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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 June 30, 2026

or

☐ 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 Symbols | 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 July 30, 2026 was 17,909,711.

INDEX

|  | Page
PART I. FINANCIAL INFORMATION | 2
Item 1. | Financial Statements (unaudited) | 2
| Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2026 and 2025 | 2
| Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2026 and 2025 | 3
| Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 | 4
| Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 | 5
| Condensed Consolidated Statement of Stockholders' Equity for the Three and Six Months Ended June 30, 2026 and 2025 | 6
| Notes to Condensed Consolidated Financial Statements | 7
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 29
Item 4. | Controls and Procedures | 30
PART II. OTHER INFORMATION | 31
Item 1. | Legal Proceedings | 31
Item 1A. | Risk Factors | 31
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 31
Item 5. | Other Information | 31
Item 6. | Exhibits | 32
SIGNATURES | 33

1

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 |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |  |  | June 30, |  |  | June 30, |
|  | 2026 |  |  | 2025 |  |  | 2026 |  |  | 2025 |
Net revenue |  | $ | 56,365 |  |  | $ | 56,777 |  |  | $ | 98,537 |  |  | $ | 120,678 |
Cost of revenue |  |  | 34,502 |  |  |  | 38,515 |  |  |  | 65,380 |  |  |  | 79,049 |
Gross profit |  |  | 21,863 |  |  |  | 18,262 |  |  |  | 33,157 |  |  |  | 41,629 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |
Selling and marketing |  |  | 14,700 |  |  |  | 12,731 |  |  |  | 26,960 |  |  |  | 25,184 |
Research and development |  |  | 4,813 |  |  |  | 4,471 |  |  |  | 9,387 |  |  |  | 8,464 |
General and administrative |  |  | 5,401 |  |  |  | 7,354 |  |  |  | 13,922 |  |  |  | 15,570 |
Insurance recovery |  |  | — |  |  |  | (5,965 | ) |  |  | — |  |  |  | (9,404 | )
Acquisition-related cost |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 608 |
Total operating expenses |  |  | 24,914 |  |  |  | 18,591 |  |  |  | 50,269 |  |  |  | 40,422 |
Operating (loss) income |  |  | (3,051 | ) |  |  | (329 | ) |  |  | (17,112 | ) |  |  | 1,207 |
Interest expense, net |  |  | 3,666 |  |  |  | 2,049 |  |  |  | 5,035 |  |  |  | 4,055 |
Other expense (income), net |  |  | 73 |  |  |  | 799 |  |  |  | (28 | ) |  |  | 1,102 |
Loss before income tax |  |  | (6,790 | ) |  |  | (3,177 | ) |  |  | (22,119 | ) |  |  | (3,950 | )
Income tax expense (benefit) |  |  | 521 |  |  |  | (246 | ) |  |  | 398 |  |  |  | (355 | )
Net loss |  | $ | (7,311 | ) |  | $ | (2,931 | ) |  | $ | (22,517 | ) |  | $ | (3,595 | )
Net loss per share |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | (0.38 | ) |  | $ | (0.14 | ) |  | $ | (1.16 | ) |  | $ | (0.17 | )
Diluted |  | $ | (0.38 | ) |  | $ | (0.14 | ) |  | $ | (1.16 | ) |  | $ | (0.17 | )
Weighted average number of shares: |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 19,182 |  |  |  | 20,667 |  |  |  | 19,339 |  |  |  | 20,587 |
Diluted |  |  | 19,182 |  |  |  | 20,667 |  |  |  | 19,339 |  |  |  | 20,587 |

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

2

Turtle Beach Corporation

Condensed Consolidated Statements of Comprehensive Loss

(unaudited, in thousands)

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, 2026 |  |  | June 30, 2025 |  |  | June 30, 2026 |  |  | June 30, 2025 |
Net loss |  | $ | (7,311 | ) |  | $ | (2,931 | ) |  | $ | (22,517 | ) |  | $ | (3,595 | )
Other comprehensive income (loss): |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustment |  |  | 167 |  |  |  | 2,787 |  |  |  | (476 | ) |  |  | 3,554 |
Other comprehensive income (loss) |  |  | 167 |  |  |  | 2,787 |  |  |  | (476 | ) |  |  | 3,554 |
Comprehensive loss |  | $ | (7,144 | ) |  | $ | (144 | ) |  | $ | (22,993 | ) |  | $ | (41 | )

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

3

Turtle Beach Corporation

Condensed Consolida ted Balance Sheets

(in thousands, except par value and share amounts)

