Corsair Gaming, Inc. 10-Q

Item 1. Financial Statements (Unaudited). Corsair Gaming, Inc. Condensed Combined Consolidated Statements of Operations (Unaudited, in thousands, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net revenue $ 391,121 $ 457,103 $ 1,393,438 $ 1,146,028 Cost of revenue 289,759 329,159 1,001,397 834,398 Gross profit 101,362 127,944 392,041 311,630 Operating expenses: Sales, general and administrative 76,112 65,321 234,134 175,877 Product development 14,495 12,902 45,150 36,285 Total operating expenses 90,607 78,223 279,284 212,162 Operating income 10,755 49,721 112,757 99,468 Other (expense) income: Interest expense ( 7,202 ) ( 10,170 ) ( 16,656 ) ( 29,116 ) Other (expense) income, net ( 1,402 ) 23 ( 4,002 ) ( 29 ) Total other expense, net ( 8,604 ) ( 10,147 ) ( 20,658 ) ( 29,145 ) Income before income taxes 2,151 39,574 92,099 70,323 Income tax expense ( 374 ) ( 3,217 ) ( 15,854 ) ( 10,149 ) Net income $ 1,777 $ 36,357 $ 76,245 $ 60,174 Net income per share Basic $ 0.02 $ 0.43 $ 0.82 $ 0.71 Diluted $ 0.02 $ 0.40 $ 0.76 $ 0.69 Weighted-average shares used to compute net income per share Basic 93,918 84,871 92,894 84,352 Diluted 100,041 90,084 100,116 87,499 The accompanying notes are an integral part of these condensed combined consolidated financial statements 2 Table of Contents Corsair Gaming, Inc. Condensed Combined Consolidated Statements of Comprehensive Income (Loss) (Unaudited, in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income $ 1,777 $ 36,357 $ 76,245 $ 60,174 Other comprehensive gain (loss): Foreign currency translation adjustments, net of zero tax ( 1,943 ) 2,378 ( 1,297 ) ( 1,217 ) Unrealized foreign exchange gain (loss) from long-term intercompany loans, net of tax benefit (expense) of $ 24 and $( 128 ) for the three months ended September 30, 2021 and 2020, respectively and $ 56 and $( 24 ) for the nine months ended September 30, 2021 and 2020, respectively ( 121 ) 691 ( 282 ) 580 Comprehensive income (loss) $ ( 287 ) $ 39,426 $ 74,666 $ 59,537 The accompanying notes are an integral part of these condensed combined consolidated financial statements 3 Table of Contents Corsair Gaming, Inc. Condensed Combined Consolidated Balance Sheets (Unaudited, in thousands, except per share amounts) September 30, 2021 December 31, 2020 Assets Current assets: Cash $ 71,922 $ 129,543 Restricted cash 4,176 3,795 Accounts receivable, net 252,406 293,629 Inventories 331,938 226,007 Prepaid expenses and other current assets 47,682 37,997 Total current assets 708,124 690,971 Property and equipment, net 16,367 16,475 Goodwill 313,793 312,760 Intangible assets, net 234,141 259,317 Restricted cash, noncurrent 231 230 Other assets 69,033 34,362 TOTAL ASSETS $ 1,341,689 $ 1,314,115 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 247,509 $ 299,636 Debt maturing within one year 4,751 — Other liabilities and accrued expenses 223,291 205,745 Total current liabilities 475,551 505,381 Long-term debt 244,087 321,393 Deferred tax liabilities 29,683 29,752 Other liabilities, noncurrent 55,353 20,199 TOTAL LIABILITIES 804,674 876,725 Commitments and Contingencies (Note 9) Stockholders’ Equity: Preferred stock, $ 0.0001 par value: 5,000 shares authorized, nil and nil shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively — — Common stock, $ 0.0001 par value: 300,000 shares authorized, 94,186 and 91,935 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively 9 9 Additional paid-in capital 463,626 438,667 Retained earnings (accumulated deficit) 73,432 ( 2,813 ) Accumulated other comprehensive income (loss) ( 52 ) 1,527 Total Stockholders’ Equity 537,015 437,390 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,341,689 $ 1,314,115 The accompanying notes are an integral part of these condensed combined consolidated financial statements 4 Table of Contents Corsair Gaming, Inc. Condensed Combined Consolidated Statements of Stockholders’ Equity (Unaudited, in thousands) Three Months Ended September 30, 2021 Common Stock Additional Paid-in Retained Accumulated Other Comprehensive Total Stockholders’ Shares Amount Capital Earnings Income (Loss) Equity Balance as of June 30, 2021 93,790 $ 9 $ 456,010 $ 71,655 $ 2,012 $ 529,686 Issuance of common stock in connection with employee equity incentive plans 403 — 2,027 — — 2,027 Shares withheld related to net share settlement ( 7 ) — ( 208 ) — — ( 208 ) Stock-based compensation — — 5,797 — — 5,797 Other comprehensive loss — — — — ( 2,064 ) ( 2,064 ) Net income — — — 1,777 — 1,777 Balance as of September 30, 2021 94,186 $ 9 $ 463,626 $ 73,432 $ ( 52 ) $ 537,015 Three Months Ended September 30, 2020 Common Stock Additional Paid-in Retained Earnings (Accumulated Accumulated Other Comprehensive Total Stockholders’ Shares Amount Capital Deficit) Income (Loss) Equity Balance as of June 30, 2020 84,349 $ 8 $ 328,588 $ ( 82,213 ) $ ( 5,877 ) $ 240,506 Issuance of common stock in connection with employee equity incentive plans 65 — 259 — — 259 Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costs 7,500 1 106,729 — — 106,730 Stock-based compensation — — 1,631 — — 1,631 Other comprehensive income — — — — 3,069 3,069 Net income — — — 36,357 — 36,357 Balance as of September 30, 2020 91,914 $ 9 $ 437,207 $ ( 45,856 ) $ ( 2,808 ) $ 388,552 Nine Months Ended September 30, 2021 Common Stock Additional Paid-in Retained Earnings (Accumulated Accumulated Other Comprehensive Total Stockholders’ Shares Amount Capital Deficit) Income (Loss) Equity Balance as of December 31, 2020 91,935 $ 9 $ 438,667 $ ( 2,813 ) $ 1,527 $ 437,390 Issuance of common stock in connection with employee equity incentive plans 2,258 — 11,493 — — 11,493 Shares withheld related to net share settlement ( 7 ) — ( 215 ) — — ( 215 ) Stock-based compensation — 13,681 — — 13,681 Other comprehensive loss — — — — ( 1,579 ) ( 1,579 ) Net income — — — 76,245 — 76,245 Balance as of September 30, 2021 94,186 $ 9 $ 463,626 $ 73,432 $ ( 52 ) $ 537,015 5 Table of Contents Nine Months Ended September 30, 2020 Common Stock Additional Paid-in Retained Earnings (Accumulated Accumulated Other Comprehensive Total Stockholders’ Shares Amount Capital Deficit) Loss Equity Balance as of December 31, 2019 84,079 $ 8 $ 324,968 $ ( 106,030 ) $ ( 2,171 ) $ 216,775 Issuance of common stock to directors 20 — — — — — Issuance of common stock in connection with employee equity incentive plans 315 — 1,224 — — 1,224 Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costs 7,500 1 106,729 — — 106,730 Stock-based compensation — — 4,286 — — 4,286 Other comprehensive loss — — — — ( 637 ) ( 637 ) Net income — — — 60,174 — 60,174 Balance as of September 30, 2020 91,914 $ 9 $ 437,207 $ ( 45,856 ) $ ( 2,808 ) $ 388,552 The accompanying notes are an integral part of these condensed combined consolidated financial statements 6 Table of Contents Corsair Gaming, Inc. Condensed Combined Consolidated Statements of Cash Flows (Unaudited, in thousands) Nine Months Ended September 30, 2021 2020 Cash flows from operating activities: Net income $ 76,245 $ 60,174 Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation 13,656 4,286 Depreciation 7,581 6,706 Amortization of intangible assets 26,118 25,344 Debt issuance costs amortization 1,372 1,990 Loss on debt extinguishment 4,868 3,256 Deferred income taxes ( 6,556 ) ( 6,892 ) Other 1,649 1,070 Changes in operating assets and liabilities: Accounts receivable 38,556 ( 58,067 ) Inventories ( 102,896 ) ( 60,886 ) Prepaid expenses and other assets ( 7,790 ) ( 20,431 ) Accounts payable ( 51,842 ) 92,772 Other liabilities and accrued expenses 24,100 51,002 Net cash provided by operating activities 25,061 100,324 Cash flows from investing activities: Acquisition of business, net of cash acquired ( 1,684 ) ( 836 ) Payment of deferred and contingent consideration ( 4,678 ) — Purchase of property and equipment ( 7,677 ) ( 5,072 ) Net cash used in investing activities ( 14,039 ) ( 5,908 ) Cash flows from financing activities: Proceeds from issuance of debt, net 248,513 — Repayment of debt ( 326,974 ) ( 140,394 ) Payment of debt issuance costs — ( 194 ) Proceeds from initial public offering and private placement, net of underwriting discounts and commissions — 118,575 Payment of other offering costs — ( 5,582 ) Proceeds from issuance of shares through employee equity incentive plans 11,493 1,224 Payment of taxes related to net share settlement of equity awards ( 215 ) — Net cash used in financing activities ( 67,183 ) ( 26,371 ) Effect of exchange rate changes on cash ( 1,078 ) 149 Net (decrease) increase in cash and restricted cash ( 57,239 ) 68,194 Cash and restricted cash at the beginning of the period 133,568 51,947 Cash and restricted cash at the end of the period $ 76,329 $ 120,141 Supplemental cash flow disclosures: Cash paid for interest $ 10,066 $ 23,397 Cash paid for income taxes 9,842 7,276 Supplemental schedule of non-cash investing and financing activities: Equipment purchased and unpaid at period end $ 2,084 $ 2,331 Right-of-use assets obtained in exchange for operating lease liabilities 34,557 14,604 Deferred purchase consideration related to business acquisitions — 145 Measurement period adjustment relating to business acquisitions 50 1,834 Deferred offering costs included in accounts payable and accrued expenses — 2,710 Debt issuance costs unpaid at period end 168 — The accompanying notes are an integral part of these condensed combined consolidated financial statements 7 Table of Contents Corsair Gaming, Inc. Notes to Condensed Combined Consolidated Financial Statements (Unaudited) 1. Description of Business and Basis of Presentation Description of Business Corsair Gaming, Inc., a Delaware corporation, together with its subsidiaries (collectively, “Corsair” the “Company”, “we”, “us”, or “our”) , is a global provider and innovator of high-performance gear for gamers, streamers and content creators. Corsair is organized into two reportable segments: • Gamer and creator peripherals . Includes our high-performance gaming keyboards, mice, headsets, controllers, and streaming gear, which includes capture cards, Stream Decks, USB microphones, studio accessories and EpocCam software, as well as coaching and training services and content design services, among others. • Gaming components and systems . Includes our high-performance power supply units, or PSUs, cooling solutions, computer cases, DRAM modules, as well as high-end prebuilt and custom-built gaming PCs, and gaming monitor, among others. Reorganization On September 15, 2020, a corporate reorganization (the “Reorganization”) was consummated whereby we now own directly and indirectly all of the operating subsidiaries and assets that were formerly owned by Corsair Group (Cayman), LP (the “Parent”) and Corsair Group (US), LLC, a minority interest holder. The Parent is a limited partnership domiciled in the Cayman Islands. The Parent and Corsair Group (US), LLC are under common control of the affiliates of EagleTree Capital, LP, a private equity investment firm. Prior to the Reorganization, the North American and international operations of Corsair were conducted by certain operating subsidiaries held by separate entities, Corsair Gaming, Inc. and Corsair Holdings (Lux) S.à r.l. (or “Corsair Luxco”) , respectively, each of which was substantially owned by and under common control of the Parent. The Reorganization was comprised of a series of steps as set forth below: • The Parent acquired the minority interest held by Corsair Group (US), LLC in exchange for its own units. • Corsair Gaming, Inc. acquired all of the outstanding capital stock of Corsair Luxco from the Parent in exchange for its own stock. • In order for management and certain other partnership unit holders of the Parent to hold Corsair’s common stock directly, we entered into exchange agreements with such holders to exchange the Parent’s units for shares of Corsair’s common stock on a pro rata basis relative to their holdings in the Parent prior to the Reorganization. • The Parent’s 2017 Equity Incentive Program was assumed by Corsair and all of the outstanding options to acquire units under the Parent’s 2017 Equity Incentive Program were converted into options to purchase Corsair’s common stock on a pro rata basis with an adjusted exercise price to reflect the assumption. • We implemented a 1-for- 28,693.596843964 stock split resulting in there being 84,405,366 shares of Corsair’s common stock outstanding and 10,029,388 options outstanding to purchase Corsair’s common stock as of the date of the Reorganization. As all legal entities included in the Reorganization are under common control of the Parent, all steps of the Reorganization were accounted for as a combination of entities under common control. Initial Public Offering and Secondary Offering On September 25, 2020, we completed our initial public offering (“IPO”) . In connection with the IPO, we sold 7,500,000 shares of common stock at $ 17.00 per share, resulting in proceeds of $ 118.6 million, net of the underwriting discounts and commissions and before offering costs. In connection with the IPO, certain stockholders sold 6,500,000 shares of common stock at $ 17.00 per share. Subsequent to the IPO, certain stockholders further sold 1,135,375 shares pursuant to the underwriters’ exercise of their option to purchase additional shares. 