Q3 2024 Turtle Beach Corp Earnings Call
Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Turtle Beach Corporation third quarter 2024 conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the prepared remarks presentation. As a reminder, the conference is being recorded.
Good day, ladies and gentlemen, thank you for standing by welcome to the Turtle Beach Corporation third quarter 2024 conference call. At this time, all participants are in a listen only mode.
Chuck Cornea: I shouldn't answer session will follow the prepared remarks presentation I'll start with my daughter Conference is being recorded I'll now turn the call over to Chuck cornea from the Investor Relations team check you may begin.
Jack Corne: I'll now turn the call over to Jack Corne from the investor relations team. Jack, you may begin.
Yeah.
Jack Corne: Thanks, operator. On today's call, we'll be referring to the press release file this afternoon that details the company's third quarter 2024 results. This press release is available on the press releases page of the company's investor relations website. at TurtleBeach.com, where you'll also find the latest earnings presentation that supplements the information discussed on today's call.
Chuck Cornea: Thanks, operator.
Chuck Cornea: On today's call, we'll be referring to the press release filed this afternoon that details the company's third quarter 2024 results.
Chuck Cornea: This press release is available on the press releases page of the company's Investor Relations website.
Chuck Cornea: At Turtle Beach Dot 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 events and presentation section of the company's Investor Relations website later today.
Jack Corne: Finally, a recording of the call will be available on the events and presentation section of the company's investor relations 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 in its filings with the Securities and Exchange Commission.
Chuck Cornea: 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.
Chuck Cornea: 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.
Chuck Cornea: These statements involve risks and uncertainties regarding the company's operations and future results that could cause turtle beach corporations results to differ materially from management's current expectations.
Chuck Cornea: 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 in its filings with the securities and exchange.
Chuck Cornea: <unk> Commission.
Jack Corne: 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 statement.
Chuck Cornea: Including without limitation its annual report on Form 10-K and.
Chuck Cornea: 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.
Jack Corne: The company does not undertake or publicly update or revise any forward-looking statements after this conference. Company also notes that on its 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. 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.
Chuck Cornea: The company does not undertake or publicly update or revise any forward looking statements. After this conference call.
Chuck Cornea: The company also notes that on its 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.
Chuck Cornea: 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.
Jack Corne: Hosting the call today are Chris Kern, Chief Executive Officer, and John Hanson, Chief Financial Officer.
Hosting the call today are Chris Kearney, Chief Executive Officer, and John Hanson, Our Chief Financial Officer, and with that I'll turn the call over to Chris.
Chris Kern: And with that, I'll turn the call over to Chris. Thanks, Jack. Good afternoon, everyone.
Chris Kearney: Thanks, Chuck Good afternoon, everyone and welcome to our third quarter 2024 earnings call we are delighted.
Chris Kern: And welcome to our third quarter 2024 earnings call. We're delighted to report another strong quarter highlighted the continued popularity of the Turtle Beach brand, our sustained momentum in gaming accessories, and the tremendous progress towards the integration of PDP, which is running ahead of schedule. Our strategic acquisition of PDP has significantly broadened our reach and further elevated our presence across several categories, especially in controllers, which I'll speak about more shortly. Further, Turtle Beach's brand reach and strong reputation for quality gaming accessories continues to gain fans, and just last month was named in Time's World's Best Brands of 2024 feature as a Top 5 Consumer Electronics Brand in the Gaming Hardware and Peripherals category.
Chris Kearney: To report another strong quarter highlighted that.
Chris Kearney: Continued popularity of the Turtle Beach brand, our sustained momentum in gaming accessories, and the tremendous progress towards the integration of PDP, which is running ahead of schedule.
Chris Kearney: Our strategic acquisition of PDP has significantly broadened our reach and further elevated our presence across several categories, especially in controllers, which I'll speak about more shortly.
Chris Kearney: Further turtle Beach's brand reach and strong reputation for quality gaming accessories continues to gain fans and just last month was named in times world's best brands of 2024 feature as a top five consumer electronics brand in the gaming hardware and peripherals category.
Chris Kern: This quarter, we experienced robust revenue growth driven by increased demand for our leading gaming accessories and the benefits of our expanded portfolio. We're in the early stages of realizing the advantages of our increased scale and diversification, which are strengthening our leadership across categories. Our unwavering commitment to innovation, top-tier execution, and continuous growth continues to set Turtle Beach apart as a leader in the gaming accessories market. For the third quarter, Turtle Beach revenue was $94.4 million, up 60% compared to the same quarter last year. Excluding PDP contributions, revenues were up 15% compared to last year. Our growth continues to be driven by the ongoing success of our portfolio and strong sales of our latest groundbreaking products, like the Stealth 700 Gen 3 Wireless Headset, a premium multi-platform headset using our unique cross-play technology.
Chris Kearney: This quarter, we experienced robust revenue growth driven by increased demand for our leading gaming accessories and the benefits of our expanded portfolio.
Chris Kearney: We're in the early stages of realizing the advantages of our increased scale and diversification, which are strengthening our leadership across categories.
Chris Kearney: Our unwavering commitment to innovation top tier execution and continuous growth continues to set turtle beach apart as a leader in the gaming accessories market.
Chris Kearney: For the third quarter Turtle Beach revenue was $94 4 million up 60% compared to the same quarter last year.
Chris Kearney: Excluding PDP contributions revenues were up 15% compared to last year.
Chris Kearney: Our growth continues to be driven by the ongoing success of our portfolio and strong sales of our latest groundbreaking products, Mike still 700 Gen. Three wireless headset, a premium multiplatform headset using our unique cross play technology.
Chris Kern: Games industry site Game Rant noted in their review that the Stealth 700 quote, is definitely one of the best gaming headsets on the market right now and a multi-platform gamer's dream.
Chris Kearney: Games industry site gain Brant noted in their review that is still 700 quote is definitely one of the best gaming headsets in the market right now and a multi platform gamers dream.
Chris Kern: Thanks for our recent launches. We achieved sales this quarter with lower promotional spend, significantly boosting our profitability. Additionally, our strong revenue results reflect earlier than anticipated retail load-ins ahead of the holiday season. as we saw activity during the quarter, which was designed to mitigate the potential impact from the port strike. Considering these accelerated load-ins, our full-year revenue guidance remains unchanged. Our adjusted EBITDA for the quarter was $16.3 million, a substantial improvement compared to the $1 million in the same period last year. We are pleased to see that the year-to-date growth of 7% for U.S. gaming accessories continues to outpace the overall gaming market, which has been roughly flat.
