Executive Summary

Q1 2025 delivered solid operational progress: revenue grew 14% to $63.9M and gross margin expanded ~470 bps to 36.6%, while Adjusted EBITDA rose to $4.1M; however GAAP results reflected a small net loss of $(0.7)M or $(0.03) diluted EPS .
Management sharply reduced FY25 guidance to revenue of $340–$360M and Adjusted EBITDA of $47–$53M, down from the Q4 guide of $395–$405M and $68–$72M, citing macro weakness and the release slate; they emphasized tariff mitigation and supply-chain shifts as offsets .
Cash generation was a bright spot: operating cash flow of $40.5M (highest since 2019) and net debt improvement to $43.6M from $85.4M at year-end; Board authorized a new $75M share repurchase program .
Strategic execution themes: accretive contribution from the March 2024 PDP acquisition, proactive supply-chain relocation (U.S. supply <10% from China; moving to Vietnam), and continued capital returns .
S&P Global consensus estimates for Q1 2025 were unavailable in our feed at time of analysis; as a result, we cannot definitively score beat/miss vs. Street for this quarter (see Estimates Context).

What Went Well and What Went Wrong

What Went Well

Revenue and margin expansion despite a softer market: net revenue +14% YoY to $63.9M; gross margin up ~470 bps to 36.6%, driven by PDP contribution and margin initiatives .
Profitability progress: Adjusted EBITDA improved to $4.1M (from $1.4M), with operating leverage aided by portfolio mix and non-GAAP adjustments .
Cash and capital allocation: $40.5M cash from operations (highest since 2019) and authorization of a $75M buyback program; $1.8M repurchased in Q1 .
Management tone: “With incremental revenue and margin from our March 2024 acquisition of PDP, we delivered strong Q1 growth over the prior year… highlights the accretive advantages of our M&A strategy and strong execution.” – CEO Cris Keirn .

What Went Wrong

GAAP earnings dipped: net loss of $(0.7)M vs. $0.2M income in the prior year despite top-line/margin gains, reflecting interest expense and other non-operating items; diluted EPS $(0.03) vs. $0.01 .
Guidance reduction: FY25 revenue cut to $340–$360M (from $395–$405M) and Adjusted EBITDA to $47–$53M (from $68–$72M), indicating a tougher accessories backdrop and release slippage .
Tariff/macro headwinds: management flagged a “dynamic” environment and took actions to mitigate tariff risk; Q&A commentary points to near-term gross margin pressure in Q2 (low-30s) before recovery later in the year .

Financial Results

Headline metrics vs. prior year and prior quarter

Metric	Q1 2024	Q4 2024	Q1 2025
Revenue ($M)	$55.85	$146.08	$63.90
Gross Margin (%)	31.8%	37.0%	36.6%
Net Income ($M)	$0.16	$20.14	$(0.66)
Diluted EPS ($)	$0.01	$0.95	$(0.03)
Adjusted EBITDA ($M, non-GAAP)	$1.45	$35.66	$4.05

Notes: Non-GAAP reconciliation provided by the company; Adjusted EBITDA excludes items such as stock-based comp, acquisition-related costs, insurance recovery, and certain one-time items .

KPIs – Operating Cash Flow

KPI	Q1 2024	Q1 2025
Cash from Operations ($M)	$27.26	$40.45

Balance Sheet & Capital Returns

KPI	Q4 2024	Q1 2025
Net Debt ($M)	$85.4 (Debt $98.4, Cash $13.0)	$43.6 (Borrowings $55.2, Cash $11.7)
Share Repurchases ($M)	$2.4 in Q4; $27.8 FY24	$1.8 in Q1; new $75M authorization

Non-GAAP adjustments called out by management

Insurance recovery of $(3.44)M recorded in operating expenses related to inventory lost in transit in Q4’24; offset by recovery-related professional fees .
Acquisition-related costs of $0.61M in Q1’25; similar items were larger in the prior year .
Adjusted EBITDA excludes interest, taxes, D&A, stock-based comp, and specified one-time items .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Revenues	FY 2025	$395–$405M	$340–$360M	Lowered
Adjusted EBITDA (non-GAAP)	FY 2025	$68–$72M	$47–$53M	Lowered