8 Table of Contents On January 26, 2021, we completed a secondary offering of our common stock where certain selling stockholders sold 8,625,000 , shares of common stock at $ 35.00 per share. We did no t receive any of the proceeds from the sale of shares by the selling stockholders in either the IPO or the secondary. Deferred offering costs consist primarily of accounting, legal, and other fees related to the IPO. Prior to the IPO, all deferred offering costs were capitalized in other assets in the condensed combined consolidated balance sheets. After the IPO, $ 12.0 million of deferred offering costs were reclassified into stockholders’ equity as a reduction of the IPO proceeds in the condensed combined consolidated balance sheets as of December 31, 2020. Basis of Presentation Our interim condensed combined consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ( “ U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The accounting policies we follow are set forth in Part II, Item 8, Note 2, Significant Accounting Policies, of the Notes to the Combined Consolidated Financial Statements included in our Annual Report on Form 10K for the year ended December 31, 2020 which was filed with the SEC on March 11, 2021. The condensed combined consolidated balance sheet as of December 31, 2020, included herein, was derived from the audited consolidated financial statements as of that date. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed, combined or omitted pursuant to such rules and regulations. Therefore, these interim condensed combined consolidated financial statements should be read in conjunction with our combined consolidated financial statements and notes thereto for the year ended December 31, 2020, included in our Annual Report on Form 10-K. The interim condensed combined consolidated financial statements have been prepared on the same basis as the audited combined consolidated financial statements, and in management’s opinion, include all adjustments, which consist of only normal recurring adjustments necessary for the fair statement of our condensed combined consolidated balance sheet as of September 30, 2021 and our results of operations for the three and nine months ended September 30, 2021 and 2020. The results for the three and nine months ended September, 2021 are not necessarily indicative of the results expected for the current fiscal year or any other future periods. Principles of Consolidation The accompanying condensed combined consolidated financial statements include the accounts of Corsair and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. 2. Summary of Significant Accounting Policies Use of Estimates The preparation of condensed combined consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed combined consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include, but are not limited to, the valuation of intangible assets, accounts receivable, sales return reserves, reserves for customer incentives, warranty reserves, inventory, derivative instruments, stock-based compensation, deferred income tax, and common stock (prior to the IPO completed in September 2020). These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. We adjust such estimates and assumptions when facts and circumstances dictate. Actual results could differ materially from those estimates due to risks and uncertainties, including uncertainty in the current economic environment due to COVID-19. Risks and Uncertainties related to the COVID-19 Pandemic Due to the COVID-19 pandemic, there has been and will continue to be uncertainty and disruption in the global economy and financial markets. Since early 2020, we have experienced some business disruptions due to COVID-19 including the stoppage in our factories in early 2020, disruption in our supply chain and increased distribution costs, which led to increases in operating costs such 9 Table of Contents as the significantly elevated ocean freight costs we incurred in the third quarter of 2021 as compared to the same quarter from the prior year and the most recent trailing quarter. As a result of the COVID-19 pandemic, we are continu ing to experience logistics challenges globally. Th ese negative financial impact s ha ve been offset by strong revenue growth year-over-year partly due to an increase in demand for our gear as more people in more countries are under shelter-in-place restrictions , which we believe have limited people’s access to alternative forms of entertainment and social interaction, and thus have increased the demand for ho m e entertainment and connecting with others through content creation . In contrast, as the COVID-19 pandemic subsides, it has, and could continue to result in shelter-in-place and other similar restrictions being eased. S uch easing of restrictions likely has, and will continue to result in consumers returning to other alternative forms of entertainment and interaction. This in turn has, and could continue to, result in a decline in demand for our products. The full extent of the impact of the COVID-19 pandemic on our business, results of operations , cash flows and financial position will depend on future developments , which are highly uncertain and cannot be predicted , including, but not limited to, the duration and spread of the outbreak, its severity, the prevalence and severity of any variants, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume . Even after the COVID-19 outbreak has subsided, we may continue to experience significant impacts to our business as a result of its global economic impact, including any economic downturn or recession that has occurred or may occur in the future. As of the date of issuance of these condensed combined consolidated financial statements, we are not aware of any specific event or circumstance that would require updates to our estimates and judgments or revisions due to COVID-19 to the carrying value of our assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed combined consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the condensed combined consolidated financial statements. Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12 , Income Taxes (Topic 740) , to simplify various aspects related to the accounting for income taxes. We adopted this standard effective January 1, 2021 . The adoption of this new standard did not have a material impact on our condensed combined consolidated financial statements. Accounting Pronouncements Issued but Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) , to provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The new guidance is effective, at our election, beginning March 12, 2020 through December 31, 2022. Our term loan and revolving line of credit have interest payments that are correlated to a reference rate, and we are currently evaluating the impact of adopting this guidance and the potential effects it could have on our condensed combined consolidated financial statements. In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805), which requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. Historically, such amounts were recognized by the acquirer at fair value in acquisition accounting. The new guidance is effective for us beginning in year 2023, with early adoption permitted. We are currently evaluating the impact of adopting this guidance and the potential effects it could have on our condensed combined consolidated financial statements. 3. Fair Value Measurement U.S. GAAP establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The hierarchy is broken down into the following three levels of inputs that may be used to measure fair value: Level 1 —Quoted prices are available in active markets for identical assets or liabilities as of the measurement date. Level 2 —Pricing inputs are other than quoted prices in active market, which are either directly or indirectly observable as of the report date. The nature of these securities includes investments for which quoted prices are available but traded less frequently and investments that are fair valued using other securities, the parameters of which can be directly observed. Level 3 —Securities that have little to no pricing observability as of the report date. These securities are measured using management’s best estimate of fair value, where the inputs into the determination of fair value are not observable and require significant management judgment or estimation. 10 Table of Contents The following tables summarize our financial assets and liabilities that were measured at fair value on a recurring basis, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value: September 30, 2021 (Level 1) (Level 2) (Level 3) Total (In thousands) Assets: Foreign currency forward contracts (1) $ — $ 457 $ — $ 457 Other — 1 — 1 Total assets $ — $ 458 $ — $ 458 Liabilities: Deferred cash consideration in connection with a business acquisition—SCUF (2) $ — $ — $ 1,250 $ 1,250 Other — 127 226 353 Total liabilities $ — $ 127 $ 1,476 $ 1,603 December 31, 2020 (Level 1) (Level 2) (Level 3) Total (In thousands) Liabilities: Contingent consideration in connection with a business acquisition—Origin (3) $ — $ — $ 2,887 $ 2,887 Deferred cash consideration in connection with a business acquisition—SCUF (2) — — 1,250 1,250 Deferred cash consideration in connection with a business acquisition—Origin (3) — — 1,505 1,505 Foreign currency forward contracts (1) — 819 — 819 Total liabilities $ — $ 819 $ 5,642 $ 6,461 (1) The fair values of the forward contracts were based on similar exchange traded derivatives and the related asset or liability is included within Level 2 of the fair value hierarchy. (2) The fair value of the SCUF contingent consideration was determined based on the estimates of acquired tax benefits owed to SCUF’s sellers according to the merger agreement, and these estimates represent a level 3 fair value measurement. The $ 1.3 million liability as of December 31, 2020 consisted of $ 0.1 million based on a contractual amount and the remaining $ 1.2 million is subject to update upon filing our tax returns for tax years 2020 and 2021. In September 2021, we filed the tax return for the 2020 tax year, and as a result, the $ 1.3 million liability as of September 30, 2021 was updated to consist of.$ 0.3 million based on a contractual amount and the remaining $ 1.0 million is subject to update upon filing our tax return for tax year 2021. ( 3 ) The Origin earn-out liability of $ 2.9 million and deferred cash consideration of $ 1.5 million were fully paid and settled in the first quarter of 2021. 4. Derivative Financial Instruments From time to time, we enter into derivative instruments such as foreign currency forward contracts, to minimize the short-term impact of foreign currency exchange rate fluctuations on certain foreign currency denominated assets and liabilities, and interest rate cap contracts, to minimize our exposure to interest rate movements on our variable rate debts. The derivative instruments are recorded at fair value in prepaid expenses and other current assets or other liabilities and accrued expenses on the condensed combined consolidated balance sheets. We do not designate such instruments as hedges for accounting purposes; accordingly, changes in the value of these contracts are recognized in each reporting period in other (expense) income, net in the condensed combined consolidated statements of operations. We do no t enter into derivative instruments for trading purposes. The foreign currency forward contracts generally mature within three to four months . The notional principal amount of outstanding foreign exchange forward contracts was $ 38.5 million and $ 41.6 million as of September 30 , 2021 and December 31, 2020, respectively, none of which have been designated as hedging instruments during the periods presented. Total fair value gains (losses) recognized in other (expense) income, net in relation to these derivative instruments was $ 0.4 million and $( 1.1 ) million for the three months ended September 30 , 2021 and 2020, respectively, and was $ 0.5 million and $( 1.2 ) million for the nine months ended September 30, 2021 and 2020, respectively. 11 Table of Contents 5. Business Combinations 2021 Immaterial Acquisition In February 2021, we completed the immaterial acquisition of Visual by Impulse (“ VBI ”), a business that provides creative design services to streamers looking to professionalize the look of their broadcast. Total cash consideration for VBI was approximately $ 1.7 million and it was accounted for using the acquisition method of accounting. 2020 Immaterial Acquisitions For the year ended December 31, 2020, we completed two immaterial acquisitions, EpocCam and Gamer Sensei, for total cash consideration of $ 1.3 million, which were accounted for using the acquisition method of accounting. 