What changed in this filing

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Item 1. Financial Statements

2022-11-03 compared with 2022-08-04 · 159 added, 108 removed, 517 unchanged (34% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenue

11 unchanged sentences

Net income (loss)

Net income (loss) attributable to noncontrolling interests

Net income attributable to noncontrolling interests

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

10 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Net income (loss)

Other comprehensive gain (loss):

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

Foreign currency translation adjustments, net of tax benefit

of $ 520 and $ 0 for the three months ended September 30, 2022 and 2021,

respectively, and $ 507 and $ 0 for the nine months ended

September 30, 2022 and 2021, respectively

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

net of tax benefit of $ 53 and $ 24 for the three months ended

September 30, 2022 and 2021, respectively, and $ 127 and $ 56 for the nine

months ended September 30, 2022 and 2021, respectively

Comprehensive income (loss)

5 unchanged sentences

(Unaudited, in thousands, except per share amounts)

September 30,

Current assets:

23 unchanged sentences

5,000 shares authorized, nil and nil shares issued

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

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

Common stock, $ 0.0001 par value:

300,000 shares authorized, 95,950 and 94,510

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

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

Additional paid-in capital

10 unchanged sentences

(Unaudited, in thousands)

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Comprehensive

2 unchanged sentences

Noncontrolling

Balance as of March 31, 2022

Balance as of June 30, 2022

Net income (loss)

1 unchanged sentence

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

1 unchanged sentence

Stock-based compensation

Balance as of June 30, 2022

Three Months Ended June 30, 2021

Balance as of September 30, 2022

Three Months Ended September 30, 2021

Comprehensive

2 unchanged sentences

Noncontrolling

Balance as of March 31, 2021

Other comprehensive income

Income (Loss)

Balance as of June 30, 2021

Other comprehensive loss

Issuance of common stock in connection with employee equity incentive plans

1 unchanged sentence

Stock-based compensation

Balance as of June 30, 2021

Six Months Ended June 30, 2022

Balance as of September 30, 2021

Nine Months Ended September 30, 2022

Comprehensive

5 unchanged sentences

Noncontrolling interests from business combination

Net income (loss)

Other comprehensive loss

Change in redemption value of redeemable noncontrolling interests

Dividend declared to nonredeemable noncontrolling interests

Dividend paid to nonredeemable noncontrolling interests

Issuance of common stock in connection with employee equity incentive plans

1 unchanged sentence

Stock-based compensation

Balance as of June 30, 2022

Six Months Ended June 30, 2021

Balance as of September 30, 2022

Nine Months Ended September 30, 2021

Comprehensive

2 unchanged sentences

Noncontrolling

Income (Loss)

Balance as of December 31, 2020

Other comprehensive income

Other comprehensive loss

Issuance of common stock in connection with employee equity incentive plans

1 unchanged sentence

Stock-based compensation

Balance as of June 30, 2021

Balance as of September 30, 2021

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

2 unchanged sentences

(Unaudited, in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

18 unchanged sentences

Cash flows from financing activities:

Proceeds from issuance of debt, net

Repayment of debt

Payment of debt issuance costs

Borrowing from line of credit

3 unchanged sentences

Payment of taxes related to net share settlement of equity awards

Dividends paid to noncontrolling interests

Net cash used in financing activities

Effect of exchange rate changes on cash

Net increase (decrease) in cash and restricted cash

Net decrease in cash and restricted cash

Cash and restricted cash at the beginning of the period

7 unchanged sentences

Issuance of common stock relating to business acquisition

Deferred and contingent purchase consideration related to business acquisitions

Debt issuance costs unpaid at period end

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

8 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, and gaming monitor, 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 laptops, and gaming monitor, among others.

Summary of Significant Accounting Policies

9 unchanged sentences

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 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.

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 September 30, 2022 and our results of operations for the three and nine months ended September 30, 2022 and 2021.

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

Principles of Consolidation

10 unchanged sentences

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 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.

As a result, w e recorded net income of $ 0.3 million and $ 33 thousand attributable to noncontrolling interests in our condensed consolidated statement of operations for the three and nine months ended September 30 , 2022, respectively, equal to the 49 % of the ownership interest retained in iDisplay by the noncontrolling interests.

Noncontrolling Interests

14 unchanged sentences

We adjust such estimates and assumptions when facts and circumstances dictate.

Actual results could differ materially from those estimates due to risks and uncertainties, including uncertainty in the current economic environment due to COVID-19.

Risks and Uncertainties related to the COVID-19 Pandemic 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.

Actual results could differ materially from those estimates due to risks and uncertainties, including uncertainty in the current economic environment.

Risks and Uncertainties

In February 2022, Russia invaded Ukraine resulting in, among other things, broad economic sanctions being imposed on Russia, and Russia’s drastic reduction in supply of natural gas to Europe in response, which has further increased existing global supply chain, logistics, and inflationary challenges and energy costs.

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 worldwide inflationary pressures and the negative impacts from the strengthening of the U.S.

dollar, has dampened consumer spending, which led to the 20.3 % and 29.9 % decrease in our net revenue in the three and nine months ended September 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.

