Hi, I am Doug Creutz, senior media and entertainment analyst here at TD Cowen. I'm very pleased to have with me here today, Michael Potter, CFO of Corsair Gaming. Michael, welcome. Thanks, Doug. I'm happy to be back to your conference again this year. I have a few introductory slides to quickly go over the top-level Corsair story, and then, Doug will grill me with his questions like, like every year, I guess. Just quickly, we're a full feature gaming hardware company. So pretty much any type of gear you need for a gaming PC and for some consoles as well, gamer and creator peripherals, keyboards, mice, headsets, full line, very, very good, decent market share. For the console side, we have SCUF, which has very, very high-end customizable controllers. They also make a PC controller called the Envision, which is doing quite well for us. And then, on the streaming gear side, we own Elgato. So if you're planning on being a YouTuber or a Twitch star for live streaming, between the Stream Deck and all the other gear that that Elgato has, you'll be quite prepared for it. And then on the other side, if you're going to build a gaming PC, pretty much everything except for the GPU and the motherboard and the CPU we provide. The cooling, the case, the power supply, fast and very, very good memory, all looking great in a well put together package. And if you like, it's very, very glowy with RGB lights as well, but we do have versions without it, if you're not so much into that. There's a really big white space opportunity for gaming. If you look at the statistics of how big the gaming market is, I mean, 1.6 billion people is what they say, but honestly, I don't know anybody that hasn't even, like, grandmothers, that hasn't at least played a game on their cell phone or something. So it's not like a case where you need to find gamers, but if you look at how many people have actually spent money on, you know, dedicated gaming gear, it's a lot smaller. And as people learn that you can get a much better experience playing on better hardware, that market continues to grow, and the TAM continues to grow. So there is still a very big white space that Corsair can grow into. Gamer and creator peripherals that grew 20% year-over-year in Q1, and we had about 40% gross margin, which is a record gross margin for us. In the components and systems area, we have very high market share, and we've been at that for quite a long time. We have lower market share, and the market itself is growing faster in peripherals, so we have a lot more opportunity to grow more quickly there at better margins. It does come at a cost of a little higher marketing cost compared to the components and systems cost, but still, it delivers very nice bottom line results, even with that additional cost. We've used M&A in the past, though we've grown organically for a lot of the products we have, but we haven't been afraid to use M&A. Typically, we look at a space that we'd like to enter, and if there's somebody already there that's well-positioned, it'll save us time, or maybe expertise. Elgato is probably the best example. We were interested in the streaming market because streaming is very adjacent to gaming, with a lot of Twitch content being gaming content. And the amount of time and effort to learn all the audiovisual software would take just a very long time to establish ourselves, whereas Elgato was available. Ended up being a great acquisition for us, grew very rapidly, and added a lot to our results. We've also bought SCUF. We bought Origin PC, it's a high-end gaming PC company. Recently, we bought Drop, which is customizable keyboards and a nice e-commerce platform and some expertise around that as well. So we've been certainly willing to do an acquisition when necessary or build the business ourselves organically. We have a few future launches coming out. One thing that's coming out is this idea of sort of customization. A lot of our younger customers, in particular, really want their own customized experience for the gear that they own, and both Origin PC and, in particular, SCUF, really brought that capability to the company. So we're gonna be rolling that out more broadly to more of our products, and there'll be more specific announcements on that coming soon, but it's gonna be a very nice part of our ability to deliver an even better experience for our customers. We'll also be coming out with a mobile gaming controller very soon, that'll allow you to play on your iPhone and, you know... In particular, all the Game Pass games or games that use a traditional type of controller will allow you to play it much better on your phone. We're also coming out with some racing sim gear. You know, we've said in the past we'll be announcing this at Computex, so it'll be a full suite of gaming gear, and all the details will be out, I guess, next week, because that's when Computex in Taipei is. That's a rapidly growing market that we're quite excited about. And that's a very top-level overview, and I guess I'll go and try and answer Doug's questions, and not trip over the light this time. Thanks, Michael. You