Slide 1: Q1 2020 Earnings Presentation
Q1 2020 EARNINGS PRESENTATION May 7, 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 of $35.0M ($35.1M constant currency) Gross margin of 30.8% Net loss of $3.6M, or $(0.25) per diluted share Adjusted EBITDA of $(2.7)M Cash & cash equivalents of $8.7M Healthy balance sheet with no long-term debt 3
Slide 4: #1 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 TURTLE BEACH EXPANDS PARTNERSHIP WITH NRG ESPORTS A top esports organization fielding some of the best professional teams and players across Apex Legends, Call of Duty, Fortnite, Rocket League, and more, this partnership now sees Turtle Beach as NRG's official gaming audio partner across
Slide 6: What's New
WHAT'S NEW ROCCAT X DR DISRESPECT NEW EXCLUSIVE PARTNER FOR PC ACCESSORIES ROCCAT has become the exclusive keyboard, mouse, and mousepad provider for Dr Disrespect as he brings his signature irrepressible approach to gamers around the world on his widely viewed Twitch channel. Dr Disrespect was name
Slide 7: Best-Selling Recon 70 Now Available in More Colors
BEST-SELLING RECON 70 NOW AVAILABLE IN MORE COLORS Three new colorways – Silver, Blue Camo, and Green Camo – of Turtle Beach’s best-selling1 Recon 70 gaming headset now make nine total options to choose from, each one delivering the immersive sound and lightweight comfort gamers expect. High-quality
Slide 8: Quarterly
QUARTERLY $ in millions (except per-share data) 2019 Q1 2020 Q1 Commentary $35.0 Decline versus 2019 as expected given unusually strong Q1 2019 from battle Revenue $44.8 ($35.1 constant royale & strong Q4 2018 triple-A games; slightly offset by record-setting market currency) surge in March 2020 due
Slide 9: Balance Sheet
BALANCE SHEET Capitalization Balance Sheet Improvements At 3-31-19 At 3-31-20 Cash & Equivalents $10.2M $8.7M • ROCCAT purchase price of $12.7M funded with cash and borrowings under revolver in 2019. Inventories $44.5M $39.3M • Inventory decline driven by Q1 ‘20 revenue trends. Revolver (asset-based
Slide 10: 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 11: Xbox and PlayStation
XBOX AND PLAYSTATION “With the launch of new systems and continued sales for existing PlayStation and Xbox Console Unit Sales consoles, we forecast Microsoft and Sony combined hardware sales will set records in 2021 and 2022.” 40 David Cole, Head DFC Intelligence, Video games industry analyst • Cons
Slide 12: Q2 2020 Outlook
Q2 2020 OUTLOOK¹ Q2-2020 Q2 Commentary Net Revenue $42-$47M Stay-at-home orders due to COVID-19 driving strong demand into Q2. Air freight to meet increased Q2 ‘20 demand, tariff costs, higher Gross Margin ~30% tooling & certifications associated with new product development. Above factors. Q2 ‘20 O
Slide 13: 2020 Updated Outlook
2020 UPDATED OUTLOOK¹ 2020 – Prior 2020 - Updated 2020 Updated Commentary Anticipate a decline in the overall console headset market until Net Revenue $214-$224M $224-$234M expected pre-holiday launch of new consoles, partially offset by increased demand resulting from stay-at-home orders. Increased
Slide 14: Revenue & Adjusted EBITDA Profile
REVENUE & ADJUSTED EBITDA PROFILE Company Revenues Adjusted EBITDA2 Millions Millions $287M $57.7M Battle Battle $224M- Royale $235M $234M Royale Surge Surge $149M $22.8 ~$9M of growth investments $11.6M $9-$14M 1 1 2017 2018 2019 2020E 2017 2018 2019 2020E 1. Guidance updated on May 7, 2020. 2. See
Slide 15: Turtle Beach Earnings
TURTLE BEACH EARNINGS • Continued leadership in the $1.3B1 console gaming headset market with tenth consecutive year of over 40% market share • Added capability to fully pursue growth in $3.0B1 market for PC accessories with acquisition of leading German PC gaming accessory maker ROCCAT • Investing
Slide 16: 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 17: Appendix
APPENDIX 17
Slide 18: GAAP Net Income to Adjusted Net Income Reconciliation
GAAP NET INCOME TO ADJUSTED NET INCOME RECONCILIATION Three Months Ended March 31, 2020 March 31, 2019 Net Income (Loss) GAAP Net Income (Loss) $ (3,555) $ 3,055 Adjustments, net of tax: Gain on financial instrument obligation — (1,601) Acquisition integration costs 175 721 Non-GAAP Earnings $ (3,38
Slide 19: GAAP to Adjusted EBITDA Reconciliation
GAAP TO ADJUSTED EBITDA RECONCILIATION Three Months Ended March 31, 2020 Adj As Adj Adj Stock Adj Reported Depreciation Amortization Compensation Other (1) EBITDA Net revenue $ 35,007 $ - $ - $ - $ - $ 35,007 Cost of revenue 24,222 (590) - (58) - 23,574 Gross Profit 10,785 590 - 58 - 11,433 Operatin
Slide 20: GAAP to Adjusted EBITDA Reconciliation
GAAP TO ADJUSTED EBITDA RECONCILIATION Three Months Ended March 31, 2019 Adj As Adj Adj Stock Adj Reported Depreciation Amortization Compensation Other (1) EBITDA Net revenue $ 44,846 $ - $ - $ - $ - $ 44,846 Cost of revenue 30,059 (352) - 125 - 29,832 Gross Profit 14,787 352 - (125) - 15,014 Operat
Slide 21: 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