Gaming hardware boom propels Razer into profitable H1 2020

Global gaming and lifestyle brand Razer has posted record-high revenues for the first half of the year, driven by the strong demand in its gaming peripherals.

Razer CEO Min-Liang Tan onstage at Tech in Asia Singapore 2017 / Photo credit: Tech in Asia.

The Singapore-born company has recorded US$447.5 million in revenues for the first half of 2020, representing a 25.3% growth compared to the US$357.2 million it posted in the six months ended June 30 last year.

While a bulk of the growth came from the company’s hardware unit, which includes its peripherals and systems businesses, its software and services also saw respectable annual growth.

Razer said its revenue from peripherals increased by 40.9% to US$252.7 million during H1, contributing more than half of its total revenue. The company attributed the increase to strong sales of mice, keyboards, and audio devices.

On the software side, which comprises Razer Gold and Razer Fintech, the company raked in US$64 million during the six months ended June 30, 2020, representing 14.3% of its total revenue.

The growth was mainly driven by the company’s expansion of channels and offerings. Razer also said that it saw growth across all its software offerings in light of increased gaming, esports, and livestreaming activities in H1 2020.

Razer also said that its financial technology arm generated US$1.8 billion in total portfolio value in H1, representing an increase of 114.3% year on year. It attributed the growth to the onboarding of new merchants and surges in online shopping and digital entertainment consumption amid the Covid-19 pandemic.

In January, Razer Fintech applied for a digital full bank license in Singapore. While it waits for the Monetary Authority of Singapore’s awarding of licenses, expected to happen in the second half of the year, Razer said it is exploring applications for similar authorization in other jurisdictions.

This revenue growth, coupled with the company’s continued cost-efficiency efforts, has helped Razer start the second half of 2020 profitably, posting US$3.2 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). In H1 2019, Razer posted US$20.6 million in adjusted losses.

Razer also recorded H1 2020 operating cash flow at US$66 million, compared to the US$54.5 million it burned in the same period last year from operating activities.

Its balance sheet remains strong, with over US$500 million in cash and no debt. With this, Razer said it plans to continue investing in hardware research and development, the development of new services, continued share buybacks, and M&A activities.

“2020 looks set to be a banner year for us. Our strong business performance has accelerated our progress to deliver on our long-term strategy and growth ambitions,” said Min-Liang Tan, Razer co-founder, CEO, and chairman.