Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Turtle Beach Corporation Second Quarter 2025 Conference Call. As a reminder, the conference is being recorded. I will now turn the call over to Jacques Cornet from the Investor Relations team. Jacques, you may begin.

Thank you, operator. On today's call, we will be referring to the press release filed this afternoon that details the company's second quarter 2025 results, which is available on the news page of the company's Investor Relations website, corp.turtlebeach.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 the Events and Presentations 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 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 statements. The company does not undertake to publicly update or revise any forward-looking statements after this conference call. The company also notes that on this 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. Hosting the call today are Cris Keirn, Chief Executive Officer; and Mark Weinswig, Chief Financial Officer. With that, I'll turn the call over to Cris. Cris?

Thanks, Jacques. Good afternoon, everyone, and thank you for joining our second quarter 2025 earnings call. Turtle Beach entered Q2 with three primary objectives: First, to deliver Q2 results while navigating a quickly evolving environment and set up a robust structure for the remainder of the year to support our 2025 full year guidance. Second, to advance our capital allocation strategy objectives, including stock buybacks and a reduction of high-cost debt. Third, to pursue a comprehensive refinancing of our credit facilities that would significantly strengthen our capital structure. I'm pleased to report that the company has successfully delivered on all three of these objectives. As a result, our business is well positioned to capitalize on the exciting upcoming gaming cycle that we believe will deliver strong growth in 2026. For the first of our Q2 objectives, Turtle Beach executed on several fronts, working collaboratively with our customers and supply base. Our teams enacted multiple tariff mitigations in Q2, including optimization of cost structures and product mix, selective retail price adjustments, and an expedited shift of some production to Vietnam. We continue to adapt our plans as necessary to improve overall margins and support timely launches for the exciting new gaming accessories we're bringing to market in the coming months. As a result of these actions by the team, we are reiterating our guidance for full year 2025 revenue in the range of $340 million to $360 million, with adjusted EBITDA in the range of $47 million to $53 million. As we continue to adjust in this dynamic environment, we have slightly modified our previous supply outlook and now anticipate that less than 15% of our total U.S. supply will be produced in China after Q1, up from approximately 10% as discussed in our previous earnings call. Our reiterated guidance and ongoing mitigations consider the new Vietnam tariff rate of 20%, and we have largely mitigated our exposure to any potential changes in U.S. tariff rates for China. Turning to our next objective of advancing our capital allocation strategy. After announcing a new $75 million share repurchase authorization in May, we amended our prior debt agreement in June to allow for additional share repurchases in the second quarter. In total, we repurchased approximately $5 million of stock at an average purchase price of $13.47. Moving forward, share repurchases will continue to be an integral part of our capital allocation strategy as they underscore our confidence in the future of Turtle Beach and our dedication to returning capital to shareholders. Completion of our third objective was realized in the announcement earlier this week of a comprehensive refinancing of our term loan and credit facility. The new terms include a reduced interest rate of approximately 450 basis points from our prior term loan, an extended term, and greater operational flexibility. This refinancing marks a significant milestone for the company and enables us to realign our financial strategies with our goal of delivering sustained value and growth. Our three pillars of capital allocation, which are investments in organic growth, share repurchases, and accretive M&A remain key areas of focus for us at Turtle Beach. Looking ahead at the gaming accessories market, as expected, we have seen improvements in year-on-year market comps in Q2. While our guidance still anticipates that the markets for headsets and third-party controllers will remain down for the full year 2025, we are looking forward to continued improvement in comps for the second half of the year and strong growth in 2026. Nintendo Switch 2 set a new record for the most hardware sold in a launch month, and we believe its continued success will provide tailwinds for accessory sales for years to come in this new generation of hardware. The exciting 2026 launch of GTA 6 will be another meaningful growth catalyst with massive expectations for high gamer engagement, which we have seen to be a key driver for gaming accessory purchases. Improving market comps, strong underlying fundamentals of a growing gamer base, and expanding engagement with next-generation systems make us optimistic for the upcoming multi-year growth cycle in the gaming industry. With that, I will now turn the call over to Mark, who will take us through the quarterly financials. Mark?

