Analyst: Parametric Sound’s Turtle Beach Leads Market for Gaming Headsets

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Source: Thinkstock

Source: Thinkstock

A strong first-quarter was in-line with recent Q1 guidance. Adjusted revenue was $38 million, compared with our estimate of $40 million, and consensus of $38 million. Adjusted EBITDA was $2.8 million, compared with our estimate of $6 million. EPS was $(0.09), compared with our adjusted EPS estimate of $0.03, and consensus of $(0.02). Adjusted EPS was $0.01, above consensus estimates.

The company reiterated FY:14 guidance for Turtle Beach segment revenues of $210 to $230 million and HyperSound (NASDAQ:HEAR) segment revenues in the range of $1 to $4 million. Adjusted EBITDA for the Turtle Beach segment is expected to be in the range of $30 to $35 million, and HyperSound is expected to generate roughly $10 million of negative adjusted EBITDA during the year, bringing total company EBITDA in the range of $20 – 25 million for the year

Last week, The Financial Times and TechCrunch reported that Apple (NASDAQ:AAPL) was in talks to acquire Beats, one of the leaders in the media headset space and a competitor to Turtle Beach’s iSeries line of headphones. If the reports prove to be true, Turtle Beach’s iSeries headsets may lose shelf space at Apple stores and availability on Apple’s website could be limited. Beats does not have a gaming headset that effectively competes with Turtle Beach, nor does Apple.

Turtle Beach has a market leading position in the U.S. gaming headsets market with a roughly 50 percent dollar share. As we head into a new console cycle, Turtle Beach should benefit as installed base of next-generation and current generation consoles grows over the next several years.

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