Corsair Gaming, Inc. (CRSR) Earnings Call Transcript & Summary

Good morning, and welcome to Corsair's first ever Investor Day. As a reminder, today's presentation is being recorded, and your participation implies consent to such recording. Recording will be available for replay via our website at ir.corsair.com. Everyone not presenting will be in listen-only mode. There will be a Q&A session at the end. If you're interested in asking a question during the Q&A, please type the subject matter of the question, and we ask that you display your name as well as your company. Just be aware we may not be able to get to everyone's question. Today, we have with us our speakers, Andy Paul, Corsair's Founder and CEO; Geoff Lyons, SVP and GM of PC Components; Julian Fest, SVP and GM of Elgato, our streaming and content creation solutions; Adrian Bedggood, VP of Marketing; and Michael G. Potter, our CFO. Before we begin, I would just like to remind everyone that this presentation, including the Q&A portion, includes forward-looking statements related to expected future results of the company. Our actual results may differ materially due to a number of risks and uncertainties, which we have described in our SEC filings and various press releases. We may also be referencing non-GAAP financial measures, and they should be treated as such. With that, I'd like to turn the presentation over to Andy. Andy, I cannot hear you.

All right. Let's start again, malfunction here because I was on mute. So welcome, everybody. Very excited to be here. Thanks very much for attending. Very excited to be here for our first Investor Day, a little after -- a year after we've gone public. So we put a press release out this morning, indicating our 2021 yearly results, preliminary results and our '22 initial guidance. And we did $1.9 billion of revenue in 2021, which we're pretty happy about because that's strong growth over 2020. We're forecasting $1.9 billion to $2.1 billion for '22, so growth again. The agenda today, we'll walk through very quickly. We'll give a quick overview of Corsair, just a few slides for those people that aren't as familiar with the company. Then we're going to get some fairly detailed market data to show you what's going on in our key areas in the market, so you can see how the market is growing and how it's fared before and after shelter at home. Then we're going to get into some detailed product line strategies. We've got a couple of guest speakers to give you some details of what we're doing. Our VP of Marketing will show you how we go to market. And then we're going to show you a path to our goal of $3.5 billion of revenue in 2026, and Michael will run through the financials at the end. So that's what we're going to do. Let's move on to the first slide. So Corsair, our mission is to help gamers and creators be their best, and we do that by providing a lot of different solutions. At the moment, almost all our revenue comes from hardware and will continue to be the majority of our revenue for some time. We actually supply a lot of software to help gamers and creators perform. At the moment, that's all free, but we do anticipate that being a revenue generation fairly soon. And lastly, services. We started to offer services to people. We have a huge install base of customers now that can all benefit from this. We've launched customer care. We've launched extended warranty. And of course, we bought last year, Gamer Sensei, which is a coaching platform. So we make probably the broadest offering of products in gaming today. I mean, we're the only company that has a full set of products for people building the gaming PC, that's the platform to play games on as well, as all the peripherals you need for playing games and all the peripherals you need for being a great content creator and streamer. So let's just step through that really quickly. These are the products that we make. Pretty much everything that gets used to build a gaming PC with the exception of the GPU and CPU, we make everything else. And we'd like to say that with Intel, NVIDIA and perhaps Asus, you can buy everything else from Corsair to build a great gaming PC. Now not everybody has the skill nor the time to build a gaming PC. And so for those people that want the end result but don't want to do the building, we do that for you. We have machines that look like this that we can sell as prebuilt gaming PCs. And we also, a couple of years ago, bought a company called ORIGIN PC that makes full custom PCs where you can get a PC that looks like this even with a custom paint job. And then we make a full array of gaming peripherals, not just the standard keyboard and mice and headset that you'd be used to. But we also make furniture, we make gaming chairs, we make lighting that ties into our iCUE system. And we just launched monitors this year. And then lastly, we have a whole suite of products for content creators and streamers, so that's microphones, cameras, lights, green screens and acoustic panels. And of course, our famous Stream Deck, which you're going to hear a lot about later in the presentation. We are a global company. We operate worldwide. We have approximately 80% to 85% of our business in Europe and the U.S., almost equally split. This year, we're slightly bigger in the U.S. than Europe, and then about 15% to 20% of our business is in Asia. We have a number of locations with our acquisitions. We've got different headquarters around the globe. We have 4 manufacturing sites now, the largest just outside Taipei, where we make all our memory modules. We're actually manufacturing products for 6 of our product lines, and we have 30 total product lines. And then we've got salespeople around the world now in 38 countries. You can see 200 sales and marketing professionals. So our revenue growth has been solid and consistent. The thing with gaming revenue and the gaming market is that growth does come in surges, and we've seen a couple of big surges in the last few years. We saw one when Fortnite was introduced back in 2018. A big surge of activity of new gaming started to discover how fun that was. And then in 2020, when people went into shelter at home and more importantly, there wasn't much to do outside the home because all the bars and restaurants were closed, there was another surge of activity in gaming, and we expect this to continue. But we're very happy to see in 2021 that we did grow over 2020, and this was a good part of the year when shelter at home was stopped and people were out and about shopping and in bars and restaurants, and we're going to get into that in a little bit of detail. The main thing that we've seen in these surges is that every time there's a surge in activity, there's a new cohort of gamers that start to buy gaming hardware, and so the install base keeps growing and growing. We have two business segments, and that comprises of a total of 30 product lines. We have our biggest product line or biggest gaming -- sorry, our biggest segment, which is gaming components and systems, has all the components that you use to build a gaming PC as well as full systems. And then all of our peripherals, both gaming peripherals and creator peripherals, are in the gaming and creator peripherals section. So you can see that while that's about 1/3 of our business, 2/3 is components, because the margins are a lot higher in the peripherals segment, it gets to about 45% of our margin. And also because the peripherals segment is growing faster, we would expect fairly soon that, that right-hand pie chart starts to become 50-50. Now there's three distinct ways that Corsair is growing. The main one actually is that we're in a market that is exploding. And so robust growth actually in every market that we participate in. The second thing is that over the years, we've managed to gain market share, and we continue to gain market share, really for three different reasons. One is that we've got 25 years of experience in gaming, so we're just really good at it, making products that people need. We constantly innovate and add technology. We know exactly what technology matters for gamers and creators. And we're also able to get our hands on the best technology, either acquiring it or inventing it. So that enables us to keep growing market share. And the last thing is that we're moving into new categories. So of course, we started the company with one category, which was memory 25 years ago. We now have 30. And we've added four distinct categories just in the last 2 years between microphones, cameras, monitors and gaming controllers, and we'll probably continue to do that. Okay. Now I'm going to get into market data. And before we start in this section, I want to give you a little insight into where we get all our data from. These days, we're using two main sources of data: one from DFC Intelligence, and this is a guy called Dave Cole, who's got about 25 years' experience in gaming, both hardware and software; the second source is Newzoo, and they're about 15 years' in gaming, again, very experienced and produce great reports and surveys. Both these companies do surveys for us from time to time. We also use the retail data collection services from NPD and GFK: NPD in the U.S. or North America; and GFK in Europe and parts of Asia. And lastly, we get sell-through data from virtually every one of our retailers. So we've got a pretty good idea of what's going on and we want to share some of that with you. Now I'm going to show you a couple of things, I'll tell you this in advance, because I remember, from -- we did the IPO right in the middle of COVID when everyone was locked down in 2020. And most people's question at the time was, well, surely, the surge you're seeing in 2020 is just people pulling forward. So all the people that would have bought in '21 and '22 are buying products now and then your sales will change. Isn't that likely to happen? And the good news is that, that's exactly the opposite of what's happening. And so what's actually happening is that we've seen continued growth, continued new gamers starting to buy more and more hardware that we expect to continue to buy hardware and upgrade in the coming years. So let's get into that in a little bit of detail. What I'm showing you here is a graph that compares growth rates. And I'm comparing the growth rates of a number of gamers, gaming software and then gaming hardware. Now you'll notice that it's difficult to see because the two bars at the bottom, the blue and the orange one, look like they're almost flatlining, but they're actually growing pretty well in the last 3 years. Both the number of gamers and the software content has grown by 20% just in 3 years, so that's a huge growth, but it's totally dwarfed by what's going on in hardware. And you can see that in 2020, a lot of gamers started to buy hardware. And so -- and look at the scale on the left. We're not talking about small increases in percentage, we're talking about doubling of revenue in 2 or 3 years. Now how is it possible that there's such a gap between hardware growth and software growth and number of gamers? Well, let me try and explain that. The first thing is that there's a vast number of gamers in the world. I think the latest numbers I've seen is approaching 3 billion people playing games of any kind, which is almost half the world. 