Turtle Beach (HEAR) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue grew 14–14.5% year-over-year to $63.9–$64 million, driven by the PDP acquisition and margin improvement initiatives, despite a declining gaming accessories market.

• Gross margin improved by 470 basis points year-over-year to 36.6%, with Adjusted EBITDA up to $4.1 million from $1.4 million.

• Net loss was $0.7 million, or $(0.03) per share, compared to net income of $0.2 million, or $0.01 per share, in Q1 2024.

• Cash flow from operations reached $40.5 million, the highest since 2019.

• $1.8 million in shares repurchased in Q1, with a new $75 million repurchase program authorized.

Financial highlights

• Q1 2025 revenue: $63.9–$64 million, up 14–14.5% year-over-year.

• Gross margin: 36.6%, up from 31.8% prior year.

• Operating expenses: $21.8 million (34% of revenue), down from 42% last year, aided by a $3.4 million insurance recovery.

• Adjusted EBITDA: $4.1 million, up 180% year-over-year.

• Cash and cash equivalents: $11.7 million as of March 31, 2025.

Outlook and guidance

• Full-year 2025 revenue guidance: $340–$360 million; Adjusted EBITDA: $47–$53 million.

• Majority of revenue expected in the second half, driven by new product launches and the Nintendo Switch 2.

• Market for gaming accessories projected to be down 10–12% for 2025, with improvement expected in 2026.

• Gross margin expected in the low 30s for Q2, building up in Q3 and Q4.

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