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Turtle Beach Corporation Announces Third Quarter 2024 Results and Raises Full Year Outlook

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Turtle Beach (HEAR) reported strong Q3 2024 results with net revenue of $94.4 million, up 60% year-over-year. The company achieved net income of $3.4 million ($0.16 per diluted share) compared to a net loss of $(3.6) million in the prior year. Adjusted EBITDA significantly improved to $16.3 million from $1.0 million last year. Organic revenue grew 15% excluding PDP acquisition contributions. The company raised its full-year 2024 Adjusted EBITDA guidance to $55-58 million and maintained revenue guidance of $370-380 million. During Q3, the company repurchased $10.1 million worth of common shares.

Turtle Beach (HEAR) ha riportato risultati solidi per il terzo trimestre del 2024 con un fatturato netto di 94,4 milioni di dollari, in aumento del 60% rispetto allo stesso periodo dell'anno precedente. L'azienda ha realizzato un reddito netto di 3,4 milioni di dollari (0,16 dollari per azione diluita) rispetto a una perdita netta di (3,6) milioni di dollariL'EBITDA rettificato è migliorato significativamente a 16,3 milioni di dollari rispetto a 1,0 milioni di dollari dell'anno scorso. Il fatturato organico è cresciuto del 15%, escludendo i contributi dell'acquisizione di PDP. L'azienda ha alzato la sua previsione di EBITDA rettificato per l'intero anno 2024 a 55-58 milioni di dollari e ha mantenuto la stima di fatturato di 370-380 milioni di dollari. Durante il terzo trimestre, l'azienda ha riacquistato azioni ordinarie per un valore di 10,1 milioni di dollari.

Turtle Beach (HEAR) reportó resultados sólidos para el tercer trimestre de 2024, con ingresos netos de 94,4 millones de dólares, un aumento del 60% en comparación con el año anterior. La compañía alcanzó un ingreso neto de 3,4 millones de dólares (0,16 dólares por acción diluida), en comparación con una pérdida neta de (3,6) millones de dólares el año pasado. El EBITDA ajustado mejoró significativamente a 16,3 millones de dólares desde 1,0 millones de dólares del año anterior. Los ingresos orgánicos crecieron un 15% excluyendo las contribuciones de la adquisición de PDP. La compañía elevó su guía de EBITDA ajustado para todo el año 2024 a 55-58 millones de dólares y mantuvo la guía de ingresos de 370-380 millones de dólares. Durante el tercer trimestre, la compañía recompró acciones ordinarias por un valor de 10,1 millones de dólares.

터틀 비치 (HEAR)는 2024년 3분기 강력한 실적을 발표하며, 순매출 9,440만 달러로 전년 대비 60% 증가했습니다. 회사는 순이익 340만 달러 ($0.16의 희석 주당 순이익)을 기록했으며, 전년도에는 (360만 달러)의 순손실이 있었습니다. 조정 EBITDA는 작년 100만 달러에서 1,630만 달러로 크게 개선되었습니다. PDP 인수 기여를 제외한 유기적 수익은 15% 성장했습니다. 회사는 2024년 전체 연도의 조정 EBITDA 가이드를 5,500만-5,800만 달러로 상향 조정하고 수익 가이드는 3억 7천만-3억 8천만 달러로 유지했습니다. 3분기 동안 회사는 1,010만 달러 상당의 보통주를 재매입했습니다.

Turtle Beach (HEAR) a annoncé de solides résultats pour le troisième trimestre 2024 avec un chiffre d'affaires net de 94,4 millions de dollars, en hausse de 60 % par rapport à l'année précédente. L'entreprise a réalisé un bénéfice net de 3,4 millions de dollars (0,16 dollar par action diluée), contre une perte nette de (3,6) millions de dollars l'année dernière. L'EBITDA ajusté s'est considérablement amélioré, atteignant 16,3 millions de dollars contre 1,0 million de dollars l'année précédente. Le chiffre d'affaires organique a augmenté de 15 %, en excluant les contributions de l'acquisition de PDP. L'entreprise a relevé ses prévisions d'EBITDA ajusté pour l'année 2024 à 55-58 millions de dollars et a maintenu ses prévisions de chiffre d'affaires de 370-380 millions de dollars. Au cours du troisième trimestre, l'entreprise a racheté des actions ordinaires pour une valeur de 10,1 millions de dollars.

Turtle Beach (HEAR) meldete für das 3. Quartal 2024 starke Ergebnisse mit einem Nettoumsatz von 94,4 Millionen Dollar, was einem Anstieg von 60 % im Jahresvergleich entspricht. Das Unternehmen erzielte einen Nettogewinn von 3,4 Millionen Dollar (0,16 Dollar pro verwässerter Aktie) im Vergleich zu einem Nettoverlust von (3,6) Millionen Dollar im Vorjahr. Das angepasste EBITDA verbesserte sich erheblich auf 16,3 Millionen Dollar von 1,0 Millionen Dollar im letzten Jahr. Der organische Umsatz wuchs um 15 %, ohne die Beiträge der PDP-Akquisition. Das Unternehmen hob seine Prognose für das angepasste EBITDA für das Gesamtjahr 2024 auf 55-58 Millionen Dollar an und hielt die Umsatzprognose von 370-380 Millionen Dollar aufrecht. Im dritten Quartal repurchasierte das Unternehmen Aktien im Wert von 10,1 Millionen Dollar.

Positive
  • Revenue increased 60% year-over-year to $94.4 million
  • Turned $3.6M loss into $3.4M profit year-over-year
  • Adjusted EBITDA improved by $15.2M to $16.3 million
  • Organic revenue growth of 15% excluding PDP acquisition
  • Gross margin expanded 630 basis points to 36.2%
  • Increased annual synergy expectations to exceed $13 million
  • Raised full-year EBITDA guidance to $55-58 million
Negative
  • Net debt increased to $94.1 million
  • Operating cash flow turned negative at -$8.6M vs +$7.9M prior year
  • Inventory levels increased to $102.3M from $44.0M at year-end

Insights

Turtle Beach delivered an exceptional Q3 2024, with $94.4 million revenue representing a 60% YoY growth. The PDP acquisition is proving transformative, with organic growth at 15% and synergies now expected to exceed $13 million annually. Key highlights include:

  • Gross margin expanded 630 basis points to 36.2%
  • Net income of $3.4 million versus previous year loss
  • Adjusted EBITDA jumped to $16.3 million from $1.0 million
  • Aggressive share buybacks totaling $10.1 million in Q3

The raised EBITDA guidance of $55-58 million for 2024 and robust inventory buildup for holiday season signal strong momentum. While net debt stands at $94.1 million, the seasonal working capital needs and strategic investments appear well-managed given the company's improved operational metrics.

– Third Quarter Net Revenue of $94.4 million, up 60% Year-over-Year –
– Net Income was $3.4 million compared to a Net Loss of ($3.6) in prior year –
– Adjusted EBITDA was $16.3 million compared to $1.0 in prior year –
– Raising Full Year 2024 EBITDA Guidance Again on Continued Execution Strength –
– Repurchased $10.1 Million of Common Shares in the Third Quarter –

WHITE PLAINS, N.Y., Nov. 07, 2024 (GLOBE NEWSWIRE) -- Turtle Beach Corporation (Nasdaq: HEAR), a leading gaming accessories brand, today reported financial results for the third quarter ended September 30, 2024.

Third Quarter Highlights

  • Net revenue was $94.4 million, an increase of 60% compared to the prior year period.
  • Net income was $3.4 million or $0.16 per diluted share compared to a net loss of $(3.6) million or $(0.21) net loss per diluted share in the prior year period.
  • Adjusted EBITDA was $16.3 million, an improvement of $15.2 million compared to an Adjusted EBITDA of $1.0 million in the prior year period.

“We delivered another strong quarter of performance, showcasing the continued momentum in our business, and have made tremendous progress towards the integration of PDP following our transformative acquisition earlier this year. Our third quarter revenue grew 60% year-over-year to $94.4 million, while adjusted EBITDA increased significantly to $16.3 million, reflecting the benefits of our expanded portfolio and operational improvements. Excluding PDP's contributions, our organic revenue grew approximately 15% compared to last year, highlighting the depth of our underlying business and an unwavering focus on execution. The gaming accessories market continues to show robust growth year-to-date, particularly in our core categories. We believe there are still additional synergies to be realized as we continue to optimize our operations,” said Cris Keirn, CEO, Turtle Beach Corporation.

“Our market position continues to strengthen, with notable share gains across key categories. The integration of PDP is exceeding our expectations, and we now anticipate achieving total annual synergies exceeding $13 million, surpassing our initial estimates. Our gross margin expansion of 630 basis points year-over-year to 36.2% demonstrates the success of our cost optimization initiatives and reduced promotional spending.”

“We're excited about our upcoming product pipeline and the continued benefits from our increased scale and diversification. Our visibility regarding continued strong demand for our products ahead of the holiday season and our improved financial performance is reflected in our increased Adjusted EBITDA guidance for the year, as we detail below. We remain focused on driving innovation, operational excellence, and market leadership while delivering value to our shareholders and gaming customers worldwide.

“Further, our confidence in Turtle Beach's value creation over the long-term is reflected in our share repurchase program, through which we bought back $10.1 million of stock in the third quarter alone. This repurchase came in addition to the more than $15 million of shares that we repurchased in the second quarter. Combined, the past two quarters mark the largest share repurchase in the history of Turtle Beach, punctuating our continued commitment to return capital to shareholders in conjunction with investing appropriately in the Company. We believe these repurchases represent a strategic investment that underscore our confidence in the Company’s future, based on our assessment of the intrinsic value of the shares.”

Share Repurchase Update
During the third quarter ended September 30, 2024, the Company repurchased approximately 688,000 shares of common stock for an aggregate purchase price of $10.1 million. The Company has repurchased $25.3 million year-to-date, and has $21.3 million remaining to repurchase shares under its share repurchase program which expires on April 9, 2025.  

Balance Sheet and Cash Flow Summary
At September 30, 2024, the Company had net debt of $94.1 million, comprised of $107.9 million of borrowings less $13.8 million of cash. Inventories at September 30, 2024 were $102.3 million compared to $44.0 million at December 31, 2023 which now includes PDP. Cash flow used in operations for the nine months ended September 30, 2024 was $8.6 million compared to cash from operations of $7.9 million for the nine months ended September 30, 2023.

Given the required investment in inventory that the Company undertakes ahead of the holiday season, it is typical that the Company’s net debt temporarily increases at the end of the third quarter of each year due to these working capital requirements.

Outlook
Turtle Beach is updating its 2024 outlook. The Company is maintaining its guidance for net revenue for the full year ending December 31, 2024, to be between $370 and $380 million. This revenue range translates to 43-47% growth year-over-year.

The Company currently expects Adjusted EBITDA for the full year ending December 31, 2024, to be between $55 and $58 million, up from the prior range of between $53 million to $56 million compared to $6.5 million of Adjusted EBITDA for 2023.

Earnings Conference Call and Webcast Details
Turtle Beach will host a conference call and audio webcast today, November 7, 2024, at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time), during which management will discuss third quarter results and provide commentary on business performance and its current outlook for 2024. A question-and-answer session will follow the prepared remarks.

The conference call may be accessed by telephone by dialing 800-717-1738 (domestic) or 646-307-1865 (international).

A live audio webcast of the earnings conference call may be accessed on Turtle Beach’s website at www.corp.turtlebeach.com, along with a copy of this press release and an investor slide presentation. An audio replay of the call will be available on the Company’s investor relations website for a limited period of time.

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 LLC (www.pdp.com) in 2024. Turtle Beach’s shares are traded on the Nasdaq Exchange under the symbol: HEAR.

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 and nine months ended September 30, 2023 and September 30, 2024.

By providing full year 2024 Adjusted EBITDA guidance, the Company provided its expectation of a forward-looking non-GAAP financial measure. Information reconciling full year 2024 Adjusted EBITDA to its most directly comparable GAAP financial measure, net income (loss), is unavailable to the Company without unreasonable effort due to 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.

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 logistic and supply chain challenges and costs, the substantial uncertainties inherent in the acceptance of existing and future products, the difficulty of commercializing and protecting new technology, the impact of competitive products and pricing, general business and economic conditions, risks associated with the expansion of our business including the integration of any 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 the United States and the rules and regulations of the Securities and Exchange Commission, the Company is under no obligation to publicly update or revise any forward-looking statement after the date of this release whether as a result of new information, future developments or otherwise.

CONTACTS

Investors:
hear@icrinc.com
(646) 277-1285

Public Relations & Media:
MacLean Marshall
Sr. Director, Global Communications
Turtle Beach Corporation
(858) 914-5093
maclean.marshall@turtlebeach.com

 
Turtle Beach Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per-share data)
(unaudited)
Table 1.

  Three Months Ended  Nine Months Ended 
  September 30,  September 30,  September 30,  September 30, 
  2024  2023  2024  2023 
Net revenue  $94,363   $59,158   $226,689   $158,584 
Cost of revenue   60,232    41,469    151,696    114,884 
Gross profit   34,131    17,689    74,993    43,700 
Operating expenses:            
Selling and marketing   13,535    10,583    36,289    30,457 
Research and development   4,311    4,380    12,802    12,670 
General and administrative   6,352    5,243    19,489    25,375 
Acquisition-related cost   3,510    -    9,814    - 
Total operating expenses   27,708    20,206    78,394    68,502 
Operating income (loss)   6,423    (2,517)   (3,401)   (24,802)
Interest expense   2,712    107    5,082    253 
Other non-operating expense, net   252    481    974    799 
Income (loss) before income tax   3,459    (3,105)   (9,457)   (25,854)
Income tax expense (benefit)   46    501    (5,501)   377 
Net income (loss)  $3,413   $(3,606)  $(3,956)  $(26,231)
             
Net income (loss) per share            
Basic  $0.17   $(0.21)  $(0.20)  $(1.54)
Diluted  $0.16   $(0.21)  $(0.20)  $(1.54)
Weighted average number of shares:            
Basic   20,553    17,345    20,050    17,029 
Diluted   21,501    17,345    20,050    17,029 


 
Turtle Beach Corporation
Condensed Consolidated Balance Sheets
(in thousands, except par value and share amounts)
Table 2.       

  September 30,  December 31, 
  2024  2023 
  (unaudited)    
ASSETS   
Current Assets:      
Cash and cash equivalents  $13,803   $18,726 
Accounts receivable, net   70,703    54,390 
Inventories   102,263    44,019 
Prepaid expenses and other current assets   9,686    7,720 
Total Current Assets   196,455    124,855 
Property and equipment, net   5,753    4,824 
Goodwill   56,700    10,686 
Intangible assets, net   44,544    1,734 
Other assets   9,749    7,868 
Total Assets  $313,201   $149,967 
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current Liabilities:      
Revolving credit facility  $58,626   $ 
Accounts payable   66,394    26,908 
Other current liabilities   30,689    29,424 
Total Current Liabilities   155,709    56,332 
Debt, non-current   45,696     
Income tax payable   1,489    1,546 
Other liabilities   8,488    7,012 
Total Liabilities   211,382    64,890 
Commitments and Contingencies      
Stockholders’ Equity      
Common stock   20    18 
Additional paid-in capital   239,345    220,185 
Accumulated deficit   (138,233)   (134,277)
Accumulated other comprehensive loss   687    (849)
Total Stockholders’ Equity   101,819    85,077 
Total Liabilities and Stockholders’ Equity  $313,201   $149,967 


 
Turtle Beach Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Table 3.

  Nine Months Ended 
  September 30,
2024
  September 30,
2023
 
  (in thousands) 
CASH FLOWS FROM OPERATING ACTIVITIES      
Net loss $(3,956) $(26,231)
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:      
Depreciation and amortization  3,261   2,912 
Costs recognized on sale of acquired inventory  2,085    
Amortization of intangible assets  4,843   761 
Amortization of debt financing costs  625   108 
Stock-based compensation  3,447   8,554 
Deferred income taxes  (6,739)  (178)
Change in sales returns reserve  1,369   (2,473)
Provision for obsolete inventory  4,690   200 
Loss on impairment of asset  753    
Changes in operating assets and liabilities, net of acquisitions:      
Accounts receivable  4,344   12,563 
Inventories  (43,597)  (4,986)
Accounts payable  30,050   19,072 
Prepaid expenses and other assets  127   385 
Income taxes payable  485   126 
Other liabilities  (10,340)  (2,869)
Net cash provided (used for) by operating activities  (8,553)  7,944 
CASH FLOWS FROM INVESTING ACTIVITIES      
Purchases of property and equipment  (3,392)  (1,924)
Acquisition of a business, net of cash acquired  (77,294)   
Net cash used for investing activities  (80,686)  (1,924)
CASH FLOWS FROM FINANCING ACTIVITIES      
Borrowings on revolving credit facilities  242,609   149,995 
Repayment of revolving credit facilities  (183,983)  (155,787)
Proceeds of term loan  50,000    
Repayment of term loan  (729)   
Proceeds from exercise of stock options and warrants  3,004   1,718 
Repurchase of common stock  (25,339)  (974)
Debt issuance costs  (2,897)  (80)
Net cash provided by (used for) financing activities  82,665   (5,128)
Effect of exchange rate changes on cash and cash equivalents  1,651   52 
Net increase (decrease) in cash and cash equivalents  (4,923)  944 
Cash and cash equivalents - beginning of period  18,726   11,396 
Cash and cash equivalents - end of period $13,803  $12,340 


 
Turtle Beach Corporation
GAAP to Adjusted EBITDA Reconciliation
(in thousands)
Table 4.

  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2024  2023  2024  2023 
  (in thousands) 
Net loss $3,413  $(3,606) $(3,956) $(26,231)
Interest expense  2,712   107   5,082   253 
Depreciation and amortization  3,322   1,212   8,104   3,673 
Stock-based compensation  1,496   1,625   3,447   8,554 
Income tax benefit (1)  46   501   (5,501)  377 
Restructuring expense (2)  910   1,104   1,657   1,104 
CEO transition related costs (3)           2,874 
Business transaction expense (4)  3,510      9,814    
Incremental costs on acquired inventory (5)  833      2,084    
Proxy contest and other (6)  26   94   30   1,936 
Adjusted EBITDA $16,268  $1,037  $20,761  $(7,460)

(1)  An income tax benefit of $7.0 million was recorded in the three months ended March 31, 2024 as a result of the reversal of a portion of the Company’s deferred tax asset valuation allowance.

(2)  Restructuring charges are expenses that are paid in connection with reorganization of our operations. These costs primarily include severance and related benefits.

(3)  CEO transition related expense includes one-time costs associated with the separation of its former CEO. Such costs included severance, bonus, medical benefits and the tax impact of accelerated vesting of stock-based compensation.

(4)  Business transaction expense includes one-time costs we incurred in connection with acquisitions including warehouse lease impairment, professional fees such as legal and accounting along with other certain integration related costs.

(5)  Costs relate to the step up of acquired PDP finished goods inventory to fair market value as required under GAAP purchase accounting. This step up in value over original cost is recorded as a charge to cost of revenue as such inventory is sold.

(6)  Proxy contest and other primarily includes one-time legal and other professional fees associated with proxy challenges presented by certain shareholder activists.


FAQ

What was Turtle Beach (HEAR) revenue growth in Q3 2024?

Turtle Beach reported Q3 2024 revenue of $94.4 million, representing a 60% increase year-over-year.

How much did Turtle Beach (HEAR) spend on share repurchases in Q3 2024?

Turtle Beach repurchased approximately 688,000 shares for $10.1 million during Q3 2024.

What is Turtle Beach's (HEAR) updated EBITDA guidance for 2024?

Turtle Beach raised its 2024 Adjusted EBITDA guidance to between $55 and $58 million, up from the previous range of $53-56 million.

What was Turtle Beach's (HEAR) Q3 2024 net income?

Turtle Beach reported Q3 2024 net income of $3.4 million or $0.16 per diluted share.

Turtle Beach Corporation

NASDAQ:HEAR

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295.37M
14.43M
28.13%
69.41%
3.93%
Consumer Electronics
Communications Equipment, Nec
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United States of America
WHITE PLAINS