RAZER INC. CORPORATE PRESENTATION

Transcription

1 RAZER INC. CORPORATE PRESENTATION

2 LEGAL DISCLAIMER 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 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. 2

3 About Us 14 OFFICES WORLDWIDE AND EMPLOYEES HAMBURG, GERMANY S&M / G&A KOREA Rep. Office SAN FRANCISCO, US R&D /G&A IRVINE, US S&M / G&A TURKEY CHENGDU, CHINA R&D SHANGHAI, CHINA S&M SHENZHEN, CHINA R&D MALAYSIA SINGAPORE S&M/ R&D / G&A INDONESIA TAIWAN R&D PHILIPPINES THAILAND Office locations S&M Sales & Marketing G&A General & Administration R&D Research & Development 3

4 OUR MISSION FOR GAMERS. BY GAMERS. TM 4

5 THE OPPORTUNITY: THE LARGE & GROWING GAMER TAM 71% OF GAMERS ARE MILLENNIALS, 55% NON- MILLENNIALS ARE GAMERS ACTIVE GAMERS US$133bn** OF REVENUE IN GLOBAL GAMES MARKET BY 2021, +5.1% CAGR GLOBAL ESPORTS AUDIENCE TO REACH 276mn BY 2022* OUTNUMBERING AUDIENCES OF NHL and MLB 2018 LoL Mid Season Invitationals 130 mn viewers** 2017 DOTA 2 International prize pool: US$23 mn *Newzoo ** Frost & Sullivan 2.4bn* bn* ACTIVE GAMERS WORLDWIDE BY 2021, WITH OVER 1bn GAMERS IN CHINA 5

6 WHO WE ARE THE WORLD S LEADING LIFESTYLE BRAND FOR GAMERS 6

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8 THE LEADING GLOBAL LIFESTYLE BRAND FOR GAMERS #1 LEADING GLOBAL GAMING BRAND 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 Top gamer lifestyle brand, gaming device brand and esports brand in China. Frost & Sullivan Newzoo and Frost & Sullivan Industry Report 8

9 THE LEADING BRAND IN ESPORTS Pioneer in esports sponsorships: 175 top esports athletes from 30 countries * Leading the gaming streaming space via collaboration with top influencers like PEWDIEPIE and SYNDICATE Top streaming platforms monetize with Razer services like zgold and Razer Pay * For the year ended December 31,

10 WHAT WE DO THE RAZER ECOSYSTEM: HARDWARE / SOFTWARE / SERVICES 10

11 THE WORLD S LARGEST INTEGRATED GAMING ECOSYSTEM INTERACTS & MAINTAINS RELATIONSHIP WITH USER BASE SOFTWARE Enhance user experience via access to integrated software platform Razer Synapse Razer Chroma Razer Cortex > 50mn REGISTERED USERS** HARDWARE BRAND-CENTRIC ECOSYSTEM SERVICES CLEAR LEADER IN KEYBOARD AND MICE EXPANDING INTO NEW CATEGORIES SUCH AS MOBILE OVER US$500mn sold in 2017 * PROVIDES COMPETITIVE EDGE AND IMMERSIVE EXPERIENCE Opportunities to expand into other gaming & lifestyle segments Opportunities to offer other services to users MONETIZE HARDWARE/ SOFTWARE PLATFORM THROUGH SERVICES ~10mn zgold WALLETS ** * As of December 31, 2017 ** As of May

12 GLOBAL FOOTPRINT Products sold through RazerStores and DIRECT SALES PRESENCE 2017 REVENUE BREAKDOWN BY GEOGRAPHIC REGION Online store is available to customers in over 100 countries* San Francisco Hong Kong Bangkok Shanghai Taipei Asia Pacific ex-china 12.6% China 11.6% 5 RazerStores RazerStore STRATEGICALLY PARTNER WITH A NETWORK OF DISTRIBUTORS AND RETAILERS EMEA 29.2% Americas 46.6% *As of December 31,

13 HARDWARE PERIPHERALS US$338.7mn (+13.4%) SYSTEMS US$137.0mn (+50.1%) MOBILE US$31.6mn* (+1,079.2%) SHIPPED OVER US$500MN OF HARDWARE IN 2017 (+28.8% YoY) Revenue for the year ended December 31, 2017 *Also includes revenue from next-generation products in the development or early marketing or launch phases 13

14 SOFTWARE Razer Synapse Razer Chroma Razer Cortex IOT PLATFORM UNIVERSAL RGB LIGHTING SYSTEM GAME LAUNCHER 50MN REGISTERED USERS* (+42.9% YoY) *As of May 2018 Excludes China 14

15 SERVICES zgold and zsilver Monetization and loyalty rewards World s largest virtual credits for games and entertainment RAZER SERVICES Razer Pay SE Asia s largest diversified online and offline payment solutions provider Razer Game Store One of the world s leading digital game store and hardware ecosystem platform 15

16 RAZER zgold A SINGLE VIRTUAL CREDITS SERVICE FOR GAMERS FOR USE OVER MULTIPLE GAMES FROM DIFFERENT PLATFORMS, DEVELOPERS AND PUBLISHERS TO EXCHANGE FOR DIGITAL CONTENT AND ITEMS 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 16

17 HOW TO BUY ONLINE OFFLINE HOW TO USE and many more Low credit card penetration in SEA Largest virtual credits network globally with 1M+ distribution points Over 2,500 game titles from over 500 content partners and growing 17

18 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 18

19 RAZER PAY - LARGEST SE ASIA O2O DIGITAL PAYMENT NETWORK 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. HANDLED OVER US$1.1BN OF TOTAL PAYMENT VALUE IN

20 RAZER PAY THE WALLET DESIGNED FOR THE YOUTH & MILLENNIALS #1 ios APP STORE AND GOOGLE PLAY STORE 500,000+ SIGN UPS IN FIRST SIX DAYS 20

21 INTENSELY DEVOTED AND HIGHLY ENGAGED USER BASE UNIQUE OPPORTUNITY TO FURTHER MONETIZE USER BASE AND ADD NEW USERS TIER 1 Hardware + Software + Services High ARPU Premium Users Highly adoptive, engaged and affluent OVER 50MN* USERS AND GROWING TIER 2 Software + Services Mid ARPU Users TIER 3 Software Only For future monetization *As of May

22 INVESTING TO CAPTURE EVEN BIGGER OPPORTUNITIES SOFTWARE HARDWARE SERVICES * For illustration purposes only, graph not drawn to scale

23 FINANCIAL PERFORMANCE *Updated as of March 22, 2018 earnings announcement 23

24 REVENUE Driven 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 TOTAL REVENUE (US$ mn) 320 YoY: 22.6% YoY: 32.1% Peripherals Systems Software & Services Others 24

25 GROSS PROFIT AND GROSS PROFIT MARGIN Primarily driven by stability in Peripherals and increased scale in Systems business GROSS PROFIT AND GROSS PROFIT MARGIN GROSS PROFIT MARGIN BY BUSINESS 98.6% 31.3% 27.9% 29.2% 35% 30% 75.7% 85.3% (US$ mn) YoY: 37.9% 25% % 47.6% 35.5% % 34.9% 35.3% 10% 4.8% 2.9% 26.2% 8.8% 5% % Gross Profit Gross Margin Peripherals Systems Software and Services Others 25

26 ADJUSTED OPERATING EXPENSES ADJUSTED OPERATING EXPENSES (US$ mn) 34.8% 34.0% % % % 11.9% 9.6% 10.9% % % 14.7% 14.1% 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 Impairment of acquisition-related intangible assets 26

27 ADJUSTED LOSS One-off US$4.4mn charge due to the U.S. tax reform ADJUSTED (LOSS) FOR THE YEAR (US$ mn) (6) (20) (4.4) (27.4) (32) (1.9)% (5.2)% (5.3)% One-off tax charge due to the U.S. tax reform Adjusted (loss) as % of revenue 27

28 CASH FLOWS AND WORKING CAPITAL Well positioned to invest in value accretive new business categories to drive long-term growth CASH FLOWS SUMMARY (US$ mn) CASH FLOWS FROM / (USED IN) OPERATING ACTIVITIES CASH FLOWS (USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES 639 CASH AND BANK BALANCES (3) (20) (32) (31) (0.04) WORKING CAPITAL CYCLE DAYS INVENTORY OUTSTANDING 1 TRADE RECEIVABLES TURNOVER DAYS 2 TRADE PAYABLES TURNOVER DAYS 3 CASH CONVERSION CYCLE 4 (days) (12) (28) (33) 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 28

29 GROWTH STRATEGY AND OUTLOOK *Updated as of March 22, 2018 earnings announcement 29

30 OUTLOOK 2018 GROWTH IN 2018 We expect strong revenue growth in 2018 to persist. SIGNIFICANT INVESTMENTS IN 1H2018/NEW PRODUCT LAUNCHES SKEWED TOWARDS 2H2018 We expect significant investments in 1H2018 in preparation for new product launches in 2H2018. GROSS PROFIT MARGIN 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. 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. 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 However, this will be moderated in part by the growth of our Peripherals and Services businesses which have much higher margins. 30

31 FUTURE OUTLOOK RIDE ON THE RISING TIDE OF GAMERS, THE GAMING INDUSTRY AND ESPORTS CONTINUE HIGH GROWTH TRAJECTORY GROW AND MAINTAIN PROFITABLE PROFILE FOR CORE BUSINESSES SCALE NEW BUSINESSES AND IMPROVE PROFIT PROFILE FOCUS ON GROWING SERVICES AS A HIGH MARGIN, HIGH GROWTH CATEGORY MOBILE ESPORTS IS A MASSIVE OPPORTUNITY 31

32 Q&A