Turtle Beach (HEAR) Q1 2025 Earnings Call May 08, 2025 05:00 PM ET Company Participants Jacques Cornet - PartnerCris Keirn - CEOMark Weinswig - CFO Conference Call Participants Anthony Stoss - AnalystSean McGowan - MD & Senior Research AnalystMartin Yang - Senior AnalystNone - Analyst Operator and welcome to Turtle Beach Q1 twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a remin ...

Financial Data and Key Metrics Changes - First quarter revenue increased by 14% year over year to $63.9 million, driven by the full quarter contribution from the PDP acquisition [4][14] - Adjusted EBITDA rose to $4.1 million, up 180% from $1.4 million a year ago, indicating strong operating leverage [4][16] - Gross margins improved by 470 basis points year over year to 36.6% [5][14] - Operating expenses were $21.8 million, representing 34% of revenue compared to 42% in the prior year [15] Business Line Data and Key Metrics Changes - The U.S. gaming accessories market experienced a 16% year over year decline in Q1, impacting overall market performance [5][27] - Despite the market decline, the company achieved revenue growth due to the PDP acquisition and improved product offerings [4][5] Market Data and Key Metrics Changes - The broader gaming accessories market is projected to decline by 10% to 12% for the full year 2025, influenced by factors such as the delayed release of Grand Theft Auto VI and tariff impacts [28][41] - The company anticipates a gradual improvement in market conditions throughout 2025, particularly with the upcoming launch of the Nintendo Switch 2 [11][19] Company Strategy and Development Direction - The company is focusing on expanding its gaming accessories portfolio and capitalizing on industry growth drivers, including new product launches [12][22] - A new share repurchase program of up to $75 million over the next two years has been authorized, reflecting confidence in the company's future [13][18] - The company is actively managing supply chain diversification to mitigate tariff impacts, with less than 10% of U.S. supply produced in China after Q1 [9][60] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by tariffs and the evolving economic landscape but expressed confidence in navigating these issues with minimal long-term effects [8][22] - The company remains optimistic about returning to robust growth in 2026 and beyond, driven by a growing gamer base and new game releases [11][19] Other Important Information - The company generated over $40 million in cash flow from operations during Q1, marking one of the highest cash flow-generating quarters in its history [17] - The company is implementing pricing adjustments to mitigate tariff impacts, which have already been factored into the revised guidance [54][56] Q&A Session Summary Question: Impact of GTA VI delay on revenue reduction - Management indicated that the revenue reduction is a combination of factors, including the GTA VI delay and broader market challenges, with the accessories market down 16% in Q1 [25][26] Question: Expectations for gross margins in upcoming quarters - Gross margins are expected to be in the low 30s for Q2, with potential recovery in Q3 and Q4 as the company adjusts to market conditions [31][33] Question: Further cost controls in light of revised guidance - The company is actively pursuing cost synergies from the PDP acquisition and is identifying additional opportunities for cost reductions [34][35] Question: Flexibility to rebound if market conditions improve - Management stated that they are well-prepared to respond to any positive changes in market conditions, with a strong inventory position [41][42] Question: Tariff assumptions for Vietnam in projections - Current guidance reflects existing tariff conditions, and the company is ready to adjust its plans based on any changes in the tariff landscape [46][48] Question: Pricing adjustments due to tariffs - Pricing adjustments have been communicated to partners and are included in the revised guidance, with some products absorbing the tariff impact entirely [54][56] Question: Transition to Vietnam and competitive advantage - The company has been diversifying its supply chain for years and was able to quickly shift production to mitigate tariff impacts, which may provide a competitive advantage [58][60]

Financial Performance - Q1 2025 revenue reached $64 million, a 14% increase compared to the previous year, primarily driven by PDP sales[4,8] - Gross margins improved by 470 basis points year-over-year in Q1 2025[4,8] - Adjusted EBITDA grew by 180% to $4.1 million in Q1 2025, reflecting higher revenue and improved cost structure[4,8] - The company repurchased $1.8 million in common shares during Q1 2025 and authorized a new stock repurchase program of up to $75 million over the next two years[5] Market Position - Turtle Beach gained 40 basis points in revenue share in the gaming headset market during Q1 2025, despite an overall market decline[7] - In March 2025, Turtle Beach gained 160 basis points in revenue share while the gaming headset market was down approximately 19%[7] - Turtle Beach's PS5 Victrix BFG is the second bestselling controller in the 3rd party market and the top selling wireless controller[7] - The Riffmaster wireless guitar on XBO and PS4 continues to be the dominant seller in the music controller's category with 95% share of music controller market[7,41,43] - Turtle Beach is the second largest third-party controllers brand with nearly 30% share[39,43] Future Outlook - The company's 2025 guidance projects net revenue between $340 million and $360 million, and adjusted EBITDA between $47 million and $53 million[9] - Long-term financial targets include revenue growth of 10%+ CAGR and Adjusted EBITDA margins in the mid-to-high teens[10]

–Net Revenue of $63.9 million, up 14% compared to prior year––Gross Margin improved to 36.6%, an increase of approximately 470 basis points compared to prior year––Net Loss of $(0.7) million compared to Net Income of $0.2 million in prior year––Adjusted EBITDA of $4.1 million, up from $1.4 million in prior year––Generated $40.5 million in cash flow from operations, the highest level since 2019––Authorized a new $75 million stock repurchase program– SAN DIEGO, May 08, 2025 (GLOBE NEWSWIRE) -- Turtle Beach Co ...

WHITE PLAINS, N.Y., April 28, 2025 (GLOBE NEWSWIRE) -- Turtle Beach Corporation (Nasdaq: TBCH) a leading gaming headset and accessories brand, today announced it will report financial results for the first quarter 2025 on Thursday, May 8, 2025, after the close of trading on the Nasdaq Stock Market. The Company will also host a conference call and audio webcast at 5:00p.m. ET / 2:00p.m. PT that same day to review the results. The call will be hosted by Cris Keirn, Chief Executive Officer, and Mark Weinswig, ...