Turtle Beach Corporation

Welcome to the Turtle Beach first quarter 2024 conference call. My name is Deedee and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star 1-1 on your touchtone phone. Delivering today's prepared remarks are Chris Kern, Chief Executive Officer, and John Hanson. Chief Financial Officer. Following their prepared remarks, the management team will open the call up for any questions. As a reminder, the conference is being recorded. I will now turn the call over to Alex Thompson from Investor Relations. Alex, you may begin.

Thank you, Operator. On today's call, we'll be referring to the press release filed this afternoon that details the company's first quarter 2024 results. which can be downloaded from the investor relations page at corp.turtlebeach.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 events and presentation 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 Corporation's results to differ materially from management's current expectations. While the company believes that its expectations are based upon 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 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 they will be discussing non-GAAP financial information the companies provided that information as a supplement to information prepared in accordance with accounting principles generally accepted in the United States or GAAP. You can find a reconciliation of these metrics through the company's recorded GAAP results in the reconciliation tables provided in today's earnings release and presentation. And now I'll turn the call over to Chris Kern, CEO of Turtle Beach. Chris.

Thank you all for joining us today on our first quarter 2024 earnings call. I'm very pleased with our continued progress in a transformative year for the company. As expected, we have made significant progress on multiple strategic initiatives to drive profitable and sustainable growth. While we are in the early stages of integration for our recent acquisition of PDP, this infusion of additional talent and expertise has further energized our team, and we are executing to achieve both revenue and cost synergies. We look forward to maximizing the benefits of our increased scale and enhanced product portfolio in 2024 and beyond. First quarter revenue was 55.8 million, up roughly 9% year over year, which included incremental revenue contribution in the back half of March from our acquisition of PDP. We also realized improved profitability in the quarter, delivering 1.4 million of adjusted EBITDA compared to an adjusted EBITDA loss of 2.8 million a year ago. As we've previously communicated, we continue to see year-over-year improvements in profitability through our portfolio optimization, skew rationalization, and platform product development initiatives, all of which are coming into full effect throughout this year. Following market gains that started in December of 2023, Both the US gaming headset and gaming controller markets continued to climb with double-digit year-over-year revenue growth in Q1. Per Cercana, combined console and PC headset markets were up 18%, and gaming controllers were up nearly 20% by revenue. Third-party controllers exceeded revenue growth compared to first-party controllers, driven by our new Stealth Ultra controller and increased sales of PDP models. We remain optimistic for continued growth in the gaming accessory markets and have an exceptional lineup of new Turtle Beach products launching in just a few weeks and then again before the holidays. Q1 demonstrated that accessory sales at this point in the console cycle are growing as gamers remain highly engaged with a strong lineup of titles over the last year. We believe another contributor to market growth in Q1 was a result of a replacement cycle lift from pandemic era accessory purchases, especially with a new generation of accessories in the market that offer upgrades to technology and features. As mentioned in previous calls, we anticipated that pandemic era replacement purchases would contribute to gaming accessory market growth in 2024. Double digit market growth for key gaming category accessory categories in Q1 was a good indicator that these replacement purchases are underway and we believe replacement purchases will continue to support market performance in future quarters. In our headset and PC categories, we proactively reduced channel inventory and promotional activity in Q1, ahead of our significant new headset and PC product launches in Q2. Channel load-in for our new headsets and PC products is occurring now, and channel inventory is projected to return to normalized levels once the new load-in of new products is completed in Q2. We are eager to bring these fantastic new products to our gaming customers and are confident they will deliver strong results for the business. Our new controller and simulation models, including the Premium Stealth Ultra controller and Velocity One simulation products, drove Q1 share gains for Turtle Beach. Our revenue share of the US flight simulation market grew from 20% in Q1 2023 to 25% in Q1 2024 as reported by Cercana. With additional products in development, we anticipate continued share growth over time in simulation categories. Additionally, we are pleased with the extraordinary pre-orders and ongoing post-launch demand for the PDP Riffmaster guitar controller. The Riffmaster launch was timed to Fortnite Festival's recent update, which added guitar controller capability with the game. Demand has greatly exceeded our initial supply, and our teams are working diligently to expedite deliveries of additional goods. We remain highly focused on delivering value to our shareholders and gaining customers everywhere through launching our innovative new products, maximizing the extensive benefits from the PDP acquisition, and driving our initiatives for profit enhancement and growth. John will now take us through the financials in more detail. John?