Chris Kearney: Thanks to our recent launches we achieved sales this quarter with lower promotional spend significantly boosting our profitability.
Chris Kearney: Additionally, our strong revenue results reflect earlier than anticipated retail load ins ahead of the holidays as we saw activity during the quarter, which was designed to mitigate the potential impact from the port strike.
Chris Kearney: Considering these accelerated load ins our full year revenue guidance remains unchanged our.
Chris Kearney: Our adjusted EBITDA for the quarter was $16 3 million a substantial improvement compared to the $1 million in the same period last year.
Chris Kearney: We were pleased to see that the year to date growth of 7% for U S. Gaming accessories continues to outpace the overall gaming market, which has been roughly flat.
Chris Kern: Our gaming headsets revenue share increased 108 basis points in Q3 compared to the previous quarter following the launch of our new wireless headsets. Additional share gains are anticipated during the upcoming holidays following the mid Q3 launch of our new Stealth 700 Gen 3 premium wireless headset. In the Controllers and Game Pads category, Turtle Beach revenue growth continued to significantly outpace the market, with a 37.9% retail sales increase year-to-date, compared to the U.S. controller market's growth of nearly 3%. Notably, our Victrix Pro BFG controller and Turtle Beach Stealth Ultra were the second and third best-selling third-party game pads year-to-date.
Chris Kearney: Our gaming headsets revenue share increased 108 basis points in Q3 compared to the previous quarter. Following the launch of our new wireless headsets.
Chris Kearney: Additional share gains are anticipated during the upcoming holidays. Following the mid Q3 launch of our new still 703 premium wireless headset.
Chris Kearney: And the controllers and game pads category Turtle Beach revenue growth continued to significantly outpace the market.
Chris Kearney: With a 37, 9% retail sales increase year to date compared to the U S controller markets growth of nearly 3%.
Chris Kearney: Notably, our Victrix Pro BFG controller, and Turtle Beach staff Ultra where the second and third best selling third party game pads year to date.
Chris Kern: Our Riffmaster Wireless Guitar Controllers, perfect for Fortnite Festival, continue dominating the music controller category with 97% share in the U.S. On the expense side, we continue to enhance our operational efficiencies, resulting in substantial profitability. Our gross margin of 36.2% for the third quarter expanded by 630 basis points year-over-year as a result of our focused cost optimization initiatives and the ongoing successful integration of PDP. We've seen reduced promotional spending following our recent new product launches, which we expect to increase somewhat to normal holiday levels in Q4. It's worth noting that gross margin for the quarter would have been 38.3%, excluding rocket brand transition reserves and PDP purchase accounting charges, neither of which are expected to continue moving forward.
Chris Kearney: Our risk Master wireless guitar controllers perfect for Fortnite Festival continued dominating the music controller category with 97% share in the U S.
Chris Kearney: On the expense side, we continue to enhance our operational efficiencies, resulting in substantial profitability gains.
Chris Kearney: Our gross margin of 36, 2% for the third quarter expanded by 630 basis points year over year as a result of our focused cost optimization initiatives and the ongoing successful integration of PDP.
Chris Kearney: We have seen reduced promotional spending following our recent new product launches, which we expect to increase somewhat to normal holiday levels in Q4.
Chris Kearney: It's worth noting that gross margin for the quarter would have been 38, 3%, excluding rocket brand transition reserves and PDP purchase accounting charges, neither of which are expected to continue moving forward.
Chris Kern: Our integration of PDP is progressing very well, ahead of schedule, and continues to drive value. We now anticipate achieving total annual synergies exceeding $13 million, surpassing our original estimate of $10 to $12 million. The expanded market opportunities from our newly combined product portfolio are exciting, and we foresee a long-term runway for growth. Beyond the acquisition cost synergies, we anticipate that there are long-term revenue synergies. due to our enhanced product lineups and strong customer relations. Furthermore, we continue to drive margin expansion through our previously communicated initiatives, including SKU Rationalization, Portfolio Optimization, and the launch of our Platform Next Generation product.
Chris Kearney: Our integration of PDP is progressing very well.
Chris Kearney: Head of schedule.
Chris Kearney: And continues to drive value.
Chris Kearney: We now anticipate achieving total annual synergies exceeding 13 million.
Chris Kearney: Surpassing our original estimate of $10 million to $12 million.
Chris Kearney: The expanded market opportunities from our newly combined product portfolio are exciting and we foresee a long term runway for growth beyond.
Chris Kearney: The acquisition cost synergies, we anticipate that there are long term revenue synergies.
Chris Kearney: Due to our enhanced product lineups and strong customer relationships.
Chris Kearney: Furthermore, we continue to drive margin expansion through our previously communicated initiatives, including SKU rationalization portfolio optimization and the launch of our platform next generation products.
Chris Kern: The result of all of this is that we're raising our full year adjusted EBITDA guidance to a range of $55 million to $58 million. up from our prior range of $53 million to $56 million.
Chris Kearney: The result of all of this is that we're raising our full year adjusted EBITDA guidance to a range of 55 million to $58 million.
Chris Kearney: Up from our prior range of $53 million to $56 million.
Chris Kern: With our strong underlying fundamentals driving increased cash generation, coupled with our positive outlook and view that our share price represents great value, we continue to buy back our stock during the third quarter. In the quarter, we repurchased a value of approximately $10.1 million of our stock, bringing our year-to-date repurchases to about $25.3 million. This underscores both our continued confidence in Turtle Beach's trajectory and our commitment to enhancing shareholder value. We believe in our vision and we are putting our resources behind it.
Chris Kearney: With our strong underlying fundamentals driving increased cash generation, coupled with our positive outlook and view that our share price represents great value, we continue to buyback our stock during the third quarter.
Chris Kearney: In the quarter, we repurchased a value of approximately $10 1 million of our stock, bringing our year to date repurchases to about $25 3 million.
Chris Kearney: This underscores both our continued confidence in turtle beach's trajectory and our commitment to enhancing shareholder value. We believe in our vision and we are putting our resources behind it.
Chris Kern: Looking ahead, we are excited about the many opportunities in front of us. We'll continue to focus on innovation and operational excellence, which we are successfully leveraging to expand our market leadership. Our upcoming product launches and the ongoing integration of PDP will further strengthen our position in the broader gaming accessories market. We remain committed to delivering value to our shareholders and providing best-in-class products for gamers worldwide.
Chris Kearney: Looking ahead, we are excited about the many opportunities in front of US we'll continue to focus on innovation and operational excellence, which we are successfully leveraging to expand our market leadership.