|  | June 30, |  |  | December 31, |
|  | 2026 |  |  | 2025 |
|  | (unaudited) |  |  |  |
ASSETS |  |  |  |  |  |
Current Assets: |  |  |  |  |  |
Cash and cash equivalents |  | $ | 19,565 |  |  | $ | 16,963 |
Accounts receivable, net |  |  | 37,941 |  |  |  | 76,797 |
Inventories |  |  | 56,544 |  |  |  | 69,222 |
Prepaid expenses and other current assets |  |  | 10,935 |  |  |  | 10,831 |
Total Current Assets |  |  | 124,985 |  |  |  | 173,813 |
Property and equipment, net |  |  | 2,372 |  |  |  | 2,995 |
Goodwill |  |  | 50,428 |  |  |  | 50,428 |
Intangible assets, net |  |  | 30,376 |  |  |  | 34,344 |
Other assets |  |  | 7,006 |  |  |  | 7,474 |
Total Assets |  | $ | 215,167 |  |  | $ | 269,054 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |  |  |  |
Current Liabilities: |  |  |  |  |  |
Revolving credit facility |  | $ | — |  |  | $ | 29,383 |
Accounts payable |  |  | 27,863 |  |  |  | 24,934 |
Term Loan, current |  |  | 4,250 |  |  |  | 8,571 |
Other current liabilities |  |  | 20,435 |  |  |  | 24,789 |
Total Current Liabilities |  |  | 52,548 |  |  |  | 87,677 |
Term Loan, non-current |  |  | 76,439 |  |  |  | 46,339 |
Income tax payable |  |  | 820 |  |  |  | 820 |
Other liabilities |  |  | 4,644 |  |  |  | 5,720 |
Total Liabilities |  |  | 134,451 |  |  |  | 140,556 |
Commitments and Contingencies |  |  |  |  |  |
Stockholders’ Equity |  |  |  |  |  |
Common stock, $0.001 par value - 25,000,000 shares authorized; 17,909,711 and 19,185,869 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively |  |  | 18 |  |  |  | 19 |
Additional paid-in capital |  |  | 204,401 |  |  |  | 229,189 |
Accumulated deficit |  |  | (124,880 | ) |  |  | (102,363 | )
Accumulated other comprehensive income |  |  | 1,177 |  |  |  | 1,653 |
Total Stockholders’ Equity |  |  | 80,716 |  |  |  | 128,498 |
Total Liabilities and Stockholders’ Equity |  | $ | 215,167 |  |  | $ | 269,054 |

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

4

Turtle Beach Corporation

Condensed Consolidated S tatements of Cash Flows

(unaudited, in thousands)

|  | Six Months Ended |
|  | June 30, 2026 |  |  | June 30, 2025 |
CASH FLOWS FROM OPERATING ACTIVITIES |  |  |  |  |  |
Net loss |  | $ | (22,517 | ) |  | $ | (3,595 | )
Adjustments to reconcile net loss to net cash provided by operating activities: |  |  |  |  |  |
Depreciation and amortization |  |  | 1,669 |  |  |  | 2,191 |
Amortization of intangible assets |  |  | 3,968 |  |  |  | 4,033 |
Amortization of debt financing costs |  |  | 486 |  |  |  | 553 |
Stock-based compensation |  |  | 2,636 |  |  |  | 2,920 |
Deferred income taxes |  |  | (227 | ) |  |  | 231 |
Change in sales returns reserve |  |  | 3,379 |  |  |  | 2,962 |
Provision for obsolete inventory |  |  | 678 |  |  |  | 1,176 |
Loss on extinguishment of debt |  |  | 1,755 |  |  |  | — |
Changes in operating assets and liabilities, net of acquisitions: |  |  |  |  |  |
Accounts receivable |  |  | 35,476 |  |  |  | 53,727 |
Inventories |  |  | 12,000 |  |  |  | (6,731 | )
Prepaid expenses and other assets |  |  | 636 |  |  |  | (681 | )
Accounts payable |  |  | 2,515 |  |  |  | (990 | )
Income taxes payable |  |  | (821 | ) |  |  | (3,367 | )
Other liabilities |  |  | (5,764 | ) |  |  | (15,126 | )
Net cash provided by operating activities |  |  | 35,869 |  |  |  | 37,303 |
CASH FLOWS FROM INVESTING ACTIVITIES |  |  |  |  |  |
Purchases of property and equipment |  |  | (848 | ) |  |  | (496 | )
Cash acquired in business combination |  |  | — |  |  |  | 2,515 |
Net cash (used in) provided by investing activities |  |  | (848 | ) |  |  | 2,019 |
CASH FLOWS FROM FINANCING ACTIVITIES |  |  |  |  |  |
Borrowings on revolving credit facilities |  |  | 33 |  |  |  | 140,346 |
Repayment of revolving credit facilities |  |  | (29,416 | ) |  |  | (169,819 | )
Proceeds from term loan |  |  | 82,450 |  |  |  | — |
Repayment of term loan |  |  | (56,777 | ) |  |  | (5,625 | )
Proceeds from exercise of stock options |  |  | 274 |  |  |  | 112 |
Repurchase of restricted stock |  |  | (500 | ) |  |  | — |
Repurchase of common stock |  |  | (27,197 | ) |  |  | (6,760 | )
Debt financing costs |  |  | (1,247 | ) |  |  | — |
Net cash used in financing activities |  |  | (32,380 | ) |  |  | (41,746 | )
Effect of exchange rate changes on cash and cash equivalents |  |  | (39 | ) |  |  | 1,134 |
Net increase (decrease) in cash and cash equivalents |  |  | 2,602 |  |  |  | (1,290 | )
Cash and cash equivalents at the beginning of period |  |  | 16,963 |  |  |  | 12,995 |
Cash and cash equivalents at the end of period |  | $ | 19,565 |  |  | $ | 11,705 |
SUPPLEMENTAL DISCLOSURE OF INFORMATION |  |  |  |  |  |
Property and equipment purchases included in accounts payable and accrued liabilities |  | $ | 372 |  |  | $ | 753 |
Unpaid debt financing costs |  | $ | 75 |  |  | $ | — |

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

5

Turtle Beach Corporation

Condensed Consolidated Statement o f 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 |

|  | 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 |

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

6

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, Californi a, 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 (“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 contains 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 receivables. The Company is exposed to credit risk and liquidity risk in the event of default by the financial

