Transcript: Turtle Beach Q2 2026 Earnings Conference Call

Turtle Beach (NASDAQ: TBCH ) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call. This content is powered APIs. 8% due to tariff refunds.

S. market share growth. Turtle Beach reaffirmed its full-year 2026 guidance, expecting revenue between $335 and $355 million and adjusted EBITDA between $44 and $48 million. The company repurchased $25 million of common stock during the quarter and has $31 million remaining under its current authorization.

Management highlighted strategic initiatives such as product expansion, brand transformation, and capital allocation to support long-term value creation. Full Transcript OPERATOR Good day, ladies and gentlemen. Thank you for standing by. We welcome you to the Turtle Beach Corporation second quarter 2026 conference call.

At this time, all participants are in a listen-only mode. A question-and-answer session will follow the prepared remarks. As a reminder, the conference is being recorded. I will now turn the call over to Jacques Cornet from the Investor Relations team.

You may begin. Jacques Cornet, Investor Relations Thank you, Operator. com, where you'll also find the latest earnings presentation that supplements the information discussed on today's call. Finally, a recording of the call will be available in the Events and Presentations section of the Company's investor relations website later today.

Please be aware that some of the comments made during this call may include forward-looking statements within the meaning of the federal securities laws. Statements about the Company's beliefs and expectations containing words such as may, will, could, believe, expect, anticipate and similar expressions constitute forward-looking statements. These statements involve risks and uncertainties regarding the Company's operations and future results that could cause Turtle Beach Corporation's results to differ materially from management's current expectations.

While the Company believes that its expectations are based upon reasonable assumptions, numerous factors may affect actual results and may cause results to differ materially. The Company encourages you to review the safe harbor statements and risk factors contained in today's press release and in its filings with the Securities and Exchange Commission, including without limitation the Annual Report on Form 10-K and other periodic reports, which identify specific risk factors that also may cause actual results or events to differ materially from those described in our forward-looking statements.

The Company does not undertake to publicly update or revise any forward-looking statements after this conference call. The Company also notes that on this call it will be discussing non-GAAP financial information. The Company is providing that information as a supplement to information prepared in accordance with accounting principles generally accepted in the United States, or GAAP. You can find a reconciliation of these metrics to the Company's reported GAAP results in the reconciliation tables provided in today's earnings release and presentation.

Hosting the call today are Cris Keirn, Chief Executive Officer, and Andrew Clipsham, Interim Chief Financial Officer. With that, I'll turn the call over to Cris. Cris Keirn, Chief Executive Officer Thanks, Jacques. Good afternoon, everyone, and welcome to our second quarter 2026 earnings call.

During the second quarter, we continued executing against the strategic priorities we've outlined throughout the year; we expanded our product portfolio, advanced our brand transformation, returned significant capital to shareholders through share repurchases, and prepared Turtle Beach for what we believe will be a stronger demand environment. 4 million, essentially flat year over year. Continuing the trends we discussed on our last call, retail partners remained disciplined in managing inventory through much of the quarter, with further reductions in channel inventory through the first half of Q2.

As the quarter progressed, however, we began to see encouraging signs that retailers have now stabilized inventory ahead of what we expect will be a stronger second half of the year. We believe the combination of historically low channel inventory, improving early Q3 sell-through trends, and the industry's upcoming content releases create a favorable setup for the second half of the year. Together, these factors prepare the business for a return to growth during the back half of 2026. One of the defining characteristics of Turtle Beach in 2026 has been the pace of innovation across our portfolio.

We are delivering a significant increase in new product introductions this year, and we're encouraged by the early performance of those models. S. gaming headsets. Supported by our new brand initiatives and building on the exceptional pre-order demand we mentioned in our previous call, we also recently announced the industry's first officially licensed wireless gaming headset for Nintendo Switch 2, further reinforcing Turtle Beach's leadership in gaming audio and our collaborative partnership with Nintendo.

