Corsair Gaming, Inc. (CRSR) Q2 2023 Earnings Call Transcript

Corsair Gaming, Inc. (NASDAQ:CRSR) Q2 2023 Earnings Convention Name August 3, 2023 5:00 PM ET

Firm Contributors

Ronald Van Veen – Vice President, Finance and IR

Andy Paul – Chief Government Officer

Michael Potter – Chief Monetary Officer

Convention Name Contributors

Aaron Lee – Macquarie

Drew Crum – Stifel

Doug Creutz – TD Cowen

Jack Butler – Barclays

Operator

Good afternoon. And welcome to the Corsair Gaming’s Second Quarter 2023 Earnings Convention Name. As a reminder, at this time’s name is being recorded and your participation implies consent to such recording. At the moment, all members are in listen-only mode. A short question-and-answer session will comply with the formal presentation. [Operator Instructions]

With that, I might now like to show the decision over to Ronald Van Veen, Corsair’s Vice President of Finance and Investor Relations. Thanks. Sir, please start.

Ronald Van Veen

Thanks. Good afternoon, everybody. And thanks for becoming a member of us for Corsair’s monetary outcomes convention name for the second quarter ended June 30, 2023. On the decision at this time, we have now our Corsair’s CEO; Andy Paul; and CFO, Michael Potter. Andy will assessment highlights from the quarter. Michael will then assessment the financials and our outlook. We are going to then have time for any questions.

Earlier than we start, permit me to offer a disclaimer concerning forward-looking statements. This name, together with the Q&A portion of the decision, might embody forward-looking statements associated to the anticipated future outcomes of our firm and are, subsequently, forward-looking statements.

Our precise outcomes might differ materially from our projections as a consequence of numerous dangers and uncertainties. The dangers and uncertainties and forward-looking statements are topic to are described in our earnings launch and on our SEC filings. Notice that till our 10-Q has been filed, these numbers are preliminary.

At this time’s remarks may also embody references to non-GAAP monetary measures. Extra info, together with reconciliation between non-GAAP monetary info to the GAAP monetary info is offered within the press launch we issued after the market shut at this time.

With that, I’ll now flip the decision over to Andy.

Andy Paul

Thanks, Ronald, and welcome everybody to our earnings name. The key takeaways for Q2 are; first, our income exceeded expectations for Q2, rising practically 15% on a year-over-year foundation. Client spending on gaming {hardware} is holding at considerably greater ranges than pre-pandemic. We imagine that even with a difficult macro degree environments, we’re seeing elevated exercise as a consequence of new players that got here into the combination in 2020, now beginning to refresh and improve their gear.

Second, gross margins confirmed robust progress with wholesome stock profiles and lowered freight prices.

Third, we are actually lively once more in M&A, which is a key part of our progress technique. Our robust money stability and low leverage is now permitting us to pursue M&A alternatives with the newest announcement made in July that we agreed to buy Drop Integrated.

Taken collectively, we anticipate gaming market to proceed to be wholesome for the stability of the yr, with new recreation titles and decrease price GPU playing cards available in the market, and we anticipate to proceed to take market share with our continued new product rollouts.

Let me take a couple of minutes to develop on these factors. So, first, I’m very happy to report that our outcomes for the second quarter exceeded our authentic expectations. The gaming {hardware} market is wholesome and seems resilient to macroeconomic results, pushed by new video games and new graphics playing cards launching.

For elements used for constructing gaming PCs, relying on area, we see a 24% to twenty-eight% improve from Q2 2019 to Q2 2023. The gaming peripherals, we see an total improve of 57% to 63% this yr in comparison with pre-pandemic.

Now it’s affordable to think about present shopper exercise as a post-pandemic baseline since there’s no proof of elevated present exercise as a consequence of COVID-related habits. Primarily based on every little thing we’re seeing and listening to, we imagine this elevated exercise is coming from the surge of recent gaming {hardware} patrons who entered the market throughout 2020 and 2021, which we now check with because the COVID bulge.

