Turtle Beach (HEAR) FY Conference Summary Industry and Company Overview - The conference focused on Turtle Beach, a leading company in the gaming accessory industry, particularly known for its headsets and controllers [1][2] - The discussion highlighted the upcoming gaming cycle, including new hardware launches and significant game releases that are expected to impact accessory sales positively [3][4] Key Points and Arguments Upcoming Gaming Cycle - Anticipation for the Nintendo Switch 2 and its impact on accessory sales, with historical trends indicating strong initial sales for accessories following new console launches [4][5] - Excitement surrounding the release of GTA VI in May, which is expected to drive significant engagement and accessory purchases [6][14] Accessory Categories and Growth - Turtle Beach aims to differentiate its products by collaborating with console manufacturers to create complementary accessories that enhance the gaming experience [8][11] - The company is focusing on innovative audio features and new technologies across all platforms, including PC [10][12] Engagement-Driven Sales - High engagement games, such as GTA VI and Fortnite, are identified as key drivers for accessory purchases, with the expectation that increased playtime leads to higher accessory demand [13][15] - The company has successfully launched licensed products for popular games like Minecraft, indicating a strategy to tap into high-engagement titles [16][17] Market Dynamics and Replacement Cycles - Historically, the replacement cycle for gaming accessories has been around 2-3 years, driven by gamer engagement and technological advancements [21][22] - The pandemic created a surge in demand for gaming accessories, but a full replacement cycle has not yet been realized, presenting an opportunity for future growth as new hardware and games are released [23][25] Financial Performance and M&A Strategy - The acquisition of PDP has been transformative, broadening Turtle Beach's product portfolio and contributing to a more balanced revenue split between headsets and other categories [30][31] - The company has exceeded synergy expectations from the PDP acquisition, achieving over $13 million in synergies compared to the anticipated $10-12 million [32] - Future M&A activities will be informed by the success of the PDP acquisition, with a focus on accretive deals that enhance growth [34][35] Capital Allocation and Cash Flow - Turtle Beach anticipates $50 million in EBITDA for the year, with cash flow expected to be in the mid-$30 million range, supported by low capital requirements [37][38] - The company has a strong buyback program, having repurchased nearly $30 million in stock last year and approving an additional $75 million buyback program [36][39] Long-Term Strategy - The focus for the next 3-5 years includes consistent execution, adapting to market changes, and maintaining a leadership position in the gaming accessory space [47][50] - The company aims to balance investments in core business growth, M&A opportunities, and share buybacks to enhance shareholder value [49][51] Additional Important Insights - The company is preparing for a shift in revenue seasonality due to the upcoming releases, particularly GTA VI, which may create patterns similar to console launches [44][45] - The management emphasizes agility and quick adaptation to market changes, which has been a competitive advantage for Turtle Beach [48][49] This summary encapsulates the key insights from the Turtle Beach FY Conference, highlighting the company's strategic direction, market opportunities, and financial outlook.

Core Viewpoint - Turtle Beach Corporation has adopted a limited duration stockholder rights plan to protect stockholders and enhance the value of their investments [1][2][4] Summary by Sections Rights Plan Adoption - The Board of Directors has approved a stockholder rights plan, declaring a dividend distribution of one right for each outstanding share of common stock, with a record date of June 23, 2025 [1][2] - The Rights Plan is designed to allow stockholders to realize the full potential value of their investments and to protect against actions deemed not in the best interests of the Company [2][4] Rights Plan Mechanism - The Rights become exercisable if a person or group acquires 10% or more of the Company's common stock without Board approval, allowing existing Right holders to purchase shares at a value of twice the exercise price [3] - In the event of a merger after such an acquisition, Right holders can purchase shares of the acquiring company at a similar valuation [3] Special Meeting Clause - The Rights Plan includes a clause allowing stockholders to call a special meeting to exempt a pending offer that meets specific criteria [4] - The plan is not a response to any specific takeover bid and does not aim to deter fair offers [4] Existing Stockholders - Current stockholders owning 10% or more of the Company's stock will not face penalties under the Rights Plan as long as they do not acquire additional shares cumulatively [5] Additional Information - Further details regarding the Rights Plan will be filed with the U.S. Securities and Exchange Commission and will be available on the Company's corporate website [6]

Core Insights - Turtle Beach Corporation, a leading gaming accessories brand, will participate in the Oppenheimer 25th Annual Consumer Growth and E-Commerce Conference from June 9-11, 2025 [1] - CEO Cris Keirn will host a fireside chat on June 10 at 11:15 a.m. ET, with management available for meetings during the conference [1] Company Overview - Turtle Beach Corporation is recognized as one of the world's leading gaming accessory providers, known for its best-selling gaming headsets, top-rated game controllers, and award-winning PC gaming peripherals [3] - The company has maintained its position as a market leader in console gaming audio for over a decade, emphasizing innovation and customer support [3] - In 2024, Turtle Beach acquired Performance Designed Products LLC, further expanding its product offerings [3] - The company's shares are traded on the Nasdaq Exchange under the symbol TBCH [3]

Company Overview - Turtle Beach Corporation is a leading gaming accessories brand known for designing best-selling gaming headsets, top-rated game controllers, award-winning PC gaming peripherals, and groundbreaking gaming simulation accessories [3] - The company has been a market leader in console gaming audio for over a decade and acquired Performance Designed Products LLC in 2024 [3] - Turtle Beach's shares are traded on the Nasdaq Exchange under the symbol TBCH [3] Upcoming Events - CEO Cris Keirn and CFO Mark Weinswig will participate in the Oppenheimer 25th Annual Consumer Growth and E-Commerce Conference from June 9-11, 2025 [1] - A fireside chat hosted by CEO Cris Keirn is scheduled for June 10 at 11:15 a.m. ET [1] - A live webcast of the event will be available on the company's website, with a replay accessible for 90 days [2]

Company Overview - Turtle Beach Corporation is a leading gaming accessories brand known for designing best-selling gaming headsets, top-rated game controllers, award-winning PC gaming peripherals, and groundbreaking gaming simulation accessories [3] - The company has been a market leader in console gaming audio for over a decade and acquired Performance Designed Products LLC in 2024 [3] - Turtle Beach's shares are traded on the Nasdaq Exchange under the symbol TBCH [3] Upcoming Events - Cris Keirn, Chief Executive Officer, and Mark Weinswig, Chief Financial Officer, will participate in a fireside chat at the Maxim Group 2025 Virtual Tech Conference on June 4 at 2:00 p.m. ET [1] - A live webcast of the event will be available on the company's website, with a replay accessible for two weeks [2]

Core Insights - PowerA has launched a new lineup of accessories for the Nintendo Switch 2, featuring high-performance controllers with Hall Effect sensors and protective gear designed to enhance gaming experiences [2][3][4] Product Features - The new controllers utilize Hall Effect technology, providing contact-free magnetic sensors in the thumbsticks for improved precision and longevity [3] - The Advantage Wired Controller includes features such as two mappable Advanced Gaming Buttons, onboard audio controls, and a 10 ft. USB-C cable, available in multiple designs [11] - The Slim Case offers a low-profile design with a zippered outer shell, plush interior lining, and storage for up to ten game cards, ideal for portability [11] - A 2-pack screen protector is included in the lineup, designed for easy installation and protection of the Nintendo Switch 2 screen [11] Availability and Warranty - PowerA's Nintendo Switch 2 accessories will be available in June 2025 through various retailers including PowerA.com and Amazon [6] - All products come with a two-year limited warranty, ensuring quality and customer satisfaction [8] Commitment to Compatibility - PowerA is actively testing its existing Nintendo Switch accessory catalog for forward compatibility with the new Nintendo Switch 2 system [7]

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 [5][14] - Adjusted EBITDA rose to $4.1 million, up 180% from $1.4 million a year ago, indicating strong operating leverage [6][16] - Gross margins improved by 470 basis points year over year to 36.6% [6][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, with headsets and third-party controllers down over 20% [6][26] - Despite the overall market decline, the company achieved revenue growth due to the PDP acquisition and improved product offerings [6][11] 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 tariffs [11][28] - The company anticipates a return to growth in 2026, supported by the launch of the Nintendo Switch 2 and other major game releases [11][28] Company Strategy and Development Direction - The company is focusing on expanding its gaming accessories portfolio and capitalizing on industry growth drivers, including the upcoming Nintendo Switch 2 launch [12][21] - 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] 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][21] - The company has proactively increased inventory levels in anticipation of tariffs, which is expected to provide near-term benefits to margins [8][41] Other Important Information - The company reported strong cash flow generation, with cash flow from operations growing by nearly 50% year over year to over $40 million [17] - The company is committed to maintaining a disciplined promotional approach, which has improved profitability [7][12] Q&A Session Summary Question: Impact of GTA VI delay on revenue reduction - Management indicated that the $50 million revenue reduction is due to a combination of factors, including the GTA VI delay and broader market challenges [24][25] 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 [30][32] Question: Further cost controls in light of revised guidance - The company is actively pursuing cost synergies and has identified additional opportunities for cost reductions [33][34] Question: Flexibility to rebound if market conditions improve - Management confirmed readiness to adjust production and shipments based on market improvements, with a strong inventory position [40][42] Question: Current tariff assumptions for Vietnam - The guidance includes current tariff conditions, and management is prepared to adjust strategies based on any changes [45][47] Question: Pricing adjustments due to tariffs - Pricing adjustments have been communicated to partners, and the impact of tariffs has been factored into the guidance [52][53] Question: Transition to Vietnam and competitive advantage - The company has been diversifying its supply chain for years, allowing for a swift transition to Vietnam, which is seen as a competitive advantage [56][58] Question: Onetime costs and impact on gross margin - Onetime costs related to tariffs and transitions are expected to have a limited impact on long-term gross margins [62][65] Question: Consumer dynamics and purchasing behavior - Consumer behavior has not shown significant changes, with no evidence of preemptive buying ahead of tariffs [68][70]

Financial Data and Key Metrics Changes - First quarter revenue grew by 14% year over year to $63.9 million, driven by the full quarter contribution from the PDP acquisition [4][13] - Adjusted EBITDA increased to $4.1 million, up 180% from $1.4 million a year ago, indicating strong operating leverage [5][15] - 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 [14] Business Line Data and Key Metrics Changes - The U.S. gaming accessories market experienced a 16% year over year decline in Q1, impacting overall revenue growth despite Turtle Beach's performance [5][25] - The company noted that headsets and third-party controllers were down more than 20% in Q1 [25] Market Data and Key Metrics Changes - The broader gaming accessories market is projected to be down about 10% to 12% for the full year, with expectations of improvement in the second half of the year due to new product launches [26][40] - Anticipated growth drivers include the launch of the Nintendo Switch 2 and other major game releases [10][11] Company Strategy and Development Direction - The company is focusing on expanding its gaming accessories portfolio and capitalizing on industry growth drivers, including the upcoming Nintendo Switch 2 [11][12] - 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 [12][17] 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 [7][20] - The company is prepared for potential tariff changes and has proactively increased inventory levels to mitigate risks [7][39] Other Important Information - The company has executed the largest share repurchase program in its history, repurchasing nearly $30 million worth of stock over the past year [12][16] - Cash flow from operations grew by nearly 50% year over year to over $40 million, marking one of the highest cash flow generating quarters in the company's history [16] Q&A Session Summary Question: What is the impact of the GTA VI delay on revenue? - Management indicated that the revised guidance reflects a combination of factors, including the GTA VI delay and broader market conditions, leading to a projected revenue decline of about $50 million [23][24] Question: What are the expectations for gross margins in the upcoming quarters? - Gross margins are expected to be in the low 30s for Q2, with a recovery anticipated in Q3 and Q4 [29][31] Question: Are there any further cost controls being implemented? - The company is actively seeking cost synergies post-PDP acquisition and is exploring additional cost reduction opportunities [32][33] Question: What is the current tariff assumption for Vietnam? - The guidance includes current tariff conditions, and the company is prepared to adjust if the situation changes [44][46] Question: How is the company managing inventory levels? - The company has focused on maintaining a favorable inventory mix, clearing slow-moving goods, and stocking replenishment-based inventory [75][76]

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]