before deciding to invest in our common stock. You should read the entire prospectus carefully, including “Risk Factors” and our financial statements and related notes included elsewhere in this prospectus, before making an investment decision. Unless we state otherwise or the context otherwise requires, all information in this prospectus gives effect to the Reorganization defined and described below. In this prospectus, the terms “Corsair” “we,” “us,” “our” and the “Company” refer to Corsair Gaming, Inc. and its consolidated subsidiaries after giving effect to the Reorganization described below. References to the “selling stockholders” refer to the selling stockholders named in this prospectus.Overview
We are a leading global provider and innovator of high-performance gear for gamers and content creators. Our industry-leading gaming gear helps digital athletes, from casual gamers to committed professionals, to perform at their peak across PC or console platforms, and our streaming gear enables creators to produce studio-quality content to share with friends or to broadcast to millions of fans. We design and sell high-performance gaming and streaming peripherals, components and systems to enthusiasts globally.
We have served the market for over two decades and many of our products maintain a number one U.S. market share position, according to data from NPD Group and internal estimates. We have built a passionate base of loyal customers due to our brand authenticity and reputation as provider of innovative and finely engineered products that deliver an uncompromising level of performance.
Competitive gaming rewards speed, precision and reliability. As in other sports, specialized high-performance gear such as gaming mice, keyboards, headsets and performance controllers allow digital athletes to perform at their best. Modern games also require significant processing power to render high-resolution graphics, and reward the speed and precision of user inputs, driving demand for powerful gaming components and systems. Further, in a world where the ability to create content is democratized and competition for viewer engagement is greater than ever, content creators, particularly streamers, are increasingly seeking ways to maximize the quality of their video capture and broadcasting, which requires specialized high-performance gear.
Our solution is the most complete suite of gear among our major competitors, and addresses the most critical components for both game performance and streaming. Our product offering is enhanced by our two proprietary software platforms: iCUE for gamers and Elgato’s streaming suite for content creators. These software platforms provide unified, intuitive performance, and aesthetic control and customization across their respective product families. We group our gear into two categories:
We believe our brand, scale and global reach provide significant competitive advantages. As of June 30, 2020, we had shipped over 190 million gaming and streaming products since 1998, with over
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85 million in the past five years. Our gear is sold to end users in more than 75 countries, primarily through online and brick-and-mortar retailers, including leading global retailers such as Amazon and Best Buy, and through our direct online channel. Due to our gamer and creator-centric design philosophy we have received over 4,000 product awards from magazines and websites in approximately 45 countries since 2016, of which more than 3,500 were “Gold,” “Editor’s Choice,” “Approved,” or similar awards, including multiple perfect “10 out of 10” or similar perfect ratings.
We believe our brand, market position and operational excellence will allow us to continue to capture a growing share of the rapidly expanding gaming and streaming gear market, estimated at over $36 billion in 2019 by Jon Peddie Research. We intend to continue to grow by offering market-leading gear to gamers and content creators, expanding the breadth of our product suite to meet the needs of our customers, growing our worldwide market share, continuing to invest in marketing, product innovation and sales, and selectively pursuing accretive acquisitions.
Since 2017, our net revenue has grown significantly. For 2017, 2018, 2019 and for the six months ended June 30, 2019 and 2020, our net revenue was $855.5 million, $937.6 million, $1,097.2 million, $486.2 million and $688.9 million, respectively. For 2017, 2018, 2019 and for the six months ended June 30, 2019 and 2020, our gross margin was 20.2%, 20.6%, 20.4%, 19.3% and 26.7%, respectively. We generated net income (loss) of $7.4 million, $(13.7) million, $(8.4) million, $(15.9) million and $23.8 million for 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, respectively. For 2017, 2018, 2019 and the six months ended June 30, 2019 and 2020, our adjusted operating income was $63.1 million, $61.6 million, $65.8 million, $18.3 million and $72.4 million, respectively, our adjusted net income was $34.3 million, $20.0 million, $27.5 million, $0.6 million and $43.6 million, respectively and our adjusted EBITDA was $67.5 million, $67.4 million, $71.6 million, $20.8 million and $76.7 million respectively. Our revenue, gross margin, net income (loss), adjusted operating income, adjusted net income (loss) and adjusted EBITDA each increased for the twelve months ended June 30, 2019 to the same period in 2020 from $973.1 million to $1,299.9 million, from 20.1% to 24.2%, from $(26.7) million to $31.3 million, from $51.2 million to $119.9 million, from $7.4 million to $70.4 million and from $56.6 million to $127.6 million, respectively.