1.4 billion is the number of people playing PC games at some level. Many of them are casual PC gamers, as we've shown here, and many of -- most of these people won't own any sort of hardware. They may be playing in an iCafe or just playing on a friend's computer or the family computer. About 125 million people in the world we see actively buying gaming hardware and owning a dedicated platform of some sort, whether it be a laptop or a PC. And then we get down to the area that's most in focus for us, and that is the group of people we call PC Gaming Enthusiasts, who are playing 6, 10 or more hours of being a week, and typically are building their own PC from components, maybe they buy from us. And it turns out that, that 24 million is about 50% of the overall gaming hardware TAM. So the reason that this market is the opportunity and the history of exploding so much faster than the number of gamers is that most people have yet to buy anything. So it's a totally untapped market. And obviously, the 125 million people playing games regularly on their own platform are gradually learning how to buy better gear. So that's what we see. Now if you look at another example, and this is North American data, this takes slices down that 1.4 billion total gamers in the world, total PC gamers, and says how many of them in North America. And the answer is 206 million. So more than half the population are playing some sort of PC game. When we look at how many keyboards and headsets were sold in the last 3 years, and the reason I've taken a 3-year view is that, that's about the refresh time of these products. That would indicate roughly how many people are buying the stuff. So only 7.5 million keyboards, 15 million headsets. Now anybody that's got kids that are gaming know that the first thing people tend to buy is as a headset. And yet in the last 3 years, only 15 million of those were sold to this base of 206 million. And that's why when we look at the data, we see that from '19 -- sorry, from '19/19 to '19/'20, the number of headsets sold in the U.S. literally doubled. And it can easily double again just because the market is so vast. And this is why the -- you can see here that the peripheral TAM, this is from DFC research, has the ability to grow so much. And so this is how the industry experts -- how bullish they are in the future for this. Now here's a slightly longer-term view, and I find this very interesting. This is some data from Newzoo. And so this is more looking at a 60-year generational view of gaming. And it shows what percentage of gamers in each generation are playing games, and it's pretty clear to see what's happening. So the Gen Z generation is just starting to move into the workforce. 81% of them respond to survey saying they're playing games. And also at the bottom, look at the number of hours average play per week. So gaming on a generational basis is getting more and more popular and people are increasing the number of hours they play. Now when we go to look at what that means, this comes from other surveys from Newzoo that shows that the more hours of gaming you play, the more you tend to spend. Okay, well, that's sort of obvious, I suppose, because any of you that know anybody with a hobby, whether it's mountain biking or skiing or golf know that the people you know that play the most of that sport tend to own the best gear and spend more money on it. So this is exactly what happens here. The other useful thing that came out of this survey is note the spend level in the yellow line, which is the self-built. And so this is very interesting because -- and we've known this for some time, but I think -- perhaps a lot of people think that people build their own computers to save money instead of buying a self-built one -- or sorry, instead of buying a prebuilt one. But in turns out that's not the case at all. People build their own computers firstly, for performance; and secondly, for customization, and the ability they have then of constantly upgrading it. So you can see a big delta between the average price -- we've known this for a while, the average price of prebuilt desktops around $1,000, whereas $1,500 to $2,000 is what people tend to spend on components to build a gaming PC. All right. So now we want to ask ourselves, well, how does that look in terms of who's using what? And this comes from a survey that Newzoo did recently of 9,000 different gamers around the world. One of the questions they were asked was, well, what platform do you play on? What are you using to play PC games? And approximately, what you can see is around 40% of people are using laptops, no surprise. That's what most consumers own as their PC today. And then the other 60% is split between prebuilt and self-built. But the interesting thing for me in this survey is that out of the people that play on gaming desktops, half of them are building them themselves, at least from this survey. So this is great news to us. So again, anybody that had this notion that people building gaming desktops was some sort of weird hobby that wouldn't perhaps go away. No, it's here and it's big and it's a thing. All right. And that is borne out by the rest of the people that look at this market. So this is Dave Coles' forecast from DFC research of how much money is being spent, the TAM for enthusiast gaming components, meaning total components here, so including GPU and CPU. But this is the TAM for PC hardware for self-built in the enthusiast category, as you can see, growing very, very quickly. All right. Now I'm going to dive into a little more detail. And what I wanted to do here when I was producing these slides was to have a detailed look at what the effect was of pre-COVID and post lockdown. In other words -- and the way I think about this for gamers is what happened when bars and restaurants or other forms of entertainment like cinemas were closed. And the only form of entertainment was at home playing games, and then what happens when all those opened afterwards. And that timeframe really started in April 2020, and this is the yellow bars we're looking at, and it finished in June of '21. So that was the time that most of these things were closed, and then they all started opening up again in July. Now interestingly, what's happened, you can see also I've overlaid here the stimulus checks. And you can see -- this graph, by the way, is just for components, people building PCs. So no question, stimulus checks, when you give young people or gamers cash, they will spend them on what's most important to them. And this case, they spend them on gaming components to build PCs. So a big surge of activity. But then when you compare post shelter at home, so that's Q3 and Q4 '21, and you look back to '19, so pretend COVID would never happen, what you see is good solid growth. In fact, Q4 24% growth over Q4 '19. And so that's a CAGR of a little over 10%. So we're pretty encouraged by that. That's what we'd expect the natural growth to be. Now I've got the same graph put together for -- actually before I move on to peripherals, I think everybody that follows gaming hardware knows that we're in the midst of a massive GPU shortage, partly fueled by semiconductor shortages, partly fueled by the fact there's not a bitcoin mining going on. But the fact is today, graphics cards that you use to build a game PC are selling at about 50% over the MSRP. So if you want to build a gaming PC, you're paying a lot of money to do it. And even with that headwind, we've got 24% lift in Q4 '21 over Q4 '19. Now when we go to gaming peripherals, it's even more extreme. And you see the same thing happening in the yellow bars during lockdown. Everyone or their parents rushed out to buy keyboards or headsets. But now, Q4, we're really encouraged to see all the data coming in. 62% growth for Q4 '21 compared with Q4 '19, which was already a growth over Q4 over '18 and before. So this market really is growing pretty strongly. So again, we ignore COVID completely. We see a CAGR of almost 27%. And again, that's comparing second half of '19 with second -- sorry, second half of '21 with second half of '19. So good strong growth going on both in components and in peripherals. Okay. Well, now we're going to move on to some details of product strategy. You're going to hear from the GMs of our product divisions of what they're planning to do and why they're so excited about their products. We're going to start with gaming components. And again, that means all the components that you use to build a gaming PC. Then we're going to move on to look at creative products and what we offer there. And then lastly, we'll start -- we'll spend a little bit of time talking about gaming peripherals. So moving on to gaming components, and this, of course, is what we started the company doing. We've been doing this for 25 years, firstly, with memory, then with power supplies. And I'm very proud to note that we've done a very great job here. And at this point, I hate to use the word dominate, but when you look at our market share position, this is all from North America, where we get good solid data on components. Look at our market share position compared to competitor #2, either in memory or components. It really is mostly Corsair. Okay. I'm going to move on with that lovely introduction, and we're going to introduce Geoff Lyons, who's SVP and GM of Gaming Components. Geoff joined us last year to lead this division. Now we have known Geoff for a long time because before he moved to us, he was CEO of one of the companies supplying most of our water cooling products to us, a company called CoolIT. So he's very, very familiar with the gaming space and the gaming hardware space. Okay, Geoff, over to you.