Chris Kearney: Our upcoming product launches and the ongoing integration of PDP will further strengthen our position in the broader gaming accessories market.
Chris Kearney: We remain committed to delivering value to our shareholders and providing best in class products for gamers worldwide.
John Hanson: John will now take us through the financials in more detail. Hey, thanks, Chris. And good afternoon, everyone. As Chris noted, our third quarter 2024 revenue was $94.4 million. That's an increase of approximately 60% compared to the year ago period and driven by increased sales of our products and from PDP. Excluding the positive impact from the PDP products, our net revenue increased approximately 15% compared to last year, highlighting the strength of our results across the board. Gross margin in the third quarter was 36.2% compared to 29.9% last year, which represents a 630 basis point improvement compared to the third quarter of 2023.
Chris Kearney: John will now take us through the financials in more detail John.
John: Hey, Thanks, Chris and good afternoon, everyone as Chris noted our third quarter 2024 revenue was $94 4 million, that's an increase of approximately 60% compared to the year ago period, and driven by increased sales of our products and from.
Chris Kearney: PDP.
Chris Kearney: Excluding the positive impact from the PDC PDP products, our net revenue increased approximately 15% compared to last year, highlighting the strength of our results across the board.
Chris Kearney: Gross margin in the third quarter was 36, 2% compared to 29, 9% last year, which represents a 630 basis point improvement compared to the third quarter of 2023 the increase.
John Hanson: The increase was driven by reduced promotional spend, lower product and freight costs, partially offset by higher royalty costs due to the mix of business. excluding PDP purchase accounting charges and Rocket Brand Transition Reserves, which are not expected to continue going forward, gross margins would have been 38.3 percent. Operating expenses in the third quarter were $27.7 million compared to $20.2 million a year ago and include $3.5 million in costs related to the acquisition of PDP. Operating expenses excluding non-recurring items were 24.8% of revenue, which is an improvement from 32.2% in the prior year. This improvement is primarily driven by our strategic efforts to achieve a better balance between revenue-enhancing initiatives and our expense management goals.
Chris Kearney: This was driven by reduced promotional spend lower product and freight costs.
Chris Kearney: <unk> offset by higher royalty costs due to the mix of business.
Chris Kearney: Excluding PDP purchased accounting charges and rocket brand transition reserves, which are not expected to continue going forward gross margins would've been 38, 3%.
Chris Kearney: Operating expenses in the third quarter were $27 7 million compared to $20 2 million a year ago and include $3 5 million in costs related to the acquisition of PDP.
Chris Kearney: Operating expenses, excluding nonrecurring items were 24, 8% of revenue, which is an improvement from 32, 2% in the prior year.
Chris Kearney: This improvement is primarily driven by our strategic efforts to achieve a better balance between revenue enhancing initiatives and our expense management goals.
John Hanson: Our third quarter adjusted EBITDA improved to $16.3 million compared to $1 million in the year-ago period. The $15.2 million year-over-year improvement is primarily the result of higher revenues combined with greater efficiencies on both costs and expenses. On an LTM basis, adjusted EBITDA is now $35 million, which is a significant improvement and driven by the higher revenue, improved margins, and operating expense leverage. Our third quarter net income was a positive $3.4 million or $0.16 per diluted share compared to a net loss of $3.6 million or negative $0.21 per diluted share a year ago. Turning to the balance sheet, at quarter end we had net debt of $94.1 million, comprised of $107.9 million of outstanding debt and $13.8 million of cash.
Chris Kearney: Our third quarter, adjusted EBITDA improved to $16 3 million compared to $1 million in the year ago period.
Chris Kearney: The $15 $2 million year over year improvement is primarily the result of higher revenues combined with greater efficiencies on both costs and expenses.
Chris Kearney: On an LTM basis, adjusted EBITDA is now $35 million, which is a significant improvement and driven by the higher revenue improved margins and operating expense leverage.
Chris Kearney: Our third quarter net income was a positive $3 4 million or <unk> 16 per diluted share compared to a net loss of $3 6 million or negative <unk> 21 per diluted share a year ago.
Chris Kearney: Turning to the balance sheet at quarter end, we had net debt of $94 1 million comprised of $107 9 million of outstanding debt.
And $13 8 million of cash.
John Hanson: The debt balance is comprised of $58.6 million outstanding under our revolving credit line and $49.3 million outstanding on the term loan we used for the PDP acquisition. Inventories at quarter end were $102.3 million compared to $76 million at this point last year. PDP added $26.7 million to inventory, and this addition was partially offset by our continued reduction initiatives in non-PDP product inventory. As Chris mentioned, during the quarter, we repurchased approximately 688,000 shares for an average price of $14.70. returning about $10.1 million to shareholders through our Share Repurchase Program. Given the attractive levels of the share price and the strong fundamentals of the company and its growth trajectory, this initiative demonstrates our continued confidence in the company's long-term prospects and our commitment to delivering shareholder value.
The debt balance is comprised of $58 6 million outstanding under our revolving credit line and $49 3 million outstanding on the term loan we used for the PDP acquisition.
Chris Kearney: Inventories at quarter end were $102 3 million compared to $76 million at this point last year.
Chris Kearney: <unk> added $26 7 million to inventory and this addition was partially offset by our continued reduction initiatives in non PDP product inventory.
Speaker Change: As Chris mentioned during the quarter, we repurchased approximately 688000 shares for an average price of $14 70.
Returning about $10 1 million to shareholders through our share repurchase program.
Speaker Change: Given the attractive levels of the share price and the strong fundamentals of the company and its growth trajectory. This initiative demonstrates our continued confidence in the company's long term prospects and our commitment to delivering shareholder value as of quarter end, we have 21 three.
John Hanson: As of quarter end, we have $21.3 million in potential buybacks remaining under the buyback plan. We will continue to consider share buybacks in our quarterly capital allocation review. Now, turning to guidance, we continue to expect full year revenue to be between $370 million and $380 million, which equates to 45% growth at the midpoint compared to 2023. With strong progress on the margin front and the PDP integration progressing smoothly, we are raising our full-year adjusted EBIDTA guidance for 2024. We expect full-year adjusted EBIDTA to be between $55 million and $58 million, which increases the midpoint to $56.5 million, up $2 million from our prior guidance.
Speaker Change: In potential buybacks remaining under the buyback plan, we will continue to consider share buybacks and our quarterly capital allocation review.
Speaker Change: Now turning to guidance, we continue to expect full year revenue to be between $370 million and $380 million, which equates to 45% growth at the midpoint compared to 2023.