Adjusted operating income, adjusted net income (loss) and adjusted EBITDA are not financial measures under U.S. generally accepted accounting principles, or GAAP. See “Selected Financial Data—Non-GAAP Financial Measures” for an explanation of how we compute these non-GAAP financial measures and for their reconciliations to the most directly comparable GAAP financial measure. Net revenue, gross margin and net income for the year ended December 31, 2017 are unaudited pro forma financial information derived from the audited statements of operations of the Predecessor and Successor. See “Unaudited Pro Forma Financial Information for the Acquisition Transaction” for an explanation of the pro forma amounts.
Our Industry
Since traditional arcade games of the 1970s, gaming has evolved into the mainstream and taken a central place in the global entertainment landscape. There were an estimated 2.6 billion gamers worldwide across all devices spending more than $148.8 billion on games in 2019, according to Newzoo. Based on the latest available Nielsen data, gaming today represents approximately 11% of leisure time in the United States, surpassing activities such as using social media and messaging.
In parallel, digital content creation today has democratized, with content sharing, video-first communication and voice-chat being the norm among creators, viewers and gamers. Streaming is now ubiquitous, with over 2 billion monthly users watching pre-recorded videos on YouTube and over 12
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billion live streaming hours watched across Twitch, YouTube Gaming and Facebook Gaming in 2019. Further, viewership of eSports, the peak of competitive gaming, has grown to surpass multiple traditional, mature sports. For example, the League of Legends World Championship attracted over 100 million live viewers in November 2019, which is comparable to the live viewers on FOX’s broadcast of the Super Bowl in February 2020, and more than five times than the viewers for game six of the 2019 NBA Finals. A virtuous circle of eSports players, viewers and revenue, catalyzed by the growing proliferation of streaming, is both attracting new gamers and increasing the performance focus of existing gamers, who advance from less engaged gaming to high-performance gameplay.
Historically, gamers and streamers were required to use hardware that was designed for office use, lacking integration capabilities and, most importantly, the performance and features necessary to maximize a gamer’s or streamer’s potential. Because both gaming and streaming have reached a level of innovation, sophistication and competition that, even on an amateur level, allows for limited margin for error, competitive gamers and streamers require high-performance gear.
Our Market Opportunity
The global gaming PC and streaming gear markets, including peripherals, components and prebuilt PCs and laptops specifically designed for PC gaming, totaled approximately $36 billion in 2019, according to Jon Peddie Research.
In 2019, there were an estimated 524 million PC gamers, comprising committed, competitive and casual PC gamers. Approximately 94 million of these gamers spent over $1,000 on their gaming PC systems. These gamers, comprising committed and competitive PC gamers, represented approximately $30 billion of the global gaming PC gear market. Further, approximately 27 million of these gamers, comprising committed PC gamers, spent over $1,800 on their gaming PC systems, representing $18 billion of the global gaming PC gear market. Globally, committed, competitive and casual gamers are estimated to have each spent on average $651, $179 and $14, respectively, on gaming PC gear in 2019.
Further, there were an estimated 729 million console gamers globally in 2019, according to Newzoo, driving demand for gaming console gear including controllers and console headsets. In addition, there were an estimated 6 million committed streamers on Twitch and YouTube alone in 2019, with those who purchased streaming gear spending an average of over $240 on capture cards, Stream Decks, microphones, lighting and other streaming gear in 2019.
As gaming, eSports and streaming continue to expand in the mainstream, casual gamers increasingly aspire to emulate committed gamers such as eSports athletes, and amateur streamers increasingly seek to improve their production value quality. We expect this will bring new customers into the gaming and streaming gear market, and push existing customers to improve their performance and content quality, in part through related gear spending.
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Our Market Leadership
Our focus on gamers and content creators, and our dedication to providing them with integrated high-performance gear have earned us a number one U.S. market share position in many of our key product lines according to June 2020 data from the NPD Group on a trailing twelve month basis and internal estimates.
We maintain our market leadership by staying true to the following principles:
Our Competitive Strengths
We are a leading global provider and innovator of high-performance gaming gear. We believe that we have a strong position in our target market, which consists of gamer and creator peripherals, and gaming components and systems markets, as a result of the following competitive strengths:
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products that have expanded the frontiers of gaming performance. As a result, we believe we have established ourselves as a leading brand among gaming enthusiasts and streamers, many of whom are active and prominent in eSports and act as ambassadors for our branded gear.
