Global gaming ecosystem giant Razer (1337.HK) turned the challenge of 2020 into the year of opportunity — smashing records in revenue, profitability, innovation, and expanding its debt-free cash pile.
Razer, which increased its market capitalisation to over HK $20bn (£1.7bn, $2.5bn) over the year, posted record high revenue of $1.2bn (£875m) for the full year ending 31 December — a 48% year-on-year. It also recorded:
Improving gross profit margin to 22.3% — thanks to its Hardware and turbocharged uptake in Services;
Beating analyst expectations by turning profitable with GAAP (generally accepted accounting principles) net profit of $0.8m;
And boosting its debt-free cash balance to over $600m — one of the strongest balance sheets in the industry.
Speaking exclusively to Yahoo Finance in a wide-ranging interview on Wednesday, Razer CEO Min-Liang Tan said this is down to leaning in and expanding its customer base beyond hardcore gamers, brought on by the global pandemic.
"The gamer demographic has really expanded during the course of the whole pandemic and people who weren't necessarily traditionally viewed like gamers — we'd thought we'd get them at some point in time but now it's been acceleration of all that," Tan told Yahoo Finance.
"So now we've gotten a lot more hyper casual and gamers with the whole lockdown. In essence the whole mainstream have become gamers and that's one aspect. I think, over and above, there's been a huge boost from broadcast/live streaming category. For example, all of a sudden all our webcams that were designed for [gamer] live streaming have been doing incredibly well. In terms of work from home, people have been adopting our goods and services."
Capturing the allure of the gamer lifestyle
For those who are not fully aware about Razer — the group originated as the go-to hardware outlet for elite gamers — think sleek backlit keyboards, ergonomic mice that can be programmed for optimal massively multiplayer online role-playing gaming (MMORPG). If you are a "real" gamer — it's likely you have a range of Razer goods. It's grown organically through that kind of branding mindset and even has led fans to tattoo themselves with Razer logos and initiatives.
But it has rapidly evolved into an ecosystem for the gaming experience — everything from digital payment services to ergonomic leather chairs. It has been into cloud computer gaming for a decade, added fintech services, payments, and software to the mix — all making the group essential to a gamer’s life.
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But Tan says the fact Razer has always put the gamer first and made everything high-end has meant people working from home, and likely for long term, have wanted to invest in kit that makes gamers lives comfortable.
"At Razer, we tend to have very few products but we have always been on the most premium side. So we've seen a huge influx in users because they've realised that 'hey, I spend so much time at my PC and my laptop, instead of me looking for budget versions, I'm going to get the best.' And the Kiyo Pro for example has done very well for us, because we launched the very best webcam in the industry and of course our chairs are doing very well," said Tan.
Innovation through a pandemic
Razer's number speak for themselves — across every facet of the company, it has seen an increase in its revenue but also, and importantly, it's profitability and the fact it's sitting on a debt-free war chest of $600m.
Beyond the gamer hardware and the lifestyle items, the Razer — like any 'stay-at-home stock' that would naturally benefit from an environment where people's movements are restricted — it innovated new products that answer the problems that arose from WFH.
"The consumer being a lot more willing giving they're not travelling that they want the very best and extending that across the vine, come up with broader suite of products. For example, our Anzu glasses that we designed for, well really for myself but others working from home, having glasses with a blue-filter," he said, before explaining the comfort of having headphones with an open back filter.
"Things like that have got the Razer brand to an audience that we wouldn't have necessarily had prior to the pandemic."
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Furthermore, the fact the world is operating on a more digital level due to COVID-induced movement restrictions has meant the uptake for its services like Razer Gold — a credit and payments system for gamers that makes it easy for them to spend their cash — and Razer Fintech:
Razer Gold recorded an 102.4% year-on-year increase in total payment volume (TPV) and expanded its footprint and added 1.6 million channel touch points especially in the Middle East and North Africa region covering users from more than 130 countries and more than 5 million channel touchpoints.
Razer Fintech increased 104.4% year-on-year with $4.3bn in TPV, driven by the onboarding of new merchants in the online e-commerce, consumer retail and food and beverage industries.
"This comes back to the brand again. It wasn't a very long time ago, back in 2017, when we launched these and we would have some people saying 'are you sure people will want to use these services? Aren't you guys a hardware company?' But from 2017 we have revenues of $10m and it's gone up 12 times — over $120m," he pointed out.
"You look out there and there are worth billions of dollars and have revenue that is smaller than what we have from that alone. So I think we have really come to the fore to say 'hey guys, we are an incredible lifestyle brand that traverses multiple areas — hardware, software, and services.' I think we have proved this in the last couple of years."
Check out Yahoo Finance UK for more exclusive stories on Razer and its new high-tech face mask, sustainability and workforce initiatives.