SUSTAINED demand for gaming and remote work hardware drove net profits at Razer to US$46.2 million in FY2021 ended December, up from US$5.6 million the year prior. Notably, sales of its IT peripherals crossed the US$1 billion mark.

Razer's total revenue for the year rose 33.3 per cent to US$1.62 billion, on the back of strong demand for its mice, keyboards and audio devices, the US and Singapore-headquartered company disclosed on Thursday (Mar 17).

The latest earnings report comes as a consortium including Razer chairman Tan Min-Liang and non-executive director Kaling Lim seeks to take the company private at a HK$24.7 billion (S$4.3 billion) valuation, offering HK$2.82 a share. The company had listed at HK$3.88 per share in 2017.

Shares of Razer closed at HK$2.43 on Thursday, up 4.7 per cent from the day before.

Razer's hardware business expanded 34 per cent to US$1.45 billion in FY2021, of which US$1.08 billion worth of revenue came from peripherals and US$368.2 million from systems. Razer had also expanded its foray into gaming chairs, consoles and broadcaster products.

However, Tan emphasised during the earnings call that Razer does not see itself as just a hardware company. “Don't get me wrong, we've crossed a billion dollars in terms of hardware revenues; it's a big part of our revenues. But the software and services are equally important,” he said. 

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On the software and services front, Razer saw a 26.6 per cent rise in revenue to US$162.5 million, from virtual credits service Razer Gold and its fintech business. Razer Merchant Services, its B2B payments processing unit, recorded a 63.5 per cent growth in total payment volume (TPV) to US$7 billion.

However, its merchant base only grew 5 per cent during the year to 52,500, slower than the 191 per cent growth rate in 2020. Malaysia-listed conglomerate Berjaya Corporation was previously a partner in Razer Fintech. But last year, it sold its 30 per cent stake in Razer Fintech back to Razer.

Addressing concerns about the merchant base, chief strategy officer Lee Li Meng said: "We started focusing on larger, regional or global merchants that require not just a singular country but a more regional service. While you may see a slowdown in terms of the merchant base, I think the TPV growth speaks for itself."

Beyond its key segments, Razer also recorded US$4.6 million in other revenue from THX certification services, for audio and visual quality, and the Respawn range of beverage products.

Overall, Razer's gross profit margins expanded to 24 per cent, from 22.3 per cent the prior year, thanks to the hardware business. But this was dampened by the spike in freight rates amid global supply chain disruptions.

Looking ahead, Razer expects that freight and logistics challenges will persist. It also cautioned of a "high base effect" amid slowing growth momentum since the second half of 2021. Razer will continue to invest in new growth areas, namely furniture and other lifestyle categories, Razer Gold and Razer Fintech.

"However, before we start to see the fruits, these growth areas will take time to fully realise and it will require additional spending in our operating expenses and may affect the short to medium-term business performance," said Tan.

The company had US$567.6 million in cash as of end-December and no bank loans and borrowings.

READ MORE: 

• Berjaya Corp divests stake in Razer Fintech

• Razer launches regional headquarters in Singapore, plans to grow local staff count to 1,000