What changed in this filing

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Item 1. Financial Statements

2022-05-06 compared with 2021-11-02 · 310 added, 319 removed, 262 unchanged (71% of the section changed)

1 unchanged sentence

Corsair Gaming, Inc.

Condensed Combined Consolidated Statements of Operations

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share amounts)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenue

3 unchanged sentences

Total operating expenses

Operating income

Operating income (loss)

Other (expense) income:

Interest expense

Other (expense) income, net

Other expense, net

Total other expense, net

Income before income taxes

Income tax expense

Net income per share

Weighted-average shares used to compute net income per share

The accompanying notes are an integral part of these condensed combined consolidated financial statements

Income (loss) before income taxes

Income tax benefit (expense)

Net income (loss)

Net loss attributable to noncontrolling interests

Net income (loss) attributable to Corsair Gaming, Inc.

Calculation of net income (loss) per share attributable to common stockholders of Corsair Gaming, Inc.:

Net income (loss) attributable to Corsair Gaming, Inc.

Change in redemption value of redeemable noncontrolling interests

Net income (loss) attributable to common stockholders of Corsair Gaming, Inc.

Net income (loss) per share attributable to common stockholders of

Corsair Gaming, Inc.:

Condensed Combined Consolidated Statements of Comprehensive Income (Loss)

Weighted-average common shares outstanding:

The accompanying notes are an integral part of these condensed consolidated financial statements

Corsair Gaming, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited, in thousands)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Net income (loss)

Other comprehensive gain (loss):

Foreign currency translation adjustments, net of zero tax

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,

Foreign currency translation adjustments, net of tax benefit of $ 151 and $ 0 for the

three months ended March 31, 2022 and 2021, respectively

Unrealized foreign exchange loss from long-term intercompany loans, net of tax

benefit of $ 19 and $ 44 for the three months ended March 31, 2022 and 2021, respectively

Comprehensive income (loss)

The accompanying notes are an integral part of these condensed combined consolidated financial statements

Comprehensive loss attributable to noncontrolling interests

Comprehensive income (loss) attributable to Corsair Gaming, Inc.

The accompanying notes are an integral part of these condensed consolidated financial statements

Corsair Gaming, Inc.

Condensed Combined Consolidated Balance Sheets

Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except per share amounts)

September 30,

Current assets:

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Total current assets

Restricted cash, noncurrent

Property and equipment, net

Intangible assets, net

Restricted cash, noncurrent

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

Debt maturing within one year

Accounts payable

Other liabilities and accrued expenses

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Commitments and Contingencies (Note 9)

Temporary equity

Redeemable noncontrolling interests

Permanent equity

Corsair Gaming, Inc.

stockholders’ equity:

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5,000 shares authorized, nil and nil shares issued

and outstanding as of September 30, 2021 and December 31, 2020, respectively

and outstanding as of March 31, 2022 and December 31, 2021, respectively

Common stock, $ 0.0001 par value:

300,000 shares authorized, 95,373 and 94,510

shares issued and outstanding as of September 30, 2021 and December 31, 2020,

shares issued and outstanding as of March 31, 2022 and December 31, 2021,

Additional paid-in capital

Retained earnings (accumulated deficit)

Accumulated other comprehensive income (loss)

Total Stockholders’ Equity

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

The accompanying notes are an integral part of these condensed combined consolidated financial statements

Retained earnings

Accumulated other comprehensive loss

Total Corsair Gaming, Inc.

stockholders’ equity

Nonredeemable noncontrolling interests

Total permanent equity

Total liabilities, temporary equity and permanent equity

The accompanying notes are an integral part of these condensed consolidated financial statements

Corsair Gaming, Inc.