7

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:

|  | June 30, |  |  | December 31, |
|  | 2026 |  |  | 2025 |
Customer A |  |  | 31.8 | % |  |  | 33.8 | %
Customer B |  |  | 15.4 | % |  |  | 17.5 | %
Customer C |  |  | 16.6 | % |  |  | 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 six months ended June 30, 2026 and 2025 were as follows:

|  | Three Months Ended |  |  | Six months ended |
|  | June 30, |  |  | June 30, |
|  | 2026 |  |  | 2025 |  |  | 2026 |  |  | 2025 |
Customer A |  |  | 17.8 | % |  |  | 24.8 | % |  |  | 20.4 | % |  |  | 20.1 | %
Customer B |  |  | 26.0 | % |  |  | 17.2 | % |  |  | 22.5 | % |  |  | 22.5 | %
Customer C |  |  | 13.3 | % |  |  | 12.3 | % |  |  | 13.5 | % |  |  | 13.6 | %
Customer D |  | * |  |  |  | 10 | % |  | * |  |  | * |

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 receivable. 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 will be effective for annual reporting perio ds beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company has adopted this standard, which did no t 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 Update (“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, 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 the adoption of this standard to determine its impact on the Company's disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other - Internal-Use Software (Subtopic 350-40), which modernizes and simplifies the accounting 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

8

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 the adoption of this standard and does not expect that it will have a material impact on its disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies that all entities issuing interim financial statements under U.S. GAAP must follow ASC 270. The update requires interim financial statements to include a full set of financial information (or condensed versions with clarified format), mandates disclosure of material events since year-end, and provides a consolidated list of required interim disclosures. 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 impact of the adoption of this standard and does not expect that it will have a material impact on 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 June 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 is classified as Level 1, as of June 30, 2026 and December 31, 2025 (in thousands):

|  | June 30, 2026 |  |  | December 31, 2025 |
|  | Reported |  |  | Fair Value |  |  | Reported |  |  | Fair Value |
Financial Assets and Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 19,565 |  |  | $ | 19,565 |  |  | $ | 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 paymen t. 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):

|  | June 30, 2026 |  |  | December 31, 2025 |
Finished goods |  | $ | 53,441 |  |  | $ | 64,006 |
Raw materials |  |  | 3,103 |  |  |  | 5,216 |
Total inventories |  | $ | 56,544 |  |  | $ | 69,222 |

9

During the three months ended June 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 during the prior fiscal year. Because the Company's right to the refund was established and the refund was received during the current quarter, the amount was recognized as a reduction of cost of goods revenue during the three months ended June 30, 2026. An additional $3.6 million related to tariffs previously capitalized as a component of inventory and was recognized as a reduction to 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.

Property and Equipment, net

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

|  | June 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 |  |  | 11,160 |  |  |  | 10,150 |
Leasehold improvements |  |  | 1,179 |  |  |  | 1,159 |
Demonstration units and convention booths |  |  | 2,353 |  |  |  | 2,356 |
Total property and equipment, gross |  |  | 19,149 |  |  |  | 18,133 |
Less: accumulated depreciation and amortization |  |  | (16,777 | ) |  |  | (15,138 | )
Total property and equipment, net |  | $ | 2,372 |  |  | $ | 2,995 |

Depreciation and amortization expense on property and equipment was $0.8 million and $1.1 million for the three months ended June 30, 2026 and 2025, respectively. Depreciation and amortization expense on property and equipment was $1.7 million and $2.2 million for the six months ended June 30, 2026 and 2025.

Other Current Liabilities

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

|  | June 30, 2026 |  |  | December 31, 2025 |
Accrued royalty |  | $ | 3,775 |  |  | $ | 8,088 |
Accrued employee expenses |  |  | 2,013 |  |  |  | 2,487 |
Accrued tax-related payables |  |  | 1,537 |  |  |  | 3,919 |
Accrued freight |  |  | 2,885 |  |  |  | 1,839 |
Accrued marketing |  |  | 1,594 |  |  |  | 2,164 |
Accrued expenses |  |  | 8,631 |  |  |  | 6,292 |
Total other current liabilities |  | $ | 20,435 |  |  | $ | 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.

10

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

|  | June 30, 2026 |  |  | December 31, 2025 |
Goodwill |  | $ | 50,428 |  |  | $ | 50,428 |

Intangible Assets, net

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

|  | June 30, 2026 |
|  | Gross Carrying Value |  |  | Accumulated Amortization |  |  | Net Book Value |
Customer relationships |  | $ | 10,285 |  |  | $ | 7,531 |  |  | $ | 2,754 |
Tradenames |  |  | 18,293 |  |  |  | 7,795 |  |  |  | 10,498 |
Developed technology |  |  | 27,706 |  |  |  | 10,582 |  |  |  | 17,124 |
Patent and trademarks |  |  | 784 |  |  |  | 784 |  |  |  | - |
Total Intangible Assets |  | $ | 57,068 |  |  | $ | 26,692 |  |  | $ | 30,376 |

|  | 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 $2.0 million was recognized for both the three months ended June 30, 2026 and 2025. Amortization expense related to definite lived intangible assets of $4.0 million was recognized for both the six months ended June 30, 2026 and 2025.

