Turtle Beach NASDAQ: TBCH reported second-quarter 2026 revenue that was essentially unchanged from a year earlier as retailers maintained tight inventory levels for much of the period, while the gaming-accessories company said it is positioning for stronger demand in the second half of the year.
Revenue for the quarter totaled $56.4 million, compared with $56.8 million in the prior-year quarter. Chief Executive Officer Cris Keirn said retail partners continued reducing channel inventories through the first half of the second quarter, though inventory levels appeared to stabilize as the period progressed.
“We began to see encouraging signs that retailers have now stabilized inventory ahead of what we expect will be a stronger second half of the year,” Keirn said. He cited historically low channel inventory, improving early third-quarter sell-through trends and a stronger video-game content calendar as factors supporting the company’s outlook.
Margins Rise on Tariff Refunds
Second-quarter gross margin rose 660 basis points year over year to 38.8%, from 32.2%. Interim Chief Financial Officer Andrew Clipsham said the result included approximately $4.3 million of tariff refunds received during the period, out of total tariff refunds of $8.2 million.
Excluding the effect of tariff refunds, Clipsham said gross margin would have been about 31.2%, compared with 26.8% in the preceding quarter. He attributed the underlying margin profile to product-mix optimization, supply-chain initiatives and pricing actions.
The company expects gross margin to remain within its targeted mid- to high-30% range for the remainder of 2026. Clipsham said recently announced tariff actions raised the effective tariff rate on imports from China and Vietnam to about 12.5% from 10%, but management expects its sourcing and supply-chain diversification efforts to largely mitigate the impact without a material effect on profitability.
Operating expenses increased to $24.9 million, or 44% of revenue, from $18.6 million, or 33% of revenue, a year earlier. The increase reflected higher marketing spending for product launches and brand initiatives, as well as higher general and administrative expenses. The prior-year period included a one-time insurance recovery.
Turtle Beach posted a net loss of $7.3 million, compared with a $2.9 million loss a year earlier. Adjusted EBITDA was positive $1.3 million, improving from negative $3.0 million in the prior-year period, primarily reflecting stronger gross margins.
Product Launches and Gaming Catalysts
Keirn said Turtle Beach has expanded its new-product introduction schedule this year, including the launch of its Stealth Pro II flagship headset. The company said the product added U.S. share in the premium gaming-headset tier following strong preorder demand.
The company also announced what it described as the industry’s first officially licensed wireless gaming headset for Nintendo Switch 2. New Nintendo Switch 2 controllers and additional retail placements contributed to year-over-year U.S. share growth in Nintendo controllers during the quarter, according to management.
During the question-and-answer session, Keirn said reported weekly retail sell-through indicated year-over-year growth since preorders began for Grand Theft Auto VI. He said the positive trend continued into early August, although market data from Circana was not yet available.
Management also pointed to the scheduled releases of Grand Theft Auto VI in November and Call of Duty: Modern Warfare 4 in October. Keirn said the company has aligned its product roadmap, retail distribution, brand spending and operations in anticipation of greater gamer engagement tied to those releases.
Keirn added that the company was seeing improving demand across product categories, including headsets, controllers and simulation products. He said Turtle Beach has gained share in simulation products and has seen benefits from retail placements secured at product launch.
Capital Allocation and Outlook
Turtle Beach refinanced its credit facilities in May and repurchased approximately $25 million of common stock during the second quarter. The company bought nearly 2 million shares at an average price of $12.53 per share, leaving approximately 17.9 million shares outstanding and about $31 million remaining under its existing repurchase authorization.
At June 30, Turtle Beach had net debt of $64.4 million, consisting of $83.9 million in outstanding debt and $19.6 million in cash. Operating cash inflow totaled $6.5 million in the quarter, compared with an operating cash outflow of $3.1 million a year earlier. Its revolving credit facility was undrawn at quarter-end.
The company’s new financing structure includes up to $80 million in an asset-based revolving facility and an $85 million term loan. Keirn said Turtle Beach plans to balance share repurchases with investments intended to support longer-term growth.
Management reaffirmed its full-year 2026 guidance for revenue of $335 million to $355 million and adjusted EBITDA of $44 million to $48 million. The company expects most of its annual revenue to be generated in the second half, with third-quarter revenue projected to represent a mid- to high-20% percentage of the full-year total. Management noted that the timing of retailer holiday inventory orders could shift revenue between the third and fourth quarters without changing its full-year expectations.
About Turtle Beach (NASDAQ:TBCH)
Turtle Beach Corporation NASDAQ: TBCH is a global developer, manufacturer and distributor of gaming audio peripherals, specializing in headsets, microphones and audio accessories for PC, console and mobile platforms. The company's product lineup spans wired and wireless gaming headsets, mixing stations, sound cards and accessories designed to enhance the immersive experience for casual and professional gamers alike.
Founded in 1975 and headquartered in San Diego, California, Turtle Beach has built a longstanding reputation in audio innovation.
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