Turtle Beach Returned To Positive Adjusted EBITDA

The Tip Desk · October 17, 2026 · 3 min read

Turtle Beach reported a 38.8% gross margin, supported by tariff refunds, and reaffirmed its full-year outlook.

Gaming accessories maker Turtle Beach Corporation (TBCH) returned to positive adjusted EBITDA in the second quarter, reversing its opening-quarter loss while remaining below its holiday-quarter earnings. Adjusted EBITDA was $1.3 million, following a $6.5 million loss in the first quarter and positive earnings on that measure of $28.1 million in the final quarter of 2025. The company kept its annual targets unchanged.

Gross margin recovered to 38.8% from 26.8% in the first quarter. The company attributed its year-over-year margin improvement to tariff refunds received during the second quarter. Management had credited cost optimization initiatives and tariff mitigation strategies for its margin performance in the fourth quarter of 2025. The latest release did not quantify the refunds separately.

The adjusted earnings recovery accompanied a wider reported net loss. Turtle Beach lost $7.3 million, or $0.38 a share, against a $2.9 million loss a year earlier. The earlier quarter included a $6.0 million insurance recovery related to inventory lost in transit, with no corresponding recovery this quarter. Net interest expense was $3.7 million. Those items formed part of the gap between the reported loss and the company's adjusted earnings measure.

Revenue was $56.4 million, little changed from $56.8 million a year earlier. Behind that result, the company described a change in retailer inventory behavior: channel inventories continued contracting through the first half of the quarter before stabilizing later in the period. That followed the inventory dip management had identified in the first quarter, when Chief Executive Cris Keirn described market conditions as a continuation of the challenges carried over from 2025.

Keirn said the company launched products across several categories during the quarter, including its flagship Stealth Pro II headset. He said that launch marked a milestone in Turtle Beach's brand transformation and helped build momentum as the quarter progressed. The company offered gaming headsets, controllers, PC peripherals and simulation accessories, although the release did not break quarterly revenue out by product category.

Alongside the operating recovery, Turtle Beach repurchased $25.0 million of stock, buying approximately 2.0 million shares during the quarter. About $31.0 million remained available under its current authorization. Net debt nevertheless increased to $64.4 million at June 30 from $41.3 million at March 31. The purchases were part of the capital return program the company had linked to its refinancing arrangements.

The new borrowing structure comprised an asset-based revolving facility of up to $80 million and an $85 million term loan facility. The company said the arrangements provided greater operating and capital allocation flexibility. Quarter-end cash was $19.6 million, and operations generated $6.5 million of cash during the second quarter.

For the six months ended June 30, revenue totaled $98.5 million, the net loss was $22.5 million and adjusted EBITDA was negative $5.2 million. Those first-half results left most of the company's annual revenue target, and all of its targeted positive adjusted EBITDA, dependent on the second half. The quarterly return to positive adjusted EBITDA had therefore not erased the opening-quarter shortfall.

Full-year guidance remains $335 million to $355 million in revenue and $44 million to $48 million in adjusted EBITDA. Those ranges were unchanged from the outlook reaffirmed in May. The company expects a meaningful business rebound as retailers rebuild inventories ahead of what it anticipates will be stronger second-half consumer demand.

Keirn said the company's outlook was supported by its product execution and the gaming release calendar. The company cited the November launch of Grand Theft Auto VI and other anticipated titles, saying major releases had historically increased gaming engagement and accessory demand. Turtle Beach expects those releases to support renewed demand, but it provided no specific guidance beyond 2026.