Turtle Beach Corporation ($TBCH)

Good afternoon, and welcome to the Turtle Beach Q4 '25 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to hand this conference over to Mr. Jacques Cornet, Investor Relations. Please go ahead.

Thank you, operator. On today's call, we'll be referring to the press release filed this afternoon that details the company's fourth quarter and full year 2025 results, which are available on the news page of the company's Investor Relations website, corp.turtlebeach.com, where you'll also find the latest earnings presentation that supplements the information discussed on today's call. Finally, a recording of the call will be available on the Events and Presentations section of the company's Investor Relations website later today. Please be aware that some of the comments made during this call may include forward-looking statements within the meaning of the federal securities laws. Statements about the company's beliefs and expectations containing words such as may, will, could, believe, expect, anticipate and similar expressions constitute forward-looking statements. These statements involve risks and uncertainties regarding the company's operations and future results that could cause Turtle Beach Corporation's results to differ materially from management's current expectations. While the company believes that its expectations are based upon reasonable assumptions, numerous factors may affect actual results and may cause results to differ materially. So the company encourages you to review the safe harbor statements and risk factors contained in today's press release and in its filings with the Securities and Exchange Commission, including without limitation, its annual report on 10-K and other periodic reports, which identify specific risk factors that also may cause actual results or events to differ materially from those described in our forward-looking statements. The company does not undertake to publicly update or revise any forward-looking statements after this conference call. The company also notes that on this call, it will be discussing non-GAAP financial information. The company is providing that information as a supplement to information prepared in accordance with accounting principles generally accepted in the United States or GAAP. You can find a reconciliation of these metrics to the company's reported GAAP results in the reconciliation tables provided in today's earnings release and presentation. Hosting the call today are Cris Keirn, Chief Executive Officer; and Mark Weinswig, Chief Financial Officer. With that, I'll turn the call over to Cris. Cris?

Thanks, Jacques. Good afternoon, everyone, and welcome to our full year and fourth quarter 2025 earnings call. As we close out 2025, it's clear that this was a year that challenged the broader industry and tested our resilience while also highlighting the discipline of our execution. We navigated a number of external pressures, including global tariff impacts, unexpected softness in the North American gaming and accessories markets and a holiday season that fell short of expectations. While our financial results came in below our guidance range, we made meaningful operational progress that strengthened our competitive position. We gained share in our core Turtle Beach headset brand and laid important groundwork to capitalize on the anticipated accessories, upgrade and replacement cycle, positioning the business for significant growth over the next 24 months. Looking forward, we're encouraged by what we see on the horizon. Grand Theft Auto 6 is currently scheduled for a late 2026 release date and we expect it to be one of the largest and most anticipated video game launches in history. Releases of this magnitude have historically driven substantial increases in gaming engagement and accessory demand across the category. We believe the combination of our product innovation, brand strength and market position will enable us to capitalize on this catalyst as it materializes. While we expect GTA to have a significant impact when launched, we also expect it to help produce a strong replacement cycle for a period beyond launch. Major franchise releases of this scale create extended periods of elevated gaming activity and accessory demand. We're well positioned with our product portfolio and go-to-market strategy to benefit from this dynamic as it unfolds. As we move through 2026 and lap the softer demand environment we've experienced, we're optimistic about the trajectory of our business. Beyond game releases, the industry is also entering a console refresh cycle in the coming years with next-generation platforms expected from major console manufacturers, including Xbox and PlayStation. New console launches have historically driven increased hardware adoption and broader consumer engagement, which typically translates to elevated accessory demand. Supporting these industry catalysts. It is worth spotlighting that over the last year, we've strengthened our product innovation pipeline. We're launching over 50% more new products in 2026 compared to 2025. And with our first significant releases beginning in Q2. Early retailer feedback has been positive, and we believe this accelerated product cadence positions us well to capitalize on the favorable industry dynamics ahead. Of course, capitalizing on these industry catalysts requires operational excellence and a strong foundation, both of which we have built throughout 2025. Despite the external pressures we faced, particularly in Q4, we delivered a number of important accomplishments that demonstrate both the resilience of our organization and the effectiveness of our strategy. I'd like to highlight 3 key achievements from 2025 that underscore the strength of our execution and position Turtle Beach to capitalize on the opportunities ahead. as new games and next-generation hardware are introduced in the exciting upcoming gaming cycle. First, we implemented comprehensive cost optimization initiatives that drove gross margin expansion. For the full year, gross margins increased 270 basis points year-over-year to get to the highest annual level since 2018. This momentum was evident in the fourth quarter where gross margins reached 40.1%, up over 310 basis points year-over-year. These results demonstrate the effectiveness of our operational discipline and focused cost management strategy. Through targeted savings initiatives and improved execution, we were able to protect and expand profitability despite a challenging top line environment. It's worth noting, we achieved these margin improvements while accelerating our pace for upcoming new product launches, as previously mentioned. Second, we effectively navigated a challenging tariff environment and mitigated what could have been significant financial headwinds. Early in 2025, we took proactive steps in anticipation of potential tariff changes building strategic inventory and accelerating our manufacturing diversification efforts. By the end of the second quarter, we had transitioned the majority of our U.S.-bound production to Vietnam, while maintaining China-based operations for non-U.S. markets and select product lines. These actions demonstrate the strength of our strategic planning and supply chain agility and they were instrumental in preserving our margin expansion throughout the year. Third, we strengthened our balance sheet and enhanced shareholder value through a comprehensive refinancing and continued disciplined capital allocation. In August, we refinanced our prior term loan and credit facilities, lowering the base interest rate on our term loan by approximately 450 basis points and generating annual interest savings of more than $2 million. This transaction reduced our cost of capital, improved our financial flexibility and removed previous restrictions on share repurchases, a key pillar of our capital allocation strategy. Taking advantage of that flexibility, we remain active with share repurchases, buying back nearly 1.35 million shares in 2025 for approximately $19 million. Over the past 2 years, we have returned nearly $47 million to shareholders through buybacks. Additionally, we authorized a new 2-year $75 million share repurchase program the largest in company history with more than $58 million of capacity remaining. Before I pass the call over to Mark to walk through the financials in more detail, I wanted to comment on a few strategic and Board-related matters. First, on strategy and capital allocation. Since our highly successful acquisition of PDP in March of 2024, we have actively assessed opportunistic bolt-on acquisitions that could be complementary to our growing platform. We have evaluated many potential acquisition opportunities over that period and have remained disciplined in how we allocate our shareholders' capital. While no new deals have been announced, we continue to assess acquisitions that could make strategic sense for the company over time. Our streamlined operations and strong cash flow characteristics have allowed us to significantly delever from the post-PDP highs of early 2024. This financial strength, combined with the long-term outlook for our business, has led us to pivot our capital allocation priorities. With a strong balance sheet, operations running at strong margins and an outlook as promising as the one that we currently have, we do not believe the equity markets are currently pricing our stock appropriately. Should this disconnect continue, we are evaluating opportunities to enhance our financial flexibility, specifically to support increased share repurchases. This includes exploring options to refinance our existing debt on more favorable terms and potentially expand our borrowing capacity. These actions would provide additional resources to increase the size of our share buyback program. Should the current valuation disconnect persists, we expect to prioritize active and significant repurchasing of our shares in the open market until our stock price better reflects what we believe is fair value or unless a compelling acquisition opportunity presents itself. As we have demonstrated with our capital allocation decisions over the past 2 years, we remain exceptionally disciplined with shareholder capital and focused on maximizing long-term value creation. Lastly, I'd like to comment on the recent updates to our Board of Directors. As you saw in our recent 8-K, Terry Jimenez has stepped down. I want to thank Terry for his contributions during his tenure at Turtle Beach. Will Wyatt, who has served on our Board since 2023 has been appointed Chairman. Will brings deep expertise and has been a valuable contributor to our board. I congratulate Will and look forward to working with him in his expanded role. Our Board of Directors remains focused working with our executive leadership team on driving long-term value creation for our shareholders. With that, Mark will take us through the detailed financial results. Mark?

Thank you, Cris. Fourth quarter net revenue was $118 million, a decline of 19% year-over-year compared to $146.1 million in the prior year period. This decline reflects the recent softness in the gaming accessories markets. In the fourth quarter, we delivered strong gross margin performance. Fourth quarter gross margins reached 40.1%, a year-over-year improvement of nearly 310 basis points. Net income for the fourth quarter was $17.6 million compared to $20.1 million in the prior year period. The structural changes we have made over the last few years have allowed us to mitigate the recent revenue decline through cost containment activities. Fourth quarter adjusted EBITDA was $28.1 million, a decline of 21% year-over-year compared to $35.7 million in the prior year period. We maintained an EBITDA margin of 24%. Operating expenses of $26.7 million represented 22% of our total revenue compared to $30.6 million or 21% of revenue in the prior year period, demonstrating our disciplined expense management in the face of a tough market environment. For the full year 2025, net revenue was $319.9 million, a decline of 14% year-over-year compared to $372.8 million in 2024. This came in below our expectations due to the market headwinds that Cris noted in his prepared remarks. Full year gross margins of 37.3% and represented an improvement of 270 basis points year-over-year and marks the highest annual level since 2018, reflecting our successful execution of cost optimization initiatives and tariff mitigation strategies throughout the year. Net income for the full year was $15.7 million, representing a 3% year-over-year decline compared to $16.2 million in 2024. Full year adjusted EBITDA of $40.1 million was 12.5% of total revenue compared to $56.4 million in 2024 due to the revenue decrease from unfavorable market conditions. Operating expenses of $91.8 million represented 28.7% of total revenue compared to $109 million or 29% of total revenue in 2024. In 2025, the company realized a onetime credit of over $9 million from recoveries. Moving to the balance sheet. Our balance sheet remains solid with a cash position of $17 million on December 31, during the year, we generated $35 million in cash from operations. Total revolver and term loan debt as of December 31 was $85 million, resulting in net debt of $68 million. During 2025, we continued returning capital to shareholders through our share repurchase program. In the fourth quarter, we repurchased approximately 140,000 shares for a total of approximately $2 million. For the full year, we repurchased 1.35 million shares for approximately $19 million. This brings our total repurchases over the past 2 years to nearly $47 million Share buybacks remain a key pillar of our capital allocation strategy. They demonstrate both our confidence in the business and our ongoing commitment to creating value for shareholders. Looking ahead, we are optimistic for 2026. We expect growth in both revenue and EBITDA as we navigate through the current headwinds in the gaming accessories markets. We anticipate the market environment will remain challenging in the first half of 2026, with improvements in the second half driven by new products and game launches. We currently expect full year 2026 revenue to be in the range of $335 million to $355 million. This represents 8% growth at the midpoint compared to 2025. We expect our full year 2026 adjusted EBITDA to be in the range of $44 million to $48 million. Due to volatility in the retail environment, we want to provide additional context on expected seasonality and revenue cadence throughout the year. It's important to reiterate that we typically see the majority of our revenues in the second half of the year, coinciding with the holiday season. In 2026, we expect to see this trend continue. For the first quarter, we anticipate approximately 13% to 14% of full year revenues to be realized. Looking to the second quarter, we expect to release a significant number of new product introductions. With these new models and retail placements, we expect to see double-digit year-on-year revenue growth in the second quarter. Our guidance assumes continued market headwinds in the first half of the year, but reflects our confidence in our operational improvements and strategic positioning for when market conditions improve. We remain focused on maintaining our margins while positioning for growth when market catalysts emerge. With that, I'll turn the call back to Cris for closing remarks. Cris?

Thanks, Mark. As we look ahead, we are confident in both the long-term strength of the gaming accessories market and our ability to lead within it. While 2025 brought meaningful challenges, we believe those pressures were cyclical in nature and we used the year to sharpen our execution and reinforce our foundation. Through disciplined cost optimization, agile supply chain management, a strategic refinancing of our debt, continued product innovation and a focused capital allocation strategy, we have meaningfully strengthened our competitive position. We enter 2026 with expanded margins, a stronger and more flexible balance sheet and a compelling product portfolio that positions us to capitalize on improving market conditions and drive sustainable growth. Building on the strong foundation we've established, our focus in 2026 is to fully leverage these operational gains while positioning the company to accelerate as demand strengthens. The global gaming audience continues to expand. And as market conditions improve, we expect to realize meaningful growth. At the same time, we will continue investing in our brand and deepening engagement with gamers worldwide capitalizing on the strength and leadership of the Turtle Beach franchise to drive long-term value creation. As always, I want to recognize and thank the entire Turtle Beach team for their dedication, focus and relentless execution throughout the year. Their hard work and commitment were instrumental in delivering our 2025 accomplishments and have positioned us strongly for continued success in 2026 and the years ahead. With that, operator, we can open the call for Q&A.

[Operator Instructions] Our first question today comes from Anthony Stoss from Craig-Hallum.

Cris, I'd love to hear a little bit more about how the racing sim products are doing. And then also your comment about 50% more products for 2026. Any way you could break that into the different buckets if it's more skewed towards one product line versus another?

