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RAZER INC.CORPORATE PRESENTATION
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 2017. 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.
LEGAL DISCLAIMER
© 2018 RAZER INC. ALL RIGHTS RESERVED.
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© 2018 RAZER INC. ALL RIGHTS RESERVED.
About Us14 OFFICES WORLDWIDE AND 1300+ EMPLOYEES
KOREARep. Office
SHANGHAI, CHINAS&M
SINGAPORES&M/ R&D / G&A
TAIWANR&D
SHENZHEN, CHINAR&D
SAN FRANCISCO, USR&D /G&A
HAMBURG, GERMANYS&M / G&A
IRVINE, USS&M / G&A
S&M – Sales & MarketingG&A – General & AdministrationR&D – Research & Development
CHENGDU, CHINAR&D
• MALAYSIA
• INDONESIA
• THAILAND• PHILIPPINES
TURKEY
Office locations
3
OUR MISSIONFOR GAMERS. BY GAMERS.TM
4
*Newzoo** Frost & Sullivan
THE OPPORTUNITY: THE LARGE & GROWING GAMER TAM
2.4bn*
2018
ACTIVE GAMERS
© 2018 RAZER INC. ALL RIGHTS RESERVED.
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O F R E V E N U E I N G L O B A L G A M E S M A R K E T B Y 2 0 2 1 , + 5 . 1 % C A G R
US$133bn**
O F G A M E R S A R E M I L L E N N I A L S , 5 5 % N O N - M I L L E N N I A L S A R E
G A M E R S
71%
G L O B A L E S P O R T S A U D I E N C E T O R E A C H
276mn B Y 2 0 2 2 * O U T N U M B E R I N G
A U D I E N C E S O F N H L a n d M L B
2018 LoL Mid Season Invitationals – 130 mn viewers**
2017 DOTA 2 International prize pool: US$23 mn
A C T I V E G A M E R S W O R L D W I D E B Y 2 0 2 1 ,
2.8bn*
W I T H O V E R 1 b n G A M E R S I N C H I N A
© 2018 RAZER INC. ALL RIGHTS RESERVED.
WHO WE ARETHE WORLD’S LEADING LIFESTYLE BRAND FOR GAMERS
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7
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THE LEADING GLOBAL LIFESTYLE BRAND FOR GAMERS
“Top gamer lifestyle brand, gaming device brand and esports brand in China.” – Frost & Sullivan
© 2018 RAZER INC. ALL RIGHTS RESERVED.
Newzoo and Frost & Sullivan Industry Report
LEADING GLOBAL GAMING BRAND
#1“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
THE LEADING BRAND IN ESPORTS
Top streaming platforms monetize with Razer services like zGold and Razer Pay
Pioneer in esports sponsorships:
175 top esports athletes from30 countries*
© 2018 RAZER INC. ALL RIGHTS RESERVED.
* For the year ended December 31, 2017
Leading the gaming streaming space via collaboration with top influencers
like PEWDIEPIE and SYNDICATE
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THE RAZER ECOSYSTEM: HARDWARE / SOFTWARE / SERVICES
WHAT WE DO
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HARDWARE
SERVICES
SOFTWARE
BRAND-CENTRICECOSYSTEM
Opportunities to offer
other services to users
Opportunities to expand into other
gaming & lifestyle segments
Enhance user experience via access to integrated software platform
MONETIZE HARDWARE/SOFTWAREPLATFORM THROUGH SERVICES
INTERACTS &MAINTAINS
RELATIONSHIPWITH USER BASE
Razer Synapse
Razer Chroma
Razer Cortex
> 50mnREGISTERED USERS**
PROVIDESCOMPETITIVE
EDGE AND IMMERSIVE EXPERIENCE
* As of December 31, 2017** As of May 2018
THE WORLD’S LARGEST INTEGRATED GAMING ECOSYSTEM
© 2018 RAZER INC. ALL RIGHTS RESERVED.
CLEAR LEADER IN KEYBOARD AND MICEEXPANDING INTO NEW CATEGORIES SUCH
AS MOBILE
OVER US$500mnsold in 2017*
~10mnzGOLD WALLETS**
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GLOBAL FOOTPRINT
RazerStore
San Francisco
Bangkok
Hong KongShanghaiTaipei
• Products sold through RazerStores and www.razerstore.com
• Online store is available to customers in over 100 countries*
• 5 RazerStores
DIRECT SALES PRESENCE2017 REVENUE BREAKDOWN
BY GEOGRAPHIC REGION
Americas46.6%
EMEA29.2%
Asia Pacific ex-China
12.6%
China11.6%
STRATEGICALLY PARTNER WITH A NETWORK OF DISTRIBUTORS AND RETAILERS
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© 2018 RAZER INC. ALL RIGHTS RESERVED.