Our Growth Strategy
We intend to grow our business by increasing value to our customers, expanding our market opportunity and further differentiating ourselves from competitors. Key components of our strategy include:
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gaming PC peripherals, streaming accessories, console controllers, and prebuilt and gaming PCs and laptops. As the gaming and content creation landscape continues to evolve, we intend to continue to introduce new products and services to address our customers’ new and changing needs, and to grow our market opportunity.
Our Solutions
We design our high-performance gear to address the needs of gamers and content creators. To help our customers perform at their peak, whether in game or on camera, we have developed the industry’s most complete integrated ecosystem of gamer and creator peripherals and gaming components and systems.
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prebuilt systems and user-built systems are designed to deliver maximum performance, all the while providing our customers the design aesthetic and customizability they demand. Our solutions include our high-performance power supply units, or PSUs, cooling solutions, computer cases, and DRAM modules, as well as high-end prebuilt and custom-built gaming PCs, among others.
Our iCUE software platform powers the full range of our gear from a single intuitive interface, providing advanced performance tuning, user customization and system monitoring. By enabling our customers to fine tune the response of our gaming gear to maximize performance and match their personal preferences and styles of play, we believe that iCUE provides a distinct competitive advantage.
Risks Associated with Our Business
Investing in our stock involves a high degree of risk. You should carefully consider the risks described in “Risk Factors” before making a decision to invest in our common stock. If any of these risks actually occurs, our business, financial condition and results of operations would likely be materially adversely affected. In such case, the trading price of our common stock would likely decline and you may lose part or all of your investment. Below is a summary of some of the principal risks we face:
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The Reorganization and the Acquisition Transaction
Prior to the consummation of this offering and following the Reorganization described below, Corsair Gaming, Inc., the registrant, will own directly and indirectly all of our operating subsidiaries and assets.
In connection with the consummation of this offering, we will complete a corporate reorganization, or the Reorganization. Prior to the Reorganization, our North American operations and the majority of our international operations were conducted by certain operating subsidiaries held by separate entities, Corsair Gaming, Inc. and Corsair Holdings (Lux) S.à r.l., respectively, each of which was substantially owned by and under common control of Corsair Group (Cayman), LP, or EagleTree. EagleTree, through its general partner, is managed by affiliates of EagleTree Capital, LP, a private equity investment firm.
The Reorganization will be effected through the transfer of all of the outstanding capital stock of Corsair Holdings (Lux) S.à r.l., the entity that owns the operating subsidiaries conducting the majority of our international operations, to Corsair Gaming, Inc. in exchange for additional shares of our common stock. As a result, prior to our initial public offering, EagleTree will hold substantially all of our outstanding common shares and will hold approximately % of our common shares (or % if the underwriters exercise their option to purchase additional shares in full) following the consummation of this offering.
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On August 28, 2017, EagleTree consummated the purchase of the shares of the subsidiaries of Corsair Components (Cayman) Ltd., or Predecessor, for aggregate consideration of approximately $550 million, or the Acquisition Transaction. In the Acquisition Transaction, Corsair Gaming, Inc. acquired the interests of the operating subsidiaries conducting our North American operations and Corsair Holdings (Lux) S.à r.l. indirectly acquired the operating subsidiaries conducting our international operations. Corsair Components (Cayman) Ltd. is our Predecessor for financial reporting purposes.
The following chart generally summarizes our organizational structure prior to and following the Reorganization and the offering. This chart is provided for illustrative purposes only and does not purport to represent all legal entities owned or controlled by us:
Corporate Information
We were originally incorporated in 1994 and began selling branded high-performance gaming PC memory in 1998. In connection with the Acquisition Transaction, Corsair Gaming, Inc. was formed as a Delaware corporation on July 19, 2017. Our corporate headquarters are located at 47100 Bayside Pkwy, Fremont, CA 94538, and our telephone number is +1 (510) 657-8747. Our website address is www.corsair.com. Information contained on our website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus.
JOBS Act
We will be treated as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, for certain purposes until the earlier of the date on which we complete this offering or December 31, 2020. As such, in this prospectus we have taken advantage of certain reduced disclosure obligations that apply to emerging growth companies regarding audited financial information and executive compensation arrangements.