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Turtle Beach (NasdaqGM:HEAR) Q3 2025 Earnings Call November 06, 2025 04:30 PM ET Speaker1Okay, ladies and gentlemen, thank you for standing by. Welcome to the Turtle Beach Corporation Third Quarter 2025 Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the prepared remarks. As a reminder, the conference call is being recorded. I will now turn the conference over to Jacques Gournet from the Investor Relations Team. Jacques, you may begin.Speake ...

Financial Performance - Net revenue for the three months ended September 30, 2025 was $80.5 million, a decrease of $13.9 million or 14.7% from $94.4 million in the same period of 2024, primarily due to reduced market demand for computer gaming accessories [115]. - For the nine months ended September 30, 2025, net revenue was $201.1 million, a decrease of $25.6 million or 11.3% from $226.7 million in the same period of 2024 [117]. - Adjusted EBITDA for the three months ended September 30, 2025, was $10.975 million, a decrease from $16.268 million in the same period of 2024 [133]. Gross Profit and Margin - Gross profit for the three months ended September 30, 2025 was $30.1 million, with a gross margin of 37.4%, an increase from 36.2% in the prior year period [116]. - Gross margin for the nine months ended September 30, 2025 improved to 35.6% from 33.1% in the comparable prior year period [118]. Operating Expenses - Operating expenses for the three months ended September 30, 2025 totaled $24.7 million, a decrease of $3.0 million or 10.8% from $27.7 million in the same period of 2024 [119]. - General and administrative expenses increased by $1.2 million or 18.7% for the three months ended September 30, 2025, primarily due to higher public company costs [123]. Cash Flow and Financing - Net cash provided by operating activities for the nine months ended September 30, 2025, was $22.121 million, an increase of $30.7 million compared to a cash outflow of $8.553 million for the same period in 2024 [137]. - Cash and cash equivalents at the end of the period on September 30, 2025, were $12.257 million, down from $13.803 million at the end of September 30, 2024 [136]. - Net cash used for financing activities was $24.476 million during the nine months ended September 30, 2025, compared to net cash provided of $82.665 million in the same period of 2024 [139]. - The Company recorded a loss on extinguishment of debt of $1.7 million related to the repayment of the Term Loan Facility on August 1, 2025 [149]. - As of September 30, 2025, the Company had excess borrowing availability of approximately $34.5 million under the Credit Agreement [155]. - The Revolving Credit Facility was amended to extend the maturity date to March 13, 2027, and incorporated PDP acquisition assets into the U.S. Borrowing Base [144]. - Cash provided by investing activities was $1.346 million for the nine months ended September 30, 2025, compared to a cash outflow of $80.686 million in the same period of 2024 [138]. - The Company believes current cash and cash equivalents, along with cash flows from operations, will be sufficient for anticipated funding needs [140]. Market Conditions and Risks - The global gaming accessories market is estimated to be an $11 billion business, driven by major game launches and franchises [110]. - The launch of the Nintendo Switch 2 in June 2025 marked the fastest-selling video game console launch of all time [113]. - The Company has exposure to market risk primarily due to fluctuations in interest rates, foreign currency exchange rates, and inflation [160]. - As of September 30, 2025, and December 31, 2024, the Company did not have any derivative financial instruments to manage foreign currency risks [161]. - A hypothetical 10% change in foreign currency exchange rates is not expected to have a material impact on the Company's earnings or cash flows due to immaterial monetary assets and liabilities [162]. - Inflationary pressures have negatively impacted consumer demand, leading to reduced sales [164]. - Trade policy actions in 2025 have increased import tariffs, adversely affecting the Company's operations [163]. - The Company continues to face higher costs due to a higher interest rate environment, impacting profit margins if selling prices do not increase accordingly [166]. - Global supply chain constraints and economic conditions have caused volatility in demand and pricing of the Company's products [165]. Acquisition - The company acquired Performance Designed Products LLC in March 2024, expanding its product portfolio to include gaming controllers and accessories [109].

THIRD QUARTER 2025 EARNINGS PRESENTATION NASDAQ: TBCH | NOVEMBER 6, 2025 SAFE HARBOR STATEMENT & IMPORTANT INFORMATION Forward-Looking Information and Statements This presentation, including the appendix, includes forward-looking information and statements within the meaning of the federal securities laws. Except for historical information contained in this release, statements in this release may constitute forward-looking statements regarding assumptions, projections, expectations, targets, intentions or b ...

