Turtle Beach (HEAR) Q4 2025 earnings summary

Executive summary

• 2025 was a challenging year with industry headwinds, including tariffs and weak North American gaming/accessory demand, resulting in revenue and net income declines but operational progress and market share gains in headsets.

• Gross margins improved to 40.1% in Q4 and 37.3% for the year, the highest since 2018, driven by cost optimization and tariff mitigation.

• Net income for Q4 was $17.6 million and $15.7 million for the full year; adjusted EBITDA was $28.1 million for Q4 and $40.1 million for the year, both down year-over-year.

• Strategic groundwork was laid for growth, focusing on product innovation, operational efficiency, and readiness for industry catalysts like GTA VI and new console cycles.

• Strengthened the balance sheet through cost optimization, supply chain agility, debt refinancing, and share repurchases.

Financial highlights

• Q4 2025 net revenue was $118.8 million, down from $146.1 million in Q4 2024; full year revenue was $319.9 million, down from $372.8 million in 2024.

• Q4 gross margin reached 40.1%, up 310 basis points year-over-year; full year gross margin was 37.3%, up 270 basis points.

• Q4 net income was $17.6 million; full year net income was $15.7 million, down 3% year-over-year.

• Q4 Adjusted EBITDA was $28.1 million (down 21%); full year Adjusted EBITDA was $40.1 million (12.5% of revenue).

• Operating expenses for the year were $91.8 million (28.7% of revenue), down from $109 million (29%) in 2024.

Outlook and guidance

• 2026 revenue expected at $335–$355 million (5–11% growth); Adjusted EBITDA guidance of $44–$48 million, up 10–20% year-over-year.

• Market headwinds expected to persist in H1 2026, with improvement in H2 driven by new products and major game launches, notably GTA VI in Q4.

• Q1 2026 expected to deliver 13–14% of full-year revenue; double-digit year-on-year revenue growth anticipated in Q2 with new product launches.

• Gross margin expansion expected to continue in 2026, with OpEx structure similar to 2025 but with increased investment in technology and brand.

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