GoPro (GPRO) 3 Nov 222022 Q3 Earnings call transcript

Hello, everybody, and welcome to today's GoPro's Third Quarter 2022 Earnings Call. My name is Drew, and I'll be coordinating your call today. [Operator Instructions]. I'm now going to hand over to Jalene Hoover, Vice President, Investor Relations to begin. Please go ahead.

Drew. you, Thank and conference everyone GoPro's quarter third Good welcome earnings call. XXXX afternoon to today Nicholas With and GoPro's are me CEO, McGee. COO, Woodman; Brian CFO and Today's Nick introduction Brian, a by agenda commentary followed some from from Q&A. will include and brief

XXXX Web about read outlook, site. commentary posted quarter management Relations Investor and to our For detailed the third section performance information we our please the of GoPro's

call everyone include pass the to that forward-looking remarks I like remind Nick, Before to may our today statements. I'd

other are number differ are may not all and are statements guarantees of and results facts materially. which and performance not subject statements Forward-looking to that cause actual uncertainties, of historical future a to risks

related COVID-XX means that Additionally, war based any time. not assumptions This are to forward-looking pandemic in and Ukraine. change as could uncertainty on the of impact and made including, duration of the the statements any at today today, results to, but limited

net with Today, to Form expense, believe margin, of ongoing operations loss and share to Exchange evaluate We We September XX, accordance and and Commission we December loss, on economic the a understanding information about use as non-GAAP how information from that most own SEC, update found we useful, is risks to the non-GAAP results discuss quarter XX-Q our of perform can in on as that and events. we ended recent our year expenses GAAP which comparisons obligation uncertainties to per result outlook the with annual manage in these and diluted reconciliation Our may date. results GAAP better to understand press gross in as differ profit not our for To reporting is actual any Investor including on non-GAAP EBITDA choose to the future results and can Securities basis. on and could based our afternoon, Form do and manner the this new our of our today's to non-GAAP filings because we XX-K and ended commentary, of refer we it that provide information a enhance to the of you operating on be future the internally cause for the is was report XXXX. business site. issued undertake on commentary available or in statements enable results. quarterly similar information operating profit XX, the of with a the updated operating file investors basic Relations net XXXX, the is section A to analyze report well as Web operating this posted which And performance. release and is

In management addition third and earnings a your reference. discussed call that replay on all management otherwise Web non-GAAP. section numbers for commentary revenue The the posted have for we metrics Unless than Relations GoPro's financial slides management are a commentary, and Investor posted to are quarter press slides of conference site noted, live as the XXXX. of other as the statement-related detailed commentary, well webcast income to today's link and are containing release the this in data of

Now, GoPro's turn Nicholas to I'll call Woodman. the CEO, and Founder over

everybody. hi joining and us Jalene, Thanks Thanks, for today.

Relations of margin were cash and HEROXX EBITDA HEROXX XX% year-over-year, our week was new actual September, guidance U.S. challenges, from revenue cameras; the in QX actual XXX to results report high approximately will Black product to impacted of basis, and be million introduced begin site, a an our Black, and we're over non-GAAP the commentary, been Investor of higher X, of many HEROXX November 'XX would November exciting will $XX QX Mini, management that revenue customers X%, XX% we launches $XX new of happy results. in for available by QX section a As which XX% the versus and $X.XX milestones. macroeconomic end retail Edition $X.XX. period stronger to EPS at pleased QX the approximately versus Black million. at lineup the global and flow of revenue beginning many XXXX, results have In of gross delivered Creator constant GoPro we're Web shipping Like XX% HEROXX million with GoPro's FX to results. we was was and week operations of On and XX. our the dollar. Considering GAAP quarter companies, or and shared we currency GoPro.com up posted EPS

the revenue business. customers XX% our GoPro while respectively our end bottom and for also grew XX% financial powerful annual a between automatically for subscribers by launched serving gross recurring subscribers million GoPro with X to subscription GoPro contributes an August, revenue gross in margin and $XXX cloud year-over-year million, XX% and continues positively We value and experience QX, positioned highlight And margin sends to At X.X generate of subscription line. and engine to million subscribers. to which to enhanced than more drive that as surpassed we million videos our $XX and in service XX%. are and