*As of December 31, 2017
© 2018 RAZER INC. ALL RIGHTS RESERVED.
HARDWARE
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PERIPHERALSUS$338.7mn
(+13.4%)
Revenue for the year ended December 31, 2017*Also includes revenue from next-generation products in the development or early marketing or launch phases
SYSTEMSUS$137.0mn
(+50.1%)
MOBILEUS$31.6mn*(+1,079.2%)
SHIPPED OVER US$500MN OF HARDWARE IN 2017 (+28.8% YoY)
© 2018 RAZER INC. ALL RIGHTS RESERVED.
IOT PLATFORM UNIVERSAL RGB LIGHTING SYSTEM GAME LAUNCHER
Razer Synapse Razer Chroma Razer Cortex
SOFTWARE
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50MN REGISTERED USERS* (+42.9% YoY)
*As of May 2018Excludes China
SERVICES
zGold and zSilverMonetization and loyalty rewardsWorld’s largest virtual credits for games
and entertainment
Razer Game StoreOne of the world’s leading
digital game store and hardware ecosystem platform
Razer PaySE Asia’s largest diversified online and offline payment
solutions provider
RAZERSERVICES
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© 2018 RAZER INC. ALL RIGHTS RESERVED.
© 2018 RAZER INC. ALL RIGHTS RESERVED.
RAZER zGOLD
• 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
A SINGLE VIRTUAL CREDITS SERVICE FOR GAMERS FOR USE OVER MULTIPLE GAMESFROM DIFFERENT PLATFORMS, DEVELOPERS AND PUBLISHERS TO EXCHANGE FOR DIGITAL CONTENT AND ITEMS
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© 2018 RAZER INC. ALL RIGHTS RESERVED.
HOW TO BUYHOW TO USE
Over 2,500 game titles from over 500 content partners and growing…
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ONLINE
and many more…
OFFLINE
Low credit card penetration in SEA – Largest virtual credits network globally with 1M+ distribution points
© 2018 RAZER INC. ALL RIGHTS RESERVED.
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
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© 2018 RAZER INC. ALL RIGHTS RESERVED.
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.
RAZER PAY - LARGEST SE ASIA O2O DIGITAL PAYMENT NETWORK
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© 2018 RAZER INC. ALL RIGHTS RESERVED.
HANDLED OVER US$1.1BN OF TOTAL PAYMENT VALUE IN 2017
© 2018 RAZER INC. ALL RIGHTS RESERVED.
RAZER PAY – THE WALLET DESIGNED FOR THE YOUTH & MILLENNIALS
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© 2018 RAZER INC. ALL RIGHTS RESERVED.
500,000+ SIGN UPS IN FIRST SIX DAYS
iOS APP STORE AND GOOGLE PLAY STORE#1
© 2018 RAZER INC. ALL RIGHTS RESERVED.
INTENSELY DEVOTED AND HIGHLY ENGAGED USER BASE
© 2018 RAZER INC. ALL RIGHTS RESERVED.
UNIQUE OPPORTUNITY TO FURTHER MONETIZE USER BASE AND ADD NEW USERS
50MN*OVER
USERS AND GROW I NG
*As of May 2018
Software + Services
TIER 1
Hardware +Software +
Services
High ARPU Premium Users
Highly adoptive, engaged and affluent
TIER 2
Mid ARPU Users
TIER 3
Software Only
For future monetization
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© 2018 RAZER INC. ALL RIGHTS RESERVED.
INVESTING TO CAPTURE EVEN BIGGER OPPORTUNITIES
HARDWARE
SOFTWARE
SERVICES
* For illustration purposes only, graph not drawn to scale
FINANCIAL PERFORMANCE
23*Updated as of March 22, 2018 earnings announcement
© 2018 RAZER INC. ALL RIGHTS RESERVED.
REVENUEDriven by increase in revenue from Systems, and to a lesser extent from Software and Services and Others, which includes new product categories such as mobile and services in 2017
282 299 339
37 91
137 320
2015 2016 2017
Peripherals Systems Software & Services Others
(US$ mn)
392
518
3211
YoY: 22.6%
YoY: 32.1%
TOTAL REVENUE
© 2018 RAZER INC. ALL RIGHTS RESERVED.
