Earnings Call: Q1 2021

May 4, 2021

Good morning, and welcome to Corsair Gaming First Quarter 2021 Earnings Conference Call. As a reminder, today's call is being recorded and your participation implies consent to such recordings. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. With that, I would like to turn the call over to Ronald Van Vere Corzier's Vice President of Finance and Investor Relations. Thank you, sir. Please begin. Thank you. Good morning, everyone, and thank you for joining us for Coursera's financial results conference For the Q1 ending March 31, 2021. On the call today, we have our CEO, Andy Paul and CFO, Michael Potter. Before we begin, allow me to provide a disclaimer regarding forward looking statements. This call, including the Q and A portion of the call, may include forward looking statements related to the expected future results of our company and are therefore forward looking statements. Our actual results may differ materially from our projections due to a number of risks and uncertainties. The risks and uncertainties that forward looking statements are subject to are described in our earnings release and other SEC filings. Today's remarks will also include references to non GAAP financial measures. Additional information, including reconciliation between non GAAP financial Information to the GAAP financial information is provided in the press release. I would also like to remind everyone Until our 10 Q is on file, Q1 2021 numbers are preliminary. This conference call will be available for replay via webcast through Corsair's Investor Relations website at ir.corsair.com. Andy will begin with our Q1 business highlights and our updated 2021 outlook. And Michael will then take you through a review of the financials before we proceed to Q and A. With that, I'll now turn it over the call to Andy. Thanks, Ronald, and welcome to our Q1 2021 earnings call. Well, we are delighted with our Q1 results, which exceeded our expectations As we continue to see elevated levels of gaming activity and the conversion of casual gamers to committed gamers who spend money on New gear. During Q1, we delivered net revenue growth of 71.6 percent to $529,400,000 which is our 2nd strongest quarterly performance surpassed only by our record Q4 2020. Adjusted EBITDA nearly tripled, growing 196.6 percent to a record $80,400,000 and adjusted earnings of $0.58 per diluted share, which was up from $0.45 per share over Q1 2020. We saw continued growth on Buying and building $2,000 plus gaming PCs, which we believe indicates expected heavy PC game playing over the next few years and subsequent accessory purchases. Q1 had some advantageous shipment mixes of high margin products, Leading to record high gross margins in both our segments, 39.1% on Gaming Segment and 25.9 percent in our Components segment. While we are pleased to see evidence that we can achieve these levels, We caution not to expect these margins in every subsequent quarter. However, it certainly underscores our strong conviction that margins will increase over time as we continue to bring out high featured products and become more dominant in the market. We're also very pleased to see that in Q1, we were The number one market share position in every gaming components category that NPD monitors in the U. S, which is our largest market. We saw massive growth year over year in both of our financial segments, But most notably in gaming and creator peripherals, where the market continues to grow strongly and our Elgato branded streaming products Continue to outgrow the overall segment. The gamer and creator peripheral segment has more than doubled in revenue from Q1 2020 nearly tripled from Q1 2019. In creative peripherals, we continue to be the market leader in video capture cards and lighting. Our Wave microphone launched last year Has gained significant market share very quickly. Our Stream Deck has now become the standard for home broadcasting and sales over the last three quarters has On gaming peripherals, we launched several new keyboards and mice, With the most notable being our new 60% keyboard, the K65, which has been sold out ever since we launched it in March. For gaming systems and components, we continue to gain share in almost every category. Our new 4000,5000 series of gaming PC cases Have helped us drive our market share in the U. S. To 28%, a 9% lead over our nearest competitor. Over 40% of our gaming case sales are now smart cases, meaning that they are shipped with an IQ controller installed. This further drives sales of IQ RGB accessories as gamers continue to upgrade and modify their gaming PCs. Our Corsair 1 A200 with liquid cooled Ryzen CPU and RTX 3080 graphics card received an Edison Award from Tom's Hardware. In our gaming memory sub segment, we also have over 30% of our shipments, which are IQ enabled, Again, which we believe drives additional IQ accessory purchases. We had Record sales of prebuilt systems from both Origin PC as well as our Corsair Vengeance PCs. We're also thrilled to start shipping our enhanced Corsair 1 gaming PC with 30 series NVIDIA GPU cards and offered with both Intel and AMD CPUs. We increased our pace of new products launched to almost 2 per week in Q1. We launched 29 new products, including 5 power supplies, 8 case and related cooling products, 3 El Gallo Studio accessory products, 4 new keyboards, 4 new mice and mouse pads, 3 high speed solid state drives