Turtle Beach Falls On Earnings Beat, Lower Guidance, ROCCAT Acquisition

Turtle Beach Corp HEAR shares are dropping despite reporting a fourth-quarter earnings beat.

Adjusted earnings came in at $1.33 per share, beating estimates by 2 cents. Sales came in at $111.3 million, beating estimates by $1.1 million.

The company sees first-quarter adjusted earnings of 5 cents per share against a 9-cent per share consensus estimate. Full-year 2019 adjusted earnings guidance also was below estimates.

"We had a terrific fourth quarter, which capped off a truly transformational year for Turtle Beach," said CEO Juergen Stark. "We achieved record sales and profits, eliminated our long-term debt and maintained disciplined spending, all of which culminated in a dramatic increase in shareholder value.

"In a year of strong market growth, we outperformed the market. According to NPD, our North America market share ended 2018 at 46.1% versus 42.4% in 2017, which positions us as the clear leader in the console gaming headset market."

The company also announced the acquisition of PC gaming accessory business ROCCAT.

"This is a dynamic and strategically important deal for Turtle Beach," said Stark. "We are adding a complementary portfolio of PC gaming mice and keyboards, a skilled PC accessories team, and a highly synergistic distribution footprint.

"The acquisition is also a key step in achieving our goal of building a $100 million PC gaming accessories business in the coming years. ROCCAT accelerates our expansion into the roughly $1.6 billion PC gaming headset market, as well as directly enables us to address the roughly $1.3 billion PC gaming keyboard and mice market."

Highlights

• Net revenue increased 40 percent
• Net income increased 73 percent
• Adjusted net income increased 51 percent
• Adjusted EBITDA increased 45 percent

Turtle Beach shares are down 13.7 percent at $14.01 in the after-hours session.

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Photo courtesy of Turtle Beach.