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Turtle Beach Corp (TBCH)·Q4 2024 Earnings Summary

Executive Summary

  • Record quarter: Net revenue $146.1M (+47% y/y), net income $20.1M, diluted EPS $0.95, and Adjusted EBITDA $35.7M (+156% y/y) .
  • Gross margin expanded by 500 bps to 37.0% despite a loss on inventory in transit; management highlighted next‑generation platform design and PDP integration synergies as primary drivers .
  • FY25 guidance introduced: net revenues $395–$405M and Adjusted EBITDA $68–$72M, including the impact of new international tariffs and expected 1H market headwinds (U.S. gaming accessories down 28% y/y in January per Circana) .
  • Capital returns and balance sheet: $27.8M repurchased in FY24 (1.8M shares; ~$15.39/share) with $18.8M buyback capacity remaining; year-end net debt $85.4M (borrowings $98.4M, cash $13.0M) .

What Went Well and What Went Wrong

What Went Well

  • “Highest quarterly net revenue and Adjusted EBITDA in the Company’s history,” driven by “highly accretive integration of PDP” and “next‑generation gaming accessories lineup and streamlined operations” .
  • Gross margin expansion to 37.0% in Q4 (+500 bps y/y) and to 34.6% for FY (+530 bps), reflecting operational initiatives and product platform changes .
  • Strong shareholder returns: nearly $28M repurchased in FY24, signaling confidence and capital allocation discipline .

What Went Wrong

  • Loss on inventory while in transit impacted Q4, reflected in non-GAAP addbacks ($3.398M) .
  • Anticipated 1H 2025 market headwinds with U.S. gaming accessories down 28% y/y in January, tempering near-term outlook .
  • Increased inventories to $71.3M (including PDP) vs. $44.0M prior year, elevating working capital needs (seasonality and integration, but a watchpoint) .

Financial Results

Core P&L Metrics (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Net Revenue ($USD Millions)$99.538 $146.077
Gross Profit ($USD Millions)$31.804 $53.989
Gross Margin (%)N/A37.0%
Operating Income ($USD Millions)$8.359 $23.430
Net Income ($USD Millions)$8.552 $20.139
Diluted EPS ($USD)$0.47 $0.95
Adjusted EBITDA ($USD Millions)$13.954 $35.656

Notes: Prior quarter (Q3 2024) figures were not available in the documents retrieved.

Non-GAAP Reconciliation Highlights (Q4 2024)

Adjustment (Q4 2024)Amount ($USD Millions)
Interest expense$2.986
Depreciation & amortization$3.287
Stock-based compensation$2.724–$2.725
Acquisition-related cost$1.018
Loss on inventory in transit$3.398
Proxy contest & other litigation$1.803

Balance Sheet & Cash Flow (FY end)

MetricDec 31, 2023Dec 31, 2024
Cash & Equivalents ($USD Millions)$18.726 $12.995
Accounts Receivable ($USD Millions)$54.390 $93.118
Inventories ($USD Millions)$44.019 $71.251
Total Assets ($USD Millions)$149.967 $298.861
Revolving Credit Facility ($USD Millions)$0.000 $49.412
Non-Current Debt ($USD Millions)$0.000 $45.620
Net Debt ($USD Millions)N/A$85.4 (Borrowings $98.4; Cash $13.0)

Capital Returns

MetricQ4 2024FY 2024
Shares Repurchased (000s)162 1,800
Total Spend ($USD Millions)$2.4 $27.8
Avg Price ($/share)N/A~$15.39
Remaining Authorization ($USD Millions)N/A$18.8 (expires Apr 9, 2025)

Segment breakdown and KPIs: Not disclosed in the materials reviewed.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Revenues ($USD Millions)FY 2025N/A$395–$405Initiated
Adjusted EBITDA ($USD Millions)FY 2025N/A$68–$72Initiated
Gross Margin (%)Long-term targetN/AMid-to-high 30s focusReiterated/focused
Adjusted EBITDA Margin (%)Long-term targetN/AMid-to-high teensIncreased expectations

Context: Guidance includes impact of new international tariffs and anticipates 1H 2025 market headwinds; expects stronger H2 driven by PDP contribution and share gains .

Earnings Call Themes & Trends

No Q4 2024 earnings call transcript was available via the tools; themes below reflect press release commentary.

TopicPrevious Mentions (Q-2 and Q-1)Current PeriodTrend
PDP integration & synergiesUnavailable>$13M annual synergies expected, surpassing initial expectations Positive execution
Product platform innovationUnavailableNext‑gen platform design improving performance and cost structure Structural margin driver
Gross margin trajectoryUnavailableQ4 at 37.0% (+500 bps y/y) Expanding
Market backdropUnavailable1H 2025 headwinds; U.S. accessories −28% y/y in January (Circana) Near-term caution
TariffsUnavailableFY25 Adjusted EBITDA includes impact of new international tariffs Headwind managed

Management Commentary

  • “Generating the highest quarterly net revenue and Adjusted EBITDA in the Company’s history… integration of PDP has meaningfully enhanced our scale and market reach” — Cris Keirn, CEO .
  • “We expect to realize more than $13 million in annual synergies from the PDP acquisition, surpassing our initial expectations” .
  • “Several of our 2024 product launches were built on our next‑generation platform design… combine best‑in‑class product performance… with significant improvements to our cost structure” .
  • “Despite a loss on inventory while in transit in the fourth quarter, our gross margin expanded by 500 basis points to 37.0%” .
  • “We’ve repurchased nearly $28 million worth of stock… highlighting our dedication to returning capital to shareholders” .

Q&A Highlights

No Q&A transcript available. Conference call logistics were provided, but content was not accessible via the tools .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue could not be retrieved due to S&P Global daily request limits. Comparisons to estimates are unavailable at this time and should be updated when access is restored. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Structural margin improvement: Gross margin reached 37.0% in Q4, driven by platform design and operational streamlining; watch for sustainability amid tariffs .
  • Scaled platform with PDP: Synergies >$13M expected and contribution in Q1 2025 supports FY25 guidance, positioning for share gains in key categories .
  • Robust capital allocation: $27.8M FY24 buyback with remaining $18.8M authorization through April 9, 2025 signals confidence; monitor pace given net debt levels .
  • Near-term caution, H2 setup: Management anticipates 1H 2025 market headwinds (−28% y/y in January per Circana) but expects stronger H2 demand and execution .
  • Non-GAAP addbacks: Adjusted EBITDA benefited from items including loss on inventory in transit ($3.398M) and acquisition-related costs ($1.018M); track normalization .
  • Working capital and inventory: Inventories increased to $71.3M with PDP; manage receivables and inventory turns through 1H softness .
  • Actionable: In absence of estimate context, focus on FY25 guide durability through 1H; catalysts include tariff mitigation, synergy capture, and product cycles. Consider risk-adjusted positioning into H2 when market backdrop is expected to improve .