RAZER INC.

CORPORATE PRESENTATION
LEGAL DISCLAIMER

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.

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© 2018 RAZER INC. ALL RIGHTS RESERVED.
About Us
14 OFFICES WORLDWIDE AND 1300+ EMPLOYEES

HAMBURG, GERMANY
S&M / G&A KOREA
Rep. Office

SAN FRANCISCO, US
R&D /G&A
TURKEY
SHANGHAI, CHINA
IRVINE, US CHENGDU, CHINA S&M
S&M / G&A R&D

SHENZHEN, CHINA
TAIWAN
R&D
R&D
• PHILIPPINES
• THAILAND

• MALAYSIA
SINGAPORE
S&M/ R&D / G&A
• INDONESIA

Office locations

S&M – Sales & Marketing

G&A – General & Administration
R&D – Research & Development

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© 2018 RAZER INC. ALL RIGHTS RESERVED.
 OUR MISSION
FOR GAMERS. BY GAMERS. TM

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 THE OPPORTUNITY: THE LARGE & GROWING GAMER TAM

71% US$133bn **

OF REVENUE IN GLOBAL GAMES

OF GAMERS ARE MILLENNIALS, MARKET BY 2021, +5.1% CAGR
55% NON-MILLENNIALS ARE
GAMERS
ACTIVE GAMERS

2.4bn *

2018

2.8bn
GLOBAL ESPORTS AUDIENCE

276mn
TO REACH *

ACTIVE GAMERS WORLDWIDE BY 2021,

WITH OVER 1bn GAMERS IN CHINA
BY 2022* OUTNUMBERING
AUDIENCES OF NHL and MLB
2018 LoL Mid Season Invitationals – 130 mn viewers**
2017 DOTA 2 International prize pool: US$23 mn
*Newzoo 5
** Frost & Sullivan
© 2018 RAZER INC. ALL RIGHTS RESERVED.
 WHO WE ARE
THE WORLD’S LEADING LIFESTYLE BRAND FOR GAMERS

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© 2018 RAZER INC. ALL RIGHTS RESERVED.
7
THE LEADING GLOBAL LIFESTYLE BRAND FOR GAMERS

“There is no single gamer-focused brand that has the

same breadth and strength as Razer in terms of

#1
products and services.” - Newzoo

“Market leader in high-performance gaming products

worldwide…”- Newzoo
LEADING GLOBAL
GAMING BRAND

“Top gamer lifestyle brand, gaming device brand and

esports brand in China.” – Frost & Sullivan

Newzoo and Frost & Sullivan Industry Report 8

© 2018 RAZER INC. ALL RIGHTS RESERVED.
THE LEADING BRAND IN ESPORTS

Pioneer in esports sponsorships: Leading the gaming streaming space Top streaming platforms monetize with Razer
via collaboration with top influencers services like zGold and Razer Pay
175 top esports athletes from like PEWDIEPIE and SYNDICATE
30 countries*

* For the year ended December 31, 2017 9

© 2018 RAZER INC. ALL RIGHTS RESERVED.
 WHAT WE DO
T H E R AZ E R E C O S Y S T E M :
H AR D W AR E / S O FT W AR E / S E R V I C E S

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THE WORLD’S LARGEST INTEGRATED
GAMING ECOSYSTEM
INTERACTS & SOFTWARE
MAINTAINS
RELATIONSHIP
WITH USER BASE

Razer Razer Razer

Enhance user experience via Synapse Chroma Cortex
access to integrated software platform
> 50mn
REGISTERED USERS**

HARDWARE
BRAND-CENTRIC
ECOSYSTEM
SERVICES
PROVIDES MONETIZE
COMPETITIVE HARDWARE/
EDGE AND SOFTWARE
CLEAR LEADER IN KEYBOARD AND MICE IMMERSIVE PLATFORM
EXPERIENCE Opportunities Opportunities THROUGH
EXPANDING INTO NEW CATEGORIES SUCH
AS MOBILE
to expand into other
gaming & lifestyle
to offer
other services
SERVICES ~10mn
segments to users zGOLD WALLETS**
OVER US$500mn
sold in 2017*

* As of December 31, 2017

** As of May 2018 11
© 2018 RAZER INC. ALL RIGHTS RESERVED.
 GLOBAL FOOTPRINT
DIRECT SALES PRESENCE
• Products sold through 2017 REVENUE BREAKDOWN
RazerStores and BY GEOGRAPHIC REGION
www.razerstore.com

• Online store is San Francisco

available Hong Kong
Shanghai
Taipei
to customers in over Bangkok Asia Pacific China
100 countries* ex-China
12.6%
11.6%

