Turtle Beach Corporation · NASDAQ:TBCH

Turtle Beach — Investor Presentation (November 2016)

32 slides from Turtle Beach's investor presentation, Nov 21, 2016

1. Slide 1: Turtle Beach Corporate Presentation November 2016

   JURTLE BEACH’ (CONRAN AI ACAN| CORPORATE: PRESENTATION : 7. = NOVEMBER 2016

2. 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

3. 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

4. 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 Leading product portfolio for new-gen consoles Evolving to a licensed model Leading Gaming Headset Business &

5. Slide 5: Tracking Towards 2016 Management Objectives

   N A S D A Q : H E A R Tracking Towards 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 a

6. Slide 6: 2016 Outlook

   N A S D A Q : H E A R 1) Prior guidance as of Aug 8, 2016. 2) Guidance updated and effective on Nov 10, 2016. 3) Delta reflects midpoint of the outlook. 4) Excludes $1.30 for goodwill impairment and $0.15 for inventory reserve charges associated with the HyperSound restructuring. 2016 Outlook 5 ($ i

7. Slide 7: Gaming Headsets

   N A S D A Q : H E A R Gaming Headsets

8. Slide 8: Dominant Gaming Audio Provider with Leading Market Share

   N A S D A Q : H E A R Dominant Gaming Audio Provider with Leading Market Share  #1 gaming headset provider for Xbox and PlayStation  Completely transitioned portfolio from old-gen (Xbox 360 & PlayStation 3) to new-gen (Xbox One & PlayStation 4) from 2013 to 2015  New-gen headset revenues up:  55

9. Slide 9: New-Gen Console Growth

   N A S D A Q : H E A R 3.0 10.9 20.0 28.7 36.7 44.0 4.6 18.0 34.6 51.5 67.1 82.4 0M 20M 40M 60M 80M 100M 120M 2013 2014 2015 2016E 2017E 2018E Xbox One PS4 0M 10M 20M 30M 40M 50M 60M 70M 80M 90M 2013 2014 2015 2016E 2017E 2018E (# of consoles) New-Gen Console Growth 35M  82M 20M  44M Sources: DFC I

10. Slide 10: We Cover All Key Price Points – More Than Any Competitor

    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 TOTAL¹ Recon 60P Recon 50P P4c Recon 50X Recon 30X Stealth 400 S350VR PX24 XO4 Stealth XO1 PX24 Stealth 520 Elite Pro Stealth 420X+ XO7 Pro Elite Pro Elite 800 Elite 800X 18

11. 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

12. 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 266,000 points of distribution Partnerships with industry leading brands Market leader in deploying interactive gamin

13. Slide 13: Growth Opportunities: Virtual Reality

    N A S D A Q : H E A R International Virtual Reality (VR) PC Gaming Headset Growth Opportunities 12  VR market expected to reach $1B in 20161  $700M in hardware sales, remainder in content  According to SuperData Research, VR hardware market expected to reach $15.9B by 2020 (40% CAGR)²  STEALTH 3

14. Slide 14: Growth Opportunities: PC Gaming Headsets

    N A S D A Q : H E A R International Virtual Reality (VR) PC Gaming Headset Growth Opportunities 13  PC gaming headsets market ~$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 gam

15. Slide 15: Growth Opportunities: International

    N A S D A Q : H E A R International Virtual Reality (VR) PC Gaming Headset Growth Opportunities 14  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 

16. Slide 16: Slide 16

17. Slide 17: 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  HyperSound Clear 500P™ TV audio solution improves the listening experience and speech intelligibility fo

18. Slide 18: Commercial Markets and New Glass Technology

    N A S D A Q : H E A R Commercial Retail Audio Commercial Markets and New Glass Technology 17 1) POPAI | HyperSound In-Store Research Report, Jun 2015. 2) BUNN Research, Jan 2014.  Pre-defined sound zones for in-store promotional, informational, beaconing and way-finding messages  Deployed in Nov 2

19. Slide 19: Evolving HyperSound to a License Model

    N A S D A Q : H E A R Evolving HyperSound to a License Model Potential licensing revenue streams include:  Retail sales of HyperSound Clear™ 500P  Test pilot at major consumer electronics retailer in Chicago area is off to a positive start  Alleviating Tinnitus symptoms  FDA 510(k) clearance for

20. Slide 20: Strong & Growing Patent Portfolio

    N A S D A Q : H E A R 26 28 35 48 74 20 68 86 108 83 Jan 2013 Jan 2014 Jan 2015 Jan 2016 Nov 2016¹ Pending Issued  Headset innovations:  Audio processing  Gaming specific features  HyperSound innovations:  Emitter construction  Ultrasound and emitter electronics  Digital signal processing tec

21. Slide 21: Financial Summary

    N A S D A Q : H E A R Financial Summary

22. Slide 22: 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  $44.6M federal, $20.6M state net operating losses @ Dec 31, 2015 offset taxabl

23. Slide 23: Headset Revenue Growth

    N A S D A Q : H E A R Headset Revenue Growth Revenue Growth Profile 22  New-gen sales up 24% from 2014 to 2015, up 41% in Q3-16 YoY  New-gen revenue expected to increase 27-31% in 2016²  Old-gen revenue expected to decline 71-77% in 2016²  Strong revenue growth supporting further gains in our #1

24. Slide 24: Strong Headset Growth

    N A S D A Q : H E A R Headset Net Revenue¹ Headset Gross Margin¹ Headset Adj. EBITDA¹ ² 23 $162M $166M $173M $175M $174M Q4-15 Q1-16 Q2-16 Q3-16 Q4-16E³ 26.5% 26.6% 27.7% 28.9% 30.0% Q4-15 Q1-16 Q2-16 Q3-16 Q4-16E³ $2M $6M $8M $11M $12M Q4-15 Q1-16 Q2-16 Q3-16 Q4-16E³ 1) Excludes HyperSound allocati

25. Slide 25: Q4 2016 Outlook

    N A S D A Q : H E A R Q4 2016 Outlook 24 Q4-16¹ YoY ∆2 Management Commentary Revenue $78-$86M 4% Holiday ‘16 units sold in somewhat earlier than in the past Gross Margin >29.1% Up vs. last year New-gen headsets carry higher gross margin, offset by HyperSound amortization Adj. EBITDA $13-15M 41% Prud

26. Slide 26: 2016 Outlook

    N A S D A Q : H E A R 1) Prior guidance as of Aug 8, 2016. 2) Guidance updated and effective on Nov 10, 2016. 3) Delta reflects midpoint of the outlook. 4) Excludes $1.30 for goodwill impairment and $0.15 for inventory reserve charges associated with the HyperSound restructuring. 2016 Outlook 25 ($

27. Slide 27: Key Takeaways

    N A S D A Q : H E A R Key Takeaways  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 PlayStation conso

28. Slide 28: 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

29. Slide 29: Appendix

    Appendix

30. Slide 30: 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 Richard Kuvalik CTO • 15+ years in consumer audio • Led peripheral

31. Slide 31: 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

32. Slide 32: Adjusted EBITDA Reconciliation

    N A S D A Q : H E A R Adjusted EBITDA Reconciliation (Trailing 12 months) 31 $ in thousands Q4-15 Q1-16 Q2-16 Q3-16 Net Loss $ (17,201) $ (17,440) $ (17,341) $ (5,630) Interest 5,096 6,091 6,943 7,270 Depreciation & Amortization 6,374 5,865 5,443 4,959 Stock Compensation 5,347 5,197 4,228 3,982 Taxe

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