- Turtle Beach reported Q1 2019 net revenue of $44.8M USD, the highest first-quarter sales in company history.
- The company attributes its record sales to a strong line-up of AAA titles released over the holiday season, as well as the demand for console headsets for use with battle royale games.
- Increased revenues allowed Turtle Beach to pay off all long-term debts ahead of its pending ROCCAT acquisition.
Gaming peripheral manufacturer Turtle Beach Corporation reported $44.8M net revenue in the first quarter of 2019, an increase of 10% YoY compared to $40.9M in Q1 2018. This was the highest quarter in company history, despite marketing expenses related to Turtle Beach’s new RECON 70 headset. Operating expenses, including marketing, increased from $11.2M in Q1 2018 to $13M in Q1 2019.
As a result of the increased operating expenses due to higher marketing allowances and acquisition costs for the ROCCAT transaction, the company’s gross margin fell from 36.8% in Q1 2018 to 33% in Q1 2019. Nevertheless, net income for Turtle Beach is up 56% YoY to $3.1M compared to $2M in Q1 2018 which translates into $0.09 in earnings per share (EPS) for Q1 2019.
Turtle Beach CEO Juergen Stark told investors during the earnings call that revenues were driven by continued momentum from the “exceptionally strong” slate of AAA game releases in the 2018 holiday season and the popularity of battle royale games.
Stark called the quarter a “home run all around” and that the company’s balance sheet is the best he has seen since joining Turtle Beach in 2012. The additional revenue in Q1 allowed the company to pay off all long-term debt ahead of its pending acquisition of PC peripheral manufacturer ROCCAT.
The purchase arrangement, announced in March, will include $14.8M in cash, another $1M in cash or stock (company option), and up to approximately $3.4M in potential earnout payments.
Related Article: Newzoo Report: ROCCAT Acquisition Gives Turtle Beach Access To PC-Focused EU Market
“Shifting to the remainder of the year, we anticipate gaining a solid position in the PC gaming accessory market through the pending acquisition of ROCCAT,” said Stark, “which we anticipate will lead to significant growth in sales and profits once it is fully integrated.”
Turtle Beach has held at least a 40% market share of the console peripheral market for nine straight years. According to Stark, Turtle Beach will increase its total addressable market by more than double to $4.7B once the ROCCAT acquisition is complete. The deal will also “facilitate broader international expansion.”
ROCCAT’s portfolio includes nine computer mice, eight keyboards, and five PC headsets. Research by Newzoo found that the combined awareness of Turtle Beach and ROCCAT would make them the #3 best-known peripheral brand (33%) in Europe.
