Good afternoon, and welcome to the Corsair Gaming's second quarter 2023 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 listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star one on your telephone keypad. With that, I would now like to turn the call over to Ronald van Veen, Corsair's Vice President of Finance and Investor Relations. Thank you, sir. Please begin. Thank you. Good afternoon, everyone, and thank you for joining us for Corsair's financial results conference call for the second quarter ended June 30th, 2023. On the call today, we have our Corsair CEO, Andy Paul, and CFO, Michael Potter. Andy will review highlights from the quarter. Michael will then review the financials and our outlook. 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&A portion of the call, may include forward-looking statements related to the expected future results of 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. The GAAP financial information is provided in the press release issued after the market closed today. With that, I'll now turn the call over to Andy. Thank you, Ronald. Welcome everyone to our earnings call. The key takeaways for Q2 are: First, our revenue exceeded expectations for Q2, growing nearly 15% on a year-over-year basis. Consumer spending on gaming hardware is holding at significantly higher levels than pre-pandemic. We believe that even with a challenging macro-level e-environment, we're seeing increased activity due to new gamers that came into the mix in 2020, now starting to refresh and upgrade their gear. Second, gross margins showed strong growth with healthy inventory profiles and reduced freight costs. Third, we're now active again in M&A, which is a key component of our growth strategy. Our strong cash balance and low leverage is now allowing us to pursue M&A opportunities with the latest announcement made in July that we agreed to purchase Drop Incorporated. Taken together, we expect the gaming market to continue to be healthy for the balance of the year, with new game titles and lower-cost GPU cards in the market. We expect to continue to take market share with our continued new product rollouts. Let me take a few minutes to expand on these points. First, I'm very pleased to report that our results for the second quarter exceeded our original expectations. The gaming hardware market is healthy and appears resilient to macroeconomic effects, driven by new games and new graphics cards launching. For components used for building gaming PCs, depending on region, we see a 24%-28% increase from Q2 2019 - Q2 2023. For gaming peripherals, we see an overall increase of 57%-63% this year compared to pre-pandemic. Now, it's reasonable to consider current consumer activity as a post-pandemic baseline, since there's no evidence of increased current activity due to COVID-related stay-at-home behavior. Based on everything we're seeing and hearing, we believe this increased activity is coming from the surge of new gaming hardware buyers who entered the market during 2020 and 2021, which we now refer to as the COVID bulge. Since this comparison is now over four years, that would lead to a net CAGR from pre-pandemic to post-pandemic as approximately 5%-6% for PC platform building and 12%-13% for gaming peripherals. This is roughly in line with what we shared with investors over the years as expected growth rates for these categories, and we think it's reasonable to expect that this will continue over the next few years. Second, margins continue to improve in all categories. In our components category, we gained significant market share in 2022, that, on top of a healthy market, meant that we were running short of inventory in many, many of our top SKUs, requiring us to air freight in products to our hubs. We largely caught up with inventory needs by Q1 2023, so in Q2, we had the benefit of lower freight costs and healthy inventory positions, thus driving up gross margins. In gaming peripheral categories, we have had some delays in getting our new flagship products out. We also noted in previous earnings reports that we appeared to clear up our excess channel inventory faster than our competitors, so we decided to hold back from matching their high levels of discounting. Both of these things combined to cause us to lose some market share over the near term, but competitors' discounting has now largely calmed down. For example, we noted during Prime Day that while we had prices at reduced levels of discounts compared to previous Prime Days, we actually outperformed compared to the total category sales at Amazon in almost every one of the categories that we track. We saw that in Q2, while our gaming peripheral revenue was less than expected, by the end of the quarter, we were experiencing much improved margins and much better sales momentum going into and coming out of Prime Day and Prime Week. As our latest new flagship products get launched during the second half of this year and into early next year, we would expect to continue to gain market share and increase margins further. We're now active again on the M&A front as we benefit from our strong cash, cash balance and low leverage. There are a lot of M&A opportunities out there, and we have been disciplined in evaluating companies. We have acquired six companies to date and have a very good track record. Our latest announcement was in July that we agreed to acquire Drop, formerly known as Massdrop, a community-based e-commerce company specializing in customized DIY keyboards and keycaps, and many other enthusiast and audiophile products. Personalized keyboards that can be modified by the consumer is one of the fastest-growing trends in the gaming peripheral space. Drop is actively engaged with millions of enthusiasts to support