What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-06 · 159 added, 106 removed, 466 unchanged (36% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Cost of revenue

6 unchanged sentences

Interest expense

Other expense, net

Other income (expense), net

Total other expense, net

2 unchanged sentences

Net income (loss)

Net loss attributable to noncontrolling interests

Net income (loss) attributable to noncontrolling interests

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

3 unchanged sentences

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

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

Corsair Gaming, Inc.:

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

Weighted-average common shares outstanding:

4 unchanged sentences

Three Months Ended

Six Months Ended

Net income (loss)

Other comprehensive gain (loss):

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

Foreign currency translation adjustments, net of tax benefit (expense)

of $( 164 ) and $ 0 for the three months ended June 30, 2022 and 2021,

respectively, and $( 13 ) and $ 0 for the six months ended June 30, 2022

and 2021, respectively

Unrealized foreign exchange gain (loss) from long-term intercompany loans,

net of tax benefit (expense) of $55 and $(12) for the three months ended

June 30, 2022 and 2021, respectively, and $74 and $32 for the six

months ended June 30, 2022 and 2021, respectively

Comprehensive income (loss)

30 unchanged sentences

5,000 shares authorized, nil and nil shares issued

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

and outstanding as of June 30, 2022 and December 31, 2021, respectively

Common stock, $ 0.0001 par value:

300,000 shares authorized, 95,780 and 94,510

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

shares issued and outstanding as of June 30, 2022 and December 31, 2021,

Additional paid-in capital

10 unchanged sentences

(Unaudited, in thousands)

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Comprehensive

2 unchanged sentences

Noncontrolling

Balance as of December 31, 2021

Issuance of common stock in relation to

business acquisition

Noncontrolling interests from business

Balance as of March 31, 2022

Net income (loss)

Other comprehensive loss

Change in redemption value of redeemable

Issuance of common stock in connection

with employee equity incentive plans

Shares withheld related to net share

Change in redemption value of redeemable noncontrolling interests

Dividend declared to nonredeemable noncontrolling interests

Issuance of common stock in connection with employee equity incentive plans

Shares withheld related to net share settlement

Stock-based compensation

Balance as of June 30, 2022

Three Months Ended June 30, 2021

Comprehensive

Stockholders’

Nonredeemable

Noncontrolling

Balance as of March 31, 2021

Three Months Ended March 31, 2021

Other comprehensive income

Issuance of common stock in connection with employee equity incentive plans

Shares withheld related to net share settlement

Stock-based compensation

Balance as of June 30, 2021

Six Months Ended June 30, 2022

Comprehensive

2 unchanged sentences

Noncontrolling

Income (Loss)

Balance as of December 31, 2021

Issuance of common stock in relation to business acquisition

Noncontrolling interests from business combination

Other comprehensive loss

Issuance of common stock in connection

with employee equity incentive plans

Change in redemption value of redeemable noncontrolling interests

Dividend declared to nonredeemable noncontrolling interests

Issuance of common stock in connection with employee equity incentive plans

Shares withheld related to net share settlement

Stock-based compensation

Balance as of March 31, 2021

Balance as of June 30, 2022

Six Months Ended June 30, 2021

Comprehensive

Stockholders’

Nonredeemable

Noncontrolling

Balance as of December 31, 2020

Other comprehensive income

Issuance of common stock in connection with employee equity incentive plans

Shares withheld related to net share settlement

Stock-based compensation

Balance as of June 30, 2021

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

2 unchanged sentences

(Unaudited, in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net income (loss)

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

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

Stock-based compensation

Amortization of intangible assets

Debt issuance costs amortization

6 unchanged sentences

Other liabilities and accrued expenses

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities:

2 unchanged sentences

Purchase of property and equipment

Investment in available-for-sale convertible note

Net cash used in investing activities

8 unchanged sentences

Effect of exchange rate changes on cash

Net decrease in cash and restricted cash

Net increase (decrease) in cash and restricted cash

Cash and restricted cash at the beginning of the period

6 unchanged sentences

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

Issuance of common stock relating to business acquisition

Deferred and contingent purchase consideration related to business acquisitions

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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.

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 June 30, 2022 and our results of operations for the three and six months ended June 30, 2022 and 2021.