and 2 prebuilt PC models. We will continue to expand in R and D and marketing to drive and execute on our roadmap. R and D was up over 31% Over Q1 2020, and we expect that growth will continue at a higher pace for the rest of the year. We'll continue to invest at a similar pace in product marketing and you should expect us to continue to launch new high performance products at a blistering pace and use these products to gain market share. During the quarter, we announced the acquisition of Visuals by Impulse, The world's premium design platform for creators. VBI provides professional and individualized designs for creators and Streamers who use VBI overlays, alerts and widgets to customize their broadcast, help to find their online persona And grow their fan bases. Based on our strong Q1 results and positive outlook for gaming gear demand, We are raising our guidance for the full year of 2021. Total revenue in the range of $1,900,000,000 to 2,100,000,000 Representing growth of 11.6 percent to 23.4 percent, up from prior guidance of $1,800,000,000 to $1,950,000,000 adjusted operating income in the range of $235,000,000 to 255,000,000 And adjusted EBITDA in the range of $245,000,000 to 265,000,000 As discussed before, we'll be adding significant resources to the company this year, both in marketing and R and D, as well as infrastructure as we move towards a $2,000,000,000 revenue number. Thank you for your time and continued support. I'll now turn the call over to Michael to discuss our financial results for the quarter. Thanks, Andy, and good morning, everyone. During the Q1, we delivered net revenue of $529,400,000 an increase of 71.6 percent compared to $308,500,000 in Q1 The gamer and creator peripheral segment more than doubled and provided $175,900,000 of net revenue during 1st quarter, an increase of 131.9 percent from $75,900,000 in Q1 2020, driven by strong growth across all product categories, in particular sales of our Elgato branded streaming products. The gamer and creator portfolio segment net revenue contributed 33.2% of total net revenue, an increase of 8 60 basis points from 24.6 percent in Q1 2020. The Gaming Components and Systems segment provided $353,500,000 of net revenue during the Q1, an increase of 51.9% from $232,700,000 in Q1 2020, primarily driven by strong growth across all as consumers continue to buy and build gaming PCs. Less than half of this revenue came from memory products, which contributed $161,900,000 Gross profit in the Q1 more than doubled $1,000,000 in Q1 2020, even beating last quarter's $153,800,000 The increase over Q1 2020 was primarily driven by increased revenues as well as the positive net margin impact from sales of higher margin products, including streaming gear. Gross profit margin increased by 480 basis points to 30.3% from 25.5 percent in Q1 2020. The It was $68,900,000 an increase of $46,700,000 from $22,100,000 in Q1 2020, primarily driven by an increase in revenue in the same periods. Gross Profit margin was 39.1% compared to 29.2% in Q1 2020. The increase in gross margin was driven largely by product mix related to strong growth in sales of higher margin streaming products coupled with less promotional activities. We continue to see a mix shift as gamer and creator peripherals contributed 43% of total gross Profit in Q1 2021 as compared to 28.2% in Q1 2020. The Gaming Components and Systems segment gross profit was $91,500,000 an increase of $35,000,000 from $56,500,000 in Q1 2020, primarily driven by the increase in revenue in the same periods. Gross profit margin was 25.9 percent compared to 24.3% in Q1 2020, primarily due to product mix. Gaming components and systems contributed 57% of the total gross profit in Q1 2021 as compared to 71.8 percent in Q1 2020. Our memory products margin in this segment was 21% for the quarter. 1st quarter SG and A expenses were $77,900,000 an increase of $24,100,000 were 44.9% compared to $53,700,000 in Q1 2020, primarily driven by an increase in outbound freight costs due to an increase in revenue and increase due to expenses related to being a public company and an increase in personnel related expenses. 1st quarter product development expenses were $15,200,000 an increase of $3,600,000 or 31.4 percent compared to $11,600,000 in Q1 2020, primarily driven by an increase in personnel related expenses as we continue to focus on bringing an increasing number of products to the market. Operating income in the Q1 of 2021 was $67,300,000 an increase of $54,000,000 from $13,300,000 in Q1 2020. Adjusted operating income in the Q1 of 2021 was $80,400,000 an increase of $55,400,000 or 221.4 percent from $25,000,000 in Q1 2020. 1st quarter net income was $46,700,000 or $0.47 per diluted share as compared to net income of $1,200,000 or $0.01 per diluted share in Q1 2020. 