Speaker Change: With strong progress on the margin front and the PDP integration progressing smoothly, we are raising our full year adjusted EBITDA guidance for 2024, we expect full year adjusted EBITDA to be between $55 million and $58 million, which increases the mid point to 56.
Speaker Change: $5 million up $2 million from our prior guidance.
John Hanson: As a reminder, our 2024 guidance includes contributions from PDP beginning on March 13, 2024, when we close the transaction.
Speaker Change: As a reminder, our 2024 guidance includes contributions from PDP beginning on March 13, 2024, when we closed the transaction.
Chris Kern: And now I'll turn the call back over to Chris for additional comments.
Speaker Change: And now I will turn the call back over to Chris for additional comments, Chris Thanks, John.
Chris Kern: Chris. Thanks, John. As we reflect on our transformation over the past year, it's clear that our strategic initiatives are paying off. The acquisition of PDP has not only expanded our product offerings, but also enhanced our operational capabilities. We are now better positioned to capitalize on market opportunities and drive sustainable growth. Synergies from this acquisition are already evident in our improved operational efficiencies and expanded market reach. Our commitment to innovation, execution, and growth remains unwavering. We are continuously exploring new technologies and product features that will set us apart in the competitive gaming accessories market. Recent innovations like our Crossplay technology and the groundbreaking Stealth Pivot Controller are just the latest testaments to this commitment, and we are confident that they will drive meaningful growth in the coming quarters.
Chris Kearney: As we reflect on our transformation over the past year, it's clear that our strategic initiatives are paying off the.
Chris Kearney: The acquisition of PDP is not only expanded our product offerings, but also enhance our operational capabilities. We are now better positioned to capitalize on market opportunities and drive sustainable growth.
Chris Kearney: Synergies from this acquisition are already evident in our improved operational efficiencies and expanded market reach.
Chris Kearney: Our commitment to innovation execution and growth remains unwavering.
Chris Kearney: Continuously exploring new technologies and product features that will set us apart in the competitive gaming accessories market recent innovations like our cross play technology and the groundbreaking staff pivot controller are just the latest estimates to this commitment and we are confident that they will drive meaningful growth in the coming quarters.
Chris Kern: Looking ahead to the holiday season, we are optimistic about our prospects. The holiday season is a critical period for our industry and we are well prepared with a strong, refreshed lineup of amazing products that cater to the diverse needs of gamers. We anticipate robust demand and are confident that our innovative products will resonate well with consumers.
Chris Kearney: Looking ahead to the holiday season, we are optimistic about our prospects.
Chris Kearney: Holiday season is a critical period for our industry and we are well prepared with a strong refreshed lineup of amazing products that cater to the diverse needs of gamers, we anticipate robust demand and are confident that our innovative products will resonate well with consumers.
Chris Kern: I want to thank and recognize our entire team at Turtle Beach. for their excellent efforts and contributions, which have delivered another strong quarter. We're excited to close out 2024 on a high note and remain confident about our renewed growth strategy and execution for this year and beyond to drive value for our shareholders and gaming customers.
Chris Kearney: I want to thank and recognize our entire team at Turtle Beach for their excellent efforts and contributions which have delivered another strong quarter. We're excited to close out 2024 on a high note and remain confident about our renewable growth strategy and execution for this year and beyond.
Chris Kearney: To drive value for our shareholders and gaming customers.
Chris Kern: And with that, let's turn to Q&A. Thank you.
Speaker Change: And with that let's turn to Q&A.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your telephone keypad.
Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your telephone keypad. You will hear a prompt that your hand has been raised and should you wish to cancel your request, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question.
Speaker Change: Hey, a pump that Johanna has been raised and should you wish to cancel your request. Please press star followed by the June.
Speaker Change: Thank you speaker phone please lift the handset before pressing any keys one moment. Please for your first question.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Shaq McGowan: Your first question comes from the line of Shaq McGowan from Roth Capital Partners.
Speaker Change: Your first question comes from the line of Sean Mcgowan from Roth Capital Partners. Please go ahead.
Shaq McGowan: Please go ahead. Thank you.
Speaker Change: Thank you hi, guys.
Shaq McGowan: Hi, guys. I'll just ask a couple and then maybe circle back, to be fair.
Speaker Change: So I'll just ask a couple and then maybe circle docs to Sir.
Chris Kern: But just one clarification or a little more color, Chris, when you're talking about market share, can you give a little bit more color on the headset business, you know, year over year share increase or changes and how that kind of breaks out console versus PC? Sure. Yeah, hey, Sean.
Speaker Change: So just one clarification or a little more color Chris when you were talking about market share can you give a little bit more color on.
Speaker Change: The headset business.
Speaker Change: Year over year share increase or changes.
Speaker Change: How that kind of breaks out parcel versus PC.
Sure Yeah, Hey, Sean Great question. So when you look at this year, we've really upgraded across our wireless headsets line, we talked about last quarter that we introduced the new stealth 500, 600 Atlas Air in Q2, and we drained the channel prior to that so we saw some.
Chris Kern: Great question. So when you look at this year, you know, we've really upgraded across our wireless headsets line. You know, we talked about last quarter that we introduced the new Stealth 500, 600, Atlas Air, and Q2. And we drained the channel, you know, prior to that, so we saw some expected share loss, you know, up to those launches. And here in the third quarter, we've done the same thing. We've drained the channel of the old generation of the Stealth 700s, and then we've reloaded the channel and made Q3 with the new Stealth 700s. So when you look at our trends, you know, we're up about 100 basis points, you know, from the prior quarter with those new launches in Q3, even though we were draining the channel for the Stealth 700s.
Speaker Change: Some expected share loss up to those launches and here in the third quarter. We've done the same thing we've drained the channel of the old generation of the <unk> seven hundreds and then we reloaded the channel make Q3 with the new <unk> seven hundreds. So so when you look at our trends were up about 100 basis points from the prior quarter.
Speaker Change: With those new launches in Q3, even though we were draining the channel for the <unk> seven hundreds and as we look ahead, we expect to continue to build on that as we go into the holiday as we normally do we normally pickup share during the holiday season, we expect that to be the case this time as well.
Chris Kern: And as we look ahead, we expect to continue to build on that, you know, as we go into the holiday. As we normally do, we normally pick up share, you know, during the holiday season. We expect that to be the case this time as well.