The results for the three and six months ended June 30, 2022 are not necessarily indicative of the results expected for the current fiscal year or any other future periods.

Principles of Consolidation

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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.

As a result, w e recorded a net income ( loss ) of $ 0.2 million and $ ( 0.2 ) million attributable to noncontrolling interests in our condensed consolidated statement of operations for the three and six months ended June 30 , 2022, respectively, equal to the 49 % of the ownership interest retained in iDisplay by the noncontrolling interests.

Noncontrolling Interests

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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

Risks and Uncertainties related to the COVID-19 Pandemic and Other General Risks

In February 2022, Russia invaded Ukraine resulting in, among other things, broad economic sanctions being imposed on Russia, which has further increased existing global supply chain, logistics, and inflationary challenges.

Although our business in Russia and Ukraine was not material to our results, we believe the war has degraded the consumer sentiment in Europe and coupled with the unexpected inflationary pressures which dampened consumer spending, attributed to the 40.0 % and 33.7 % decrease in our net revenue in the three and six months ended June 30, 2022, respectively, compared to the same periods last year.

Due to the COVID-19 pandemic, there has been and will continue to be uncertainty and disruption in the global economy and financial markets.

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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 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.

In addition, we have experienced and continue to experience supply chain challenges, including longer production and shipping times, and increased shipping and logistics costs, each of which has negatively impacted our gross margins, as well as the need to purchase long-lead time items ahead of demand due to supply constraints.

The extent of the impact of macroeconomic conditions, the COVID-19 pandemic, geopolitical tensions and supply chain challenges on our business, sales, results of operations, cash flows and financial condition will depend on future developments, which are not within our control and are highly uncertain and cannot be predicted.

We will continue to evaluate these risks and uncertainties and further our mitigation plans.

Our inventory impairment and related charges increased by $ 22.7 million in the three months ended June 30, 2022, as compared to the same period last year, primarily resulting from our inventory valuation assessment and our plan to rationalize our inventory

level to align with the current revenue outlook at end of June 2022.

In addition, i n the three months ended June 30, 2022, in order to align our expenses with the expected revenue level, we implemented a restructuring plan and terminated 92 employees worldwide, resulting in approximately $ 1.5 million of restructuring costs, primarily consisting of severance and benefits.

Our restructuring plan has been substantially completed as of June 2022.

Recently Adopted Accounting Pronouncements

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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

The following tables summarize our financial assets and 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):

June 30, 2022

Foreign currency forward contracts (1)

Available-for-sale debt securities (2)

Deferred cash consideration in connection with a

3 unchanged sentences

December 31, 2021

Foreign currency forward contracts (1)

Deferred cash consideration in connection with a

2 unchanged sentences

Total liabilities

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

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.

In May 2022, we invested in a convertible promissory note issued by a private company (the “Note”) for $ 1.0 million.

The Note is interest bearing and matures in April 2023 .

The Note is classified as an available-for-sale security and is included in prepaid expenses and other assets in our condensed consolidated balance sheets.

We included the Note as Level 3 in the fair value hierarchy due to the absence of quoted market prices or other observable data.

The fair value of the Note is estimated based on a qualitative analysis using the most recent observable transaction price and other significant unobservable inputs requiring management judgement.

In December 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”).

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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.

In March 2022, we paid the $ 0.3 million contractual amount, and the remaining $ 1.0 million liability as of June 30, 2022 is subject to update upon filing our tax return for tax year 2021.

Derivative Financial Instruments

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We do no t enter into derivative instruments for trading purposes.

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.

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

The notional principal amount of outstanding foreign exchange forward contracts was $ 20.9 million and $ 48.6 million as of June 30, 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 $ 2.1 million and $( 0.6 ) million for the three months ended June 30, 2022 and 2021, respectively, and was $ 2.6 million and $ 0.1 million for the six months ended June 30, 2022 and 2021, respectively.

Business Combinations

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.

On January 1, 2022, we completed the acquisition of a 51 % ownership stake in iDisplay (the “ iDisplay Acquisition ”), 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.

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.

8 unchanged sentences

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

Subsequent to the iDisplay Acquisition Closing Date, we recorded measurement period adjustments which increased goodwill by $ 1.0 million, and decreased identifiable intangible assets and deferred liabilities by $ 1.1 million and $ 0.1 million, respectively.