Thank you, Chris. As Chris mentioned, we made significant progress on our second quarter objectives, meeting our full year guidance, returning capital to shareholders and completing a comprehensive refinancing. While second quarter revenue of $56.8 million reflected dampened market conditions within the gaming accessories industry, we are well positioned to deliver on our full year revenue guidance of $340 million to $360 million. We are seeing improving market trends and believe second half results will strengthen. Gross margins for the second quarter were 32% compared to 30% in the prior year and demonstrated the execution of our ongoing cost optimization initiatives despite a reduction in revenue. Heading into the quarter, we anticipate direct and indirect cost impacts as we shifted some production to Vietnam. In the second quarter, direct tariff costs had a roughly 150 basis point impact on our gross margins. We expect the direct tariff impact to be roughly similar for the full year, subject to future tariff levels. Our ability to expand operating leverage is also evident in the quarter through our control of operating expenses. In the second quarter, operating expenses were $18.6 million or 33% of revenue compared to 36% in the prior year period. As we efficiently scale revenue in the future, we expect to convert revenue growth into higher profitability levels. In the second quarter, we realized a $6 million insurance recovery, which was incremental to the $3.4 million we realized in the first quarter. Approximately $9.4 million was received in cash, and we do not expect further proceeds at this time. The recovery relates to the previously communicated inventory loss in transit. Our second quarter 2025 adjusted EBITDA loss was $3 million below the prior year, primarily due to the lower revenues in the period. I would like to note that our improved flexibility and operating structure helped to mitigate the impact of lower revenues. We expect a notable increase in adjusted EBITDA throughout the second half of the year and are guiding to generate between $47 million and $53 million in adjusted EBITDA for the full fiscal year. With respect to our liquidity and capital allocation objectives for the quarter, we are happy to discuss our progress. First, as we announced on Monday, we successfully refinanced our existing revolving credit facility and term loan. The new $150 million facility is comprised of a $90 million revolving credit facility and a $60 million term loan, replacing the prior debt arrangements and providing additional capacity. This significant milestone strengthens our capital structure, providing a lower cost of capital and enhanced financial flexibility. Under the terms of the new loan agreement, we have reduced our base interest rate on the term loan by approximately 450 basis points, resulting in an annual dollar cost savings of over $2 million. Additionally, this refinancing removes certain limitations on our ability to buy back stock, acquire assets, and operate our business. As we continue scaling our business and delivering shareholder value, we believe this refinancing is an essential step in driving our capital allocation strategy. As of June 30, our net debt was $51.6 million, comprised of $63.3 million of outstanding debt and over $11.7 million of cash. Since the refinancing was only recently completed, our balance sheet as of June 30 does not reflect the new facility. Additionally, during the quarter, we returned approximately $5 million to shareholders under our recently authorized $75 million share repurchase program. Over the past 6 quarters, we have repurchased $35 million of stock underscoring our ongoing commitment to deliver value to our shareholders. With increased flexibility under our new debt agreements, we have the ability to remain active in the market using share buybacks as a key lever to return capital to our shareholders. In summary, based on our execution and outlook for the second half of the year, we are reiterating our prior full year guidance ranges. We expect full year 2025 revenue to be in the range of $340 million to $360 million and full year 2025 adjusted EBITDA to be in the range of $47 million to $53 million. We anticipate approximately two-thirds of our total annual revenue to come in the second half of 2025 and approximately 23% of the annual revenue to occur in Q3. Gross margins for the third quarter are expected to return to our targeted levels of mid- to high 30s. Overall, we are pleased with our ability to achieve our key objectives for the quarter and are excited about the remainder of the year. Our team's quick actions, nimbleness, and strong execution have positioned Turtle Beach for success into 2026. With that, I will turn the call back to Cris. Cris?

Thanks, Mark. As we look ahead to the remainder of 2025 and into 2026, we are confident in our strengthened strategic positioning and are excited about the opportunities ahead as the outlook for gaming accessories continues to improve. We remain committed to our comprehensive strategy for innovation, execution, and growth. Our focus for the rest of the year remains on delivering on this strategy to drive long-term value for all Turtle Beach stakeholders. As always, I want to extend my deepest appreciation to our amazing Turtle Beach team whose tremendous dedication is fundamental to our success. With that, operator, we can open the call for Q&A.

We will now begin the question-and-answer session. And our first question comes from Sean McGowan from ROTH Capital Partners.

I wanted to start with kind of a reflection on how much has changed since the last time you did a quarterly call. And on that call, as you were setting the full year guidance, you cited a number of factors that, I guess, had some uncertainty. The U.S. economy, tariffs, and maybe not uncertainty, but the shift in Grand Theft into next year. So could you comment on how you're viewing each of those? And when I say GTA, I mean, kind of title releases in general, we have a little bit more clarity on that now. So those three factors that kind of drove your guidance at the beginning of the year, how are you feeling about each one of those?

Sean, great question. Thanks for the question there. When we think about those different areas that we're considering for guidance, starting with the economy, it's tracked fairly close to what we believed in our last earnings call that it would. When you look at sort of the macroeconomic pressure, it still exists. And in the gaming sector, in particular, we believe that we would see improvement, really driven by Switch 2 in June, which turned out to be a very, very successful launch. A record sales for the first month of hardware and gaming. Here in the U.S., I think, 1.6 million units sold. So really, really strong results out of the gate for Nintendo Switch 2. And what that did is it drove the market for gaming accessories not only with Switch but just general improvements in the market. If you recall, at the end of Q1, our main markets of headsets and third-party controllers were down over 20% year-to-date. At the end of Q2, those markets have improved, and they're down mid-teens year-to-date with sort of like high single-digit drops year-over-year in Q2. So that's right in line with where we believed we would be sitting at this point from an overall economy and a market standpoint. On the tariff front, recall it was a 10% tariff, sort of with an unresolved factor in it for Vietnam during our last call, and what we've seen since then, and those went into effect today actually is those tariffs for Vietnam are now 20%. We did factor in plans in our revised guidance for the year at that level of tariffs. And so from a planning standpoint and from a guidance standpoint, both the macro economy and the tariff situation has tracked very closely to our expectations. And so that's why we're reiterating guidance. GTA 6 remains a very positive factor when you look to the future. While it did move out of 2025, when we've accounted for that already with our adjustment in Q1. This is going to be a really fantastic game. The current plan is May of 2026. It is going to be a major catalyst for new accessory purchases and just general gaming engagement. We are very excited about that one, along with other titles that are coming. I think what you're going to see is that Nintendo will continue to launch new products. They've got some great announcements out there. Games like Battlefield VI, we know drive engagement and drive purchases. So there's a lot of things to be very excited about, even between now and GTA 6, and then we'll see the benefits of that for the balance of the year in 2026 as well.

Okay. Have you, in fact, seen a lift in your sales of Nintendo-related products?

We have. The June sales for that particular category were very strong. There are a lot of first-party accessory sales at the moment as we expected. We've seen that with every new hardware release through each generation is that there's a trend where you see a strong amount of first-party sales as the third-party ecosystem gets built out, that trends over time. We've got a lot of great products coming from Nintendo in the rest of this year and in the early part of next year, continuing on. So we're excited to get those to market and really enjoy the benefits of that partnership with Nintendo. I think that what you'll see is this is going to be a multi-year growth cycle with Switch 2. And as you look ahead to some of the new hardware that will be coming from some of the other first-party folks, we're looking at a good, strong multi-year cycle for gaming.

There are no more questions in the queue. This concludes our question session. We have one more question here from Anthony Stoss from Craig-Hallum.

Sorry about that, to sneak in my question, a lot of earnings tonight. I just want to follow up on a comment that Mark made saying you're starting to see improving market conditions. Is that generally across all product lines? Or is it specific to a few of the product lines?

We understand it's a busy day for everyone. We're pleased to see improvements in gaming accessories across the board in Q2 compared to the end of Q1. I mentioned the growth in controllers, particularly third-party controllers, and headsets, and we've observed similar trends in other categories as well. In June, the launch of the Switch 2 and the interest it generated contributed to a further boost. As we stated previously, we expect the second half of the year to show continued market improvement, even though overall performance may end the year slightly down. This positions us well for strong growth next year, especially with a full year of the Switch 2 and upcoming major releases like GTA 6. Overall, we were encouraged by the across-the-board improvement in gaming accessories for the quarter.

Perfect. Congrats again to term loan refi. That's nice to see you guys and especially lower interest rate.

I appreciate that, Tony. Yes, we're very excited about that as well.

This concludes our question-and-answer session. I would like to turn the conference back over to Cris Keirn for any closing remarks.

Thank you, everyone, for your interest in Turtle Beach, and have a great day. The conference has now concluded.

Thank you for attending today's presentation. You may now disconnect.