know, I think right now, the general investor view about the video game space is a bit of a concern of lack of growth or perceived lack of growth. There's been a lot of layoffs around the industry. A lot of that centers on console, where, you know, the installed base of consoles isn't really growing cycle over cycle. But one thing we've seen is that PC software growth is outstripping console software growth by a pretty healthy margin right now, and has been. It feels like PC is taking share away from console, perhaps among core gamers. So can you talk a little bit about why you think that might be happening, and what's the outlook for that to continue over the next five years? So our general experience for people that are serious about gaming, they'll own a console or two and a gaming PC. So people that are really gamers, they'll own different, they'll probably game mobile as well. So it's sort of whatever is the best use for the game they're playing and the social environment they're wanting. I think that the console skews a little younger for gamers, and then the PC is a little bit older. It's sort of a journey. As you learn how to game on these other devices, eventually you realize that the superior experience is in PC, and then people move over time into PC gaming, and then they stick there. So the length of time that you can be a PC gamer is a lot longer, likely, than you'll be in console gaming, and that's why I think it kind of drives the longer term and higher growth for it. We've been quite encouraged by, by that, and the data says that it should continue to grow quite nicely. The experience of gaming on a PC tends to be a lot better than gaming on a console, unless it's an in-person social thing where, like, a few people are sitting on the couch. It's a little harder to replicate that with a gaming PC, but otherwise, the experience on, on the gaming PC is just better. You mentioned in the deck you talked about your peripherals having a very strong quarter in Q1, and you had record segment gross margins north of 40%. Can you talk a bit about what drove that? And then on your last call, you said you could maintain 40% plus gross margin. So is that a mix shift issue or are there other things going on there? So the peripherals area was an area that was a little bit weak for the last few years. It probably was impacted the most by the COVID jump and then the correction afterwards. A lot of inventory in the channel. A lot of our competitors had a lot of inventory on their balance sheets, and there was heavy promotional activity, very difficult to market into that environment. So we sort of and components was doing quite well then, so we sort of took that opportunity to retool. So I think a lot of the success is from the work that our teams did to come out with better products. On the keyboard side, we had few wireless keyboards and not as much variety of the smaller form factor keyboards, which are more popular. So now we have a lot more wireless keyboards and a bigger variety of 60%, 65, and 75% with and without 10-key, depending on the gamer preference. For mice, it was the same thing. We had some great mice, but almost no wireless mice. So the best example of a recent wireless mouse for me is the Scimitar mouse. Scimitar mouse is an MMO mouse with all the extra buttons on the side. So now I have a wireless version, whereas before I had a wired version. The wireless technology is so much better and the battery technology is better, so gamers feel more. They don't feel that they lose reaction time by using it, and they're quite popular. So we have many more wireless mice, and that's doing well. Headsets was this—you know, we really thought that some gamers really want to have different radios, in particular Bluetooth. If you're spending a reasonable amount on a stylish and good quality headset, you want to use it on your phone as well as just on your PC, or even just switch, take a call on your phone when you're gaming and a call comes in without taking your headset off. So we offer that for a lot more of our headsets. So overall, I think we just hit the market better. We also were very strategic in the features we offer for the more mainstream, we call the core series of keyboards, for example, so that those have a certain promotional pattern, particularly in different seasonal holiday periods where there's more promotion. So the ones we came out with are much more able to do normal promotion and not leave a lot of margin on the table when you do that. So they were, you know, I think they're quite well designed, and the market responded well, and that was a lot of work we did in the background on it. The Envision controller from SCUF has been a pretty big hit for us. That's done quite well. And we've been— we're a little bit worried 'cause we made it PC only. It sort of looks like a console controller, but doesn't have every single thing a console controller has. But it's got extra buttons for macros, which is a little bit more of a keyboard experience, and it's been a huge hit. I mean, the SCUF, back paddles and the ability to customize