Condensed Combined Consolidated Statements of Stockholders’ Equity

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited, in thousands)

Three Months Ended September 30, 2021

Three Months Ended March 31, 2022

Comprehensive

Stockholders’

Income (Loss)

Balance as of June 30, 2021

Issuance of common stock in

connection with employee equity

incentive plans

Shares withheld related to net share

Stock-based compensation

Nonredeemable

Noncontrolling

Balance as of December 31, 2021

Issuance of common stock in relation to

business acquisition

Noncontrolling interests from business

Other comprehensive loss

Balance as of September 30, 2021

Three Months Ended September 30, 2020

Comprehensive

Stockholders’

Income (Loss)

Balance as of June 30, 2020

Issuance of common stock in

connection with employee equity

incentive plans

Issuance of common stock upon initial

public offering, net of underwriting

discounts and commissions and

other offering costs

Change in redemption value of redeemable

Issuance of common stock in connection

with employee equity incentive plans

Shares withheld related to net share

Stock-based compensation

Other comprehensive income

Balance as of September 30, 2020

Nine Months Ended September 30, 2021

Balance as of March 31, 2022

Three Months Ended March 31, 2021

Comprehensive

Stockholders’

Nonredeemable

Noncontrolling

Income (Loss)

Balance as of December 31, 2020

Issuance of common stock in

connection with employee equity

incentive plans

Shares withheld related to net share

Stock-based compensation

Other comprehensive loss

Balance as of September 30, 2021

Nine Months Ended September 30, 2020

Comprehensive

Stockholders’

Balance as of December 31, 2019

Issuance of common stock to directors

Issuance of common stock in

connection with employee equity

incentive plans

Issuance of common stock upon initial

public offering, net of underwriting

discounts and commissions and

other offering costs

Issuance of common stock in connection

with employee equity incentive plans

Stock-based compensation

Other comprehensive loss

Balance as of September 30, 2020

The accompanying notes are an integral part of these condensed combined consolidated financial statements

Balance as of March 31, 2021

The accompanying notes are an integral part of these condensed consolidated financial statements

Corsair Gaming, Inc.

Condensed Combined Consolidated Statements of Cash Flows

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Stock-based compensation

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Other liabilities and accrued expenses

Net cash provided by operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Acquisition of business, net of cash acquired

Payment of deferred and contingent consideration

Payment of deferred contingent consideration

Purchase of property and equipment

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Cash flows from financing activities:

Proceeds from issuance of debt, net

Repayment of debt

Payment of debt issuance costs

Proceeds from initial public offering and private placement, net of

underwriting discounts and commissions

Payment of other offering costs

Borrowing from line of credit

Repayment of line of credit

Payment of contingent consideration

Proceeds from issuance of shares through employee equity incentive plans

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Effect of exchange rate changes on cash

Net (decrease) increase in cash and restricted cash

Net decrease in cash and restricted cash

Cash and restricted cash at the beginning of the period

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Right-of-use assets obtained in exchange for operating lease liabilities

Deferred purchase consideration related to business acquisitions

Measurement period adjustment relating to business acquisitions

Deferred offering costs included in accounts payable and accrued expenses

Debt issuance costs unpaid at period end

The accompanying notes are an integral part of these condensed combined consolidated financial statements

Deferred and contingent purchase consideration related to business acquisitions

The accompanying notes are an integral part of these condensed consolidated financial statements

Corsair Gaming, Inc.

Notes to Condensed Combined Consolidated Financial Statements

Description of Business and Basis of Presentation

Notes to Condensed Consolidated Financial Statements

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.

Description of Business

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.

Includes our high-performance gaming keyboards, mice, headsets, controllers, and our streaming gear, which includes capture cards, Stream Decks, USB microphones, our Facecam streaming camera, studio accessories and EpocCam software, as well as coaching and training 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.

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.

Summary of Significant Accounting Policies

Basis of Presentation

Our interim condensed combined consolidated financial statements have been prepared in accordance with U.S.

Our interim condensed consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles ( “ U.S.

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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.

The accounting policies we follow are set forth in Part II, Item 8, Note 2, Significant Accounting Policies, of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10K for the year ended December 31, 2021 which was filed with the SEC on March 1, 2022.

The condensed consolidated balance sheet as of December 31, 2021, 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.

Therefore, these interim condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2021, included in our Annual Report on Form 10-K.

The interim condensed consolidated financial statements have been prepared on the same basis as the audited 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 consolidated balance sheet as of March 31, 2022 and our results of operations for the three months ended March 31, 2022 and 2021.

The results for the three months ended March 31, 2022 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.