The final allocation of the iDisplay Acquisition purchase consideration to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date is as follows (in thousands):

Accounts receivable

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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 excess of the purchase consideration over the fair value of the identifiable intangible assets and the net tangible assets and liabilities acquired has been estimated to be $ 33.0 million, of which $ 29.3 million and $ 3.7 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.

A portion of the identifiable intangible assets are not deductible for tax purposes of which $ 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

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, including subsequent measurement period adjustments:

(In thousands)

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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.

We incurred acquisition-related costs of approximately $ 0.1 million and $ 0.6 million for the three and six months ended June 30, 2022, respectively, 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.

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Addition from iDisplay Acquisition

Measurement period adjustments

Effect of foreign currency exchange rates

Balance as of March 31, 2022

Balance as of June 30, 2022

Intangible assets, net

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

March 31, 2022

June 30, 2022

December 31, 2021

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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 March 31, 2022 is as follows (in thousands):

The estimated future amortization expense of intangible assets as of June 30, 2022 is as follows (in thousands):

Remainder of 2022

9 unchanged sentences

Accounts receivable, net

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

As of June 30, 2022 , and December 31, 2021, two customers each represented 10% or more of our consolidated accounts receivable, net.

Raw materials

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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 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.

In connection with such nonmonetary transactions with our manufacturers, as of June 30, 2022 , we recognized $ 2.2 million prepaid inventory and $ 2.5 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.

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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.

In the six months ended June 30, 2021, with the excess cash on hand, we made voluntary prepayment of $ 53 million, and accordingly we recorded losses on extinguishment of debt of $ 0.8 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.

The effective interest rate inclusive of the debt discount and debt issuance costs for the First Lien, was approximately 6.46 % and 6.45 % for the three and six months ended June 30, 2021, 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.

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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 Term Loan and Revolving Facility under the Credit Agreement initially carried interest at the Company’s election at 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.

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.

The financial covenants include 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 the Credit Agreement) .

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 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.

Our obligations under the Credit Agreement are guaranteed by substantially all of our U.S.

On June 30, 2022, we entered into a First Amendment of the Credit Agreement (“ First Amendment ”), which among other changes resulted in the Bloomberg Short-Term Bank Yield Index rate (“ BSBY ”) being utilized as a replacement rate for LIBOR.

Consequently, following the First Amendment, the Term Loan and Revolving Facility will each bear interest at the Company’s election at either (a) BSBY plus a percentage spread (ranging from 1.25 % to 2.25 %) based on our total net leverage ratio, or (b) the base rate as the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.50 % and (iii) one-month BSBY plus 1.0 %) plus a percentage spread (ranging from 0.25 % to 1.25 %) based on our net leverage ratio.

In addition, pursuant to the First Amendment, the maximum permitted Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement) was also amended to increase to 3.50 to 1.0 between the quarters ending September 30, 2022 through and including March 31, 2023, and such ratio will revert to 3.00 to 1.00 from the quarter ended June 30, 2023 and each quarter thereafter, provided that, upon the occurrence of a Qualified Acquisition (as defined in the Credit Agreement), such ratio can be increased to 3.50 to 1.0 temporarily provided all the requirements set forth in the Credit Agreement are met.

The First Amendment was accounted for as a debt modification.

As of June 30, 2022, we were not in default under the Credit Agreement.

As of June 30, 2022 and December 31, 2021, we had no outstanding balance under the Revolving Facility.

The carrying value of our Term Loan was $ 245.1 million and $ 247.7 million as of June 30, 2022 and December 31, 2021, respectively.

The estimated fair value of the Term Loan as of June 30, 2022, which we have classified as a Level 2 financial instrument, was approximately $ 240.4 million.

The effective interest rate inclusive of the debt discount and debt issuance costs was approximately 2.13 % and 1.81 % for the three and six months ended June 30, 2022, respectively.

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

Three Months Ended

Six Months Ended

First Lien Guaranty Agreement:

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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):

The estimated future principal payments under our total long-term debt as of June 30, 2022 are as follows (in thousands):

Remainder of 2022

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Three Months Ended

Six Months Ended

Beginning of the period

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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 March 31, 2022 were as follows (in thousands) :

Our long-term non-cancelable purchase commitments consist primarily of multi-year contractual arrangements relating to subscriptions for cloud computing hosting arrangements for various reporting applications and the related support services.