the trigger points and customize the way the joysticks and stuff work, and the ability to go to the SCUF website. You know, you can go to Best Buy and buy the basic model, and you go to the SCUF website and get a much more colorful, customized version. Then you go to Best Buy and buy the standard version and go to SCUF and buy the new faceplate if you want to do something. So I think that's been quite, quite a good hit for us. And finally, Elgato's Stream Deck continues to do really well for us. And SCUF and Elgato both have higher margins in general. SCUF, because it's more direct to consumer and the customization part. Elgato, because of the excellent software suite that's behind it. We also recently released the Elgato Neo suite of products, which is white instead of black. I think that was a very difficult thing for the Elgato guys to move off of basic black. But it's aimed at the more mainstream market, whereas the mainline Elgato thing is a little bit higher, more pro streamer type target. So I think just very good strategic positioning and thinking about it. Stream Deck also keeps on finding uses outside of just running a stream. One of the more recent kind of fun one is in Helldivers 2. There's different procedures and stuff you can do to call down extra help. That's called tactics or something. I haven't played the game, so I don't know it, but they, somebody figured out that you can program them all into the Stream Deck, which has a nice LCD button, so in the heat of battle, you can quickly look and push the button. So we saw that application show up on our App Store, which is now part of our, our revenue stream, and then we saw a big group of people buying it, and then Stream Deck sales went up. So I think that's an example. As more people discover how good the Stream Deck is, the better it does. So, you know, the market recovered a little bit 'cause of less promotion, and that helped the margins. I think the overall performance is because of the things that Corsair has done very carefully to position ourselves better, and it really, like, always deliver things that gamers want. Okay. Switching over to performance memory, you hit a high in gross margins there in 2020 for obvious reasons, and they've been sort of declining since then. Do you think we've reached a point of margin stability for that business? And in general, how should investors think about the major drivers of margin in that business? So I think that we're in a much more stable environment now. In 2023, the prices end of 2022 all through 2023, prices of chips came down pretty steadily. Not really so much because of the PC market. I think a little bit of the cell phone market is a little weaker. On top of that, they had enough supply and maybe more supply than the market needed for DDR5, so the chip manufacturers adjusted, and then the prices stabilized at the end of Q3, beginning of Q4. When the prices go down in general, you know, with the overcapacity, it pressures margins, 'cause as it goes down, the inventory you have is a little bit more expensive than the current perceived market price. When it stabilizes and goes up, you can get more reasonable margins. Somewhere around mid-teens, and I always like to say it could be between 13%-17%, and, you know, memory is a little bit more of a 13%-15% type product, but it has very low marketing costs, and we're extremely good at, you know, we have leading market share, well over 70% in the U.S. And through all this pricing stuff, we've managed to maintain our market share. So I, I'm quite happy with our memory business, and I think it's doing well. Okay. Back in early 2022, you had an analyst day where you suggested your five-year growth rate could be in the low double digits or even low teens, based on long-term market trends and your ability to take share. Have we reached a point where that long-term growth potential can start to assert itself? I think that, with the GPU cycle, you know, quite potentially, based on the comments from NVIDIA's earnings call recently, that there's probably a new GPU coming out at the end of this year. That should help our components business, which is a little bit more strongly tied to the GPU cycle. And I think the success we've been having with our peripherals business recently, and just the distance from when a lot of people geared up a lot during COVID, so a refresh cycle will also be kicking in. I think all those combined means that the end of this year should be good, and then, you know, next year should be quite good as well. So we're feeling, PC market, gaming market is growing. The main big AAA software titles all did well last year, so we think that leaves a good backdrop for people to spend more time on their computers. And the products we're releasing, we think are quite strong and quite good. So we're looking forward to a good growth. We did have, as you'd sort of implied there, we had a pretty big AAA release year last year. This year seems a lot narrower than in 2025. You know, we're gonna get GTA VI, but it's unclear whether that's coming to PC or not. They so far have only announced