Shares of Turtle Beach (HEAR) have surged in pre-market trading after the company's preliminary results for the third quarter topped analysts' estimates. The company said in a statement that it is seeing a "strong increase" in demand for gaming headsets. Q3 VIEW BOOSTED: Gaming headset and audio accessory company Turtle Beach this morning reported preliminary results for its Q3, which ended September 30. Turtle Beach said it now expects to report EPS of 74c-78c, significantly higher than its previous view of approximately 44c, the (4c) loss the company reported in the year-ago quarter, and consensus estimates of 46c. Turtle Beach also raised its Q3 net revenue view to $73M-$74M from approximately $65M, an increase of 103%-106% compared to $36M in the year-ago quarter. Analysts had expected Turtle Beach to report quarterly revenue of $65.6M. Additionally, Turtle Beach boosted its adjusted EBITDA view for the quarter to about $17M from $11M, more than five-fold the $3.3M it reported last year. While it plans to update its outlook for the fourth quarter and full year on its Q3 earnings call, the company said it expects the full year outlook to increase by "at least the amount by which the Q3 revenue and adjusted EBITDA exceeded the company's prior guidance." In August, Turtle Beach lifted its FY18 EPS view to $1.95 from 95c and its revenue view to $255M-$205M. Analysts currently expect full-year EPS of $2.12 on revenue of $257M. EXECUTIVE COMMENTARY: In a statement, CEO Juergen Stark said the company is seeing a "strong increase" in demand for gaming headsets, adding that the momentum Turtle Beach saw in the first half of the year continued in Q3. "The strong increase in demand for gaming headsets that occurred with the rise of the 'battle royale' genre has continued, drawing new gamers into the market, leading veteran gamers to upgrade their gear, and increasing the overall usage rate and installed base of gaming headsets," Stark said. Epic Games' "Fortnite: Battle Royale" has been at the forefront in the "battle royale" trend in gaming. "Exciting launches such as Call of Duty: Black Ops 4 and Red Dead Redemption 2, coming this month, should provide another set of high headset usage games," he added. Further, he stated that "Given the fact that our surveys show gamers, on average, replace their headsets every 20 to 24 months, which we believe was driving the majority of the core headset market prior to the battle royale phenomenon, we anticipate that the increase in gaming headset users will be reflected in the market size going forward. We also expect to have once-again outpaced the overall market based on increased year-over-year share in Q3, further adding to our revenue and profit." PRICE ACTION: After being halted pending the news, shares of Turtle Beach are now up over 11% in pre-market trading.
