CRSR

Overall Quarterly Financial Performance • Total gross profit grew 21% year-over-year to $104.3 million, with a company record gross margin of 33.2% (up 640 basis points year-over-year). The company recognized a $15.6 million GAAP gross profit benefit from tariff refunds, which added 500 basis points to gross margin. Excluding this benefit, core results still exceeded prior guidance ranges. • GAAP operating income improved to $7.6 million from a year-ago loss of $16.9 million; adjusted EBITDA increased to $30.8 million from $8.1 million year-over-year. • Operating cash flow grew 148% year-over-year to $74.8 million, with first half 2026 operating cash flow exceeding full-year totals for both 2024 and 2025. The company ended the quarter with a net cash position of $75.1 million. • Operating expenses were cut by $6.1 million year-over-year, improving bottom-line conversion of gross profit gains.

Gamer and Creator Peripherals Strategic Progress • Sim racing (led by the Fanatec brand) remained a key high-margin growth driver, supported by new products, expanded distribution, and strong direct-to-consumer sales. The company acquired complementary sim racing hardware brand TrackRacer, which broadens the sim racing product portfolio and extends distribution. • A new licensing partnership with Nissan was announced, expanding Fanatec's premium motorsport brand partnerships and reinforcing its position as the leading premium sim racing platform. • The Elgato Stream Deck ecosystem is evolving from a creator tool to a full workflow platform. In H1 2026, Elgato Marketplace revenue and transactions more than doubled year-over-year, product submissions grew over 300%, and 500,000 new user accounts were added. AI-assisted development is accelerating plugin and profile growth, creating a self-reinforcing growth flywheel. • Corsair made a minority investment in professional show control software firm Bitfocus, which is already integrated with Stream Deck. This extends Elgato into higher-value professional broadcast and live event control environments, with Stream Deck designated as the preferred control solution for all Bitfocus customer deployments.

Gaming Components and Systems Updates • Segment revenue declined due to elevated memory pricing delaying DIY PC builds, but management notes this demand is deferred rather than lost, and will recover as pricing and product cycles normalize. • Memory net revenue grew 17% year-over-year on strong supply chain execution and North American market share gains, with inventory now properly sized and supply remaining adequate. • AI workstations are a bright spot of solid year-over-year growth, representing a natural extension of Corsair's existing high-performance system design capabilities. The company is targeting the $22 billion desktop AI PC market, focused initially on prosumers and SMBs seeking local compute, data security, and lower cloud costs. Meaningful revenue contribution from this segment is not expected until the second half of 2027 due to early-stage opportunity and tight GPU allocations.

Capital Allocation Priorities • Management prioritizes investments in strategic, margin-accretive revenue growth, recurring revenue ecosystem development, and the AI workstation opportunity. The company will pursue disciplined M&A and strategic partnerships to extend platforms and diversify the business, while maintaining discipline on transaction pricing and integration risk. The strong balance sheet provides flexibility for organic investment, acquisitions, and share repurchases.

• Third quarter 2026 guidance: Net revenue is expected to be $320 million to $350 million, adjusted EBITDA is expected to be $18 million to $21 million, and non-GAAP diluted EPS is expected to be $0.09 to $0.12. The outlook forecasts continued low double-digit year-over-year growth for the gamer and creator peripherals segment, with the gaming components and systems segment expected to decline low double digits year-over-year due to ongoing pressure from elevated memory pricing. • Full year 2026 guidance was upwardly revised: Net revenue is now expected to be $1.4 billion to $1.47 billion, representing a $35 million increase at the guidance midpoint compared to prior guidance. Adjusted EBITDA is now expected to be $121 million to $131 million, an increase of approximately $19 million at the midpoint compared to prior guidance. Non-GAAP diluted EPS is expected to be $0.85 to $0.94. • Key drivers of the full-year guidance raise include stronger-than-expected organic business performance, the upcoming GTA 6 launch in Q4 2026 expected to create a meaningful tailwind for console and peripheral products, new product launches and expanded distribution for Fanatec, continued Elgato Marketplace growth, ongoing memory market share gains, and a modest revenue contribution from the TrackRacer acquisition starting in Q4 2026.

Corsair Gaming reported total Q2 2026 revenue of $314.3 million, down 2% year-over-year. There are two operating segments: 1. Gamer and creator peripherals: Revenue grew 13% year-over-year to $115.9 million, accounting for 36.9% of total company revenue. Segment gross profit increased 27% year-over-year to $52 million, with a gross margin of 44.9% (up from 40% year-over-year). 2. Gaming components and systems: Revenue declined 9% year-over-year to $198.5 million, accounting for 63.1% of total company revenue. Despite lower revenue, segment gross profit grew 17% year-over-year to $52.2 million, with a gross margin of 26.3% (up 570 basis points year-over-year). Direct-to-consumer revenue, a high-margin priority channel, represented 20% of total company revenue in the quarter.

• Elevated memory pricing continues to pressure DIY PC build demand, resulting in near-term revenue declines in the gaming components and systems segment. While management expects demand is deferred, a prolonged period of high pricing could lead to permanent demand loss or substitution. • GPU allocation constraints are expected to limit near-term growth of the new AI workstation business, with meaningful revenue not expected until the second half of 2027. Continued tight allocations could delay the segment's ramp. • Strategic acquisitions and minority investments carry integration risk, even for complementary targets like TrackRacer, and may not deliver the expected margin growth, market share gains, or product diversification that management projects.

Q: The $19 million midpoint increase in 2026 adjusted EBITDA guidance is larger than the one-time $14 million tariff benefit plus the Q2 beat. What factors are driving the upgraded back-half outlook, and what growth potential and synergies does the TrackRacer acquisition bring? / A: The EBITDA guidance increase combines the $14 million tariff benefit, a $2.5 million organic beat from Q2, and stronger organic performance expectations for the back half of the year, with a very small immaterial contribution from TrackRacer. TrackRacer is complementary to Fanatec: it produces mechanical cockpit and accessories while Fanatec focuses on electronics and software. Integration of systems and roadmap alignment is expected to take 3-6 months, with TrackRacer folded under the Fanatec brand umbrella to create a full sim racing product portfolio that accelerates market growth. (718 characters)

Q: The $35 million full-year revenue guidance raise implies $24 million of upward adjustment to the second half revenue outlook. What is driving this increased optimism, and what are your gross margin expectations for the gaming components segment through the end of the year? / A: The second-half revenue upgrade is almost entirely from organic growth, driven by the Q4 2026 GTA 6 launch tailwind, new Fanatec products and distribution gains, continued Elgato Marketplace growth, and ongoing memory share gains, with only a modest Q4 contribution from TrackRacer. Memory gross margin is expected to stay near Q2's 23.4% in Q3, then moderate to high teens in Q4, bringing the full components segment gross margin to roughly the low 20% range for the back half. Diversification into growing memory and AI workstation lines has softened the impact of DIY pressure better than many peers. (682 characters)

Q: Management says delayed DIY PC demand is deferred, not lost. What channel and demand data supports this, and how will pricing need to change for demand to return to growth? / A: Channel inventory normalized in Q2 after being elevated at the start of the year, and while promotional activity is slightly higher due to high prices, demand has stabilized as consumers have adjusted to current pricing. ASPs are expected to rise slightly through the end of the year, which is encouraging consumers to stop delaying purchases. Growing demand for AI PC memory to support local large language models is also creating a new tailwind that is expected to drive further demand growth in 2027. (476 characters)