Turtle Beach reports Q3 EPS (21c), consensus (25c)

Reports Q3 revenue $59.2M, consensus $53.6M. “With our sharp focus on improvements in execution, our third quarter sales and adjusted EBITDA results increased significantly compared to the year ago period. We outperformed gaming accessories markets due to share gains across key categories and geographies, in addition to the strong progress we’ve made on our profitability initiatives outlined last quarter,” said Cris Keirn, Interim CEO and SVP, Global Sales, Turtle Beach Corporation. “In fact, the execution against our strategic pillars and ongoing cost management initiatives are driving adjusted EBITDA improvements ahead of expectations, as demonstrated by the increase in our full-year 2023 adjusted EBITDA guidance to $8 to $10 million. Additionally, the improved line-of-sight to the impacts from SKU rationalization, portfolio optimization, and platformed product development during the third quarter now positions us to exit 2023 with a run-rate EBITDA of approximately $28 million to $33 million, an increase from the previously announced run-rate of approximately $25 million to $30 million. The overall operating environment continues to improve as we progress through the year, demonstrated by our improved margins due to lower freight and a more normalized promotional environment, as we anticipated. Additionally, we experienced an increase in channel inventories during the quarter as our channel partners prepare for the holidays, which we believe is a positive sign for retailer demand for our products in the upcoming holiday season. Gaming accessories markets performed similarly quarter-over-quarter, as the US console headset market was up 2% year-to-date in September while PC markets were down 12% year-to-date. We continue to maintain our historic leadership in console gaming headsets while also successfully driving growth in adjacent categories, demonstrated by the rapid year-over-year growth of over 20% in our US flight simulation business while that market is down 11% year-to-date. Our non-console gaming categories continue to perform well, a testament to our diversification strategy, and we look forward to unveiling more new products soon. Additionally, demand for gaming accessories has normalized at higher levels than pre-pandemic levels. This heightened normalized demand level was expected and helps create stable demand for our accessories. Further, we believe the positive trends in gaming will support increased accessories demand for the remainder of 2023 and into 2024, ultimately increasing our growth and profitability.”