Q1 2024 Turtle Beach Corp Earnings Call Transcript
Key Points
- First quarter revenue increased by approximately 9% year-over-year to $55.8 million, driven by sales of controller and simulation products and incremental revenue from the PDP acquisition.
- Gross margin improved significantly from 27.5% to 31.8% due to lower freight costs, product costs, promotional spend, and return reserves.
- Adjusted EBITDA improved to $1.4 million compared to an adjusted EBITDA loss of $2.8 million in the year-ago period, reflecting better operational efficiency and cost management.
- Strong market growth in gaming accessories, with double-digit year-over-year revenue growth in Q1 for both US gaming headset and gaming controller markets.
- Successful integration of PDP acquisition, enhancing Turtle Beach's product portfolio and market position, and expected to drive future revenue and cost synergies.
- Console headset revenue was down year-over-year as the company intentionally reduced channel inventory levels ahead of new product launches.
- Operating expenses increased to $23.5 million from $20.6 million a year ago, partly due to costs related to the PDP acquisition.
- Inventory levels rose to $69.5 million from $65.2 million in the previous year, reflecting the addition of PDP inventory, which could pose risks if not managed effectively.
- Despite overall revenue growth, the core Turtle Beach product lines (excluding PDP) experienced relatively flat performance, indicating potential challenges in these segments.
- The company is in a transitional phase with significant product launches and SKU rationalizations, which could lead to short-term disruptions or execution risks.
Welcome to the Turtle Beach First Quarter 2024 conference call. My name is TD, and I will be your operator for today's call. (Operator Instructions) Today's prepared remarks are Chris Keirn, Chief Executive Officer; and John Hanson, Chief Financial Officer. In their prepared remarks, management team will open the call up for any questions. As a reminder, conference is being recorded.
I will now turn the call over to Alex Thompson from Investor Relations.
Alex, you may begin your operator on today's call. We will refer to the press release filed this afternoon that details the company's first quarter 2024 results, which can be downloaded from the Investor Relations page at corp dot Turtle Beach.com, where you'll also find the latest earnings presentation that supplements the information discussed on today's call. Finally, a recording of the call will be available on the Events and Presentations section of the company's website later today. Please be aware that some of the comments made during this call
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