Turtle Beach Corporation · NASDAQ:TBCH
Turtle Beach — Q3 2020 Earnings Presentation
25 slides from Turtle Beach's earnings presentation, Nov 5, 2020
Slide 1: Investor Presentation
INVESTOR PRESENTATION November 2020
Slide 2: Safe Harbor
SAFE HARBOR Forward-Looking Information This presentation includes forward-looking information and statements within the meaning of the federal securities laws. Except for historical information contained in this release, statements in this release may constitute forward-looking statements regarding
Slide 3: Who We Are
WHO WE ARE… $35+ million $330 million in $50 million in NASDAQ: HEAR Cash From $1.80 EPS* Revenues* EBITDA* Operations* * Reflects guidance for 2020 updated November 5, 2020 3
Slide 4: Gaming Is the Market to Be a Leader In
GAMING IS THE MARKET TO BE A LEADER IN Global Market for Gaming Headsets, Mice, and Keyboards 1 Why gaming has been such a strong market for years… Entertainment Since the 70’s gaming has been a growing source of entertainment, capturing increasing share of leisure time Keyboards • Gaming now leads
Slide 5: The Global Market Leader in Console Gaming Headsets
#1 IN GAMING AUDIO The Global Market Leader In Console Gaming Headsets for Over 10 Years Broad Portfolio of PC Gaming Accessories 50 Million+ Headsets Sold Since 2010 Award-Winning Design and Build Quality Industry-Leading Innovation at Every Price Point With Over 230 Patents 5
Slide 6: The Leader in Console Gaming Headsets
THE LEADER IN CONSOLE GAMING HEADSETS #1 GAMING HEADSET HIGHER REVENUE SHARE STRONG BRAND & REPUTATION PROVIDER FOR XBOX & PLAYSTATION THAN NEXT THREE PLAYERS COMBINED Among Gamers, Retailers, Gaming Industry PRODUCT FOR EVERY GAMER Entry Level to Professional PRODUCT INNOVATIONS And Unique Features
Slide 7: Industry Leading Headsets
INDUSTRY LEADING HEADSETS "A fantastically priced headset and worthy successor to the original." - Games Radar "This $40 headset is worth every penny." - Windows Central “A best gaming headset of 2020.” - Tom’s Guide 7
Slide 8: The Most Complete Portfolio
THE MOST COMPLETE PORTFOLIO CORE CONSOLE HEADSET RANGE $249.95 $149.95 XBOX SERIES X | XBOX ONE STEP-UP FEATURE FROM XBOX SERIES X | XBOX ONE PS5™* | PS4™ PS5™ | PS4™ | MOBILE NINTENDO SWITCH™ PREVIOUS SERIES Bluetooth® w/ App Bluetooth® w/ App Control Control $99.95 LED & Preset XBOX SERIES X | XBO
Slide 9: ROCCAT
ROCCAT Acquired in 2019, ROCCAT is Turtle Beach's award- winning brand of gaming mice, keyboards, headsets, software, and more for PC gamers. The brand is driven by former esports pro, Founder and Head of PC Products for Turtle Beach, Rene Korte, and his highly experienced product and engineering te
Slide 10: It's Time to Experience Precision
IT'S TIME TO EXPERIENCE PRECISION "The ROCCAT Vulcan TKL Pro is a gorgeous optical gaming keyboard with supurb build quality." "For gaming, this is the mouse to use." "Simple, affordable, stylish and comfortable, but - Rock Paper Shotgun - Back to the Gaming also packing a mighty acoustic punch you
Slide 11: ROCCAT's Growing & Award-Winning PC Lineup
ROCCAT’S GROWING & AWARD-WINNING PC LINEUP Burst Pro | Burst Core Kain 200/120/100 Kone AIMO Remastered Kone Pure Ultra MSRP: $99.99 | $29.99 MSRP: $99.99 | $69.99 | $49.99 MSRP: $79.99 MSRP: $69.99 Vulcan Pro Vulcan TKL Pro Vulcan TKL MSRP: $199.99 MSRP: $159.99 MSRP: $129.99 Vulcan 120/121/122 MSR
Slide 12: Investing to Drive Growth
INVESTING TO DRIVE GROWTH Global Gaming Accessory Market: $5.1B (SEPTEMBER NEWZOO ESTIMATES) 7 Mice Mice Expand Portfolio $0.9B 2020-2021 $3.4B Market To Further Penetrate 6 Keyboards Keyboards Expand Portfolio $1.0B 2020 Growth Investments of 2020-2021 ~$12M Including in ROCCAT Portfolio Expansion
Slide 13: We Partner With Leading Teams
