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Razer Inc Achieves Record-High Revenue Despite COVID-19

profileSudhan P

Razer Inc (HKG: 1337) just…

Source: Razer | Giphy

The company, which prides itself in being the world’s leading lifestyle brand for gamers, reported record revenue for the six months ended 30 June 2020.

Let’s find out more about Razer’s latest earnings right here!


But Before That, How Does Razer Make Money? 

Most of us would be familiar with Razer’s iconic trademark — the triple-headed snake.

Source: Razer | Giphy

But how many of us know how exactly Razer makes money?

Knowing this would give us a better context to understand Razer’s latest financial results.

Razer has four business segments, namely:

  1. Peripherals,
  2. Systems,
  3. Software and Services, and
  4. Others.

And they collectively reach 2 billion gamers worldwide!

Source: Razer 1H2020 earnings presentation

Meanwhile, the Peripherals and Systems segments, which sell hardware components and are collectively Razer’s hardware business, are the company’s major revenue drivers.

In 2019, the hardware business raked in 87% of Razer’s total revenue of US$820.8 million.

Under this business, Razer sells products gamers die for such as gaming laptops, keyboards, mice, and audio headsets.

Source: Razer 1H2020 earnings presentation

The Software and Services segment, which contributed to 9.4% of 2019’s total revenue, includes things like:

  1. Razer Synapse (an Internet of Things platform),
  2. Razer Gold (one of the world’s largest virtual credit services for gamers), and
  3. Razer Fintech (a digital payment network in Southeast Asia).
Source: Razer 1H2020 earnings presentation

Last but not the least, the Others segment consists of new products and services, including the Razer Phone and THX.

A Look at Razer’s Latest Financial Results 

For Razer’s first half ended 30 June 2020 (1H 2020), sales beat expectations and soared 25.3% year-on-year to a record US$447.5 million.

The strong growth was driven by robust sales for its entire Peripherals portfolio, double-digit percentage year-on-year growth for Systems in May and June, and a 79% growth in its Services business.

The COVID-19 pandemic, which affected economies the world over, actually helped Razer to garner higher revenue.

Razer’s co-founder and chief executive, Min-Liang Tan, explained that the “global ‘stay-at-home’ situation has boosted user engagement with gaming and esports to record levels”.

Source: Razer 1H2020 earnings presentation

Due mainly to the strong growth in its Services segment, gross profit margin rose to 22%, up from 21.2%.

With that, Razer’s net loss for 1H 2020 narrowed to US$17.3 million, an improvement from US$48.1 million a year ago.

Furthermore, Razer’s free cash flow situation improved, from a negative figure a year ago to US$60.9 million in 1H 2020.

The gaming giant ended off the latest financial period with a rock-solid balance sheet of more than US$500 million in cash and cash equivalents and zero debt.

The robust balance sheet will allow Razer to weather through the economic downturn better.

Where Does Razer See Itself in the Future? 

Looking ahead, Razer expects its ecosystem to continue growing.

This should be contributed by revenue growth in its hardware business as new products are introduced in the second half of 2020…

and increasing Services revenue supported by ongoing growth momentum from stay-at-home trends.

Source: Razer | Giphy

With a healthy cash balance, Razer said it will continue with its R&D investments in new hardware categories, develop new Services, and perform share buybacks.

Source: Razer 1H2020 earnings presentation

Want to Discuss Further?

Why not check out the SeedlyCommunity and participate in the discussion surrounding stocks like Razer Inc (HKG: 1337) and many more!

Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. ​Readers should always do their own due diligence and consider their financial goals before investing in any stock.

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About Sudhan P
It isn't fair competition when only one company in the world makes Monopoly. But I love investing in monopolies. Before joining the Seedly hood, I had the chance to co-author a Singapore-themed investment book – "Invest Lah! The Average Joe's Guide To Investing" – and work at The Motley Fool Singapore as an analyst.
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