Investment Summary
Razer (the Company) is the world’s leading lifestyle brand for gamers. The triple-headed snake trademark of Razer is one of the most recognized logos in the global gaming and esports communities. With a fan base that spans every continent, the Company has designed and built the world’s largest gamer-focused ecosystem of hardware, software and services.
The world’s largest integrated ecosystem brings a superior life experience
The Company builds an integrated ecosystem of “hardware, software, and services” for players through its own product lines and services. The core of the Company’s ecosystem is the Razer software platform. The Company’s platforms include Razer Synapse, Razer Chroma, and Razer Cortex. The Company uses these software products to maintain interaction with users to collect data for analysis (including user game performance indicators, behavioral data, and game preferences, etc.), which able to gain an in-depth understanding of the user base. Most of the Company’s hardware products are “connected devices” which can connect to the ecosystem through software. For example, users use the Razer Chroma Symphony Connection Module to connect the mouse, keyboard, and computer case to bring a unique illusion lighting experience. After successfully attracting these users to become a loyal user, the Company can monetize its business through Razer Gold and Fintech business.
The core business continues to benefit from “stay-at-home”
The global ‘stay-at-home’ situation has boosted user engagement with gaming and esports to record levels. The Company’s 2020 interim results performed strongly. Revenue hit a record high in history, reaching US$447.5 million, up by 25.3% year-on-year, mainly due to the strong growth of the entire peripheral equipment portfolio. Among them, the hardware business increased by 26% year-on-year to US$382.7 million; the revenue of the software and services segment increased by 79.3% to US$64 million. Gross profit improved by 30.1% next year to US$98.53 million, and gross profit margin improved from 21.2% in the same period last year to 22.0% in the same period this year.
Monetize the brand through financial technology
The Company was founded in 2005. Over the years, it has established a brand popular among young people with high-quality products and services. The Company has one of the largest online social media followings globally among games and esports brands. As of October 15, 2020, the Company had more than 10 million “likes” on Facebook, 6.19 million followers on Instagram, 3.34 million followers on Twitter, 1.72 million subscribers on Youtube, and 440 thousand followers on Weibo, and the software business had over 100 million registered users. When these users recognize the brand, they will be willing to use other products or services launched by the Company. We believe that the Company can take advantage on its brand and huge fans base to grow rapidly in the Fintech business.