Press Release: Turtle Beach Corporation Announces Record Fourth Quarter and Year End 2024 Results

Dow Jones
14 Mar

Turtle Beach Corporation Announces Record Fourth Quarter and Year End 2024 Results

-- Fourth Quarter Net Revenue Reaches Quarterly Record of $146.1 million, up 47% Year-over-Year --

-- Fourth Quarter Net Income of $20.1 million compared to $8.6 million in prior year --

-- Fourth Quarter Adjusted EBITDA Reaches Quarterly Record of $35.7 million, up from $14.0 million in prior year --

-- Initiates Full Year 2025 Guidance, including Adjusted EBITDA of between $68 and $72 million representing year-over-year growth of between 21% and 28% --

WHITE PLAINS, N.Y., March 13, 2025 (GLOBE NEWSWIRE) -- Turtle Beach Corporation (Nasdaq: TBCH), a leading gaming accessories brand, today reported financial results for the fourth quarter and full year ended December 31, 2024.

Fourth Quarter Highlights

   -- Net revenue was a record $146.1 million, an increase of 47% compared to 
      the prior year period. 
 
   -- Net income was $20.1 million or $0.95 per diluted share compared to $8.6 
      million or $0.47 per diluted share in the prior year period. 
 
   -- Adjusted EBITDA was a record $35.7 million, an increase of 156% compared 
      to the prior year period. 

Full Year Highlights

   -- Net revenue was $372.8 million, the largest revenue year in Company 
      history and an increase of 44% compared to the prior year. 
 
   -- Net income was $16.2 million or $0.78 per diluted share compared to a net 
      loss of $(17.7) million or $(1.03) per diluted share in the prior year. 
 
   -- Adjusted EBITDA was $56.4 million, compared to $6.5 million in the prior 
      year. 

"We are pleased to report another outstanding quarter, generating the highest quarterly net revenue and Adjusted EBITDA in the Company's history and building on positive momentum for continued growth. Our highly accretive integration of PDP has meaningfully enhanced our scale and market reach. Fourth quarter revenue expanded by 47% year-over-year to $146.1 million, and Adjusted EBITDA increased to $35.7 million, reflecting benefits from our next-generation gaming accessories lineup and streamlined operations. For the full year, our significant revenue and Adjusted EBITDA growth, accelerated by our acquisition of PDP, underscores the strength of our core business and relentless focus on execution. Gaming accessories markets continue to represent a large and attractive opportunity, particularly in our key categories. We are driving further opportunities for growth and value creation as we execute our operational and capital allocation strategies," said Cris Keirn, CEO, Turtle Beach Corporation.

"Turtle Beach's transformational year in 2024 reflects our focused approach to drive profitable scale and diversification. We expect to realize more than $13 million in annual synergies from the PDP acquisition, surpassing our initial expectations. Having now proven that we can quickly integrate a large acquisition, we are committed to pursuing potential complementary products and companies accretive to our leading gaming accessories portfolio. We will continue to be disciplined in the deployment of our capital, but we are excited about the opportunities for growth and will provide updates accordingly as we progress."

"Separately, we are also focusing on the drivers that we can fully control, including a number of strategic initiatives that we have undertaken in our core product offerings that should propel our growth independent of any acquisitions. As an example, several of our 2024 product launches were built on our next-generation platform design, a key strategic initiative to combine best-in-class product performance for gamers with significant improvements to our cost structure."

"As a result of our coordinated organic initiatives and integration efforts, and despite a loss on inventory while in transit in the fourth quarter, our gross margin expanded by 500 basis points to 37.0% for the fourth quarter and by 530 basis points to 34.6% for the full year."

"We remain dedicated to further expanding our market leadership while increasing value for our shareholders and gaming customers worldwide. Our commitment to long-term value creation has been demonstrated by consistent execution of our share repurchase program. Over the past year, we've repurchased nearly $28 million worth of stock at an average price of $15.39 per share. This represents the largest share buyback in our history, highlighting our dedication to returning capital to shareholders while making strategic investments to grow the Company. These repurchases underscore our unwavering confidence in Turtle Beach's future."

Share Repurchase Update

For the fourth quarter ended December 31, 2024, the Company repurchased approximately 162,000 shares of common stock for an aggregate purchase price of $2.4 million. For the full year ended December 31, 2024, the Company repurchased 1.8 million shares for an aggregate purchase price of $27.8 million, or $15.39 per share. As of December 31, 2024, the Company has $18.8 million remaining to repurchase shares under its share repurchase program which expires on April 9, 2025. In line with its continued commitment to return capital to shareholders, the Company is opportunistically assessing various potential share repurchase strategies.

Balance Sheet Summary

At December 31, 2024, the Company had net debt of $85.4 million, comprised of $98.4 million of borrowings less $13.0 million of cash. As is typical, the Company's net debt is expected to decline substantially in the first quarter, as payments from customers are received.

Inventories at December 31, 2024, which includes PDP, were $71.3 million compared to $44.0 million at December 31, 2023.

Financial Outlook

The Company is initiating guidance for the full year 2025 and expects net revenues to be in the range of $395 million and $405 million. The Company's outlook considers expected headwinds for gaming accessories markets in the first half of 2025 following the US gaming accessories markets experiencing a 28% decline in January year-over-year, per Circana(1) . Full year revenue growth is projected to be primarily driven by nearly three months of incremental PDP contributions in the first quarter of 2025, followed by a strong second half of the year for gaming accessories markets and expected Company share growth in key categories.

With continued strong execution on profitability initiatives, the Company expects Adjusted EBITDA to be between $68 million and $72 million, a forecast that includes the impact of newly introduced international tariffs currently in effect. Adjusted EBITDA guidance translates to between 21% to 28% expected growth year-over-year for Adjusted EBITDA.

The Company is reiterating its long-term goals of a 10%+ revenue CAGR, is now focused on a mid-to-high-30's gross margin percentage and has increased expectations for mid-to-high-teens percentage Adjusted EBITDA margins.

Earnings Conference Call and Webcast Details

Turtle Beach will host a conference call and audio webcast today, March 13, at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time), during which management will discuss fourth quarter results and provide commentary on business performance and its current outlook for 2025. A question-and-answer session will follow the prepared remarks.

The conference call may be accessed by telephone by dialing 877-407-0792 (domestic) or 201-689-8263 (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 updated investor 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: TBCH.

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 twelve months ended December 31, 2024, and December 31, 2023.

By providing full year 2025 Adjusted EBITDA guidance, the Company provided its expectation of a forward-looking non-GAAP financial measure. Information reconciling full year 2025 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 macroeconomic conditions affecting the demand for our products, logistic and supply chain challenges and costs, dependence on the success and availability of third-parties to manufacture and manage the logistics of transporting and distributing our products, 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:

tbch@icrinc.com

(646) 277-1285

Public Relations & Media:

MacLean Marshall

Sr. Director, Global Communications

Turtle Beach Corporation

(858) 914-5093

maclean.marshall@turtlebeach.com

_____________________________

(1) Circana, LLC/U.S. Video Game Industry Sales/Dollars/January 2025

 
 
                        Turtle Beach Corporation 
             Condensed Consolidated Statements of Operations 
                  (in thousands, except per-share data) 
                               (unaudited) 
Table 1. 
 
                           Three Months Ended     Twelve Months Ended 
                         ----------------------   -------------------- 
                         December     December    December    December 
                            31,         31,          31,        31, 
                           2024         2023        2024        2023 
                         ---------   ----------   ---------   -------- 
Net revenue              $ 146,077    $  99,538   $ 372,766   $258,122 
Cost of revenue             92,088       67,734     243,784    182,618 
                          --------       ------    --------    ------- 
    Gross profit            53,989       31,804     128,982     75,504 
                          --------       ------    --------    ------- 
Operating expenses: 
  Selling and marketing     16,140       13,032      52,429     43,489 
  Research and 
   development               4,502        4,467      17,304     17,137 
  General and 
   administrative            8,899        5,946      28,388     31,321 
  Acquisition-related 
   cost                      1,018            -      10,832          - 
    Total operating 
     expenses               30,559       23,445     108,953     91,947 
                          --------       ------    --------    ------- 
    Operating income 
     (loss)                 23,430        8,359      20,029    (16,443) 
Interest expense             2,986          251       8,068        504 
Other non-operating 
 expense (income), net         315         (405)      1,289        394 
                          --------       ------    --------    ------- 
    Income (loss) 
     before income tax      20,129        8,513      10,672    (17,341) 
Income tax expense 
 benefit                       (10)         (39)     (5,511)       338 
                          --------       ------    --------    ------- 
    Net income (loss)    $  20,139    $   8,552   $  16,183   $(17,679) 
                          ========       ======    ========    ======= 
 
Net income (loss) per 
share 
    Basic                $    1.01    $    0.49   $    0.81   $  (1.03) 
    Diluted              $    0.95    $    0.47   $    0.78   $  (1.03) 
Weighted average 
number of shares: 
    Basic                   19,937       17,449      20,022     17,135 
    Diluted                 21,136       18,383      20,832     17,135 
 
 
 
 
                         Turtle Beach Corporation 
                   Condensed Consolidated Balance Sheets 
            (in thousands, except par value and share amounts) 
Table 2. 
 
                          December 31,                December 31, 
                              2024                        2023 
                     -----------------------      --------------------- 
                           (unaudited) 
      ASSETS         (in thousands, except par value and share amounts) 
Current Assets: 
  Cash and cash 
   equivalents           $            12,995       $             18,726 
  Accounts 
   receivable, net                    93,118                     54,390 
  Inventories                         71,251                     44,019 
  Prepaid expenses 
   and other 
   current assets                     11,007                      7,720 
                     -----  ----------------          ----------------- 
    Total Current 
     Assets                          188,371                    124,855 
Property and 
 equipment, net                        5,844                      4,824 
Goodwill                              52,942                     10,686 
Intangible assets, 
 net                                  42,398                      1,734 
Other assets                           9,306                      7,868 
                     -----  ----------------          ----------------- 
    Total Assets         $           298,861       $            149,967 
                     =====  ================          ================= 
 LIABILITIES AND 
  STOCKHOLDERS' 
      EQUITY 
Current 
Liabilities: 
  Revolving credit 
   facility              $            49,412       $                 -- 
  Accounts payable                    34,839                     26,908 
  Other current 
   liabilities                        39,421                     29,424 
                     -----  ----------------          ----------------- 
    Total Current 
     Liabilities                     123,672                     56,332 
Debt, non-current                     45,620                         -- 
Income tax payable                     1,362                      1,546 
Other liabilities                      7,603                      7,012 
                     -----  ----------------          ----------------- 
    Total 
     Liabilities                     178,257                     64,890 
                     -----  ----------------          ----------------- 
Commitments and 
Contingencies 
Stockholders' 
Equity 
  Stockholders' 
   Equity                                 20                         18 
  Additional 
   paid-in capital                   239,983                    220,185 
  Accumulated 
   deficit                          (118,094)                  (134,277) 
  Accumulated other 
   comprehensive 
   loss                               (1,305)                      (849) 
                     -----  ----------------          ----------------- 
    Total 
     Stockholders' 
     Equity                          120,604                     85,077 
                     -----  ----------------          ----------------- 
    Total 
     Liabilities 
     and 
     Stockholders' 
     Equity              $           298,861       $            149,967 
                     =====  ================          ================= 
 
 
 
 
                        Turtle Beach Corporation 
             Condensed Consolidated Statements of Cash Flows 
                             (in thousands) 
                               (unaudited) 
Table 3. 
 
                                                Year Ended 
                                      ------------------------------- 
                                       December 31,     December 31, 
                                           2024             2023 
                                      --------------   -------------- 
 
CASH FLOWS FROM OPERATING 
ACTIVITIES 
Net income (loss)                      $      16,183    $     (17,679) 
Adjustments to reconcile net income 
(loss) to net cash provided by 
operating activities: 
  Depreciation and amortization                4,407            3,830 
  Costs recognized on sale of 
  acquired inventory                           2,085               -- 
  Amortization of intangible assets            6,984            1,009 
  Amortization of debt financing 
   costs                                         902              141 
  Stock-based compensation                     6,172           11,983 
  Deferred income taxes                       (6,859)             (44) 
  Change in sales returns reserve                784              632 
  Provision for doubtful accounts                 --               (3) 
  Inventory recorded to net 
   realizable value                            5,661              810 
  Loss on impairment of assets                   753               -- 
  Changes in operating assets and 
  liabilities, net of 
  acquisitions: 
    Accounts receivable                      (15,624)          (5,757) 
    Inventories                              (12,257)          27,336 
    Accounts payable                          (1,088)           1,772 
    Prepaid expenses and other 
     assets                                     (227)           1,437 
    Income taxes payable                        (159)            (283) 
    Other liabilities                         (1,956)           1,860 
                                          ----------       ---------- 
      Net cash provided by operating 
       activities                              5,761           27,044 
                                          ----------       ---------- 
CASH FLOWS FROM INVESTING 
ACTIVITIES 
    Purchases of property and 
     equipment                                (4,914)          (2,159) 
    Acquisition of a business, net 
     of cash acquired                        (77,294)              -- 
                                          ----------       ---------- 
      Net cash used for investing 
       activities                            (82,208)          (2,159) 
                                          ----------       ---------- 
CASH FLOWS FROM FINANCING 
ACTIVITIES 
    Borrowings on revolving credit 
     facilities                              346,906          210,210 
    Repayment of revolving credit 
     facilities                             (297,494)        (229,263) 
    Proceeds of term loan                     50,000               -- 
    Repayment of term loan                    (1,042)              -- 
    Proceeds from exercise of stock 
     options and warrants                      3,356            2,261 
    Repurchase of common stock               (27,778)            (974) 
    Debt issuance costs                       (2,897)             (80) 
                                          ----------       ---------- 
      Net cash provided by (used 
       for) financing activities              71,051          (17,846) 
                                          ----------       ---------- 
Effect of exchange rate changes on 
 cash and cash equivalents                      (335)             291 
                                          ----------       ---------- 
      Net increase (decrease) in 
       cash and cash equivalents              (5,731)           7,330 
Cash and cash equivalents - 
 beginning of period                          18,726           11,396 
                                          ----------       ---------- 
Cash and cash equivalents - end of 
 period                                $      12,995    $      18,726 
                                          ==========       ========== 
 
 
 
 
                    Turtle Beach Corporation 
             GAAP to Adjusted EBITDA Reconciliation 
                         (in thousands) 
Table 4. 
 
                         Three Months 
                             Ended             Year Ended 
                         December 31,         December 31, 
                       -----------------   ------------------ 
                        2024      2023      2024       2023 
                       -------   -------   -------   -------- 
                                   (in thousands) 
Net income (loss)      $20,139   $ 8,552   $16,183   $(17,679) 
Interest expense         2,986       251     8,068        504 
Depreciation and 
 amortization            3,287     1,166    11,391      4,839 
Stock-based 
 compensation (1)        2,724     3,429     6,172     11,983 
Income tax expense 
 (benefit) (2)             (10)      (39)   (5,511)       338 
Restructuring expense 
 (3)                       310        (0)    1,967      1,061 
CEO transition 
 related costs (4)          --        --        --      2,874 
Acquisition-related 
 cost (5)                1,018       653    10,832        653 
Incremental costs on 
acquired inventory 
(6)                         --        --     2,084         -- 
Loss on inventory in 
 transit (7)             3,398        --     3,398         -- 
Proxy contest and 
 other litigation 
 (8)                     1,803       (15)    1,833      1,921 
                        ------    ------    ------    ------- 
    Adjusted EBITDA    $35,655   $13,954   $56,417   $  6,494 
                        ======    ======    ======    ======= 
 
 
    (1)      Increase in stock-based compensation in the year-ended 
              December 31, 2023, primarily driven by $4.0 million 
              charge related to the accelerated vesting of equities 
              of the Company's former Chief Executive Officer. 
 
    (2)      An income tax benefit of $7.6 million was recorded 
              as a result of the reversal of a portion of the Company's 
              deferred tax asset valuation allowance in 2024. 
 
    (3)      Restructuring charges are expenses that are paid in 
              connection with reorganization of our operations. 
              These costs primarily include severance and related 
              benefits. 
 
    (4)      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. 
 
    (5)      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. 
 
    (6)      Costs relate to the step up of acquired finished goods 
              inventory to fair market value as required under purchase 
              accounting. This step up in value over original cost 
              is recorded as a charge to cost of revenue as such 
              inventory is sold. 
 
    (7)      Reflects a loss of Turtle Beach inventory while in 
              transit that impacted the three months ended December 
              31, 2024. 
 
    (8)      Proxy contest and other primarily includes (a) a $1.7 
              million judgement in an insolvency dispute in Germany 
              recorded in 2024, and (b) one-time legal and other 
              professional fee associated with proxy challenges 
              presented by certain shareholder activists in 2023. 
 
 

(END) Dow Jones Newswires

March 13, 2025 16:15 ET (20:15 GMT)

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