Turtle Beach Reports First Quarter 2023 Results, Exceeding Expectations
- Turtle Beach Corporation reported a 10% increase in net revenue for the first quarter of 2023 compared to the year-ago quarter. The company also improved its adjusted net loss. These positive results indicate a healthier console gaming headset market and good business execution. Turtle Beach is raising its full-year outlook, expecting 10 to 12% revenue growth and a return to positive adjusted EBITDA.
- None.
Raises Full Year Outlook
First Quarter Summary vs. Year-Ago Quarter:
-
Net revenue was
$51.4 million 10% compared to$46.7 million -
Net loss was
$6.7 million $0.40 $6.5 million $0.40 -
Adjusted net loss was
$4.4 million $0.27 $6.3 million $0.39 -
Adjusted EBITDA loss improved to
$2.3 million $5.7 million
Management Commentary
“Our solid first quarter results reflect a healthier console gaming headset market compared to a year ago and good business execution, as revenue and adjusted EBITDA were slightly above expectations and well on-track to our increased full year 2023 targets of 10 to
“The operating environment, gaming market dynamics and macroeconomic conditions have improved compared to a year ago. Increased supply and strong sales performance of console hardware has contributed to market growth, and per Circana (formerly NPD), the console gaming headset market had a
“Our strategy to continue our leadership in console headsets, while diversifying into additional categories and platforms, is progressing well, as we gained share in nearly every category this quarter. This strategy enables us to best leverage the positive long-term trends underlying the gaming market and positions us well to capitalize on the additional opportunities created as the gaming market continues its recovery.”
First Quarter 2023 Financial Results
Net revenue in the first quarter of 2023 was
Gross margin in the first quarter of 2023 was
Operating expenses in the first quarter of 2023 were
Net loss in the first quarter of 2023 was
Adjusted EBITDA loss (as defined below in “Non-GAAP Financial Measures”) in the first quarter of 2023 improved to
Balance Sheet and Cash Flow Summary
At March 31, 2023, the Company had
Increased 2023 Outlook
In light of the aforementioned market and operational conditions, the Company now expects net revenues for fiscal year 2023 to be in the range of
The Company is maintaining its long-term goals of 10 to
With respect to the Company's adjusted EBITDA outlook for the full year 2023, 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 on May 4, 2023 at 5:00 p.m. ET / 2:00 p.m. PT with the Company’s CEO, Juergen Stark, 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.turtlebeachcorp.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 fifteen minutes ahead of the scheduled start time. A replay of the webcast will also be available for a limited time at www.turtlebeachcorp.com.
Non-GAAP Financial Measures
In addition to its reported results, the Company has included in this earnings release certain financial results, including adjusted EBITDA, and adjusted net income that the Securities and Exchange Commission defines 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. “Non-GAAP net income or loss” is defined as net income excluding (i) certain non-recurring business costs, (ii) inventory and component related reserves, (iii) goodwill and other intangible asset impairments, and (iv) certain valuation allowances. “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. 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 Non-GAAP net income or loss and Adjusted EBITDA included below for each of the three months ended March 31, 2022 and March 31, 2023.
Important Additional Information
The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from the Company’s shareholders in connection with the Annual Meeting. The Company intends to file a definitive proxy statement and a WHITE proxy card with the SEC in connection with any such solicitation of proxies from the Company’s shareholders. SHAREHOLDERS OF THE COMPANY ARE STRONGLY ENCOURAGED TO READ SUCH PROXY STATEMENT, ACCOMPANYING WHITE PROXY CARD AND ALL OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION. The Company’s definitive proxy statement for the 2022 Annual Meeting of Shareholders contains information regarding the direct and indirect interests, by security holdings or otherwise, of the Company’s directors and executive officers in the Company’s securities. Information regarding subsequent changes to their holdings of the Company’s securities can be found in the SEC filings on Forms 3, 4 and 5, which are available on the Company’s website at https://corp.turtlebeach.com/ or through the SEC’s website at www.sec.gov. Information can also be found in the Company’s other SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2022. Updated information regarding the identity of potential participants, and their direct or indirect interests, by security holdings or otherwise, will be set forth in the definitive proxy statement and other materials to be filed with the SEC in connection with the Annual Meeting. Shareholders will be able to obtain the definitive proxy statement, any amendments or supplements to the proxy statement and other documents filed by the Company with the SEC at no charge at the SEC’s website at www.sec.gov. Copies will also be available at no charge on the Company’s website at https://corp.turtlebeach.com/.
About Turtle Beach Corporation
Turtle Beach Corporation (corp.turtlebeach.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, 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’s ROCCAT brand (www.roccat.com) combines detail-loving German innovation with a genuine passion for designing the best PC gaming products, including award-winning keyboards, mice, headsets, mousepads, and other PC accessories. 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 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 inflationary pressures, logistic and supply chain challenges, 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 future direction or governance of the Company, 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
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, |
||||
|
|
2023 |
|
2022 |
||||
Net revenue |
|
$ |
51,444 |
|
|
$ |
46,662 |
|
Cost of revenue |
|
|
37,305 |
|
|
|
32,633 |
|
Gross profit |
|
|
14,139 |
|
|
|
14,029 |
|
Operating expenses: |
|
|
|
|
||||
Selling and marketing |
|
|
9,523 |
|
|
|
10,829 |
|
Research and development |
|
|
4,101 |
|
|
|
5,252 |
|
General and administrative |
|
|
7,007 |
|
|
|
6,235 |
|
Total operating expenses |
|
|
20,631 |
|
|
|
22,316 |
|
Operating income (loss) |
|
|
(6,492 |
) |
|
|
(8,287 |
) |
Interest expense |
|
|
163 |
|
|
|
109 |
|
Other non-operating expense, net |
|
|
120 |
|
|
|
719 |
|
Income (loss) before income tax |
|
|
(6,775 |
) |
|
|
(9,115 |
) |
Income tax expense benefit |
|
|
(70 |
) |
|
|
(2,639 |
) |
Net income (loss) |
|
$ |
(6,705 |
) |
|
$ |
(6,476 |
) |
|
|
|
|
|
||||
Net income (loss) per share |
|
|
|
|
||||
Basic |
|
$ |
(0.40 |
) |
|
$ |
(0.40 |
) |
Diluted |
|
$ |
(0.40 |
) |
|
$ |
(0.40 |
) |
Weighted average number of shares: |
|
|
|
|
||||
Basic |
|
|
16,578 |
|
|
|
16,194 |
|
Diluted |
|
|
16,578 |
|
|
|
16,194 |
|
Turtle Beach Corporation |
||||||||
Condensed Consolidated Balance Sheets |
||||||||
(in thousands, except par value and share amounts) |
||||||||
Table 2. |
||||||||
|
|
|
|
|
||||
|
|
March 31, |
|
December 31, |
||||
|
|
2023 |
|
2022 |
||||
|
|
(unaudited) |
|
|
||||
ASSETS |
|
(in thousands, except par value and share amounts) |
||||||
Current Assets: |
|
|
|
|
||||
Cash |
|
$ |
20,573 |
|
|
$ |
11,396 |
|
Accounts receivable, net |
|
|
23,955 |
|
|
|
43,336 |
|
Inventories |
|
|
65,214 |
|
|
|
71,252 |
|
Prepaid expenses and other current assets |
|
|
9,108 |
|
|
|
9,196 |
|
Total Current Assets |
|
|
118,850 |
|
|
|
135,180 |
|
Property and equipment, net |
|
|
6,144 |
|
|
|
6,362 |
|
Goodwill |
|
|
10,686 |
|
|
|
10,686 |
|
Intangible assets, net |
|
|
2,471 |
|
|
|
2,612 |
|
Other assets |
|
|
8,361 |
|
|
|
8,547 |
|
Total Assets |
|
$ |
146,512 |
|
|
$ |
163,387 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
||||
Current Liabilities: |
|
|
|
|
||||
Revolving credit facility |
|
$ |
— |
|
|
$ |
19,053 |
|
Accounts payable |
|
|
21,887 |
|
|
|
19,846 |
|
Other current liabilities |
|
|
30,023 |
|
|
|
25,433 |
|
Total Current Liabilities |
|
|
51,910 |
|
|
|
64,332 |
|
Income tax payable |
|
|
2,135 |
|
|
|
2,076 |
|
Other liabilities |
|
|
7,703 |
|
|
|
8,038 |
|
Total Liabilities |
|
|
61,748 |
|
|
|
74,446 |
|
Commitments and Contingencies |
|
|
|
|
||||
Stockholders’ Equity |
|
|
|
|
||||
Additional paid-in capital |
|
|
17 |
|
|
|
17 |
|
Additional paid-in capital |
|
|
208,999 |
|
|
|
206,916 |
|
Accumulated deficit |
|
|
(123,303 |
) |
|
|
(116,598 |
) |
Accumulated other comprehensive income (loss) |
|
|
(949 |
) |
|
|
(1,394 |
) |
Total Stockholders’ Equity |
|
|
84,764 |
|
|
|
88,941 |
|
Total Liabilities and Stockholders’ Equity |
|
$ |
146,512 |
|
|
$ |
163,387 |
|
Turtle Beach Corporation |
||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||
(in thousands) |
||||||||
(unaudited) |
||||||||
Table 3. |
||||||||
|
|
Three Months Ended |
||||||
|
|
March 31, 2023 |
|
March 31, 2022 |
||||
|
|
|
|
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
$ |
28,989 |
|
|
$ |
(13,348 |
) |
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
(887 |
) |
|
|
(611 |
) |
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
||||
Borrowings on revolving credit facilities |
|
|
53,892 |
|
|
|
- |
|
Repayment of revolving credit facilities |
|
|
(72,945 |
) |
|
|
- |
|
Proceeds from exercise of stock options and warrants |
|
|
125 |
|
|
|
361 |
|
Debt Issuance Costs |
|
|
(80 |
) |
|
|
- |
|
Net cash provided by (used for) financing activities |
|
|
(19,008 |
) |
|
|
361 |
|
Effect of exchange rate changes on cash |
|
|
83 |
|
|
|
(422 |
) |
Net decrease in cash |
|
|
9,177 |
|
|
|
(14,020 |
) |
Cash - beginning of period |
|
|
11,396 |
|
|
|
37,720 |
|
Cash - end of period |
|
$ |
20,573 |
|
|
$ |
23,700 |
|
Turtle Beach Corporation |
||||||||
Reconciliation of GAAP and Non-GAAP Measures |
||||||||
(in thousands, except per-share data) |
||||||||
(unaudited) |
||||||||
Table 4. |
||||||||
|
|
Three Months Ended |
||||||
|
|
March 31, 2023 |
|
March 31, 2022 |
||||
Net Income (Loss) |
|
|
|
|
||||
GAAP Net Income (Loss) |
|
$ |
(6,705 |
) |
|
$ |
(6,476 |
) |
|
|
|
|
|
||||
Adjustments, net of tax: |
|
|
|
|
||||
Non-recurring business costs |
|
|
1,048 |
|
|
|
173 |
|
Valuation allowance |
|
|
1,244 |
|
|
|
— |
|
Non-GAAP Earnings |
|
$ |
(4,413 |
) |
|
$ |
(6,303 |
) |
|
|
|
|
|
||||
Diluted Earnings Per Share |
|
|
|
|
||||
GAAP- Diluted |
|
$ |
(0.40 |
) |
|
$ |
(0.40 |
) |
|
|
|
|
|
||||
Non-recurring business costs |
|
|
0.06 |
|
|
|
0.01 |
|
Valuation allowance |
|
|
0.08 |
|
|
|
— |
|
Non-GAAP- Diluted |
|
$ |
(0.27 |
) |
|
$ |
(0.39 |
) |
Turtle Beach Corporation |
||||||||||||||||||||||||
GAAP to Adjusted EBITDA Reconciliation |
||||||||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
Table 5. |
||||||||||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||||||||
|
|
March 31, 2023 |
||||||||||||||||||||||
|
|
|
|
|
Adj |
|
|
|||||||||||||||||
|
|
As |
Adj |
Adj |
Stock |
|
Adj |
|||||||||||||||||
|
|
Reported |
Depreciation |
Amortization |
Compensation |
Other(1) |
EBITDA |
|||||||||||||||||
Net revenue |
|
$ |
51,444 |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
51,444 |
|
|||||
Cost of revenue |
|
|
37,305 |
|
|
(517 |
) |
|
- |
|
|
(175 |
) |
|
- |
|
|
36,613 |
|
|||||
Gross Profit |
|
|
14,139 |
|
|
517 |
|
|
- |
|
|
175 |
|
|
- |
|
|
14,831 |
|
|||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Operating expenses |
|
|
20,631 |
|
|
(461 |
) |
|
(264 |
) |
|
(1,784 |
) |
|
(1,086 |
) |
|
17,036 |
|
|||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Operating income (loss) |
|
|
(6,492 |
) |
|
978 |
|
|
264 |
|
|
1,959 |
|
|
1,086 |
|
|
(2,205 |
) |
|||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Interest expense |
|
|
163 |
|
|
|
|
|
|
|||||||||||||||
Other non-operating expense, net |
|
|
120 |
|
|
|
|
|
|
120 |
|
|||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Income (loss) before income tax |
|
|
(6,775 |
) |
|
|
|
|
|
|||||||||||||||
Income tax benefit |
|
|
(70 |
) |
|
|
|
|
|
|||||||||||||||
Net loss |
|
$ |
(6,705 |
) |
|
|
Adjusted EBITDA |
$ |
(2,325 |
) |
||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
(1) Other includes certain non-recurring business costs. |
||||||||||||||||||||||||
Turtle Beach Corporation |
||||||||||||||||||||||||
GAAP to Adjusted EBITDA Reconciliation |
||||||||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
Table 5. (continued) |
||||||||||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||||||||
|
|
March 31, 2022 |
||||||||||||||||||||||
|
|
|
|
|
Adj |
|
|
|||||||||||||||||
|
|
As |
Adj |
Adj |
Stock |
|
Adj |
|||||||||||||||||
|
|
Reported |
Depreciation |
Amortization |
Compensation |
Other(1) |
EBITDA |
|||||||||||||||||
Net revenue |
|
$ |
46,662 |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
46,662 |
|
|||||
Cost of revenue |
|
|
32,633 |
|
|
(585 |
) |
|
- |
|
|
(26 |
) |
|
- |
|
|
32,022 |
|
|||||
Gross Profit |
|
|
14,029 |
|
|
585 |
|
|
- |
|
|
26 |
|
|
- |
|
|
14,640 |
|
|||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Operating expenses |
|
|
22,316 |
|
|
(607 |
) |
|
(312 |
) |
|
(1,511 |
) |
|
(232 |
) |
|
19,654 |
|
|||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Operating income (loss) |
|
|
(8,287 |
) |
|
1,192 |
|
|
312 |
|
|
1,537 |
|
|
232 |
|
|
(5,014 |
) |
|||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Interest expense |
|
|
109 |
|
|
|
|
|
|
|||||||||||||||
Other non-operating expense, net |
|
|
719 |
|
|
|
|
|
|
719 |
|
|||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Income (loss) before income tax |
|
|
(9,115 |
) |
|
|
|
|
|
|||||||||||||||
Income tax benefit |
|
|
(2,639 |
) |
|
|
|
|
|
|||||||||||||||
Net loss |
|
$ |
(6,476 |
) |
|
|
Adjusted EBITDA |
$ |
(5,733 |
) |
||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
(1) Other includes certain non-recurring business costs. |
||||||||||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005972/en/
MacLean Marshall
Sr. Director, Public Relations &
Brand Communications
Turtle Beach Corporation
858.914.5093
maclean.marshall@turtlebeach.com
Investor Information:
Cody Slach or Alex Thompson
Gateway Investor Relations
949.574.3860
hear@gatewayir.com
Source: Turtle Beach Corporation
FAQ
What were Turtle Beach Corporation's financial results for the first quarter of 2023?
What is Turtle Beach Corporation's outlook for the full year 2023?
What factors contributed to Turtle Beach Corporation's improved financial results?
What is Turtle Beach Corporation's strategy for growth?
What is Turtle Beach Corporation's cash position?
What are Turtle Beach Corporation's long-term goals?
