Corsair (CRSR) Q1 2026 Earnings Transcript

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Date

May 7, 2026, 5 p.m. ET

Call participants

• Chief Executive Officer — Thi La
• Chief Financial Officer — Gordon Mattingly

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Takeaways

• Revenue -- $354.5 million, topping the midpoint of company guidance.
• Gross profit -- $116 million, reflecting a 13% increase year over year, supported by both main segments.
• Gross margin -- Reached a first-quarter high of 32.7%.
• Gamer and Creator Peripherals segment revenue -- Increased 10% year over year despite tariff headwinds.
• Gamer and Creator Peripherals segment gross profit -- Rose 8% to $50.3 million; segment gross margin was 40.8%.
• Gaming Components and Systems segment revenue -- Declined 10% year over year, attributed to a "non-GPU upgrade cycle" and "challenging memory pricing dynamics."
• Gaming Components and Systems segment gross profit -- Increased 18% to $65.7 million, with segment gross margin expanding from 21.7% to 28.4% (a rise of 670 basis points).
• Direct-to-consumer channel -- Comprised 20% of revenue, up from 17% a year ago; carries structurally higher margins.
• Segment mix shift -- Higher-margin Gamer and Creator Peripherals accounted for 35% of revenue, up from 30% a year prior.
• Adjusted EBITDA -- $35.8 million, a 58% year-over-year increase, representing 10.1% of revenue and exceeding the high end of guidance.
• GAAP EPS -- $0.11 compared to a loss in the prior-year period.
• Non-GAAP EPS -- $0.27, a significant improvement from the prior-year period.
• Cash from operations -- $29.7 million generated during the quarter; cash and restricted cash rose by $20.9 million sequentially to $119.7 million.
• Net debt -- Ended the quarter with a near zero position, enhancing flexibility for capital allocation.
• Share repurchases -- Approximately $5 million in shares repurchased under a $50 million authorization.
• Elgato Marketplace KPIs -- Delivered double-digit sequential growth in new accounts and digital products.
• Sim racing partnership -- Fanatec signed as a licensed Formula 1 brand partner and F1 Esports Official Partner, with product showcased at the Miami Grands Prix.
• AI-focused workstations -- Early demand noted, particularly from prosumers and SMB customers seeking high-performance local AI compute solutions.
• Fiscal Q2 2026 guidance (period ending June 30, 2026) -- Net revenue projected between $295 million and $320 million; adjusted EBITDA $12.5 million to $15.5 million; non-GAAP EPS $0.05 to $0.07.
• Fiscal full-year guidance (period ending Dec. 31, 2026) -- Reaffirmed without revision despite exceeding internal Q1 profit expectations.
• Direct-to-consumer midterm target -- Management reiterated the goal to reach 25% of revenue via the DTC channel, up from current 20%.

Summary

The call positioned Corsair Gaming (NASDAQ:CRSR) as executing its ongoing transformation strategy by improving profitability and capital structure while steadily growing its higher-margin segments. Management distinctly highlighted a shift toward recurring revenue and ecosystem integration, notably with Stream Deck and a broadened Elgato Marketplace driving user engagement and revenue diversity. Integration of Stream Deck capabilities across multiple hardware product lines was emphasized as a material strategic evolution, supporting both margin expansion and market share gains.

• Gross profit expansion was attributed to operational discipline, enhanced product mix, and direct execution on cost management, allowing profit growth to flow through to EBITDA and EPS gains.
• Investments in the direct-to-consumer strategy included M&A, differentiated product launches, targeted marketing spend, and the opening of a physical retail store supporting DTC mix growth.
• Management expects ongoing semiconductor supply constraints and memory price uncertainty to persist through the near term, with normalization not anticipated until at least 2027.
• The company confirmed early momentum in AI workstations, pointing to prosumer and SMB demand, but signaled measured expectations due to semiconductor availability concerns.
• Fanatec's partnership with Formula 1 is expected to increase brand reach and authenticity for the sim racing category, with recent event presence highlighted as a validation point.
• Market share gains, particularly in the peripherals segment, were explicitly called out as reflecting successful strategic integration of software and hardware ecosystems.

Industry glossary

• DTC (Direct-to-consumer): Sales channel where products are sold directly by Corsair to end customers without intermediaries, typically yielding higher gross margins.
• Gross margin: Ratio of gross profit to net revenue, measuring how efficiently revenue is converted to profit after cost of goods sold.
• Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, further adjusted for unusual or non-recurring items, representing core operating performance.
• Fanatec: Corsair's sim racing brand, now partnered with Formula 1 in both licensing and esports capacities.
• Elgato Marketplace: Corsair’s digital storefront for plug-ins and digital products tailored to content creators and streamers, integrated with the Stream Deck ecosystem.

Full Conference Call Transcript

Thi La: Thank you, David, and good afternoon, everyone. We delivered a strong start to 2026. This quarter reflects real progress in the transformation of this business, and I will frame what the results show before Gordon takes you through the details. The headline is this: first quarter record gross margin, both adjusted EBITDA and EPS well above the high end of our guidance and a meaningful improvement in profitability versus a year ago. We also generated strong cash flow, reduced net debt to near 0 and returned capital to shareholders via our share repurchase. What I want to convey is that this is more than one strong metric.

It is the whole company moving in the right direction at the same time. In Gamer and Creator Peripherals, we had another excellent quarter. Revenue grew 10% year-over-year, and we absorbed real tariff headwinds in the process. The growth is structural, not cyclical, and I want to explain why. Stream Deck, our solution that combines workflow control software with a hardware innovative interface puts powerful automation literally at your fingertips. What we have built on top of that is the flywheel, a marketplace for plug-ins and digital products that connects developers with users, and it is working. underscoring our success and momentum, our Elgato Marketplace delivered double-digit sequential growth in new accounts and digital products this quarter.

We are also excited to see the rise of AI-assisted development, accelerating that flywheel further, lowering the barrier for a new generation of builders. Critically, Stream Deck is no longer just a stand-alone device. We have deployed the ecosystem across our product lines with keyboards, mice and other Corsair peripherals now integrating directly with Stream Deck, turning the software layer into a connected tissue across our hardware portfolio. This integration alongside the Elgato marketplace provides unique benefits to our customers and the results show in our Q1 2026 market share gain. Wave Next is our most ambitious hardware and software integration to date, unifying audio workflows into a single ecosystem with onboard DSP and intuitive tactile control.

Sim Racing also had a strong quarter. We recently signed a strategic partnership with Formula 1, naming Fanatec as a licensed F1 brand partner and F1 Esports Official Partner for the F1 Sim Racing World Championship. Fanatec was showcased at the Miami [ Grands Prix ] recently. This validates our position at the top of the market and opens meaningful doors for brand reach and product authenticity going forward. In gaming components and systems, revenue declined 10% year-over-year, and I want to be direct about why we are in a non-GPU upgrade cycle compounded by challenging memory pricing dynamics. Semiconductor supply constraints have added further headwinds on both availability and consumer demand.

These are industry-wide dynamics, not Corsair specific, and we expect them to persist through near term. What I want you to focus on is how we managed through it. Despite the revenue decline, we grew gross profit 18% year-over-year to $65.7 million and expanded gross margin 670 basis points from 21.7% to 28.4%. Gordon will give you the specifics, but the point is that our team delivered real margin improvement under dynamic pressure. That reflects operational discipline and a deliberate shift toward higher-margin products. Within the segment, we're also seeing early but real demand for AI-focused workstations, particularly from prosumers and SMB customers who need high-performance locally run AI compute.

This is a large and growing market, and it plays to Corsair's and ORIGIN PC's strengths. We are encouraged by the early signals and believe this has the potential to become a more meaningful contributor as adoption matures, though we want to be measured in our expectations until semiconductor availability is more established. Stepping back, the strategy we've been executing against is that Corsair's profitability improves as we continue to grow our higher-margin gaming and creator segment, leveraging our platform ecosystem and continue to exercise operational discipline. This quarter is a proof point that our strategy is working. Our 2026 priorities are clear.

First, improve the quality of growth, leaning into higher-margin categories and scaling our ecosystem where we see strong momentum. Second, grow the Elgato marketplace and recurring revenue to drive lifetime value engagement and margin enhancement. Third, scale direct-to-consumer because higher-margin channels and better customer data make other parts of the business smarter. With that, I will turn it over to Gordon to take you through the financials. Gordon?

Gordon Mattingly: Thank you, Thi, and good afternoon, everyone. Before I get into the numbers, I want to frame what this quarter's results represent. We are working to transform Corsair into a consistently profitable cash-generative business, underpinned by our diversified portfolio of market-leading brands. This quarter, we saw several benefits of that transformation and diversification simultaneously contributing to our strong results. These include consistent market leadership in memory products, an accelerating pace of innovation in higher-margin peripherals, platform growth in Elgato, direct-consumer expansion and disciplined expense and working capital management. Our team will continue to prioritize progress and improvements across all these areas. Now turning to our results. Revenue for the first quarter was $354.5 million, above the midpoint of our guidance.