Racing sim is doing well for us. We're seeing share gains year-over-year in that category. We started with really one SKU in that category initially, and then we expanded that to a few more SKUs last year, and we'll continue building on that here in 2026. When you look across the different categories with the 50% more SKUs coming out, it's really across all of the categories that we operate in. There's some really great products coming in and for competitive reasons, I won't go into too many details, but the headset space is an area that we're going to continue to drive innovations. And we have some really exciting innovations coming in that space very soon. And then you look across the controller categories, particularly with the strength that we expect this year from Switch 2, we've got a lot of great accessories that have been launched and are gaining placements in Q2 and will continue to gain placements throughout the year in that space as we typically see in a new console cycle like Switch 2 is in. And then across the other categories of PC and some of the accessory categories that we expect to see grow as Switch 2 comes out and across sim as well, we've got new products coming in really every category. And so that's part of the excitement that we've got here. We did a lot of work last year as the market was a bit slower to really focus on our product pipeline, and I think the team has done an amazing job at that.

Got it. Your midpoint of your guide for the full year revenues of $345 million and given the cadence for Q1 and the remainder of the year, it would presume a pretty lofty September, December. So I would assume you're assuming GTA 6 launches in November as planned. Maybe can you bracket a range of revenue that you've added to that $345 million guide that would be somewhat related to GTA 6? Just again, we can figure out how much to back out.

Sure. Yes. You framed it up correctly. We do expect the second half of the year to be very strong. If you think about seasonality for 2026, for us, it's going to look very similar to 2024. If you look back at 2024, it was more heavily weighted towards Q4. Q1 was also more pressured as we're going to see here in this Q1. If you remember, Q1 had a very strong market, but Turtle Beach actually slightly underperformed that market in Q1 of '24 as we were preparing for new launches in Q2. It's very much the same dynamic in 2026. So we're currently running the channel down as we prep for a pretty significant amount of new placements in Q2, and we'll see a nice increase in our Q2 numbers to really help the first half here. But with GTA 6 launching in Q4, that's our expectation. That's what our guidance is built on. It's hard to put an exact range because there's a variety of factors that are going to drive growth for us this year. But certainly, double-digit growth -- double-digit portion of that growth that we would expect to see in Q4 is going to come from GTA 6.

[Operator Instructions] Your next question comes from Martin Yang from Oppenheimer.

My question is about the cost structure for '26. Can you give us more details around your expectations for gross margin versus OpEx and whether the group of new products will impact either part of the cost?

Sure. Martin, we're really happy with the progress that we've made on gross margin so far, and we expect to see continued improvements in gross margin as we go into 2026. The drivers behind that, we're now comping a full year of all of those mitigations that we made for tariffs additional product changes that we made, focusing on the higher-margin products as we look at our retail placements. So all of those improvements that we made throughout the year in '25, we're now comping a full year of that here in '26. So we'll see improved margins continue and continued margin growth in that space. Our OpEx structure is going to remain fairly similar to what we had in 2025. We are going to be making some additional structural investments on continued upgrades in technology. We're implementing new tools that are going to help with our efficiencies. We're also making investments in our brand, and you'll see more coming out about that from us in the coming weeks and months. We think there's a huge amount of equity in the Turtle Beach brand. And with all of the great things coming up in gaming, we're going to be repositioning the brand and really making a brand push this year.

One more question on the pace of new product introduction. Do you view 2026 as a more of a unique year, you have more new products coming out to the market? Or do you believe this pace of new product introduction is a sustainable pace for you?

I think it's sustainable. You look at -- there's always some ebb and flow in the timing of launches. And we had a very, very strong year in '24 with new launches we did a bit more preparation last year with our launch cadence. So there'll be a bit of ebb and flow, but we've made some real improvements and I really have to give credit to the team on this. We've made some great improvements in our development process. And as we look ahead to preparing for the next round of consoles that are coming up, we feel really good about where we're positioned and our capabilities of our R&D team and our product team to deliver on those. So you'll see this pace continue from us moving forward as we look at preparing for the next console cycle here.

Your next question comes from Sean McGowan from ROTH Capital Partners.

I have a couple of questions. First, to follow up on Martin's question on the gross margin and your response. Normally, when your sales are soft or softer than expected, you see some deleveraging at the gross margin line. So would this suggest that from this level, if we were to look at a quarter that saw a lot more sales increase that we could expect significantly higher margins? Or are there some givebacks that we can expect to see?

Yes. Great question, Sean. So we did have a very good Q4. We do expect to continue to be in our range of our targeted gross margins of the mid- to high 30s. We are very, very happy that for the full year, we were able to make it to the 37% level. We do expect to have some additional expansion, as you mentioned, partially due to the higher revenue base and then also from some of the new products that we'll be introducing in '26.

Okay. And in terms of G&A and selling and marketing, there's good discipline there, but were you holding back? And should we expect to see maybe an increase in spending as a percentage of revenue in those categories?

Yes. When you look at Q4, we made the decision that we weren't going to go chase into a soft market on price. That's part of why you're seeing the better gross margin is we really don't think that's good for the brand long term and didn't see the need to do that. Obviously, that creates a little bit of pressure on the top line I do believe that we'll be making some additional investments this year, and our guide includes those investments. particularly around the brand. We've got -- we made some real changes with some great new talent on our marketing team that have done some amazing work on some of the brand work you're going to see coming out from Turtle Beach here in the coming months. And so we're going to make some investments in that space, along with the investments that we've made in our products and on the development side. So you'll see a bit more there, but that's included in our guide.

Okay. Any comment on where your read of retail inventories both at year-end and kind of where they sit right now as the trade is working through some of these issues?

Great question. As we saw the softer demand, we did see inventories, as you might expect, decline. We ended the year in a much lighter inventory position than we've seen because of where the markets were. Retailers adjusted to those dynamics. And so that was some of the impact that we saw. The good news is for this year, we don't see the potential for a further decline in the channel inventories. So we'll see the benefit of that, I would say, of not having that risk in the numbers of potential additional shrinkage of channel inventory stocks. If anything for us, with some placements that we've been able to gain for Q2 and looking ahead, we would expect that to potentially even expand a bit. All that obviously included in the guide numbers.

Okay. And then my final question for now is kind of related to the timing and phasing issues that you talked about earlier. We've got a weird dynamic here, it seems where the first quarter, you're probably going to see some destocking, right, or cutbacks on some purchases that would have been made last year in preparation for these new products that are launching later, plus the overall softness in the market. And then fast forward toward the end of the year, we have a major, major software launch coming late in the year that I think we've talked before about is probably going to have a positive impact on the months and quarters after it's released. So could be -- we should be looking at a fairly dramatic swing Q1 '27 versus Q1 '26. So would you venture to say that sitting here in mid-March, toward the end of that first quarter that we're looking at a significantly better next 12 months compared to the prior 12-month period?

Yes. Certainly, I think you framed it up in the right way that we're thinking about it is when you look forward, it's been -- it was obviously a tough Q4 -- Q1 because of exactly what you referred to there, we are draining the channel, and so we're not replenishing at the moment. So it does put a lot of pressure on the Q1 numbers. Again, we saw the same dynamic. If you look back to 2024, exactly the same type of thing. It was a softer Q1 for us relative to the market because we were preparing for all these great new launches. And then Q2, we exceeded the markets, and we expect to see exactly that same dynamic repeat here in '26 because it's a very similar kind of launch cadence for us. The Q4 numbers will be outsized if GTA 6 launches as expected. And we do anticipate that it will launch as planned in November. We know what that does to markets. And when you look at the go-forward demand for accessories and the go-forward engagement from gamers after that game comes out, it's going to continue into Q1 and we would anticipate -- if you look at the last time when GTA V came out, it continued for quite some time after that launch and GTA V is still one of the leading sellers after all these years. So Yes, I do think that when you think about the go-forward next 12 months versus trailing 12 months, it's a very different picture for us.

Your next question comes from Drew Crum from B. Riley Securities.

You mentioned a willingness to expand the company's borrowing capacity for share repurchases. Is there a leverage threshold that you're comfortable with, you can share with us?

Well, when we look at those numbers, we've been able to deleverage pretty significantly since we did the PDP acquisition. And I think, a fair range for the company, certainly a 2 to 2.5 kind of range is something we feel comfortable with. It's something that is not out of the norm for the industry and I think that when we look at our capital allocation, again, as we start to see some of the benefits of the upcoming gaming cycle, we see opportunity there, which is why we're looking into potentially obtaining some new financing around that to allow us even more flexibility than the work that was done last year. So that's roughly the range that we're thinking about.

Okay. Got it. And then maybe just to kind of follow up on that last comment. I think you -- throughout the call, you've mentioned expectations for significant growth over the next, call it, 12 to 24 months. And I know there's been a lot of questions around GTA 6. Beyond that launch, is there anything else that's behind the optimism? Because I know there's been some concern in the market that the semiconductor shortages could push out the launch of the next Xbox and the PlayStation 6. So I just want to get a better understanding as to what those drivers are behind the optimism beyond this year.