Management attributes the revision to macro uncertainty and the industry release schedule; they continue to expect improvement through 2025 but below 2024 levels, with stronger growth targeted in 2026 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’24 and Q4’24)	Current Period (Q1’25)	Trend
Tariffs & supply chain	Focus on operational execution; Q4 noted inventory-in-transit loss and record margins; no explicit tariff relocation detail .	Proactively shifting production out of China; <10% of U.S. supply from China; primary U.S. supply from Vietnam; mitigation plans in place .	Proactive tariff mitigation and diversification.
Market/macro & release slate	Q4 initiated robust FY25 outlook anticipating second-half strength; strong FY24 momentum .	FY25 guide cut; call commentary cited weaker accessories market and major title timing (e.g., GTA6 delay), with better setup into 2026 (incl. Switch 2) .	More cautious near term; constructive medium term.
PDP acquisition synergies	>$13M annual synergy target, accretive integration emphasized in Q4 .	“Incremental revenue and margin from…PDP” supporting Q1 growth; accretive M&A remains a strategic lever .	Accretion continuing.
Gross margin trajectory	Q4 GM 37.0%; +500 bps YoY; long-term target mid-to-high-30s .	Q1 GM 36.6%; call flagged Q2 pressure (low-30s) then recovery in H2 as mitigation actions flow through .	Near-term dip before H2 recovery.
Capital allocation	Q3/Q4 executed ~$27.8M FY24 buybacks; continued emphasis on repurchases .	New $75M authorization; $1.8M repurchased in Q1 .	Step-up in repurchase capacity.

Management Commentary

“With incremental revenue and margin from our March 2024 acquisition of PDP… highlights the accretive advantages of our M&A strategy and strong execution.” – Cris Keirn, CEO .
“We proactively increased inventory… following the announcement in early April of new tariffs… transitioning significant production out of China… for the remainder of 2025, our U.S. supply will primarily come from Vietnam… less than 10% of our supply for the U.S. will come from China.” – Cris Keirn .
“The decision to authorize the repurchase of up to $75 million… signals our continued confidence in our prospects…” – Cris Keirn .

Additional corporate context: Mark Weinswig appointed CFO effective February 3, 2025, to support financial execution and integration initiatives .

Q&A Highlights

Market outlook and guidance reset: Management noted the accessories market came in weaker than expected in early 2025 and that the timing of major releases (e.g., GTA6) pushed demand into 2026; this drove the FY25 guide reduction .
Gross margin cadence: Expect GM to dip into the low-30s in Q2 given revenue mix and tariff timing, with recovery in Q3/Q4 as mitigation actions take hold .
Tariff mitigation and supply chain: Diversification efforts leave TBCH with <10% of U.S. supply from China and primary U.S. sourcing from Vietnam; management positioned this as a competitive advantage in a dynamic environment .
Capital allocation: Reaffirmed commitment to opportunistic repurchases under the new $75M authorization while balancing debt agreements and cash flow .

Estimates Context

S&P Global (Capital IQ) consensus estimates for Q1 2025 were unavailable in our data pull; as such, we cannot provide definitive revenue/EPS beat/miss analysis anchored to S&P Global for this quarter. We will update when S&P Global figures become available.
Management’s FY25 guidance moved from $395–$405M revenue and $68–$72M Adjusted EBITDA (3/13/25) to $340–$360M and $47–$53M (5/8/25), implying lower Street expectations are likely warranted near term .

Key Takeaways for Investors

Guidance reset is the dominant narrative: a meaningful cut to FY25 revenue and Adjusted EBITDA reframes near-term expectations despite solid Q1 execution .
Tariff risk is being proactively mitigated: with <10% U.S. supply now from China and Vietnam as primary U.S. source, TBCH reduces exposure and could gain relative advantage if peers are slower to adapt .
Margin path matters for the stock: management telegraphed a dip in Q2 gross margin before recovery in H2; delivery on this cadence will be a key catalyst .
PDP remains accretive: integration is on track with continued contributions to revenue and margins, supporting the medium-term thesis .
Strong cash generation supports flexibility: $40.5M operating cash flow in Q1 and improved net leverage enhance capacity for repurchases and execution of mitigation strategies .
2026 setup looks better: management points to a richer release slate and platform cycle (e.g., Nintendo Switch 2) to re-accelerate growth beyond the near-term macro softness .

Sources: Q1’25 8-K and press release (including financial schedules), Q4’24 8-K (including prior guidance), and company press releases and investor materials as cited.

Q1 2025 8-K and exhibits:
Q1 2025 press release:
Q4 2024 8-K and exhibits:
Q3 2024 company news:
Earnings call transcript references:
CFO appointment:

Turtle Beach Corp (TBCH)·Q1 2025 Earnings Summary