to achieve execution these X.X serves talented and solutions as a on people. role be entirely impossible GoPro people's during to imaging in macroeconomic document. that helping million share And lives, capture company testament them our is believe to our We are plays challenging subscribers We experiences by to is passionate employees. and year global we're most end. the resilience our would meaningful otherwise thanks and ongoing times track creative advancing that active the world's relevance GoPro's digital

innovation plan invest value with growth. and products leading to yield subscription we XXXX, to services people, in ahead edge and emphasis and Looking technology on an creation that

beyond, company to a position strategically are potentially XXXX for headwinds company global and currency While the confident improves normalize. economy and in when rates operate as to in ability we we and anticipate profitable the exchange our continuing GoPro macroeconomic

business Our is strong.

positioned feel the are well market future. Our leading. for we And products

Brian Q&A, jumping Before to comments share. has few into a

Thanks, like color full I'd to our Nick. some on year QX outlook. XXXX and provide

both Web a of and reminder, Investor Relations CFO section extended site. our the commentary and comments in management the CEO posted As

ahead, year anticipate we the continued impact Looking in we've from dynamics guidance. macro business key which full our quarter contemplated and on fourth XXXX

million of program. We million, expect our XXXX share cash contemplates which existing $XXX exit with XX under with repurchases to continued remaining approximately

and to We at to relative yen. U.S. current pound, expect the the dollar British dollar, levels euro Japanese remain Australian

more that more merchandize food, than and impact margins to million compared and year than call. outlook reductions inflation reflects prioritizing XXXX revenue, inventory, since items struggled dollars. in of abundance to more housing, last XXXX a million anticipated living have other retailers Our FX high. to experiences over $XX many and August XX paying in open buy when as secure hovers earnings an Consumers earnings healthcare our also and of to expenses for things resulting four-decade are around Unlike while

retailers weeks inventory, a Friday As in are increasing and promotional accelerating announced reduce result, advance. their activities being Black such deals as to

and grow subscription and remaining market of edge products, following the XXXX, positive, will into owned inventory. focused growth ahead on flow focused manage Looking business our technologies cash priorities; manage channel and total share, innovative with the on develop appropriate retention, laser laser we leading levels

macroeconomic present, will While environment improve over the currencies the time. challenging and in

with exchange which business generate an believe earnings conditions market currency improve the effective are We model, will leader normalize. we once impressive again macroeconomic once and rates

flow. We operating in drive XXXX be cash expect to profitable while to continuing

our environment current balance believe We take ready future economic as to and strength sheet Operator, GoPro the to emerge will sound. have navigate the we're fundamentals questions. stronger business are an even in the now we

now session. Q&A today's Instructions]. Thank you. We'll start [Operator

is Please go from from ahead. Our question Yang first today Oppenheimer. Martin

assuming taking the the you no margin for Thank you for my afternoon. what expectations Can year? and about terms, In further Good currency headwinds? puts are very question. Hi. next general talk takes

Yes.

I driven the or so given think on constant we'd exchange results the exchange a a to minus for expect to around it's by end XXs that it's an by to XX% going basis, provided going basis, we actual closer on is quarter, which way. Martin, So XX%. what's the operating with be guidance And the rates. just fourth of currency lot our all On model to plus rates, look would mid currently at low

there customer meaningful feedback core the Got GoPro signals early or up, and has on from maybe impact And it. guidance? is you any not Mini, any the whether your delay can follow XQ from Mini get reviews, versus Mini's on

no. question, guidance the On

Mini number best, four and As our is HEROXX would then in be I be quarter the last we've HEROXX I will expectation the think the perspective cell that fourth lineup from Mini. a in and phone the nine think talked I think on call,

I'll expect we and expectation Nick our the been that that's comment let on reviews. hold. to So

that of part first the catch didn't I that. for Thanks question.