Chris Kern: Okay, and when I said console versus PC, I realized that's not as relevant as it used to be. But what about the like some of the newer console like switch or you know, how does that look? Yeah, that's a great point. And, you know, Cercana actually switched up the way they categorize headsets. You've probably seen that across the industry. They've now combined as well the console and PC categories into one gaming headset category. We like that a lot because it really does reflect, you know, how gamers are using their accessories. Very much multi-platform these days.
Speaker Change: Okay.
Speaker Change: When I said Costco versus PC I realize it's not as relevant as it used to be.
Speaker Change: What about the like some of the newer possibly switch or how is that looking.
Speaker Change: Yes, that's a great point and you know circon.
Speaker Change: Actually switched up the way they categorize.
Speaker Change: Headsets, a pricing that across the industry. They have now combined as well.
Speaker Change: The console and PC categories into one gaming headset category, we liked that a lot because it really does reflect.
How gamers or are using their accessories.
Speaker Change: Very much multi platform these days.
Chris Kern: So, if you look at the, if you do break it down between console and PC, we are seeing larger gains on the console side, but our PC headsets are up as well. Year over year in Q3, I believe our PC headsets were up 150 basis points in the U.S. here. So, we're seeing gains on both as we get these new products into the market. Okay.
Speaker Change: So if you look at the if you do break it down between console and PC, we are seeing larger gains on the console side.
Speaker Change: But our PC headsets are up as well year over year in Q3, I believe our PC headsets were up 150 basis points.
Speaker Change: In the U S. Here. So so we're seeing gains on both as we get these new products into the market.
John Hanson: And for you, John, a couple of housekeeping kinds of things. When you say you don't expect the PDP inventory step-up and the Rocket brand, you know, to proceed going forward, you mean we won't see any in the fourth quarter? I just want to be specific on that quarter. Right. So relative to the, relative to PDP inventory step-up, that is completed. We took charges in both Q2 and Q3 for that, but that is now completed. And then relative to Rocket, we do not expect any additional reserves as part of the brand transition.
Speaker Change: Okay.
Speaker Change: When you John a couple of positive signs of things when you say you don't expect.
Speaker Change: PDP inventory step up on the rocket.
Speaker Change: Going forward, we won't see any in the fourth quarter I just want to be specific on that quarter right. So relative to the relative to PDP inventory step up that is completed.
Speaker Change: We took charges in both Q2 and Q3 for that but that is now completed and then relative directly we do not expect any additional reserves as part of the brand transition work.
John Hanson: Okay, so if I dare, does that mean we could see gross margins in the fourth quarter in excess of 40%?
Speaker Change: Okay. So if I dare does that mean.
Speaker Change: Should see gross margins in the fourth quarter in excess of 40%.
Okay.
John Hanson: Well, I think what I think what, certainly in the it'll, they'll be in the upper 30% range, we would, there's typically some higher promotional activity in Q4 in and around Black Friday, Cyber Monday, etc, for the holidays.
Well I think I think what.
Speaker Change: Certainly.
Speaker Change: They will be in the upper 30% range, we would there is typically some.
Speaker Change: Higher promotional activity in Q4, and in and around Black Friday, cyber Monday et cetera for the holidays, and so that will offset some of the other benefit but our aggregate it but our margins are run rate margins going forward are certainly in the target range, which is the upper thirties, which we've previously disclosed.
John Hanson: And so that will offset some of the other benefits, but our aggregated, but our margins, our run rate margins going forward, are certainly in the target range, which is the upper 30s, which we've previously disclosed. Okay, great.
Speaker Change: Okay.
John Hanson: And then my last question, I guess for you, John, is G&A in the fourth quarter, you know, the relationship of G&A in the fourth quarter to the third quarter kind of bounces around historically, should we expect, you know, given that you don't have those, well, maybe you do, do you have recurring business acquisition expenses in the fourth quarter? And if we exclude them, would there be a meaningful increase in G&A in the fourth quarter? So, integration work, although it's progressing smoothly and ahead of schedule, as Chris noted earlier, Sean, we do expect to continue to incur some integration-related expenses, obviously, in Q4, but they'll be certainly at a much lower level.
Speaker Change: Great and then my last question I guess either John.
Speaker Change: Sure G&A in the fourth quarter.
Speaker Change: Nation sugar G&A in the fourth quarter to the third quarter kind of bounces around historically should we expect.
Speaker Change: Given that you don't have those well maybe you do have recurring business acquisition expenses in the fourth quarter and if we exclude them would there be a meaningful increase in G&A.
Speaker Change: The fourth quarter.
Speaker Change: So integration work, although it is progressing smoothly and ahead of schedule as Chris noted earlier, Sean we do expect.
Speaker Change: To continue to incur some integration related expenses, obviously in Q4, but there'll be certainly at a much lower level.
John Hanson: And if you were to exclude that, as you know, when you add it back to be the dog, would you expect...
Speaker Change: Okay.
Speaker Change: Exclude.
Speaker Change: EBITDA would your operating expense cost would rise slightly in Q4, as we invest more in terms of marketing, which is what we've historically done here.
John Hanson: Our operating expenses would rise slightly in Q4 as we invest more in terms of marketing, which is what we've historically done. which is what you're going.
Speaker Change: Which is what you are looking at thank you.
John Hanson: Okay, thank you.
John Hanson: Yeah, thanks.
Speaker Change: Yes. Thanks.
Shaq McGowan: I'll get back in the queue. Sure. Thanks, Sean.
John: Sure. Thanks, John.
Operator: Thank you.
drew Crum: And your next question comes from the line of Drew Crum from Stifle. Please go ahead. Okay, thanks. Hey, guys. Good afternoon.
Speaker Change: Thank you and your next question comes from the line of drew Crum from Stifel. Please go ahead.
Speaker Change: Okay. Thanks, Hey, guys good afternoon, Chris.
drew Crum: Chris, you talked about pulling forward some shipments to avoid potential port strikes during the quarter.
Speaker Change: Chris you talked about pulling forward some shipments to avoid potential port strike during the quarter.
Chris Kern: Given that and based on your retail performance, where does that leave you with respect to channel inventory as you enter 4Q? Yeah, hey, Drew. It looks really good. Channel inventory at this point, we saw it, I would say, be higher than normal as we exited Q3. And now as we're into November, it's really at what I would call normal levels heading into holiday. So it was really a temporary, maybe a three week or so pull in on a few of those shipments, as the retailers are looking to avoid any delays from any potential port strikes.
Speaker Change: Given that and based on your retail performance where does.
Speaker Change: Where does that leave you with respect to channel inventory as you enter <unk>.