Sure. Yes, absolutely. And it's -- the great thing for the business going forward is it's really not one thing, it's a combination of multiple factors here. And we've seen it before because we saw it during the last console cycle when we had GTA V come out and then we had the new consoles come out from Xbox and from PlayStation, we're about to hit that same kind of cycle over the next couple of years. So while it could be that the consoles push out because of memory issues, we're -- personally, we're not seeing any impact to our business that's significant from the memory shortages. We've had a bit of lead time impact, nominal cost increases all again within the guide. So we're not seeing an impact on our business. But if it does push the console refresh cycle out, clearly, GTA 6 and the other games will run on the current generation of consoles, and we could see even towards the end of life of these consoles a nice lift on those sales even if the new consoles do move out. We also have -- for an accessories business such as ours, we've got an overdue accessories replacement cycle that we do anticipate will start to come in once we see that engagement, whether it's from GTA 6 or any other great games that are coming out or Switch 2, which we're seeing some nice momentum and starting to see people come over into third-party accessories on Switch 2 is expected. So all of those together, in addition to our own product innovations, that's another thing that drives gamers to go and get new gear is great new products come out. They've got new features that they can't enjoy on the current accessories and so they'll go out and they'll replace those. So all those things together are really what's driving the optimism from our side.

Your next question comes from Jack Vander Aarde from Maxim Group.

Cris, so with the 50% more new product launches in 2026 and the focus kind of still being on this. It sounds like high gross margins are going to continue, which have been historically high. Can you speak to your overall just pricing and promotional strategies with this extra layer of substantial new products in the market? Assuming these gross margins are going to stay high, are you also -- what are you doing with the price points here across the portfolio and for this new lineup?

Sure. Jack, great question. It's something that we're looking at very closely. As you might imagine, the pricing dynamics, the promotional dynamics, they've changed pretty dramatically over the last year when you look at how we've addressed some of those tariff challenges, some of the cost challenges and the overall market slowness and what we're seeing is we're still seeing good performance from some of the higher-end price points. We're seeing some pressure on some of the entry and mid-level price points. And we're -- as we look at our promotional strategy, we're really trying to find a way to address all of the needs that gamers have at every price point. And so our decision in Q4 and as we get ready for these new launches that are coming up has really been to not be as promotional as we have been in the past. That's part of what's driving our improvements in gross margin. Obviously, that can put some pressure on top line revenue. That's a little bit of what we saw in Q4. So we are evaluating how to go out and get the right mix, the optimized mix of promotions and price. And we want to make sure that we've got the gamer, first and foremost in mind on that. And so I think that we could probably start to be a bit more promotional. We've been very conservative on our promotions. So we may do some of that, but we would much rather invest in the brand, and we're also going to be putting some of those dollars to work to really talk about some of the great things that Turtle Beach brings to gamers and really building a community with the gamers out there.

Okay. Great. And then maybe for Mark on the 2026 outlook. EBITDA, it looks like it's -- that growth is supposed to outpace revenue. which is also going to be growing, it looks like, it sounds like gross margins are going to remain historically strong we don't guide for EPS, but is it safe to assume a similar kind of growth trend relative to EBITDA with EPS, I mean, a similar sub-7% or 10% tax rate. I'm assuming you're likely buying back more shares, so maybe a decline in share count. Is there a read-through there on the EPS line that it should outpace -- that growth should outpace revenue assuming all things play out like that?

I think you mentioned a lot of the great points, and I would reiterate one of the items that you noted, which is our share buyback strategy. This year, we had a significant amount of buybacks over the past couple of years. more than $40 million of total buybacks. We are looking at opportunities to continue to drive additional buyback strategies in 2026 and what that could mean for us in terms of just the overall share count. As we noted here in terms of the guide, we're looking at adjusted EBITDA to be in the range of $44 million to $48 million. as a percentage basis, that's going to be up from where we were in '25, just showing the leverage that we get on the revenue and as you noted, the gross margin side, we are very excited about the fact that we are already in our targeted range, and yet we still see opportunities to slightly increase our margin levels going into the new year with new products. So we think '26 is going to be a very good year and looking forward to seeing the outcomes.

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

Thank you, everyone, for your interest in Turtle Beach, and have a great day.

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.