Great. Thanks, Andy. Hi, everyone. I'm excited to talk a bit about our components business today. But before we look ahead, let's look back. On the screen right now, we see a high-performance PC showcased as a complete kit that might have been advertised by CompUSA back in 2007 for about $1,500. For it today, it was pretty fancy with a flat screen and everything. Silver painted plastic was all the rage back then. I'm not shocking anyone here to say that gaming PCs have truly evolved over the last 15 years. For one, CompUSA doesn't exist. That PC doesn't have any glass. I don't want to use that nasty keyboard and I, for sure, need to choose my own mouse. In fact, I want to choose everything. The state of the art today is very different. Now it's the control room, the cockpit, the command center or the battle station. It's a combination of technology that's been carefully curated: the game; the stream; or even work. Like with most things, a custom-built solution does cost more. The cumulative price tag for a typical setup can now range from $3,000 to more than double that. So why would you want to build your own PC? Today's enthusiast PC experience is not only about how fast you paint the screen with dazzling graphics, its about the emotion that's generated as you power up that PC that you built before you even sit down. As a gaming enthusiast, I now want to choose everything. What color case should I get? Do I want to build it murdered out black or do I want to light it up? By the time I finished building my PC, I want to take pictures of it. I want to show it off to my digital community. It's a source of personal pride, a chance to say, check this out, it's the only one like this because I built it, and it's beautiful. The high-performance PC customers' needs and ambitions will continue to evolve as new applications and games demand leading-edge technology for the best experience. The trends dominating this space today require more memory, higher-powered CPUs and higher-powered GPUs. In order to support these new requirements, our customers have to upgrade their power supply. And because that power turns into heat, upgrading the cooling systems and fans, along with high airflow cases is necessary. Obviously, this is a great trend for us. Let's have a deeper look at what we actually do. When building a PC, the process is actually pretty straightforward. After you decide what you want to use for a CPU and GPU, you'll choose a motherboard, mostly just one that's compatible with your CPU. And from that point forward, Corsair is the trusted choice for nearly every decision that's left. Memory and storage, how much do you need for the games you run? How fast you want it? What color theme? RGB? Corsair has you covered. Next, it's the case, the color, the size, the style, the cooling capability. Again, Corsair is the #1 choice. How about power supply? How many watts do you need to drive that system? How quiet do you like it to run? Are you going to need -- you are going to need high-quality, reliable power you can depend on? And no one does it better than Corsair. Then there's cooling. The cooler the CPUs get, the faster it goes. Liquid cooling is a standard for high-performance, and Corsair is a standard for liquid cooling. Perhaps it might be fun to even choose an LCD screen to further personalize your rig, and dress up the rest of the case with fans to match your theme. With every product Corsair brings to this market, performance and quality are the cornerstones of the brand. But if we're honest, it's the added aesthetic flexibility that has truly separated Corsair from its competitors. I think most of you know, we've been doing this for a while. We know everyone in the space, and everyone knows us. Years ago Andy and the team recognized that if Corsair was going to continue to win in this business, it was going to take more than high-performance and reliability. The careful construction of a unified ecosystem is the core of Corsair's product strategy. By continually investing in software-enabled products, the customer is treated to a new functionality that can be used to tune, tweak and personalize the PC. Building a PC used to be harder. The drivers, the hardware bugs, unknown incompatibilities, it was difficult. Today, through the efforts of our partners, ourselves and our competitors, the complexity is getting lower and the fun is getting higher. It's now possible with basic skills and a screwdriver to construct a very sophisticated system, to do things that no one even dreamed of even a few years ago. Looking forward, we're focusing on bringing the best and brightest minds to continue the drive for an even better customer experience. With each new generation product, we expect the line between hardware and software to fade as the experience becomes more and more integrated. Enter iCUE, the software that unites the hardware solution with both style and utility. Think about this. If I want to use one software package to adjust my fan speeds and RGB color, then open another to control the liquid cooler, then another for the keyboard and another for the mouse, you get the idea. Once the system is unified, new opportunities for increasingly immersive experiences are created. Check out the seamless game integration that allows the gaming experience to envelop the room on the screen right now. It's really amazing stuff. Only Corsair unifies the PC control settings with one software interface. And people really like it as we're now seeing hundreds of thousands of installations per month. When you think about it, it's no wonder we sell a lot of gear. Once a customer has been introduced to the iCUE ecosystem and has experienced the control and ability to personalize their set up, their choices for their next fan, cooler or memory become easier for them to make. To that end, our data suggests that over 35% of iCUE component customers later purchased iCUE gaming peripherals. This has a tangible value to the customer and a significant positive impact for Corsair. the value created for our customers is realized with a higher average selling price. Now the idea of software creating value is not a new concept, but the combination of spectacular hardware solutions being bound together with a common software interface make the Corsair hardware brand sticky with software. Corsair components are priced higher because they're worth more. Each time a customer chooses Corsair for the next part of their build, they realize the promise that Corsair products work better together through software. To take a closer look in both components and memory, Corsair is the leader by a colossal margin. In the memory category, if you're investing in a 64-gig kit of DDR5, you aren't going to risk that decision with the second best brand. As more memory is required for optimum performance, customers put their faith in Corsair, clearly. Turning to components. If we had time, we'd break down each individual product line and we'd show that Corsair is #1 in cases, #1 in power supplies, #1 in CPU coolers and #1 in fans. Now we do have legitimate competitors in each category, all still second to Corsair there, but none that compete across the full range. That's why it has allowed the iCUE strategy to be so successful. Look at the market share gains over the last 4 years. The component share has grown from under 35% to -- in 2018 to 42% at the end of '21. Check out memory. Memory has gone from 38% to 60%. The next closest competitor isn't even close. I can honestly say, I wouldn't really want to be competing against us here. This is fun. As an example of what we've been talking about here, let's look at a recent product we released. This is the ELITE LCD all-in-one liquid cooling system. What makes this product so awesome is not that it's an LCD on a liquid cooler, granted that is pretty cool, or that it's a good location for a display in the case. It's the iCUE software that makes it so simple to engage our customers in realizing their own creative outlet. It's the next step in personalization of the build. It's the special coat of paint, the evolving style signature, the renewable canvas to make this build truly personal and fun to play with. It's fun, it's creative, it's personal, and it's definitely Instagramable. So the market is growing due to an incessant progress of technology and the consumers' insatiable desire to own and experience it. It is an excellent growing market to participate in and, Corsair dominates it. Corsair has established a brand experience that's reliable, high-performing and immersive, both during and after the build. At this point, it's clear that we deliver more than enough perceived value to demand a premium ASP across all our component product lines. It's worth noting this business is not driven by prices. As Andy mentioned earlier, it's driven by the best customer experience. Aside from all the metrics in the business, Corsair is winning because we make super cool products. It's fun to build, it's fun to sell, and it's really fun to use. The best part of the story is that we're just getting warmed up. I can't wait to show off what we've got coming in 2022. It's going to be awesome. Thanks.

All right. Well, thanks very much, Geoff, and I hope that's given everybody an insight into what's going on in the world where we're building incredible gaming PCs. The next thing we want to talk about is streaming and content creation. Now we first started looking at this in 2017, around that time. Back then, everyone was thinking about streaming, was the label. Now we've moved into calling that content creation. But we've realized that was a growing segment and that's what people were starting to spend money on and what's happening. So we looked around to see who is in that space and we came across a company called Elgato. And it was very clear when we started talking to them that they were the best experts in that. Elgato, at this time, was doing multiple things. But we ended up buying from Elgato their gaming division and bought the name with it. That -- so that was run by the gentleman you're about to hear from who's now our GM of Elgato inside Corsair. And just to give you a sense of how that's doing, Elgato was a fairly small company when we bought them. They now represent about 1/3 of our revenue in the peripheral space, and certainly, it's the fastest-growing part of our company. And I think when you hear what Julian has to tell you about the products, you're going to see why. All right. So with that, I'm going to introduce you to Julian Fest, who's our SVP and GM of Elgato. And he's been with Elgato for over 10 years. We bought the company in 2018. And we've now completely integrated them into our company to use all of our sales and marketing network. It's been a great success together. So with that, over to you, Julian.

