Turtle Beach Corporation Q3 FY2025 earnings call

• Generated $80.5M revenue, gross margins up nearly 120bps y-o-y to over 37%, offsetting tariff margin impact through partner cost negotiations, price adjustments, and inventory management. • Completed refinancing of term loan and credit facility, strengthening balance sheet, lowering cost of capital, and extending maturity. • Repurchased $10M of stock during the quarter, with year-to-date repurchases at ~$17M. • Launched over 40 new products since Q2 across headsets, controllers, simulation gear, and PC peripherals, including officially licensed models and innovative features like hall-effect triggers and mechanical buttons.

Turtle Beach generated $80.5 million in revenue for the third quarter. Gross margins were over 37%, up nearly 120 basis points year-over-year, reflecting operational discipline and cost management.

• Reiterated full-year 2025 revenue guidance of $340M to $360M and adjusted EBITDA guidance of $47M to $53M. • Expect significant improvement in operating cash flow over the next two quarters due to holiday season dynamics. • Refinancing cut term loan interest rate by over 450bps, providing annual interest savings over $2M.

• Impact of ongoing challenges in the gaming accessories market. • Potential effects of tariffs on margins if not managed effectively. • Uncertainties related to market trends and consumer spending patterns affecting product sell-through.

Q: From a high level, on headset controllers and consumer spending trends for December quarter?

A: Rian Bisson asked about accessory refresh and consumer spending. Cris Keirn responded that markets are improving year-over-year but still down, with refresh cycle not fully kicked in yet, but expecting growth in 2026 due to factors like GTA 6 and Switch 2.

Q: On GTA 6 delay and impact on 2026 financials?

A: Drew Crum asked about GTA 6 delay. Cris Keirn said GTA 6 launch will factor into 2026 guidance, noting other industry trends like consecutive year-over-year growth in gaming.

Q: On gross margin sustainability and tariffs?

A: Sean McGowan asked about gross margin sustainability. Cris Keirn explained they've offset tariff impact through manufacturing shifts, retail negotiations, and price increases, confident in mitigating future tariff impacts.

Q: On product features driving upgrades?

A: Sean McGowan asked about product features. Cris Keirn mentioned new headsets with longer battery life and flawless wireless connectivity, controllers with hall-effect triggers and TMR technology to eliminate drift.

Q: On consumer strength and holiday season?

A: Jack Codera asked about consumer strength. Cris Keirn said premium consumers show strong demand, while lower/mid price points face some challenges, expecting continued market improvement in Q4.