Moody’s Investors Service (“Moody’s”) has completed a periodic review of the ratings of Corsair Gaming Inc. The review was conducted through a portfolio discussion held on February 16th, 2022 in which Moody’s reassessed the appropriateness of the ratings in the context of the relevant principal methodology, recent developments, and a comparison of the financial and operating profile to similarly rated peers. Since 2019, Moody’s practice has been to issue a press release following each periodic review to announce its completion.
Corsair’s Ba3 CFR is supported by its strong brand and market position as one of the top three gaming peripheral makers, low debt-to-EBITDA leverage, and strong revenue growth. Moody’s believes demand is being boosted by consumers staying at home more during the pandemic, but the higher earnings level is sustainable, driven by expanding market shares, large addressable markets, and growing interests in esports and high-end gaming requiring PC peripherals, memory cards, power supplies, and cooling equipment.
Corsair’s credit profile is constrained by the highly competitive PC gaming hardware market and the limited defensible patented intellectual property of the market participants, which results in relatively low-profit margins. The credit profile is also constrained by the short life cycles of Corsair’s products and investments required to support sales growth. While the company is public following its September 2020 initial public stock offering, it remains a controlled company (EagleTree Capital owns 57.5%).
Moody’s believes Corsair is targeting low leverage and EagleTree will continue to reduce its ownership through secondary offerings and not leveraging transactions for Corsair. However, Moody’s expects the company will continue to make tuck-in acquisitions that could periodically increase debt.
(All information was provided by Yahoo! Finance)