Speaker Change: Yeah, Hey drew.
drew Crum: It looks really good.
drew Crum: Channel inventory at this point, we saw it.
drew Crum: I would say be higher than normal as we exited Q3 and now as we're into November it's really what I would call normal levels heading into holiday. So it was really a temporary call. It maybe a three three week or so pull in on a few of those shipments as the retailers are looking to avoid any delays.
From from any potential port strikes.
drew Crum: But as we get into, you know, prepping for holiday. Now in November, it looks very normal compared to previous, let's call them normal holidays. Got it. Okay, that's helpful.
drew Crum: But as we get into prepping for holiday.
drew Crum: Now in November it looks very normal compared to previous let's call them normal holidays.
Speaker Change: Got it Okay. That's helpful. And then John I think you mentioned you would anticipate a sequential increase in promo spend during <unk>, but just kind of looking at that.
John Hanson: And then, John, I think you mentioned you would anticipate a sequential increase in promo spend during 4Q over 3Q. But just, you know, kind of looking at that year on year, should we anticipate higher promo spend this fourth quarter versus last fourth quarter? Yes, certainly we're bigger, we've got more products, and we have the new wireless that are now coming out in the market. So yes, the answer is yes, we do expect the marketing to be higher here year over year. Okay, makes sense.
Speaker Change: Year on year should we anticipate higher promo spend in this fourth quarter versus last fourth quarter.
Speaker Change: Yes, certainly.
Speaker Change: We are bigger we've got more products and we have the new wireless that are.
Speaker Change: That are now coming out of the market. So yes. The answer is yes, we do expect marketing to be higher here year over year.
Speaker Change: Okay makes sense and then maybe just one last one for me can you address your plans around uses of cash through the balance of the year should we.
John Hanson: And then maybe just one last one for me. Can you address your plans around uses of cash through the balance of the year? Should we expect you to continue to buy back stock? Or do you plan to pay off the outstanding balance on the revolver or maybe both? Thanks.
Speaker Change: Spec you to continue to buy back stock or do you plan to pay off the outstanding balance on the revolver or maybe both.
Speaker Change: Yes.
John Hanson: Sure. So the answer is yes, obviously, it's going to be a function of collections. We do, with certain retailers, they do have different payment terms during the holiday, a little more extended, but our cash will be focused primarily on paying down the ABL as well as to the extent that there's an opportunity for us to buy additional shares back, then we would look to do that. Got it. Thanks, guys.
Speaker Change: Sure.
Speaker Change: So the answer is yes, obviously.
Speaker Change: It would be a function of collections, we do with certain retailers. They do have a <unk>.
Different payment terms during the holiday little more extended but.
Speaker Change: Our cash will be focused primarily on paying down the ABL as well as.
Speaker Change: To the extent there is an opportunity for us too.
Speaker Change: By additional shares back then we would look to do that.
Speaker Change: Got it thanks guys.
Speaker Change: Thanks drew thanks drew.
Jack Codera: Thank you. And your next question comes from the line of Jack Codera from Maxim Group. Please go ahead.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Jeff <unk> from Maxim Group. Please go ahead.
Jack Codera: Hi, this is Jack Codera calling in for Jack Bader-Ardey. Thank you. I'm going into 4Q, you know, holiday season. Hi. Are you expecting the PDP business to have any differences in terms of seasonality? I know they're both kind of consumer electronics, very similar fit. But do you expect it to continue to contribute, you know, roughly that 28% if you back into that total revenue number? Yeah, good question, Jack. I think that it will be pretty normal. You know, you look at the businesses combined now between headsets, controllers, some of the specialty controllers like the Riffmaster, very similar seasonality to the historic headset business.
Speaker Change: Hi, This is Jack good Erik calling in for Jack that are already thank you.
Speaker Change: Going into <unk> holiday season.
Speaker Change: Are you expecting the PDP business to have any differences in terms of seasonality I know they are both kind of consumer electronics.
Speaker Change: But do you expect it to continue to contribute roughly that 28% if you back into that total revenue number.
Speaker Change: Yes, good question Jack.
Speaker Change: I think that it will be pretty normal you look at the.
Speaker Change: The businesses combined now between headsets controllers, some of the specialty specialty controllers like the rift master.
Speaker Change: Very similar seasonality.
To the historic headset business, So I would say yes.
Jack Codera: So I would say yes.
Jack Codera: Okay, that's helpful. And then just one other.
Speaker Change: Okay. That's helpful and then just one other.
Jack Codera: How are you viewing the customer, the consumer? I saw some highlighted data points in the presentation, which were helpful. And you kind of mentioned the refresh product portfolio.
Speaker Change: How are you viewing that.
Speaker Change: Consumer.
Speaker Change: I saw some highlighted data points in the presentation, which we're hopeful and you kind of mentioned the refreshed product portfolio are there any other individual indicators in the mix that are giving you confidence in like a strong holiday season any color there would be helpful. Thank you.
Chris Kern: Are there any other individual indicators in the mix that are giving you confidence in like a strong holiday season, any color that would be helpful? Sure, yeah, when you look at, you know, the gaming industry in general, we're all enjoying the benefits of a very strong Call of Duty launch, you've probably seen the numbers on that. You know, Black Ops 6 is doing extremely well, lots of engagement from gamers, that's good for everybody in the industry. So we're really happy to see that we think that'll help drive some of the market here. You know, even through holiday, we've seen that historically.
Speaker Change: Sure, Yes, when you look at.
Speaker Change: The gaming industry in general.
Speaker Change: We are all enjoying the benefits of a very strong call of duty launch.
Speaker Change: <unk> seen the numbers on that.
Speaker Change: Black ops <unk> is doing extremely well lots of engagement from gamers and that's good for everybody in the industry. So we're really happy to see that we think that will help drive some of the the market here even through holiday we've seen that historically.
Chris Kern: We're also seeing continued benefits of replacement on the pandemic cycle purchases. So all those purchases when, you know, everyone spiked back in 2020, 2021, we started to see a lot of those really kick in, in the last couple of weeks of 2023. You know, a lot of late holiday purchases last year. And that's really sustained for the for the peripherals categories and gaming accessories. That's really sustained and why you're seeing that accessories are outperforming the broader market this year. So we think that's going to carry through in the holiday.
Speaker Change: We're also seeing continued benefits of replacement on the pandemic cycle purchases. So all of those purchases.
Speaker Change: <unk> spiked back in 2000 22021, we started to see a lot of those really kick in in the last couple of weeks of 2023.
Speaker Change: A lot of late holiday purchases.