console, although I don't know why they wouldn't bring it to PC. But you know, how much does the overall software slate drive or not drive the underlying hardware business and the peripherals business? I mean, it definitely makes a big difference. So on the peripherals side, the best example more recently is Fortnite. So headset sales exploded after Fortnite became popular because everybody was playing it, and you had to be in the team, and you had to stay in communications, and speakers just didn't cut it. So everybody sort of moved to headsets. And although there's not as many AAA games meant to come out this year, the games that came out last year are 100+ hours to play. A lot of gamers have not finished playing them, so they're gonna keep playing them this year. And the longer you stand in front of your computer, the more— If you don't like your keyboard, the more likely you are to go and buy a new keyboard. Peripherals is a little bit more of an impulse purchase. I mean, to buy a $2,000-$4,000 gaming PC is, most people at least think about it or do some research or take their time to do it. But if you don't like your mouse because you died one time too often, and you've thrown your mouse against the wall enough times, it's easier to go get yourself a better mouse than, than, you know, completely replace the gaming PC. The other thing that's helped on the component side is that the system requirements to run all the bells and whistles on, which PC gamers, they have machines powerful enough for the bells and whistles. The memory has stepped up from 16 GB to 32 GB. It's a standard requirement, so we think that's gonna drive more memory content in the next generation of PC builds. And the GPU requirements, they're much faster to go with the higher-end GPUs in the past. Usually, the game makers would aim at more the mid-range or the lower-end GPUs just for total volume, but they seem to be a lot less afraid to have the higher-end ones spec'd in if you want more of the features. That means better cooling and better power supplies are needed. And if people spend more money on the total PC, they tend to get a better case, and it's in a sweet spot of, you know, 850 W, 1000 W, 1200 W power supplies, Corsair is very strong at. 650 W power supply is the market for that because people are spending less money. They do a little bit less research, a little bit more of whatever power supply happens to be on sale. But when people actually do the research, they find out exactly how good the Corsair components are, and they're willing and more likely to come in and buy our gear. So I think that's sort of the interplay between these games. The games moving up the specs needed for your PC helps the component side of the business, and then more game playing helps peripherals. The more time in front of the computer, the better peripherals you want. You mentioned you're gonna be launching a mobile controller sort of imminently. How big of a market is that? 'Cause I would think that would be something where there potentially is a lot of headroom for growth, especially with, you know, cloud gaming becoming more of a thing, and Microsoft obviously has a big push behind that. There's actually not an enormous market right now for mobile controllers. I mean, for the most part, games on cell phones have been designed to use the touch screen, so there hasn't been a huge advantage to it. I think Game Pass and similar type of games make a big difference. They can emulate the controller on the screen, but it really doesn't work as well as having some sort of a attachment to the phone. So you know, this is like hundreds of millions of dollars of market opportunity, but you know, not as big as the racing sim market, we believe today. But we do believe that because it's gonna, you know, it's a SCUF product and has a lot of the innovations to improve the gaming that SCUF brings, we think it'll be quite a good product, and we're hoping that it'll be as good, longer term as our PC gaming controller we just came out with. Talk about the racing sim market too, 'cause I would have thought that would be a pretty niche market, but it sounds like it's a bit more than that maybe. So talk a little bit about what the opportunity is there. So we believe the TAM is about $1 billion or over $1 billion, and it's, you know, very divided between very lower end, sort of clamp to your desk, plasticky type, you know, racing wheels, to a full sim with a full rig and everything, you know, a sturdy base for your seat to be on and all the rest. So we do think there's a pretty good opportunity in that market. You know, we have a reasonably high-end set of gear coming out. We'll talk more about it next week at Computex. But you can see from the picture, includes the rig that you attach all the gear to and the chair as well. So I think the market acceptance will be quite good, and the group is fairly excited about it. I'm not a car guy, but I know my boss is, and he's got the prototype gaming thing has been outside of his office for, since we had it now. Of course, it's also next to the people running