Turtle Beach Corporation

Today's conference is scheduled to begin momentarily. Please continue to stand by. Thank you for your patience. Thank you. Good afternoon, ladies and gentlemen, and welcome to the Turtle Beach first quarter 2021 conference call. Delivering today's prepared remarks are Chairman and Chief Executive Officer Juergen Stark and Chief Financial Officer John Hanson. Following their prepared remarks, the management team will open up the call for any questions. Before we go further, I would like to turn the call over to Sean McGowan of Gateway Investor Relations, Turtle Beach's IR advisor, as he reads the company's safe harbor that provides important cautions regarding forward-looking statements. Sean, please go ahead.

Thank you, Liz. On today's call, we will be referring to the press release filed this afternoon that details the company's first quarter 2021 results which can be downloaded from the investor relations page at corp.dirttotalbeach.com, where you'll also find the latest earnings presentation that supplements the information discussed on today's call. Finally, a recording of the call will be available on the investor section of the company's website later today. Please be aware that some of the comments made during this call may include forward-looking statements within the meaning of the federal securities laws, statements about the company's beliefs and expectations containing words such as may, will, could, believe, expect, anticipate, and similar expressions constitute forward-looking statements. These statements involve risks and uncertainties regarding the company's operations and future results that could cause Turtle Beach's results to differ materially from management's current expectations. While the company believes that its expectations are based on reasonable assumptions, numerous factors may affect actual results and may cause results to differ materially, so the company encourages you to review the safe harbor statements and risk factors contained in today's press release and in its filings with the Securities and Exchange Commission, including, without limitation, its annual report on Form 10-K and other periodic reports which identify specific risk factors that also may cause actual results or events to differ materially from those described in our forward-looking statements. The company does not undertake to publicly update or revise any forward-looking statements after this conference call. The company also notes that on this call it will be discussing non-GAAP financial information, The company is providing that information as a supplement to information prepared in accordance with accounting principles generally accepted in the United States, or GAAP, and you can find a reconciliation of these metrics to the company's reported GAAP results in the reconciliation tables provided in today's earnings release and presentation. And now I'll turn the call over to Juergen Stark, the company's chairman and chief executive officer. Juergen?

Juergen Stark Good afternoon, and thank you for joining us. We're very pleased to report 2021 got off to a great start with another strong quarter. Q1 revenues are up 166% year over year, exceeding expectations as both the market and our products continue to perform very well. Furthermore, we delivered adjusted EBITDA of over 15 million in the quarter and operating cash flows over 21 million, both of which set records for the first quarter. As we've often said, gaming is a great category in which to be a leader. The past years have now shown two surges that dramatically expanded the base of gamers, gaming headset users, and gaming accessory buyers, both in console and in PC. The first surge in 2018 was driven by Fortnite and the second in 2020 was driven by stay-at-home orders. In both surges, we outperformed the market and demonstrated excellent execution that leveraged those surges to significantly move our business forward. Those dynamics continued in Q1 2021 without outperforming the market and leveraging our execution to generate excellent financial results and to significantly progress our business strategy. With so many new and lapsed gamers being drawn into the market and existing gamers spending even more time gaming, we continue to see the overall market for gaming accessories grow. New console launches have typically been followed by an uptick in sales of console accessories, and this is happening again with sell-through up after the fall 2020 launches of Xbox Series X and S and PlayStation 5. In the first quarter, according to NPD, retail sales of console gaming headsets in the U.S. were up just over 60% in dollars compared to the first quarter 2020. Because stay-at-home mandates last year didn't really kick in until the very end of the quarter, this year-over-year increase was not up against the strong increase in consumer demand that occurred when everyone was staying at home, but still reflects strong growth, including over 2019. First quarter year-to-date, seven of the top 10 and 12 of the top 20 best-selling council headset models in the U.S., were Turtle Beach models. Our new Gen 2 Stealth 600 and 700 wireless models continue to take the market by storm, holding four of the top five selling product spots in the US per NPD. What a great proof point of our ability to launch market-winning products year after year. In fact, nearly 50% of our revenues in Q1 came from products we launched last year. The PC accessory market for headsets, keyboards, and mice also grew substantially, up over 90% in U.S. retail sales per NPD. And we way more than doubled the market growth. Our progress in expanding our award-winning rocket portfolio of PC accessories and gaining share in that $3.5 billion market is going well, and there are more very exciting products coming. On Monday, we announced two incredible new PC gaming keyboards. First is the Magma, which has a fully illuminated top plate showcasing Rocket's innovative IMO RGB lighting technology for a great price of $59.99. There are also our new Pyro keyboard, which takes inspiration from Rocket's award-winning Vulcan line and is one of the most feature-packed mechanical gaming keyboards available for under $100. We also continued expanding Rocket's line of Vulcan keyboards with our recent launch of a new version of the Vulcan Pro optical keyboard. In April, another really big announcement for Rocket was the new Kone Pro series PC gaming mice. Rocket's first Kone mouse debuted in 2007, early in Rocket's life as a company. And since then, it has undergone well over a decade's worth of research into hand sizes, grip types, and button clicks. The Kone Pro series combines Rocket's iconic mouse design with their latest technologies like the ridiculously fast Titan optical switch, Titan Wheel Pro, and more. Beyond all the amazing new PC products, we've also secured partnerships for our Rocket brand with several leading streamers, and esports organizations, including noted variety streamer Brennan Goldglove O'Neill, leading Korean esports organization Gen.G, and Riot Games League Championship Series, North America's largest esports league and the third most popular professional sports league among young adults in the U.S. As you can probably tell, I'm excited both about the products we've launched but also about the products we still have coming this year. As John will detail in a minute, the balance sheet continues to get stronger. We ended Q1 with $63 million in cash and no debt. The solid cash position and strong outlook for cash generation led us to extend and expand our share buyback program at the beginning of last month, approving up to $25 million in buybacks over the next two years. More importantly, the rock-solid balance sheet allows us to make strategic and tactical moves focused on generating future growth. After John reviews the numbers, I will come back and talk more about our longer-term growth plans, as well as the details of our increased outlook for 2021. With that, I'll turn the call over to John to review our financial performance.