Turtle Beach Corporation (NASDAQ:HEAR) shares saw a double-digit boost after releasing preliminary third-quarter results that show revenue, income and adjusted EBITDA to be ahead of its prior guidance.
The audio accessory company credits the rise in popularity of multiplayer games like Fortnite as a driving force behind revenue growth.
Its shares soared 12% to $19.30 in Thursday morning trading.
READ: Wedbush reiterates US$42 price target on Turtle Beach after positive takeaways from management meetings
Turtle Beach expects net revenue between $73 million and $74 million, above its prior guidance of $65 million and more than double the $36 million reported in last year’s third quarter.
Third-quarter net income is expected to range between $0.74 and $0.78 per share compared with its previous guidance of $0.44, if 16.2 million weighted average shares are outstanding.
Earnings per share could be as much as $0.10 higher depending on tax treatments, according to the company’s release.
Adjusted EBITDA in the third quarter is expected to be approximately $17 million, above guidance of $11 million and more than five times higher than the $3.3 million reported in the previous third quarter.
Turtle Beach plans to update its outlook for the fourth quarter and its full-year outlook is expected to increase by at least the amount the third quarter surpassed expectations.
READ: Turtle Beach crushes second-quarter estimates as rise of Fortnite and PUBG boosts demand for headsets
"The strong increase in demand for gaming headsets that occurred with the rise of the 'battle royale' genre has continued, drawing new gamers into the market, leading veteran gamers to upgrade their gear, and increasing the overall usage rate and installed base of gaming headsets,” said CEO Juergen Stark in the company’s press release.
The upcoming launches of Call of Duty: Black Ops 4 and Red Dead Redemption 2 are expected to boost the demand for headsets.
Stark said the company’s surveys suggest that gamers replace their headsets every 20 to 24 months.
Marketing research company NPD found that year-to-date through August, Turtle Beach sold more console video gaming headsets than any other competitor in any other calendar year since 2006.
The company said it expects the boost in revenue will help to reduce its debt and support long-term growth investments, which will be addressed during its third-quarter earnings call.
Contact Lenore Fedow at [email protected]