razer inc.irmedia.razer.com/201808061808461764483544_en.pdf · indonesia • thailand • ... •...

RAZER INC.CORPORATE PRESENTATION

Potential investors and shareholders (the “Potential Investors and Shareholders”) of Razer Inc. (the “Company”) are reminded that information contained in this Presentation comprises extracts of operational data and financial information of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2017. The information included is solely for the use in this Presentation and certain information has not been independently verified. No representations or warranties, expressed or implied, are made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions presented or contained in this Presentation. Potential Investors and Shareholders should refer to the 2017 Annual Report for the audited results of the Company which are published in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

The performance and the results of operations of the Group contained within this Presentation are historical in nature, and past performance is no guarantee of the future results of the Group. Any forward-looking statements and opinions contained within this Presentation are based on current plans, estimates and projections, and therefore involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward looking statements and opinions. The Group, the directors, employees and agents of the Group assume (a) no obligation to correct or update the forward-looking statements or opinions contained in this Presentation; and (b) no liability in the event that any of the forward-looking statements or opinions do not materialise or turn out to be incorrect.

Potential Investors and Shareholders should exercise caution when investing in or dealing in the securities of the Company.

LEGAL DISCLAIMER

© 2018 RAZER INC. ALL RIGHTS RESERVED.

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About Us14 OFFICES WORLDWIDE AND 1300+ EMPLOYEES

KOREARep. Office

SHANGHAI, CHINAS&M

SINGAPORES&M/ R&D / G&A

TAIWANR&D

SHENZHEN, CHINAR&D

SAN FRANCISCO, USR&D /G&A

HAMBURG, GERMANYS&M / G&A

IRVINE, USS&M / G&A

S&M – Sales & MarketingG&A – General & AdministrationR&D – Research & Development

CHENGDU, CHINAR&D

• MALAYSIA

• INDONESIA

• THAILAND• PHILIPPINES

TURKEY

Office locations

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OUR MISSIONFOR GAMERS. BY GAMERS.TM

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*Newzoo** Frost & Sullivan

THE OPPORTUNITY: THE LARGE & GROWING GAMER TAM

2.4bn*

2018

ACTIVE GAMERS


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O F R E V E N U E I N G L O B A L G A M E S M A R K E T B Y 2 0 2 1 , + 5 . 1 % C A G R

US$133bn**

O F G A M E R S A R E M I L L E N N I A L S , 5 5 % N O N - M I L L E N N I A L S A R E

G A M E R S

71%

G L O B A L E S P O R T S A U D I E N C E T O R E A C H

276mn B Y 2 0 2 2 * O U T N U M B E R I N G

A U D I E N C E S O F N H L a n d M L B

2018 LoL Mid Season Invitationals – 130 mn viewers**

2017 DOTA 2 International prize pool: US$23 mn

A C T I V E G A M E R S W O R L D W I D E B Y 2 0 2 1 ,

2.8bn*

W I T H O V E R 1 b n G A M E R S I N C H I N A


WHO WE ARETHE WORLD’S LEADING LIFESTYLE BRAND FOR GAMERS

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THE LEADING GLOBAL LIFESTYLE BRAND FOR GAMERS

“Top gamer lifestyle brand, gaming device brand and esports brand in China.” – Frost & Sullivan


Newzoo and Frost & Sullivan Industry Report

LEADING GLOBAL GAMING BRAND

#1“There is no single gamer-focused brand that has the same breadth and strength as Razer in terms of products and services.” - Newzoo

“Market leader in high-performance gaming products worldwide…”- Newzoo

THE LEADING BRAND IN ESPORTS

Top streaming platforms monetize with Razer services like zGold and Razer Pay

Pioneer in esports sponsorships:

175 top esports athletes from30 countries*


* For the year ended December 31, 2017

Leading the gaming streaming space via collaboration with top influencers

like PEWDIEPIE and SYNDICATE

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THE RAZER ECOSYSTEM: HARDWARE / SOFTWARE / SERVICES

WHAT WE DO

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HARDWARE

SERVICES

SOFTWARE

BRAND-CENTRICECOSYSTEM

Opportunities to offer

other services to users

Opportunities to expand into other

gaming & lifestyle segments

Enhance user experience via access to integrated software platform

MONETIZE HARDWARE/SOFTWAREPLATFORM THROUGH SERVICES

INTERACTS &MAINTAINS

RELATIONSHIPWITH USER BASE

Razer Synapse

Razer Chroma

Razer Cortex

> 50mnREGISTERED USERS**

PROVIDESCOMPETITIVE

EDGE AND IMMERSIVE EXPERIENCE

* As of December 31, 2017** As of May 2018

THE WORLD’S LARGEST INTEGRATED GAMING ECOSYSTEM


CLEAR LEADER IN KEYBOARD AND MICEEXPANDING INTO NEW CATEGORIES SUCH

AS MOBILE

OVER US$500mnsold in 2017*

~10mnzGOLD WALLETS**

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GLOBAL FOOTPRINT

RazerStore

San Francisco

Bangkok

Hong KongShanghaiTaipei

• Products sold through RazerStores and www.razerstore.com

• Online store is available to customers in over 100 countries*

• 5 RazerStores

DIRECT SALES PRESENCE2017 REVENUE BREAKDOWN

BY GEOGRAPHIC REGION

Americas46.6%

EMEA29.2%

Asia Pacific ex-China

12.6%

China11.6%

STRATEGICALLY PARTNER WITH A NETWORK OF DISTRIBUTORS AND RETAILERS

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*As of December 31, 2017


HARDWARE

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PERIPHERALSUS$338.7mn

(+13.4%)

Revenue for the year ended December 31, 2017*Also includes revenue from next-generation products in the development or early marketing or launch phases

SYSTEMSUS$137.0mn

(+50.1%)

MOBILEUS$31.6mn*(+1,079.2%)

SHIPPED OVER US$500MN OF HARDWARE IN 2017 (+28.8% YoY)


IOT PLATFORM UNIVERSAL RGB LIGHTING SYSTEM GAME LAUNCHER

Razer Synapse Razer Chroma Razer Cortex

SOFTWARE

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50MN REGISTERED USERS* (+42.9% YoY)

*As of May 2018Excludes China

SERVICES

zGold and zSilverMonetization and loyalty rewardsWorld’s largest virtual credits for games

and entertainment

Razer Game StoreOne of the world’s leading

digital game store and hardware ecosystem platform

Razer PaySE Asia’s largest diversified online and offline payment

solutions provider

RAZERSERVICES

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RAZER zGOLD

• Game companies have transitioned to F2P games but without a single global virtual credits service

• Game companies are unlikely to use game credit services from other gaming companies that create similar or competing content

• Razer zGold is a standalone non-content neutral game credits service that reaches millions of high ARPU / premium users

A SINGLE VIRTUAL CREDITS SERVICE FOR GAMERS FOR USE OVER MULTIPLE GAMESFROM DIFFERENT PLATFORMS, DEVELOPERS AND PUBLISHERS TO EXCHANGE FOR DIGITAL CONTENT AND ITEMS

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HOW TO BUYHOW TO USE

Over 2,500 game titles from over 500 content partners and growing…

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ONLINE

and many more…

OFFLINE

Low credit card penetration in SEA – Largest virtual credits network globally with 1M+ distribution points


RAZER GAMESTORE

A digital market place for PC gaming content featuring the industry’s biggest

names through direct cooperation

Rewards customers including a rotating selection of exclusives each week and

zSilver loyalty rewards credits

Enhance user stickiness and earn better margins

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Leading Online SE Asia Payment Gateway

Powering payments for global merchants in SE Asia (e.g. Lazada,

Grab, Uniqlo and many more)

Largest Offline SE Asia Payment Network

Over 1 million physical acceptance points retail outlets such as 7-11,

Starbucks, etc.

Powering gateways such as Adyen, Worldpay and channels such as

PayPal & Ingenico

Regulated/Licensed/Robust Tech

Obtained regulatory/licenses to operate in SE Asia including

Malaysia and Thailand.

Robust tech stack from online payments to offline POS

acceptance and settlement.

RAZER PAY - LARGEST SE ASIA O2O DIGITAL PAYMENT NETWORK

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HANDLED OVER US$1.1BN OF TOTAL PAYMENT VALUE IN 2017


RAZER PAY – THE WALLET DESIGNED FOR THE YOUTH & MILLENNIALS

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500,000+ SIGN UPS IN FIRST SIX DAYS

iOS APP STORE AND GOOGLE PLAY STORE#1


INTENSELY DEVOTED AND HIGHLY ENGAGED USER BASE


UNIQUE OPPORTUNITY TO FURTHER MONETIZE USER BASE AND ADD NEW USERS

50MN*OVER

USERS AND GROW I NG

*As of May 2018

Software + Services

TIER 1

Hardware +Software +

Services

High ARPU Premium Users

Highly adoptive, engaged and affluent

TIER 2

Mid ARPU Users

TIER 3

Software Only

For future monetization

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INVESTING TO CAPTURE EVEN BIGGER OPPORTUNITIES

HARDWARE

SOFTWARE

SERVICES

* For illustration purposes only, graph not drawn to scale

FINANCIAL PERFORMANCE

23*Updated as of March 22, 2018 earnings announcement


REVENUEDriven by increase in revenue from Systems, and to a lesser extent from Software and Services and Others, which includes new product categories such as mobile and services in 2017

282 299 339

37 91

137 320

2015 2016 2017

Peripherals Systems Software & Services Others

(US$ mn)

392

518

3211

YoY: 22.6%

YoY: 32.1%

TOTAL REVENUE


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GROSS PROFIT AND GROSS PROFIT MARGIN