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

2026 (remaining six months) |  | $ | 3,795 |
2027 |  |  | 7,590 |
2028 |  |  | 7,590 |
2029 |  |  | 7,590 |
2030 |  |  | 3,346 |
Thereafter |  |  | 465 |
Total |  | $ | 30,376 |

Note 6. Credit Facility and Long-Term Debt

The following table presents the outstanding principal amounts of the Revolving Credit Facility and Term Loan (in thousands):

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|  | June 30, 2026 |  |  | December 31, 2025 |
Revolving credit facility |  | $ | — |  |  | $ | 29,383 |
Term loan |  | $ | 83,938 |  |  | $ | 55,714 |

Total interest expense, inclusive of amortization of deferred financing costs, on current and non-current debt obligations was $2.2 million and $2.0 million for the three months ended June 30, 2026 and 2025, respectively. Total interest expense, inclusive of amortization of deferred financing costs, on current and non-current debt obligations was $3.6 million and $4.1 million for the six months ended June 30, 2026 and 2025, respectively.

Amortization of deferred financing costs was $0.3 million for both the three months ended June 30, 2026 and 2025. Amortization of deferred financing costs was $0.5 million and $0.6 million for the six months ended June 30, 2026 and 2025, respectively.

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, dated as of March 13, 2024 (the “Fourth Amendment”), to the 2024 Revolving Credit Facility. The Company 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, 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.

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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. Accordingly, the 2025 Credit Facility was no longer available to the Company as of June 30, 2026. 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 subsidiary of the Company 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 3.00 x, (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 2.25 x but less than 3.00 x, 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 2.25 x; 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 June 30, 2026, the interest rate for outstanding borrowings was 11.17%.

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

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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 June 30, 2026, the Company was in compliance with all the financial covenants under the Credit Facility, as amended, and excess borrowing availability was approximately $31.0 million.

As part of the 2026 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, are as follows (in thousands):

2026 (remaining six months) |  | $ | 2,125 |
2027 |  |  | 4,250 |
2028 |  |  | 4,250 |
2029 |  |  | 73,313 |
|  |  | 83,938 |
Less: |  |  |
Current portion |  |  | (4,250 | )
Unamortized debt discount |  |  | (3,249 | )
Total Term Loan, non-current |  | $ | 76,439 |

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 September 30, 2025, PDP moved for judgment on the pleadings on multiple aspects of Nyko’s counterclaims and that motion is pending. 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.

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 June 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

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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 |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2026 |  |  | 2025 |  |  | 2026 |  |  | 2025 |
Warranty, beginning of period |  | $ | 505 |  |  | $ | 809 |  |  | $ | 582 |  |  | $ | 815 |
Warranty costs accrued |  |  | 67 |  |  |  | 69 |  |  |  | 111 |  |  |  | 261 |
Settlements of warranty claims |  |  | (104 | ) |  |  | (142 | ) |  |  | (225 | ) |  |  | (340 | )
Warranty, end of period |  | $ | 468 |  |  | $ | 736 |  |  | $ | 468 |  |  | $ | 736 |

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 June 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 and effective income tax rate (in thousands, except percentages):

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2026 |  |  | 2025 |  |  | 2026 |  |  | 2025 |
Income tax expense (benefit) |  | $ | 521 |  |  | $ | (246 | ) |  | $ | 398 |  |  | $ | (355 | )
Effective income tax rate |  |  | (7.7 | %) |  |  | 7.7 | % |  |  | (1.8 | %) |  |  | 9.0 | %

A nominal provision for income taxes was recorded for the three and six months ended June 30, 2026, as there were no material changes in the Company’s income tax positions, estimates, or circumstances that would require recognition of a current or deferred tax expense or benefit. The Company’s income tax positions, including the assessment of valuation allowances and uncertain tax positions, remain 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 evaluate the realizability of deferred tax assets and the adequacy of valuation allowances, and will update its estimates as appropriate in future periods.

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 June 30, 2026, the Company had uncertain tax positions of $1.8 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

15

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 six months ended June 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 2024, 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 2024.

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 is scheduled to expire on May 6, 2027.

The Company repurchased 1,994,526 and 372,198 shares of its common stock in the three months ended June 30, 2026 and 2025, respectively, for a total cost of $25.0 million and $5.0 million, respectively. The Company repurchased 2,156,341 and 493,519 shares of its common stock in the six months ended June 30, 2026 and 2025, respectively, for a total cost of $27.2 million and $6.8 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 |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2026 |  |  | 2025 |  |  | 2026 |  |  | 2025 |
Cost of revenue |  | $ | 99 |  |  | $ | 131 |  |  | $ | 227 |  |  | $ | 306 |
Selling and marketing |  |  | 224 |  |  |  | 256 |  |  |  | 455 |  |  |  | 1,124 |
Research and development |  |  | 177 |  |  |  | 322 |  |  |  | 431 |  |  |  | 791 |
General and administrative |  |  | 771 |  |  |  | 299 |  |  |  | 1,523 |  |  |  | 699 |
Total stock-based compensation |  | $ | 1,271 |  |  | $ | 1,008 |  |  | $ | 2,636 |  |  | $ | 2,920 |

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):

|  | June 30, 2026 |
|  | Unrecognized Expense |  |  | Remaining weighted average period (In years) |
RSUs |  | $ | 7,663 |  |  |  | 2.9 |
PSUs |  |  | 3,101 |  |  |  | 1.7 |
Total unrecognized stock-based compensation expense |  | $ | 10,764 |  |  |  |

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

|  | Number of Shares Available |
Balance at December 31, 2025 |  |  | 1,849,094 |
Grants |  |  | (436,520 | )
Cancelled |  |  | 54,591 |
Balance as of June 30, 2026 |  |  | 1,467,165 |