• 5 RazerStores
RazerStore

STRATEGICALLY PARTNER WITH A NETWORK OF DISTRIBUTORS AND

RETAILERS EMEA
Americas
29.2%
46.6%

*As of December 31, 2017 12

© 2018 RAZER INC. ALL RIGHTS RESERVED.
HARDWARE

PERIPHERALS SYSTEMS MOBILE

US$338.7mn US$137.0mn US$31.6mn*
(+13.4%) (+50.1%) (+1,079.2%)

SHIPPED OVER US$500MN OF HARDWARE IN 2017 (+28.8% YoY)

Revenue for the year ended December 31, 2017
*Also includes revenue from next-generation products in the development or early marketing or launch phases
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© 2018 RAZER INC. ALL RIGHTS RESERVED.
SOFTWARE

Razer Synapse Razer Chroma Razer Cortex

IOT PLATFORM UNIVERSAL GAME LAUNCHER

RGB LIGHTING SYSTEM

50MN REGISTERED USERS* (+42.9% YoY)

*As of May 2018
Excludes China 14
© 2018 RAZER INC. ALL RIGHTS RESERVED.
SERVICES
zGold and zSilver
Monetization and loyalty rewards
World’s largest virtual credits for games
and entertainment

RAZER
SERVICES

Razer Pay Razer Game Store

SE Asia’s largest diversified One of the world’s leading
online and offline payment digital game store and
solutions provider hardware ecosystem platform

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© 2018 RAZER INC. ALL RIGHTS RESERVED.
 RAZER zGOLD

A SINGLE VIRTUAL CREDITS SERVICE FOR GAMERS FOR USE OVER MULTIPLE GAMES
FROM DIFFERENT PLATFORMS, DEVELOPERS AND PUBLISHERS TO EXCHANGE FOR
DIGITAL CONTENT AND ITEMS

• 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

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© 2018 RAZER INC. ALL RIGHTS RESERVED.
HOW TO BUY
O N LI N E OFFLIN E
H OW TO U S E

Low credit card penetration in SEA

and many more… – Largest virtual credits network Over 2,500 game titles from over 500
globally with 1M+ distribution content partners and growing…
points

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© 2018 RAZER INC. ALL RIGHTS RESERVED.
RAZER GAMESTORE

A digital market place for PC gaming Rewards customers including a rotating Enhance user stickiness
content featuring the industry’s biggest selection of exclusives each week and and earn better margins
names through direct cooperation zSilver loyalty rewards credits

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© 2018 RAZER INC. ALL RIGHTS RESERVED.
RAZER PAY - LARGEST SE ASIA O2O DIGITAL PAYMENT NETWORK

Leading Online SE Asia Largest Offline SE Asia

Regulated/Licensed/Robust Tech
Payment Gateway Payment Network

Over 1 million physical acceptance Obtained regulatory/licenses to

Powering payments for global
merchants in SE Asia (e.g. Lazada,
Grab, Uniqlo and many more)
points retail outlets such as 7-11,
Starbucks, etc.
Powering gateways such as Adyen,
Worldpay and channels such as
PayPal & Ingenico
operate in SE Asia including
Malaysia and Thailand.
Robust tech stack from online
payments to offline POS
acceptance and settlement.

HANDLED OVER US$1.1BN OF TOTAL PAYMENT VALUE IN 2017

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© 2018 RAZER INC. ALL RIGHTS RESERVED.
RAZER PAY – THE WALLET DESIGNED FOR THE YOUTH &
MILLENNIALS

#1 iOS APP STORE AND GOOGLE PLAY STORE

500,000+ SIGN UPS IN FIRST SIX DAYS

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© 2018 RAZER INC. ALL RIGHTS RESERVED.
INTENSELY DEVOTED AND
HIGHLY ENGAGED USER BASE TIER 1
UNIQUE OPPORTUNITY TO FURTHER MONETIZE
Hardware +
USER BASE AND ADD NEW USERS Software +
Services

High ARPU Premium Users

Highly adoptive, engaged and affluent

OVER

50MN*
USERS AND GROWING
TIER 2
Software + Services

Mid ARPU Users

TIER 3
Software Only

For future monetization

*As of May 2018 21

© 2018 RAZER INC. ALL RIGHTS RESERVED.
 INVESTING TO CAPTURE EVEN BIGGER OPPORTUNITIES

SOFTWARE

SERVICES
HARDWARE

* For illustration purposes only, graph not drawn to scale

© 2018 RAZER INC. ALL RIGHTS RESERVED.