Financial Performance - Net revenue for Q3 2025 was $80.5 million, a decrease from $94.4 million in Q3 2024[19] - Quarterly net income was $1.7 million, compared to $3.4 million in the same quarter last year[19] - Operating income for Q3 2025 was $5.4 million, compared to $6.4 million in Q3 2024[19] - Adjusted EBITDA for the quarter was reported at $11.0 million[5] - Adjusted EBITDA for the nine months ended September 30, 2025, was $11,981 million, down from $20,761 million in the same period of 2024[27] Guidance and Projections - Full year revenue guidance is reiterated at $340 million to $360 million, with Adjusted EBITDA guidance of $47 million to $53 million[8] Expenses and Cost Management - Total operating expenses for Q3 2025 were $24.7 million, down from $27.7 million in the same quarter last year[19] - Debt refinancing reduced the cost of capital on the term loan by over 450 basis points, resulting in expected annual interest savings of over $2 million[7] Assets and Liabilities - Total assets decreased from $298,861 million as of December 31, 2024, to $278,207 million as of September 30, 2025, representing a decline of approximately 6.8%[22] - Current liabilities decreased from $123,672 million to $111,554 million, a reduction of about 9.8%[22] Cash Flow and Investments - Net cash provided by operating activities was $22,121 million for the nine months ended September 30, 2025, compared to a net cash used of $8,553 million in the prior year[25] - The company made an acquisition that resulted in a cash inflow of $2,515 million, contrasting with a cash outflow of $77,294 million for acquisitions in the previous year[25] Shareholder Actions - The company repurchased approximately 695,000 shares for $10 million at an average price of $14.40 per share during Q3 2025[5] Accounts Receivable and Losses - The company reported a significant increase in accounts receivable, which rose from $93,118 million to $56,754 million, indicating improved collection efforts[22] - Net loss for the nine months ended September 30, 2025, was $1,878 million, an improvement compared to a net loss of $3,956 million for the same period in 2024[25] - The company incurred $1,923 million in loss on extinguishment of debt during the nine months ended September 30, 2025[25] Stock-Based Compensation - Stock-based compensation increased to $4,306 million for the nine months ended September 30, 2025, compared to $3,447 million in the same period of 2024[27] Product Development - The company launched or announced more than 40 new products since Q2 2025, including officially licensed PlayStation headsets and Nintendo-licensed accessories[4]

Turtle Beach (HEAR) FY Conference Summary Company Overview - **Company**: Turtle Beach - **Industry**: Gaming Accessories Key Points and Arguments Business Performance and Strategy - The CEO highlighted significant changes in Turtle Beach's business model over the past two years, focusing on improving performance and adapting to market dynamics [3][4] - The company has rationalized its SKUs, emphasizing higher productivity and margin products, and optimized its distribution channels [3][4] - The acquisition of PDP, a leader in the controller space, has diversified Turtle Beach's offerings beyond headsets, which historically accounted for 95% of the business [4][5] Market Trends and Growth Opportunities - The current gaming cycle, including the launch of Nintendo's Switch 2 and the anticipated release of GTA 6, is expected to drive accessory purchases [5][6][8] - The company is well-positioned to capitalize on upcoming hardware releases from Microsoft and Sony, which could further stimulate growth [7][8] - Despite a challenging first half of the year, the company anticipates a recovery in the second half, with a projected decline of about 10% in key categories in the U.S. [12][13] Supply Chain Management - Turtle Beach has proactively developed manufacturing capabilities in Vietnam to mitigate the impact of tariffs on production costs, with an expected 85% of production to be based in Vietnam post-Q2 2025 [9][10] - The company bulked up on inventory to counteract tariff impacts, which has helped maintain competitiveness [11] Financial Outlook - The company reiterated its revenue guidance for 2025, despite experiencing a 15-17% decline in key categories year-to-date [12][13][21] - Gross margins improved to 32.2% in Q2, with expectations to reach mid to high thirties in the latter half of the year due to better product mix and cost management [24][25] Competitive Landscape - The competitive environment is intensifying, but Turtle Beach maintains a leadership position in audio and controller markets due to its R&D investments [19][20][33] - The company is focused on leveraging new technologies and product refreshes to stay ahead in the premium headset category [33][36] R&D and Marketing Balance - Turtle Beach invests approximately 5% of its revenue back into R&D, which has led to successful product launches and technological advancements [38][39] - The marketing team has undergone significant changes, including brand refreshes and integration of acquired products, to enhance consumer engagement [40] Capital Allocation Strategy - The