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 |  |  | (46,057 | ) |  |  | 5.96 |  |  |  |  |  |  |
Options Forfeited |  |  | (7,134 | ) |  |  | 17.64 |  |  |  |  |  |  |
Outstanding at June 30, 2026 |  |  | 337,778 |  |  | $ | 10.39 |  |  |  | 2.59 |  |  | $ | 1,337,122 |
Vested and expected to vest at June 30, 2026 |  |  | 337,778 |  |  | $ | 10.39 |  |  |  | 2.59 |  |  | $ | 1,337,122 |
Exercisable at June 30, 2026 |  |  | 337,778 |  |  | $ | 10.39 |  |  |  | 2.59 |  |  | $ | 1,337,122 |

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 |  |  | 436,520 |  |  |  | 10.31 |
Vested |  |  | (285,479 | ) |  |  | 15.31 |
Forfeited |  |  | (150,108 | ) |  |  | 14.55 |
Nonvested restricted stock at June 30, 2026 |  |  | 696,300 |  |  | $ | 11.23 |

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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 | ) |  |  | 11.75 |
Outstanding at June 30, 2026 |  |  | 206,297 |  |  | $ | 10.97 |

The outstanding PSUs as of June 30, 2026 were comprised of 13,925, 21,999 and 170,373 p erformance 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 six months ended June 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 PSUs 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 to 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 Loss Per Share

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

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2026 |  |  | 2025 |  |  | 2026 |  |  | 2025 |
Net loss |  | $ | (7,311 | ) |  | $ | (2,931 | ) |  | $ | (22,517 | ) |  | $ | (3,595 | )
Weighted average common shares outstanding — Basic |  |  | 19,182 |  |  |  | 20,667 |  |  |  | 19,339 |  |  |  | 20,587 |
Weighted average common shares outstanding — Diluted |  |  | 19,182 |  |  |  | 20,667 |  |  |  | 19,339 |  |  |  | 20,587 |
Net loss per share: |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | (0.38 | ) |  | $ | (0.14 | ) |  | $ | (1.16 | ) |  | $ | (0.17 | )
Diluted |  | $ | (0.38 | ) |  | $ | (0.14 | ) |  | $ | (1.16 | ) |  | $ | (0.17 | )

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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 and the estimated tax benefit of the assumed exercises.

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 |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2026 |  |  | 2025 |  |  | 2026 |  |  | 2025 |
Stock options |  |  | 370 |  |  |  | 638 |  |  |  | 367 |  |  |  | 615 |
Restricted stock |  |  | 787 |  |  |  | 669 |  |  |  | 715 |  |  |  | 708 |
Total |  |  | 1,157 |  |  |  | 1,307 |  |  |  | 1,082 |  |  |  | 1,323 |

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 |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2026 |  |  | 2025 |  |  | 2026 |  |  | 2025 |
Americas |  | $ | 41,297 |  |  | $ | 42,889 |  |  | $ | 70,588 |  |  | $ | 89,873 |
Europe and Middle East |  |  | 12,166 |  |  |  | 10,842 |  |  |  | 23,088 |  |  |  | 24,460 |
Asia Pacific |  |  | 2,902 |  |  |  | 3,046 |  |  |  | 4,861 |  |  |  | 6,345 |
Total net revenue |  | $ | 56,365 |  |  | $ | 56,777 |  |  | $ | 98,537 |  |  | $ | 120,678 |

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

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2026 |  |  | 2025 |  |  | 2026 |  |  | 2025 |
Net revenue |  | $ | 56,365 |  |  | $ | 56,777 |  |  | $ | 98,537 |  |  | $ | 120,678 |
Significant segment expenses: |  |  |  |  |  |  |  |  |  |  |  |
Cost of revenue |  |  | 34,502 |  |  |  | 38,515 |  |  |  | 65,380 |  |  |  | 79,049 |
Sales |  |  | 5,791 |  |  |  | 6,131 |  |  |  | 11,381 |  |  |  | 12,155 |
Marketing |  |  | 8,909 |  |  |  | 6,600 |  |  |  | 15,579 |  |  |  | 13,029 |
Research and development |  |  | 4,813 |  |  |  | 4,471 |  |  |  | 9,387 |  |  |  | 8,464 |
General and administrative |  |  | 5,401 |  |  |  | 7,354 |  |  |  | 13,922 |  |  |  | 15,570 |
Other costs (recovery) (1) |  |  | — |  |  |  | (5,965 | ) |  |  | — |  |  |  | (8,796 | )
Operating (loss) income |  |  | (3,051 | ) |  |  | (329 | ) |  |  | (17,112 | ) |  |  | 1,207 |
Interest expense, net |  |  | 3,666 |  |  |  | 2,049 |  |  |  | 5,035 |  |  |  | 4,055 |
Other expense (income), net |  |  | 73 |  |  |  | 799 |  |  |  | (28 | ) |  |  | 1,102 |
Income tax expense (benefit) |  |  | 521 |  |  |  | (246 | ) |  |  | 398 |  |  |  | (355 | )
Net loss |  | $ | (7,311 | ) |  | $ | (2,931 | ) |  | $ | (22,517 | ) |  | $ | (3,595 | )

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(1) Other costs (recovery) in the three and six months ended June 30, 2025 in clude acquisition-related costs and an insurance recovery.

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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 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 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

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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 three months ended June 30, 2026, we received tariff refunds totaling $8.2 million from the CBP 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 during the prior fiscal year. Because our right to the refund was established and the refund was received during the current quarter, the amount was recognized as a reduction of cost of goods revenue during the three months ended June 30, 2026. An additional $3.6 million related to tariffs previously capitalized as a component of inventory and was recognized as a reduction to 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.