WE PARTNER WITH LEADING TEAMS Over 862M Gamers and 202M esports fans in the Americas and Europe1 Ali-A Dr. Disrespect Mr Savage Castro_1021 Skyrroz (30M Reach) (8M Reach) (8M Reach) (6M Reach) (4M Reach) NRG Esports Chicago Huntsmen A leading collective of top Franchise team in influencers and world
Slide 14: Gen 8 Console
GEN 8 CONSOLE Gen 7 Xbox (Nov. 2013) Gen 8 Xbox (Nov. 2020) Gen 7 PlayStation (Nov. 2013) Gen 8 PlayStation (Nov. 2020) Xbox Series X|S (announced E3/June 2019) PlayStation 5/PlayStation 5 Digital (announced April 2019) Release: November 10, 2020 Release: November 12, 2020 Price: $499 for Xbox Serie
Slide 15: Xbox and PlayStation Console Unit Sales
XBOX AND PLAYSTATION PlayStation and Xbox Console Unit Sales “With the launch of new systems and continued sales for existing consoles, we forecast Microsoft and Sony combined hardware sales will 40 set records in 2021 and 2022.” David Cole, Head DFC Intelligence, Video games industry analyst ➢ Cons
Slide 16: Anticipated Console Headset Market Dynamics
ANTICIPATED CONSOLE HEADSET MARKET DYNAMICS SIMPLIFIED MARKET MODEL¹ NORTH AMERICA CONSOLE GAMING HEADSET SELL-THROUGH MILLIONS OF UNITS Recent unprecedented increase in gaming and gaming accessories Battle Royale Stay-at-home Orders due to stay-at-home orders. 16 15.0 TB analysis indicates 2020 gro
Slide 17: Balance Sheet
BALANCE SHEET Liquidity Balance Sheet Improvements At September 30, 2019 At September 30, 2020 ➢ Cash and equivalents increased significantly due to record revenue, higher margins and fixed cost leverage. Cash & Equivalents $7.0M $27.3M ➢ Inventory increase driven by higher current demand, earlier-t
Slide 18: Increased 2020 Outlook
INCREASED 2020 OUTLOOK¹ 2020 – 2020 – Updated 2020 Updated Commentary Prior Continued strong consumer demand for gaming accessories, higher Net Revenue ~$300M ~$330M share driven by supply and retail execution, good progress in PC category expansion. Higher operating leverage and lower than normal p
Slide 19: Revenue & Adjusted EBITDA Profile
REVENUE & ADJUSTED EBITDA PROFILE Company Revenues Adjusted EBITDA2 Millions Millions ~$330M $287M $57.7M Battle Battle Royale ~$50.0M Royale $235M Surge Surge ~$12M of growth investments $149M $22.8 $11.6M 1 1 2017 2018 2019 2020E 2017 2018 2019 2020E 1. Guidance updated on November 5, 2020. 2. See
Slide 20: Long-Term Financial Targets
LONG-TERM FINANCIAL TARGETS Metric Target Maintain leadership position in console gaming headsets Revenue $ 10-20% CAGR Drive growth in PC gaming headsets, keyboards, and mice (leveraging ROCCAT brand and portfolio) Gross Margins % Mid 30’s Maintain disciplined spending with investments for growth L
Slide 21: Contact Us
CONTACT US INVESTOR RELATIONS: PR/MEDIA CONTACT: Cody Slach/Sean McGowan Maclean Marshall Gateway Turtle Beach +1 (949) 574-3860 +1 (858) 914-5093 HEAR@gatewayir.com maclean.marshall@turtlebeach.com COMPANY WEBSITES www.turtlebeachcorp.com | www.turtlebeach.com | www.roccat.org
Slide 22: Appendix
APPENDIX 227
Slide 23: Experienced Board of Directors
EXPERIENCED BOARD OF DIRECTORS - COO of Motorola Mobility’s mobile business Juergen Stark - 10 years as Principal at McKinsey & Company, Inc. Chairman & CEO - MBA, Harvard Business School - Former CFO of Qualcomm Incorporated (NASDAQ: QCOM) William Keitel - During his tenure, Qualcomm grew revenues
Slide 24: Experienced Management Team
EXPERIENCED MANAGEMENT TEAM Rene Korte General Manager, PC Products Rene Korte General Manager, PC Products Juergen Stark Chairman & CEO • Founder of ROCCAT GmbH and CEO for 12 years - Founder of ROCCAT GmbH and CEO for 12 years - COO Of Motorola Mobility’s Mobile Business • VP Europe for RAZER - VP
Slide 25: GAAP to Adjusted EBITDA Reconciliation
GAAP TO ADJUSTED EBITDA RECONCILIATION December 31, 2019 December 31, 2018 December 31, 2017 Consolidated Net Income (Loss) 17,944 39,190 (3,248) Depreciation 4,556 3,954 4,074 Amortization of intangibles 642 303 348 Interest 929 5,335 7,916 Taxes (6,237) 1,737 593 Stock Compensation 3,558 1,877 1,4