Turtle Beach Announces First Quarter 2024 Earnings Results
Turtle Beach reported strong financial results for the first quarter of 2024, with net revenue up 8.6% year-over-year. The company's diligent cost management initiatives led to improved Adjusted EBITDA profitability. Favorable gaming trends and upcoming product launches position Turtle Beach for continued success.
Net revenue increased by 8.6% year-over-year to $55.8 million.
Net income improved to $0.2 million compared to a net loss of $6.7 million in the year-ago quarter.
Adjusted EBITDA improved to $1.4 million from a loss of $2.8 million a year ago.
Gross margin expanded by 430 basis points driven by lower costs.
First quarter cash-based recurring operating expenses declined approximately 6% year over year.
Operating expenses increased to $23.5 million from $20.6 million a year ago.
Net income was only $0.2 million for the quarter.
The company secured a $50 million term loan for the PDP acquisition, resulting in a net debt of $32.1 million at March 31, 2024.
Cash flow from operations decreased to $27.3 million compared to $29.0 million in the same period last year.
Strong Product Demand Increases Net Revenue
Diligent Cost Management Initiatives Significantly Improve Adjusted EBITDA Profitability
Favorable Gaming Trends and Upcoming New Product Launches Position Turtle Beach for Continued Success
First Quarter Summary vs. Year-Ago Quarter:
-
Net revenue was
$55.8 million 8.6% compared to$51.4 million -
Net income was
$0.2 million $0.01 $6.7 million $0.40 -
Adjusted EBITDA improved to
$1.4 million $2.8 million
Management Commentary
“Our first quarter results were in-line with our expectations and track well to our full year 2024 plan,” said Cris Keirn, Chief Executive Officer, Turtle Beach Corporation. “I’m pleased with our start to the year and the work underway to rapidly integrate our PDP team. We are seeing solid demand for products that are in pre-launch or in the launch phase, and we have an exciting number of other new product launches planned throughout the year across headsets and controllers. We also continue to benefit from our diligent cost management initiatives consisting of portfolio optimization, SKU rationalization and product platforming, all of which are coming into full effect in 2024.
“We continued to showcase our disciplined approach to the business, which drove profitable growth in the quarter. First quarter 2024 net revenue was up
“I’m proud of our team’s hard work and commitment to execution, and we remain optimistic about our 2024 prospects given our progress against optimizing the business for the future, our growth prospects in all our gaming categories driven by fantastic new product launches, and our focus on significantly increasing profitability.”
First Quarter 2024 Financial Results
Net revenue in the first quarter of 2024 was
Gross margin expanded by 430 basis points primarily driven by lower freight, promotional spend and returns along with direct focus on reducing product costs to enable margin expansion.
Operating expenses in the first quarter of 2024 were
Net income in the first quarter of 2024 was
Adjusted EBITDA (as defined below in “Non-GAAP Financial Measures”) in the first quarter of 2024 improved to
Balance Sheet and Cash Flow Summary
At March 31, 2024, the Company had
Outlook
The Company is maintaining its 2024 outlook, with net revenues expected to be in the range of
The Company further reiterates its long-term goals of a
With respect to the Company's adjusted EBITDA outlook, a reconciliation to its net income (loss) outlook for the same periods has not been provided because of the variability, complexity, and lack of visibility with respect to certain reconciling items between adjusted EBITDA and net income (loss), including other income (expense), provision for income taxes and stock-based compensation. These items cannot be reasonably and accurately predicted without the investment of undue time, cost and other resources and, accordingly, a reconciliation of the Company’s adjusted EBITDA outlook to its net income (loss) outlook for such periods is not provided. These reconciling items could be material to the Company’s actual results for such periods.
Conference Call Details
In conjunction with this announcement, Turtle Beach will host a conference call at 5:00 p.m. ET / 2:00 p.m. PT with the Company’s Chief Executive Officer, Cris Keirn, and CFO, John Hanson. A live webcast of the call will be available on the “Events & Presentations” page of the Company’s website at www.corp.turtlebeach.com. To access the call by phone, please go to this link (registration link) and you will be provided with dial in details. To avoid delays, we encourage participants to dial into the conference call 15-minutes ahead of the scheduled start time. A replay of the webcast will also be available for a limited time at www.corp.turtlebeach.com.
Non-GAAP Financial Measures
In addition to its reported results, the Company has included in this earnings release certain financial metrics, including adjusted EBITDA, that the Securities and Exchange Commission define as “non-GAAP financial measures.” Management believes that such non-GAAP financial measures, when read in conjunction with the Company's reported results, can provide useful supplemental information for investors analyzing period-to-period comparisons of the Company's results. Non-GAAP financial measures are not an alternative to the Company’s GAAP financial results and may not be calculated in the same manner as similar measures presented by other companies. “Adjusted EBITDA” is defined by the Company as net income (loss) before interest, taxes, depreciation and amortization, stock-based compensation (non-cash), and certain non-recurring special items that we believe are not representative of core operations, as further described in Table 4. These non-GAAP financial measures are presented because management uses non-GAAP financial measures to evaluate the Company’s operating performance, to perform financial planning, and to determine incentive compensation. Therefore, the Company believes that the presentation of non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors. The non-GAAP financial measures included herein exclude items that management does not believe reflect the Company’s core operating performance because such items are inherently unusual, non-operating, unpredictable, non-recurring, or non-cash. See a reconciliation of GAAP results to Adjusted EBITDA included as Table 4 below for each of the three months ended March 31, 2023 and March 31, 2024.
About Turtle Beach Corporation
Turtle Beach Corporation (the “Company”) (www.turtlebeachcorp.com) is one of the world’s leading gaming accessory providers. The Company’s namesake Turtle Beach brand (www.turtlebeach.com) is known for designing best-selling gaming headsets, top-rated game controllers, award-winning PC gaming peripherals, and groundbreaking gaming simulation accessories. Innovation, first-to-market features, a broad range of products for all types of gamers, and top-rated customer support have made Turtle Beach a fan-favorite brand and the market leader in console gaming audio for over a decade. Turtle Beach Corporation acquired Performance Designed Products (www.pdp.com) in 2024. Turtle Beach’s shares are traded on the Nasdaq Exchange under the symbol: HEAR.
Cautionary Note on Forward-Looking Statements
This press release 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 beliefs about future events. Statements containing the words “may,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “goal,” “project,” “intend” and similar expressions, or the negatives thereof, constitute forward-looking statements. Forward-looking statements are only predictions and are not guarantees of performance. Forward-looking statements involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. The inclusion of such information should not be regarded as a representation by the Company, or any person, that the objectives of the Company will be achieved. Forward-looking statements are based on management’s current beliefs and expectations, as well as assumptions made by, and information currently available to, management.
While the Company believes that its expectations are based upon reasonable assumptions, there can be no assurances that its goals and strategy will be realized. Numerous factors, including risks and uncertainties, may affect actual results and may cause results to differ materially from those expressed in forward-looking statements made by the Company or on its behalf. Some of these factors include, but are not limited to, risks related to general business and economic conditions, inflationary pressures, the impact of competitive products and pricing, including promotional credits and discounts, optimizing our product portfolio, the substantial uncertainties inherent in the acceptance of existing and future products, our dependence on third parties to manufacture and transport our products, reductions in logistic and supply chain challenges and costs, reducing our cost of goods and operating expenses, the difficulty of commercializing and protecting new technology, risks associated with the future direction or governance of the Company, risks associated with the expansion of our business, including the integration of PDP and any other businesses we acquire and the integration of such businesses within our internal control over financial reporting and operations, our indebtedness, liquidity, and other factors discussed in our public filings, including the risk factors included in the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and the Company’s other periodic reports filed with the Securities and Exchange Commission. Except as required by applicable law, including the securities laws of
All trademarks are the property of their respective owners.
Turtle Beach Corporation Condensed Consolidated Statements of Operations (in thousands, except per-share data) (unaudited) |
||||||||
Table 1. |
||||||||
|
|
Three Months Ended |
||||||
|
|
March 31, |
|
March 31, |
||||
|
|
2024 |
|
2023 |
||||
Net revenue |
|
$ |
55,848 |
|
|
$ |
51,444 |
|
Cost of revenue |
|
|
38,062 |
|
|
|
37,305 |
|
Gross profit |
|
|
17,786 |
|
|
|
14,139 |
|
Operating expenses: |
|
|
|
|
||||
Selling and marketing |
|
|
9,013 |
|
|
|
9,523 |
|
Research and development |
|
|
3,902 |
|
|
|
4,101 |
|
General and administrative |
|
|
5,674 |
|
|
|
7,007 |
|
Acquisition-related cost |
|
|
4,910 |
|
|
|
— |
|
Total operating expenses |
|
|
23,499 |
|
|
|
20,631 |
|
Operating loss |
|
|
(5,713 |
) |
|
|
(6,492 |
) |
Interest expense |
|
|
150 |
|
|
|
163 |
|
Other non-operating expense, net |
|
|
370 |
|
|
|
120 |
|
Loss before income tax |
|
|
(6,233 |
) |
|
|
(6,775 |
) |
Income tax benefit |
|
|
(6,388 |
) |
|
|
(70 |
) |
Net income (loss) |
|
$ |
155 |
|
|
$ |
(6,705 |
) |
|
|
|
|
|
||||
Net income (loss) per share |
|
|
|
|
||||
Basic |
|
$ |
0.01 |
|
|
$ |
(0.40 |
) |
Diluted |
|
$ |
0.01 |
|
|
$ |
(0.40 |
) |
Weighted average number of shares: |
|
|
|
|
||||
Basic |
|
|
18,321 |
|
|
|
16,578 |
|
Diluted |
|
|
19,389 |
|
|
|
16,578 |
|
Turtle Beach Corporation Condensed Consolidated Balance Sheets (in thousands, except par value and share amounts) |
||||||||
Table 2. |
||||||||
|
|
|
|
|
||||
|
|
March 31, |
|
December 31, |
||||
|
|
2024 |
|
2023 |
||||
|
|
(unaudited) |
|
|
||||
ASSETS |
|
|
||||||
Current Assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
17,816 |
|
|
$ |
18,726 |
|
Accounts receivable, net |
|
|
42,908 |
|
|
|
54,390 |
|
Inventories |
|
|
69,531 |
|
|
|
44,019 |
|
Prepaid expenses and other current assets |
|
|
10,322 |
|
|
|
7,720 |
|
Total Current Assets |
|
|
140,577 |
|
|
|
124,855 |
|
Property and equipment, net |
|
|
5,533 |
|
|
|
4,824 |
|
Goodwill |
|
|
52,907 |
|
|
|
10,686 |
|
Intangible assets, net |
|
|
48,704 |
|
|
|
1,734 |
|
Other assets |
|
|
10,668 |
|
|
|
7,868 |
|
Total Assets |
|
$ |
258,389 |
|
|
$ |
149,967 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
||||
Current Liabilities: |
|
|
|
|
||||
Revolving credit facility |
|
$ |
— |
|
|
$ |
— |
|
Accounts payable |
|
|
44,842 |
|
|
|
26,908 |
|
Other current liabilities |
|
|
31,947 |
|
|
|
29,424 |
|
Total Current Liabilities |
|
|
76,789 |
|
|
|
56,332 |
|
Debt, non-current |
|
|
45,954 |
|
|
|
— |
|
Income tax payable |
|
|
1,527 |
|
|
|
1,546 |
|
Other liabilities |
|
|
8,893 |
|
|
|
7,012 |
|
Total Liabilities |
|
|
133,163 |
|
|
|
64,890 |
|
Commitments and Contingencies |
|
|
|
|
||||
Stockholders’ Equity |
|
|
|
|
||||
Common stock |
|
|
21 |
|
|
|
18 |
|
Additional paid-in capital |
|
|
260,594 |
|
|
|
220,185 |
|
Accumulated deficit |
|
|
(134,122 |
) |
|
|
(134,277 |
) |
Accumulated other comprehensive loss |
|
|
(1,267 |
) |
|
|
(849 |
) |
Total Stockholders’ Equity |
|
|
125,226 |
|
|
|
85,077 |
|
Total Liabilities and Stockholders’ Equity |
|
$ |
258,389 |
|
|
$ |
149,967 |
|
Turtle Beach Corporation Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) |
||||||||
Table 3. |
||||||||
|
|
Three Months Ended |
||||||
|
|
March 31, 2024 |
|
March 31, 2023 |
||||
|
|
|
|
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
$ |
27,257 |
|
|
$ |
28,989 |
|
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
(76,225 |
) |
|
|
(887 |
) |
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
||||
Borrowings on revolving credit facilities |
|
|
80,288 |
|
|
|
53,892 |
|
Repayment of revolving credit facilities |
|
|
(80,288 |
) |
|
|
(72,945 |
) |
Proceeds of term loan |
|
|
50,000 |
|
|
|
— |
|
Repayment of term loan |
|
|
(104 |
) |
|
|
— |
|
Proceeds from exercise of stock options and warrants |
|
|
1,257 |
|
|
|
125 |
|
Debt Issuance Costs |
|
|
(3,170 |
) |
|
|
(80 |
) |
Net cash provided by (used for) financing activities |
|
|
47,983 |
|
|
|
(19,008 |
) |
Effect of exchange rate changes on cash |
|
|
75 |
|
|
|
83 |
|
Net increase (decrease) in cash |
|
|
(910 |
) |
|
|
9,177 |
|
Cash - beginning of period |
|
|
18,726 |
|
|
|
11,396 |
|
Cash - end of period |
|
$ |
17,816 |
|
|
$ |
20,573 |
|
Turtle Beach Corporation GAAP to Adjusted EBITDA Reconciliation (in thousands) |
||||||||
Table 4. |
||||||||
|
|
Three Months Ended |
||||||
|
|
March 31, |
||||||
|
|
2024 |
|
2023 |
||||
|
|
(in thousands) |
||||||
Net loss |
|
$ |
155 |
|
|
$ |
(6,705 |
) |
Interest expense |
|
|
150 |
|
|
|
163 |
|
Depreciation and amortization |
|
|
1,476 |
|
|
|
1,242 |
|
Stock-based compensation |
|
|
1,105 |
|
|
|
1,959 |
|
Income tax benefit (1) |
|
|
(6,388 |
) |
|
|
(70 |
) |
Restructuring expense (2) |
|
|
41 |
|
|
|
— |
|
Business transaction expense (3) |
|
|
4,910 |
|
|
|
— |
|
Proxy contest and other (4) |
|
|
— |
|
|
|
569 |
|
Adjusted EBITDA |
|
$ |
1,449 |
|
|
$ |
(2,842 |
) |
(1) |
An income tax benefit of |
(2) |
Restructuring charges are expenses that are paid in connection with reorganization of our operations. These costs primarily include severance and related benefits. |
(3) |
Business transaction expense includes one-time costs we incurred in connection with acquisitions including professional fees such as legal and accounting along with other certain integration related costs of the acquisition. |
(4) |
Proxy contest and other primarily includes one-time legal and other professional fees associated with proxy challenges presented by certain shareholder activists. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240507322859/en/
MacLean Marshall
Sr. Director, Public Relations &
Brand Communications
Turtle Beach Corporation
858.914.5093
maclean.marshall@turtlebeach.com
Investor Information:
Alex Thompson
Gateway Group
949.574.3860
hear@gateway-grp.com
Source: Turtle Beach Corporation
FAQ
What was Turtle Beach's net revenue for the first quarter of 2024?
Turtle Beach reported a net revenue of $55.8 million for the first quarter of 2024, representing an 8.6% increase year-over-year.
What was Turtle Beach's net income for the first quarter of 2024?
Turtle Beach's net income for the first quarter of 2024 was $0.2 million, compared to a net loss of $6.7 million in the year-ago quarter.
What was Turtle Beach's Adjusted EBITDA for the first quarter of 2024?
Turtle Beach's Adjusted EBITDA for the first quarter of 2024 improved to $1.4 million, compared to a loss of $2.8 million a year ago.
What is Turtle Beach's stock symbol?
Turtle Beach's stock symbol is HEAR and is traded on the Nasdaq Exchange.
What were Turtle Beach's cash flow from operations for the first quarter of 2024?
Turtle Beach's cash flow from operations for the first quarter of 2024 was $27.3 million, down from $29.0 million in the same period last year.