The accompanying condensed consolidated financial statements include the accounts of Corsair and its wholly owned subsidiaries.

All intercompany accounts and transactions have been eliminated in consolidation.

Summary of Significant Accounting Policies

For consolidated entities where we own less than 100% of the equity, our consolidated net comprehensive income (loss) is reduced by the portion attributable to the noncontrolling interests.

In determining whether an entity is considered a controlled entity, we apply the VIE (Variable Interest Entity) and VOE (voting interest entity) models.

Entities that do not qualify as a VIE are assessed for consolidation under the VOE model.

Under the VOE model, we consolidate the entity if we determine that we have a controlling financial interest in the entity through our ownership of greater than 50% of the outstanding voting shares of the entity and that other equity holders do not have substantive voting, participating or liquidation rights.

On January 1, 2022 (the “Closing” or “Closing Date”), we completed the acquisition of a 51 % ownership stake in Elgato iDisplay Holdings LTD.

and its related companies (together “iDisplay”).

(See Note 5 , Business Combination - iDisplay Acquisition for more details on the iDisplay Acquisition).

We have determined that iDisplay does not qualify as a VIE and Corsair has a controlling financial

interest in iDisplay under the VOE model and therefore, iDisplay’s results of operations are fully consolidated with Corsair with effect from January 1, 2022.

As a result, w e recorded a net loss of $ 0.4 million attributable to noncontrolling interests in our condensed consolidated statement of operations for the three months ended March 31, 2022, equal to the 49 % of the ownership interest retained in iDisplay by the noncontrolling interests.

Noncontrolling Interests

We have included both redeemable noncontrolling interests and noncontrolling interests in our condensed consolidated balance sheet in connection with our consolidation of the 51 % ownership of iDisplay .

Redeemable noncontrolling interests that are redeemable and not solely within our control are classified within temporary equity in the condensed consolidated balance sheets.

Redeemable noncontrolling interests are measured at the greater of the redemption value (calculated based on the formula stipulated in the Shareholders Agreement between the iDisplay seller and Corsair and, including the amounts for dividends not currently declared or paid, for which the payment is not solely within our control), or the carrying value before giving effect to the redemption feature.

The redeemable noncontrolling interests are recorded at their maximum redemption value at each reporting date.

The redemption value is remeasured each quarter and changes in the value are recognized immediately.

Any resulting change in the value of the redeemable noncontrolling interests is recognized through retained earnings and this adjustment also impacts the net income or loss attributable to common stockholders of Corsair Gaming, Inc used in the net income (loss) per share calculation.

(See Note 16 for more information regarding the redeemable noncontrolling interests).

In addition, we have noncontrolling interests recorded at carrying value which do not have redemption features and are classified within permanent equity in our condensed consolidated balance sheet.

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).

The preparation of condensed 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

These estimates and assumptions are based on management’s best estimates and judgment.

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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

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 .

Since early 2020, we have experienced an increase in demand for our gear as more people were 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 home entertainment and connecting with others through content creation.

In contrast, as the COVID-19 pandemic subsides, it has resulted in shelter-in-place and other similar restrictions being eased.

Such easing of restrictions has resulted in consumers returning to other alternative forms of entertainment and interaction.

This in turn has resulted in a decline in demand for our products since the second half of 2021.

The extent to which the COVID-19 outbreak ultimately impacts our business, sales, results of operations, cash flows and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the severity, duration and spread of the outbreak, how quickly and to what extent normal economic and operating conditions can resume, and the actions to contain the virus and prevent any reoccurrence.

For example, China's zero-COVID policy has negative implications for global supply chains generally;

factory shutdowns and transport backlogs may result in inventory shortfalls for our products, which could negatively impact our sales.

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.

As of the date of issuance of these condensed 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 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 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.

We adopted this standard effective January 1, 2022 .

The adoption of this new standard did not have a material impact on our condensed consolidated financial statements.

In October 2021, the FASB issued ASU No.

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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.

We adopted this standard effective January 1, 2022 .

The adoption of this new standard did not have a material impact on our condensed consolidated financial statements.

