Gaming Firm Razer Records Revenue Of US$447.5M For H1 2020

Hong Kong-listed games company Razer yesterday (August 26) reported record revenue of US $ 447.5 million with 25.3% year-over-year growth for the first semester 2020.

The global stay-at-home situation has helped propel sales to record highs amid the COVID-19 pandemic.

Razer’s hardware segment, which contributed 85.5% of revenue, includes the gaming peripherals business – the sale of gaming mice, keyboards, audio devices, and mouse pads – and systems business, which includes sales of laptops.

Peripheral sales increased 40.9% to US $ 252.7 million. Razer noted that the stay-at-home situation had boosted sales of live streaming devices such as the Kiyo camera and the Seiren broadcast microphone.

At the same time, systems segment revenue increased 4.6 percent to US $ 130 million, mainly due to sales of updated model lines.

Razer’s gross profit margin improved slightly from 21.2% to 22%, due to a higher contribution from the services business.

It loaned nearly 30 percent to the gross margin of the business and had a gross profit margin of 45.9 percent. This was in part offset by rising freight costs to ease surges in demand for Razer products.

Cash flow turned positive at US $ 66 million

The group posted adjusted EBITDA (earnings before interest, taxes and depreciation) of $ 3.2 million, compared to negative EBITDA of $ 20.6 million a year ago. EBITDA has been adjusted for restructuring costs, merger and acquisition (M&A) costs and stock-based compensation expense.

Operating expenses fell 9.8 percent to $ 115.5 million, or 23.9 percent of net income. The decrease is attributable to lower research and development (R&D) expenses and general and administrative expenses.

Razer reported a decline of US $ 2.2 million in employee benefits after exiting the loss-making mobile phone business and a decline in stock compensation expense of US $ 11.1 million.

Selling and marketing expenses increased 1.4 percent to US $ 54.8 million due to higher personnel costs. This was offset by an overall decrease in spending as marketing programs were streamlined and spending for Razer Phone was reduced.

Covid-19 lockdowns have boosted Razer’s fintech business. The group, which is seeking a digital banking license in Singapore with a consortium, generated a 114.3% increase in total payment volume (TPV) to US $ 1.8 billion for the first half of the year.

The group generated operating cash flow of 66 million USD for the six-month period ended in June. Cash and cash equivalents were US $ 585.9 million as of June 30, 2020, without debt.

Razer said it would continue to invest in R&D in new categories of hardware and the development of new services, continued share buybacks and merger and acquisition activities.

“2020 has been a year like no other for all of us around the world. Despite the global market uncertainty caused by the COVID-19 pandemic, Razer has had a spectacular start to the year, thanks to the brand’s dominance, expanding user base and trends to stay at home, ”said Min-Liang Tan, co-founder and CEO of Razer.

“Our business fundamentals remain as strong as ever, thanks to our entrenched brand leadership, compelling hardware, software and service offerings, and solid execution. We are confident that these factors, together with our strong discipline in operating costs and our strong cash position of over US $ 500 million, position us well, even in times of difficult global economic conditions ” , he added.

In a post on Facebook, Tan said Razer has a “phenomenal” line of new products in the second half of 2020 and expects to end the year “on a high”.

In the article, he also detailed how fans can invest in Razer shares.

Featured Image Credit: Dickson Lee

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Jothi Venkat

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