Since this comparability is now over 4 years, that may result in a web CAGR from pre-pandemic to post-pandemic as roughly 5% to six% of PC platform constructing and 12% to 13% for gaming peripherals. That is roughly consistent with what we shared with buyers through the years as anticipated progress charges for these classes and we expect it’s affordable to anticipate that this can proceed over the subsequent few years.

Second, margins continued to enhance in all classes. In our elements class, we gained important market share in 2022 and that on prime of the wholesome market, meant that we had been working wanting stock in lots of our prime SKUs, requires us to airfreight in merchandise or our hubs. We largely caught up with stock wants by Q1 2023 and so in Q2, we had the good thing about decrease freight price and wholesome stock positions, thus driving up gross margins.

In gaming peripheral classes, we have now had some delays in getting our new flagship merchandise out. We additionally famous in earlier earnings stories that we appeared to clear up our extra channel stock quicker than our opponents and so we determined to carry again from matching their excessive ranges of discounting.

Each of this stuff mixed to the causes to lose some market share over the near-term, however opponents discounting has now largely relax. For instance, we famous throughout Prime Day that whereas we had costs at lowered ranges of reductions in comparison with greatest Prime Days, we really outperformed in comparison with the full class gross sales of Amazon in virtually each one of many classes that we monitor.

So we noticed that in Q2, whereas our gaming peripheral income was much less anticipated, by the top of the quarter, we’re experiencing a lot improved margins and a lot better gross sales momentum going into and popping out of Prime Day and Prime Week. As our newest new flagship merchandise get launched in the course of the second half of this yr and into early subsequent yr, we’d anticipate to proceed to achieve market share and improve margins additional.

We are actually lively once more on the M&A entrance as we profit from our robust money stability and low leverage. So a number of M&A alternatives on the market and we have now been disciplined in evaluating corporations. We have now acquired six corporations to-date and have an excellent monitor report.

Our newest announcement was in July that we agreed to accumulate Drop, previously referred to as Massdrop, a community-based e-commerce firm specializing in custom-made DIY keyboards and key caps and lots of different fanatic and audio for merchandise.

Customized keyboards that be modified by the patron is without doubt one of the quickest rising tendencies within the gaming peripheral house. Drop is actively engaged with tens of millions of fans to help its merchandise and construct and showcase gaming stations.

Drop has confirmed to be one of many leaders on this house, and with, after all, a worldwide footprint, we anticipate to considerably develop the Drop model worldwide. We anticipate some important alternatives and synergies right here, each by providing price conversions of our merchandise on the Drop aspect, in addition to introducing a few of their standard merchandise into our worldwide channel.

Our goal is for this to reflect the success we have now had with Elgato. As a reminder, we acquired Elgato about 5 years in the past. We have now elevated the income by greater than 3 occasions and we have now expanded the model into the completely new income areas, together with microphones, cameras and lights.

We additionally simply did a gentle launch of our market a number of weeks in the past and anticipate this to develop over time. The brand new Stream Deck market will permit third-party plug-ins and functions that run on our world body stream deck to be offered to our content material creators straight from the Elgato web site.

Builders will now be capable of simply entry Elgato’s giant and quickly rising Stream Deck put in base. We imagine that these added plug-ins and functions dramatically improve our put in base of Stream Deck customers and opened a major new income stream for us as we make Stream Deck an much more great tool.

Total, we’re off to a robust first half and anticipate an additional enchancment within the second half of 2023. We anticipate the gaming market to proceed wholesome for the stability of the yr and we absolutely anticipate to construct a number one market share within the classes we serve.

Let me now flip the decision over to our CFO, Michael Potter, for particulars on the financials. Michael, please go forward.

Michael Potter

Thanks, Andy, and good afternoon, everybody. We’re happy with the substantial monetary enchancment in Q2, led by income progress, steadily enhancing adjusted EBITDA and a extra balanced stock.