Gross profit increased 13% year-over-year to $116 million, reflecting strong execution within both our segments, while gross margin expanded to a first quarter record of 32.7%. Our Gamer and Creator Peripheral segment gross profit grew 8% to $50.3 million despite year-over-year tariff-related headwinds with segment gross margin of 40.8%. Our Gaming Components and Systems segment gross profit grew 18% to $65.7 million, with segment gross margin expanded significantly from 21.7% to 28.4%. This is an increase of 670 basis points, which was driven by our strong supply chain execution, favorable memory pricing and sequential market share gains. Though we do expect margin normalization over time, we are very pleased with the expansion we delivered in Q1.

Our higher-margin Gamer and Creator Peripheral segment also grew to 35% of our Q1 revenue mix, up from 30% a year ago, which helped lift our blended company gross margin, a trend that we expect to continue. I want to call out one additional driver of margin quality. Our direct-to-consumer channel grew to 20% of Q1 revenue, up from 17% a year ago. That 3-point mix shift matters. Direct-to-consumer carries structurally higher margins than our wholesale and retail channels. As a result, this growth flowed directly into gross profit. It's a deliberate part of our strategy, and we continue to make good progress on it.

Disciplined operating expense management with flat year-over-year expenses enabled gross profit growth to flow entirely through to adjusted EBITDA. As a result, adjusted EBITDA grew to $35.8 million, up 58% year-over-year and above the high end of our guidance at 10.1% of revenue. This marks our second consecutive quarter of double-digit adjusted EBITDA margin. Earnings per share improved significantly, coming in at $0.11 on a GAAP basis and $0.27 on a non-GAAP basis compared to a loss in the prior year period. Turning to the balance sheet and cash flow. We generated $29.7 million in cash from operations in Q1, driven by strong earnings with balanced working capital management.

This translated into good progress on the balance sheet with our cash and restricted cash increasing sequentially by $20.9 million to $119.7 million. Importantly, we ended the first quarter with a near 0 net debt position. This will give us even greater flexibility to deploy our capital across the business and maximize future shareholder returns. In line with that, during the first quarter, we repurchased approximately $5 million of stock under our recent $50 million authorization. This reflects our view that our shares represent a highly compelling investment opportunity. We intend to continue to deploy our capital optimally, whether investing in organic growth, executing M&A, deleveraging the business or returning capital to shareholders. Now turning to our guidance.

For the second quarter of 2026, we expect net revenue to be in the range of $295 million to $320 million, adjusted EBITDA to be in the range of $12.5 million to $15.5 million and non-GAAP EPS to be in the range of $0.05 to $0.07 per share. We expect revenue to be down by about 4% year-over-year at the midpoint of our guided range with expected low teens year-over-year growth in our Gamer and Creator Peripheral segment, offset by a more cautious outlook for gaming components and systems, driven by the ongoing global semiconductor shortages and related demand dynamics. The sequential decline in our revenue from Q1 reflects the normal seasonal pattern of our business.

Adjusted EBITDA is expected to grow more than 70% year-over-year at the assumed midpoint of our guided range as we continue to focus on margin expansion and operating expense management. We also reaffirm our previously issued full year guidance, reflecting continued confidence in our outlook. To close, we delivered a strong first quarter with solid top line performance relative to expectations, significant profit growth together with meaningful balance sheet improvement and cash generation. As we look ahead, our priorities remain clear: continued optimization of our product mix towards higher-margin categories and sales channels, disciplined cost management and driving consistent profitable growth across our diversified portfolio of market-leading brands.

We believe the progress we've made positions us well to build on this momentum through the remainder of 2026, and we remain confident in our ability to execute against our strategy as we deploy our capital optimally to deliver long-term value for our shareholders. Operator, that concludes our formal remarks. You can now open the call for Q&A.

Operator: [Operator Instructions] Your first question today comes from Aaron Lee from Macquarie.

Aaron Lee: Nice job on the quarter. I wanted to talk about -- maybe to start with guidance. So obviously, you beat the high end of EBITDA guidance in the first quarter. So can you just talk a bit about the decision to keep the full year outlook the same? Does that just kind of reflect -- it's early in the year, so no reason to kind of move that around? Or any other puts and takes that we should be mindful of?

