Slide 1: Corporate Presentation May 2016
JURTLE BEACH’ (CONRAN AI ACAN| CORPORATE PRESENTATION: + = May 2016
Slide 2: Safe Harbor Statement
N A S D A Q : H E A R Safe Harbor Statement Forward-Looking Information This presentation includes “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements are statements that are not historical facts including statements about our beliefs and
Slide 3: Who We Are
N A S D A Q : H E A R Who We Are Turtle Beach is a premier audio innovation company with a 40-year legacy of creating new audio categories Longstanding, #1 brand for gaming headsets with 42% share of the U.S. market1 Positioned for renewed revenue and profit growth as major industry product cy
Slide 4: Leading Gaming Headset Business & Transformational New Directed Audio Technology
N A S D A Q : H E A R Headsets HyperSound Overview Market share leader with large, loyal customer base Breakthrough audio technology that allows directed placement of sound Markets Catalysts Well-positioned product portfolio for new gen consoles Launched HyperSound Clear 500P into the $5B hearing he
Slide 5: 2016 Management Objectives
N A S D A Q : H E A R 2016 Management Objectives Significantly improve profitability of headset business (~5X EBITDA improvement) Drive overall growth, offsetting expected $20M+ YoY decline in old gen revenues with new gen increases Continue to improve headset gross margins to achieve ~30% for
Slide 6: 2016 Outlook
N A S D A Q : H E A R 1) Guidance updated and effective on May 10, 2016. 2) Delta reflects midpoint of the outlook. 2016 Outlook1 5 ($ in millions) Old New % ∆² Management Commentary Revenue: New Gen $140-$145 $147-$153 5% 18-23% growth from 2015 Old Gen $8-$10 $8-$10 - 60-70% decline from 2015 Othe
Slide 7: Gaming Headsets
N A S D A Q : H E A R Gaming Headsets
Slide 8: Dominant Gaming Audio Provider with Leading Market Share
N A S D A Q : H E A R 42% 2015 U.S. Gaming Headset Market Share1 Dominant Gaming Audio Provider with Leading Market Share #1 gaming headset provider for Xbox and PlayStation 42% of U.S. market in 2015 (42% in Q1 2016)1 45% of U.K. market in 2015 (46% in Q1 2016)2 Completely transitioned port
Slide 9: New Gen Console Growth
N A S D A Q : H E A R 3.0 11.5 22.1 34.6 47.7 60.0 4.6 18.8 36.3 55.3 74.9 94.6 0M 20M 40M 60M 80M 100M 120M 2013 2014 2015 2016E 2017E 2018E Xbox One PS4 0M 20M 40M 60M 80M 100M 120M 2013 2014 2015 2016E 2017E 2018E (# of consoles) New Gen Console Growth 36M 94M 22M 60M Sources: DFC Intelligenc
Slide 10: We Cover All Key Price Points
N A S D A Q : H E A R Retail ASP <$50 $50 - $99 $100 - $200 >$200 Console PS4 Xbox One PS4 Xbox One PS4 Xbox One PS4 Xbox One TOTAL Recon 60P Recon 50P P4c Recon 50X Recon 30X Stealth 400 PX22 XO4 Stealth XO1 Stealth 500P Stealth 420X XO7 Pro Elite 800 Stealth 500X Elite 800X 16 PX24 Sony Silver Wir
Slide 11: We Have Differentiated Technology
N A S D A Q : H E A R We Have Differentiated Technology… Advanced Chat Chat technology like noise gate, chat boost, variable microphone monitor Bluetooth Dual-pairing Bluetooth in most wireless headsets for chat, mobile gaming, audio calls and music streaming DTS Headphone:X 1st gaming headsets with
Slide 12: Strong Retail Presence, Great Partnerships and Strong Distribution
N A S D A Q : H E A R Strong Retail Presence Great Partnerships 12,000+ Interactive Displays Sample retailers …And Strong Distribution 11 Product sales in over 40 countries with over 280,000 points of distribution Partnerships with industry leading brands Market leader in deploying interactive gamin
Slide 13: PC Gaming
N A S D A Q : H E A R PC Gaming International Headset Growth Opportunities 12 Approximately $400M market globally1 Launched eight new SKUs in 2014 and 2015 Launched PC gaming accessories via a partner in 2014 including: Keyboards Mice Mouse pads PC gaming more popular than console gami
Slide 14: International Headset Growth Opportunities: China
N A S D A Q : H E A R PC Gaming International Headset Growth Opportunities 13 China represents long-term growth opportunity for console and PC gaming headsets 446M Chinese gamers2 China represents <2% of our annual revenues today China has lifted video game console ban Turtle Beach first-t
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Slide 16: HyperSound – A New Sound Delivery Mechanism
N A S D A Q : H E A R HyperSound – A New Sound Delivery Mechanism How does HyperSound technology work? Thin panels produce directional audio within an ultrasound beam, masking ambient noise Q4-15 launch into $5B hearing health market1 via HyperSound Clear 500P product HyperSound Clear 500P T
Slide 17: HyperSound Clear 500P – Entering a $5 Billion Hearing Health Market