Accounting Pronouncements Issued but Not Yet Adopted

Fair Value Measurement

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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.

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

(In thousands)

Foreign currency forward contracts (1)

The carrying values of certain of our financial instruments, including accounts receivable and accounts payable, approximate their fair values due to their short maturities.

The balances of our financial assets that were measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 were not material.

The following tables summarize our financial 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 (in thousands):

March 31, 2022

Deferred cash consideration in connection with a

business acquisition—SCUF (1)

Foreign currency forward contracts (2)

Total liabilities

December 31, 2021

(In thousands)

Contingent consideration in connection with a

business acquisition—Origin (3)

Deferred cash consideration in connection with a

business acquisition—SCUF (1)

Deferred cash consideration in connection with a

business acquisition—Origin (3)

Foreign currency forward contracts (2)

Total liabilities

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.

On December 19, 2019, one of our subsidiaries entered into an Agreement and Plan of Merger with Scuf Holdings, Inc.

and subsidiaries (collectively “SCUF”) and acquired 100% of their equity interests (the “SCUF Acquisition”).

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.

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.

The $ 1.3 million liability as of December 31, 2021 consisted 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.

In March 2022, we paid the $ 0.3 million contractual amount, and the remaining $ 1.0 million liability as of March 31, 2022 is subject to update upon filing our tax return for tax year 2021.

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.

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.

The derivative instruments are recorded at fair value in prepaid expenses and other current assets or other liabilities and accrued expenses on the condensed 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.

accordingly, changes in the value of these contracts are recognized in each reporting period in other (expense) income, net in the condensed 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.

The foreign currency forward contracts generally mature within two to three months .

The notional principal amount of outstanding foreign exchange forward contracts was $ 48.0 million and $ 48.6 million as of March 31, 2022 and December 31, 2021, respectively, no ne 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 $ 0.5 million and $ 0.7 million for the three months ended March 31, 2022 and 2021, respectively.

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.

Goodwill and Intangible Assets

The following table summarizes the changes in the carrying amount of goodwill by reportable segment:

iDisplay Acquisition

On January 1, 2022, we completed the acquisition of a 51 % ownership stake in iDisplay, a leader in electronic development and design specializing in display technology, headquartered in Taiwan.

The fair value consideration for iDisplay was $ 36.4 million, including $ 21.9 million in cash and the issuance of 690,333 shares of our common stock with a fair value of $ 14.5 million at Closing Date.

The consideration was reduced for the effective 51 % settlement of a pre-existing contractual accounts payable balance owed to iDisplay of $ 3.5 million.

The iDisplay Acquisition will allow us to direct the development and integration of iDisplay’s display-based touch-screen technologies into our products for creators, gamers and streamers.

iDisplay’s results of operations are fully consolidated with Corsair with effect from January 1, 2022.

The seller of iDisplay (the “iDisplay Seller”) has retained 49 % noncontrolling interests in iDisplay.

Under the Shareholders Agreement between Corsair and the iDisplay Seller, a put option was provided to the iDisplay Seller and a call option was provided to Corsair for the option to transfer (i) 14 % ownership interest in iDisplay to Corsair upon the first anniversary of the Closing and (ii) an additional 15 % of ownership interest in iDisplay to Corsair upon the second anniversary of the Closing.

Both put and call options expire on January 1, 2025 .

The exercise price of the put option and the call option is based on multiples of iDisplay’s trailing twelve-month earnings before interest, income tax, depreciation and amortization (“TTM EBITDA”) less any debt.

The 29 % noncontrolling interests entitled to the put option is considered a redeemable noncontrolling interests.

See Note 2, Summary of Significant Accounting Policies – Noncontrolling Interests and Note 16, Redeemable Noncontrolling Interests for more information regarding the redeemable noncontrolling interests.

The fair value of the 49 % noncontrolling interests was estimated to be $ 29.6 million.

The control premium assigned to Corsair’s 51 % controlling financial interest was 15 %, which resulted in an implied minority discount of 13 %.

The control premium was based on an analysis considering similar market transactions involving control premiums, as well as factors specific to iDisplay, including its significant customer concentration.