We exceeded our near-term expectations for gross margins and we proceed to be operational money circulate optimistic, whereas investing modestly in stock to help the anticipated stronger second half of 2023.

By way of the specifics, Q2 2023 web income was $325.4 million, in comparison with $283.9 million in Q2 2022. For the primary six months of 2023, web income elevated 2.2% to $679.4 million from $664.6 million within the yr in the past interval.

European markets proceed to be softer than Americas, however are enhancing and contributed about 32.3% of our revenues, which is a rise from 32% in Q1 2023.

Turning now to our segments. The gamer and creator peripheral phase contributed $78.8 million of web income in the course of the second quarter, in comparison with $89 million in Q2 2022. For the primary six months of 2023, gamer and creator peripheral phase income was $167.7 million, in comparison with $223.1 million for the primary six months of 2022.

The gaming elements and methods phase contributed $246.7 million of web income in the course of the quarter, a rise of 26.6% from $194.9 million in Q2 2022. Reminiscence merchandise contributed $108.9 million in Q2 2023, in comparison with $99.1 million in Q2 2022. For the primary six months of 2023, gaming elements and methods phase income elevated to $511.7 million from $441.5 million within the first six months of 2022, with income from reminiscence merchandise growing to $240.2 million from $231.3 million.

Total gross revenue within the second quarter was $82.8 million, in comparison with $36.5 million in Q2 2022, which had decrease income and an extra stock reserve. Gross margin elevated 25.5%, in comparison with 19.7% in Q2 2022 with out the impact of the surplus stock reserve. Ongoing enhancements in freight prices, in addition to new product introductions had been the principle causes for the development. Total gross revenue elevated to $168.2 million for the primary six months of 2023, in comparison with $127.2 million within the first six months of 2022.

The gamer and creator peripheral phase gross revenue was $25.5 million, in comparison with $10.6 million in Q2 2022. Gross margin was 32.4%, in comparison with 11.9% in Q2 2022. We benefited from an additional discount in extra promotions by some main opponents on gaming peripherals in Q2, which we proceed to imagine will result in additional enhancements in margins later within the second half of 2023.

The gaming elements and methods phase gross revenue was $57.3 million, a rise of 121.3% from $25.9 million in Q2 2022. Gross margin was 23.2%, in comparison with 13.3% in Q2 2022. Our reminiscence merchandise gross margins on this phase had been 14.6% for the second quarter, in comparison with 9% in Q2 2022.

Second quarter SG&A bills had been $70 million, a 4.7% lower, in comparison with $73.4 million in Q2 2022, pushed partly by lowered freight charges. This displays the impression of some prior 2022 headcount reductions, together with our continued shut administration of all bills as we help income producing areas.

Second quarter R&D bills had been $15.6 million, down about 13.5% in comparison with Q2 2022 as we proceed to prioritize our investments in our new merchandise. GAAP working loss within the second quarter of 2023 had been $2.7 million, in comparison with a GAAP working lack of $55 million in Q2 2022. As famous earlier, the yr in the past interval included the impression of the surplus stock cost.

Second quarter adjusted working earnings was once more a vibrant spot for us, growing to $15.9 million, in comparison with an adjusted working lack of $14.2 million in Q2 2022. Adjusted working earnings elevated to $34 million for the primary half of 2023 from a lack of $0.9 million within the first half of 2022.

Second quarter web earnings attributable to frequent shareholders was $1.1 million or $0.01 per diluted share, as in comparison with web lack of $59.4 million or a lack of $0.62 per diluted share in Q2 2022.

On an adjusted foundation, second quarter web earnings improved to $9.8 million or $0.09 per diluted share, in comparison with an adjusted web lack of $19 million or a lack of $0.20 per share in Q2 2022. For the primary six months of 2023, adjusted web earnings improved to $21.8 million or $0.20 per diluted share from a lack of $9.8 million or a lack of $0.10 per share within the first six months of 2022.