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 |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2026 |  |  | 2025 |  |  | 2026 |  |  | 2025 |
Net revenue |  | $ | 56,365 |  |  | $ | 56,777 |  |  | $ | 98,537 |  |  | $ | 120,678 |
Cost of revenue |  |  | 34,502 |  |  |  | 38,515 |  |  |  | 65,380 |  |  |  | 79,049 |
Gross profit |  |  | 21,863 |  |  |  | 18,262 |  |  |  | 33,157 |  |  |  | 41,629 |
Operating expenses |  |  | 24,914 |  |  |  | 18,591 |  |  |  | 50,269 |  |  |  | 40,422 |
Operating (loss) income |  |  | (3,051 | ) |  |  | (329 | ) |  |  | (17,112 | ) |  |  | 1,207 |
Interest expense, net |  |  | 3,666 |  |  |  | 2,049 |  |  |  | 5,035 |  |  |  | 4,055 |
Other expense (income), net |  |  | 73 |  |  |  | 799 |  |  |  | (28 | ) |  |  | 1,102 |
Loss before income tax |  |  | (6,790 | ) |  |  | (3,177 | ) |  |  | (22,119 | ) |  |  | (3,950 | )
Income tax expense (benefit) |  |  | 521 |  |  |  | (246 | ) |  |  | 398 |  |  |  | (355 | )
Net loss |  | $ | (7,311 | ) |  | $ | (2,931 | ) |  | $ | (22,517 | ) |  | $ | (3,595 | )

Net Revenue and Gross Profit

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

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2026 |  |  | 2025 |  |  | 2026 |  |  | 2025 |
Net Revenue |  | $ | 56,365 |  |  | $ | 56,777 |  |  | $ | 98,537 |  |  | $ | 120,678 |
Gross Profit |  | $ | 21,863 |  |  | $ | 18,262 |  |  | $ | 33,157 |  |  | $ | 41,629 |
Gross Margin |  |  | 38.8 | % |  |  | 32.2 | % |  |  | 33.6 | % |  |  | 34.5 | %

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

Net revenue for the three months ended June 30, 2026 was $56.4 million, a $0.4 million or 0.7% decrease from $56.8 million for the three months ended June 30, 2025. 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 three months ended June 30, 2026, gross margin increased to 38.8% from 32.2% in the comparable prior year period. The increase was primarily due to a $4.3 million reduction to cost of revenue related to a tariff refund recognized during the three months ended June 30, 2026, of which $3.1 million related to cost of revenue recognized in 2025. This benefit was partially offset by higher product costs and the effect of product mix compared with the prior three-month period.

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Comparison of the Six Months Ended June 30, 2026 to the Six Months Ended June 30, 2025

Net revenue for the six months ended June 30, 2026 was $98.5 million, a decrease of $22.2 million, or 18.4%, from $120.7 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 six months ended June 30, 2026, gross margin slightly decreased to 33.6% from 34.5% in the comparable prior year period. Gross profit for the six months ended June 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 the Company’s principal third-party logistics provider, partially offset by the tariff refund benefit.

Operating Expenses

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2026 |  |  | 2025 |  |  | 2026 |  |  | 2025 |
(in thousands) |  |  |
Selling and marketing |  | $ | 14,700 |  |  | $ | 12,731 |  |  | $ | 26,960 |  |  | $ | 25,184 |
Research and development |  |  | 4,813 |  |  |  | 4,471 |  |  |  | 9,387 |  |  |  | 8,464 |
General and administrative |  |  | 5,401 |  |  |  | 7,354 |  |  |  | 13,922 |  |  |  | 15,570 |
Subtotal operating expenses |  |  | 24,914 |  |  |  | 24,556 |  |  |  | 50,269 |  |  |  | 49,218 |
Insurance recovery |  |  | — |  |  |  | (5,965 | ) |  |  | — |  |  |  | (9,404 | )
Acquisition-related cost |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 608 |
Total operating expenses |  | $ | 24,914 |  |  | $ | 18,591 |  |  | $ | 50,269 |  |  | $ | 40,422 |

Selling and Marketing

Selling and marketing expenses increased by $2.0 million, or 15.5% for the three months ended June 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 $1.8 million, or 7.1% for the six months ended June 30, 2026 as compared to the same period in the prior year primarily due to higher marketing initiatives and strategic brand positioning.

Research and Development

Research and development costs increased by $0.3 million or 7.6% for the three months ended June 30, 2026 as compared to the same period in the prior year due to engineering costs related to new products.

Research and development costs increased by $0.9 million or 10.9% for the six months ended June 30, 2026 as compared to the same period in the prior year due to engineering costs related to new products.

General and Administrative

General and administrative expenses decreased by $2.0 million or 26.6% for the three months ended June 30, 2026 as compared to the same period in the prior year primarily due to the reduction in employee-related expense.

General and administrative expenses decreased by $1.6 million or 10.6% for the six months ended June 30, 2026 as compared to the same period in the prior year primarily due to the reduction in employee-related expense.

Insurance recovery

Insurance recovery for the three and six months ended June 30, 2025 totaled $6.0 million and $9.4 million, respectively, 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.

Acquisition-related cost

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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 integration related costs.