Preliminary purchase price allocation

As of March 31, 2022, the purchase price allocation is still preliminary and based upon estimates and assumptions that are subject to change within the measurement period as additional information for the estimates is obtained, and its finalization may result in changes to preliminary estimate of identified intangible assets and goodwill.

The following table presents the estimated fair value of the assets acquired and liabilities as of the Closing Date (in thousands):

Preliminary Allocation

Accounts receivable

Prepaid and other assets

Operating lease right-of-use asset

Property and equipment

Identifiable intangible assets

Total assets acquired

Accounts payable

Deferred tax liabilities

Accrued liabilities

Operating lease liabilities

Total liabilities assumed

Net assets acquired

Noncontrolling interests

Fair value of consideration transferred

Purchase consideration:

Corsair common stock

Fair value of consideration transferred

The fair value of certain working capital related items, including accounts receivable, prepaid and other assets, accounts payable and accrued liabilities, as well as the fair value of property and equipment approximated their book values at the date of the iDisplay Acquisition.

The fair value of the inventories was estimated by major category, at net realizable value, which we believe approximates the price a market participant could achieve in a current sale.

The difference between the fair value of the inventories and the book value recorded by iDisplay on the acquisition date was $ 0.3 million, which was recognized in cost of revenue in the consolidated statements of operations upon the sale of the acquired inventory.

The excess of the purchase consideration over the fair value of the identifiable intangible assets and the net tangible assets and liabilities acquired has currently been estimated to be $ 32.0 million, of which $ 28.5 million and $ 3.5 million are assigned to our gamer and creator peripherals reporting unit and gaming component and systems reporting unit, respectively.

We believe goodwill represents the strengthening of our supply chain with display-based touch-screen technologies into our products for creators, gamers and streamers, and the ability to design and generate new technologies to enhance the features of our products.

The identifiable intangible assets are deductible for tax purposes and a $ 4.6 million deferred tax liability has been estimated at the date of acquisition for the difference between the book and tax bases of these assets.

The goodwill is not deductible for tax purposes.

Valuation of identified intangible assets

The following table summarizes the valuation of the identifiable intangible assets acquired in the iDisplay Acquisition and the estimate of their respective useful lives as of Closing Date :

Preliminary Valuation

(In thousands)

Patent portfolio

Supplier relationships

Developed technology

Total identifiable intangible assets

The fair value of patent portfolio was estimated using the relief from royalty approach and the economic useful life was determined based on the average product life cycle of the products manufactured by iDisplay.

The supplier relationships intangible asset represents the value assigned to the relationship iDisplay had established over the years with a broad network of suppliers and OEMs that have been crucial to the quality and magnitude of iDisplay manufacturing capability.

The fair value of supplier relationships was estimated using the multi-period excess earnings approach and the economic useful life was determined to be aligned with the estimated useful life of the developed technology acquired from iDisplay.

The developed technology intangible asset represents unpatented propriety technologies, such as hardware designs and architectures and process technologies used in the on-going research and design of the products manufactured by iDisplay.

The fair value of developed technology was estimated using the income approach and the economic useful life was based on the technology cycle of the products manufactured, as well as the cash flows anticipated over the forecasted periods.

The valuations of the intangible assets were calculated with the assistance of a third-party valuation firm.

The fair values of these intangibles were valued based on long-term cash flow projections, which we consider to be Level 3 inputs.

These intangibles are being amortized over their estimated useful lives using the straight-line method of amortization, which reflects the pattern in which the economic benefits of the intangible asset are consumed.

Amortization of patent portfolio and supplier relationships is included in cost of revenue and amortization of developed technology is included in product development expense in our condensed consolidated statements of operations.

Acquisition-related costs

We incurred acquisition-related costs of approximately $ 0.5 million for the three months ended March 31, 2022, and $ 0.6 million for the year ended December 31, 2021.

These costs are recorded in sales, general and administrative expenses in the consolidated statement of operations.

Unaudited Pro-forma Financial Information

Pro forma financial information is not included because the effects of the acquisition are not material to our consolidated statements of operations for 2021.