Lastly, we elevated the second quarter adjusted EBITDA to $17.8 million, in comparison with an adjusted lack of $11 million for Q2 2022. For the primary six months of 2023, adjusted EBITDA elevated to $38.3 million from $4.4 million within the yr in the past interval.

Turning now to our stability sheet. We ended Q2 with a money stability of $184 million. Shortly after quarter finish, we invested in progress through our acquisition of Drop, which Andy offered particulars on earlier. This will likely be mirrored in Q3 that the acquisition price was not important and was within the low double digits of tens of millions of {dollars}.

We ended Q2 with a $220 million of debt at face worth and our $100 million working capital revolver stays undrawn and absolutely out there. Total, we anticipate liquidity to stay wonderful for the remainder of 2023, permitting us to be versatile as alternatives current themselves.

We’re happy that the primary half carried out barely above our expectations and we imagine that we’re effectively positioned for the second half. Each channel and our stock are in a wholesome state. Though we’re intently monitoring this due to financial headwinds from excessive rates of interest and inflation affecting shopper confidence, we proceed to imagine that we have now substantial white house to promote into and room to recapture market share as extra discounting and gaming peripherals eases and as new merchandise proceed to be launched.

By way of the complete yr 2023, we’re reiterating our earlier outlook of flat to up income. We proceed to anticipate complete income within the vary of $1.35 billion to $1.55 billion, adjusted working earnings within the vary of $75 million to $95 million and adjusted EBITDA within the vary of $90 million to $110 million.

With that, we are actually glad to open the decision for questions. Operator, will you please open the decision for Q&A?

Query-and-Reply Session

Operator

Thanks. [Operator Instructions] Your first query comes from Aaron Lee with Macquarie. Please go forward.

Aaron Lee

Hello. Good afternoon. Thanks for taking my query. I wished to begin with the steerage vary, which you clearly famous within the launch incorporates a softer macro. It looks as if there’s larger confidence on the market that the U.S. will keep away from a tough touchdown. So may you simply speak in regards to the diploma to which a stronger than anticipated macro atmosphere would impression the place you land in your steerage vary versus among the issues that you could management?

Andy Paul

Properly, let’s be clear. If the financial system improves, clearly, our income will go up and vice versa. So I feel that the — since we had at the start of the yr, which was that the market can be roughly flat is what we take into consideration at this time. In order that hasn’t actually modified.

I feel the sense is that the market was barely down, the patron market normally and you’ve got seen that throughout completely different industries, a number of components are down, some are flat. However definitely slightly additional down than we thought and we expect the second half will likely be slightly additional up. So I feel it’s going to finish up, the complete yr might be going to be flat as we anticipated.

Michael Potter

That’s the…

Aaron Lee

Okay.

Michael Potter

…total market. The vary has an honest risk of rising year-over-year for us.

Andy Paul

Yeah.

Aaron Lee

Yeah. Understood. Truthful sufficient. As a fast follow-up, you guys have achieved a terrific job increasing the Corsair ecosystem like with iCUE LINK just lately, and clearly, you had the acquisition of Drop. As you concentrate on your peripheral ecosystem, are you able to speak about any white areas which might be left?

Andy Paul

Yeah. There’s fairly a number of really. A few issues we’re fairly all in favour of. One is cellular gaming, and for the time being, cellular gaming is basically achieved on the telephones. I imply that’s the attraction of it, as a result of no approval is required.

However there’s a rising alternative for wraparound controllers, you may put a telephone or an iPad in. It’s a comparatively small market now, however we’re watching that fastidiously to see how that evolves, particularly with Sport Cross, which lets you play on the identical recreation and completely different platforms. In order that’s one.

We’re very all in favour of sim racing. We see that as a — and it is a full simulator that used to probably have one driver. That has grown considerably in that market, particularly within the U.S. after Drive to Survive got here out, which has acquired all people to listen to in F1. It’s already fairly massive in Europe. However that’s beginning to develop.