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.

Since early 2020 through the first half of 2021, 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.

1 unchanged sentence

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

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.

In addition, we have experienced and may in the future 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 and geopolitical tensions 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.

During the second fiscal quarter of 2022, as part of the plan to rationalize inventory level to align with our updated revenue outlook for 2022, we increased our inventory impairment and related charges by approximately $ 22.7 million, as compared to the same period last year.

In the third fiscal quarter of 2022, we have seen the excess inventory situation in the distribution channels begin to ease in the United States.

Inventory impairment and related charges, of a routine nature, were recognized in the three months ended September 30, 2022, and the amount was immaterial.

In order to align our expenses with the expected revenue level, we implemented a restructuring plan in 2022 and terminated 94 employees worldwide, resulting in approximately $ 1.6 million of restructuring costs, primarily consisting of severance and benefits.

Our restructuring plan has been completed as of September 30, 2022.

Recently Adopted Accounting Pronouncements

20 unchanged sentences

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

September 30, 2022

Foreign currency forward contracts (1)

17 unchanged sentences

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”).

and its 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, 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 June 30, 2022 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 contingency around the remaining $ 1.0 million liability is expected to be resolved in the fourth quarter of 2022 and this amount is expected to be paid by the end of 2022.

Derivative Financial Instruments

5 unchanged sentences

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.

The notional principal amount of outstanding foreign exchange forward contracts was $ 32.4 million and $ 48.6 million as of September 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 $ 1.5 million and $ 0.4 million for the three months ended September 30 , 2022 and 2021 , respectively , and was $ 4.1 million and $ 0.5 million for th e n ine m onths ended September 30 , 2022 and 2021, respectively.

Business Combinations

3 unchanged sentences

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.

31 unchanged sentences

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.

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.

17 unchanged sentences

Acquisition-related costs

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.

We incurred acquisition-related costs of approximately $ 0.1 million and $ 0.7 million for the three and nine months ended September 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.

7 unchanged sentences

Effect of foreign currency exchange rates

Balance as of June 30, 2022

Balance as of September 30, 2022

Intangible assets, net

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

June 30, 2022

September 30, 2022

December 31, 2021

8 unchanged sentences

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 June 30, 2022 is as follows (in thousands):

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

Remainder of 2022

2 unchanged sentences

Cash and Restricted Cash

September 30,

Restricted cash—short term

2 unchanged sentences

Accounts Receivable, Net

Accounts receivable

September 30,

Accounts receivable from customers

Due from factor

Allowance for doubtful accounts

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.

On September 29, 2022, one of our fully consolidated subsidiaries entered into an accounts receivable factoring agreement (“ Factoring Agreement” ) with a third-party financial institution (“ Factor” ).

Pursuant to the terms of the arrangement, we sell certain of our customer receivables on a non-recourse basis to the Factor.

Proceeds from factoring the accounts receivable are due upon collection of payments from the customers, but upon our request, the Factor may, at their sole discretion, remit a portion of the proceeds to us prior to their collection of payments from the customers.

Our obligations to the Factor arising from the Factoring Agreement are secured by certain assets of our subsidiary.

In the three months ended September 30, 2022, we sold receivables and received cash proceeds of $ 66.3 million and $ 40.6 million, respectively.

The cost of factoring is included in selling, general and administrative expenses in our condensed consolidated statements of operations and the amount incurred in the three months ended September 30, 2022, was immaterial.

As of S eptember 30, 2022, the amount due from the Factor was $ 25.6 million, or 16.4 % of our accounts receivable, net balance, with one other customer with more than 10% of our accounts receivable, net balance.

Two customers represented 10% or more of our accounts receivable, net balance as of December 31, 2021.

September 30,

Raw materials

2 unchanged sentences

Property and Equipment, Net

September 30,

Manufacturing equipment

5 unchanged sentences

Property and equipment, net

September 30,

Right-of-use assets

1 unchanged sentence

Other Liabilities and Accrued Expenses

September 30,

Accrued reserves for customer incentive programs

Accrued reserves for sales return

Accrued payroll and related expense

Income tax payable

Accrued freight expenses

Accrued payroll and related expense

Operating lease liabilities, current

Income tax payable

Contract liabilities

1 unchanged sentence

Other Liabilities, Noncurrent

September 30,

Operating lease liabilities, noncurrent

4 unchanged sentences

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 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.

In connection with such nonmonetary transactions with our manufacturers, as of September 30, 2022 , we recognized $ 0.5 million prepaid inventory and $ 0.6 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):

September 30,

Term Loan (variable rate) due September 2026

11 unchanged sentences

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 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 6.46 % and 6.45 % for the three and six months ended June 30, 2021, respectively.

In the nine months ended September 30, 2021, with the excess cash on hand, we made voluntary prepayments of $ 78.3 million.

The remaining $ 248.5 million of the First Lien Term Loan 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.

Accordingly, we recorded losses on extinguishment of debt of $ 4.9 million for the nine months ended September 30, 2021.