6. Goodwill and Intangible Assets Goodwill The following table summarizes the changes in the carrying amount of goodwill by reportable segment: Gaming Components and Systems Gamer and Creator Peripherals Total (In thousands) Balance as of December 31, 2020 $ 145,644 $ 167,116 $ 312,760 Addition from an immaterial business acquisition — 1,272 1,272 Measurement period adjustments — 50 50 Effect of foreign currency exchange rates ( 13 ) ( 276 ) ( 289 ) Balance as of September 30, 2021 $ 145,631 $ 168,162 $ 313,793 Intangible assets, net The following table is a summary of intangible assets, net: September 30, 2021 December 31, 2020 Weighted Average Useful Life in Years Weighted Average Remaining Amortization Period in Years Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (In thousands) Developed technology 5.5 3.6 $ 32,086 $ 13,404 $ 18,682 $ 31,016 $ 8,892 $ 22,124 Trade name 14.9 12.8 30,636 4,419 26,216 30,632 2,873 27,759 Customer relationships 10.0 5.9 218,566 89,403 129,162 218,469 72,892 145,577 Patent 7.9 6.2 31,358 7,161 24,198 31,802 4,207 27,595 Non-competition agreements 5.0 0.9 2,521 2,067 453 2,521 1,689 832 Total finite-life intangibles 9.7 6.6 315,166 116,455 198,711 314,440 90,553 223,887 Indefinite life trade name Indefinite life — 35,430 — 35,430 35,430 — 35,430 Total intangible assets $ 350,596 $ 116,455 $ 234,141 $ 349,870 $ 90,553 $ 259,317 In the year after an identified intangible asset becomes fully amortized, we remove the fully amortized balances from the gross asset and accumulated amortization amounts from the table above. 12 Table of Contents The estimated future amortization expense of intangible assets as of September 30, 2021 is as follows: Amounts (In thousands) Remainder of 2021 $ 8,671 2022 34,402 2023 32,795 2024 31,344 2025 31,040 Thereafter 60,459 Total $ 198,711 7. Balance Sheet Components Cash and Restricted Cash September 30, 2021 December 31, 2020 (In thousands) Cash $ 71,922 $ 129,543 Restricted cash—short term 4,176 3,795 Restricted cash—noncurrent 231 230 Total cash and restricted cash $ 76,329 $ 133,568 Accounts Receivable, Net September 30, 2021 December 31, 2020 (In thousands) Accounts receivable $ 252,935 $ 293,975 Allowance for doubtful accounts ( 529 ) ( 346 ) Accounts receivable, net $ 252,406 $ 293,629 As of September 30, 2021, and December 31, 2020, two customers each represented 10% or more of our consolidated accounts receivable, net. Inventories September 30, 2021 December 31, 2020 (In thousands) Raw materials $ 51,894 $ 52,165 Work in progress 8,402 9,654 Finished goods 271,642 164,188 Inventories $ 331,938 $ 226,007 13 Table of Contents Property and Equipment, Net September 30, 2021 December 31, 2020 (In thousands) Manufacturing equipment $ 26,585 $ 22,035 Computer equipment, software and office equipment 9,479 9,407 Furniture and fixtures 5,183 3,675 Leasehold improvements 4,813 4,521 Total property and equipment $ 46,060 $ 39,638 Less: Accumulated depreciation and amortization ( 29,693 ) ( 23,163 ) Property and equipment, net $ 16,367 $ 16,475 Other Assets September 30, 2021 December 31, 2020 (In thousands) Right-of-use assets (1) $ 52,373 $ 25,998 Deferred tax asset 11,290 4,792 Other 5,370 3,572 Other assets $ 69,033 $ 34,362 Other Liabilities and Accrued Expenses September 30, 2021 December 31, 2020 (In thousands) Accrued reserves for customer incentive programs $ 61,631 $ 49,619 Income tax payable 35,189 22,445 Accrued reserves for sales return 34,161 35,673 Accrued payroll and related expense 23,328 26,877 Accrued freight expenses 17,992 7,523 Operating lease liabilities 8,922 9,070 Contract liabilities 4,518 9,787 Other 37,550 44,751 Other liabilities and accrued expenses $ 223,291 $ 205,745 Other Liabilities, Noncurrent September 30, 2021 December 31, 2020 (In thousands) Operating lease liabilities, noncurrent (1) $ 52,042 $ 17,571 Other 3,311 2,628 Other liabilities, noncurrent $ 55,353 $ 20,199 (1) On April 27, 2021, we entered into an operating lease agreement for our new Milpitas headquarters in California, U.S. with lease term over 10.5 years and an accounting lease commencement date of May 14, 2021. The balances of this lease as of September 30, 2021 consisted of $ 6.7 million of lease incentive receivables that were recorded under prepaid and other assets, $ 24.6 million of right-of-use assets that were recorded under other assets and $ 32.2 million of lease liabilities that were recorded under other liabilities noncurrent in our condensed combined consolidated balance sheet. Nonmonetary Transactions The sales and purchases of inventory with our manufacturers are accounted for as nonmonetary transactions. Upon sale of raw materials to the manufacturer, for the inventories on-hand with the manufacturer where there is an anticipated reciprocal purchase by 14 Table of Contents us, we will record this nonmonetary transaction as prepaid inventories and accrued liabilities. When we transact the reciprocal purchase of inventory from the manufacturer, we will record a payable to the manufacturer at the purchase price, which replaces the initial nonmonetary transaction and inventory will be reflected at carrying value, which includes the costs for the raw materials and the incremental costs charged by the manufacturer for additional work performed on the inventory. In connection with such nonmonetary transactions with our manufacturers , as of September 30 , 2021 , we recognized $ 2.9 million prepaid inventory and $ 3.2 million accrued liabilities and as of December 31, 2020, we recognized $ 5.9 million prepaid inventory and accrued liabilities in the condensed combined consolidated balance sheet. Because the transactions are nonmonetary, they have not been included in the condensed combined consolidated statements of cash flows pursuant to ASC 230, Statement of Cash Flows . 