1st quarter adjusted net income was $58,200,000 or $0.58 per diluted share as compared to adjusted net for Q1 2021 was $80,400,000 an increase of $53,300,000 or 196.6 percent compared to $27,100,000 for Q1 2020, bringing adjusted EBITDA margin to 15.2%, an increase of 6.40 basis points year over year. Turning now to our balance sheet. We were able to convert our strong financial performance in the Q1 into an opportunity to further strengthen our balance sheet. We reduced debt by an additional $28,000,000 with face value now at $299,000,000 And net debt of $177,300,000 resulting in a net leverage ratio well below 1. We did this while growing quickly and leaving sufficient resources to further accelerate growth in the future. We expect to continue to reduce debt In 2021, subject to business conditions and any need for additional growth capital, the $28,000,000 debt payoff will result in approximately $1,000,000 in interest expense savings during the year. As of March 31, 2021, We had $48,100,000 capacity under our revolving credit facility, total GAAP long term debt of $294,300,000 and cash excluding restricted cash of $121,600,000 Our strong financial performance in 2020 and the debt pay down plans for 2021 resulted in S and P increasing our corporate rating from B plus to BB- on February 25, 2021. That reduction is not as exciting as the new products Andy just discussed, But it does give increased confidence to our suppliers and customers that Coursera Gaming continues to be a strong and reliable company to do business with. It helps when our supply chain teams are working to overcome the different shortage and logistics challenges we face today. The additional modeling details underlying our outlook remain the same as we discussed in our Q4 earnings call with the exception of and now reduce interest expense. For ease, I'll repeat them. We expect gross margins to slightly improve year over year and operating expense to increase As well to support our higher revenue level, the need to continue to innovate at a larger scale and a full year of public company costs. Assuming no further debt pay down, we now expect interest expense of approximately $4,600,000 per quarter. As noted, we've already paid down $28,000,000 of our debt this year and expect to pay down approximately an additional $72,000,000 for a total of $100,000,000 of debt reduction in 2021 subject to business conditions and any need for additional capital. The $4,000,000 patent trial win in Q1 2021 is not in our outlook. This amount could vary depending on what the judge rules, is subject to appeal and the timing of recognition of a gain, if any, is uncertain at this time. An effective Average diluted shares outstanding of approximately 100,000,000 to 102,000,000 shares. Overall, we're pleased with the continued Progress we have made on our strategic initiatives and performance of the business. We grew more than we expected in Q1 2021, And we are expecting growth in revenue and adjusted operating income for 2021, where our competitors are expecting down compared to 2020. We believe that as supply and logistics constraints ease, we'll be able to increase market share as we are more fully stocked in the channel with the full range of our products. With that, we're now happy to open the call for questions. Operator, will you please open the line for Q and A? Yes. Thank you. Our first question is from Matt Cabral with Credit Suisse. Please proceed. Yes. Thank you. Andy, you talked 90 days ago about a stronger first half than second half during this year. Wondering if you could just update us on how we should think about trends compared to just the typical seasonality as we head into the second quarter? And then thinking about sort of the transition as we move from the first half into the back half of the year, just your latest thoughts. Yes. Well, we've given out guidance of what we think is going to happen, our best estimates. All the signs that we see at the moment is that people are still spending a lot of time gaming. And more importantly, More people have started to play games in a more committed fashion and buy gear. Now We expect that to continue. In fact, what we are focused on now is really looking past COVID and pre COVID and trying to compare The numbers that we're seeing now with 2019 comps, so you can see what the true growth is in the sector. And it's pretty encouraging what's going on. So obviously, we don't know for sure what's going to happen in the second half. The Assumption is that 2020 was a fairly good acceleration of people migrating to committed gaming. And we'll have to see how that plays out in the second half. So we've been somewhat conservative In our outlook, thinking that it will be relatively low growth in second half. But so far, clearly, we're seeing a lot higher acceleration than we planned. Got it. And then from the prepared remarks, it sounds like supply constraints are still an issue that you're seeing. Guess, wondering if you can update us on where you're feeling those the most across the portfolio and how the constraints look today versus where they were 90 days ago? And I don't know if you just have a guess on when you think you'll finally be able to catch up to demand from a supply chain standpoint. Well, so I think the last part of the question, it all depends on the supply and demand. At the moment, demand for consumer electronics goods It's obviously outstripping the supply capability of the semiconductor industry. So and if you listen to different Parts of the industry, the big guys, the TSMCs and Intel, etcetera, they're not seeing this as a short term thing. Now for us specifically, the good news is, we could have shipped even more. So Q1 results as good as they are Could have been higher, it would have more supply. So what are we doing? We've obviously got a team of operations People that are working hard to make sure we can get the supply we need. At this point, we have enough supply to meet the Plans we have and the forecasts we're giving out, but we'd like to get more, that's for