Interest expense

Interest expense increased by $1.7 million, or 85.0% to $3.7 million for three months ended June 30, 2026, from $2.0 million or for the three months ended June 30, 2025, and increased by $0.9 million, or 22.0%, to $5.0 million for the six months ended June 30, 2026 from $4.1 million for the six months ended June 30, 2025. The increases were primarily attributable to a $1.8 million loss on extinguishment of debt recognized in connection with the April 2026 refinancing. This increase was partially offset by lower recurring interest expense, primarily reflecting lower average outstanding borrowings following repayments of the Company’s prior credit facilities, partially offset by interest incurred on the 2026 Term Loan Facility, which had an interest rate of 11.17% as of June 30, 2026, and amortization of debt discount and financing costs.

Income Taxes

Income tax expense for the three months ended June 30, 2026 was $0.5 million at an effective tax rate of (7.7%) compared to income tax benefit of $0.2 million for the three months ended June 30, 2025 at an effective tax rate of 7.7%. The effective tax rate for the three months ended June 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 June 30, 2025 was primarily impacted by the change in U.S. valuation allowance and foreign taxes.

Income tax expense for the six months ended June 30, 2026 was $0.4 million at an effective tax rate of (1.8%) compared to income tax benefit of $0.4 million for the six months ended June 30, 2025 at an effective tax rate of 9.0%. The effective tax rate for the six months ended June 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 six months ended June 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.

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

|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2026 |  |  | 2025 |  |  | 2026 |  |  | 2025 |
Net loss |  | $ | (7,311 | ) |  | $ | (2,931 | ) |  | $ | (22,517 | ) |  | $ | (3,595 | )
Interest expense, net |  |  | 3,666 |  |  |  | 2,049 |  |  |  | 5,035 |  |  |  | 4,055 |
Depreciation and amortization |  |  | 2,744 |  |  |  | 3,098 |  |  |  | 5,637 |  |  |  | 6,224 |
Stock-based compensation |  |  | 1,271 |  |  |  | 1,008 |  |  |  | 2,636 |  |  |  | 2,920 |
Income tax expense (benefit) |  |  | 521 |  |  |  | (246 | ) |  |  | 398 |  |  |  | (355 | )
Restructuring expense (1) |  |  | 173 |  |  |  | 125 |  |  |  | 397 |  |  |  | 130 |
Acquisition-related costs (2) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 608 |
Loss on inventory in transit and other costs (3) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 605 |
Professional fees, litigation and other (4) |  |  | 238 |  |  |  | (182 | ) |  |  | 3,216 |  |  |  | (182 | )
Insurance recovery (5) |  |  | — |  |  |  | (5,965 | ) |  |  | — |  |  |  | (9,404 | )
Adjusted EBITDA |  | $ | 1,302 |  |  | $ | (3,044 | ) |  | $ | (5,198 | ) |  | $ | 1,006 |

(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 PDP acquisition.
(3)
Loss of inventory while in transit.
(4)
Professional fees related to potential acquisition opportunities, warehouse relocation and certain litigation proceedings fees.
(5)
Insurance proceeds from claims related to a loss of inventory while in transit that occurred primarily in the fourth quarter of 2024.

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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):

|  | Six Months Ended |
|  | June 30, |
|  | 2026 |  |  | 2025 |
Cash and cash equivalents at beginning of period |  | $ | 16,963 |  |  | $ | 12,995 |
Net cash provided by operating activities |  |  | 35,869 |  |  |  | 37,303 |
Net cash (used in) provided by investing activities |  |  | (848 | ) |  |  | 2,019 |
Net cash used in financing activities |  |  | (32,380 | ) |  |  | (41,746 | )
Effect of exchange rate changes on cash and cash equivalents |  |  | (39 | ) |  |  | 1,134 |
Cash and cash equivalents at end of period |  | $ | 19,565 |  |  | $ | 11,705 |

Cash Flows from Operating activities

Cash provided by operating activities was $35.9 million for the six months ended June 30, 2026, a decrease of $1.4 million from $37.3 million of cash provided by operating activities for the six months ended June 30, 2025. The decrease was primarily attributable to an $18.9 million increase in net loss, partially offset by favorable working capital changes of $17.2 million. Working capital changes provided $44.0 million of cash during the six months ended June 30, 2026, compared with $26.8 million during the prior six-month period, an improvement of $17.2 million. The year-over-year improvement in working capital was primarily driven by an $18.7 million favorable change in inventories, a $9.3 million favorable change in other liabilities, a $3.5 million favorable change in accounts payable, a $2.6 million favorable change in income taxes payable, and a $1.3 million favorable change in prepaid expenses and other assets, partially offset by an $18.2 million unfavorable change in accounts receivable. The current six-month period operating cash flows also reflected a $3.4 million non-cash adjustment for the change in sales returns reserve and the receipt of $8.2 million of tariff refunds, of which $4.3 million reduced cost of revenue, $3.6 million reduced inventory, and $0.3 million was recognized in other expense (income), net.

Cash provided by operating activities for the six months ended June 30, 2025 was $37.3 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 $0.8 million for the six months ended June 30, 2026, which was primarily related to purchase of property and equipment of $0.8 million. Cash provided by investing activities was $2.0 million for the six months ended June 30, 2025 primarily driven by $2.5 million of cash acquired in relation to the acquisition of the PDP business.

Cash provided by investing activities was $2.0 million for the six months ended June 30, 2025, which was primarily related to purchase price working capital adjustments of $2.5 million.

Cash Flows from Financing activities

Net cash used in financing activities was $32.4 million during the six months ended June 30, 2026 compared to net cash used by financing activities of $41.7 million during the six months ended June 30, 2025. Financing activities during the six months ended June 30, 2026 consisted primarily of $29.4 million repayments of revolving credit facility, $56.8 million repayments of term loan, and $27.2 million repurchases of common stock. These repayments and repurchases were partially offset by $82.5 million of proceeds from term loan related to the 2026 Credit Agreement.

Net cash used for financing activities was $41.7 million during the six months ended June 30, 2025, which consisted primarily of $29.5 million revolving credit facility net repayments, $6.7 million of share repurchases and $5.6 million of term loan repayments.

Management assessment of liquidity

Management believes that our current cash and cash equivalents, the amounts available under our Revolving Credit Facility and cash flows derived from operations will be sufficient to meet anticipated short-term and long-term funding for working capital and capital expenditures

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including amounts to develop new products, fund future stock repurchases and to pursue strategic opportunities. 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 June 30, 2026 and December 31, 2025 were $5.6 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.

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, 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.

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, 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. Accordingly, the 2025 Credit Facility was no longer available to us as of June 30, 2026. As part of the

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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 subsidiary 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.

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 June 30, 2026, the interest rate for outstanding borrowings was 11.17%.

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.

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 June 30, 2026, we were in compliance with all the financial covenants under the Credit Facility, as amended, and excess borrowing availability was approximately $31.0 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.

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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 its 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 June 30, 2026 and December 31, 2025, we did not have any derivative financial instruments.

Interest Rate Risk

As of June 30, 2026, we had cash of $19.6 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 benchmark rate such as Reference Rate Loans and SOFR, plus the margin specified for term loans. Borrowings under the 2026 Revolving Credit Facility accrue interest at a benchmark rate such as the prime rate announced by Bank of America, Term SOFR, Daily Simple SOFR, EURIBOR, or SONIA, plus the margin applicable to revolving loans. Because these benchmark rates fluctuate with market conditions, our interest expense will increase or decrease as the underlying reference rates change. As of June 30, 2026, under the 2026 Term Loan Facility, we had $83.9 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 $83.9 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 June 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 result 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.

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We continue to experience the on-going impacts of a higher interest rate environment, which resulted in higher cost of goods, selling expenses, and general and administrative expenses. Such increases have had and may continue to have a negative impact on our profit margins if selling prices of products do not increase with the increased costs.

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 June 30, 2026.

Changes in Internal Control over Financial Reporting

We are in 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. There have been no changes in our internal control over financial reporting during the period covered that have 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, even 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.

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PART II. OTHER INFORMATION

Item 1 - Lega l 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 - R isk Factors

T here 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 is scheduled to expire on May 6, 2027.

|  | Issuer Purchases of Equity Securities |
|  | Total Number of Shares Purchased |  |  | Average Price Paid Per Share |  |  | Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs |  |  | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs |
Period |  |  |  |  |  |  |  |  |  |  |  |
April 1-30, 2026 |  |  | — |  |  | $ | — |  |  |  | — |  |  |  |
May 1-31, 2026 |  |  | 787,536 |  |  | $ | 12.92 |  |  |  | 787,536 |  |  |  |
June 1-30, 2026 |  |  | 1,206,990 |  |  | $ | 12.28 |  |  |  | 1,206,990 |  |  | $ | 30,592,433 |
Total |  |  | 1,994,526 |  |  | $ | 12.53 |  |  |  | 1,994,526 |  |  |  |

Item 5 - Othe r Information

On May 26, 2026, Katherine Scherping, a former member of the Board who was serving as a director at the time of the termination, terminated a Rule 10b5-1 trading arrangement that was intended to satisfy the affirmative defense under Rule 10b5-1(c) under the Exchange Act (such arrangement, a “10b5-1 Plan”). Ms. Scherping adopted the 10b5-1 Plan on March 23, 2026, and the plan provided for the sale of up to 13,465 shares of common stock through March 23, 2027. No shares of common stock were sold pursuant to the 10b5-1 Plan prior to its termination.

Except as described above, none of our other directors or executive officers adopted or terminated a 10b5-1 Plan, or a "non-Rule 10b5-1 trading arrangement" (as each term is defined in Item 408 of Regulation S-K) during the three months ended June 30, 2026.

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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).
10.1 |  |  | Financing Agreement, dated as of April 30, 2026, by and among Turtle Beach Corporation, Voyetra Turtle Beach, Inc., VTB Holdings, Inc., each subsidiary of Turtle Beach Corporation listed as a “Guarantor” on the signature pages thereto, the lenders from time to time party thereto, Blue Torch Finance, LLC, as collateral agent for the Secured Parties, and Blue Torch, as administrative agent for the Lenders (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 4, 2026).
10.2 |  |  | Loan, Guaranty and Security Agreement, dated as of April 30, 2026, by and among Turtle Beach Corporation, Voyetra Turtle Beach, Inc., TBC Holding Company LLC, Performance Designed Products LLC, Turtle Beach Europe Limited, VTB Holdings, Inc., Tide Acquisition Sub II, LLC, the financial institutions party thereto and Bank of America, N.A., as administrative agent, collateral agent and security trustee for the lenders to the credit facility (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed May 4, 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.INS |  | Inline XBRL Instance Document
101.SCH |  | Inline XBRL Taxonomy Extension Schema Document
104 |  | Cover Page Interactive Data File (embedded within the Inline XBRL document)

** Filed or furnished herewith.

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SIGNAT URES

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: | August 6, 2026 |  | By: | /s/ ANDREW CLIPSHAM
|  |  |  | Andrew Clipsham Interim Chief Financial Officer
|  |  |  | (Principal Financial and Accounting Officer)

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