company has successfully refinanced its debt, reducing costs and improving cash flow generation, with a focus on three pillars: organic investment, M&A, and share repurchases [42][45] - The acquisition of PDP has been transformative, and the company remains open to further M&A opportunities across all product categories [47][48] Future Outlook - The CEO expressed optimism about the gaming industry's growth potential, particularly with the upcoming hardware cycles and the need for gamers to upgrade their accessories [49][50] - The company anticipates a multi-year growth cycle driven by high gamer engagement and the replacement of pandemic-era purchases [50][51] Additional Important Insights - The company is adapting its product designs and marketing strategies to align with macro trends in gaming, focusing on large franchise games and community engagement [41][42] - The competitive landscape for headsets is evolving, with consolidation in the market, but Turtle Beach is well-positioned to leverage its expertise and technology [33][36]

Financial Data and Key Metrics Changes - The company reported second quarter revenue of $56.8 million, reflecting a decrease due to dampened market conditions in the gaming accessories industry [11] - Gross margins improved to 32% from 30% in the prior year, demonstrating effective cost optimization initiatives despite lower revenue [11][12] - Adjusted EBITDA loss for the second quarter was $3 million, with expectations for a notable increase in adjusted EBITDA in the second half of the year, guiding for a full year range of $47 million to $53 million [13][14] Business Line Data and Key Metrics Changes - The company has seen improvements in year-on-year market comparisons in Q2, particularly in the headset and third-party controller markets, which were down mid-teens year-to-date compared to over 20% at the end of Q1 [10][25] - The launch of Nintendo Switch 2 has driven strong sales in related accessories, indicating a positive trend in the gaming accessories market [10][29] Market Data and Key Metrics Changes - The overall gaming accessories market is expected to remain down for the full year 2025, but improvements are anticipated in the second half of the year, setting the stage for strong growth in 2026 [10][11] - The company noted that less than 15% of total U.S. supply will be produced in China after Q1, up from approximately 10% previously discussed [7] Company Strategy and Development Direction - The company is focused on three primary objectives: delivering Q2 results, advancing capital allocation strategies including stock buybacks, and refinancing credit facilities to strengthen capital structure [5][9] - The capital allocation strategy emphasizes investments in organic growth, share repurchases, and accretive mergers and acquisitions [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strengthened strategic positioning and opportunities ahead as the outlook for gaming accessories improves [19] - The macroeconomic environment has tracked closely to expectations, with improvements driven by successful product launches like the Nintendo Switch 2 [24][26] Other Important Information - The company successfully repurchased approximately $5 million of stock at an average price of $13.47 as part of its $75 million share repurchase program [8][16] - A comprehensive refinancing of the term loan and credit facility was completed, resulting in a reduced interest rate and enhanced operational flexibility [9][15] Q&A Session Summary Question: Reflection on changes since the last quarterly call regarding the U.S. economy, tariffs, and game title releases - Management noted that the macroeconomic pressures remain but improvements are expected, particularly driven by the successful launch of Nintendo Switch 2 [24][26] Question: Lift in sales of Nintendo-related products - Management confirmed strong sales in June for Nintendo-related accessories, indicating a positive trend following the hardware release [29] Question: Improvement in market conditions across product lines - Management indicated that improvements were seen across gaming accessories, particularly in controllers and headsets, with expectations for continued improvement in the back half of the year [34]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company reported a net loss of $2.9 million for Q2 2025, an improvement from the prior year, with total assets decreasing to $240.2 million and net cash from operations significantly increasing to $37.3 million for the first six months of 2025 Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Revenue** | $56.8M | $76.5M | $120.7M | $132.3M | | **Gross Profit** | $18.3M | $23.1M | $41.6M | $40.9M | | **Operating (Loss) Income** | $(0.3M) | $(4.1M) | $1.2M | $(9.8M) | | **Net Loss** | $(2.9M) | $(7.5M) | $(3.6M) | $(7.4M) | | **Diluted Net Loss Per Share** | $(0.14) | $(0.35) | $(0.17) | $(0.37) | Condensed Consolidated Balance Sheets (Unaudited) | Balance Sheet Item | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $138.0M | $188.4M | | **Total Assets** | $240.2M | $298.9M | | **Total Current Liabilities** | $75.3M | $123.7M | | **Total Liabilities** | $123.3M | $178.3M | | **Total Stockholders' Equity** | $116.8M | $120.6M | Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity (Six Months Ended) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $37.3M | $14.6M | | **Net cash provided by (used for) investing activities** | $2.0M | $(79.3M) | | **Net cash (used for) provided by financing activities** | $(41.7M) | $58.2M | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail significant events and accounting policies, including the $114.4 million PDP acquisition, the company's single reportable segment, new debt facilities, ongoing litigation, and a new stock repurchase program - On March 13, 2024, the Company acquired Performance Designed Products LLC (PDP) for a total consideration of **$114.4 million**, consisting of **$78.9 million** in cash and **3.45 million shares** of common stock[35](index=35&type=chunk)[36](index=36&type=chunk) - The company operates as a single reportable segment, with North America accounting for **$89.9 million** in net revenue, Europe and Middle East with **$24.5 million**, and Asia Pacific with **$6.3 million** for the six months ended June 30, 2025[101](index=101&type=chunk)[102](index=102&type=chunk) - On August 1, 2025, the Company entered into a new Credit Agreement with Bank of America, including a **$60 million** term loan and a **$90 million** revolving credit facility, maturing on August 1, 2028[67](index=67&type=chunk) - The company is subject to various legal proceedings, including an insolvency dispute in Germany settled for **EUR 722,989**, and two intellectual property disputes involving PDP and Nyko Technologies, and Voyetra Turtle Beach and Gametronics LLC[75](index=75&type=chunk)[76](index=76&type=chunk)[79](index=79&type=chunk) - A stock repurchase program was authorized on May 7, 2025, to acquire up to **$75 million** of common stock, with **0.4 million shares** repurchased for **$5.0 million** during Q2 2025[91](index=91&type=chunk)[92](index=92&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the Q2 2025 revenue decrease of $19.7 million year-over-year to reduced market demand, while gross margin improved to 32.2% due to the absence of a prior-year fair value adjustment, and liquidity is supported by operations and a new credit facility [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Net revenue for Q2 2025 decreased by 25.8% to $56.8 million due to lower market demand, while gross margin improved to 32.2% primarily from the absence of a prior-year fair value step-up adjustment, and operating expenses decreased due to an insurance recovery Results of Operations Summary | Metric | Q2 2025 | Q2 2024 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Net Revenue** | $56.8M | $76.5M | $(19.7)M | (25.8)% | | **Gross Profit** | $18.3M | $23.1M | $(4.8)M | (20.8)% | | **Gross Margin** | 32.2% | 30.2% | +2.0 p.p. | N/A | - The decrease in Q2 2025 net revenue was driven by a significant reduction in market demand for computer gaming accessories[110](index=110&type=chunk) - The increase in Q2 2025 gross margin was primarily due to the unfavorable impact of a fair value step-up adjustment in the prior year period, partially offset by higher tariffs in 2025[111](index=111&type=chunk) - Operating expenses in Q2 2025 included a **$6.0 million** insurance recovery related to inventory lost in transit during Q4 2024[114](index=114&type=chunk)[119](index=119&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The company's working capital is primarily from operations and its revolving credit facility, with cash and cash equivalents at $11.7 million and net cash from operations significantly increasing to $37.3 million for the first six months of 2025, supported by a new credit agreement Cash Flow and Cash Equivalents | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $37.3M | $14.6M | | **Cash and cash equivalents at end of period** | $11.7M | $12.5M | - The increase in cash from operations was primarily due to higher gross receipts, insurance proceeds from claims related to a loss of inventory, lower acquisition-related costs, and reduced spending levels[133](index=133&type=chunk) - As of June 30, 2025, the company was in compliance with all financial covenants under its Credit Facility and Term Loan Facility, with excess borrowing availability of approximately **$36.2 million**[62](index=62&type=chunk)[65](index=65&type=chunk)[146](index=146&type=chunk) - On August 1, 2025, the company replaced its previous debt arrangements with a new Credit Agreement that includes a **$60 million** term loan and a **$90 million** revolving credit facility, maturing August 1, 2028[150](index=150&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rate fluctuations, foreign currency exchange rates (primarily British Pound and Euro), and inflation, with inflationary pressures potentially increasing costs and reducing consumer demand - The company's primary market risks are interest rate fluctuations, foreign currency exchange rates, and inflation[157](index=157&type=chunk) - Foreign currency exchange risk is primarily related to the British Pound and Euro, but the exposure is considered immaterial as of June 30, 2025[159](index=159&type=chunk) - Inflation risk affects the company through increased costs from tariffs, materials, and logistics, and can negatively impact consumer demand for its products due to reduced discretionary spending[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were deemed ineffective as of June 30, 2025, and management is actively remediating material weaknesses identified in the 2024 Annual Report - Management, including the PEO and PFO, concluded that the company's disclosure controls and procedures were ineffective as of June 30, 2025[165](index=165&type=chunk) - The company is in the process of remediating material weaknesses identified in its 2024 Annual Report on Form 10-K[166](index=166&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 8 of the financial statements for details on ongoing legal proceedings, including a settled German insolvency dispute and two intellectual property disputes - For details on legal proceedings, the report refers to Note 8, "Commitments and Contingencies" in the financial statements[170](index=170&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) The company's business is highly dependent on third-party gaming platforms and game releases, and faces risks from changes in U.S. or foreign trade policies, including tariffs, which could increase costs and decrease demand - The company's business is highly dependent on the success and availability of third-party gaming platforms (Microsoft Xbox, Sony PlayStation, Nintendo Switch) and the timely release of popular game titles[171](index=171&type=chunk)[172](index=172&type=chunk) - Changes in U.S. or foreign trade policies, including tariffs on imported goods, pose a risk to the business, as increased tariffs could require price increases, which may decrease product demand[173](index=173&type=chunk)[174](index=174&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Board authorized a **$75 million** stock repurchase program on May 7, 2025, under which **372,198 shares** were repurchased for **$13.47** per share during Q2 2025, leaving approximately **$70.0 million** available Stock Repurchase Details | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet Be Purchased | | :--- | :--- | :--- | :--- | | **June 1-30, 2025** | 372,198 | $13.47 | $70.0M | - A stock repurchase program for up to **$75 million** was authorized on May 7, 2025, and is scheduled to expire on May 6, 2027[177](index=177&type=chunk) [Other Information](index=46&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the second quarter of 2025 - No directors or executive officers adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" during the second quarter of 2025[179](index=179&type=chunk) [Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including officer certifications, amendments to financing and compensation plans, and corporate governance documents - The exhibits filed include officer certifications (31.1, 31.2, 32.1), amendments to financing and compensation plans (10.1, 10.2), and corporate governance documents[183](index=183&type=chunk)

SECOND QUARTER 2025 EARNINGS PRESENTATION NASDAQ: TBCH | AUGUST 7, 2025 SAFE HARBOR STATEMENT & IMPORTANT INFORMATION Forward-Looking Information and Statements This presentation, including the appendix, includes forward-looking information and statements within the meaning of the federal securities laws. Except for historical information contained in this release, statements in this release may constitute forward-looking statements regarding assumptions, projections, expectations, targets, intentions or be ...

[Q2 2025 Financial Performance and Corporate Updates](index=1&type=section&id=First%20Quarter%202025%20Results%20and%20Corporate%20Updates) This section details Turtle Beach's second-quarter financial results, corporate strategic actions, and full-year guidance [Q2 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%20Highlights) Turtle Beach reported Q2 2025 net revenue of $56.8 million, improved gross margin to 32.2%, and significantly narrowed its net loss Q2 2025 Financial Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $56.8M | $76.5M | (25.8%) | | Gross Margin | 32.2% | 30.2% | +200 bps | | Net Loss | ($2.9M) | ($7.5M) | Improved by $4.6M | | Adjusted EBITDA | ($3.0M) | $3.0M | ($6.0M) | - CEO Cris Keirn highlighted the company's agility in navigating macro challenges, noting that swift actions on cost optimization and production strategy significantly mitigated tariff impacts[3](index=3&type=chunk) - Year-over-year gross margin improved to over **32%** despite an approximate **150 basis point negative impact** from tariffs[3](index=3&type=chunk) [Corporate Developments](index=2&type=section&id=Corporate%20Developments) The company executed strategic debt refinancing to lower capital costs and initiated a $5.0 million share repurchase program [Debt Refinancing](index=2&type=section&id=Debt%20Refinancing) Turtle Beach secured a new $150 million facility, lowering the term loan interest rate by 450 basis points for over $2.0 million in annual savings - The new **$150 million facility** consists of a **$90 million revolving credit facility** and a **$60 million term loan**[5](index=5&type=chunk) - The refinancing lowered the cost of capital on the term loan by approximately **450 basis points**, leading to annual savings of over **$2.0 million**[5](index=5&type=chunk) - The new agreement revises prior operational limitations, enhancing the company's ability to repurchase shares[5](index=5&type=chunk) [Share Repurchase Program](index=2&type=section&id=Share%20Repurchase%20Update) The company repurchased $5.0 million of common stock in Q2 2025 under its $75 million program, planning continued opportunistic buybacks - In Q2 2025, the company repurchased **$5.0 million of common stock**[6](index=6&type=chunk) - This is part of a recently announced **$75 million share repurchase agreement**[6](index=6&type=chunk) - The company intends to remain opportunistic in share buybacks, supported by the flexibility of its new debt agreements[6](index=6&type=chunk) [Full Year 2025 Outlook](index=2&type=section&id=Financial%20Outlook) Turtle Beach reiterated its full-year 2025 financial guidance, signaling confidence in its performance for the remainder of the year Full Year 2025 Guidance | Metric | Full Year 2025 Guidance Range | | :--- | :--- | | Net Revenues | $340 million - $360 million | | Adjusted EBITDA | $47 million - $53 million | [Financial Statements](index=5&type=section&id=Financial%20Statements) The detailed financial statements show a Q2 revenue decline but narrowed operating and net loss, with positive cash flow from operations [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 net revenue decreased to $56.8 million, but net loss improved to $2.9 million, aided by a $6.0 million insurance recovery Condensed Consolidated Statements of Operations (in thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net revenue | $56,777 | $76,478 | | Gross profit | $18,262 | $23,076 | | Operating loss | ($329) | ($4,111) | | Net loss | ($2,931) | ($7,524) | | Diluted net loss per share | ($0.14) | ($0.35) | - A notable item was a **$5.965 million insurance recovery**, which significantly reduced total operating expenses from **$27.2 million in Q2 2024** to **$18.6 million in Q2 2025**[19](index=19&type=chunk) [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $240.2 million, down from $298.9 million, primarily due to decreases in accounts receivable and cash Condensed Consolidated Balance Sheets (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $11,705 | $12,995 | | Total Current Assets | $138,032 | $188,371 | | Total Assets | $240,181 | $298,861 | | Total Current Liabilities | $75,255 | $123,672 | | Total Liabilities | $123,346 | $178,257 | | Total Stockholders' Equity | $116,835 | $120,604 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, cash from operating activities significantly improved to $37.3 million, while financing activities used $41.7 million Condensed Consolidated Statements of Cash Flows (in thousands) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $37,303 | $14,613 | | Net cash provided by (used for) investing activities | $2,019 | ($79,261) | | Net cash (used for) provided by financing activities | ($41,746) | $58,176 | | Net decrease in cash and cash equivalents | ($1,290) | ($6,264) | [GAAP to Adjusted EBITDA Reconciliation](index=8&type=section&id=GAAP%20to%20Adjusted%20EBITDA%20Reconciliation) The company reported a Q2 2025 Adjusted EBITDA of ($3.0) million, with a significant ($6.0) million insurance recovery adjustment from net loss GAAP to Adjusted EBITDA Reconciliation (in thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net loss | ($2,931) | ($7,524) | | Adjustments | $1,113 | $10,568 | | Insurance recovery | ($5,965) | $0 | | **Adjusted EBITDA** | **($3,044)** | **$3,044** | - The largest reconciling item in Q2 2025 was the **($5.965 million) insurance recovery**, which is excluded from Adjusted EBITDA; other key add-backs include **depreciation & amortization ($3.1 million)** and **interest expense ($2.0 million)**[26](index=26&type=chunk) [Disclosures and Definitions](index=2&type=section&id=Disclosures%20and%20Definitions) This section outlines the company's use of non-GAAP financial measures and provides cautionary notes regarding forward-looking statements [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures) The company uses Adjusted EBITDA, a non-GAAP measure, to evaluate operating performance, with a reconciliation provided for historical data - Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization, stock-based compensation, and certain non-recurring special items[12](index=12&type=chunk) - The company does not provide a reconciliation for its forward-looking Adjusted EBITDA guidance to net income (loss) due to the variability and complexity of reconciling items[13](index=13&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Cautionary%20Note%20on%20Forward-Looking%20Statements) This section contains a standard safe harbor statement, warning that future events are subject to risks and uncertainties - The press release includes forward-looking statements that are predictions and not guarantees of future performance, subject to known and unknown risks[14](index=14&type=chunk) - Key risk factors mentioned include trade policies (tariffs), release of successful game titles, macroeconomic conditions, and supply chain challenges[14](index=14&type=chunk)