Razer narrows losses in first full year as a public company, inks Tencent deal

Razer released its FY 2018 financial results today, its first full-year report since its Hong Kong IPO in late 2017. It also unveiled a partnership with Chinese tech giant Tencent which will see the two collaborate on mobile gaming.

The Singapore-rooted, gaming-focused company notched up record group revenues of just over US$712 million, with year-on-year revenue growth hitting a three-year high of 37.6 percent. The group’s net loss narrowed by 41 percent year-on-year, from a US$166 million deficit in 2017 to US$97.9 million for 2018.

Razer co-founder and CEO Tan Min-Liang / Photo credit: Gene Wang

Razer’s flagship gaming hardware division saw revenues grow year-on-year by 29.4 percent to reach US$615.5 million, driven by high volume growth in peripherals including audio equipment, keyboards, and mice, and systems such as its new Razer Blade 15 advanced gaming laptop. The company also launched its first monitor, the Razer Raptor, during the period.

The company’s software business – which encompasses Chroma, its proprietary multi-colored lighting, and its internet-of-things platform Synapse – saw its user base grow 40.7 percent year-on-year, with 60 million registered users as of the end of February.

Razer didn’t report separate financials for software, instead lumping it in with its services business. Together, software and services – the latter including its Razer Gold virtual credits ecosystem and Razer Pay digital wallet – increased almost 4x to US$49.6 million and made up 14 percent of the group’s gross profit for the year.

This increase was “primarily driven by revenue generated from MOL Global” after Razer acquired the Malaysian payments company in May 2018, it said.

Reductions in the group’s administrative and non-operating expenses, as well as an increase in finance income from interest, helped to narrow its losses from the previous year.

“We expect to continue this strong growth trajectory at scale [in 2019],” said Razer CEO Tan Min-Liang. “We will continue to expand our high-margin services business. Improvements in gross margins [at] the company level are also expected, as well as strengthening of operating leverage, as we seek to drive further improvements in our operations.”

Featuring in the company’s growth strategy will be its newly announced partnership with Tencent around mobile gaming. The two said they’ll work together to optimize Tencent’s massively popular games titles for Razer’s smartphones, as well as to integrate Razer tech such as Chroma lighting and THX audio into Tencent’s games.

While mobile gaming and esports will be key focal points for Razer’s growth plans looking forward, Razer Pay could also play an important role for the company. The wallet handled more than US$1.4 billion in total payments volume last year, according to Razer.

“We expect Razer Pay to expand significantly to multiple geographies with total payment value scaling further,” said Tan. “Razer Pay has had a strong start in 2019 with the release of an upgraded Razer Pay e-wallet in Malaysia, the limited beta launch of the Razer Pay e-wallet in Singapore, and a full public launch slated for the first half of 2019, as well as the roll-out of new exciting payment partnerships.”