its products and build and showcase gaming battle stations. Drop has proven to be one of the leaders in this space, and with Corsair's global footprint, we expect to significantly grow the Drop brand worldwide. We expect some significant opportunities and synergies here, both by offering custom versions of our products on the Drop site, as well as introducing some of their popular products into our worldwide channel. Our target is for this to mirror the success we have had with Elgato. As a reminder, we acquired Elgato about five years ago. We've increased their revenue by more than 3 times, and we've expanded the brand into other totally new revenue areas, including microphones, cameras, and lights. We also just did a soft launch of a marketplace a few weeks ago and expect this to grow over time. The new Stream Deck marketplace will allow third-party plugins and applications that run on our world-famous Stream Deck to be sold to our content creators directly from the Elgato website. Developers will now be able to easily access Elgato's large and rapidly growing Stream Deck installed base. We believe that these added plugins and applications will dramatically increase our installed base of Stream Deck users and open a significant new, new revenue stream for us as we make Stream Deck an even more useful tool. Overall, we're off to a strong first half and expect a further improvement in the second half of 2023. We expect the gaming market to continue to be healthy for the balance of the year, we fully expect to build on our leading market share in the categories we serve. Let me now turn the call over to our CFO, Michael Potter, for details on the financials. Michael, please go ahead. Thanks, Andy. Good afternoon, everyone. We're pleased with the substantial financial improvement in Q2, led by revenue growth, steadily improving adjusted EBITDA, and a more balanced inventory. We exceeded our near-term expectations for gross margins. We continued to be operational cash flow positive while investing modestly in inventory to support this expected stronger second half of 2023. In terms of the specifics, Q2 2023 net revenue was $325.4 million, compared to $283.9 million in Q2 2022. For the first six months of 2023, net revenue increased 2.2% to $679.4 million, from $664.6 million in the year-ago period. European markets continue to be softer than Americas, but are improving and contributed about 32.3% of our revenues, which is an increase from 32% in Q1 2023. Turning now to our segments. The gamer and creator peripherals segment contributed $78.8 million of net revenue during the second quarter, compared to $89 million in Q2 2022. For the first six months of 2023, gamer and creator peripherals segment revenue was $167.7 million, compared to $223.1 million for the first six months of 2022. The gaming components and systems segment contributed $246.7 million of net revenue during the quarter, an increase of 26.6% from $194.9 million in Q2 2022. Memory products contributed $108.9 million in Q2 2023, compared to $99.1 million in Q2 2022. For the first six months of 2023, gaming components and systems segment revenue increased to $511.7 million from $441.5 million in the first six months of 2022, with revenue from memory products increasing to $240.2 million from $231.3 million. Overall gross profit in the second quarter was $82.8 million, compared to $36.5 million in Q2 2022, which had lower revenue and an excess inventory reserve. Gross margin increased to 25.5%, compared to 19.7% in Q2 2022, without the effect of the excess inventory reserve. Ongoing improvements in freight costs, as well as new product introductions, were the main reasons for the improvement. Overall gross profit increased to $168.2 million for the first six months of 2023, compared to $127.2 million in the first six months of 2022. The gamer and creator peripheral segment gross profit was $25.5 million, compared to $10.6 million in Q2 2022. Gross margin was 32.4%, compared to 11.9% in Q2 2022. We benefited from a further reduction in excess promotions by some leading competitors on gaming peripherals in Q2, which we continue to believe will lead to further improvements in margins later in the second half of 2023. The gaming components and systems segment gross profit was $57.3 million, an increase of 121.3% from $25.9 million in Q2 2022. Gross margin was 23.2%, compared to 13.3% in Q2 2022. Our memory products gross margins in this segment were 14.6% for the second quarter, compared to 9% in Q2 2022. Second quarter SG&A expenses were $70 million, a 4.7% decrease compared to $73.4 million in Q2 2022, driven in part by reduced freight rates. This reflects the impact of some prior 2022 headcount reductions, along with our continued close management of all expenses as we support revenue-generating areas. Second quarter R&D expenses were $15.6 million, down about 13.5% compared to Q2 2022, as we've continued to prioritize our investments in our new products. GAAP operating loss in the second quarter of 2023 was $2.7 million, compared to a GAAP operating loss of $55 million in Q2 2022. As noted earlier, the year ago period included the impact of the excess inventory charge. Second quarter adjusted operating income was again a bright spot for us, increasing to $15.9 million, compared to an adjusted operating loss of $14.2 million in Q2 2022. Adjusted operating income increased to $34 million for the first half of 2023, from a loss of $0.9 million in the first half of 2022. Second quarter net income attributable to common shareholders was $1.1 million, or $0.01 per diluted share, as compared to a net loss of $59.4 million, or a loss of $0.62 per diluted share in Q2 2022. On an adjusted basis, second quarter net income improved to $9.8 million, or $0.09 per diluted share, compared to an adjusted net loss of $19 million, or a loss of $0.20 per share in Q2 2022. For the first six months of 2023, adjusted net income improved to $21.8 million or $0.20 per diluted share, from a loss of $9.8 million, or a loss of $0.10 per share in the first six months of 2022. Finally, we increased the second quarter adjusted EBITDA to $17.8 million, compared to an adjusted loss of $11 million for Q2 2022. For the first six months of 2023, adjusted EBITDA increased to $38.3 million from $4.4 million in the year ago period. Turning now to our balance sheet. We ended Q2 with a cash balance of $184 million. Shortly after quarter end, we invested in growth via our acquisition of Drop, which Andy provided details on earlier. This will be reflected in Q3, the acquisition cost was not significant and was in the low double digits of millions of dollars. We ended Q2 with $228 million of debt at face value, and our $100 million working capital revolver remains undrawn and fully available. Overall, we expect liquidity to remain excellent for the rest of 2023, allowing us to be flexible as opportunities present themselves. We are pleased that the first half performed slightly above our expectations, and we believe that we're well positioned for the second half. Both channel and our inventory are in a healthy state. We are closely monitoring this because of economic headwinds from high interest rates and inflation affecting consumer confidence, we continue to believe that we have substantial white space to sell into and room to recapture market share as excess discounting in gaming peripherals eases and as new products continue to be introduced. In terms of the full year 2023, we are reiterating our previous outlook of flat to up revenue. We continue to expect total revenue in the range of $1.35 billion-$1.55 billion, adjusted operating income in the range of $75 million-$95 million, and adjusted EBITDA in the range of $90 million-$110 million. We're now happy to open the call for questions. Operator, will you please open the call for Q&A? Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your touch tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Aaron Lee with Macquarie. Please go ahead. Hi, good afternoon. Thanks for taking my question. I wanted to start with the guidance range, which you obviously noted in the release, incorporates, you know, a softer macro. It seems like there's greater confidence out there that the U.S. will avoid a hard landing. Could you just talk about the degree to which a stronger-than-expected macro environment would impact where you land in your guidance range versus some of the things that you can control? Well, let's, let's be clear. If the economy improves, obviously, our revenue will go up and vice versa. I think that the sense we had at the beginning of the year, which was that the market would be roughly flat, is what we think about today, so that hasn't really changed. I think the sense is that the market was slightly down, the consumer market in general, and, and you've seen that across different industries. A lot of parts are down, some are flat. Certainly a little, little further down than we thought, and we think the second half will be a little further up. I think it's gonna end up. Yeah, the full year is probably gonna be flat, as we expected. That's the overall market. The range show has a decent possibility of growing year-over-year for us. Yes. Yep, understood. Fair enough. As a quick follow-up, you guys have done a great job expanding the Corsair ecosystem, like with iCUE LINK recently, and obviously, you had the acquisition of Drop. As you think about your peripheral ecosystem, can you talk about any white spaces that are left? Yeah, there's quite a few actually. A couple of things we're pretty interested in. One is, one is mobile gaming, and at the moment, mobile gaming is largely done on the phones. I mean, that's the attraction of it 'cause the, you know, no peripherals needed. There is a, there is a growing opportunity for, you know, wraparound controllers that you can put a phone or an iPad in. It's a relatively small market now, but we're watching that carefully to see how that evolves, especially with Game Pass, you know, which allows you to play on, on the same game on different platforms. That's one. We're very interested in sim racing. We see that as a full simulator that you use to, you know, pretend you're an F1 driver. That has grown significantly, that market, especially in the U.S., after Drive to Survive came out, which has got everybody interested here in F1. It's already pretty big in, in Europe, but that is starting to expand. That's a nice market for us to move into because it, you not only need a system, but you need a whole bunch of peripherals, like a cage and a seat and pedals and wheels and that sort of thing. We're, we're pretty interested in that market. Obviously, we've always been looking at VR goggles. Now, at the moment, we don't think there's a big opportunity to make money on VR headsets. It's still a very early market, but we're watching that space carefully as well. Fantastic. Thanks for the color. Your next question comes from Eric Sheridan with Goldman Sachs. Please go ahead. Hi, guys. This is Lena in for Eric. Thanks for taking my question. I just had a few on the Drop acquisition. First, could you just speak to what the deciding factors were that led you to acquire Drop? How should we be thinking about the timing in terms of integration and the synergies that you see? Thanks. Yeah. The main reason we bought Drop was that, as you possibly or probably noticed, most of the acquisitions we do are direct-to-consumer, and Drop is no exception, so it's all direct to consumer. That's because over time, we want to expand our direct connection with consumers so that we can sell them multiple items. Most of the products that we sell to consumers through the channel, you know, is one at a time. Obviously, a, a gaming platform, like a gaming PC, there's, you know, 5 or 10 different things that you can sell somebody. That's the first thing, is a strong e-commerce platform. The second thing is, it was a community-based, enthusiast e-commerce player, and so a lot of the things that they were selling were being sold to very similar customers that we already have, but slightly outside the traditional people that are building gaming PCs. It kind of expands our market, but in the same genre. Thirdly, they've done a really good job with mechanical, what we call DIY keyboards. This is a growing trend among enthusiasts and actually some people that would never even think about gaming or building a gaming platform, but just like to have something different on their desk. These are keyboards that you can have a variety of different key switches, keycaps, and then you can change them like clothes, you know, every few months. When we looked at that, the overall packages, it was pretty interesting, and that leads us into the synergy aspect. Obviously, we have an enormous footprint throughout the world, mostly in the channel. What we want to do there is take a lot of the key SKUs that they've got and put them into the channel with the expectation that, that we can then continue to sell things like different keycaps to those customers directly. Then we'll take some of our products that are difficult to sell through the channel, like accessories, cables, this sort of thing, and we'll run those through the Drop site. In terms of acquisition, we've got a, we've got a probably a six-month scheduled out integration, where we'll be largely trying to, you know, combine activities, save some, some OpEx. The revenue synergy, which I'm more excited about, is gonna be ongoing. We're starting that immediately, we're looking at SKUs now that we can put into the channel. Some of that takes some time. You know, if you want to put a product into Best Buy, you know, the next window is probably Q1. That'll happen over the next year or two. Okay, great. Thank you. Your next question comes from Drew Crum with Stifel. Please go ahead. Okay, thanks. Hey, guys. Good afternoon. On your peripherals business, can you comment on your retail inventory position heading into the second half and the conversations you're having with retail partners and their willingness to restock inventory levels going into the holidays? I have a follow-up. Yeah, I mean, Q2, the time we got well into Q2 is pretty neutral. I think we've, in terms of our sales in versus sales out, I think we've said on previous calls that we largely cleared up our channel inventory last year, overall, to the tune of about $100 million, which we thought was an excess. This year has been generally neutral. Obviously, depends on category, but, yeah, I wouldn't say we're concerned about having too much inventory in the channel at this point. Okay. Andy, just to follow up on the Drop acquisition, you know, I think there was a comment in your preamble suggesting that you hope to replicate your experience here with similar to Elgato. Is that more of a qualitative comment, or would you aspire to grow sales three times as, as you have with the Elgato asset? Thanks. Well, well, both. I mean, we we're not obviously including that in any kind of guidance because we've been together for 5 minutes, you know? But I think there's a big opportunity. I don't know how big that is yet, because the, the, the DIY keyboard market is very new, and there's lots of small players. It is similar to when we bought Elgato, and that the streaming market was then very small. And we're anticipating that this market, you know, will grow at a fair crack, but it's, it's very. It's too early to say whether this is something we could double sales or triple or... We obviously believe we can, make, you know, some significant impact. Okay, got it. Thanks, guys. Your next question comes from Colin Sebastian with Baird. Please go ahead. Yeah, good afternoon. This is Reese on for Colin. Hey, Michael and Andy. I guess we have two questions. One would be, could you maybe just talk about the keys that-- the keys to success that worked with Elgato and the products there? You know, maybe some of the things you did more on the internal side that wouldn't be as present to investors that, you know, you could maybe replicate with Drop. Then, you know, maybe just looking at the guidance, what is, you know, looking at the environment today, what is required to kind of maybe get to the upper end of the, upper end of the guidance range? What does the environment need to look like for that to happen? Thanks. All right. Well, let's hit those one at a time. What we did with Elgato was fairly straightforward, and it's actually typical to most of the startups. Let me back up a second. Most of the small companies we buy, and I'm talking about sub- 50 million companies, spend half their life, you know, battling cash flow. Significant, a significant amount, amount of their overhead is in G&A. We're just not able to focus on purely, you know, bringing products to market. That's no different than Drop. You know, it's been a bit of a struggle for that company over the last few years to be cash flow positive. They spend, you know, a lot of their time, you know, trying to raise money and that sort of thing. All that goes away, allowing them to completely focus on, on said products we're bringing into market. That was very similar to Elgato. When we, when we did the Elgato carve out, you know, we left behind the G&A because it was