And that’s a pleasant marketplace for us to maneuver into, since you not solely want a system, however you want a complete bunch of peripherals, a cage and a seat and pedals and wheels and that kind of factor. So we’re fairly all in favour of that market.

And clearly, we have now all the time been VR goggles. Now for the time being, we don’t suppose there’s an enormous alternative to earn a living on VR headsets, nonetheless a really early available in the market, however we’re watching that house fastidiously as effectively.

Aaron Lee

Improbable. Thanks for the colour.

Andy Paul

Thanks.

Operator

Your subsequent query comes from Eric Sheridan with Goldman Sachs. Please go forward.

Unidentified Analyst

Hello, guys. That is Lina [ph] on for Eric. Thanks for taking my questions. So I simply had a number of on the Drop acquisition. First, may you simply communicate to what the deciding elements the place that led you to accumulate Drop? After which how ought to we be occupied with the timing by way of integration and the synergies that you just see? Thanks.

Andy Paul

Yeah. So the principle cause we purchased Drop was that, as you probably or in all probability seen, many of the acquisitions we do are direct-to-consumer and Drop is not any exception. So it’s all direct-to-consumer, and that’s as a result of over time, we wish to develop our direct reference to shoppers in order that we will promote them a number of objects.

Many of the merchandise that we promote to shoppers via the channel is one after the other, and clearly, in a gaming platform, on a gaming PC, there’s 5 or 10 various things that you could promote to anyone. In order that’s the very first thing. There’s a robust e-commerce platform.

The second factor is it was a community-based fanatic e-commerce participant. And so a number of the issues that they had been promoting had been being offered to very related clients that we have already got, however barely exterior the normal individuals constructing gaming PC. So it sort of expands our market however in the identical style.

And thirdly, they’ve achieved a very good job with mechanical, what we name DIY keyboards. So it is a rising pattern amongst fans and really some individuals that may by no means even take into consideration gaming or constructing a gaming platform, however identical to to have one thing completely different on their desk. And these are keyboards that you could have quite a lot of completely different key switches, key caps after which you may change them like garments each few months.

So once we checked out that, the general package deal, it was fairly fascinating and that leads us into the synergy facet. Clearly, we have now an unlimited footprint all through the world, principally within the channel. So what we wish to do there’s take a number of the important thing SKUs that they have and put them into the channel with the expectation that we will then proceed to promote issues like completely different key caps to these clients straight. After which we are going to take a few of our merchandise which might be tough to promote via the channel, like equipment, cables, this kind of factor and we are going to run these via the Drop website.

By way of acquisition, we have now acquired a reasonably a six-month scheduled out integration the place we will likely be largely attempting to mix actions to avoid wasting OpEx. The income synergy, which I’m extra enthusiastic about goes to be ongoing. We’re beginning that instantly.

So we’re SKUs now that we will put into the channel. A few of that takes a while. If you wish to put a product into Greatest Purchase, the subsequent window might be Q1. So that can occur over the subsequent yr or two.

Unidentified Analyst

Okay. Nice. Thanks.

Operator

Your subsequent query comes from Drew Crum with Stifel. Please go forward.

Drew Crum

Okay. Thanks. Hey, guys. Good afternoon. In your peripherals enterprise, are you able to remark in your retail stock place heading into the second half and the conversations you’re having with retail companions and their willingness to restock stock ranges going into the vacations? After which I’ve a follow-up.

Andy Paul

Yeah. I imply, Q2, the time we acquired one within the Q2 is fairly impartial. I feel we have now — by way of our gross sales in versus gross sales out, I feel, we have now mentioned on earlier calls that we largely cleared up our channel stock final yr total to the tune of about $100 million, which we thought was extra and so this yr has been typically impartial, clearly, relies on class. However, yeah, I wouldn’t say we’re involved about having an excessive amount of stock within the channel at this level.