S. share growth in Nintendo controllers for the quarter, building momentum for Turtle Beach in this key growth segment. More importantly, these launches, with more to be announced, strengthen our leadership heading into what we believe will be one of the strongest gaming content calendars in years. Looking ahead, Grand Theft Auto VI remains on track for its confirmed November launch, while Call of Duty: Modern Warfare 4 has been confirmed to launch in October.

Rather than simply benefiting from the increased demand these releases have historically generated, we've spent the past several quarters aligning our product roadmap, brand investments, retail distribution, and operations to proactively set up Turtle Beach for the anticipated increase in gamer engagement with GTA 6. Launching first on consoles, we believe Turtle Beach is particularly well positioned given our leadership across console gaming accessories and the timing of our newest product introductions as the market strengthens. Capital allocation also remained an important area of execution throughout the quarter.

Following the refinancing of our credit facilities in May, we repurchased approximately $25 million of our common stock during the second quarter. Those repurchases reflect our disciplined approach to capital allocation and our continued belief that the market does not fully recognize the long-term value of Turtle Beach. With approximately $31 million remaining under our current authorization, we will continue balancing opportunistic share repurchases with investments that support long-term value creation for the growth opportunities ahead.

Given our confidence in our new product pipeline, the strength of the second-half gaming release calendar, and our expectation that channel inventories will rebuild toward more normalized levels, we are reaffirming our full-year 2026 guidance. Before turning to the financials, I'd like to introduce Andrew Clipsham, our recently appointed Interim Chief Financial Officer. Andrew has been with Turtle Beach for nearly eight years and brings more than 20 years of global financial leadership experience.

Throughout his time with the company, he has played an important role in strengthening our financial operations and supporting many of the strategic initiatives we've discussed over the past several years. I'm pleased to welcome Andrew to his first earnings call as Interim CFO. With that, I'll turn it over to Andrew to provide additional details on our second quarter financials. Andrew Clipsham, Interim Chief Financial Officer Thank you, Cris, and good afternoon, everyone.

It's a pleasure to be joining you today as Interim Chief Financial Officer. 8 million in the prior-year period. While retail inventory levels remained below historical norms through much of the quarter, we began to see improving retail ordering patterns as we moved through the period. 2% in the prior year.

2 million of tariff refunds received during the period. Excluding one-time items, our underlying gross margin profile continues to reflect the benefits of the structural improvements we've made over recent years through product mix optimization, supply chain initiatives, and disciplined pricing actions. For the balance of the year, we continue to expect gross margins to remain within our targeted mid- to high-30% range. As our newest products scale through the second half of the year and revenue increases seasonally, we expect those operating improvements and positive product mix to become increasingly evident.

5% from the prior 10% level. While we continue to monitor the trade environment closely, the actions we've taken over the past year to diversify our supply chain and optimize sourcing provide confidence that we can largely mitigate these changes without a material impact on profitability. 6 million, or 33% of revenue, in the prior-year quarter. The increase primarily reflects higher marketing investments supporting our expanded product launch schedule and brand initiatives together with higher general and administrative expenses compared to the prior-year quarter that included a one-time insurance recovery.

The marketing investments are consistent with the strategy we've outlined throughout the year and are intended to support long-term growth rather than near-term revenue. 9 million in the prior-year period. This quarter's loss reflects increased marketing investments during the period to support our brand and 2026 product roadmap together with modestly higher interest expense. The prior-year quarter included a one-time insurance recovery which partially offset the net loss for that period.

This recovery was adjusted out of prior-year EBITDA. 0 million in the prior-year period. The year-over-year improvement reflects the stronger gross margins presented. 6 million of cash.

1 million during the prior-year period. Our revolving credit facility remained undrawn at quarter end. As we announced in May, we completed the refinancing of our credit facilities to increase financial flexibility and better align our capital structure with our long-term capital allocation priorities. The new structure provides up to $80 million in an asset-based revolving facility as well as an $85 million term loan supporting both operational flexibility and our ongoing share repurchase strategy.