Thank you, Andy, for the introduction. Hi, everyone. Apologies if I sound very congested, I've got a bit of cold going on, but let's dive in. So as Andy mentioned, we've seen pretty phenomenal growth at Elgato over the past years, and that's down to a few reasons. One, I would say is that we've been laser-focused on this demographic of content creators for 10 years now. So really, before the term content creator even existed or definitely many years before most other companies in consumer electronics were designing for this use case. Secondly, the install base of content creators has been growing organically for over 15 years now. And I'd like to just zoom out a little bit and give some context as to what's been happening. So to me, it really all started in 2006 when Google acquired YouTube, and through that made it super easy for anyone to upload their own videos to the Internet, but then also for anybody else in the world to view those videos. Another watershed moment in the space was in 2014 when Amazon acquired Twitch, which at the time was focused exclusively on live streaming of gameplay. In 2018, another major tech player to attack in the ring when Facebook launched Facebook Gaming, which is focused almost exclusively on individual content creators. Now a huge vertical in all of this has been gaming. And I'd like to share some numbers just how big gaming content as an entertainment vertical is on YouTube alone. So YouTube shared that last year, 250 million people were consuming gameplay related content on the platform every single day, which is actually a staggering number. If you think about it, the number of monthly viewers is probably well in excess of 0.5 billion people. Now that massive audience is being served by currently 40 million individual channels who are uploading hundreds of millions of videos to the platform every year. Since then, user-generated content, especially in the form of video, has expanded far beyond gaming. Another watershed moment was, of course, 2020 with COVID at the start of lockdown rules and work-from-home orders, where, whether we like it or not, most of us became content creators in some capacity. We spent so many hours per day on platforms like Zoom or Microsoft Teams, effectively broadcasting or live streaming to our colleagues, even our friends and family. And people started to realize more and more that the tech that gaming creators have been using for so many years actually is really helpful when we saw our products end up in a lot of home offices all around the world. Last year was another huge milestone with TikTok becoming the most visited website in the world, which is significant because TikTok is video-only and is predominantly user-generated content. So in that sense, social media has gone full circle, which started with text messages on Facebook and photos on Instagram is now 100% video content. Today, we're seeing user-generated video pop-up on basically any major platform you can think of. Spotify recently introduced video podcasts, LinkedIn, Airbnb, Pinterest, all of these platforms now have creator programs to boost user-generated content on their platforms. So it's safe to say that today, content creators really are everywhere. At Elgato, we started catering to this group in 2012 with the launch of our game capture products, which very quickly established themselves as the gold standard for sharing high-quality gameplay on platforms like YouTube and Twitch. Since 2017, we've then launched at least one major new product category every year to the point where today, we're really able to offer a full production ecosystem with which anyone is able to build basically a mini TV studio inside their home. So let me give you an example of what that looks like. What you see here is pretty representative of what a high-production value Twitch live streaming set up would look like. Now in this case, this customer would have close to $1,000 of Elgato peripherals in the setup, ranging from the lights to the camera to the microphone and its accessories and the control unit, which is the Stream Deck sitting under the monitor here. Now we focus a lot on purpose design in our hardware to create maximum value for our customers in their workflows. So I'm not going to run through all of these products, but to give you a couple of examples, if you look at just the lights, they're built to be super space saving. They're built to never get hot, even at very high brightness. They're built to be very easy on the eyes. So if you live stream for, let's say, 6 hours at a time, the lights aren't going to be an issue. The same goes for the camera. We opted to remove the microphone from the camera altogether because we know our customers don't really need it. They favor quality, so they invested to a dedicated microphone. Where we did invest was, for example, into a lens that's about 10x the size of most other webcam lenses because our customers care about video quality and visual fidelity. So the hardware is great. And I think we've become really, really good at understanding our customers and really designing solutions that fit their workflows. But what ties it all together is the software that we develop alongside. So to give you some examples, if you buy Facecam, which is our first webcam that we launched last year, you get access to a software called Camera hub, which lets you control every setting of the camera manually and in detail. It even gives you access to settings like shutter speed and ISO, which prior to this were simply not available for a webcam. These were settings that were reserved for professional high-end DSL styled cameras. Another example would be Wave:3, our USB microphone. So when you buy this microphone, you also get access to our Wave Link software, which is effectively a full-on digital mixer that allows you to control up to 9 individual audio sources. Now this is important for a few reasons. So for one, content creators tend to juggle a lot of different audio sources. It could be your voice as one, maybe your friends' voices through discord as another, maybe music through Spotify, then your gameplay and a bunch of other audio sources. As a creator, you need to balance these audio channels for what you yourself hear locally, but then also separately from what your audience hears because you generally don't want them to hear exactly the same thing. Keep in mind that a content creator is usually a one-man show. So it's one person that's the actor, director and producer. So for us, our biggest priority is designing solutions that allow this one-man show to focus on their audience while retaining the highest quality. And we've really seen this show through the fact that half of our customers already own two or more Elgato products. Now one product, in particular, I'd like to spend a little bit more time on is Stream deck, which is the little controller that's sitting on the bottom-right of this setup. And to start, we're going to show you a little video of what our customers say about Stream Deck and how they use it in their workflows. [Presentation]

So Stream Deck is really a great example of how we combine hardware and software to unlock truly unique functionality. So I think you saw from the video how unique the hardware itself is. It's effectively a keyboard where each key is an LCD screen, which means you can customize Stream Deck to fit your specific workflow, and it gives you a visual feedback in real-time every step of the way. But what really unlocks the true potential is the software. So for one, Stream Deck sits at the center of our own product ecosystem because it interacts with our audio, video and lighting solutions. For example, I could press a Stream Deck button to turn all my lights on, a separate button to change the brightness on all of them. I could press a button to record the last 10 minutes of gameplay during a session with ease, meaning I don't have to switch software or alt+tab out of my game. But where Stream Deck really shines is in the way it interfaces with all of the other apps, platforms and services creators use on a daily basis. So to that end, in 2019, we launched the Stream Deck SDK that enables anyone to natively integrate their apps or services with the Stream Deck platform. And so while Stream Deck started out with a clear focus on live streaming, today, our customers are using it for far more. So we see people using it to control their lighting or even their entire smart home. We see people controlling music playback and a bunch of other creative applications, video editing in Adobe Premiere, music production in Cubase, even game design in Unity and office and productivity apps like PowerPoint, Microsoft Teams and Zoom. So for example, right here in Zoom, I could control basically every aspect of the meeting. I could control my mic mute, show and hide my camera, end the meeting, start my screen share, record the meeting, et cetera. Now we've seen the success in how customers are adopting Stream deck in the sales velocity. So just recently, we reached a massive milestone of 1 million units shipped since launch. And actually, we think we're just getting started here when we look at the excitement that the new customers bring to Stream Deck and just how important this device is becoming in people's workflows because it makes things easier, it makes things more intuitive, and it simply makes things more proof to failure because you're simply pressing pictures at the end of the day to execute really complex actions. So to summarize, we're pretty excited about the opportunity ahead of us. Content creation today is everywhere. It's expanded far beyond entertainment into education and even into our professional lives. At Elgato, we already have a full production ecosystem in place today that caters both to new and existing creators with Stream Deck at the core. And we've seen Stream Deck become an increasingly important component of creators' workflows. And we've also seen it as a great opportunity for us to upsell and cross-sell other products and services. So we're setting ourselves a very ambitious goal to ship 5 million Stream Deck's over the course of the next 4 years. Beyond that, later this year, we plan to add another layer of value to our customers with the launch of an Elgato Marketplace that will make producing high-quality content even easier and more seamless as we roll out digital goods and services across our range of products. And with that, I'm going to pass it back to Andy.