8. Debt Our debt consisted of the following: September 30, 2021 December 31, 2020 (In thousands) Term Loan (variable rate) due September 2026 $ 250,000 $ — First Lien Term Loan (variable rate) extinguished in September 2021 — 326,938 Debt discount and issuance cost, net of amortization ( 1,162 ) ( 5,545 ) Total debt 248,838 321,393 Less: debt maturing within one year 4,751 — Long-term debt $ 244,087 $ 321,393 First Lien Credit and Guaranty Agreement (Extinguished in September 2021) In August 2017, we entered into a syndicated First Lien Credit and Guaranty Agreement ( “First Lien” ) with various financial institutions. The First Lien originally provided a $ 235 million term loan ( “First Lien Term Loan” ) for a business acquisition and to repay existing indebtedness of the acquired company and a $ 50 million revolving line-of-credit ( “Revolver” ). The First Lien and the Revolver was to mature on August 28, 2024 and August 28, 2022 , respectively. Subsequently, we entered into several amendments to the First Lien and the principal amount of the First Lien Term Loan was increased by $ 10 million in 2017 and increased by $ 115 million in each of 2018 and 2019, primarily to fund various business acquisitions and operation needs. The First Lien Term Loan initially carried interest at a rate equal to, at our election, either the (a) greatest of (i) the prime rate, (ii) sum of the Federal Funds Effective Rate plus 0.5 %, (iii) one month LIBOR plus 1.0 % and (iv) 2 %, plus a margin of 3.5 %, or (b) the greater of (i) LIBOR and (ii) 1.0 %, plus a margin of 4.5 %. The Revolver initially bore interest at a rate equal to, at our election, either the (a) greatest of (i) the prime rate, (ii) sum of the Federal Funds Effective Rate plus 0.5 %, (iii) one month LIBOR plus 1.0 % and (iv) 2 %, plus 3.5 %, or (b) the greater of (i) LIBOR and (ii) 1.0 %, plus a margin of 4.5 %. As a result of the First Lien amendment in October 2018, the First Lien term loan and Revolver margin were both changed to range from 2.75 % to 3.25 % for base rate loans and to range from 3.75 % to 4.25 % for Eurodollar loans, based on our net leverage ratio. According to the repayment schedule, the Consolidated Excess Cash Flow (as defined in the First Lien) and the IPO repayment provisions as set forth in the First Lien, we made required repayments of the First Lien Term Loan of $ 59.6 million, in aggregate, in 2020 using the net proceeds from our IPO and excess cash on hand. Further, we may prepay the First Lien Term Loan and the Revolver at any time without premium or penalty other than customary LIBOR breakage. In 2020, we began to prepay the First Lien Term loan using our excess cash on hand, resulting in $ 80.8 million in 2020 and $ 78.3 million in 2021 through September 2021. The remainder of First Lien Term Loan of $ 248.5 million was fully prepaid with the proceeds from the Term Loan (defined below) on September 3, 2021, and as a result, all obligations and covenants thereunder were terminated. In connection with the progressive prepayments of the First Lien Term Loan throughout 2020 and 2021, we have recorded losses on extinguishment of debt of $ 4.1 million and $ 1.6 million for the three months ended September 30, 2021 and 2020, respectively, and $ 4.9 million and $ 1.6 million for the nine months ended September 30, 2021 and 2020, respectively. Second Lien Credit and Guaranty Agreement (Extinguished in September 2020) In August 2017, we also entered into a syndicated Second Lien Credit and Guaranty Agreement ( “Second Lien” ) with various financial institutions. The Second Lien initially provided a $ 65 million term loan ( “Second Lien Term Loan” ), with a maturity date of 15 Table of Contents August 28, 2025 , for a business acquisition and for general corporate operations purposes. The Second Lien Term Loan initially carried interest at a base rate equal to that of the First Lien loan, plus a margin of 7.25 % for base rate loans and 8.25 % for Eurodollar loans. In October 2017, we entered into an amendment to the Second Lien and the principal amount of the Second Lien Term Loan was reduced to $ 50 million and the applicable interest rate margins for both the base rate loans and Eurodollar loans were increased by 0.25 %. In 2020, with excess cash on hand, we prepaid the entire outstanding balance of $ 50 million on the Second Lien Term Loan without paying any premium or penalty, and as a result, all obligations and covenants thereunder were terminated. In connection with the progressive prepayments of the Second Lien Term Loan throughout 2020, we have recorded losses on extinguishment of debt of $ 1.3 million and $ 1.6 million for the three and nine months ended September 30, 2020, respectively. The following table summarizes the interest expense recognized for the First Lien and Second Lien: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (In thousands) Contractual interest expense for First Lien and Second Lien Term Loan $ 2,399 $ 6,408 $ 9,818 $ 22,914 Contractual interest expense for Revolver — — — 16 Amortization of debt discount 80 219 395 672 Amortization of debt issuance costs 211 489 948 1,401 Loss on debt extinguishment 4,107 2,864 4,904 3,256 Total interest expense recognized $ 6,797 $ 9,980 $ 16,065 $ 28,259 The effective interest rate inclusive of the debt discount and debt issuance costs for the First Lien and Second Lien, in aggregate, was approximately 5.7 % and 6.0 % for the three months ended September 30, 2021 and 2020, respectively, and was approximately 5.4 % and 6.4 % for the nine months ended September 30, 2021 and 2020, respectively. Credit Agreement On September 3, 2021, we entered into a new Credit Agreement (“ Credit Agreement ”) which provides for a $ 100.0 million five-year revolving credit facility (“ Revolving Facility ”) and a $ 250.0 million five-year term loan facility (“ Term Loan ”), with each maturing in September 2026 . The Credit Agreement also permits, subject to conditions stated therein, additional incremental facilities in a maximum aggregate principal amount not to exceed $ 250.0 million. We may prepay the Term Loan and the Revolving Facility at any time without premium or penalty. The credit facilities under the Credit Agreement replaced our senior credit facilities under the First Lien Credit and Guaranty Agreement. The net proceeds from borrowings under the Credit Agreement of $ 248.5 million (net of $ 1.5 million of debt discount) were used to repay all amounts outstanding under the First Lien Term Loan on September 3, 2021. The Term Loan and Revolving Facility under the Credit Agreement will each bear interest at the Company’s election, either (a) LIBOR plus a percentage spread (ranging from 1.25 % to 2.0 %) based on our total net leverage ratio, or (b) the base rate (described in the Credit Agreement as the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.50 % and (iii) one-month LIBOR plus 1.0 %) plus a percentage spread (ranging from 0.25 % to 1.0 %) based on our net leverage ratio. Our obligations under the Credit Agreement are guaranteed by substantially all of our U.S. subsidiaries and secured by a security interest in substantially all assets of the Company and the guarantor subsidiaries, subject to certain exceptions detailed in the Credit Agreement and related ancillary documentation. The Credit Agreement contains covenants with which we must comply during the term of the agreement, which we believe are ordinary and standard for agreements of this nature, including the maintenance of a maximum Consolidated Total Net Leverage Ratio of 3.0 to 1.0 and a minimum Consolidated Interest Coverage Ratio of 3.0 to 1.0 (as defined in our credit facilities) . The Credit Agreement also includes events of default customary for facilities of this nature and upon the occurrence of such events of default, among other things, all outstanding amounts under the Credit Agreement may be accelerated and/or the lenders’ commitments terminated. In addition, upon the occurrence of certain events of default, the interest on the Term loan and Revolving Facility can be increased by 2.0 %. As of September 30, 2021, we were not in default under the Credit Agreement and our Consolidated Total Net Leverage Ratio and Consolidated Interest Coverage Ratio were 0.8 to 1.0 and 10.4 to 1.0 as of September 30, 2021, respectively. 