Long-term non-cancelable purchase commitments as of June 30, 2022 were as follows (in thousands) :

Remainder of 2022

1 unchanged sentence

Letters of Credit

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

The total letters of credit outstanding, in aggregate, was $ 0.5 million as of June 30, 2022 and December 31, 2021.

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

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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.

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.

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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 March 31, 2022 and December 31, 2021.

There were no shares of preferred stock outstanding as of June 30, 2022 and December 31, 2021.

Equity Incentive Plans and Stock-Based Compensation

As of March 31, 2022 , we have two active equity incentive plans:

As of June 30, 2022 , we have two active equity incentive plans:

the 2020 Equity Incentive Plan and the Employee Stock Purchase Plan (“ ESPP ”).

1 unchanged sentence

Three Months Ended

Six Months Ended

Cost of revenue

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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

June 30, 2022

Unrecognized Expense

2 unchanged sentences

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.

The total intrinsic value of options exercised was $ 2.4 million and $ 4.0 million for the three and six months ended June 30, 2022, respectively, and was $ 49.3 million and $ 53.7 million for the three and six months ended June 30, 2021, respectively .

The total fair value of RSUs vested was $ 0.4 million and $ 2.9 million for the three and six months ended June 30, 2022, there were immaterial RSUs vested for the three and six months ended June 30, 2021.

Net Income (Loss) Per Share

1 unchanged sentence

Three Months Ended

Six Months Ended

Net income (loss)

Net loss attributable to noncontrolling interests

Net income (loss) attributable to noncontrolling interests

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

7 unchanged sentences

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):

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, except percentages):

Three Months Ended

Six Months Ended

Income (loss) before income taxes

4 unchanged sentences

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 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 .

Our effective tax rates were consistent for the three months ended June 30, 2022 and 2021, at 7.4 % and 7.6 %, respectively.

Our effective tax rates were 8.5 % and 17.2 % for the six months ended June 30, 2022 and 2021, respectively.

The decrease in effective tax rates was primarily due to an increase in losses in our foreign subsidiaries offset by a decrease in excess tax benefits from stock-based compensation recognized in the six months ended June 30, 2022, as compared to the same period last year.

In addition, in the six months ended June 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.

Unrecognized tax benefits were $ 3.7 million and $ 3.8 million as of June 30, 2022 and December 31, 2021, respectively, and i f recognized, would favorably affect the effective income tax rate in future periods .

Segment and Geographic Information

3 unchanged sentences

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 .

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 .

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

4 unchanged sentences

Three Months Ended

Six Months Ended

Gamer and Creator Peripherals

9 unchanged sentences

Three Months Ended

Six Months Ended

Europe and Middle East

Total net revenue

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.

Revenues from sales to customers in the United States represented 45.0 % and 35.1 % for the three months ended June 30, 2022 and 2021, respectively, and represented 44.2 % and 35.7 % for the six months ended June 30, 2022 and 2021, respectively.

Revenue from sales to customers in the United Kingdom were below 10.0 % for the three and six months ended June 30, 2022 but represented 10.0 % and 10.1 % for the three and six months ended June 30, 2021, respectively.

No other countries besides the United States and the United Kingdom 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

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

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.

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

The change in redemption value is recognized through retained earnings.

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

June 30, 2022

Six Months Ended

June 30, 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

Net income (loss) attributable to redeemable noncontrolling interests

Other comprehensive loss attributable to redeemable noncontrolling interests

1 unchanged sentence

Balance at end of period (2)

These amounts represent $ 7.4 million and $ 9.6 million increase in redemption value over the carrying value for the three and six months ended June 30, 2022 respectively.

These amounts were recorded as an offset to retained earnings and increased the net loss used in the calculation of net loss per share attributable for these periods.

The redeemable noncontrolling interest balance at June 30, 2022 included the amount calculated based on multiples of iDisplay’s historical TTM EBITDA less any debt and the accrual for dividends declared in June 2022 based on the Shareholders Agreement.

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