Speaker Change: Last year, and that's really sustained for the for the peripherals categories in gaming accessories gets really sustain and why youre seeing that.
Speaker Change: Accessories are outperforming the broader market. This year. So we think thats going to carry through in the holiday. There's a lot of new products that we've got out in the market. We know new releases drive share and drive additional purchases because we've got a ton of great New tech out there for gamers.
Chris Kern: There's a lot of new products that we've got out in the market. We know new releases drive share and drive additional purchases because we've got a ton of great new tech out there for gamers. So we're excited about how that's going to look. And that's why we're feeling good about the holiday.
Speaker Change: So we're excited about how that's going to look and that's why we're feeling good about the holiday.
Jack Codera: Awesome. Thanks.
Jack Codera: Congrats on the strong quarter. That's all I had. Thank you. Great.
Speaker Change: Awesome. Thanks, Congrats on the strong quarter Thats, all I had thank you.
Speaker Change: Great. Thanks, Jack Thanks, Jack.
Operator: Thank you.
Speaker Change: Thank you once again should you have a question. Please press star followed by the one on your telephone keypad.
Sean McGowan: Once again, should you have a question, please press star, followed by the one on your telephone keypad.
Sean McGowan: Your next question comes from the line of Sean McGowan from Roth Capital Partners.
Speaker Change: Next question comes from the line of Sean Mcgowan from Roth Capital Partners. Please go ahead.
Sean McGowan: Please go ahead. Yeah, I'm back.
Speaker Change: Yes.
John Hanson: John, on the promotional spending that you're talking about for the fourth quarter, will all of the impact of that increase both sequentially and year over year, will all of that be seen in the gross margin? Or is it going to be kind of split also between selling, marketing, and the gross margin level. Yes, when we talk about promotional spend, the reference really is to is to the gross margin, Sean. from my perspective, right? So, so yes, it's a margin impacting. But marketing outside the OPEX, marketing OPEX, we do expect to rise in the fourth quarter over Q3 for all the reasons, right?
Speaker Change: Okay.
Speaker Change: On the promotional spending that you are talking about for the fourth quarter will all of the impact of that increase both sequentially and year over year all of that be seen in.
Speaker Change: The gross margin or is it going to be split also between.
Speaker Change: Selling and marketing.
Speaker Change: And on the gross margin level.
Speaker Change: Yes, so when we talk about promotional spend the reference really is to is to the gross margin.
Speaker Change: Sean.
Speaker Change: Michael.
Speaker Change: Alright.
Speaker Change: So yes it is.
Speaker Change: Our margin.
Speaker Change: Impacting.
Speaker Change: But marketing outside the Opex marketing Opex, we do expect to rise in the fourth quarter over Q3 for all the reasons right, that's a big quarter very important than theirs.
John Hanson: It's a big quarter, very important. And then there's, you know, overall different market dynamics with Black Friday and as well as Cyber Monday, etc. Right, okay.
Speaker Change: Overall different market dynamics, with black Friday, and as well as cyber Monday et cetera.
Chris Kern: And then last one, truly, for me, for Chris, can you talk a little bit about some of the new categories, you know, outside of controllers and headsets, some of the things you either have launched or, you know, or planning to imminently launch or what, give us an update on what's going on with some new segments. Sure, yeah, we've refreshed a bit of the mice and keyboards here in the quarter, you saw the new Cone 2 mice that launched, that was looking historically at Rocket, the flagship product. Got some great reviews out there on the Cone 2.
Speaker Change: Right Okay.
Speaker Change: And then last one truly.
Speaker Change: Yes.
Chris Kearney: Chris can you talk a little bit about some of the new categories outside of controllers and has some of the things you either have launched or no.
Chris Kearney: We're planning to imminently launched in a work to give us an update on what's going on with some new segments.
Speaker Change: Sure sure yes.
Speaker Change: We've refreshed a bit of the mice and keyboards here in the quarter you saw the new come to mice that launched that was looking historically at rocket the flagship product.
Speaker Change: <unk> got some great reviews out there on the cone too that will help support us as we transition into the Turtle Beach brand for PC, We're seeing very good results as we mentioned earlier on the PC headset side and we're seeing those gamers come along with us in the category So happy with the progress there and.
Chris Kern: That'll help support us as we transition into the Turtle Beach brand for PC. We're seeing very good results, as we mentioned earlier, on the PC headset side, and we're seeing those gamers come along with us in the category. So, happy with the progress there, and the team's done a great job on the brand transition. Obviously, that's always a large task when we're moving from one brand to the other, and the team's done a fantastic job there.
Speaker Change: <unk> has done a great job on the brand transition obviously, that's always a large task when we're moving from from one brand to the other and team has done a fantastic job there.
Chris Kern: Some of the other categories, music specialty controllers are really interesting for us this year. If you look at the market for the Riffmaster, as an example, PDP team did a great job launching that product. That market's around, I want to say, six and a half or seven million retail sales so far this year, of which we own 97% of that. So, that's been a nice upside surprise for us. The traction that Fortnite and Fortnite Festival is gaining with some of the really fun things that Epic is doing in that space, it's great to see that those gamers are out there, and we've got some new gear for them to play with, outside of the normal traditional controllers and headset categories.
Speaker Change: Some of the other categories music specialty controllers are really interesting for us. This year, if you look at the market.
Speaker Change: For the risk Master as an example.
Speaker Change: PDP team did a great job launching that product that market's around I want to say six five for $7 million of retail sales. So far this year of which we own 97% of that so that's been a nice upside surprise for us.
Speaker Change: The traction that Fortnite and Fortnite festival is gaining with some of the really fun things that epic is doing in that space.
Speaker Change: It's great to see that those gamers are out there and we've got some new gear for them to play with.
Speaker Change: Outside of the normal sort of traditional controllers and headset category. So so that's really exciting.
Chris Kern: So, that's really exciting. We've also got some really cool products coming up in the fight stick category as well.
Speaker Change: <unk> also got some really cool products coming up in the fight stick category as well.
Chris Kern: So, just with the combined company portfolios between Turtle Beach and PDP, just some really fun stuff coming out here in the holiday and into next year.
Speaker Change: So just.
Speaker Change: With the combined company portfolios between Turtle Beach in PDP.
Speaker Change: Some really fun stuff coming out here in the holiday and into next year.
Sean McGowan: Okay, thank you very much. Thanks, Sean.
Okay. Thank you very much.
Speaker Change: Thanks, Sean.
Speaker Change: Yes.
Operator: Thank you.