N A S D A Q : H E A R HyperSound Clear 500P improves the listening experience and speech intelligibility for individuals with hearing loss HyperSound Clear 500P – Entering a $5 Billion Hearing Health Market 16 1) Johns Hopkins School of Medicine, Nov 2011. World Health Organization, 2013. 2) The Hea
Slide 18: U.S. Hearing Health Market Structure & Channel Approach
N A S D A Q : H E A R 1) Approximate units of hearing aids sold via this channel. Channel Landscape Market Size (est.) Retail Channel U.S. Hearing Health Market Structure & Channel Approach 17 Independent & Buying Groups Retail Store Front Veterans Admin. Direct to Consumer 8,000 POS (Points of Sale
Slide 19: HyperSound Clear 500P For Hearing Market: Our Strategy
N A S D A Q : H E A R HyperSound Clear 500P For Hearing Market: Our Strategy Hire Leader: Former president/CEO of two large hearing aid companies hired in 2014 to lead HyperSound Get Clearance for Medical Device: FDA 510(k) clearance in Feb 2014 allows us to market the product “to improve clarit
Slide 20: HyperSound Clear 500P Initial Channel Ramp Progress
N A S D A Q : H E A R 0 20 40 60 80 100 120 140 160 180 200 Nov Dec Jan Feb Mar Apr # of Off ic es Fully Active Stocked HyperSound Clear 500P Initial Channel Ramp Progress We are in early stage of rollout to hearing healthcare offices, pursuing careful approach to ensure success Offices require
Slide 21: Commercial Potential Growth Opportunities for HyperSound Technology
N A S D A Q : H E A R Commercial Potential Growth Opportunities for HyperSound Technology 20 1) POPAI | HyperSound In-Store Research Report, Jun 2015. 2) BUNN Research, Jan 2014. 3) Self-Service Markets: ATMs, Kiosks, Vending Machines, BCC Research, Mar 2011. Pre-defined sound zones for in-store p
Slide 22: Strong & Rapidly Growing Patent Portfolio
N A S D A Q : H E A R 26 28 35 59 20 68 86 108 Jan 2013 Jan 2014 Jan 2015 Mar 2016¹ Pending Issued Headset innovations: Audio processing Gaming specific features HyperSound innovations: Emitter construction Ultrasound and emitter electronics Digital signal processing techniques 121 96
Slide 23: Financial Summary
N A S D A Q : H E A R Financial Summary
Slide 24: Balance Sheet Highlights
N A S D A Q : H E A R Balance Sheet Highlights Revolver typically peaks in Q4 and lowest in Q1 after holiday receipts In Feb 2016, raised $6.2M in net proceeds (over 50% purchased by insiders), stabilizing liquidity Accounts payable down 30% to $12.5M @ Mar 31, 2016 Cash + AR - AP = $6.5M @
Slide 25: Revenue Growth Profile
N A S D A Q : H E A R $M $1M $2M $3M $4M $5M $6M Q2-'15 Q3-'15 Q4-'15 Q1-'16 2016E² $5M ~$0.3M ~$0.5M ~$0.2M ~$0.1M Headset Revenue Growth Revenue Growth Profile 24 Revenue Profile Over Time New gen sales up 24% from 2014 to 2015, up 64% in Q1-16 YoY Old gen sales declined ~$40M to under 12% of
Slide 26: Q2 2016 Outlook
N A S D A Q : H E A R Q2 2016 Outlook¹ 25 Q2-16 YoY ∆ Management Commentary Revenue $25M 11% Strong start to 2016 in headsets and upcoming product launches driving strong outlook Gross Margin ~15% Roughly flat New gen headsets carry higher gross margin, offset by HyperSound amortization Adj. EBITDA
Slide 27: 2016 Outlook
N A S D A Q : H E A R 1) Guidance updated and effective on May 10, 2016. 2) Delta reflects midpoint of the outlook. 2016 Outlook1 26 ($ in millions) Old New % ∆² Management Commentary Revenue: New Gen $140-$145 $147-$153 5% 18-23% growth from 2015 Old Gen $8-$10 $8-$10 - 60-70% decline from 2015 Oth
Slide 28: Key Takeaways
N A S D A Q : H E A R Key Takeaways Longstanding, dominant market leader in console gaming headset market with technologically differentiated products Console market growing strongly post new platform launches late 2013 Company now completed successful portfolio transition for new Xbox and Pla
Slide 29: Contact Information
N A S D A Q : H E A R Contact Information Investor Relations: Media Contact: Cody Slach Maclean Marshall Liolios Turtle Beach Corporation 949.574.3860 858.914.5093 HEAR@Liolios.com Maclean.Marshall@turtlebeach.com www.turtlebeach.com www.hypersound.com C O M PA N Y W E B S I T E S www.turtlebeachcor
Slide 30: Appendix
Appendix
Slide 31: Experienced Management Team
N A S D A Q : H E A R Experienced Management Team Juergen Stark CEO • COO of Motorola Mobility’s mobile business • 10 years as principal at McKinsey & Company John Hanson CFO • EVP and CFO at Dialogic • CFO at One Communications Corp Rodney Schutt SVP, GM - HyperSound Richard Kuvalik CTO • 25+ years
Slide 32: Experienced Board of Directors
N A S D A Q : H E A R Experienced Board of Directors Laureen DeBuono Director Ken Fox Director William Keitel Director Dr. Andrew Wolfe, PhD Director Ron Doornink Chairman • Partner at leading CFO consulting services firm FLG Partners, LLC • Former President and CEO of Coapt Systems, Inc. • Former C