Release Date: March 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Turtle Beach Corp (TBCH, Financial) achieved record-breaking quarterly results in both revenue and adjusted EBITDA for Q4 2024.
- The acquisition of PDP significantly expanded the product portfolio and market reach, contributing positively to performance.
- Revenue for Q4 2024 was $146.1 million, up 46.8% compared to the same quarter last year.
- Adjusted EBITDA for Q4 2024 was $35.7 million, a significant increase from $14 million in the same period last year.
- The company executed nearly $28 million in share buybacks for the full year, demonstrating confidence in long-term growth prospects.
Negative Points
- There was a $3.4 million charge related to a loss of inventory in transit, impacting cost of sales.
- The company is facing potential impacts from tariffs, which could affect future results.
- The gaming accessories market in the US was down significantly in January, affecting Q1 2025 expectations.
- Operating expenses were 21% of revenue, indicating room for further cost management improvements.
- The company does not hedge against currency fluctuations, which could pose a risk given the dynamic FX environment.
Q & A Highlights
Q: Chris, could you possibly put any kind of a number around what you expect the impact to be from tariffs? Is it simply a reduction in sales, an increase in cost, or both?
A: Cristopher Keirn, CEO: It's a great question. If tariffs were removed, it would benefit us by several million in EBITDA. However, the situation is dynamic, and while we are prepared for potential new tariffs, they could impact our results.
Q: Mark, regarding the margin, if we add back the inventory charge, does that imply that gross margin in the quarter would have been 39%? Is that a level we should expect going forward?
A: Mark Weinswig, CFO: We are now focusing on mid to high 30s in terms of gross margin percentage for the full year. Our gross margin is reflective of revenues, and we feel good about the potential margin opportunity.
Q: Regarding buybacks, should we view the current price as attractive, and would you consider a significant buyback event?
A: Cristopher Keirn, CEO: We are committed to returning capital to shareholders and will be opportunistic. We believe the stock is extremely attractive at its current price, which factors into our decisions.
Q: Can you touch on your revenue outlook by product category and geographical regions?
A: Cristopher Keirn, CEO: We anticipate a softer first half of 2025 but expect a strong back half due to the Nintendo Switch 2 and GTA 6 launches. More than a third of our revenues will come from non-headset categories, with about 70% of revenue domestically, 25% in the UK and Europe, and single digits in Asia.
Q: On the adjusted EBITDA guidance, how does the operating expense line compare seasonally to the prior year?
A: Cristopher Keirn, CEO: We expect continued leverage on operating expenses due to synergies from the PDP acquisition. This year, you'll see improved leverage as we realize the full $13 million in synergies, with a lower run rate level than in the past.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