Martin Yang: And your next question comes from the line of Martin Yang from OPCO. Please go ahead. Thank you for taking my question. My question regarding product design this year, especially the Dell 6700 Gen 3. Both look to have a very refreshed design. I think similar changes are also consistent with your desktop app. So can you maybe talk about, you know, is there anything new regarding the product design and, you know, how that implies on your future product, both in headsets and other categories?
Speaker Change: Thank you and your next question comes from the line of Martin Yang from <unk>. Please go ahead.
Alright, Thank you for taking my question.
Speaker Change: Hi, My question regarding product design this year, especially the.
Speaker Change: 600 700 Gen three.
Speaker Change: Bose looks.
Speaker Change: Two to have a very refreshed design I think similar.
Speaker Change: Changes are also consistent with your desktop.
Speaker Change: So can you maybe talk about is there anything new.
Speaker Change: Regarding the product design.
Speaker Change: And how that implies.
Speaker Change: Future.
Speaker Change: Both the assets and other categories.
Chris Kern: Hi Martin, great question. This is something we love to talk about internally and externally. We've really made a lot of investments in our R&D over the last several years to bring these really cool products to market this year. It's not just on the external design that you're seeing on that 700 and some of the improvements that you noted there on the desktop app and some of the investments we've made there. The team has done a great job of also platforming all these new products on commonized chipsets and that's what you're seeing in the financial performance with the product mix moving to these new products and really helping our business results as well as bringing some really exciting products out to gamers.
Speaker Change: Hi, Martin Great question. This is something we love to talk about internally and externally.
Speaker Change: We've really made a lot of investments in our R&D over the last several years to bring these really cool products to market. This year.
Speaker Change: It's not just only external design that youre seeing on that 700.
Speaker Change: And some of the improvements that you noted there on the desktop app and some of the investments. We've made there. The team has done a great job also platforming all these new products on <unk> com and <unk> chipsets, and Thats Thats, what youre seeing in the financial performance with the product mix move into these new products.
Speaker Change: And really helping our business results as well as bringing some really exciting products out to gamers. So.
Chris Kern: So we are excited about the new look and feel of all the products, all the great functionality that's in these products. It's what you're going to see from us moving forward on the innovation front. With the new PDP team that's on board, it just adds to the brainpower that we've got behind all these products and expertise that we've got in the gaming industry. So I thank you for noticing, number one, it's something that we take a great deal of pride in here, you know, through the whole organization and we love bringing these kind of products to market.
Speaker Change: We are excited about the new look and feel of all the products all the great functionality thats in these products.
Speaker Change: It's what youre going to see from US moving forward on the innovation front.
Speaker Change: With the new PDP team that's on board.
Speaker Change: It just adds to the brainpower that we've got.
Speaker Change: Find all these products and expertise that we've got in the gaming industry. So.
Speaker Change: So thank you for noticing number one is something that we take a great deal of pride in here.
Speaker Change: Through the whole organization, and we love, bringing these kind of products to market.
Chris Kern: Great, thanks. My next question is about, you know, how you feel about the potential uplift from a new crop of games in holiday season. For example, Call of Duty Black Ops 6 seems to be, have a lot of traction. Are you seeing a concurrent lip to your headset's demand because of some of the higher profile games launching into the holiday season? Yes, it always has a good effect across the accessory space when you see a strong launch like we're seeing with Call of Duty. So we have seen that lift over the last few weeks. We did anticipate some lift, so that's included in our guidance for the year.
Speaker Change: Great. Thanks.
Speaker Change: The next question is about how you feel about the Patel.
Speaker Change: Potential uplift from a new crop of games in holiday seasons for example call of duty Black.
Speaker Change: Black ops six seems to be.
Speaker Change: Have a lot of traction are you seeing a concurrent lift.
Speaker Change: <unk> your headsets demands.
Speaker Change: Because of some of the higher profile games launching into the holiday season.
Speaker Change: Yes.
Speaker Change: <unk> has a good effect across the accessories space when you see a strong launch like we're seeing with call of duty. So we have seen that lift over the last few weeks we.
Speaker Change: We did anticipate some lift so that's included in our guidance for the year, but as you get.
Chris Kern: But you know, as you get that product, if it continues to sustain, if you get some some new surprises, which we always seem to have every year, some nice surprise, you know, launches out there that drive engagement, that could be another catalyst for us, you know, for for Q4 and as you go on to 2025. You know, this is why we're feeling good about the holiday for gaming. If you look at how accessories have been doing all year, we don't really see that falling off here in Q4. We think that with all the new products on the market, with great games out there, like Call of Duty, as you noted, you know, we're really in a good position here to see a strong holiday.
Speaker Change: That product if it continues to sustain if you get some some new surprises, which we always seem to have every year some nice surprise.
Speaker Change: Launches out there.
Drive engagement.
Speaker Change: That could be another catalyst for us.
Speaker Change: For Q4, and as you go into 2025.
Speaker Change: Yes.
Speaker Change: This is why we're feeling good about the holiday for gaming if you look at how accessories have been doing all year.
Speaker Change: We don't really see that falling off hearing in Q4.
Speaker Change: Think that with all the new products on the market with great games out there like like call of duty as you noted.
Speaker Change: We're really in a good position here to see a strong holiday so let's see how it plays out we've got some a lot of a lot of.
Chris Kern: So let's see how it plays out. You know, we've got some a lot of a lot of time ahead of us here. Yet, as you know, the last two months of the year are always very heavy and a huge part of our years. But we're feeling good about how we're positioned going in. Got it.
Time ahead of US here, yet as you know the last two months of the year always very heavy.
Speaker Change: And a huge part of our years, but we're feeling good about how we're positioned going in.
Speaker Change: Got it thank you Chris that's it for me.
Martin Yang: Thank you, Chris. That's it for me.
Operator: Thanks, Martin. Thank you. There are no further questions at this time.
Speaker Change: Martin Thank you Martin.
Speaker Change: Thank you there are no further questions at this time I will now hand, the call back to Mr. Chris Crane, <unk> CEO for any closing remarks.
Chris Kern: I want to hand the call back to Mr. Chris Kerner, CEO, for any closing remarks. Thank you, Operator, and thanks, everyone, for joining the call.
Chris Crane: Thank you operator, and thanks, everyone for joining the call have a great day.
Operator: Have a great day.
Operator: Thank you and that concludes our conference for today. Thank you all for participating.
Speaker Change: Thank you and that concludes our conference for today. Thank you all for participating you may now disconnect.
Operator: You may now disconnect.
Chris Crane: Yes.
Chris Crane: Yes.
Chris Crane: Okay.