Goodwill and Intangible Assets

The following table summarizes the changes in the carrying amount of goodwill by reportable segment (in thousands):

Balance as of December 31, 2021

Addition from an immaterial business acquisition

Measurement period adjustments

Addition from iDisplay Acquisition

Effect of foreign currency exchange rates

Balance as of September 30, 2021

Balance as of March 31, 2022

Intangible assets, net

The following table is a summary of intangible assets, net:

September 30, 2021

The following table is a summary of intangible assets, net (in thousands):

March 31, 2022

December 31, 2021

(In thousands)

Developed technology

Customer relationships

Patent portfolio

Non-competition agreements

Supplier relationships

Total finite-life intangibles

Indefinite life trade name

Indefinite life

Total intangible assets

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.

The estimated future amortization expense of intangible assets as of September 30, 2021 is as follows:

(In thousands)

The estimated future amortization expense of intangible assets as of March 31, 2022 is as follows (in thousands):

Remainder of 2022

Balance Sheet Components

The following tables present the components of certain balance sheet amounts (in thousands):

Cash and Restricted Cash

September 30,

(In thousands)

Restricted cash—short term

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Accounts Receivable, Net

September 30,

(In thousands)

Accounts receivable

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Accounts receivable, net

As of September 30, 2021, and December 31, 2020, two customers each represented 10% or more of our consolidated accounts receivable, net.

September 30,

(In thousands)

As of March 31, 2022 , and December 31, 2021, two customers each represented 10% or more of our consolidated accounts receivable, net.

Raw materials

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Property and Equipment, Net

September 30,

(In thousands)

Manufacturing equipment

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Property and equipment, net

September 30,

(In thousands)

Right-of-use assets

1 unchanged sentence

Other Liabilities and Accrued Expenses

September 30,

(In thousands)

Accrued reserves for customer incentive programs

Income tax payable

Accrued reserves for sales return

1 unchanged sentence

Accrued freight expenses

Operating lease liabilities

Operating lease liabilities, current

Income tax payable

Contract liabilities

1 unchanged sentence

Other Liabilities, Noncurrent

September 30,

(In thousands)

Operating lease liabilities, noncurrent

Other liabilities, noncurrent

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

us, we will record this nonmonetary transaction as prepaid inventories and accrued liabilities.

Upon sale of raw materials to the manufacturer, for the inventories on-hand with the manufacturer where there is an anticipated reciprocal purchase by 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 .

Our debt consisted of the following:

September 30,

(In thousands)

In connection with such nonmonetary transactions with our manufacturers, as of March 31, 2022 , we recognized $ 6.2 million prepaid inventory and $ 6.7 million accrued liabilities and as of December 31, 2021, we recognized $ 5.0 million prepaid inventory and $ 5.4 million accrued liabilities in the condensed consolidated balance sheet.

Because the transactions are nonmonetary, they have not been included in the condensed consolidated statements of cash flows pursuant to ASC 230, Statement of Cash Flows.

Our debt consisted of the following (in thousands):

Term Loan (variable rate) due September 2026

First Lien Term Loan (variable rate) extinguished in September 2021

Debt discount and issuance cost, net of amortization

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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

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,

(In thousands)

Contractual interest expense for First Lien and Second

Lien Term Loan

Contractual interest expense for Revolver

Amortization of debt discount

Amortization of debt issuance costs

Loss on debt extinguishment

Total interest expense recognized

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.

We may prepay the First Lien Term Loan and the Revolver at any time without premium or penalty other than customary LIBOR breakage.

In the three months ended March 31, 2021, with the excess cash on hand, we made voluntary prepayment of $ 28 million, and accordingly we recorded losses on extinguishment of debt of $ 0.4 million.

The First Lien Term Loan was subsequently 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.

The effective interest rate inclusive of the debt discount and debt issuance costs for the First Lien, was approximately 6.45 % for the three months ended March 31, 2021.

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 .

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.

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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.

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:

(In thousands)

As of March 31, 2022, we were not in default under the Credit Agreement.

As of March 31, 2022 and December 31, 2021, we had no outstanding balance under the Revolving Facility.

The carrying value of our Term Loan was $ 246.5 million and $ 247.7 million as of March 31, 2022 and December 31, 2021, respectively.

The estimated fair value of the Term Loan as of March 31, 2022, which we have classified as a Level 2 financial instrument, was approximately $ 255.5 million.

The effective interest rate inclusive of the debt discount and debt issuance costs was approximately 1.49 % for the three months ended March 31, 2022.

The following table summarizes the interest expense recognized for all periods presented (in thousands):

Three Months Ended

First Lien Guaranty Agreement:

Contractual interest expense for term loan

Amortization of debt discount and issuance cost

Loss on debt extinguishment

Credit Agreement:

Contractual interest expense for term loan

Contractual interest expense for revolving facility

Amortization of debt discount and issuance cost

Total interest expense recognized

The estimated future principal payments under our total long-term debt as of March 31, 2022 are as follows (in thousands):

Remainder of 2022

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Product Warranties

Changes in our warranty obligations were as follows:

Changes in our warranty obligations were as follows (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

Beginning of the period

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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 :

(In thousands)

Long-term non-cancelable purchase commitment as of March 31, 2022 were as follows (in thousands) :

Remainder of 2022

Our total non-cancelable purchase commitments outstanding as of December 31, 2020 were $ 6.8 million.

Our total long term non-cancelable purchase commitments outstanding as of December 31, 2021 were $ 7.1 million.

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.

The total letters of credit outstanding, in aggregate, was $ 0.5 million as of March 31, 2022 and December 31, 2021.

No amounts have been drawn upon the letters of credit for all periods presented.

Legal Proceedings

We may from time to time be involved in various claims and legal proceedings of a character normally incident to the ordinary course of business.

Litigation can be expensive and disruptive to normal business operations, and the results of complex legal proceedings are difficult to predict, and our view of these matters may change in the future as the litigation and events related thereto unfold.

We expense legal fees as incurred and we record a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

Based on currently available information, we believe there are no existing claims or proceedings that are likely to have a material adverse effect on our financial position, or the outcome of these

matters is currently not determinable.

An unfavorable outcome to any legal matter, if material, could have an adverse effect on our operations or financial position, liquidity of results of operations.

Indemnification

1 unchanged sentence

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.

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 consolidated balance sheets, statements of operations, or statements of cash flows.

We currently have directors’ and officers’ insurance.

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.

There were no shares of preferred stock outstanding as of March 31, 2022 and December 31, 2021.

Equity Incentive Plans and Stock-Based Compensation

As of September 30, 2021, we have two active equity incentive plans:

As of March 31, 2022 , 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:

The following table summarizes stock-based compensation expense by line item in the accompanying condensed consolidated statements of operations (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

Cost of revenue

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Stock-based compensation expense, net of amounts capitalized (1)

Income tax benefits (expense) related to stock-based

Income tax benefits related to stock-based

compensation expense

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.

Net Income Per Share

The following table summarizes the calculation of basic and diluted net income per share:

Total stock-based compensation expense capitalized in inventory and as cloud computing arrangement (“CCA”) implementation costs were not material for each of the periods presented.

The following table summarizes by type of grant, the total unrecognized stock-based compensation expense and the remaining period over which such expense is expected to be recognized (in thousands, except number of years):

March 31, 2022

Unrecognized Expense

Remaining weighted average period (In years)

Stock Options

Total unrecognized stock-based compensation expense

The total intrinsic value of options exercised was $ 1.5 million and $ 4.4 million for the three months ended March 31, 2022 and 2021 , respectively .

The total fair value of RSUs vested was $ 2.5 million for the three months ended March 31, 2022, there were no RSUs vested for the three months ended March 31, 2021.

Net Income (Loss) Per Share

The following table summarizes the calculation of basic and diluted net income (loss) per share (in thousands, except per share amounts):

Three Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands, except per share amounts)

Net income, basic and diluted

Weighted-average shares used to compute net income per

Net income (loss)

Net loss attributable to noncontrolling interests

Net income (loss) attributable to Corsair Gaming, Inc.

Change in redemption value of redeemable noncontrolling interests

Net income (loss) attributable to common stockholders of Corsair Gaming, Inc.