All right. Well, thank you. Thank you so much, Julian. I'm very excited. Hopefully, everyone in the audience can see how excited we are about firstly, the fact that we teamed up with Julian and Elgato years ago, but just what's happening in this creative market. I think that I just sort of underscore some of the details to sort of bring this together for you. Most of the Elgato products that we sell have ASPs in excess of $100. Most people we see using multiple devices and certainly, if you bought a Stream Deck, you'd likely have other devices. So if you think about selling 5 million Stream Decks and what those customers could also -- those content creators could also buy from us, you can start to do the math and figure out what a great opportunity this is for us in the future. Now we're going to move on to gaming peripherals now. And -- for a few minutes. And I think the first thing to tell you about gaming peripherals is that we focus on products that make a difference for gamers. So we're not thinking that we're going to rule the world in making $30 headsets for kids, but we are making high-end gear. And as you heard from Geoff earlier, some 35%, a little more, actually, of our gaming enthusiasts end up buying our peripherals. And a lot of that is because of our wonderful iCUE software. And a lot of that is because we make products that are suitable for PC enthusiasts, people that are quite happy to pay $100 or $200 for gaming gear that has got the right features and makes a difference. And this really underscores that, I think, when you look at the market share, and this data is from January through November, it's the last data we had. And what we're showing you here is the keyboards and PC headsets, which is our 2 best individual product lines, what our market share is overall and then what our market share is for products that are over $200. So it's very easy to see where we excel. And the reason for that is, of course, because of our heritage because we're making products that are for that set. Now that set of people. Now I want to underscore that what we saw in 2020, while the number of new gamers didn't increase a lot. The number of hours played did and the number of new hardware buyers increased a lot. So in 2020, we saw a huge number of people rushing in and buying products. And if we take headsets, for example, I started this in a little bit of detail, an awful lot of $30 to $50 gaming headsets were sold presumably to new first-time buyers of PC peripherals. But the market ASP didn't go down. And that's because there was an equal number of people upgrading to more expensive headsets that perhaps 2 years ago bought $50 headsets. So this is what we continue to see. And so we believe that this surge in activity in 2020 of first-time hardware buyers, we're going to see them come back in '22 and '23 buying and upgrading to more expensive and more full-featured products. Now I want to share with you some of the technology that we put into our products, and there's really four, I think, that are worth talking about. SLIPSTREAM was a wireless technology that we developed a few years ago. And if you go back, let's say, 5 years and talk to any serious gamer, they would say we're never going to use any wireless product, too slow, too much lag, too much latency. So we developed a wireless technology with between 0.5 millisecond and a millisecond latency. It's a very clever technology. It wasn't easy to put together, but it was groundbreaking in terms of showing that you could actually have a wireless mouse or keyboard that acted exactly the same as a wired product. And then AXON is something we introduced on our latest flagship keyboard, where we've actually now put a processor and an operating system on the keyboard so that it can operate independently. And that means once you set it up with whatever macros or whatever settings you want, you can take that to a different computer and it's going to run with all those settings. The third thing is that we have a partnership with CHERRY. We started, I don't know, back in 2014, when we launched our first mechanical keyboard. We realized at a time that CHERRY made the best mechanical keys. And they've been a great partner. And I think we really brought the combination of mechanical keys and RGB technology to the gaming world with our initial K70 launch. And then lastly, CAPELLIX, this was a pretty good investment we made with in Taiwan, where we have developed a micro LED technology, and that allows us to pack a huge amount of LED elements into a small space several hundred per square inch. And this has been incredibly useful for us to develop wonderful RGB experiences on things where there's not much space like memory modules. And the nice thing about these micro LEDs is that are not only a little bit brighter, but they're more efficient and so you can really get a great experience. So if I just go through the timeline really quickly of what we've brought to the market, I think the most iconic product that we launched over the last 7 or 8 years in peripheral is K70. And that's a product where we took our existing mechanical keyboard with CHERRY keys, and we managed to integrate RGB, LEDs and control using our iCUE software, independent control for every single key together with the classic Corsair design of super rugged keyboard and these mechanical keys. And every took the game world by storm. In fact, we had even people like Ninja, who as many of you know, is one of the most famous first-person-shooter players use this. We actually never even paid them. But generally, you have to pay people like Ninja to use your products. He just used it because it was the best products in the market. And we followed that up with our M65 mouse, that was our first-person-shooter mouse with a dedicated sniper button. And these products really resonated with gamers that were competitive. 2015, we launched our void headset packed with audio quality. In 2017, we upgraded the K7 to K95. And then 2019, we launched a very special headset for us, the VIRTUOSO. And this was taking an audio file type headset with huge drivers, broadcast grade microphone and packing that into a headset. We priced that today at over $200, which is very unusual price point for gaming headsets, and we sell a lot of them. People love that product. And then 2020, most recently, we've launched K100. That's another upgrade from K95. That's the one with AXON technology, has CAPELLIX lighting in it, a fantastic keyboard. We've actually introduced that with both mechanical and optical switches. And then lastly, the latest thing we've launched in wireless mice is the SABRE PRO. That's a fantastic mouse. And of course, we've also recently bought a company called SCUF Gaming. This is about a year ago. which makes super high-performance gaming controllers. And we just launched, very recently, both upgraded and new controllers for both the new Xbox X and S and the PS5 platform. So that's what we've been doing with products. Now we're going to continue to develop technology that allows gamers to make a difference. As I said before, our focus is on PC enthusiasts, people that are spending several thousand dollars on the gaming hardware that want really good peripheral and really good technology. And we think that as the market evolves, all the new gamers and new gamers are starting to learn that decent hardware makes the difference are going to continue to see upgrade and start buying our peripherals. Now I'm going to move to the third pillar of our growth. Remember, we had three pillars. One was market growth, which we showed you the second was market share, which I think when you listen to Geoff and listen to Julian and Elgato, you can see why we're gaining market share so quickly. And the third is new categories. We've introduced a number of new categories over the last couple of years. So I want to just spend a few minutes on each one of those. So the first thing is prebuilt gaming PCs. Now up until 2017, we just sold components. We realized at that point that we made so many different components that we could probably make an amazing gaming PC. So we set about making the Corsair ONE, which was sort of an experiment to see whether we could make a gaming PC the size of a graphics card in terms of depth, still with the same performance, and then cool it with liquid cooling technology. We managed to do that. It's an amazing game PC, very expensive to build, a pack full of technology, and it's fantastic. We later realized -- we won so many awards for that PC, and we still sell that today in volume. We then realized that what a lot of people actually want is a PC more like you see on the right of the page here that looks like they build it themselves, but they want to search them. And so we have a line called Vengeance PCs, which is PCs that have got all the iCUE components and iCUE software preloaded, and then we sell that as a finished product. And then lastly, a couple of years ago, we bought a company called Origin PC. We searched around for a custom PC builder and they wanted to join our team. And they make a complete custom PC for you. And so -- and we're talking you spec exactly what you want, trick paint colors. And I mean, they build PCs where people spend $10,000 and getting the ultimate set up. ASP about $3,500 with Corsair IQ. So it's a very big TAM, obviously, in terms of the whole market. We are focused really on the $2,000 to $5,000 market. That's where we exist. And we're making really good headway. This is a really high-growth area for us. Second thing is microphones. You heard from Julian earlier about our microphone. It's a great microphone. We designed it from the ground up content creators. We brought this out at $149. This is a high price point when you can buy a simple Karaoke microphone for $20 or $30. But we've done really well with this. Already in the first 18 months, we've picked up about a 5% market share in the U.S. and Europe, and we're continuing to gain ground. And obviously, we're going to follow this up with other microphones. TAM here, anywhere between $500 million and $1 billion of opportunity. Streaming cameras. This is something we just launched this year. We've got an amazing camera. Funny enough, internally, our code name for this was not a webcam. And it's interesting that most people have just picked up standard webcams in the marketplace to do streaming, but they're just not designed for that. And so we, again, designed this from the ground up. This has taken off really well, $199. Again, you can buy a webcam for $30 or $40, but not ONE that does high-quality 1080p, 60 frames per second with great video clarity, as Julian explained to you. And so we're now up to about 4% market share just after 6 months. Camera over $60 and continue to see big progress. And as I said, obviously, this isn't going to be the only camera we ever make. And then lastly, monitors, our most recently, we launched just a few months ago. Clearly, everybody that plays games on any kind of desktop has a monitor. And people that play games a lot like monitors with amazing clarity and capability. So we've launched this 32 inch, very high refresh gaming monitor. One of the things about gaming is that whereas when you watch TV at 30 frames a second, the gamers the world starts at 60 frames a second, and most people want to go up to 100 and 200 frames. So that's for that, you need a really good monitor. So this is not $100 monitor, this is a $799 monitor. It's selling very well. And again, we're not going to be in the business we're selling millions of $100 monitors, we'll operate at the high end for people that really care about making a difference. And lastly, we'll talk a little bit about control as we entered this market by buying a company called SCUF Gaming., Now gaming controllers for consoles is a slightly different thing. But what we noticed was that, yes, there's a lot of kids using consoles. There's a lot of people buying $50 controllers. But in the world of competitive gaming, we noticed that -- when we looked at people in the esports arena for consoles, they're all using these consoles with extra panels on the back, they will tricked out with custom triggers. And most of them are coming from SCUF Gaming. And if they weren't, they were coming from using the Xbox Elite, which is actually a licensee of SCUF Gaming because SCUF invented this whole concept of pedals. And so we have a very big patent portfolio and Xbox is one of our licensees. We just launched both for the new Xbox Series X, a controller for that. And we also just launched our new control for PS5. The other thing that's great about SCUF is the direct involvement with customers virtually all their sales are direct-to-consumer. And then lastly, service revenue. We have a big install base. I mean, we've sold well over 120 million things to customers over our lifetime. We sold almost 30 million units this year in 2021 alone. So a big growing customer base, and we do think there's a lot of services we can offer them. You've heard Julian talk about Stream Deck Marketplace. Customer care and extended warranty. We launched this year. These are obvious things for us to do, especially with the high-end systems. People want to get some more assurance service and warranty. These are obviously very profitable parts of the business. We bought last year Gamer Sensei, which is a coaching company, which connects coaches with gamers. And we think that's a massive potential. It's still a work in progress. It's going to take many years for this part of the business to build out. But we're seeing a lot of interest from competitive gamers that want to go into esports, schools that want to help digital athletes going to esports. So we're really excited about this for the business. All right. Well, I'm going to move to sales and marketing, how we go to market. And for that I'm going to introduce Adrian Bedggood to you. Adrian has actually been with the company for 10 years in various sales and marketing positions. And then recently, we put him into VP of Corporate Marketing. So Adrian, over to you.