Yes.

are Mini? core this saying product? So users are about what customer feedbacks on the new What

you haven't park back, down favorite the feedback in the really all a reviews out come that assure will, demand one had I and But more, media embargoed section-like previously until interested shaped that rates, And just had slimmed and of is resolution cube that form factor. coconut Mini received factor of my form yet. in frame convenient of are continued for of through but GoPro everything the and we Session was experience the we've the camera, and is it the positive. it bring Session Mini. that Black its is Mini. we've we that all a full the with you wireless, much Those start It's so that is camera come performance can distinct if remember as it's camera. very time. button out and become hit much of which for us a may result who simplicity everybody to Those the in back simplified shipping HEROX Session camera of camera features that Well, we seeing actually session, was HEROXX

I'm this be to of our think to customers. get product excited hands I another And So in for the really hit GoPro. going it's for

Got very you I it. the appreciate much. color. Thank

Suva go comes from today Citigroup. ahead. Please question Jim next Our from

the Nick A down know inventory been and little hearing levels. consumer on the you've I to Brian, for manage better. and electronics details. stores great Thank there working has a you've success, question GoPro.com been been you, -- about inventories your a electronic able

we how but kind about small your levels levels, are inventory they, should and I'm also think of retailer, box about building inventory hearing? it's there And sure big also? expectations, at what kind retailers are wondering what of storefronts external Just the just you

Yes. is this Jim, Brian.

quarter, big year-over-year, In comment me they box supply on hand declined basis. a so Let third XX% on down. I with inventory mentioned reduced they’re that Their on of the inventory. along definitely seeing dollars the inventories bringing holidays. buy them their definitely retail. year And of year-over-year weeks in I to and my down, this going seeing normally to down is the weeks X, They're opening think we're remarks open were into of that And we're time around eight they XX XX, it. about

not definitely By they're the GoPro. So down. inventory that's related to just way, squeezing

more of are I think demand a broader this willing regarding industry-wide retailers is to hold. what kind issue and of

to it going So not just across we're see It's the We're it big everywhere. seeing box. board.

dot-com, the to On the up quarter. pleased. in we're It revenue of XX% pretty was

I that from XX% think year. last was up

and our were I year, drive this have we margin XX%. should because that's the also XX% subscribers, right, it progress we're but course, dot-com XX% to on so of front. helps think of GoPro.com. XX% [indiscernible] year, GoPro.com improving, last We And more on helping demand about we making good on driving to overall front be definitely between

model exciting change to pretty business it's as that pretty that's be we've So and made sound. proving

about I'm take too Are And reshuffling? employees, course subscriptions increase alluded caught comments, do bodies opening kind because market or like have in on my But assessments, was focusing on much share. comments that. maybe your cash what subscriptions? it focus, made and seen success great To flow. increase of even reading in those or the more a that, into does some more Nick your already Nick you to with place, of bigger ear just

me. No, if you -- on of top comment and maybe Nick can

be of this X.X over million up expect subscribers end That's XX% the to XXXX. year. by We

business who the better subscribers than up down total this out was X%, and Another actually storage, seeing actually retention time annual X% reported companies subs make pointed has some opposite. we're about in thing XX% of from we're we storage improved last year the their is of our

content. Our storage GoPro for year-over-year doubled has

And put by another up So who people we're which providing we're service. highlight seeing consumers. usage videos in the real cloud, for their the is content auto great now

fastest engineering growing to portion is software more XX% our and build the because drive and to continue to our we'll continue a So the XXXX offerings, product it's margin XX% subscription of business, to service subscription right? most into we've our As out product, profitable got.

for out So it be the and case. turning the call GoPro financial we engine it's to

really that be how would investing for I ongoing emphasize we add want to it to beyond on our engine just a GoPro laser our proving are in And our clearly value our just focused to subscription for very subscribers. and market-leading be cameras. growing proving differentiator It's add business to business. investors already It's for to our we to subscribers. that Yes. valuable financial the it's And goes

really And value emphasize we strategy so the the and our wins around everyone scale when business. it's of efforts subscription growing

I up think on that Brian said glad it So and picked I'm it, well, Jim. you

the I question manner, much so Thank you complimentary been very because the meant a a Yes. great in And again, for it's success. details.

that. Thanks for

[Operator Instructions].