sure. Whether or not demand in the second half overall will ease up and we don't know. But Certainly, this is not a short term issue. So what we're doing about it is, as you sort of expect, We're trying to make sure we prioritize the high feature products that we know the most committed game is 1. And for those products we have, the more entry level that still have some of the semiconductor controllers in them, We're easing off on those. And so that helps obviously with product mix and that sort of thing. But that's what we're trying to focus to supply. Got it. Thank you. Our next question is from Mario Lu with Barclays. Please proceed. Great. Thanks for taking the questions. I have one, the first one on new products. So you mentioned in your slides that 33,000,000 units sold in the 12 months as well as 84 product launches. So how important are these new launches each year In terms of revenue compared to existing and what would you say are the main gaps you're still hoping to fill in your product portfolio? Well, so first off, obviously, for any company, new products are important. We haven't actually Looked at how many of those products are refresh versus brand new segments, but there's quite a significant number of the products last year We're for brand new segments. And when you think about microphones, for example, Some of the lighting products we brought out, we didn't have those before. So that's incremental growth, incremental revenue, incremental TAMs that we're addressing. There's a certain amount of products, probably 2 thirds of the ones that we introduced that are we have to keep refreshing or we want refreshing to make sure that we use the latest technology and supply the latest features. But yes, any tech company Making products like we do, you've got to keep bringing products out. We try and refresh most of our product lines every 18 months. That's a little bit faster than the inherent refresh rate that consumers are looking for, but we want to make sure we're ahead of that curve. So as soon as consumers are looking to refresh or upgrade, there's a latest and greatest product available. Got it. Thank you. And then just one on Scuf. You mentioned that Scuf was one of the drivers of peripherals Outperforming. I believe the Xbox controller currently is compatible with the Xbox Series Console, but I believe the PlayStation controller still isn't compatible fully with PlayStation 5. So any updates you can provide on the PlayStation 5 controller and just high level overview of that segment? Thanks. Yes. Well, look, the first thing is, as you probably know, we have a license agreement with Microsoft for Xbox. And so it's a slightly different split between Xbox and PS4. In other words, we have a higher sales of PS4. So it is Majority of the revenue is Scuf. If you look at the installed base, it's well over 100,000,000 units of PS4 This is a few million of PS5. So still by far the majority of the demand comes from that segment. We're obviously working as fast as we can to get out of PS5 controller. We haven't released when that will be, But I suspect we'll be pretty early in the market compared to any of our competitors. That makes sense. Thank you. Our next question is from Rod Hall with Goldman Sachs. Please proceed. Yes. Hi, guys. Thanks for the question. I wanted to just kind of come back to the guidance because When we calculate the implied Q2 through Q4 revenue guide, it just comes in line with consensus, which seems pretty conservative considering how Significantly, you beat in Q1. So I'm just curious, is supplies the main reason you're being so conservative there? Or are you seeing some early signs that Demand is tailing off or what's kind of affecting that and coloring that guidance? And then secondly, I wanted to come back to performance memory and see if you could quantify for us, just how big that was in the quarter? And I'm also kind of curious about The margins there whether the supply issue is helping, hurting margins, what's going on with Performance Memory? Thanks. Yes. Well, let's see if we can handle the first part of the question. So I think in general, as we've approached 2021, we're not suggesting that there's going to be massive growth in 2020 because over the years where we've looked at the growth in gaming, you get surges that are Due to various things, 2018 was Fortnite, big surge of growth and 2020, obviously, shelter at home helps. So When we look over our shoulder, we see that there's waves of growth that drive the market rather than a steady linear growth. And so that's how we expected 2020 and 2021 will look as we get through it. We don't have any new information at This point to suggest any different, clearly, we've got a fantastic Q1 result. And so we're pretty optimistic. But no reason yet to get ahead of ourselves and suggest that there's going to be massive growth in the rest of the year. But obviously, they could be. Now the second thing on memory, we'll ask Michael to give you the Breakout, do you want to The gross margin of memory was I mentioned in my remarks was 21%. So that's Higher than our total like our average in the last few years, but sort of in line with performance last year. Memory chip pricing went up Starting at the end of last year through Q1 and that tends to help our margins when chip prices are going up. It hasn't quite hit the point where it's impacting how much memory people buy yet. But if it does get too