Thanks, Andy. So I'd like to just spend a few minutes taking you through how we go to market and engage with our customers across the world and in different marketplaces that we operate in. So hang on, let me just go back to a slide here. So we've built this brand over 25 years. It's a brand that's known for top performance and high-quality products. We have a very loyal customer base. The vast majority are enthusiasts, whether they're gamers or PC builders. And I guess, for those of you who are not that familiar with this marketplace, it's a little bit like the mountain bike market or the golf market or even the custom car market, where customers are they're in a community. They're wanting to share data. They want to research and find out what's going on. But importantly, they're trying to maximize their performance. And so our customers are a very loyal customer base. And that means we have a very efficient way of reaching them. And our marketing machine allows us to spend dollars efficiently and maximizing the engagement. So our fans they love us, frankly. There's a sense of belonging within the Corsair community. And they're proud of the Corsair products that they own. And as we see the trend for customization and personalization, as we see that increasing, we have to show off their rig and their set up with their friends and families and through their communities. And so actually, what we end up with is with our customers, they are evangelist for us, and they're starting to share the Corsair brand. So that leads to a very strong brand loyalty. And a recent survey that we received from DFC, it shows that the Corsair brand, our customers are extremely loyal, right up there with NVIDIA, Intel and Microsoft. And our customers that own some of our products, they plan to buy again in the future. So we're very proud about this. And it just shows what a loyal set of customers that we have. Now we have a large social footprint, huge reach and high engagement across the world. And we have our platform customers choose to engage in. We're there to talk to them on a regular basis. So we have a large worldwide footprint. We also have a strong relationship with the professional review sites. And remember, this is where people will go and research and find out about product and learn what's going on. We have an impressive base of influencers around the world who are talking to their followers and sharing the latest tips and tricks from Corsair and our portfolio of products. Now earlier on, we heard Geoff talk about iCUE and how we use that to unite all the hardware within the portfolio. Well, we've taken that a step further, and we've created worldwide partnerships with game studios. And as you'll see in the video in what that allows us to do is have lighting react to what's going on in the gameplay. So whether that's a change of environment or whether it's action within the game, it allows the consumer to completely immerse themselves in the gameplay and elevate the experience for them. So by having premium hardware with premium software, it completely elevates the gaming experience for the consumer. And our most recent integration is with the FARCRY franchise. So their latest game, FARCRY 6, was launched at the end of last year. And we had a strong partnership with Ubisoft, where we're able to showcase iCUE in all its full extent. Now we're unique in this situation because we're able to bring everything together, whether it's a mouse and keyboard or the components within the gaming rig, and even the desktop ambient lighting. It brings everything together and allows a complete experience for the consumer. Now we've built an established global sales force, which is covering 90 countries. We have strong relationships with all the major retailers. We have strong relationships with retailers like Best Buy and Amazon in North America, Dixons in the U.K., MediaMarkt in Germany, and they're servicing 23,000 storefronts. But we've created a multichannel approach and whether it's online or in store, we've developed a model where we can successfully roll out as we further expand. And in regions like Asia and Latin America, we're going to be able to roll out and increase our footprint with the model that we've developed. We've got a very healthy channel, which is growing nicely. But as we develop a more direct relation with our customer, it allows us to upsell. And with the recent acquisitions of SCUF and Origin PC, we've expanded our footprint. So with the ability to talk directly to the consumer, we can sell more specialized products and upsell and increase the basket size. So I hope we've demonstrated our ability to go to market by consistent growth over the last few years. We have a very strong high performance brand, a loyal customer base in which we engage with every day, and we're going to continue to invest in marketing, staying ahead of the latest consumer trends that we see in the marketplace. And with that, I'm going to hand you back to Andy.

Thank you very much, Adrian. And -- Okay. All right. Let's talk about what we are planning to do for the next few years. So we set ourselves an internal goal of $3.5 billion by 2026. And we didn't just do that by putting a number out of thin air. We've actually developed a pretty good model -- We've looked at all the market data. We've looked at our progression in market share. We've got all the new categories we've moved into, and we think this is pretty achievable. Now let's get into some -- a little bit of detail of that. Firstly, on components and systems, which is 2/3 of our business right now by revenue. And as you saw about 55% by margin. We expect the overall market to grow at double rates. I'm not talking about 2020 surge or Fortnite surge. When we look at the last 10 years of activity and see what's happening in gaming, we've got a pretty good idea of how the market is going and how new -- and how gamers that are casual gamers are moving in to learn how to buy hardware. So we model the gaming components market to grow by 6% to 8%. And you can see from the data I showed earlier, that's conservative than the data that we're looking at. We do expect to continue to grow market share. We've shown you the trajectory. We're modeling 1% a year. Obviously, that's less than we've managed to achieve in the last few years. and that's mostly because of iCUE and brand stickiness. And we also expect that we're going to continue to grow very quickly in the prebuilt systems area. Although we are in a small part of the market, the $2,000 to $5,000 ASP, that market is growing very quickly and our market share is growing very quickly. So we expect that to grow at 20% to 25% per year. Now if we move over to gaming and creator peripherals. Gaming peripherals, we expect to continue to grow at 20%. We showed you in the last few years is more a 27% CAGR. We're using 20% on model. We expect Creative products to be a little bit higher. And that's, of course, because we've just jumped into brand-new markets, microphones and cameras. And you've seen what's happening. We showed you the unit growth graph of Stream Deck, which is exploding. And also, of course, we've got a streaming marketplace starting in 2022. Now the other thing that we've noticed in Creative products is that, remember, Julian mentioned that all of us have become creative in some ways we're involved in things like this video conferencing. And so we've seen a substantial B2B interest around our creative products as well in terms of lights, cameras, microphones, et cetera. In terms of service offerings, look, those are all growing very quickly. but it's a very small base. So I think given the revenue we're at now of around $2 billion, we're going to see good growth, but that's not going to affect the overall number that much for a while. Lastly, I'd say, look, we've closed 8 acquisitions in the last few years since 2018. 6 of those are revenue bearing, 2 of the vertical integrations, and we're going to certainly intend to assume more, in fact, we look at options all the time. But we haven't loaded into our models any big $500 million revenue acquisitions or anything like that. It's all organic growth. All right. With that, I'm going to move over to financials and introduce you Michael Potter, who's our CFO, joined us in 2019. He's been with us for 2 years. Michael, over to you.