that program, not necessarily just for Andy, but it's something we've looked at quite carefully for quite a while. Is VR typically a part of those setups? Do people utilize that, or is it still, you know, on a computer screen? Usually, it's on a computer screen. There's a few of the titles that have a decent VR component to it. Typically, we've kept a careful eye on VR, but it's hard to make a hardware argument that we should compete with people like Meta at the price point they're selling their goggles at. So we've tended to make a really good computer that runs VR very well, and, you know, that's how we participate. If for some reason there's more of an opportunity to move into that market, we would. Yeah. For the most part, these rigs have the ability to connect one or more monitors to it, and most people game using monitors. And then obviously, you got into this market through an acquisition. Can you talk a little bit about generally what the environment is for M&A in gaming hardware and so forth? You know, how hot is the market or how not hot is the market right now? I mean, we didn't make an acquisition, at least yet, in racing sims, but, I mean, we got into the console market by buying SCUF. Yeah. So I think that, you know, the SCUF experience is an example, you know, if you're gonna do it, sometimes you get an acceleration by buying somebody that's already there, that's the right fit with the company, higher end, well-liked by customers. You know, we tend not to buy very low-end, mass market type of items, and that's been a successful collaboration with them. Elgato was a great opportunity where they had grown, but they kind of hit a wall, working capital, dealing with the channel. They, you know, they couldn't grow more faster. But inside Corsair, with the ability and the channel management that we have, we could quickly expand it. We also took all the admin burden off of the really good product team there and just absorbed it into the existing Corsair team, so they can concentrate on releasing great products, so their cadence of releasing products stepped up. And they didn't need to worry about, you know, this year, we want to spend extra on R&D. Well, Corsair has the resources that we can steer it to places we think have good returns, so we did that in that, that case. So we tend to be thoughtful and careful about the M&A, but that's sort of what we targeted at. Okay. Can you talk a little bit about where we are in terms of the overall macro environment and how that's impacting your business? Obviously, we had a stretch there where we had inflation, and in Europe, you had war going on, and it was disruptive. Do you feel like we're sort of back to the normal situation, or does the consumer still feel a bit pressured? I think Europe returned a little bit more to normal compared to after Russia invaded Ukraine, so that market is a little bit more normal. Obviously, when there's a little bit of economic bad news or worry out there, the decision to buy a new gaming PC maybe takes a little longer, particularly when people kinda know there's a new GPU coming out relatively soon. So the macro environment is the normal, let's wait for the new thing to come out versus buying it now, and do I really want to spend money on something today? Otherwise, I think it's been reasonably okay. We haven't had a tremendous amount of inflationary pressure on our supply chain. So, you know, we haven't had a huge surge in costs we've had to deal with, so that's all been okay. Okay. Any questions from the audience? We've got a couple minutes left. [audio distortion] P something or other. I never heard of them, so, but I'm not a console guy. I think they make very low-end, very, very low-end gear, so it's not in a market that we've paid much attention to. So obviously, I don't know much about that. I mean, we've announced that we're looking at a company called Fanatec, which is one of the leaders in racing sims. So we're in a process now in working with them. And we've always been active in the past in the M&A market. So most opportunities come to us sort of by the fact that we're active in the market and willing to purchase something that's good. So I can certainly see us being continually active in the M&A market going forward as well. I don't know how much consolidation it really is to whereas people just really hit a wall after a certain size, and it, it's hard for them to grow bigger, with any good speed. You know, we have a good track record of keeping management teams or keeping the core people from the group and even some of the brand names. So it's a friendly type of acquisition, environment. I mean, obviously, it'd be Logitech, Razer, and SteelSeries. Those are probably the three that in the peripheral space. Component space, it's a whole bunch of, smaller companies, for the most part, or people that make other computer gear, like motherboards and graphics cards, that maybe also have a line of power supplies or something. So it depends on which side you're talking about. All right, well, I think we're at time. So, Michael, thank you very much. Thanks, Doug.