Drew Crum

Okay. After which, Andy, only a follow-up on the Drop acquisition. I feel there was a remark in your preamble suggesting that you just hope to duplicate your expertise right here with much like Elgato. Is that extra of a qualitative remark or would you aspire to develop gross sales 3 occasions as you’ve gotten with the Elgato asset? Thanks.

Andy Paul

Properly, each, I imply, we’re not clearly together with that in any sort of steerage, as a result of we have now been collectively for five minutes. However I feel there’s an enormous alternative. I don’t know the way massive that’s but, as a result of the DIY keyboard market may be very new and there’s numerous small gamers.

So it’s much like once we purchased Elgato and that the streaming market was then very small. And we’re anticipating that this market will develop at a good crack, however it’s very — it’s too early to say whether or not that is one thing we may double gross sales or triple or however we clearly imagine we will make some important impression.

Drew Crum

Okay. Obtained it. Thanks, guys.

Operator

Your subsequent query comes from Colin Sebastian with Baird. Please go forward.

Unidentified Analyst

Yeah. Good afternoon. That is Reese [ph] on for Colin. Hey, Michael and Andy. I suppose we have now two questions. One can be, may you perhaps simply speak in regards to the keys to success that labored Elgato and the merchandise there? Possibly among the belongings you did extra on the interior aspect that wouldn’t be as current to buyers that you can perhaps replicate with drop. After which perhaps simply wanting on the steerage, what’s — wanting on the atmosphere keep, what’s required to sort of perhaps get to the higher finish of the steerage vary or what does the atmosphere have to appear like for that to occur? Thanks.

Andy Paul

All proper. Properly, let’s hit these one after the other. So what we did with Elgato was pretty simple and it’s really typical to many of the startups. So let me again up a second. So many of the small corporations we purchase and I’m speaking about sub-$50 million corporations, spend half their life battling money circulate, important — a major quantity of their overhead is in G&A.

And so we’re simply not in a position to give attention to purely carry merchandise to market and that’s no completely different than Drop. It’s been a little bit of a wrestle for that firm over the previous couple of years to be money circulate optimistic, in order that they spend a number of their time attempting to lift cash and that kind of factor.

So all that goes away permitting them to utterly give attention to mentioned merchandise we’re bringing to market. That was similar to Elgato once we did the Elgato carve out, we left behind the G&A, as a result of it was an organization with two divisions, we purchased considered one of them. In order that’s the very first thing that’s centered.

The second factor is we took a number of their key merchandise right into a a lot wider channel. So with the Elgato, inside about three months, we had a few of their key merchandise in each single Greatest Purchase retailer. And we’re clearly going to try to replicate the identical factor with Drop, as a result of that you just by no means know the way quick these items can roll out.

And we’re a bit too late now to kind of get into pre-2023 vacation scenario, these issues we often deliberate out upfront. So, yeah, we’re going to try to do precisely the identical factor. It’s only a query of how massive the market is and how briskly the market grows.

Now the second factor was — the second query was on steerage and what’s acquired to occur within the atmosphere to hit the excessive finish of our steerage, and I’d say, it’s what we had been speaking about earlier. We need to see how a lot the market kind of recovers, how a lot it grows.

As I mentioned earlier, it’s considerably above pre-pandemic ranges and it seems like we’re kind of getting to some extent the place, typically, the financial system is a gentle touchdown and I’m already seeing fairly good outcomes from Prime Day, each at Amazon complete and our outcomes at Amazon.

So it does really feel to me as if the market began off being slightly underwater from final yr, the start of the yr and now it’s far more impartial. Now if that continues to go optimistic and goes optimistic in a big method and we do what we’re alleged to do and acquire market share and proceed to carry our merchandise then I’m certain we will likely be on the greater finish, if the market is way flatter then that turns into tougher.

Unidentified Analyst

Yeah. Yeah. Obtained it. And perhaps simply as a follow-up to that, are you able to perhaps simply present some shade on the place the promotional atmosphere stands together with your opponents within the channel and what you’re seeing there? Thanks.