Gordon Mattingly: You got it absolutely right. If you look at revenue for Q1, we're a little bit above the midpoint of guidance. But from a revenue perspective, no reason to change the annual guide, we're on track. From a profit perspective, you're absolutely right. It's pretty pleasing for us to have already banked 33% of the annual guide, 25% of the way through the year. But we just back to what you said at the outset, we're pretty early on through the year. The macro situation is a little bit uncertain. So we just feel that it's right to maintain the guide that we issued before, and we remain confident in that guidance.

Aaron Lee: Okay. Perfect. And then I wanted to ask about AI. You made some pretty interesting comments about the opportunity there. Can you just talk about your strategy to penetrate this TAM? And is this something that would require significant time or investment to unlock? Or can you be pretty nimble?

Thi La: Aaron, on AI workstation, this is a product line that we launched about 2 quarters ago. And at the beginning, the category was still pretty new. There were a lot of education that needs to be done. Since then, a lot more LLM models became available to the market and people are a lot more familiar with using AI to do the work, to establish very complex business model. And alongside with that, we started to see a much stronger awareness of the benefit of AI computing. And then furthermore, the concern around security and the ability to just do local computing with AI, it's a lot higher and the demand started to surface for our particular solution.

So a lot of the performance that we see in Q1 for the systems side is really stemming from the awareness and the need of these new consumers, we call them prosumers as well as SMB wanting to invest in the category. The category itself, we shared the TAM data in our earnings. It's a big market. It's just a question is, number one, the acceleration time line and the availability of semiconductor.

Operator: Your next question comes from Drew Crum from Stifel.

Andrew Crum: I just wanted to get your additional thoughts on updated expectations for when you think semiconductor supply will improve for your business. I think the language that you used was it would be constrained near term. But just any more detail there and how you're thinking about it beyond '26? And then I have a follow-up.

Thi La: At this point, the data that we use is pretty much very consistent with what the market is saying is sometime in '27. Although in terms of availability, for us, we will continue to be able to have access to memory, especially DRAM. The big question is around pricing because you do see demand basically track ASP memory, for example. So for us, when we talk about availability of semiconductor, it just means that the supply-demand picture is more balanced, and you will see ASP normalize, and that's going to bring in, we believe, at this point, a much bigger acceleration in computing. And for our business, that's very beneficial to see people coming back into the market.

I think we just see right now just this pent-up demand on waiting for the ASP to normalize.

Andrew Crum: Got it. Okay. And then my follow-up is pertaining to the improvement in mix from DTC at 20% of revenue. I think this has been a key initiative for the company for several years now. Are there specific drivers to move that percentage higher? And do you have an intermediate or longer-term target in terms of what it can represent as a percentage of your total revenue?

Thi La: Yes. We had made a deliberate goal to get the DTC business to 25%, and we communicated this a few quarters ago. And since then, we've grown from 18% now to 20% for exiting this Q1. That came from a number of activities or investments. The first one is M&A, right? A lot of our M&A companies are very strong in DTC. Number two is product strategy, where we put products on DTC versus the broader channel. And we increased marketing investment for our DTC business. The store that we opened in the Bay Area is the first retail format that we have for Corsair and all of our brands, and that's shown to be very successful.

And we also kicked off AI commerce or AI e-commerce investment to basically adopt to consumers' shopping behavior with the most recent change, and that's also been paying off.

Operator: [Operator Instructions] Your next question comes from Colin Sebastian from Baird.

Zachary Witaszek: This is Zach on for Colin. So you disclosed the double-digit sequential growth in a few KPIs for the Elgato Marketplace. So just stepping back, what type of applications are gaining the most traction with users? And how are you thinking about the longer-term opportunity there?

Thi La: Yes. We actually see a pretty broad range of products that are being submitted recently, and it's ranging from content creation, extensive use of Adobe Photoshop, for example, to gaming applications, so different kind of profiles to help you game better and even broadcasting, voice, video control and including streaming software. And because the use case is so diverse and the Stream Deck platform is very flexible, I think people are very active in terms of adding content all the time. And the bottleneck is almost to where we can curate the content and make it published fast enough. So there's -- this is the beauty of the solution is it can be anything. I think we lost Zach?

Are we still on?

Zachary Witaszek: Yes, that was my only question.

Operator: [Operator Instructions] There are no other questions at this time. This does conclude our question-and-answer session. I would now like to turn the conference back over to CEO, Thi La, for any closing remarks.

Thi La: Thank you all for joining us today. We're proud of the start that we make in 2026 and look forward to updating you on our continued progress when we report Q2 results. Have a good evening.

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