The effective interest rate inclusive of the debt discount and debt issuance costs for the First Lien was approximately 5.7 % and 5.4 % for the three and nine months ended September 30, 2021, respectively.

Credit Agreement

12 unchanged sentences

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.

base rate ( as 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 BSBY plus 1.0 %) plus a percentage spread (ranging from 0.25 % to 1.25 %) based on our total 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.

On September 29, 2022, we entered into an accounts receivable Factoring Agreement with a Factor.

See Note 7 “Balance Sheet Components – Accounts Receivable, Net” for additional information on the Factoring Agreement .

In connection with the Factoring Agreement, we also entered into (i) a Second Amendment ( “ Second Amendment ”) to the Credit Agreement to permit the transactions contemplated by the Factoring Agreement and (ii) an Assignment of Factoring Proceeds and Intercreditor Agreement with the Factor and the administrative agent under the Credit Agreement to establish the respective rights of the Factor and the Credit Agreement Agent in and to the related factoring collateral.

The First and Second Amendment were both accounted for as debt modifications.

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

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

The carrying value of our Term Loan was $ 243.7 million and $ 247.7 million as of September 30, 2022 and December 31, 2021, respectively.

The estimated fair value of the Term Loan as of September 30, 2022, which we have classified as a Level 2 financial instrument, was approximately $ 243.2 million.

The effective interest rate inclusive of the debt discount and debt issuance costs was approximately 3.8 % and 2.5 % for the three and nine months ended September 30, 2022, respectively.

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

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

First Lien Guaranty Agreement:

7 unchanged sentences

Total interest expense recognized

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

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

Remainder of 2022

3 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Beginning of the period

4 unchanged sentences

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) :

Long-term non-cancelable purchase commitments as of September 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 June 30, 2022 and December 31, 2021.

There were no letters of credit outstanding as of September 30, 2022;

total letters of credit outstanding were $ 0.5 million as of December 31, 2021.

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

3 unchanged sentences

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.

6 unchanged sentences

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 June 30, 2022 and December 31, 2021.

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

Equity Incentive Plans and Stock-Based Compensation

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

As of September 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

September 30,

Nine Months Ended

September 30,

Cost of revenue

4 unchanged sentences

compensation expense

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.

Total stock-based compensation expense capitalized in inventory and as cloud computing arrangement 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):

June 30, 2022

September 30, 2022

Unrecognized Expense

2 unchanged sentences

Total unrecognized stock-based compensation expense

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.

The total intrinsic value of options exercised was $ 0.4 million and $ 4.4 million for the three and nine months ended September 30, 2022, respectively, and was $ 8.8 million and $ 62.4 million for the three and nine months ended September 30, 2021, respectively .

The total fair value of RSUs vested was $ 1.1 million and $ 4.0 million for the three and nine months ended September 30, 2022, respectively, and was $ 0.8 million for both the three and nine months ended September 30, 2021.

Net Income (Loss) Per Share

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Net income (loss)

Net income (loss) attributable to noncontrolling interests

Net income attributable to noncontrolling interests

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

9 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

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 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 .

Our effective tax rates were 50.7 % and 17.4 % for the three months ended September 30, 2022 and 2021, respectively.

The increase in effective tax rates was primarily due to the change in the forecast and the mix of losses between the various jurisdictions.

Our effective tax rates were 15.6 % and 17.2 % for the nine months ended September 30, 2022 and 2021, respectively.

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

In addition, 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.

Unrecognized tax benefits were $ 3.8 million as of September 30, 2022 and December 31, 2021, 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, 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

September 30,

Nine Months Ended

September 30,

Gamer and Creator Peripherals

9 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Europe and Middle East

Total net revenue

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.

Revenues from sales to customers in the United States represented 44.7 % and 41.4 % for the three months ended September 30, 2022 and 2021, respectively, and represented 44.5 % and 37.3 % for the nine months ended September 30, 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.

Two customers represented at least 10 % of total net revenue for the three and nine months ended September 30, 2022 .

One customer represented at least 10 % of total net revenue for the three and nine months ended September 30, 2021.

Redeemable Noncontrolling Interests

5 unchanged sentences

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 .

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

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

Three Months Ended

June 30, 2022

Six Months Ended

June 30, 2022

September 30, 2022

Nine Months Ended

September 30, 2022

Balance at beginning of period

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

Net income (loss) attributable to redeemable noncontrolling interests

Net income attributable to redeemable noncontrolling interests

Other comprehensive loss attributable to redeemable noncontrolling interests

Dividend paid to the redeemable noncontrolling interests

Change in redemption value of redeemable noncontrolling interests (1)

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 represent a $ 2.7 million and $ 12.3 million increase in redemption value over the carrying value for the three and nine months ended September 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.

The redeemable noncontrolling interests balance at September 30, 2022 included the amount that would be paid to the noncontrolling interests holder if they exercise their put option (calculated based on multiples of iDisplay’s historical TTM EBITDA less any debt), and the accrual for dividends 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