Andy Paul

Yeah. So I imply on — in peripherals the place that’s a bit extra seasonal and a bit extra of a spike you are inclined to get on Prime Day and Black Friday and that kind of factor. There was a lot much less discounting occurring with our predominant opponents than beforehand and so we really discovered that with much less discounting, we did so much higher than final yr.

In order that meant that the decrease reductions had been far more enticing in comparison with individuals providing issues at half supply, et cetera. So I presume that occurred as a result of our opponents had been largely taken care of the stock bubble that they’d, they’re attending to the purpose the place they didn’t see the necessity to run clearance on a regular basis.

Unidentified Analyst

Thanks.

Operator

Goodbye. Your subsequent query comes from Doug Creutz with TD Cowen. Please go forward.

Doug Creutz

Hey. There was an enormous business launch late in Q2. I simply questioned should you may remark to any beneficial properties that you just suppose might need helped push both PC builds or peripheral gross sales? After which simply waiting for Q3, I feel, Starfield is popping out, which might be an enormous PC title and simply your view on whether or not that may very well be an essential recreation in driving PC builds? Thanks.

Andy Paul

Yeah. I feel the one that everyone was speaking about actually was Diablo IV over the past quarter that we expect helped. I put within the deck, I don’t know in case you have seen that but, the decks on IR web site.

There’s about eight new video games that we have now listed and I feel there’s a brand new rev of Name of Obligation popping out on the finish of the yr, which will likely be fairly massive website, we’re paying focus releasing one thing in September.

Sure, Starfield in September. CounterStrike 2 is listed as a summer season of 2023. That might be big. So, yeah, there’s a number of video games. However I feel, first half, in all probability, Diablo was the most important one and I believe Name of Obligation and CounterStrike for second half.

Michael Potter

I feel essentially the most fascinating factor is should you have a look at the required specs for the brand new video games developing, they’re much greater than they’ve been — if you wish to get all of the iCandy and the additional options, you’re actually concentrating on a a lot greater spec PC. Extra reminiscence and far greater finish video card, which suggests extra energy necessities. So it matches fairly effectively into the suite of merchandise that we do.

Andy Paul

Yeah. That’s an excellent level.

Doug Creutz

Nice. Thanks.

Operator

[Operator Instructions] Your subsequent query comes from Mario Lu with Barclays. Please go forward.

Jack Butler

Nice. Hello. That is Jack Butler on for Mario. Thanks for taking my questions. I used to be simply questioning whether or not you can speak a bit extra about among the partnerships you now have in place with content material creators a few quarters in the past. You introduced the NICKMERCS partnership. Now we get CouRageJD. I’m simply curious perhaps what kind of response have you ever seen from the gaming group, particularly, like, if there’s any indicators you’re seeing that these partnerships are working? After which perhaps how that initiative has developed or will proceed to evolve if there’s any replace to how you’re occupied with partnerships?

Andy Paul

Yeah. I’d say, effectively, firstly, I imply, we have now acquired a number of completely different partnerships. I imply these are two fairly massive names. We have now been with NICKMERCS on the SCUF aspect for a while. CouRageJD is new. Nevertheless it’s too early to attract any conclusions from how that works. You don’t see an enormous spike instantly for a lot of of this stuff. So, yeah, effectively, I feel, as we wait till subsequent earnings or later within the yr earlier than we may give you any significant knowledge from that.

Jack Butler

Obtained it. Nice. Thanks.

Operator

There are not any additional questions presently. I’ll now flip the decision over to Andy Paul.

Andy Paul

Okay. Thanks all people for becoming a member of us on the decision at this time and thanks for the continued help. Any follow-up questions, please contact our Investor Relations Division and we stay up for updating you subsequent quarter. Thanks and have an excellent night.

Operator

Women and gents, this concludes your convention name for at this time. We thanks for taking part and ask that you just disconnect your strains.