Corsair Gaming Reports 16.2% Decline in Q3 Revenue, Widened Losses and Deteriorating Cash Position

Corsair Gaming, Inc. reported a significant decline in financial performance for the third quarter and the first nine months of 2024 compared to the same periods in 2023. For Q3 2024, net revenue was $304.2 million, a decrease of 16.2% from $363.2 million in Q3 2023. The nine-month revenue also fell by 13.4%, totaling $902.8 million compared to $1,042.6 million in the prior year. The decline was primarily driven by a 25.9% drop in the Gaming Components and Systems segment, which was partially offset by a 12.8% increase in the Gamer and Creator Peripherals segment.

Gross profit for Q3 2024 was $69.7 million, down from $89.4 million in Q3 2023, resulting in a gross margin of 22.9%, compared to 24.6% in the previous year. For the nine months ended September 30, 2024, gross profit decreased to $219.4 million from $257.6 million, with a slight decline in gross margin to 24.3%.

The company reported an operating loss of $20.9 million for Q3 2024, compared to a loss of $0.8 million in Q3 2023. For the nine-month period, the operating loss widened to $55.9 million from $2.4 million. Net loss for Q3 2024 was $51.6 million, significantly higher than the $2.9 million loss in Q3 2023. The nine-month net loss also increased to $86.1 million from $8.6 million in the prior year.

Corsair's cash position deteriorated, with cash and restricted cash decreasing to $61.6 million as of September 30, 2024, down from $178.6 million at the end of 2023. The company also reported a substantial decline in accounts receivable and an increase in inventories, which rose to $293.0 million from $240.2 million.

Strategically, Corsair completed the acquisition of Fanatec on September 19, 2024, for approximately $43.7 million, which is expected to enhance its market presence in the sim racing segment. The company also made a significant investment in iDisplay, increasing its ownership stake from 51% to 81% for $19.8 million.

Operating expenses rose, with sales, general, and administrative expenses increasing by 6.2% for the nine months ended September 30, 2024, primarily due to higher legal and distribution costs. Interest expenses decreased due to a lower principal balance on the Term Loan, while the effective tax rate reflected a tax expense of (32.7%) for the nine months, influenced by a valuation allowance against deferred tax assets.

Overall, Corsair Gaming, Inc. faced challenges in revenue generation and profitability, compounded by strategic investments and rising operational costs.