GROSS PROFIT MARGIN BY BUSINESS

100 109

151

31.3%27.9% 29.2%

0%

5%

10%

15%

20%

25%

30%

35%

2015 2016 2017

Gross Profit Gross Margin

(US$ mn)

GROSS PROFIT AND GROSS PROFIT MARGIN


Primarily driven by stability in Peripherals and increased scale in Systems business

34.9% 35.3%

35.5%

4.8% 2.9%8.8%

75.7%

85.3%

98.6%

47.6%

26.2%

2015 2016 2017

Peripherals Systems Software and Services Others

YoY: 37.9%

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ADJUSTED OPERATING EXPENSES


12.9% 14.7% 14.1%9.3%

10.9%11.9%9.6%

8.4%

8.9%

6

39 121

5

13

112

172

31.7%

34.0%

34.8%

2015 2016 2017

Selling and Marketing expenses Research and Development expenses General and Administrative expenses Share-based compensation

One-time settlement Listing expenses Total Opex as % of Revenue

(US$ mn)

ADJUSTED OPERATING EXPENSES

133101

180

314

Impairment of acquisition-related intangible assets

1

26


(6)

(20)

(32)

2015 2016 2017

(US$ mn)

ADJUSTED (LOSS) FOR THE YEAR

ADJUSTED LOSS


One-off US$4.4mn charge due to the U.S. tax reform

(1.9)%

(5.2)%(5.3)%

One-off tax charge due to the U.S. tax reform

(27.4)(4.4)

Adjusted (loss) as % of revenue

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CASH FLOWS AND WORKING CAPITAL

CASH FLOWS FROM / (USED IN) OPERATING ACTIVITIES

CASH FLOWS (USED IN) INVESTING ACTIVITIES

4 2

(20)

2015 2016 2017

(US$ mn)

(3)

(32) (31)

2015 2016 2017

(0.04)

77

639

2015 2016 2017

75 131

739

2015 2016 2017

CASH FLOWS FROM FINANCING ACTIVITIES

CASH AND BANK BALANCES

DAYS INVENTORY OUTSTANDING1 TRADE RECEIVABLES TURNOVER DAYS2

33 30 34

2015 2016 2017

(days)

71 71 69

2015 2016 2017

116 129 136

2015 2016 2017

TRADE PAYABLES TURNOVER DAYS3 CASH CONVERSION CYCLE4

WORKING CAPITAL CYCLE

CASH FLOWS SUMMARY

(12)(28) (33)

2015 2016 2017

Notes:1 Days inventory outstanding equals the average of the opening and closing inventory balances divided by the cost of sales for the period and multiplied by the number of days in the period (365 for a full year)2 Trade receivables turnover days equals the average of trade receivables divided by the total revenue for the period and multiplied by the number of days in the period (365 for a full year)3 Trade payables turnover days equals the average of trade payables divided by the total cost of sales for the period and multiplied by the number of days in the period (365 for a full year)4 Cash conversion cycle for a period equals days inventory outstanding plus trade receivables turnover days less trade payables turnover days

Well positioned to invest in value accretive new business categories to drive long-term growth


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GROWTH STRATEGY AND OUTLOOK

29*Updated as of March 22, 2018 earnings announcement

OUTLOOK 2018


• Group:• In 2018, as our Systems business and new categories such as Mobile expand as a proportion of our overall business, we

expect the overall GPM to be lower as compared with 2017. However, this will be moderated in part by the growth of our Peripherals and Services businesses which have much higher margins.

• We expect strong revenue growth in 2018 to persist.

• Hardware:• GPM for our Peripherals business is expected to be maintained while we continue to grow. • GPM for our Systems business is expected to improve, and continue to improve in the longer term due to

an increase in scale with global distribution.

• GROWTH IN 2018

• GROSS PROFIT MARGIN

• Services:• While our launch year saw very high GPM for the zGold virtual credits business, we expect it to normalize but still maintain a

significantly higher level than our Hardware business.

• SIGNIFICANT INVESTMENTS IN 1H2018/NEW PRODUCT LAUNCHES SKEWED TOWARDS 2H2018• We expect significant investments in 1H2018 in preparation for new product launches in 2H2018.

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FUTURE OUTLOOK


RIDE ON THE RISING TIDE OF GAMERS, THE

GAMING INDUSTRY AND

ESPORTS

CONTINUE HIGH GROWTH

TRAJECTORY

FOCUS ON GROWING

SERVICES AS A HIGH MARGIN, HIGH GROWTH

CATEGORY

GROW AND MAINTAIN

PROFITABLE PROFILE FOR

CORE BUSINESSES

MOBILE ESPORTS IS A MASSIVE

OPPORTUNITY

SCALE NEW BUSINESSES

AND IMPROVE PROFIT PROFILE

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razer inc.irmedia.razer.com/201808061808461764483544_en.pdf · indonesia • thailand • ... •...

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