Turtle Beach (HEAR) investor relations material

Executive summary

• Q1 2026 revenue was $42.2 million, down year-over-year due to market softness, channel inventory reductions, and macroeconomic challenges impacting consumer spending.

• Gross margin declined to 26.8% from 36.6% year-over-year, impacted by lower revenue, promotional activity, and one-time warehouse transition costs.

• Net loss for Q1 2026 was $15.2 million, with adjusted EBITDA loss of $6.5 million, reflecting higher operating expenses and lower sales.

• Significant new product launches planned for 2026, including Stealth Pro II headset and Nintendo Switch 2 accessories, with strong early pre-order momentum and over 50% more launches than last year.

• Well-positioned for the anticipated November 2026 Grand Theft Auto VI launch, expected to boost accessory demand in H2.

Financial highlights

• Q1 2026 revenue was $42.2 million, down from $63.9 million year-over-year.

• Gross margin was 26.8%, down from 36.6% year-over-year.

• Net loss per share was $(0.78) compared to $(0.03) in Q1 2025.

• Adjusted EBITDA loss was $6.5 million versus income of $4.1 million in prior year.

• Operating loss for Q1 2026 was $14.1 million, compared to operating income of $1.4–$1.5 million in Q1 2025.

Outlook and guidance

• Reaffirmed full-year 2026 revenue guidance of $335–$355 million and adjusted EBITDA of $44–$48 million, reflecting expected growth over 2025.

• Q2 expected to represent 17–18% of full-year revenue, with significant acceleration in H2 driven by new products, Switch 2, GTA VI, and holiday season.

• Guidance assumes flat year-over-year channel inventory by year-end and a return to growth in gaming accessories markets.

• Long-term targets include 10%+ revenue CAGR, gross margins in mid-to-high 30s, and adjusted EBITDA margins in mid-to-high teens.

• Management expects current cash, credit facility, and operating cash flows to be sufficient for short- and long-term needs.