Thanks, Andy. Andy, Geoff, Julian and Adrian just reviewed our key markets and why we're winning in them. Our products and our teams continue to perform well in Q4 2021, and we finished the year at approximately $1.9 billion of revenue. That puts us in the top end of the revenue guidance we gave. We saw strength across the board in Q4 and the quarter ended strongly for us. For 2022, we're expecting revenue to be in the range of $1.9 billion to $2.1 billion. and expect year-over-year growth to be concentrated in the second half of the year. This is driven by two main factors: expected GPU availability improving as the year progresses, and a very strong first half of 2021 that had stimulus checks and work-from-home. We'll discuss the details of our finished 2021 and our 2022 guidance at our earnings call on February 8 after the market closes. Andy introduced our internal target of $3.5 billion revenue by 2026. This is based on both our estimates of our future success in introducing new products and outside analyst predictions of overall market growth. We assume a few small tuck-in acquisitions in that number would occur, but no large material M&A. This represents about a 13% CAGR over the period, which is supported by our expectations and external expectations for the markets we compete in. As we've said in the past, we expect a higher margin gamer and creator peripheral segment to grow as a percentage of our revenue, and this should lift our overall margins. We expect to continue our investment in marketing and product development to support our hope for revenue growth and believe that long-term EBITDA margin should be 13% or higher. Finally, the last few years have marked the transformation from us being a highly levered LBO who are comfortable with very reasonable leverage levels and debt cost. We've reduced debt by over 50% and the cost of the remaining debt is down about 85%. Our net debt-to-EBITDA is about 1x, and we're comfortable at this level. We expect to use cash we generate for working capital to support our expected growth. M&A transactions should they make sense and further debt reduction. We do have the option of converting our term debt into a larger revolver if we pay off the term debt, which should maintain our full financial flexibility and liquidity. Thanks for attending, and I'll turn it back over to Andy to open up a Q&A session. As we explained in the beginning, please type your question or a summary of it, and we will unmute different people to ask their questions. Andy?

All right. Thanks. Well, I think Ron is going to act as a question master. And so I think we're going to see live questions coming up.

Yes. We'll wait a moment for people to type-in some questions. Andy, there have been a couple of questions around Corsair's plans perhaps to move into VR or how it would play or tap into the metaverse.

Yes. So let's talk about that. For a second, it's funny because the Metaverse is something that is a label that applies to so many different things. And in these days, people talk about Metaverse just for gaming. I think, most recently, after Mark Zuckerberg put out the video when he changed the company name to Meta, people have started thinking about Metaverse as a VR experience. And VR is still very, very early in gaming. And so I think early enough that it's only a few million units shipped compared to the installed base of games that we showed you of multiple billions. So I think that it's too early to say whether VR goggles will be something that every gamer wants. But certainly, I would say in the hardware space, because we're so prevalent, everybody with any VR technology comes and shows it to us. In fact, we looked at an incredible demonstration just a couple of days ago from a company. So I think any solution that looks good and if the market starts to really connect. So VR becomes the main part of gaming, then obviously, we're going to jump right into it. Now I think the other part of the Metaverse is really watching how people are starting to socially interact in a digital way inside games, and we've seen this notably in Fortnite and Roblox, for example. And I think there, you have to think about if the world gets to a point where everybody has their own avatar, then they're going to have to create it digitally. And that's right along the lines of what we do with Elgato. And in fact, one of the acquisitions we made last year with a company called VBI that does exactly that help people create their own digital persona. And so I think that with the fact that anything that makes games more immersive, which obviously Fortnite and Roblox have done, creates gamers to spend more hours playing, and that tends to drive them to buy hardware, which, of course, we make a lot of. So I think that's really the way to think about the Metaverse. One thing is clear none of us can predict the future. Before Fortnite came out or before PUBG came out, one was talking about Battle Royale as the next big thing. And so we'll have to see what actually plays out and what becomes effective.

All right. We've got a question from Drew Crum. Drew, you have to unmute yourself.

So this is maybe for Julian and Andy. You mentioned that with Elgato, you've launched the new product category every year since 2017. Can you talk about the product pipeline? Have you exhausted all categories native to streaming, or are there any white holes -- or white space or holes in the portfolio that you can address going forward?

Well, yes, so it's great question, Drew. Julian, do you want to have a stab at answering that without riveting too much of our new product pipeline?

Sure. I think there's different opportunities here. I mean we spent -- the last year is going really broad. And so I do think we have a huge opportunity to just focus on the various categories that we're in. So that's part one. The second part is we've been doing this for 10 years, and our customers are some of the most creative people in the world. They come up with new things, new ideas all the time, which requires solutions to problems. And I think one of the things we've just become really good at is working with the community to understand their problems and to then develop solutions for them, and this is going to keep happening. Some of the stuff we see already and have in our pipeline and some of this, I think, will just play out over time.

Yes. And so just to give you some further thoughts on that. Stream Deck, which is one of our most successful products, we now have, I think, 3 versions, maybe 4 in terms of different sizes and price points. We've introduced 1 camera, 2 microphones. And obviously, the people that are the biggest players in that space have a lot more than one product. So I think expanding each product line is the obvious thing that we're going to do, and we talked about the marketplace where we start to be able to sell software solutions, digital solutions as well as hardware.

All right. Next question is from Drew Crum.

Again?

No, sorry, sorry, I -- it's flipped around. What I meant to say, Rahul.

Thanks for the question. I was curious about China. I noticed that more people in China are building their own PCs. I'm just curious, Andy, maybe you could give us a little update on how you see China going right now? How things -- what you're selling there, how that market develops for you over the next couple of years, how it fits into this $3.5 billion target?

Yes. Well, China has been one of the fastest growth, let's say, over the last 10 years, one of the fastest growth areas. It is a tricky market. And the reason I say that is that what tends to happen in China for the bulk of the gaming PCs is that people buy expensive graphics card and then wrap around it, some very low-cost components to build a PC. So it's an ASP challenge market. That's the first thing. The second thing is that it was a very much a blurry line between what we call self-built where consumers are building it and small shops that will build what a customer wants, where you can go in and buy components and then the shop builds it for you. And in that market, maybe one where the customer says, look, I just want a 3070 graphics card, build me a gaming PC with lots of lights. And then the shopkeeper decides what he's going to put in there and mostly from local brands. So I think it's more than a $100 million business for us in China. So it's not insignificant. But -- and right behind that is India. So we've got parts of the market with huge populations, a lot of them playing games, but as I said, very ASP challenged. And so we really have to wait for the market to develop a little bit in terms of people having the ability to spend a few hundred dollars on peripherals or components before we can have the same sort of market share as we have in the more developed countries.

Okay. And I don't know if I can ask another one, but I will, if you let me.

It's up to Ron.

Okay. Just curious, I mean, I don't know if anybody knows, but you've been around that component world semiconductor supply chain for a long time, have a lot of experience. Just wondering what you think what you're seeing in terms of supply out there, GPU supply, et cetera. Some of the big PC makers have started to talk about things turning the corner, but I'm just curious what you're seeing and observing?

Yes. So I think the -- that's a great question because it makes a huge impact on what builders self-builders need to do. I think the first thing I'd say is that, in general, the semiconductor shortage is generally going to be much better in the second half of '22 than first half. I think for GPUs, which is really our biggest issue now, not that we buy a lot of GPUs but our customers do. We see Intel coming along with offerings in the middle of the year. And we think there's different solutions for Bitcoin and cryptocurrency miners to use. That's really what's causing the biggest issue right now is the fact that so many crypto miners are using graphics cards. And NVIDIA really wants to limit that usage. And so the amount of graphics cards that get you into the channel is very constrained. So I think that will normalize itself over the middle of the year. That's what it looks like. Certainly, things are getting a little bit easier, but they're still pretty expensive. And the second thing is that, look, I think people get used to it. We already showed you some of the ASPs. I think for serious gamers, no one wants to spend $1,500 on the graphics cards if last year it was $1,000. But the fact is that even if it stays at $1,500, eventually people are going to get used to it and keep upgrading. I think the rest of the semiconductor shortage, we've sort of overcome by inventory. Obviously, things that used to be on 8 weeks lead time for us and all the microcontrollers that we use in our headsets and keyboards. Now some of those lead times are 24 weeks, we've just had to increase stockpiles of them, as everybody else has, we don't want to not ship a $200 keyboard or headset just because we're short of a $1 or $2 semiconductor. So that has largely taken care of itself and we'll continue to get better. So really, I think as we move into 2020, the biggest issue that's hampering the market and our revenue is GPUs, and we expect that to be over in the middle of the year.

Question is from Mario Lu.

Great. Thanks for the presentation today. It's very insightful. So a question more on the long-term guidance revenue of $3.5 billion by 2026. I was wondering how much, if any, of that is coming from non-gaming verticals? I know you guys mentioned, for Elgato, there's content creators, other platforms like Spotify or TikTok. Is that all upside in terms of the guidance? Or is that $3.5 billion just purely the core business?

Yes. Well, firstly, let's not call it guidance. This is our internal goals, and we're just sharing our models with you. We're guiding for next year, not 5 years out. But we just want to give you an idea of what happens if you use the existing market growth rates and put them in a spreadsheet and roll them forward. Now the answer to the specific question is we haven't loaded any incremental chunks of revenue for new markets. This is existing markets, existing product lines. And so obviously, we're loading in what we know we're going to introduce in the next year. But yes, so the answer is we would expect to do a little bit of B2B revenue. But again, at the scale we're at now, it's not going to make a huge difference. So we're not planning to have a $500 million or $1 billion division of B2B anytime soon. And if we do it, it will be incremental.

Got it. If I could ask one more on the prebuilt systems. You guys mentioned the expectation is to gain market share. I was just wondering the 20% to 25% growth, I think, right now, as you guys said, GPUs are expensive, right? So there are some subset of users that are buying these prebuilt PCs just because it's the easiest way to get that GPU. Has that been a tailwind? And how do we extrapolate that versus that 20% to 25% growth?

Yes. That's an interesting question. I think it's certainly been a tailwind and our prebuilt systems have actually grown a lot more than the future growth rates that we're showing you. So we had a huge growth this year, and some of it clearly was because people made that switch. But Interesting, I was actually on -- read it the other day, sort of reading some threads. It's -- I don't think a lot of people that build gaming PCs are suddenly going to switch over and get a prebuilt one just to save a few hundred dollars on a GPU. I don't see that happening. There's a lot of people talking about why they would never do that. So I think in general, the fact is that the market is growing and more and more people want to buy a PC platform, and they just want to make a choice. And you've got to remember, we have a very large business in components and a relatively small business in prebuilt and it all at roughly the same price point. Remember, most of the people that buy our components are building $1,500 to $2,000 machines. We're not selling components to people that are building $700 gaming rigs. So I think there's a lot of room in that market to grow.

All right. Next is a question from [ Franco Granda ]?

Thanks for the presentation as well. That was very informative. Just I wanted to dive in a little deeper on the announcement of Elgato marketplace. Do you view this as a monetization kind of tactic or a quality of light feature for its existing users?

Well, I think the answer is both. But Julian, do you want to comment on that some more?

Yes. So it's definitely both. What we see today is that there are a growing number of third parties that are already developing for Stream Deck. And the problem that they have is distribution. So we have the distribution. And we want to make that accessible to these third parties that are building great content, whether it's native plug-ins for Stream Deck, whether it's profiles for specific apps. For example, there's a small company that has built profiles for basically any creative app that you can think of from the entire Adobe range to DaVinci Resolve and all kinds of other apps. We would like to give these kinds of developers an opportunity to monetize their products. So that's the one goal with the marketplace. A second goal is absolutely to just continue to increase the utility of our products and to open up Stream Deck to more and more users outside of live streaming.

All right. Great. And then one more, if I may. Just on iCUE. You mentioned that 35% effected users go on to later purchase Corsair products. Do you have any insight into what percentage of iCUE users don't currently have any Corsair products?

Don't have any like -- sorry, are you asking what percentage of iCUE users have no Corsair products?

That's correct.

Yes. So funnily enough, the answer should be 0. We do see or hear of people, them running the iCUE just to look at it. But it really is a program that you buy to control Corsair products that have the iCUE interface. So unlikely that, that number is very high.

All right. Next, we have Colin Sebastian.

Two questions. One, in the streaming and content creators segment, I was just hoping you could talk a little bit more about how the competitive environment is shaping up there? I know this market, which you were very early to access is certainly getting more attention. And then secondly, maybe for Michael, I don't think you talked about margins for next year. Any particular reason for that? Maybe you're just saving that commentary for the earnings call.

Well, actually, let me take the first part of the question because we -- when we decided to have a hard look at streaming, we obviously looked around the whole market, who is doing what. And I can tell you that the vast majority of gear that people are using for streaming was standard gear. Actually no different than gaming was 15 years ago, people were just using standard headsets and mice. And that's why we picked Elgato because we saw that they had dedicated equipment that was designed specifically for this use case. And so when we look across the competitive area, I think everybody is trying to tune up their products. Obviously, there's companies that have got a heritage in making microphones from the music industry, there's companies that make a lot of webcams, but you know very well. And those start to get used by entry-level content creators. And we've seen a lot of these companies scrambling to upgrade their products to make them fit for purpose, but they've been doing that at Elgato for 10 years. So I think -- I remember we said earlier in our components business that 25 years of experience really does matter. And having people inside the company that all they think about is content creation. That's what we discovered when we started talking with Elgato. When we started -- when we looked around at some of the other companies that happen to be selling gear into the streaming market, we didn't find a lot of knowledge of the market. or people really excited about content creation. And so I don't know if that really answers the question. Obviously, any market that's big, people are going to try and make products for it, but we found over the years that what really makes a difference, if you're successful, is how much you really understand about the market and how connected you are with the consumer base. That allows you to make products that connect and customers are going to use and get more excited about. Now the other question was a financial one, so I'll turn it over to Michael. I think he was asking about margins.

So the short answer is we're going to talk about those sort of details, February 8 in our earnings release. It's pretty close to today's date. And we really wanted to focus this presentation and the questions around our products and our positioning. So we'll go over all the financial details and such on the 8th, when we do our earnings release.

All right. Next, it's Doug Creutz.

I'm just curious, we've had 2, a big and a very big, merger announcement on the software side of the business in the last 1.5 weeks. Just curious on your take about whether that's kind of good or bad for the trajectory of the industry. And then more specifically, with regard to your business, do you see it as sort of good, bad or indifferent?

Yes. I mean, look, the first thing is, I think it's great. And it's very clear -- I mean, look, I'm getting on an age of it. So I've watched how entertainment gets given to consumers over many, many years. And it's very clear watching the whole cable rollout, watching Internet TV build, but what matters is content. And if you don't have content, you can't win. And so when we look at these big companies, whether it's Facebook, whether it's Microsoft, whether it's Google, if they want to be present in the space, they have to have content. And I think this was simply a play to get content because it's very expensive and it takes a long time to develop it. So in the same way that Netflix has done a great job acquiring studios and building up content, this is what I think, obviously, Microsoft is doing. And we'd expect to see, I would think more of this as companies that have got some sort of reach. I mean think of Microsoft with all the different Xbox Cloud, Xbox Experience and consoles as a conduit through the consumers, so they need content to give the consumer. So that's I think that. As far as what difference does it make to us. If it helps advance gaming and have more people spend time gaming, then that's great. Our business is selling hardware to people that really enjoy immersive gaming. So anything that helps that we applaud.

There's a number of questions that I've seen that really relate to our financial results that we're going to cover in our earnings call on February 8. But are there any other questions?

Just in general, we see all the questions that are coming in. So there's a lot of questions about freight costs, supply chain costs and such. So we're noting all those questions, and we're going to try and make sure that we will answer when we do our earnings release in a few weeks.

All right. I do not see any more questions come in. So with that, Andy, any closing remarks from you?

Yes. Well, I hope you're as excited to hear all the fun things we're doing as I get to watch every day. Hopefully, we've shown you a few key things. One is that we've got solid market growth. The market isn't cratering after people go out and spend their time in pubs and restaurants. In fact, just the opposite. We've got a new cohort of gamers now that have learned by year. We expect them to be upgrading over the coming years. So we do look into a healthy market. It's clear everyone's jumping into what they call gaming now, people start calling it metaverse. But yes, the fact that all the big companies are starting to jump into this and provide better content, that's fantastic. As we showed you right at the beginning, half the world is gaming and ready to consume content, and we're there to help them be more immersive and play games better with our gear. All right. So with that, I think we'll sign off. And thanks for attending.