53. 9 million shares remained outstanding with approximately $31 million remaining available under our current buyback authorization. As Cris mentioned, we continue to view share repurchases as an important component of our capital allocation framework. At the same time, we'll remain disciplined in balancing those repurchases with investments that support future growth.

Turning to guidance, we are reaffirming our full-year 2026 outlook. Revenue is expected to remain in the range of $335 to $355 million, while adjusted EBITDA is expected to be between $44 million and $48 million. As is typical for Turtle Beach, we expect the majority of our revenue to be generated in the second half of the year. This year's revenue cadence is expected to be more heavily weighted towards the back half than our historical seasonal pattern, reflecting the timing of our expanded new product introductions, improving channel inventory levels, and the industry's major software releases including Grand Theft Auto 6.

While we currently expect the third quarter to contribute a percentage in the mid- to high-twenties of full-year revenue, the precise timing of retail holiday inventory load-ins can shift revenue between the third and fourth quarters. This is a normal feature of our business, is reflected in our guidance, and does not affect our expectations for the full year. With that, I'll turn the call back to Cris. Cris Keirn, Chief Executive Officer Thanks, Andrew.

As we look toward the second half of 2026, our priorities remain clear. We are focused on executing our product roadmap, supporting our retail partners through the holiday season, continuing to invest behind the Turtle Beach brand, and allocating capital with discipline. The work we've completed over the past several years has created a stronger company with a broader product portfolio, improved operating leverage, and greater financial flexibility.

While the overall gaming accessories market has remained challenged over the past several quarters, we believe the industry is entering a more favorable period supported by an improving content release calendar, momentum around Nintendo Switch 2, and the anticipated launch of Grand Theft Auto 6 and other titles. As those industry catalysts develop, our focus remains on translating revenue growth into expanding profitability and long-term shareholder value through disciplined execution.

As always, I'd like to thank our employees for their strong delivery towards our goals, our retail and strategic partners for their collaboration, and our shareholders for their continued support. With that, operator, we can open the call for Q&A. OPERATOR Thank you. We will now be conducting a question and answer session.

If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment, please, while we poll for questions. Our first question is from Drew Crumb from B. Riley Securities. Please proceed with your question.

Perhaps you are on mute and would need to unmute your device to ask your question. Drew Crumb, Analyst at B. Riley Securities Okay, let me try that again. Thanks, everyone.

Good afternoon. Andrew, welcome to the call. Appreciate the detail on the retail inventory dynamics. You noted one month into 3Q.

Can you talk about any observations, what you've seen in terms of willingness on the part of retailers to replenish, or that's something you're anticipating later in the quarter? And then I have a follow-up. Cris Keirn, Chief Executive Officer Yeah, thanks for your question. Good to hear from you.

Yes, we are seeing positive signs here to start Q3. You know, we're a month in here, and what we have seen is really since the preorders for GTA 6 started. While we haven't received the market data yet—obviously, that won't come out until, you know, in a few weeks here in August from Circana—we do have the reported sell-through from retail that we get on a weekly basis, and we've seen since that preorder started weekly, year-over-year growth in the business. And so that's been a very positive sign for us, and we're seeing that momentum continue here into August, the very early part of August.

So we're pleased to see that development. In addition, the channel inventory dynamics that we saw in the first quarter and that really continued until about midpoint in the second quarter appear to be behind us. We've seen a nice stabilization of those numbers, and knowing what's coming up in the back half with not only GTA 6 but some other really strong titles, we feel that'll be a nice tailwind for the business moving forward. Drew Crumb, Analyst at B.

Riley Securities Got it. Okay, appreciate that. And then just a quick follow-up. I know that the business typically uses cash in 3Q.

Can you talk about your ability to continue to buy shares given the cash flow dynamics of the business near term? Andrew Clipsham, Interim Chief Financial Officer Absolutely. As you mentioned, you know, we are getting into that period of time where we start to build inventory for holiday. You may see in the numbers, you know, we've had a good reduction of inventory year over year up to this point in the year.

We're about $20 million of inventory lower than we were at this time last year.