3
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© 2018 RAZER INC. ALL RIGHTS RESERVED.
GROSS PROFIT AND GROSS PROFIT MARGIN
GROSS PROFIT MARGIN BY BUSINESS
100 109
151
31.3%27.9% 29.2%
0%
5%
10%
15%
20%
25%
30%
35%
2015 2016 2017
Gross Profit Gross Margin
(US$ mn)
GROSS PROFIT AND GROSS PROFIT MARGIN
© 2018 RAZER INC. ALL RIGHTS RESERVED.
Primarily driven by stability in Peripherals and increased scale in Systems business
34.9% 35.3%
35.5%
4.8% 2.9%8.8%
75.7%
85.3%
98.6%
47.6%
26.2%
2015 2016 2017
Peripherals Systems Software and Services Others
YoY: 37.9%
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© 2018 RAZER INC. ALL RIGHTS RESERVED.
ADJUSTED OPERATING EXPENSES
© 2018 RAZER INC. ALL RIGHTS RESERVED.
12.9% 14.7% 14.1%9.3%
10.9%11.9%9.6%
8.4%
8.9%
6
39 121
5
13
112
172
31.7%
34.0%
34.8%
2015 2016 2017
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
(US$ mn)
ADJUSTED OPERATING EXPENSES
133101
180
314
Impairment of acquisition-related intangible assets
1
26
© 2018 RAZER INC. ALL RIGHTS RESERVED.
(6)
(20)
(32)
2015 2016 2017
(US$ mn)
ADJUSTED (LOSS) FOR THE YEAR
ADJUSTED LOSS
© 2018 RAZER INC. ALL RIGHTS RESERVED.
One-off US$4.4mn charge due to the U.S. tax reform
(1.9)%
(5.2)%(5.3)%
One-off tax charge due to the U.S. tax reform
(27.4)(4.4)
Adjusted (loss) as % of revenue
27
© 2018 RAZER INC. ALL RIGHTS RESERVED.
CASH FLOWS AND WORKING CAPITAL
CASH FLOWS FROM / (USED IN) OPERATING ACTIVITIES
CASH FLOWS (USED IN) INVESTING ACTIVITIES
4 2
(20)
2015 2016 2017
(US$ mn)
(3)
(32) (31)
2015 2016 2017
(0.04)
77
639
2015 2016 2017
75 131
739
2015 2016 2017
CASH FLOWS FROM FINANCING ACTIVITIES
CASH AND BANK BALANCES
DAYS INVENTORY OUTSTANDING1 TRADE RECEIVABLES TURNOVER DAYS2
33 30 34
2015 2016 2017
(days)
71 71 69
2015 2016 2017
116 129 136
2015 2016 2017
TRADE PAYABLES TURNOVER DAYS3 CASH CONVERSION CYCLE4
WORKING CAPITAL CYCLE
CASH FLOWS SUMMARY
(12)(28) (33)
2015 2016 2017
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
Well positioned to invest in value accretive new business categories to drive long-term growth
© 2018 RAZER INC. ALL RIGHTS RESERVED.
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GROWTH STRATEGY AND OUTLOOK
29*Updated as of March 22, 2018 earnings announcement
OUTLOOK 2018
© 2018 RAZER INC. ALL RIGHTS RESERVED.
• 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 2017. However, this will be moderated in part by the growth of our Peripherals and Services businesses which have much higher margins.
• We expect strong revenue growth in 2018 to persist.
• 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.
• GROWTH IN 2018
• GROSS PROFIT MARGIN
• 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.
• SIGNIFICANT INVESTMENTS IN 1H2018/NEW PRODUCT LAUNCHES SKEWED TOWARDS 2H2018• We expect significant investments in 1H2018 in preparation for new product launches in 2H2018.
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FUTURE OUTLOOK
© 2018 RAZER INC. ALL RIGHTS RESERVED.
RIDE ON THE RISING TIDE OF GAMERS, THE
GAMING INDUSTRY AND
ESPORTS
CONTINUE HIGH GROWTH
TRAJECTORY
FOCUS ON GROWING
SERVICES AS A HIGH MARGIN, HIGH GROWTH
CATEGORY
GROW AND MAINTAIN
PROFITABLE PROFILE FOR
CORE BUSINESSES
MOBILE ESPORTS IS A MASSIVE
OPPORTUNITY
SCALE NEW BUSINESSES
AND IMPROVE PROFIT PROFILE
31
Q&A