a, it was a company with two divisions, we bought one of them. That, so that's the first thing, is focus. The second thing is we took a lot of their key products into a much wider channel. With Elgato, within about three months, we had some of their key products in every single Best Buy store. We're obviously gonna try and replicate, replicate the same thing, with Drop. It's just that you never know how fast this stuff can roll out. We're a bit too late now to sort of get into pre-2023 holiday situations. Those things are usually planned out in advance. Yeah, we're gonna try and do exactly the same thing. It's just a question of how big the market is and how fast the market grows. The second question was on guidance and what's gotta happen in the environment to hit the high end of our, high end of our guidance. I'd say it's what we were talking about earlier. You know, we're looking, we're looking to see how, how much the market sort of recovers, how much it grows. As I said earlier, it's significantly above pre-pandemic levels, and it feels like we're sort of getting to a point where in generally, the economy is looking at a soft landing, and I'm already seeing pretty good results from Prime Day, both at Amazon total and our results at Amazon. It does feel to me as though the market, you know, the market started off being a little underwater from last year, the beginning of the year, and now it's much more neutral. If that continues to go positive and goes positive in a large way, and we do what we're supposed to do and gain market share, and continue to bring our products, then I'm sure we'll be at the higher end. If the market is much flatter, then that becomes more difficult. Yep, yep, got it. Maybe just as a follow-up to that, can you maybe just provide some color on where the promotional environment stands with your competitors in the channel and, and what you're seeing there? Thanks. Yeah. I mean on, in peripherals where, you know, that's a bit more seasonal and a bit more of a spike you tend to get on Prime Day and Black Friday and that sort of thing, there was much less discounting going on with our main competitors than previously. We, we actually found that with less discounting, we did a lot better than last year. That meant that, you know, the lower discounts were much more attractive compared to people offering things at half off, etc. I presume that happened because our competitors were largely, you know, taking care of the inventory bubble that they had, and they were getting to the point where they didn't see the need to run clearance all the time. Thank you. Your next question comes from Doug Creutz with TD Cowen. Please go ahead. Hey, yeah, there was a pretty big industry release late in Q2, and I just wondered if you could comment to any games that you think might have helped push either PC builds or peripheral sales. Then just looking ahead to Q3, I think Starfield is coming out, which is probably a big PC title, and, you know, just your view on whether that could be an important game in driving PC builds. Thanks. Yeah, I think the, the one that everybody was talking about really was Diablo IV over the last quarter, that we think helped. I put in the in the deck, I don't know if you've seen that yet, but the deck's on our IR website. There's, there's about 8 new games that we've, we've listed. I think there's a new, there's a new Call of Duty coming out at the end of the year, which will be pretty big. Cyberpunk is releasing something in September. Yes, Starfield in September. Counter-Strike 2 is listed as summer of 2023. That would be huge. Yeah, there's a lot of games. I think first, first half, probably Diablo was the, was the biggest one, and I suspect, yeah, Call of Duty and Counter-Strike for second half. I think the most interesting thing is if you look at the required specs for the new games coming up, they're much higher than they've been. If you want to get all the eye candy and the extra features, you're really targeting a much higher spec PC, more memory and much higher-end video card, which means more power requirements. It fits pretty well into, into the suite of products that we do. Yeah, that's a good point. Great. Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star followed by the one. Your next question comes from Mario Lu with Barclays. Please go ahead. Great. Hi, this is Jack Butler in for Mario. Thanks for taking my questions. I was just wondering whether you could talk a bit more about some of the partnerships you now have in place with content creators. A couple of quarters ago, you announced the NICKMERCS partnership. Now we get CouRageJD. I'm just curious, maybe what sort of response have you seen from the, the gaming community to these, specifically, like if there's any indicators you're seeing that these partnerships are, are working, and then maybe how that initiative has evolved or will continue to evolve, if there's any update to how you're thinking about, about partnerships? Yeah, I'd say... Well, firstly, I mean, we've got a lot of different partnerships. I mean, these are two pretty big names. We've been with NICKMERCS on the SCUF side for some time. Courage is new, but it's too early to draw any conclusions for how that works. You don't see a big spike immediately for many of these things. Yeah, look, I think you have to wait till next earnings or later in the year before we can give you any meaningful data from that. Got it. Great. Thanks. There are no further questions at this time. I will now turn the call over to Andy Paul. Okay, well, thank you, everybody, for joining us on the call today, and thanks for the continued support. 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. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.