16 Table of Contents As of September 30, 2021, we had $ 100.0 million available under the Revolving Facility. As of September 30, 2021, the carrying value of our Term Loan was $ 250.0 million. The estimated fair value of the Term Loan as of September 30, 2021, which we have classified as a Level 2 financial instrument, approximates its carrying value. For the three and nine months ended September 30, 2021, total interest expense recognized for the Credit Agreement was $ 0.3 million including amortization of debt discount and debt issuance costs. The effective interest rate inclusive of the debt discount and debt issuance costs was approximately 1.3 % for both the three and nine months ended September 30, 2021. The estimated future principal payments under our total long-term debt as of September 30, 2021 are as follows: Amounts (In thousands) Remainder of 2021 $ 1,250 2022 5,000 2023 6,875 2024 12,500 2025 12,500 Thereafter 211,875 Total debt $ 250,000 9. Commitments and Contingencies Product Warranties Changes in our warranty obligations were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (In thousands) Beginning of the period $ 5,749 $ 5,005 $ 5,865 $ 3,991 Warranty provision related to products shipped 1,690 1,518 5,223 4,928 Deductions for warranty claims processed ( 1,678 ) ( 1,400 ) ( 5,327 ) ( 3,796 ) End of period $ 5,761 $ 5,123 $ 5,761 $ 5,123 Unconditional Purchase Obligations Our long-term non-cancelable purchase commitments consist primarily of multi-year contractual arrangements relating to subscriptions for cloud computing hosting arrangements for our enterprise resource planning ( “ERP” ) system and the related support services as well as marketing sponsorship. Long-term non-cancelable purchase commitment as of September 30, 2021 were as follows : Amounts (In thousands) Remainder of 2021 $ 686 2022 3,261 2023 2,275 2024 1,699 2025 308 Thereafter — Total $ 8,229 Our total non-cancelable purchase commitments outstanding as of December 31, 2020 were $ 6.8 million. 17 Table of Contents Letters of Credit The total letters of credit outstanding, in aggregate, was $ 0.5 million and $ 2.0 million as of September 30, 2021 and December 31, 2020, respectively. No amounts have been drawn upon the letters of credit for all periods presented. Indemnification In the ordinary course of business, we may provide indemnifications of varying scope and terms with respect to certain transactions. We have entered into indemnification agreements with directors and certain officers and employees that will require Corsair, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No demands have been made upon Corsair to provide indemnification under such agreements, and thus, there are no claims that we are aware of that could have a material effect on our condensed combined consolidated balance sheets, statements of operations, or statements of cash flows. We currently have directors’ and officers’ insurance. 10. Stockholders’ Equity On September 15, 2020, we completed a Reorganization through a series of steps as discussed in Note 1. In connection with the Reorganization, we filed a certificate of amendment to our Amended and Restated Certificate of Incorporation which authorized 100,000,000 shares of our common stock for issuance, with a par value of $ 0.0001 per share and effected a 1-for- 28,693.596843964 stock split resulting in there being 84,405,366 shares of Corsair’s common stock outstanding as of September 15, 2020. On September 25, 2020, in connection with the closing of the IPO, we filed an Amended and Restated Certificate of Incorporation which increased the authorized shares of common stock for issuance to 300,000,000 and authorized 5,000,000 shares of preferred stock, with a par value of $ 0.0001 per share, for issuance. There were no shares of preferred stock outstanding as of September 30, 2021 and December 31, 2020. 11. Equity Incentive Plans and Stock-Based Compensation As of September 30, 2021, we have two active equity incentive plans: the 2020 Equity Incentive Plan and the Employee Stock Purchase Plan (“ ESPP ”). The following table summarizes stock-based compensation expense by line item in the accompanying condensed combined consolidated statements of operations: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (In thousands) Cost of revenue $ 282 $ 60 $ 756 $ 192 Sales, general and administrative 4,889 1,414 11,061 3,634 Product development 641 157 1,839 460 Stock-based compensation expense, net of amounts capitalized (1) 5,812 1,631 13,656 4,286 Income tax benefits (expense) related to stock-based compensation expense $ 832 $ ( 140 ) $ 5,987 $ ( 476 ) (1) Total stock-based compensation expense capitalized in inventory was not material for each of the periods presented. As of September 30, 2021, we had $ 37.1 million of total unrecognized stock-based compensation relating to outstanding unvested awards which is expected to be amortized over a weighted-average period of 2.9 years. The total intrinsic value of options exercised was $ 8.8 million and $ 62.4 million for the three and nine months ended September 30 , 2021, respectively . The total intrinsic value of stock options exercises was $ 0.4 million for both the three and nine months ended September 30, 2020. 