razer min liang tan
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Hong Kong-listed gaming firm Razer reported yesterday (26 August) a record-high revenue of US$447.5 million with 25.3 per cent year-on-year growth for the first half of 2020.

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

Razer’s hardware segment, which contributed to 85.5 per cent of revenue, consists of the gaming peripherals business — the sale of gaming mice, keyboards, audio devices and mouse mats — and the systems business, which comprise laptop sales.

Sales of peripherals grew 40.9 per cent to US$252.7 million. Razer noted that the stay-home situation had boosted sales for live-streaming devices such as the Kiyo camera and Seiren streaming microphone.

Meanwhile, revenue from the systems segment increased by 4.6 per cent to US$130 million, primarily due to sales from refreshed model lines.

Razer’s gross profit margin improved slightly to 22 per cent from 21.2 per cent as a result of a higher contribution from the services business.

It lent almost 30 per cent to the company’s gross profit and had a gross profit margin of 45.9 per cent. This was partially offset by the increase in freight costs to facilitate surges in demand for Razer’s products.

Cashflow Turned Positive To US$66M

The group posted an adjusted Ebitda (earnings before interest, taxes, depreciation and amortisation) of US$3.2 million, compared with a negative Ebitda of US$20.6 million a year ago. Ebitda was adjusted for restructuring expense, merger and acquisitions (M&A) expense, and share-based compensation expense.

Operating expenses fell 9.8 per cent to US$115.5 million, representing 23.9 per cent of net revenue. The decrease was driven by falls in research and development (R&D) expenses, and general and administrative expenses.

Razer recorded a decrease of US$2.2 million in employee benefits after it exited the loss-making mobile handset business, and a fall in share-based compensation expense of US$11.1 million.

Selling and marketing expenses grew 1.4 per cent to US$54.8 million due to higher personnel costs. This was offset by an overall fall in spending as marketing programmes were streamlined and spending for Razer Phone was cut.

The Covid-19 lockdowns boosted Razer’s fintech business. The group, which is gunning for a digital banking licence in Singapore with a consortium, generated a 114.3 per cent increase in total payment volume (TPV) to US$1.8 billion for H1.

The group generated operating cashflow of US$66 million for the half-year ended June. Cash and cash equivalents were US$585.9 million as at June 30, 2020, with no debt.

Razer said it will continue with R&D investments in new hardware categories and development of new services, continued share buybacks and M&A 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, driven by dominant brand position, user base expansion and stay-at-home trends,” said Min-Liang Tan, co-founder and CEO of Razer.

“The fundamentals of our business remain as solid as ever, thanks to our entrenched brand leadership, compelling offerings across hardware, software and services and strong execution. We are confident that these factors, coupled with our strong operating cost discipline and our strong cash position of over US$500 million, put us in good stead, even during times of challenging global economic conditions,” he added.

In a Facebook post, Tan said that Razer has a “phenomenal” line up of new products in the second half of 2020 and expects to close the year “strong”.

In the post, he also detailed how fans can invest in Razer stocks.

Featured Image Credit: Dickson Lee

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