Turtle Beach Corporation — Third Quarter 2026 Earnings Summary

Financial Performance

• Net revenue increased 5.3% year-over-year to $84.7 million for the quarter ended September 30, 2026, compared to $80.5 million in the prior year.
• Gross margin was 34.9% for the quarter, impacted by product mix, higher promotional, tariff, and logistics costs.
• Net income was $4.4 million for the quarter, an increase from $1.7 million in the prior year.
• Adjusted EBITDA was $8.1 million for the quarter, down from $11.0 million in the prior year.
• For the nine months ended September 30, 2026, net revenue was $183.2 million compared to $201.1 million in the prior year.
• Net loss for the nine months ended September 30, 2026, was $18.1 million, compared to a net loss of $1.9 million in the prior year.
• Net debt stood at $71.7 million as of September 30, 2026, comprised of $82.9 million in borrowings less $11.2 million in cash.
• Inventory levels were $79.8 million as of September 30, 2026, an increase of $23.2 million from the second quarter of 2026.
• Cash and cash equivalents were $11.2 million as of September 30, 2026.
• Net cash provided by operating activities was $29.5 million for the nine months ended September 30, 2026.

Guidance and Future Outlook

• Reaffirmed full-year 2026 net revenue guidance of $335 million to $355 million, representing 5% to 11% year-over-year growth.
• Reaffirmed full-year 2026 Adjusted EBITDA guidance of $44 million to $48 million, representing 10% to 20% year-over-year growth.
• Anticipates substantial fourth-quarter revenue contribution driven by retailer holiday inventory replenishment, new product introductions, and increased gamer engagement.
• Early fourth-quarter retail orders are accelerating year-over-year through October.
• Consumer sell-through trends are improving, particularly in the back half of October, ahead of major game releases including Grand Theft Auto VI.
• Management expects balance sheet capacity to resume share repurchases following the holiday season.
• No specific financial guidance is provided beyond 2026.

Business Segments and Product Lines

• Ranked #1 in U.S. gaming headsets and third-party gaming controllers during the quarter, according to Circana.
• Achieved the number-one ranking in third-party gaming controllers for the first time in any quarter since the acquisition of PDP.
• Growth supported by an expanded product portfolio and continued progress across strategic priorities.
• The Victrix brand is noted for its reputation among pro gamers in esports and the fighting game community.

Market and Competitive Landscape

• The company maintains its position as the market leader in console gaming audio for over a decade.
• Industry dynamics include favorable long-term trends and the anticipation of major game releases driving engagement.
• Retailers previously maintained lean inventory levels through the third quarter.

Risks and Challenges

• Gross margin was pressured by higher promotional, tariff, and logistics costs.
• Future results depend on the timing and magnitude of retailer purchases, consumer sell-through, and prevailing cost conditions.
• Risks include trade policies, tariffs, supply chain challenges, dependence on third-party manufacturers and logistics providers, and the success of new technology commercialization.
• Macroeconomic conditions and the availability of successful game titles impact demand.

Management Commentary and Tone

• CEO Cris Keirn stated the company returned to year-over-year revenue growth supported by an expanded product portfolio.
• Management expressed confidence in opportunities ahead, citing new products, broader retail distribution, and improving sell-through trends.
• The tone emphasizes a disciplined approach to capital allocation and a focus on executing through the holiday season.
• Management reiterated a commitment to supporting retail partners and maintaining an unwavering focus on execution.

Other Key Points

• The company anticipates having the balance sheet capacity to resume share repurchases following the holiday season.
• An earnings conference call and webcast were hosted on November 5, 2026, at 4:30 p.m. Eastern Time.
• The company is not providing a reconciliation of full-year 2026 Adjusted EBITDA to net income due to the variability and complexity of reconciling items.
• Insurance recovery of $1.1 million was recorded for the quarter related to a loss of inventory while in transit.
• Stock-based compensation was $1.0 million for the quarter and $3.7 million for the nine months ended September 30, 2026.
• The company repurchased $27.2 million of common stock during the nine months ended September 30, 2026.