 FINANCIAL PERFORMANCE

*Updated as of March 22, 2018 earnings announcement 23

REVENUE
Driven 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

TOTAL REVENUE

(US$ mn) 518

YoY: 32.1% 32
11
392
YoY: 22.6%
3
320 137

91
37

339
282 299

2015 2016 2017

Peripherals Systems Software & Services Others

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© 2018 RAZER INC. ALL RIGHTS RESERVED.
GROSS PROFIT AND GROSS PROFIT MARGIN
Primarily driven by stability in Peripherals and increased scale in Systems business

GROSS PROFIT AND GROSS PROFIT MARGIN GROSS PROFIT MARGIN BY BUSINESS

98.6%

35%
85.3%
31.3%
29.2% 75.7%
27.9% 30%

(US$ mn) YoY: 37.9% 25%

47.6%
20%
151
35.5%
109 15%
100 34.9% 35.3%
26.2%
10%
8.8%
4.8% 2.9%
5%
2015 2016 2017
0%
2015 2016 2017

Gross Profit Gross Margin Peripherals Systems Software and Services Others

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© 2018 RAZER INC. ALL RIGHTS RESERVED.
ADJUSTED OPERATING EXPENSES
ADJUSTED OPERATING EXPENSES

(US$ mn)

34.8%

34.0%
314
13

172
121
31.7% 39

112 5 1 8.9%
8.4%
6
11.9% 180
9.6%
10.9% 133
9.3% 101
14.7% 14.1%
12.9%
2015 2016 2017

Selling and Marketing expenses Research and Development expenses General and Administrative expenses Share-based compensation
Impairment of acquisition-related
One-time settlement Listing expenses Total Opex as % of Revenue
intangible assets

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© 2018 RAZER INC. ALL RIGHTS RESERVED.
ADJUSTED LOSS
One-off US$4.4mn charge due to the U.S. tax reform

ADJUSTED (LOSS) FOR THE YEAR

(US$ mn)

(6) (27.4)
(20) (4.4)

(32)

(1.9)%

(5.3)%
(5.2)%

2015 2016 2017

One-off tax charge due to the U.S. tax reform Adjusted (loss) as % of revenue

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© 2018 RAZER INC. ALL RIGHTS RESERVED.
CASH FLOWS AND WORKING CAPITAL
Well positioned to invest in value accretive new business categories to drive long-term growth

CASH FLOWS SUMMARY

CASH FLOWS FROM / (USED IN) CASH FLOWS (USED IN) INVESTING CASH FLOWS FROM FINANCING CASH AND BANK BALANCES
OPERATING ACTIVITIES ACTIVITIES ACTIVITIES
739
(US$ mn)
639

4 2 (3) 77 131
75

(20) (32) (31) (0.04)

2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017

WORKING CAPITAL CYCLE

DAYS INVENTORY OUTSTANDING1 TRADE RECEIVABLES TURNOVER DAYS2 TRADE PAYABLES TURNOVER DAYS3 CASH CONVERSION CYCLE4

(days)

129 136
116
71 71 69 (12)
33 30 34 (28) (33)

2015 2016 2017 2015 2016 2017 2015 2016 2017 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 28
© 2018 RAZER INC. ALL RIGHTS RESERVED.
 GROWTH STRATEGY AND OUTLOOK

*Updated as of March 22, 2018 earnings announcement 29

OUTLOOK 2018
• GROWTH IN 2018
• We expect strong revenue growth in 2018 to persist.

• SIGNIFICANT INVESTMENTS IN 1H2018/NEW PRODUCT LAUNCHES SKEWED TOWARDS 2H2018

• We expect significant investments in 1H2018 in preparation for new product launches in 2H2018.

• GROSS PROFIT MARGIN

• 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.
• 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.
• 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.
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© 2018 RAZER INC. ALL RIGHTS RESERVED.
FUTURE OUTLOOK

RIDE ON THE GROW AND

RISING TIDE OF CONTINUE HIGH MAINTAIN
GAMERS, THE GROWTH PROFITABLE
GAMING TRAJECTORY PROFILE FOR
INDUSTRY AND CORE BUSINESSES
ESPORTS

FOCUS ON
SCALE NEW GROWING
BUSINESSES MOBILE ESPORTS
SERVICES AS A IS A MASSIVE
AND IMPROVE HIGH MARGIN,
PROFIT PROFILE OPPORTUNITY
HIGH GROWTH
CATEGORY

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© 2018 RAZER INC. ALL RIGHTS RESERVED.
Q&A