Morgan Our Stanley. Woodring next question Erik today is from from

is now open. line Your

the first you Thank my guys. for if questions. you Hi, Maybe, ask one. Nick, I taking

cameras, comment maybe look just you on up. the data? what cameras the that about it to how that kind low of change? in of you follow now launched you've think can something we of the hanging was Was to almost thought derivative your can sell-through? and it you each fruit? that in Brian's behind have earlier, to then important Now love why you new the terms force strategy? changed and Was And And of new I elaborate flagship strategy just sell-in just Thanks. was I driving something kind the then of a getting all should back, understand

of out at same different to referring different best types points? just the coming you rather having better, but Are cameras with a price not good, of camera,

Exactly.

Okay. was before what thought that we people research before Well, -- into customer was what broke we what -- through of categories just learned we price learned people sensitivity. different

different buyer level you value We last that and entry at price wants spear your buyer, the and latest to that your different that more are a is levels. there of then who willing the it tip have there's interests needs greatest buy for it. and your to lot to also than flagship a and have buyer learned price, You year's pay just discount, at

So of a it's a bit matrix.

And the price but on Edition gave different a both at different success types at of that are of not points. so for go in price. year builds different experiences, to pushing before the work different just different what the we to us points, developing solutions was consumers products went price confidence of performance the with end directions where to Black HEROXX and HEROXX Black which Creator really boundaries higher features Creator Edition, also the on we and And the

exceeded price and simplicity. also into in more we you a not highest It of not and video quite and how product GoPro to expectations GoPro photos our as people of and there of out just captures more it how terms something it's interested come HEROXX can that as to learning Black lower simple, make still the moved the at happy GoPro who point, make accessible We're a straightforward and but we and ultimately So down looking for products, version stack, want capable still And new it's came maybe from about done then they different why the to we yet really yet. that. with stayed realized at how want more price they that necessarily well. yesteryears buy us, that, that's are we're and our discount-after-discount. people price are there And we done we're with quality

supply can development And But it's innovation happy an customers to GoPro done this GoPro's done and products products way this and exciting with getting exploring the so not periods in great outstanding. teams there's we're just supply really new are how we're during to where job year gone again, kudos challenging in the out product So TAM. grow year. with such our Once yet forth. team got challenges team for operations and that engineering products court and

direct Okay, to one Nick. And that I just then helpful. really was Thank if you. maybe, Brian, you,

come might have and box most more Q&A in reducing it's I'm weeks curious color inventories other and whatever is earlier might now to if your from your seen alluded remarks waiting reduction look from how we there prepared just seat, to it, reorders supply. just holiday How and obviously or of it You've inventory on of in would be is retailers demand you. then Thank can it shaping of And that's share come? last great? year kind for for And different you any up? that me. big

October comment did the prepared be. right in through our was month our on to that track remarks, In of where needed I it sell to

what said, demand environment. a doing is in would it again, predict see, beat QX. And for great is be. historically. who I inventory think food, as of good are same And housing to at not my did been those difficult that's to have to quarter, definitely more heck even We're are there's the and of our time, down living that. numbers for many. this our be our December. bunch or absolutely of That alone our think in job And This care, demand of good in inflation predictors. to It's so challenging the QX the We're has a rising, as behavior we took given got a at they We're I rates numbers, to have difficult think I pretty you'll they what's going been team that's handle is play carry in said, teams planning about hit be predicting here. be out. QX. are November on job of going will October. month paying dynamics kind unique And interest those feeling actually darn a two positive. able guidance, why of demand in of pretty our the willing what good because offers retailers And dynamics. I kind so Consumer -- we as our on. levels we at and range going for not And and dynamics have a all-time Like So a on much the wide highs, kind playing pretty expenses for

are So those think I positives.

the midpoint came to two but also we ahead. I'd so of we million the X.X that in the subscriber still track out guide. so to point go, have We months, number. continue And this very we're far well to big tracking out months

that the right pieces model So drives in direction. our are key the of moving this business

Thank Brian. you, Super.

you. Thank

at have We no further questions this time.

now management back the I will So to refer you remarks. for team closing

very operator, and for thank you Thank everyone joining you much, call. today's

today's As I confident we're and said GoPro profitable challenges very ahead, are is to the we until positioned the earlier, operate improve challenging to off. business our macroeconomic GoPro signing in exchange these and thanks normalize. for weather conditions rates joining our well times a as team call. again Many excited future. This Despite ability is company for foreign

earnings GoPro concludes third XXXX quarter That today's conference.

may now your disconnect You line.