Turtle Beach Corp (NASDAQ: HEAR) is having an overwhelmingly strong start to the trading session this morning after the company reported its financial results for the first quarter. Of course, the results were overwhelmingly positive, leading to excitement among investors and sending the stock screaming for the top. Today, we’ll talk about:
- The financial results;
- what we’re seeing from HEAR as a result;
- and what we’ll be watching for ahead.
HEAR Heads For The Top On Financial Results
As mentioned above, Turtle Beach is having an overwhelmingly strong start to the trading session this morning after reporting record financial results for the first quarter. Here’s what we saw from the report:
- Revenue – During the first quarter, HEAR saw some incredibly positive revenue growth. During the quarter, the company generated revenue in the amount of $40.9 million. That’s a 185% year over year increase.
- Gross Margin – In terms of gross margin, the company has seen strong growth as well. In the same quarter one year ago, the figure came to 15.4%. However, the gross margin for the company in Q1 came to more than double that figure at 36.8%.
- Net Income – During the quarter, the company saw substantial growth in net income with the figure coming in at $2 million in the first quarter. That works out to $0.16 per share. In the same quarter one year ago, the company reported a net loss of $9.9 million, or $0.81 per share.
- Adjusted Earnings – Finally, adjusted earnings came in at $5.3 million. That showed incredible growth over the same quarter last year when the company reported an adjusted loss of $6.2 million.
In a statement, Juergen Stark, CEO at HEAR, had the following to offer:
As indicated in our pre-announcement, we delivered substantial growth in our first quarter, both relative to last year and our prior outlook… This growth was due to market share gains on top of a very strong overall market, propelled by the successes of Fortnite and PlayerUnknown’s Battlegrounds, as these games have driven new gamers into the market and much higher headset attach rates than we have historically experienced.
The strong market, and our significant outperformance, can be seen in NPD’s latest North American console headset update. Year-to-date through March 2018, we grew our revenue share 720 basis points to 45.9% from 38.7% in the same period in 2017. In addition, while the market was up 77.6% on a sell-through basis during the same time, Turtle Beach was up 110.3%. In fact, this 110% revenue growth was nearly double the 57% growth experienced by the rest of the market as our strong brand and quality products had us well positioned to leverage the opportunity.
We expect the momentum from this strong market to continue and have raised our 2018 financial outlook accordingly. In addition, we were pleased to have facilitated a set of transactions in late April to retire the Series B Preferred Stock at a discount of more than 50% relative to its redemption value. This was a nearly $20 million liability growing at 8% per year. On top of the March amendments to our term loan, revolver, and subordinated notes, this represents another substantial balance sheet improvement and is expected to result in a material reduction in non-cash interest expense going forward. Given these positive developments, we believe 2018 is off to a very strong start and better positions us to make selective growth investments and further reduce our debt over time.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news moves the market. In the case of Turtle Beach, the news proved to be overwhelmingly positive. After all, how can you argue with a record quarterly performance? So, it’s no surprise to see that the stock is making a run for the top in the market today. Of course, our partners at Trade Ideas were the first to alert us to the gains. At the moment (9:39), HEAR is trading at $10.85 per share after a gain of $3.91 per share or 56.34% thus far today.
Stop wasting your time! Start finding winning trades in minutes with Trade Ideas!
What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on HEAR. In particular, we’re interested in following the company’s ongoing growth. With rapid growth in revenue, earnings and margins, things are getting exciting to say the least. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
Never Miss The News Again
Do you want real-time, actionable news delivered to your inbox? Join the CNA Finance mailing list below!