Basic weighted-average shares outstanding

Effect of dilutive securities (1)

Weighted-average shares used to compute net income per

share, diluted

Net income per share:

Total diluted weighted-average shares outstanding

Net income (loss) per share attributable to common stockholders of Corsair Gaming, Inc.

Anti-dilutive potential common shares (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

The table below presents our income before income taxes, income tax expense and effective income tax rates for all periods presented:

Potential common share equivalents were not included in the calculation of diluted net income (loss) per share as the effect would have been anti-dilutive.

The table below presents our income (loss) before income taxes, income tax benefit (expense) and effective income tax rates for all periods presented (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

Income before income taxes

Income tax expense

Income (loss) before income taxes

Income tax benefit (expense)

Effective tax rate

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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

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 .

Our effective tax rates were 23.1 % and 22.0 % for the three months ended March 31, 2022 and 2021, respectively.

The effective tax rate was higher in the three months ended March 31, 2022, as compared to the same period last year primarily due to a reduction of foreign tax credit upon adopting the new rules under the 2021 Final Regulations released by Treasury and IRS in December 2021 finalizing certain regulations regarding foreign tax credit and an increase of the deduction limitation over $ 1 million on our named executive officers’ stock-based compensation expense.

Unrecognized tax benefits were $ 3.8 million as of March 31, 2022 and December 31, 2021, and i f recognized, would favorably affect the effective income tax rate in future periods .

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.

Gamer and Creator Peripherals .

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, among others .

The segments are defined as those operations our chief operating decision maker ( “CODM” ) regularly reviews to analyze performance and allocate resources.

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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:

The table below summarizes the financial information for each reportable segment (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

Gamer and Creator Peripherals

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Geographic Information

The following table summarizes our net revenue by geographic region based on the location of the customer:

The following table summarizes our net revenue by geographic region based on the location of the customer (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

Europe and Middle East

Total net revenue

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.

Revenues from sales to customers in the United States represented 43.6 % and 36.2 % for the three months ended March 31, 2022 and 2021, 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.

Redeemable Noncontrolling Interests

Under the Shareholders Agreement between Corsair and the iDisplay Seller a put option was provided to the iDisplay Seller to transfer to Corsair (i) 14 % of their ownership interest in iDisplay upon the first anniversary of the Closing Date of the iDisplay

Acquisition, and (ii) an additional 15 % of their ownership interest in iDisplay upon the second anniversary of the Closing Date.

The put option will expire after January 1, 2025 .

The exercise price of the put option is based on multiples of iDisplay’s historical TTM EBITDA less any debt.

The put option makes this portion of the noncontrolling interests redeemable and therefore, the redeemable noncontrolling interest s are classified as temporary equity on our condensed consolidated balance sheet.

As of the Closing Date of the iDisplay Acquisition, the fair value of the total 49 % noncontrolling interests in iDisplay has been estimated to be $ 29.6 million, of which $ 17.5 million is attributable to the 29 % redeemable noncontrolling interests and classified within temporary equity and $ 12.1 million is attributable to the 20 % noncontrolling interests classified within permanent equity on our condensed consolidated balance sheets .

As of March 31, 2022, based on the formula for determining the value of the iDisplay Seller’s put option and including amounts for dividends not currently declared, but for which have been accrued based on the Shareholders Agreement, the redemption value of the redeemable noncontrolling interests was estimated to be $ 2.3 million higher than the value that is determined without the effect of the iDisplay Seller’s put option and dividends.

As a result, we recorded a $ 2.3 million increase in the value of the redeemable noncontrolling interest as of March 31, 2022, with offset to retained earnings, and this also increased the net loss used in the calculation of net loss per share attributable to common stockholders of Corsair Gaming, Inc.

for the three months ended March 31, 2022.

The following table presents the changes in redeemable noncontrolling interests for the period presented (in thousands):

Three Months Ended

March 31, 2022

Balance at beginning of period

Redeemable noncontrolling interests in iDisplay estimated at fair value at Closing Date

Net loss attributable to redeemable noncontrolling interests

Other comprehensive loss attributable to redeemable noncontrolling interests

Change in redemption value of redeemable noncontrolling interests

Balance at end of period

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements