Turtle Beach Announces First Quarter 2024 Earnings Results
Strong Product Demand Increases Net Revenue 8.6% Year-over-Year
Diligent Cost Management Initiatives Significantly Improve Adjusted EBITDA Profitability
Favorable Gaming Trends and Upcoming New Product Launches Position
First Quarter Summary vs.
-
Net revenue was
$55.8 million , an increase of 8.6% compared to$51.4 million a year ago; -
Net income was
$0.2 million , or$0.01 per diluted share, compared to net loss of$6.7 million , or$0.40 per diluted share, a year ago; -
Adjusted EBITDA improved to
$1.4 million compared to an Adjusted EBITDA loss of$2.8 million a year ago.
Management Commentary
“Our first quarter results were in-line with our expectations and track well to our full year 2024 plan,” said
“We continued to showcase our disciplined approach to the business, which drove profitable growth in the quarter. First quarter 2024 net revenue was up 8.6% compared to the year-ago period, and Adjusted EBITDA improved to
“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
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 10%+ revenue CAGR, a mid-30’s gross margin percentage, and is focused on driving a mid-teens percentage for Adjusted EBITDA margins.
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,
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
About
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
All trademarks are the property of their respective owners.
Condensed Consolidated Statements of Operations (in thousands, except per-share data) (unaudited) |
||||||||
Table 1. |
||||||||
|
|
Three Months Ended |
||||||
|
|
|
|
|
||||
|
|
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 |
|
Condensed Consolidated Balance Sheets (in thousands, except par value and share amounts) |
||||||||
Table 2. |
||||||||
|
|
|
|
|
||||
|
|
|
|
|
||||
|
|
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 |
|
|
|
|
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 |
|
Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) |
||||||||
Table 3. |
||||||||
|
|
Three Months Ended |
||||||
|
|
|
|
|
||||
|
|
|
|
|
||||
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 |
|
GAAP to Adjusted EBITDA Reconciliation (in thousands) |
||||||||
Table 4. |
||||||||
|
|
Three Months Ended |
||||||
|
|
|
||||||
|
|
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/
Sr. Director, Public Relations &
858.914.5093
maclean.marshall@turtlebeach.com
Investor Information:
949.574.3860
hear@gateway-grp.com
Source: