10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35465

TURTLE BEACH CORPORATION

(Exact name of registrant as specified in its charter)


Nevada	27-2767540
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

15822 Bernardo Center Drive, Suite 105 San Diego, California	92127
(Address of principal executive offices)	(Zip Code)

(914) 345-2255

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001	TBCH	The Nasdaq Global Market
Preferred Stock Purchase Rights	N/A	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares of the registrant’s Common Stock, par value $0.001 per share, outstanding on October 29, 2026 was 17,940,271.

INDEX


		Page

PART I. FINANCIAL INFORMATION		2

Item 1.	Financial Statements (unaudited)	2

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2026 and 2025	2

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2026 and 2025	3

	Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025	4

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2026 and 2025	5

	Condensed Consolidated Statement of Stockholders' Equity for the Three and Nine Months Ended September 30, 2026 and 2025	6

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	32

PART II. OTHER INFORMATION		33

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 5.	Other Information	33

Item 6.	Exhibits	34

SIGNATURES		35

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Turtle Beach Corporation

Condensed Consolidated Statements of Operations

(unaudited, in thousands, except per-share data)


	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2026			2025			2026			2025

Net revenue	$	84,703		$	80,457		$	183,240		$	201,135
Cost of revenue		55,109			50,399			120,489			129,448
Gross profit		29,594			30,058			62,751			71,687
Operating expenses:
Selling and marketing		14,988			12,513			41,948			37,697
Research and development		4,553			4,161			13,940			12,625
General and administrative		5,340			7,541			19,654			23,111
Insurance recovery		(1,172	)		—			(1,564	)		(9,404	)
Acquisition-related cost		—			476			—			1,084
Total operating expenses		23,709			24,691			73,978			65,113
Operating income (loss)		5,885			5,367			(11,227	)		6,574
Interest expense, net		2,707			3,718			7,742			7,773
Other expense (income), net		213			(322	)		185			780
Income (loss) before income tax		2,965			1,971			(19,154	)		(1,979	)
Income tax (benefit) expense		(1,421	)		254			(1,023	)		(101	)
Net income (loss)	$	4,386		$	1,717		$	(18,131	)	$	(1,878	)

Net income (loss) per share
Basic	$	0.24		$	0.09		$	(0.96	)	$	(0.09	)
Diluted	$	0.24		$	0.08		$	(0.96	)	$	(0.09	)
Weighted average number of shares:
Basic		17,926			20,073			18,863			20,413
Diluted		18,197			20,406			18,863			20,413

The accompanying notes are an integral part of these condensed consolidated financial statements.

Turtle Beach Corporation

Condensed Consolidated Statements of Comprehensive Income (Loss)

(unaudited, in thousands)


	Three Months Ended					Nine Months Ended
	September 30, 2026		September 30, 2025			September 30, 2026			September 30, 2025

Net income (loss)	$	4,386	$	1,717		$	(18,131	)	$	(1,878	)
Other comprehensive income (loss):
Foreign currency translation adjustment		169		(819	)		(307	)		2,735
Other comprehensive income (loss)		169		(819	)		(307	)		2,735
Comprehensive income (loss)	$	4,555	$	898		$	(18,438	)	$	857

The accompanying notes are an integral part of these condensed consolidated financial statements.

Turtle Beach Corporation

Condensed Consolidated Balance Sheets

(in thousands, except par value and share amounts)



	September 30,			December 31,
	2026			2025
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	11,188		$	16,963
Accounts receivable, net		60,443			76,797
Inventories		79,782			69,222
Prepaid expenses and other current assets		12,294			10,831
Total Current Assets		163,707			173,813
Property and equipment, net		3,095			2,995
Goodwill		50,428			50,428
Intangible assets, net		28,478			34,344
Other assets		6,056			7,474
Total Assets	$	251,764		$	269,054
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Revolving credit facility	$	—		$	29,383
Accounts payable		53,910			24,934
Term Loan, current		4,250			8,571
Other current liabilities		26,442			24,789
Total Current Liabilities		84,602			87,677
Term Loan, non-current		75,663			46,339
Income tax payable		1,392			820
Other liabilities		3,754			5,720
Total Liabilities		165,411			140,556
Commitments and Contingencies
Stockholders’ Equity
Common stock, $0.001 par value - 25,000,000 shares authorized; 17,940,196 and 19,185,869 shares issued and outstanding as of September 30, 2026 and December 31, 2025, respectively		18			19
Additional paid-in capital		205,483			229,189
Accumulated deficit		(120,494	)		(102,363	)
Accumulated other comprehensive income		1,346			1,653
Total Stockholders’ Equity		86,353			128,498
Total Liabilities and Stockholders’ Equity	$	251,764		$	269,054

The accompanying notes are an integral part of these condensed consolidated financial statements.

Turtle Beach Corporation

Condensed Consolidated Statements of Cash Flows

(unaudited, in thousands)


	Nine Months Ended
	September 30, 2026			September 30, 2025

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(18,131	)	$	(1,878	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		2,324			3,259
Amortization of intangible assets		5,865			6,051
Amortization of debt financing costs		840			776
Stock-based compensation		3,682			4,306
Deferred income taxes		(565	)		165
Change in sales returns reserve		2,591			1,777
Provision for obsolete inventory		1,238			2,162
Loss on extinguishment of debt		1,755			1,923
Other		—			(54	)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		13,763			34,586
Inventories		(11,799	)		(25,875	)
Prepaid expenses and other assets		1,118			(1,495	)
Accounts payable		27,996			12,045
Income taxes payable		(2,137	)		(3,471	)
Other liabilities		919			(12,156	)
Net cash provided by operating activities		29,459			22,121
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(1,767	)		(1,169	)
Cash acquired in business combination		—			2,515
Net cash (used in) provided by investing activities		(1,767	)		1,346
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on revolving credit facilities		85			186,249
Repayment of revolving credit facilities		(29,468	)		(202,175	)
Proceeds from term loan		82,450			60,000
Repayment of term loan		(57,839	)		(51,101	)
Proceeds from exercise of stock options		416			1,900
Repurchase of restricted stock		(500	)		—
Repurchase of common stock		(27,197	)		(17,015	)
Debt financing costs		(1,417	)		(2,334	)
Net cash used in financing activities		(33,470	)		(24,476	)
Effect of exchange rate changes on cash and cash equivalents		3			271
Net decrease in cash and cash equivalents		(5,775	)		(738	)
Cash and cash equivalents at the beginning of period		16,963			12,995
Cash and cash equivalents at the end of period	$	11,188		$	12,257

SUPPLEMENTAL DISCLOSURE OF INFORMATION
Property and equipment purchases included in accounts payable and accrued liabilities	$	831		$	154
Unpaid debt financing costs	$	—		$	513

The accompanying notes are an integral part of these condensed consolidated financial statements.

Turtle Beach Corporation

Condensed Consolidated Statement of Stockholders’ Equity

(unaudited, in thousands)


	Common Stock						Additional Paid-In			Accumulated			Accumulated Other Comprehensive
	Shares			Amount			Capital			Deficit			Income (Loss)			Total

Balance at December 31, 2025		19,186		$	19		$	229,189		$	(102,363	)	$	1,653		$	128,498
Net loss		—			—			—			(15,206	)		—			(15,206	)
Other comprehensive loss, net of tax		—			—			—			—			(643	)		(643	)
Issuance of restricted stock		25			—			—			—			—			—
Stock options exercised		8			—			43			—			—			43
Stock-based compensation		—			—			1,365			—			—			1,365
Exercise of wholly-funded warrants		550			1			(1	)		—			—			—
Repurchase of common stock		(162	)		—			(2,199	)		—			—			(2,199	)
Balance at March 31, 2026		19,607		$	20		$	228,397		$	(117,569	)	$	1,010		$	111,858
Net loss		—			—			—			(7,311	)		—			(7,311	)
Other comprehensive income, net of tax		—			—			—			—			167			167
Issuance of restricted stock		259			—			—			—			—			—
Stock options exercised		38			—			231			—			—			231
Stock-based compensation		—			—			1,271			—			—			1,271
Repurchase of common stock to satisfy employee tax withholding obligations		—			—			(500	)		—			—			(500	)
Repurchase of common stock		(1,995	)		(2	)		(24,998	)		—			—			(25,000	)
Balance at June 30, 2026		17,909		$	18		$	204,401		$	(124,880	)	$	1,177		$	80,716
Net income		—			—			—			4,386			—			4,386
Other comprehensive income, net of tax		—			—			—			—			169			169
Issuance of restricted stock		9			—			—			—			—			—
Stock options exercised		22			—			142			—			—			142
Stock-based compensation		—			—			1,046			—			—			1,046
Excise tax on repurchases of common stock		—			—			(106	)		—			—			(106	)
Balance at September 30, 2026		17,940		$	18		$	205,483		$	(120,494	)	$	1,346		$	86,353


	Common Stock						Additional Paid-In			Accumulated			Accumulated Other Comprehensive
	Shares			Amount			Capital			Deficit			(Loss) Income			Total

Balance at December 31, 2024		19,962		$	20		$	239,983		$	(118,094	)	$	(1,305	)	$	120,604
Net loss		—			—			—			(664	)		—			(664	)
Other comprehensive income, net of tax		—			—			—			—			767			767
Issuance of restricted stock		9			—			—			—			—			—
Stock options exercised		—			—			5			—			—			5
Stock-based compensation		—			—			1,912			—			—			1,912
Repurchase of common stock		(121	)		—			(1,750	)		—			—			(1,750	)
Balance at March 31, 2025		19,850		$	20		$	240,150		$	(118,758	)	$	(538	)	$	120,874
Net loss		—			—			—			(2,931	)		—			(2,931	)
Other comprehensive income, net of tax		—			—			—			—			2,787			2,787
Issuance of restricted stock		314			—			—			—			—			—
Stock options exercised		32			—			107			—			—			107
Stock-based compensation		—			—			1,008			—			—			1,008
Repurchase of common stock		(373	)		—			(5,010	)		—			—			(5,010	)
Balance at June 30, 2025		19,823		$	20		$	236,255		$	(121,689	)	$	2,249		$	116,835
Net income		—			—			—			1,717			—			1,717
Other comprehensive loss, net of tax		—			—			—			—			(819	)		(819	)
Issuance of restricted stock		6			—			—			—			—			—
Stock options exercised		191			—			1,788			—			—			1,788
Stock-based compensation		—			—			1,386			—			—			1,386
Repurchase of common stock		(712	)		(1	)		(10,255	)		—			—			(10,256	)
Balance at September 30, 2025		19,308		$	19		$	229,174		$	(119,972	)	$	1,430		$	110,651

The accompanying notes are an integral part of these condensed consolidated financial statements.

Turtle Beach Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 1. Description of Business

Organization

Turtle Beach Corporation (“Turtle Beach” or the “Company”) develops and markets audio and gaming accessory products under the Turtle Beach® brand for use with video game and entertainment consoles, handheld consoles, personal computers (“PCs”), tablets, and mobile devices. The Company’s product offerings have expanded over time beyond gaming headsets to include gaming controllers, flight and racing simulation accessories, and PC keyboards and mice. The Company operates within the gaming accessories market and sells its products through a variety of retail, distribution, and ecommerce channels in the U.S. and international markets. The Company is headquartered in San Diego, California, and was incorporated in the State of Nevada in 2010.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, reflect all adjustments (which include normal recurring adjustments) considered necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented.

All intercompany accounts and transactions have been eliminated in consolidation. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), have been condensed or omitted pursuant to those rules and regulations. The Company believes that the disclosures made are adequate to make the information presented not misleading. The results of operations for the interim periods are not necessarily indicative of the results of operations for the entire fiscal year.

The December 31, 2025 Condensed Consolidated Balance Sheet has been derived from the Company’s audited financial statements included in its Annual Report on Form 10-K filed with the SEC on March 12, 2026 (the “Annual Report”).

These financial statements should be read in conjunction with the annual financial statements and the notes thereto included in the Annual Report that contain information useful to understanding the Company’s businesses and financial statement presentations.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to use estimates and assumptions that affect the reported amount of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. The significant estimates and assumptions used by management affect: sales return reserve, allowances for cash-based incentive programs, warranty reserve, valuation of inventory, valuation of long-lived assets, goodwill and other intangible assets, depreciation and amortization of long-lived assets, valuation of deferred tax assets, probability of performance shares vesting and forfeiture rates utilized in issuing stock-based compensation awards. The Company evaluates estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from these estimates, and those differences could be material to the consolidated financial statements.

There have been no material changes to the significant accounting policies and estimates from the information provided in Note 2 of the notes to our consolidated financial statements in our Annual Report.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of investments in cash, cash equivalents and accounts receivable. The Company is exposed to credit risk and liquidity risk in the event of default by the financial institutions

or issuers of investments in excess of FDIC insured limits. The Company performs periodic evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any institution.

Accounts receivable are unsecured and represent amounts due based on contractual obligations of customers. Accounts receivable from the Company's major customers representing 10% or more of total accounts receivable were as follows:


	September 30,			December 31,
	2026			2025

Customer A		34.7	%		33.8	%
Customer B		11.8	%		17.5	%
Customer C		11.5	%		17.4	%
Customer D	*				12.4	%

* Customer accounted for less than 10% of total accounts receivable in the period.

Customers that accounted for more than 10% of revenue during the three and nine months ended September 30, 2026 and 2025 were as follows:


	Three Months Ended						Nine months ended
	September 30,						September 30,
	2026			2025			2026			2025

Customer A		13.4	%		14.1	%		17.3	%		17.7	%
Customer B		28.8	%		31.6	%		25.3	%		26.1	%
Customer C		12.1	%		12.6	%		12.9	%		13.2	%

Accounting Pronouncements Issued and Adopted

In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient and accounting policy election which will result in reduced complexity for the measurement of credit losses arising from transactions accounted for under ASC 606—Revenue from Contracts with Customers, which include current contract assets and current contract receivables. Specifically, the practical expedient permits entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset, and the accounting policy election permits an entity other than a public business entity to consider collection activity after the balance sheet date when estimating expected credit losses. Entities electing to apply the practical expedient and the accounting policy election, if applicable, should apply the amendments prospectively. This ASU is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company adopted this standard on a prospective basis. In adopting the standard, the Company elected the permitted practical expedient, which assumes current conditions as of the balance sheet date remain unchanged over the remaining life of the assets. The adoption did not have a significant impact on its condensed consolidated financial statements.

Accounting Pronouncements Issued but Not Yet Adopted

The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”). ASUs not referenced below were assessed and determined to be either not applicable or are not expected to have a material impact on the Company's unaudited condensed consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to improve disclosures related to certain income statement expenses of the Company. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this pronouncement on its condensed consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes and simplifies the accounting for costs incurred to develop or acquire internal use software costs. The update eliminates the legacy three-stage waterfall model - preliminary, application development, and

post-implementation. Under the new standard, capitalization begins when management authorizes and commits funding for the project and completion is probable, aligning better with agile and iterative development practices. The types of costs eligible remain unchanged, and the update does not affect accounting for software developed for sale or licensing. This ASU will be effective for fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this pronouncement on its condensed consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the scope of Topic 270, the form and content of interim financial statements and the disclosures required for interim reporting periods. This ASU will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The amendments in this update can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the timing and method of adoption of this pronouncement but does not expect it to materially affect its disclosures.

Other recently issued accounting pronouncements are not expected to have a material impact on the Company's consolidated financial statements.

Note 3. Fair Value Measurement

The Company follows a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

•

Level 1 — Quoted prices in active markets for identical assets or liabilities.

•

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

•

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and the revolving line of credit. As of September 30, 2026 and December 31, 2025, the Company has not elected the fair value option for any financial assets and liabilities for which such an election would have been permitted.

The following is a summary of the carrying amounts and estimated fair values of the Company's financial instruments, which are classified as Level 1, as of September 30, 2026 and December 31, 2025 (in thousands):


	September 30, 2026				December 31, 2025
	Reported		Fair Value		Reported		Fair Value

Financial Assets and Liabilities:
Cash and cash equivalents	$	11,188	$	11,188	$	16,963	$	16,963

Cash equivalents are stated at amortized cost, which approximates fair value as of the consolidated balance sheet dates, due to the short period of time to maturity; and accounts receivable and accounts payable are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment. The carrying values of the 2026 Revolving Credit Facility and 2026 Term Loan due in 2029 approximate fair value as their stated interest rates reflect current market rates.

Note 4. Balance Sheet Components

Inventories

Inventories consist of the following (in thousands):


	September 30, 2026		December 31, 2025

Finished goods	$	76,738	$	64,006
Raw materials		3,044		5,216
Total inventories	$	79,782	$	69,222

During the nine months ended September 30, 2026, the Company received tariff refunds totaling $8.2 million from the U.S. Customs and Border Protection related to previously paid import duties, all of which were recorded as an increase to cash. Of the total amount received, $4.3 million related to tariffs recognized in cost of revenue. Because the Company's right to the refund was established and the refund was received during the second quarter, the amount was recognized as a reduction of cost of revenue during the nine months ended September 30, 2026. The Company had previously capitalized $3.6 million of tariffs as a component of inventory. Upon receipt of the refund, the Company recognized a corresponding $3.6 million reduction in the carrying value of inventory. The remaining amount, representing statutory interest on the refunded duties of $0.3 million, was recognized in Other expense (income), net in the accompanying condensed consolidated statements of operations during the nine months ended September 30, 2026.

Property and Equipment, net

Property and equipment, net, consists of the following (in thousands):


	September 30, 2026			December 31, 2025

Machinery and equipment	$	1,079		$	1,079
Software and software development		2,137			2,138
Furniture and fixtures		1,241			1,251
Tooling		12,537			10,150
Leasehold improvements		1,180			1,159
Demonstration units and convention booths		2,354			2,356
Total property and equipment, gross		20,528			18,133
Less: accumulated depreciation and amortization		(17,433	)		(15,138	)
Total property and equipment, net	$	3,095		$	2,995

Depreciation and amortization expense on property and equipment was $0.7 million and $1.1 million for the three months ended September 30, 2026 and 2025, respectively. Depreciation and amortization expense on property and equipment was $2.3 million and $3.3 million for the nine months ended September 30, 2026 and 2025, respectively.

Other Current Liabilities

Other current liabilities consist of the following (in thousands):


	September 30, 2026		December 31, 2025

Accrued royalty	$	5,070	$	8,088
Accrued tariffs		5,644		—
Accrued employee expenses		2,429		2,487
Accrued tax-related payables		2,265		3,919
Accrued freight		2,890		1,839
Accrued marketing		1,885		2,164
Accrued expenses		6,259		6,292
Total other current liabilities	$	26,442	$	24,789

Note 5. Goodwill and Other Intangible Assets

Goodwill

The Company conducts its goodwill impairment analysis annually or more frequently if changes in facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit may be less than its carrying value. There were no impairment indicators and the Company's market capitalization continues to exceed the net carrying value of the business. As such, the Company did not perform any further quantitative testing.

There was no change in the carrying amount of goodwill (in thousands):


	September 30, 2026		December 31, 2025

Goodwill	$	50,428	$	50,428

Intangible Assets, net

Acquired identifiable intangible assets, and related accumulated amortization, as of September 30, 2026 and December 31, 2025 consist of (in thousands):


	September 30, 2026
	Gross Carrying Value		Accumulated Amortization		Net Book Value

Customer relationships	$	10,285	$	7,716	$	2,569
Tradenames		18,293		8,353		9,940
Developed technology		27,706		11,737		15,969
Patent and trademarks		784		784		—
Total Intangible Assets	$	57,068	$	28,590	$	28,478


	December 31, 2025
	Gross Carrying Value		Accumulated Amortization		Net Book Value

Customer relationships	$	10,285	$	7,034	$	3,251
Tradenames		18,293		6,681		11,612
Developed technology		27,706		8,273		19,433
Patent and trademarks		784		736		48
Total Intangible Assets	$	57,068	$	22,724	$	34,344

Amortization expense related to definite lived intangible assets of $1.9 million and $2.0 million was recognized for the three months ended September 30, 2026 and 2025, respectively. Amortization expense related to definite lived intangible assets of $5.9 million and $6.1 million was recognized for the nine months ended September 30, 2026 and 2025, respectively.

As of September 30, 2026, estimated annual amortization expense related to definite lived intangible assets in future periods was as follows (in thousands):


2026 (remaining three months)	$	1,897
2027		7,590
2028		7,590
2029		7,590
2030		3,346
Thereafter		465
Total	$	28,478

Note 6. Credit Facility and Long-Term Debt

The following table presents the outstanding principal amounts of the Company's revolving credit facility and term loan (in thousands):


	September 30, 2026		December 31, 2025
Revolving credit facility	$	—	$	29,383
Term loan	$	82,875	$	55,714

The following table summarizes the interest expense recognized for all periods presented (in thousands):


	Three Months Ended						Nine months ended
	September 30,						September 30,
	2026			2025			2026			2025

Contractual interest expense	$	2,434		$	1,581		$	5,551		$	5,080
Amortization of debt discount		353			223			840			779
Loss on extinguishment of debt		—			1,923			1,755			1,923
Interest income		(80	)		(9	)		(404	)		(9	)
Total interest expense, net	$	2,707		$	3,718		$	7,742		$	7,773

2024 Revolving Credit Facility

In 2024, the Company maintained a Revolving Credit Facility (the “2024 Revolving Credit Facility”) with Bank of America, N.A. (“Bank of America”) that provided up to $50.0 million in borrowing capacity, including a $10.0 million sub-facility for Turtle Beach Europe Limited, and was secured by substantially all Company assets. On March 13, 2024, the Company entered into a Fourth Amendment to the 2024 Revolving Credit Facility (the “Fourth Amendment”). The Company executed the Fourth Amendment to the facility for the purposes of extending the maturity to March 13, 2027, incorporating Performance Designed Products LLC (“PDP”) acquisition assets into the U.S. Borrowing Base and updating interest rate and fee terms. The facility included customary covenants, including a minimum fixed-charge coverage ratio when availability thresholds were not met, and restrictions on additional indebtedness, dividends share repurchases, certain investments, mergers, and asset sales.

On August 1, 2025, the Company entered into the 2025 Credit Facility, defined and discussed below, and repaid in full the amount then-outstanding under the 2024 Revolving Credit Facility. The Company treated the 2025 Credit Facility as a partial extinguishment of the 2024 Revolving Credit Facility and recognized a loss on extinguishment of debt of $0.3 million to write-off the unamortized deferred financing costs in interest expense in its condensed consolidated statements of operations.

2024 Term Loan Facility

In March 2024, the Company entered into a $50.0 million Term Loan Facility (the “2024 Term Loan Facility”) with Blue Torch Finance, LLC (“Blue Torch”) to support the PDP acquisition, repay certain indebtedness of the acquired business, cover transaction‑related fees, and provide general corporate liquidity. The facility was being amortized over its term, was secured by substantially all Company assets, and carried a prepayment premium that expired in March 2025.

The 2024 Term Loan Facility was scheduled to mature on March 13, 2027 and included interest rates tied to base rate or Secured Overnight Financing Rate (“SOFR”) benchmarks with leverage‑based pricing tiers, as well as customary affirmative, negative, and financial covenants, including minimum liquidity and quarterly total net leverage requirements.

On August 1, 2025, the Company entered into the 2025 Credit Facility and repaid in full the amount then-outstanding under the 2024 Term Loan Facility for the amount of $43.2 million. The Company treated the repayment as a debt extinguishment and recognized a loss on extinguishment of debt of $1.7 million to write-off the unamortized deferred financing costs in interest expense in the condensed consolidated statements of operations.

2025 Credit Facility

On August 1, 2025, the Company and certain of our subsidiaries entered into a Credit Agreement with Bank of America, as the administrative agent, the swingline lender and the line of credit issuer (the “2025 Credit Facility”). The 2025 Credit Facility was to mature on August 1, 2028 and included a $60 million term loan facility and a $90 million revolving credit facility with designated sub-facility limits of (i) $15 million for the U.K. Borrower, (ii) $10 million for a swingline facility and (iii) $5 million for letters of credit. Actual credit availability under the revolving facility was subject to a borrowing base limitation that was calculated based on a percentage of eligible trade accounts receivable and inventories, the balances of which fluctuate, and was subject to discretionary reserves and revaluation adjustments. The 2025 Credit Facility may have been used for borrowings as well as for the issuance of letters of credit, repaying existing indebtedness outstanding as of the effective date of the 2025 Credit Facility and ongoing working capital and general corporate purposes as defined by the Credit Agreement governing the 2025 Credit Facility. The 2025 Credit Facility replaced our previous debt arrangements at that time.

Prior to its repayment and termination, borrowings under the 2025 Credit Facility bore interest at a rate that varied depending on the type of loan and the borrower. The interest rate was calculated using a floating rate plus a margin. Depending on the type of loan, the floating rate was either the prime rate announced by Bank of America, Term SOFR, Daily Simple SOFR, EURIBOR or SONIA. The margin ranged from 2.00% to 2.75% for base rate loans and SONIA based loans and from 3.00% to 3.75% for Term SOFR, Daily Simple SOFR and EURIBOR loans. The 2025 Credit Facility also provided for an unused line fee, letter of credit fees, and agent fees. The borrowers were able to voluntarily prepay the principal of any advance, without penalty or premium, at any time in whole or in part, subject to certain breakage costs.

On April 30, 2026, the Company repaid in full the amount then-outstanding under the 2025 Credit Facility in connection with the 2026 Term Loan Facility, as defined and described below. As part of the repayment, the Company recognized a loss on extinguishment of debt of $1.8 million to write-off the unamortized deferred financing costs in interest expense in its condensed consolidated statements of operations.

2026 Term Loan Facility

On April 30, 2026, the Company entered into a new financing agreement (the “2026 Term Loan Financing Agreement”) by and among the Company, Voyetra Turtle Beach, Inc. (“VTB"), as borrower, each of the Company's subsidiaries listed as a guarantor on the signature pages thereto, the lenders from time to time party thereto, and Blue Torch, as administrative agent and collateral agent, pursuant to which Blue Torch made a loan to VTB in the aggregate amount of $85.0 million (the “2026 Term Loan Facility”), the proceeds of which were used to or will be used to (a) refinance existing indebtedness of the Company and its subsidiaries; (b) for general corporate purposes; and (c) to pay fees and expenses related to the loan transactions. The 2026 Term Loan Facility will amortize in a quarterly amount equal to 1.25% of the aggregate original principal amount of the 2026 Term Loan Facility. Any prepayment, or any acceleration or other repayment in connection with an insolvency proceeding, occurring during the first twelve months following the closing date will be subject to a prepayment premium equal to (i) the interest that would otherwise have accrued on the principal amount being repaid through the twelve-month anniversary of the closing date, plus (ii) 3.00% of the principal amount being repaid, provided that no such premium applies to regularly scheduled quarterly amortization payments or to certain prepayments specified in the 2026 Term Loan Financing Agreement. The 2026 Term Loan Facility is secured by substantially all of the assets of the Company and its subsidiaries which are party to the 2026 Term Loan Facility.

The 2026 Term Loan Facility (a) will mature on April 30, 2029; (b) will bear interest at a rate equal to (i) a base rate plus 6.50% per annum for Reference Rate Loans and SOFR plus 7.50% per annum for SOFR Loans if the total leverage ratio is greater than or equal to 3.00x, (ii) a base rate plus 6.25% per annum for Reference Rate Loans and SOFR plus 7.25% per annum for SOFR Loans if the total leverage ratio is greater than or equal to 2.25x but less than 3.00x, and (iii) a base rate plus 5.75% per annum for Reference Rate Loans and SOFR plus 6.75% per annum for SOFR Loans if the total leverage ratio is less than 2.25x; and (c) is subject to certain affirmative, negative and financial covenants, including a minimum liquidity covenant and a quarterly total net leverage ratio covenant. As of September 30, 2026, the interest rate for outstanding borrowings was 11.59%.

2026 Revolving Credit Facility

On April 30, 2026, the Company entered into a Loan, Guaranty and Security Agreement (the “2026 Revolving Credit Agreement”), by and among the Company, VTB, TBC Holding Company LLC, PDP, Turtle Beach Europe Limited, VTB Holdings, Inc., Tide Acquisition Sub II, LLC, the financial institutions party thereto and Bank of America, as agent, collateral agent and security trustee for the lenders to the credit facility (the “2026 Revolving Credit Facility”). The 2026 Revolving Credit Agreement provides for, among other things: (a) subject in each case to the applicable borrowing base, a US commitment in an amount equal to $50.0 million or $65.0 million based on the season and a UK commitment equal to $10.0 million or $15.0 million based on the season; (b) a maturity date of April 30, 2029; (c) interest rate and margin terms such that the loans will bear interest at a rate equal to (1) SOFR, (2) the US Base Rate, (3) SONIA for loans denominated in Sterling, and (4) EURIBOR for loans denominated in Euros, plus in each case, an applicable margin, which is between 0.50% and 1.00% for US Base Rate Loans and 1.50% and 2.00% for US Term SOFR Loans, UK SONIA Rate Loans and UK EURIBOR Loans; and (d) certain affirmative and negative covenants and a springing (subject to certain triggers) fixed charge coverage ratio. The obligations under the 2026 Revolving Credit Agreement are secured by substantially all of the assets of the Company and its subsidiaries which are party to the 2026 Revolving Credit Agreement.

The respective priorities of the security interests securing the 2026 Term Loan Financing Agreement and the 2026 Revolving Credit Agreement are governed by an intercreditor agreement, dated as of April 30, 2026, between Blue Torch and Bank of America.

As of September 30, 2026, the Company was in compliance with all the financial covenants under the2026 Revolving Credit Facility, as amended, and excess borrowing availability was approximately $61.5 million.

As part of the 2026 Revolving Credit Facility, the Company recorded an aggregate amount of deferred debt financing costs of $1.2 million in its condensed consolidated balance sheet.

Maturities of Term Loan Debt

The following table summarizes the maturities of debt, assuming no prepayments or refinancing (in thousands):


2026 (remaining three months)	$	1,063
2027		4,250
2028		4,250
2029		73,312
		82,875
Less:
Current portion		(4,250	)
Unamortized debt discount		(2,962	)
Total Term Loan, non-current	$	75,663

Note 7. Commitments and Contingencies

Litigation

The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. Although the amount of any liability that could arise with respect to these actions cannot be determined with certainty, in the Company’s opinion, any such liability will not have a material adverse effect on its consolidated financial position, consolidated results of operations or liquidity.

Intellectual Property Dispute: On May 28, 2025, PDP filed an action for declaratory judgment of non-infringement of four patents purportedly owned by OKYN Holdings, Inc., d/b/a Nyko Technologies (“Nyko”) in the United States District Court for the Southern District of California. Nyko had written to PDP on October 31, 2024 asserting that PDP’s Ultra Slim Charge System for PlayStation 4 (“Ultra Slim”) infringed those patents. Nyko has responded to PDP’s complaint and filed counterclaims for patent infringement by the Ultra Slim. On June 12, 2025, Nyko filed a lawsuit in the Southern District of California asserting that PDP and Turtle Beach Corporation (“TBC”) infringed the same four patents at issue in the declaratory judgment action filed by PDP. On July 8, 2025, PDP and TBC moved to dismiss Nyko’s complaint. On March 25, 2026, the Court partially granted that motion, dismissed TBC, and consolidated the two actions. On April 16, 2026, Nyko filed a First Amended Complaint that again alleged infringement by TBC and PDP. On May 21, 2026, PDP filed an answer to Nyko’s First Amended Complaint and TBC moved to dismiss Nyko’s First Amended Complaint. That motion is pending. On August 4, 2026, the Court issued its claim construction order that construed certain claim terms in Nyko’s patents. On August 6, 2026, the Court denied PDP’s motion for judgment on the pleadings.

Intellectual Property Dispute: On October 3, 2025, Robert Lyden, an individual, filed a patent infringement lawsuit against PDP, Voyetra Turtle Beach, Inc. (“VTB”), and Turtle Beach Corporation (“TBC”) in the United States District Court for the District of Minnesota, asserting infringement of one patent by the Victrix™ Pro BFG™ Wireless Controller and Victrix™ Gambit Wireless Controller. On December 16, 2025, PDP, VTB and TBC moved to dismiss the complaint for improper venue. On March 19, 2026, the Court granted that motion and transferred the case to the United States District Court for the Southern District of California. On May 13, 2026, PDP, VTB and TBC moved to dismiss the Complaint. That motion is pending.

The Company will continue to vigorously defend itself in the foregoing unresolved matters. However, litigation and investigations are inherently uncertain. Accordingly, the Company cannot predict the outcome of these matters. The Company has not recorded any accrual at September 30, 2026 for contingent losses associated with these matters unless otherwise disclosed above based on its belief that losses, while possible, are not probable. Further, any possible range of loss cannot be reasonably estimated at this time. The unfavorable resolution of these matters could have a material adverse effect on the Company’s business, results of operations, financial condition, or cash flows. The Company is engaged in other legal actions, not described above, arising in the ordinary course of its business and, while there can be no assurance, believes that the ultimate outcome of these other legal actions will not have a material adverse effect on its business, results of operations, financial condition, or cash flows.

Product Warranties

The Company warrants its products against certain manufacturing and other defects. These product warranties are provided for specific periods of time depending on the nature of the product. Warranties are generally fulfilled by replacing defective products with new products. The following table provides the changes in our product warranties, which are included in other current liabilities (in thousands):


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2026			2025			2026			2025

Warranty, beginning of period	$	468		$	736		$	582		$	815
Warranty costs accrued		63			56			174			317
Settlements of warranty claims		(97	)		(131	)		(322	)		(471	)
Warranty, end of period	$	434		$	661		$	434		$	661

Indemnifications

The Company indemnifies certain suppliers and customers for losses arising from matters such as intellectual property disputes and product safety defects, subject to certain restrictions. The scope of these indemnities varies, but in some instances includes indemnification for damages and expenses, including reasonable attorneys’ fees. As of September 30, 2026, no material amounts have been accrued for indemnification provisions. The Company does not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid under its indemnification arrangements.

The Company also indemnifies its current and former directors and certain current and former officers. Certain costs incurred for providing such indemnification may be recoverable under various insurance policies. The Company is unable to reasonably estimate the maximum amount that could be payable under these arrangements because these exposures are not capped, the obligations are conditional in nature, and the facts and circumstances involved in any situation that might arise are variable.

Note 8. Income Taxes

The following table presents the Company’s income tax (benefit) expense and effective income tax rate (in thousands, except percentages):


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2026			2025			2026			2025

Income tax (benefit) expense	$	(1,421	)	$	254		$	(1,023	)	$	(101	)
Effective income tax rate		(47.9	%)		12.9	%		5.3	%		5.1	%

The Company recorded income tax benefits of $1.4 million and $1.0 million for the three and nine months ended September 30, 2026, respectively. The year-to-date benefit reflects the application of the estimated annual effective tax rate to the year-to-date pretax loss, partially offset by discrete tax expense related to uncertain tax positions and stock-based compensation. The third-quarter benefit includes the cumulative adjustment to the year-to-date provision based on the estimated annual effective tax rate. The Company’s income tax positions, including the assessment of valuation allowances and uncertain tax positions, remain largely consistent with those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The Company continues to maintain a valuation allowance on its net U.S. deferred tax assets while periodically reassessing the need for it.

The Company recognizes only those tax positions that meet the more-likely-than-not recognition threshold and establishes tax reserves for uncertain tax positions that do not meet this threshold. Interest and penalties associated with income tax matters are included in the provision for income taxes in the condensed consolidated statements of operations. As of September 30, 2026, the Company had uncertain tax positions of $2.2 million, inclusive of $0.4 million of interest and penalties.

As required by the authoritative guidance on accounting for income taxes, the Company evaluates the realizability of deferred tax assets on a jurisdictional basis at each reporting date. Accounting for income taxes requires that a valuation allowance be established when it is more likely than not that all or a portion of the deferred taxes will not be realized. The Company considers all positive and negative evidence in determining if, based on the weight of such evidence, a valuation allowance is required. In circumstances where there is sufficient negative evidence indicating that the deferred tax assets are not more likely than not realizable, the Company establishes a valuation allowance. Due to

the significant 2022 pre-tax loss, coupled with cumulative book losses, the Company recorded a valuation allowance on its net U.S. deferred tax assets as of December 31, 2022. The Company continues to maintain this valuation allowance for the three and nine months ended September 30, 2026. The Company will continue to evaluate all available positive and negative evidence in future periods to assess the realizability of its deferred tax assets and the need for a valuation allowance. Should facts and circumstances change, the Company may adjust its valuation allowance and record income tax expense or benefit in future periods.

The Company is subject to income taxes domestically and in various foreign jurisdictions. The Company files U.S., state and foreign income tax returns in jurisdictions with various statutes of limitations. The federal tax years open under the statute of limitations are 2022 through 2025, and the state tax years open under the statute of limitations are 2022 through 2024, and the foreign tax years open under the statute of limitations are 2022 through 2025.

Note 9. Equity and Stock-Based Compensation

Stock Repurchase Activity

On May 7, 2025, the Company's Board of Directors (the "Board") authorized a stock repurchase program to acquire up to $75 million of Company common stock. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements, restrictions in the Company’s debt agreements and other factors. The Company intends to fund the share repurchases using cash from operations or borrowings and may suspend or discontinue repurchases at any time. The share repurchase program expires on May 6, 2027.

The Company did not repurchase any shares of its common stock during the three months ended September 30, 2026 and incurred no associated costs. During the three months ended September 30, 2025, the Company repurchased 712,205 shares of its common stock for a total cost of $10.3 million. The Company repurchased 2,156,341 and 1,205,724 shares of its common stock in the nine months ended September 30, 2026 and 2025, respectively, for a total cost of $27.2 million and $17.0 million, respectively.

Stock-Based Compensation

Total stock-based compensation expense for employees and non-employees, related to all of the Company’s stock-based awards, was as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2026		2025		2026		2025

Cost of revenue	$	101	$	110	$	328	$	416
Selling and marketing		231		253		686		1,377
Research and development		159		196		590		987
General and administrative		555		827		2,078		1,526
Total stock-based compensation	$	1,046	$	1,386	$	3,682	$	4,306

The following table summarizes the total unrecognized stock-based compensation expense and remaining recognition period by Restricted Stock Units (“RSUs”) and Performance Stock Units (“PSUs”) (in thousands, except number of years):


	September 30, 2026
	Unrecognized Expense		Remaining weighted average period (In years)

RSUs	$	6,724		2.7
PSUs		2,842		1.4
Total unrecognized stock-based compensation expense	$	9,566

The following table presents the stock activity and the total number of shares available for grant as of September 30, 2026:


	Number of Shares Available
Balance at December 31, 2025		1,849,094
Grants		(648,464	)
Cancelled		291,644
Balance as of September 30, 2026		1,492,274

Stock Option Activity


	Options Outstanding
	Number of Shares Underlying Outstanding Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
						(in years)
Outstanding at December 31, 2025		390,969		$	10.23		3.43	$	2,174,529
Options Granted		—			—
Options Exercised		(67,378	)		6.18
Options Forfeited		(8,584	)		17.54
Outstanding at September 30, 2026		315,007		$	10.61		2.57	$	1,299,090
Vested and expected to vest at September 30, 2026		315,007		$	10.61		2.57	$	1,299,090
Exercisable at September 30, 2026		315,007		$	10.61		2.57	$	1,299,090

Stock options generally vested in accordance with the terms of the applicable award agreements and are exercisable for up to ten years once vested. Vested options must be exercised within 90 days following a participant’s termination of service or they are forfeited.

There have been no options granted since the fiscal year 2021.

Restricted Stock Activity


	Shares			Weighted Average Grant Date Fair Value Per Share
Nonvested restricted stock at December 31, 2025		695,367		$	14.19
Granted		451,184			10.39
Vested		(294,643	)		15.29
Forfeited		(178,174	)		14.21
Nonvested restricted stock at September 30, 2026		673,734		$	11.16

Performance-Based Restricted Share Activity


	Number of Shares Underlying Outstanding Performance Shares			Weighted Average Grant Date Fair Value Per Share

Outstanding at December 31, 2025		160,127		$	14.63
Granted		197,280			10.22
Released		(45,443	)		13.08
Forfeited		(105,667	)		11.74
Outstanding at September 30, 2026		206,297		$	10.89

The outstanding PSUs as of September 30, 2026 were comprised of 13,925, 21,999 and 170,373 performance shares that were granted on April 1, 2024, 2025 and 2026, respectively. With respect to the PSUs that were granted on April 1, 2026, the vesting is conditional based on the achievement of certain key financial and corporate strategic targets for the year ended December 31, 2026, and continued service over a three-year period. The number of units that could be earned ranged from 0% to 150% of the target shares depending on the achievement of these targets. The number of PSUs to be earned is subject to approval by the Board after the completion of the performance period based on the Company’s 2026 performance over the performance period. Approximately 17,886, 15,356, and 12,201 performance shares were released during the nine months ended September 30, 2026 relating to shares that were granted on April 1, 2023, 2024, and 2025, respectively. Earned PSUs typically vest with 33%, 33% and 34% of the earned PSU shares over the first, second and third year of the requisite vesting period, respectively.

Warrants

In January 2026, the holders exercised 550,000 wholly-funded warrants for an equal number of shares of the Company's common stock, which related to a series of transactions pursuant to the retirement of Series B preferred stock in 2018. Upon exercise, no warrants remained outstanding.

Note 10. Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share of common stock attributable to common stockholders (in thousands, except per-share data):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2026		2025		2026			2025

Net income (loss)	$	4,386	$	1,717	$	(18,131	)	$	(1,878	)

Weighted average common shares outstanding — Basic		17,926		20,073		18,863			20,413
Plus incremental shares from assumed conversions:
Effect of dilutive securities		271		333		—			—
Weighted average common shares outstanding — Diluted		18,197		20,406		18,863			20,413
Net income (loss) per share:
Basic	$	0.24	$	0.09	$	(0.96	)	$	(0.09	)
Diluted	$	0.24	$	0.08	$	(0.96	)	$	(0.09	)

Incremental shares from stock options and restricted stock are computed by the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of restricted stock, reduced by the repurchase of shares with the proceeds from the assumed exercises and unrecognized compensation expense for outstanding awards.

The weighted average shares listed below were not included in the computation of diluted earnings per common share because to do so would have been anti-dilutive for the periods presented or were otherwise excluded under the treasury stock method:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2026		2025		2026		2025

Stock options		52		57		359		589
Restricted stock		78		255		712		701
Total		130		312		1,071		1,290

Note 11. Segment Information

The Company operates in a single reportable segment. The Company’s chief operating decision maker is its Chief Executive Officer. The Chief Executive Officer regularly reviews operating loss and net loss for the Company’s single reportable segment when assessing performance and making resource allocation decisions. Operating loss, which is the segment profit or loss measure most consistent with the measurement principles used in the Company’s consolidated financial statements, is used to evaluate the results of the Company’s core operations before the effects of interest expense, other income or expense, and income taxes. Net loss is also reviewed by the Chief Executive Officer to evaluate overall consolidated performance after these items. Because the Company has one reportable segment, the segment measures reviewed by the Chief Executive Officer are consistent with the corresponding consolidated measures presented in the Company’s condensed consolidated statements of operations.

The following table represents total net revenue based on where customers are physically located (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2026		2025		2026		2025

Americas	$	65,494	$	61,673	$	136,082	$	151,546
Europe and Middle East		15,921		16,478		39,009		40,938
Asia Pacific		3,288		2,306		8,149		8,651
Total net revenue	$	84,703	$	80,457	$	183,240	$	201,135

The following table reflects the significant expenses of the Company's reportable segment for the following periods (in thousands):


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2026			2025			2026			2025

Net revenue	$	84,703		$	80,457		$	183,240		$	201,135
Significant segment expenses:
Cost of revenue		55,109			50,399			120,489			129,448
Sales		7,158			5,843			18,539			17,998
Marketing		7,830			6,670			23,409			19,699
Research and development		4,553			4,161			13,940			12,625
General and administrative		5,340			7,541			19,654			23,111
Other (recovery) costs (1)		(1,172	)		476			(1,564	)		(8,320	)
Operating income (loss)		5,885			5,367			(11,227	)		6,574
Interest expense, net		2,707			3,718			7,742			7,773
Other expense (income), net		213			(322	)		185			780
Income tax (benefit) expense		(1,421	)		254			(1,023	)		(101	)
Net income (loss)		4,386		$	1,717			(18,131	)	$	(1,878	)

(1) Other (recovery) costs in the three and nine months ended September 30, 2026 and 2025 include acquisition-related costs and an insurance recovery.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our operations and financial condition of Turtle Beach Corporation ("we," "us," "our," the "Company," "Turtle Beach") should be read together with our unaudited condensed consolidated financial statements and the related notes included in Part I of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 12, 2026 (the “Annual Report.”)

This Quarterly Report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this report are indicated by words such as “anticipates,” “expects,” “believes,” “intends,” “plans,” “estimates,” “projects,” “strategies” and similar expressions or negatives thereof. Caution should be taken not to place undue reliance on any such forward-looking statements because they involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such statements. Forward-looking statements are based on the beliefs, as well as assumptions made by, and information currently available to, the Company's management and are made only as of the date hereof. The Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the federal securities laws. In addition, forward-looking statements are subject to certain risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” of the Annual Report and elsewhere in this Quarterly Report on Form 10-Q that could cause actual results to differ materially from the Company's historical experience and its present expectations or projections.

Overview

We are a premier audio and gaming technology company with expertise and experience in developing, commercializing, and marketing innovative products across a range of large addressable markets under our brand, Turtle Beach. The Turtle Beach® brand is a market share leader in console gaming headsets for over 16 years running with a vast portfolio of headsets designed to be multiplatform compatible with the latest Xbox, PlayStation, and Nintendo consoles, as well as for PCs and mobile and tablet devices. Our PC product portfolio includes PC gaming headsets, keyboards, mice, microphones and other PC gaming peripherals and in 2021 we expanded our brand beyond gaming headsets and launched our gaming controller product line, as well as, flight simulation and racing simulation accessories. In 2024, we acquired PDP, another leading gaming accessory brand with a robust slate of products, including gaming controllers for all major platforms and licensing deals with popular gaming and entertainment properties. We are headquartered in San Diego, California, and were incorporated in the State of Nevada in 2010.

Business Trends

We operate in a nearly $200.0 billion global games and accessories market, according to the Newzoo Peripheral Market Forecast. The global gaming audience now exceeds global cinema and music markets with over 3.5 billion active gamers worldwide. Gaming peripherals, such as headsets, controllers, keyboards, mice, microphones, and flight and racing simulation controls are estimated to be an $11.2 billion business globally.

The console and PC gaming accessory markets are also driven by major game launches and long-running franchises that encourage players to continually buy equipment and accessories. On Xbox, PlayStation, Nintendo Switch, and PC, flagship games like Call of Duty, Destiny, Star Wars: Battlefront, Grand Theft Auto, Battlefield, and battle royale games like Fortnite, Call of Duty Warzone, Apex Legends, and PlayerUnknown’s Battlegrounds, are examples of major franchises that prominently feature online multiplayer modes that promote player-to-player communication and drive increased demand for gaming headsets, controllers, and more. Many of these established franchises launch new titles annually, leading into the holidays and beyond, and as a result can cause an additional boost to the normally strong holiday sales for gaming accessories.

Additionally, some larger franchise games, for example Call of Duty and Fortnite, follow-up with multiple post-launch downloadable content or new content update packs, to keep interest and fan engagement/momentum going for months following a game’s initial release. Many gamers play online where a gaming headset, which includes a microphone, is required because it allows players to communicate with each other in real-time, provides a more immersive experience, and delivers a competitive advantage.

Further, June 2025 saw the launch of the highly anticipated Nintendo Switch 2 game system in the U.S., which debuted as the fastest-selling video game console launch of all time, with the largest launch month sales for any new gaming platform.

Tariffs Update

Beginning in 2025, the U.S. implemented a broad-based tariff framework applicable to most imports, with higher country- and product-specific rates imposed on certain trading partners, including Mexico, Germany, and China, among others. Certain foreign jurisdictions also announced

reciprocal measures. In February 2026, the U.S. Supreme Court held that the International Emergency Economic Powers Act (“IEEPA”) did not authorize the President to impose the challenged tariffs. Following the Supreme Court’s decision and related proceedings, the U.S. Court of International Trade issued orders establishing processes and procedures affecting potential refunds of IEEPA-related duties.

During the nine months ended September 30, 2026, we received tariff refunds totaling $8.2 million from the U.S. Customs and Border Protection related to previously paid import duties, all of which were recorded as an increase to cash. Of the total amount received, $4.3 million related to tariffs recognized in cost of revenue. Because our right to the refund was established and the refund was received during the second quarter of fiscal year 2026, the amount was recognized as a reduction of cost of revenue during the nine months ended September 30, 2026. We had previously capitalized $3.6 million of tariffs as a component of inventory. Upon receipt of the refund, we recognized a corresponding $3.6 million reduction in the carrying value of inventory. The remaining amount, representing statutory interest on the refunded duties of $0.3 million, was recognized in Other expense (income), net in the accompanying condensed consolidated statements of operations during the nine months ended September 30, 2026.

Various modifications to U.S. tariff policy have been announced since the Supreme Court’s decision, and newly imposed tariffs may affect the Company’s future cost of inventory and operating results. Although the impact to the Company of ongoing changes in U.S. and international tariff policy remains uncertain, the Company continues to evaluate the extent of its exposure and actions available to mitigate any impacts.

Results of Operations

The following table sets forth the Company’s statements of operations for the periods presented (in thousands):


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2026			2025			2026			2025

Net revenue	$	84,703		$	80,457		$	183,240		$	201,135
Cost of revenue		55,109			50,399			120,489			129,448
Gross profit		29,594			30,058			62,751			71,687
Operating expenses		23,709			24,691			73,978			65,113
Operating income (loss)		5,885			5,367			(11,227	)		6,574
Interest expense, net		2,707			3,718			7,742			7,773
Other expense (income), net		213			(322	)		185			780
Income (loss) before income tax		2,965			1,971			(19,154	)		(1,979	)
Income tax (benefit) expense		(1,421	)		254			(1,023	)		(101	)
Net income (loss)	$	4,386		$	1,717		$	(18,131	)	$	(1,878	)

Net Revenue and Gross Profit

The following table summarizes net revenue and gross profit for the periods presented (in thousands):


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2026			2025			2026			2025

Net Revenue	$	84,703		$	80,457		$	183,240		$	201,135
Gross Profit	$	29,594		$	30,058		$	62,751		$	71,687
Gross Margin		34.9	%		37.4	%		34.2	%		35.6	%

Comparison of the Three Months Ended September 30, 2026 to the Three Months Ended September 30, 2025

Net revenue for the three months ended September 30, 2026 was $84.7 million, a $4.2 million or 5.3% increase from $80.5 million for the three months ended September 30, 2025. The increase was primarily attributable to higher unit volumes and an increase in average selling price, partially offset by promotional spend.

For the three months ended September 30, 2026, gross margin decreased to 34.9% from 37.4% in the comparable prior year period. The decrease was primarily due to higher promotional spend and tariffs during the three months ended September 30, 2026. This decrease was partially offset by lower product and operating costs compared with the prior three-month period.

Comparison of the Nine Months Ended September 30, 2026 to the Nine Months Ended September 30, 2025

Net revenue for the nine months ended September 30, 2026 was $183.2 million, a decrease of $17.9 million, or 9%, from $201.1 million. The decrease was primarily attributable to softer market demand for gaming accessories, which was driven in part by macroeconomic challenges affecting consumer spending.

For the nine months ended September 30, 2026, gross margin slightly decreased to 34.2% from 35.6% in the comparable prior year period. Gross profit for the nine months ended September 30, 2026 included a $4.3 million reduction to cost of revenue related to the tariff refund received during the period, of which $3.1 million related to cost of revenue recognized in 2025. The year-over-year decrease in gross margin was primarily due to higher costs from certain product mix and transition-related costs associated with the relocation of our principal third-party logistics provider, partially offset by the tariff refund benefit.

Operating Expenses


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2026			2025		2026			2025
(in thousands)
Selling and marketing	$	14,988		$	12,513	$	41,948		$	37,697
Research and development		4,553			4,161		13,940			12,625
General and administrative		5,340			7,541		19,654			23,111
Subtotal operating expenses		24,881			24,215		75,542			73,433
Insurance recovery		(1,172	)		—		(1,564	)		(9,404	)
Acquisition-related cost		—			476		—			1,084
Total operating expenses	$	23,709		$	24,691	$	73,978		$	65,113

Selling and Marketing

Selling and marketing expenses increased by $2.5 million, or 19.8%, for the three months ended September 30, 2026 as compared to the same period in the prior year primarily due to higher marketing initiatives and strategic brand positioning.

Selling and marketing expenses increased by $4.3 million, or 11.3%, for the nine months ended September 30, 2026 as compared to the same period in the prior year primarily due to higher marketing initiatives and strategic brand positioning, partially offset by lower employee-related costs.

Research and Development

Research and development costs increased by $0.4 million or 9.4%, for the three months ended September 30, 2026 as compared to the same period in the prior year due to engineering costs related to new products, partially offset by lower legal fees.

Research and development costs increased by $1.3 million or 10.4%, for the nine months ended September 30, 2026 as compared to the same period in the prior year due to engineering costs related to new products, partially offset by lower legal fees.

General and Administrative

General and administrative expenses decreased by $2.2 million or 29.2%, for the three months ended September 30, 2026 as compared to the same period in the prior year primarily due to the reduction in employee-related expense, partially offset by technology-related cost.

General and administrative expenses decreased by $3.5 million or 15.0%, for the nine months ended September 30, 2026 as compared to the same period in the prior year primarily due to the reduction in employee-related expense, partially offset by legal fees.

Insurance recovery

Insurance recovery for the three and nine months ended September 30, 2026 was $1.2 million and $1.6 million, respectively. Insurance recovery for the nine months ended September 30, 2025 was $9.4 million, and relates to the receipt of certain insurance claims from the previously disclosed loss of inventory while in transit that occurred in the fourth quarter of 2024. There was no insurance recovery for the three months ended September 30, 2025.

Acquisition-related cost

Acquisition-related costs include one-time costs incurred in connection with the PDP acquisition including professional fees such as legal and accounting along with other certain other integration-related costs.

Interest expense

Interest expense decreased by $1.0 million, or 27.2% to $2.7 million for the three months ended September 30, 2026 from $3.7 million for the three months ended September 30, 2025, and decreased by $0.03 million, or 0.4%, to $7.7 million for the nine months ended September 30, 2026 from $7.8 million for the nine months ended September 30, 2025. The decrease during the three months ended September 30, 2026 was primarily attributable to the absence of a $1.9 million loss on extinguishment of debt recognized in the three months ended September 30, 2025, partially offset by a $0.9 million increase in contractual interest expense primarily associated with 2026 Term Loan facility. Interest expense remained relatively consistent for the nine months ended September 30, 2026. A $0.5 million increase in contractual interest expense primarily associated with the 2026 Term Loan facility, was partially offset by $0.4 million of interest income.

Income Taxes

Income tax benefit for the three months ended September 30, 2026 was $1.4 million at an effective tax rate of (47.9%) compared to income tax expense of $0.3 million for the three months ended September 30, 2025 at an effective tax rate of 12.9%. The effective tax rate for the three months ended September 30, 2026 was primarily impacted by the change in U.S. valuation allowance, foreign taxes and Federal and State current tax. The effective tax rate for the three months ended September 30, 2025 was primarily impacted by the change in U.S. valuation allowance and foreign taxes.

Income tax benefit for the nine months ended September 30, 2026 was $1.0 million at an effective tax rate of 5.3% compared to income tax benefit of $0.1 million for the nine months ended September 30, 2025 at an effective tax rate of 5.1%. The effective tax rate for the nine months ended September 30, 2026 was primarily impacted by the change in U.S. valuation allowance, foreign taxes and Federal and State current tax. The effective tax rate for the nine months ended September 30, 2025 was primarily impacted by the change in U.S. valuation allowance, foreign taxes and Federal and State current tax.

Key Performance Indicators and Non-GAAP Measures

Management routinely reviews key performance indicators, including revenue, operating income and margins, and earnings per share, among others. In addition, we believe certain other measures provide useful information to management and investors about us and our financial condition and results of operations for the following reasons: (i) they are measures used by our Board and management team to evaluate our operating performance; (ii) they are measures used by our management team to make day-to-day operating decisions; (iii) the adjustments made are often viewed as either non-recurring or not reflective of ongoing financial performance and/or have no cash impact on operations; and (iv) the measures are used by securities analysts, investors and other interested parties as a common operating performance measure to compare results across companies in our industry by adjusting for potential differences caused by variations in capital structures (affecting relative interest expense), and the age and book value of facilities and equipment (affecting relative depreciation and amortization expense). These other metrics, however, are not measures of financial performance under accounting principles generally accepted in the United States of America (“GAAP”) and given the limitations of these metrics as analytical tools, should not be considered a substitute for gross profit, gross margins, net income (loss) or other consolidated income statement data as determined in accordance with GAAP.

We believe that the presentation of Adjusted EBITDA, defined as net income (loss) before interest, taxes, depreciation and amortization, stock-based compensation (non-cash) and certain non-recurring special items that we believe are not representative of core operations, is appropriate to provide additional information to investors about our operating profitability adjusted for certain non-cash items or non-routine items that we do not expect to continue at the same level in the future, as well as other items that are not core to our operations. Further, we believe Adjusted EBITDA provides a meaningful measure of operating profitability because we use it for evaluating our business performance, making budgeting decisions, and comparing our performance against that of other peer companies using similar measures. However, Adjusted EBITDA is not a measure of financial performance under GAAP and, given the limitations of these metrics as analytical tools, should not be considered a substitute for gross profit, gross margin, net income (loss) or other consolidated income statement data as determined in accordance with GAAP.

Adjusted EBITDA (and a reconciliation to Net loss, the nearest GAAP financial measure) for the three and nine months ended September 30, 2026 and September 30, 2025 are as follows (in thousands):


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2026			2025			2026			2025

Net income (loss)	$	4,386		$	1,717		$	(18,131	)	$	(1,878	)
Interest expense, net		2,707			3,718			7,742			7,773
Depreciation and amortization		2,552			3,086			8,189			9,310
Stock-based compensation		1,046			1,386			3,682			4,306
Income tax (benefit) expense		(1,421	)		254			(1,023	)		(101	)
Restructuring expense (1)		81			347			478			477
Acquisition-related costs (2)		—			476			—			1,084
(Recovery) loss on inventory in transit and other costs		(506	)		—			(506	)		605
Professional fees, litigation and other (3)		374			(9	)		3,590			(191	)
Insurance recovery (4)		(1,117	)		—			(1,117	)		(9,404	)
Adjusted EBITDA	$	8,102		$	10,975		$	2,904		$	11,981

(1)

Restructuring expenses are costs in connection with reorganization of operations. These costs primarily include severance and related benefits.

(2)

Costs in connection with reorganization of operations which primarily include severance, related benefits and post-acquisition costs related to the PDP acquisition.

(3)

Professional fees related to potential acquisition opportunities, warehouse relocation and certain litigation proceedings fees.

(4)

Insurance proceeds from claims related to a loss of inventory while in transit.

Liquidity and Capital Resources

Our primary sources of working capital are cash flow from operations and availability of capital under our Credit Agreement. We have funded operations and acquisitions in recent periods with operating cash flows and proceeds from debt and equity financings.

The following table summarizes our sources and uses of cash (in thousands):


	Nine Months Ended
	September 30,
	2026			2025

Cash and cash equivalents at beginning of period	$	16,963		$	12,995
Net cash provided by operating activities		29,459			22,121
Net cash (used in) provided by investing activities		(1,767	)		1,346
Net cash used in financing activities		(33,470	)		(24,476	)
Effect of exchange rate changes on cash and cash equivalents		3			271
Cash and cash equivalents at end of period	$	11,188		$	12,257

Cash Flows from Operating activities

Cash provided by operating activities was $29.5 million for the nine months ended September 30, 2026, an increase of $7.3 million from $22.1 million of cash provided by operating activities for the nine months ended September 30, 2025. The $7.3 million increase was primarily driven by $26.2 million of favorable working capital changes, including favorable changes of $16.0 million in accounts payable, $15.6 million in accrued liabilities and $14.1 million in inventories. These benefits were partially offset by a $16.3 million increase in net loss, a $2.6 million decrease in non-cash adjustments and a $20.8 million unfavorable change in accounts receivable. Operating cash flows for the current period also benefited from the receipt of $8.2 million of tariff refunds.

Cash provided by operating activities for the nine months ended September 30, 2025 was $22.1 million, primarily due to higher gross receipts, insurance proceeds from claims related to a loss of inventory, lower acquisition-related costs and reduced spending levels.

Cash Flows from Investing activities

Cash used in investing activities was $1.8 million for the nine months ended September 30, 2026, which was primarily related to purchase of property and equipment.

Cash provided by investing activities was $1.3 million for the nine months ended September 30, 2025 primarily driven by $2.5 million of cash acquired in relation to the acquisition of the PDP business.

Cash Flows from Financing activities

Net cash used in financing activities was $33.5 million during the nine months ended September 30, 2026 compared to net cash used by financing activities of $24.5 million during the nine months ended September 30, 2025. Financing activities during the nine months ended September 30, 2026 consisted primarily of $29.5 million of repayments of the revolving credit facility, $57.8 million of repayments of the term loan, and $27.2 million of repurchases of common stock. These repayments and repurchases were partially offset by $82.5 million of proceeds from the term loan related to the 2026 Credit Agreement.

Net cash used for financing activities was $24.5 million during the nine months ended September 30, 2025, which consisted primarily of $15.9 million revolving credit facility net repayments, $17.0 million of share repurchases, $2.3 million of debt financing costs and $8.9 million of term loan net proceeds.

Management assessment of liquidity

Management believes that our current cash and cash equivalents, the amounts available under our 2026 Revolving Credit Facility and cash flows derived from operations are expected to be sufficient to meet our anticipated short-term and long-term funding requirements for working capital and capital expenditures including amounts to develop new products, scheduled debt service, fund future stock repurchases and to pursue strategic opportunities. This assessment considers the liquidity available under the 2026 Revolving Credit Facility after giving effect to borrowing-base availability, letters of credit and applicable reserves, as well as our required compliance with financial covenants under our debt facilities. Significant assumptions underlie this belief, including, among other things, that there will be no material adverse developments in our business, liquidity or capital requirements, or strategic opportunities that require additional capital.

In addition, the Company monitors the capital markets on an ongoing basis and may consider raising capital if favorable market conditions develop.

Foreign cash balances at September 30, 2026 and December 31, 2025 were $3.5 million and $8.7 million, respectively.

2024 Revolving Credit Facility

In 2024, we maintained a Revolving Credit Facility (the “2024 Revolving Credit Facility”) with Bank of America, N.A. (“Bank of America”) that provided up to $50.0 million in borrowing capacity, including a $10.0 million sub-facility for Turtle Beach Europe Limited, and was secured by substantially all Company assets. On March 13, 2024, the Company entered into a Fourth Amendment, dated as of March 13, 2024 (the “Fourth Amendment”), to the 2024 Revolving Credit Facility. We executed a Fourth Amendment to the facility, extending the maturity to March 13, 2027, incorporating Performance Designed Products LLC (“PDP”) acquisition assets into the U.S. Borrowing Base and updating interest rate and fee terms. The facility included customary covenants, including a minimum fixed-charge coverage ratio when availability thresholds were not met, and restrictions on additional indebtedness, dividends, share repurchases, certain investments, mergers, and asset sales.

On August 1, 2025, we entered into the 2025 Credit Facility, defined and discussed below, and repaid in full the amount then-outstanding under the 2024 Revolving Credit Facility. We treated the 2025 Credit Facility as a partial extinguishment of the 2024 Revolving Credit Facility and recognized a loss on extinguishment of debt of $0.3 million to write-off the unamortized deferred financing costs in interest expense in its condensed consolidated statements of operations.

2024 Term Loan Facility

In March 2024, we entered into a $50.0 million Term Loan Facility (the “2024 Term Loan Facility”) with Blue Torch Finance, LLC (“Blue Torch”) to support the PDP acquisition, repay certain indebtedness of the acquired business, cover transaction‑related fees, and provide general corporate liquidity. The facility was being amortized over its term, was secured by substantially all Company assets, and carried a prepayment premium that expired in March 2025.

On August 1, 2025, we entered into the 2025 Credit Facility and repaid in full the amount then-outstanding under the 2024 Term Loan Facility for the amount of $43.2 million. We treated the repayment as a debt extinguishment and recognized a loss on extinguishment of debt of $1.7 million to write-off the unamortized deferred financing costs in interest expense in the condensed consolidated statements of operations.

2025 Credit Facility

On August 1, 2025, we and certain of our subsidiaries entered into a Credit Agreement with Bank of America, as the administrative agent, the swingline lender and the line of credit issuer ("the 2025 Credit Facility"). The 2025 Credit Facility was to mature on August 1, 2028 and included a $60 million term loan facility and a $90 million revolving credit facility with designated sub-facility limits of (i) $15 million for the U.K. Borrower, (ii) $10 million for a swingline facility and (iii) $5 million for letters of credit. Actual credit availability under the revolving facility was subject to a borrowing base limitation that was calculated based on a percentage of eligible trade accounts receivable and inventories, the balances of which fluctuate, and was subject to discretionary reserves and revaluation adjustments. The 2025 Credit Facility may have been used for borrowings as well as for the issuance of letters of credit, repaying existing indebtedness outstanding as of the effective date of the 2025 Credit Facility and ongoing working capital and general corporate purposes as defined by the Credit Agreement governing the 2025 Credit Facility. The 2025 Credit Facility replaced our previous debt arrangements at that time.

On April 30, 2026, we repaid in full the amount then-outstanding under the 2025 Credit Facility in connection with the 2026 Term Loan Facility, as defined and described below. As part of the repayment, we recognized a loss on extinguishment of debt of $1.8 million to write-off the unamortized deferred financing costs in interest expense in our condensed consolidated statements of operations.

2026 Term Loan Facility

On April 30, 2026, we entered into a new financing agreement (the "2026 Term Loan Financing Agreement") by and among us, Voyetra Turtle Beach, Inc. (“VTB"), as borrower, each of our subsidiaries listed as a guarantor on the signature pages thereto, the lenders from time to time party thereto, and Blue Torch, as administrative agent and collateral agent, pursuant to which Blue Torch made a loan to VTB in the aggregate amount of $85.0 million (the "2026 Term Loan Facility"), the proceeds of which were used to or will be used to (a) refinance existing indebtedness of ours and our subsidiaries; (b) for general corporate purposes; and (c) to pay fees and expenses related to the loan transactions. The 2026 Term Loan Facility will amortize in a quarterly amount equal to 1.25% of the aggregate original principal amount of the 2026 Term Loan Facility. Any prepayment, or any acceleration or other repayment in connection with an insolvency proceeding, occurring during the first twelve months following the closing date will be subject to a prepayment premium equal to (i) the interest that would otherwise have accrued on the principal amount being repaid through the twelve-month anniversary of the closing date, plus (ii) 3.00% of the principal amount being repaid, provided that no such premium applies to regularly scheduled quarterly amortization payments or to certain prepayments specified in the 2026 Term Loan Financing Agreement. The 2026 Term Loan Facility is secured by substantially all of our assets and those of our subsidiaries which are party to the 2026 Term Loan Facility.

2026 Revolving Credit Facility

On April 30, 2026, we entered into a Loan, Guaranty and Security Agreement (the “2026 Revolving Credit Agreement"), by and among us, VTB, TBC Holding Company LLC, PDP, Turtle Beach Europe Limited, VTB Holdings, Inc., Tide Acquisition Sub II, LLC, the financial institutions party thereto and Bank of America, as agent, collateral agent and security trustee for the lenders to the credit facility (the "2026 Revolving Credit Facility"). The 2026 Revolving Credit Agreement provides for, among other things: (a) subject in each case to the applicable borrowing base, a US commitment in an amount equal to $50.0 million or $65.0 million based on the season and a UK commitment equal to $10.0 million or $15.0 million based on the season; (b) a maturity date of April 30, 2029; (c) interest rate and margin terms such that the loans will bear interest at a rate equal to (1) SOFR, (2) the US Base Rate, (3) SONIA for loans denominated in Sterling, and (4) EURIBOR for loans denominated in Euros, plus in each case, an applicable margin, which is between 0.50% and 1.00% for US Base Rate Loans and 1.50% and 2.00% for US Term SOFR Loans, UK SONIA Rate Loans and UK EURIBOR Loans; and (d) certain affirmative and negative covenants and a springing (subject to certain triggers) fixed charge coverage ratio. The obligations under the 2026 Revolving Credit Agreement are secured by substantially all of our assets and those of our subsidiaries which are party to the 2026 Revolving Credit Agreement.

As of September 30, 2026, we were in compliance with all the financial covenants under the Credit Facility, as amended, and excess borrowing availability was approximately $61.5 million.

As part of the 2026 Credit Facility, we recorded an aggregate amount of deferred debt financing costs of $1.2 million in our condensed consolidated balance sheet.

Critical Accounting Estimates

Our discussion and analysis of our results of operations and capital resources are based on our consolidated financial statements, which have been prepared in conformity with GAAP. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities. Management bases its estimates, assumptions and judgments on historical experience and on various other factors that it believes to be reasonable under the circumstances.

Different assumptions and judgments would change the estimates used in the preparation of the condensed consolidated financial statements, which, in turn, could change the results from those reported. Management evaluates its estimates, assumptions and judgments on an ongoing basis. For a discussion of the critical estimates that affect the condensed consolidated financial statements, see “Critical Accounting Estimates” included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

See Note 2, “Summary of Significant Accounting Policies,” to the unaudited condensed consolidated financial statements contained herein for a complete discussion of recent accounting pronouncements. We are currently evaluating the impact of certain recently issued guidance on our financial condition and results of operations in future periods.

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in interest rates, foreign currency exchange rates and inflation.

We have used derivative financial instruments, specifically foreign currency forward and option contracts, to manage exposure to foreign currency risks, by hedging a portion of our forecasted expenses denominated in British Pounds expected to occur within a year. The effect of exchange rate changes on foreign currency forward and option contracts is expected to offset the effect of exchange rate changes on the underlying hedged item. We do not use derivative financial instruments for speculative or trading purposes. As of September 30, 2026 and December 31, 2025, we did not have any derivative financial instruments.

Interest Rate Risk

As of September 30, 2026, we had cash of $11.2 million, which consisted primarily of bank deposits. Our cash is held for working capital purposes.

We are exposed to interest rate risk primarily through borrowings under our 2026 Term Loan Facility and 2026 Revolving Credit Facility, each of which bears interest at variable rates. The applicable interest rate depends on the facility and loan type and is calculated as a floating benchmark rate plus an applicable margin. Borrowings under the 2026 Term Loan Facility accrue interest at a base rate (for Reference Rate Loans) or SOFR (for SOFR Loans), plus an applicable margin that varies based on our total leverage ratio. Borrowings under the 2026 Revolving Credit Facility accrue interest at SOFR or the US Base Rate for U.S. dollar loans, SONIA for loans denominated in Sterling or EURIBOR for loans denominated in Euros, plus an applicable margin ranging from 0.5% to 1.0% for US Base Rate loans and from 1.5% to 2.0% for SOFR, SONIA and EURIBOR loans. Because these benchmark rates fluctuate with market conditions, our interest expense will increase or decrease as the underlying reference rates change. As of September 30, 2026, under the 2026 Term Loan Facility, we had $82.9 million of outstanding balance at face value. A 100 basis-point change in applicable benchmark interest rates would increase or decrease our annual interest expense by approximately $0.8 million based on $82.9 million of variable-rate borrowings outstanding.

Foreign Currency Exchange Risk

We have exchange rate exposure primarily with respect to the British Pound and Euro. As of September 30, 2026 and December 31, 2025, our monetary assets and liabilities that are subject to this exposure are immaterial, therefore the potential immediate loss to us that would result from a hypothetical 10% change in foreign currency exchange rates would not be expected to have a material impact on our earnings or cash flows. This sensitivity analysis assumes an unfavorable 10% fluctuation in the exchange rates affecting the foreign currencies in which monetary assets and liabilities are denominated and does not take into account the offsetting effect of such a change on our foreign currency denominated revenues.

Inflation Risk

We remain exposed to market risk driven by inflationary pressures affecting our costs and demand for the products we sell. Such inflationary pressures have been and could continue to be exacerbated by continued high tariffs, higher oil prices, geopolitical turmoil, and economic policy actions and could lead to a recessionary environment. In recent years, our business has been affected by volatile global supply chain constraints and unfavorable changes in economic or political conditions in the countries and markets where we operate. Our financial performance continues to be influenced by shifting economic and political landscapes, most notably regarding evolving U.S. trade policies. The incremental tariffs have had and may continue to have an adverse impact on our results of operations.

Inflationary pressures can also have a negative impact on demand for the products we sell. Reduced or delayed discretionary spending by consumers in response to inflationary pressures has reduced consumer demand for our products, and may result in reduced sales.

The global and regional economic and political conditions, as well as changes in trade policies, have caused and may continue to cause volatility in demand for our products as well as the cost of tariffs, materials and logistics, and transportation delays, and as a result have impacted and may continue to impact the pricing of our products, product availability and our results of operations.

We continue to experience the impacts of elevated market interest rates and broader inflationary pressures. Higher market interest rates directly increase our borrowing costs, while inflationary pressures have contributed to increased costs for materials, freight and logistics, and third-party service providers, which have affected our cost of revenue, selling expenses, and general and administrative expenses. These cost increases have had, and may continue to have, a negative impact on our profit margins if we are unable to offset them through pricing actions, operational efficiencies, or other cost-mitigation measures.

Item 4 - Controls and Procedures

Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), are designed to ensure that (1) information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (2) that such information is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures.

At the conclusion of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision of our Principal Executive Officer (or PEO) and our Principal Financial Officer (or PFO), of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our PEO and PFO concluded that our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, were ineffective as of September 30, 2026.

Changes in Internal Control over Financial Reporting

We are in the process of remediating the material weaknesses identified and discussed in Part II, Item 9A. Controls and Procedures of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. During the period covered by this report, management considered the impact of the Company’s new debt facilities, tariff-refund accounting, warehouse transition, and interim Chief Financial Officer change on internal control over financial reporting. Based on this assessment, these matters did not result in changes to the design or operation of controls that materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting. Accordingly, other than the ongoing remediation activities related to the previously identified material weaknesses, there were no changes in our internal control over financial reporting during the period covered by this report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies, which may be identified during this process.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Accordingly, effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PART II. OTHER INFORMATION

Item 1 - Legal Proceedings

Please refer to Note 7, “Commitments and Contingencies” in the notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated into this item by reference.

Item 1A - Risk Factors

There have been no material changes in the risk factors set forth in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

On May 7, 2025, our Board authorized a stock repurchase program to acquire up to $75.0 million of Company common stock. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements, restrictions in our debt agreements and other factors. We intend to fund the share repurchases using cash from operations or short-term borrowings and may suspend or discontinue repurchases at any time. The share repurchase program expires on May 6, 2027. During the three months ended September 30, 2026, no shares of common stock were repurchased by us under the share repurchase program. As of September 30, 2026, approximately $30.6 million remains available for future share repurchases under the program authorized by our Board.

Item 5 - Other Information

The Company is providing the following disclosure in lieu of a Current Report on Form 8-K under Item 5.03. On November 2, 2026, the Company filed two Certificates of Withdrawal of Certificate of Designation with the Secretary of State of the State of Nevada (the “Certificates of Withdrawal”). The Certificates of Withdrawal withdrew the Certificates of Designation of Series A Junior Participating Preferred Stock of the Company (the “Series A Preferred Stock”) and Series B Junior Participating Preferred Stock of the Company (the “Series B Preferred Stock”), which were designated in connection with the Company's Rights Agreement dated March 28, 2023, which terminated on June 15, 2023, and its Rights Agreement dated June 9, 2025, which expired on June 9, 2026. No shares of Series A Preferred Stock or Series B Preferred Stock were issued or outstanding at the time of the filing of the Certificates of Withdrawal. Copies of the Certificates of Withdrawal are attached as Exhibits 3.4 and 3.5 for the Series A Preferred Stock and Series B Preferred Stock, respectively, and incorporated herein by reference.

None of our directors or executive officers adopted or terminated a “Rule 10b5-1 trading arrangement”, or a “non-Rule 10b5-1 trading

arrangement” (as each term is defined in Item 408(a) of Regulation S-K) during the three months ended September 30, 2026.

Item 6. Exhibits


3.1			Articles of Incorporation of Turtle Beach Corporation, as amended (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed August 6, 2018).

3.2			Amended and Restated Bylaws of Turtle Beach Corporation, amended and restated as of April 22, 2024 (Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed April 23, 2024).

3.3			Certificate of Designation of Series B Junior Participating Preferred Stock of Turtle Beach Corporation (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed June 9, 2025).

3.4**			Certificate of Withdrawal of Certificate of Designation of Series A Junior Participating Preferred Stock of Turtle Beach Corporation, as filed with the Secretary of State of Nevada on November 2, 2026.

3.5**			Certificate of Withdrawal of Certificate of Designation of Series B Junior Participating Preferred Stock of Turtle Beach Corporation, as filed with the Secretary of State of Nevada on November 2, 2026.

10.1			Turtle Beach Corporation Executive Severance Policy, dated July 28, 2026 (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 3, 2026)

10.2			Severance Agreement, dated July 29, 2026, by and between Turtle Beach Corporation and Megan Wynne (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed August 3, 2026)

31.1 **			Certification of Cris Keirn, Principal Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 **			Certification of Andrew Clipsham, Principal Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 **			Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Cris Keirn, Principal Executive Officer and Andrew Clipsham, Principal Financial Officer.

			Extensible Business Reporting Language (XBRL) Exhibits

101			Interactive Data Files (formatted as Inline XBRL)

104			Cover Page Interactive Data File (embedded within the Inline XBRL document)

** Filed or furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



			TURTLE BEACH CORPORATION

Date:	November 5, 2026	By:	/s/ ANDREW CLIPSHAM
			Andrew Clipsham Interim Chief Financial Officer
			(Principal Financial and Accounting Officer)