18 Table of Contents 12. Net Income Per Share The following table summarizes the calculation of basic and diluted net income per share: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (In thousands, except per share amounts) Numerator Net income, basic and diluted $ 1,777 $ 36,357 $ 76,245 $ 60,174 Denominator Weighted-average shares used to compute net income per share, basic 93,918 84,871 92,894 84,352 Effect of dilutive securities (1) 6,123 5,213 7,222 3,147 Weighted-average shares used to compute net income per share, diluted 100,041 90,084 100,116 87,499 Net income per share: Basic $ 0.02 $ 0.43 $ 0.82 $ 0.71 Diluted $ 0.02 $ 0.40 $ 0.76 $ 0.69 Anti-dilutive potential common shares (1) 1,226 22 792 2,135 (1) Potential common share equivalents were not included in the calculation of diluted net income per share as the effect would have been anti-dilutive 13. Income Taxes The table below presents our income before income taxes, income tax expense and effective income tax rates for all periods presented: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (In thousands) Income before income taxes $ 2,151 $ 39,574 $ 92,099 $ 70,323 Income tax expense ( 374 ) ( 3,217 ) ( 15,854 ) ( 10,149 ) Effective tax rate 17.4 % 8.1 % 17.2 % 14.4 % We are subject to income taxes in the United States and foreign jurisdictions in which we do business. These foreign jurisdictions have statutory tax rates different from those in the United States. Accordingly, our effective tax rates will vary depending on the relative proportion of foreign to United States income, the utilization of net operating loss and tax credit carry forwards, changes in geographic mix of income and expense, and changes in management’s assessment of matters such as the ability to realize deferred tax assets, and changes in tax laws. Our effective tax rates were 17.4 % and 8.1 % for the three months ended September 30, 2021 and 2020, respectively. The effective tax rate was higher in the three months ended September 30, 2021, as compared to the same period last year primarily due to a $ 4.3 million tax benefit recognized in the three months September 30, 2020, resulting from the change in management’s assessment of the realizability of certain deferred tax assets as a result of the Reorganization. The increase to the effective tax rate for such three-month period was partially offset by the favorable impacts on the effective tax rate for 2021 from higher excess tax benefits related to stock-based compensation recognized in the three months ended September 30, 2021, as well as the change in the mix of income and losses in the various tax jurisdictions in which we operate. Our effective tax rates were 17.2 % and 14.4 % for the nine months ended September 30, 2021 and 2020, respectively. The effective tax rate was higher in the nine months ended September 30, 2021, as compared to the same period last year primarily due to a $ 4.3 million tax benefit recognized in the nine months September 30, 2020, resulting from the change in management’s assessment of the realizability of certain deferred tax assets as a result of the Reorganization and a $ 0.6 million one-time tax benefit from the change in tax law resulting from the enactment of the CARES Act . In the nine months ended September 30, 2021, we recorded a $ 1.4 million one-time tax expense related to the remeasurement of our United Kingdom deferred tax liabilities as a result of the enactment 19 Table of Contents of the increased corporate tax rate in the United Kingdom. Th e increase to the effective tax rate for such nine-month period was partially offset by the favorable impacts on the effective tax rate for 2021 from higher excess tax benefits related to stock-based compensation recognized in the nine months ended September 30, 2021, as well as the change in the mix of income and losses in the various tax jurisdictions in which we operate. Unrecognized tax benefits were $ 1.6 million and $ 1.2 million as of September 30, 2021 and December 31, 2020, respectively, and i f recognized, would favorably affect the effective income tax rate in future periods . 14. Segment and Geographic Information We have two reportable segments: • Gamer and Creator Peripherals , which includes high-performance gaming keyboards, mice, headsets, controllers, and streaming gear, which includes capture cards, Stream Decks, USB microphones, studio accessories, and EpocCam software, as well as coaching and training services and content design services, among others. • Gaming Components and Systems , which includes high-performance power supply units, or PSUs, cooling solutions, computer cases, DRAM modules, as well as high-end prebuilt and custom-built gaming PCs, and gaming monitor, among others. The segments are defined as those operations our chief operating decision maker ( “CODM” ) regularly reviews to analyze performance and allocate resources. Our CODM is determined to be Corsair’s Chief Executive Officer. The results of the reportable segments are derived directly from our reporting system and are based on the methods of internal reporting which are not necessarily in conformity with GAAP. Management measures net revenue and gross profit to evaluate the performance of, and allocate resources to, each of the segments. The table below summarizes the financial information for each reportable segment: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (In thousands) Net revenue Gamer and Creator Peripherals $ 139,260 $ 161,555 $ 470,329 $ 347,531 Gaming Components and Systems 251,861 295,548 923,109 798,497 Total net revenue $ 391,121 $ 457,103 $ 1,393,438 $ 1,146,028 Gross Profit Gamer and Creator Peripherals $ 48,580 $ 60,010 $ 172,080 $ 120,886 Gaming Components and Systems 52,782 67,934 219,961 190,744 Total gross profit $ 101,362 $ 127,944 $ 392,041 $ 311,630 The CODM manages assets on a total company basis, not by operating segments; therefore, asset information and capital expenditures by operating segments are not presented. 20 Table of Contents Geographic Information The following table summarizes our net revenue by geographic region based on the location of the customer: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (In thousands) Net revenue Americas $ 189,330 $ 216,982 $ 606,788 $ 517,165 Europe and Middle East 147,703 162,615 560,905 412,349 Asia Pacific 54,088 77,506 225,745 216,514 Total net revenue $ 391,121 $ 457,103 $ 1,393,438 $ 1,146,028 Revenues from sales to customers in the United States represented 41.4 % and 39.6 % for the three months ended September 30, 2021 and, 2020, respectively, and represented 37.3 % and 37.6 % for the nine months ended September 30, 2021 and, 2020, respectively. No other countries besides the United States represented 10 % or more of total net revenue for each of the periods presented. One customer represented at least 10% of total net revenue for each of the periods presented. 21 Table of Contents