Slide 1: Q2 2020 Earnings Presentation
Q2 2020 EARNINGS PRESENTATION August 6, 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: Turtle Beach Earnings
TURTLE BEACH EARNINGS Net revenue up 93% to record $79.7M ($80.1M constant currency) Gross margin up 480 basis points to 36.7% Net income increased >3x to $8.2M vs. $2.4M EPS of $0.51 vs. $(0.16) Adjusted EBITDA up >8x to $12.9M vs. $1.6M Cash & cash equivalents of $21.2M Healthy balance sheet with
Slide 4: Global Market Leader in Gaming Audio
In 2019, Turtle Beach acquired ROCCAT, a leading PC gaming accessories brand, to bring their award-winning product portfolio to more gamers globally. #1 IN GAMING AUDIO The Global Market Leader In Console Gaming Headsets for 10 years Broad Portfolio of PC Gaming Accessories 40 Million+ Headsets Sold
Slide 5: What's New
WHAT'S NEW TOP YOUTUBERS ALI-A AND CLARE SIOBHAN TEAM-UP WITH ROCCAT Already fans of Turtle Beach gaming headsets, the two UK-based influencers – with over 24 million combined subscribers – are now fully equipped with the latest award-winning gear from ROCCAT for their PC gaming stations. Clare's Yo
Slide 6: Quarterly
QUARTERLY $ in millions (except per-share data) 2019 Q2 2020 Q2 Commentary $79.7 Continued increase driven by stay-at-home orders plus the ability to significantly Revenue $41.3 ($80.1 constant currency) increase production, fill retailers order & gain market share. Volume-driven fixed cost leverage
Slide 7: Balance Sheet
BALANCE SHEET Capitalization Balance Sheet Improvements At June 30, 2019 At June 30, 2020 • Cash and equivalents increased significantly due to record revenue, higher margins and fixed cost leverage. Cash & Equivalents $3.4M $21.2M • Inventory decline driven by record Q2 Inventories $50.4M $45.0M '2
Slide 8: Gen 8 Console
GEN 8 CONSOLE Gen 7 Xbox (Nov 2013) Gen 8 Xbox (2020) Gen 7 PlayStation (Nov 2013) Gen 8 PlayStation (2020) Xbox Series X (announced E3/June 2019) PlayStation 5/PS5 (announced April 2019) Release: Holiday 2020 (expected November) Release: Holiday 2020 (expected November) Price: $499 (expected) Price
Slide 9: Xbox and PlayStation
XBOX AND PLAYSTATION “With the launch of new systems and continued sales for existing consoles, we forecast Microsoft and Sony combined hardware sales will PlayStation and Xbox Console Unit Sales set records in 2021 and 2022.” David Cole, Head DFC Intelligence, Video games industry analyst 40 • Cons
Slide 10: Anticipated Console Headset Market Dynamics
ANTICIPATED CONSOLE HEADSET MARKET DYNAMICS SIMPLIFIED MARKET MODEL¹ US & CANADA CONSOLE GAMING HEADSET SELL-THROUGH MILLIONS OF UNITS Battle Royale Stay-at-home Orders Recent unprecedented increase in gaming and gaming accessories 14.8 due to stay-at-home orders. 20% or More TB analysis indicates d
Slide 11: Increased 2020 Outlook
INCREASED 2020 OUTLOOK¹ 2020 – 2020 – Updated 2020 Updated Commentary Prior Continued strong consumer demand for gaming accessories driven by new & existing gamers, increased use of headsets for non-gaming Net Revenue $224-$234M ~$300M uses, further increase in demand spurred by new holiday season c
Slide 12: Revenue & Adjusted EBITDA Profile
REVENUE & ADJUSTED EBITDA PROFILE Company Revenues Adjusted EBITDA2 Millions Millions ~$300M $57.7M $287M Battle Battle Royale $235M Royale Surge Surge ~$12M of growth investments $149M ~$30M $22.8 $11.6M 2017 2018 2019 2020E1 2017 2018 2019 2020E1 1. Guidance updated on August 6, 2020. 2. See appen
Slide 13: Turtle Beach Earnings
TURTLE BEACH EARNINGS • Record performance driven by stay-at-home orders increasing demand and strong operational execution • Continued leadership in the $1.3B1 console gaming headset market with ten consecutive years of over 40% market share • Exceeding expectations in pursuit of $3.0B1 PC accessor
Slide 14: 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 15: Appendix
APPENDIX 15
Slide 16: GAAP Net Income to Adjusted Net Income Reconciliation
GAAP NET INCOME TO ADJUSTED NET INCOME RECONCILIATION Three Months Ended June 30, 2020 June 30, 2019 Net Income (Loss) GAAP Net Income (Loss) $ 8,204 $ (2,373) Adjustments, net of tax: Gain on financial instrument obligation — — Gain on acquisition-related settlement (1,702) — Change in fair value o
Slide 17: GAAP to Adjusted EBITDA Reconciliation
GAAP TO ADJUSTED EBITDA RECONCILIATION Three Months Ended June 30, 2020 Adj As Adj Adj Stock Adj Reported Depreciation Amortization Compensation Other (1) EBITDA Net revenue $ 79,680 $ - $ - $ - $ - $ 79,680 Cost of revenue 50,453 (593) - (280) - 49,580 Gross Profit 29,227 593 - 280 - 30,100 Operati
Slide 18: GAAP to Adjusted EBITDA Reconciliation
GAAP TO ADJUSTED EBITDA RECONCILIATION Six Months Ended June 30, 2020 Adj As Adj Adj Stock Adj Reported Depreciation Amortization Compensation Other (1) EBITDA Net revenue $ 114,687 $ - $ - $ - $ - $ 114,687 Cost of revenue 74,675 (1,184) - (338 ) - 73,153 Gross Profit 40,012 1,184 - 338 - 41,534 Op
Slide 19: 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