expensive, That starts to become a consideration because people tend to have a set budget per system per memory. So it was a good quarter for us for margin and performance. But obviously, our gamer and creator peripherals and our rest of our components outgrew memory in Q1. Yes. And I'd say from a supply standpoint, I think what's happening is We are starting to get a little more dominant. We got a very high market share in memory. Well over half the market Is Corsair now in the U. S? As you probably know, HyperX is a brand that got sold to HP. So that brand has to exit the market for memory. So some of this is just The fact we've got a slightly more dominant position in the channel. The other thing is we're up to almost 35% of our shipments now are RGB For IQ enabled memory and so rather different. So we're really not yes, than standard. So we're really not shipping a lot of commodity memory at this point and that obviously allows Some differential in margins. Great. Okay. Thanks a lot. Our next question is from Drew Crum with Stifel. Please proceed. Okay, thanks. Hey, guys. Good morning. Andy, in some past calls, you've noted an influx of new gamers to the business. Can you comment on what you saw in 1Q? There's been some concerns that as economies reopen, this is going to slow. Just based on your observations, is the velocity of new Coursera consumers continued or is it decelerated? And then separately, can you comment on M and A and your decision to accelerate debt pay down? What does that portend to or suggest In terms of M and A opportunities that the business has? Thanks. Yes. So look, in terms of gamers and We've got the benefit now of having quite a few research reports done by the usual suspects, so Newzoo, JPR, etcetera. I think what we're seeing is that although the gamers continue to increase, now the numbers are Getting around 3,000,000,000 gamers in the world. The more important number for us are, firstly, those people that are actually paying money Any sort at all for games or hardware? And specifically for us, how many people are Playing games at a higher level, so they start to buy gear. As you probably know, it's still a small fraction of the people who are Playing games who are buying specialized gaming gear, so we're nowhere near any kind of saturation, In fact, quite the opposite. The vast majority of people that are playing video games have bought no specialist gaming gear at all. So we still have a very untapped market, and that's really what we've seen now looking over our shoulder over the last 12 months. It's less of a factor that more gamers are coming to the market, more a factor that the gamers that exist are playing more and starting to buy more gear. Now the most encouraging part of that is the number of people In the PC gaming sector that have actually stepped up to buy or build gaming PCs, because My notion is if you are buying a 2,000 plus gaming PC now, You're planning to play a lot of games, not just in the next few months, but well into after COVID shelter home stops. So that's the most encouraging thing we've seen. And we had record sales in Q1 for all of our prebuilt gaming systems from Origin and Corsair. And we had very, very healthy growth in the components business and that's directly tied to Certainly for the products we make, it's really tied to people building $2,000 plus gaming PCs. So that's a very different dynamic than somebody The parent buying a pair of $50 headsets for their kids because they're at home. So I do think we're seeing a continued Long term growth as people get more and more into gaming and especially in the PC gaming sector and decide to buy Specialist gear, maybe move from playing on a laptop to a dedicated high performance gaming PC. And quickly on the M and A question and the debt pay down. For the average smaller Product oriented acquisitions we've done over the last 2 years. We certainly have sufficient capital to execute on those type of acquisitions Out of our cash flow, while still continuing to reduce debt somewhat, when it comes to a quarter by quarter choice, I mean, our debt is from an earlier stage in the history at slightly higher interest rates. So it's an immediate return in terms of higher EPS via lower interest expense. So we don't have anything immediate to use the cash for. I usually choose to pay down debt and get that immediate benefit. Andy and the team came with a larger acquisition. I always couch what I say about what's going to be going in the future with subject to business conditions And need for further growth capital. So we could steer more cash flow to acquisitions versus debt pay down We're not committed to make any specific debt pay down. Yes. And I suppose the only thing I'd add on that is that Smaller acquisition, we've got a pretty good pipeline of people we're talking to. The smaller acquisitions, as Michael said, we can pay out of cash flow. Bigger acquisitions would take now that we're public, would take some time to close. So We're not sort of staring into obviously, we had a massive cash need in front of us, we wouldn't be paying down debt. So there's nothing on the horizon. Okay. Thanks, guys. Our next question is from Thomas Forte with D. A. Davidson. Please proceed. Great. Thanks for taking my question. First off, congrats on an excellent quarter. I have one question and one follow-up. So for my first question, I wanted to talk about, you were asked about kind of the Pace of reopening and the demand for gaming, I was curious if you were seeing anything geographically. So locations in the globe that maybe are still having A greater challenge with the pandemic versus perhaps the U. S, which is progressing with the inoculations, are you seeing any variance in Demand for gaming in that regard? Well, we are, for sure. I mean, I think it's more to do with sort of seasonal patterns so far. I mean, towards the end of the quarter, Europe started to slow down a little bit, but that's quite normal. The U. S, which is now Ahead of the curve, I think, in terms of reopening, we haven't seen any slowdown. So I think that's That's the only data we really have in front of us that's sort of handy and people can understand what's going on. I mean, where I live, there's people in the streets, in restaurants, everybody's out And we don't see any effect. So but that's the only thing I can really point to. It's still Too early to comment on Q2 activity. Remember, last year, the lockdown sort of went into effect Late March, early April, when people were really starting to be stuck at home and realized they're going to be there for a while. So it's Really too early to sort of draw a lot of conclusions. But so far in the results we've seen, yes, No obvious country that's suddenly changing direction. Excellent. And then Andy, I wanted to ask you as a long time participant in the gaming industry, What your high level thoughts were on the Epic Games versus Apple Court Battle? Yes. We'll let them fight that out. That's a complicated question of how games get distributed, but I'm not going to comment on that. All right. Thank you. Yes. Our next question is from Tim Nollen with Macquarie. Please proceed. Hey, guys. Thanks. This is Sean on for Tim. My question is on DTC. Could you give us an update? You mentioned the goal of 15% DTC revenue by 20 Could you tell us where that's at now and any trends you're seeing around that area? Thanks. Yes. Well, we I I mean, we're well north of 10% now, is the first thing across our portfolio of companies. Almost every Acquisition we've done over the last year has been mostly direct to consumer with their business. So that's helpful. And then our own business, we've really doubled down on. So we hired a pretty New dedicated team Q4 last year and they're really coming up to speed pretty quickly. We've added a lot of infrastructure to keep track of customers and upsell and cross sell. So Yes, that's what's happening. So it's already at a pretty good pace. And so I think we've set that target, I think, Pretty reasonable. We'll probably get there before 2023, as we said. But anyway, yes, that's where it's at now, well north of 10%. Got it. Thanks. And our final question is from Doug Kreutz with Cowen and Company. Please proceed. Hey, thanks. Can you maybe comment on how the gamer sensei This is going. You've had it now for several months. And just wanted to know if that's progressing according to what you had hoped. Yes. I mean, it's still early days. I mean, we've had a few months to get the team sort of integrated And figure out what we're going to do. I think we've mentioned in previous calls that the main thing we're doing with Gamersensai is to relook at the entire Coaching roster and look at all the pricing structures and change so change how it works. So When we bought Gamers Sensa, they were operating in more like an open table structure where they had a platform where gamers and Coaches could get together and the coaches could set their own prices. We're going to move to a slightly different model, more like You'd see the health club, where you book lessons to the health club and the health club sets the prices. And then We will we're going to drastically reduce the number of coaches. Obviously, we've got access With our influence and network to a lot of really good coaches, same thing with the sponsored teams we have. So we'll upgrade coaches, Hopefully, upgrade prices a little bit and then we'll set the pricing tiers. We've got a lot more ambitious plans of doing Not just 1 on 1 training, but doing camps and master classes and that sort of thing. So it will be a I think by the time we get into the middle of the year, it will be quite a different business than it was when we bought them. Great. Thank you. We have reached the end of our question and answer session. I would like to turn the conference back over to Andy for closing comments. All right. Thank you. Well, look, we've stated this before. We're at the forefront of a massively growing market centered around gaming, esports and streaming. We can see a clear path It's a strong growth in revenue and margin over the next few years, obviously helped in 2020 by Shelter at Home, By giving gamers more time to play games and learn about how better gear can improve their gameplay. We're not seeing any signs of trend reversing as shelter homes subsides in different parts of the world. In fact, in the U. S, where most shops, bars and restaurants already open, we've not noticed any significant drop in demand Other than normal seasonal patterns, on the contrary, we continue to see demand exceed our ability to many of the product lines due to worldwide shortages of key semiconductors. We remain focused and committed joining us on the call today. Thank you. This does conclude today's conference. You may disconnect your lines at this time and thank you for your participation.