GoPro (GPRO) 6 Aug 242024 Q2 Earnings call transcript

Good afternoon. Thank you for attending the GoPro Second Quarter 2024 Earnings Call. My name is Cameron and I'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to your host, Chris Clark, Vice President of Corporate Communications at GoPro.

proceed. may You

Today's Good XXXX Cameron. GoPro's welcome GoPro's Q&A. Brian to Nicholas from brief Thank followed Nick Conference afternoon, Call. Quarter by McGee. COO, and Earnings and are will With Second include Woodman; commentary you, CFO and agenda me CEO, today

GoPro's For Relations we XXXX as release earnings website. as detailed and second section posted please outlook, the performance about XXXX our commentary to press Investor the read of information management quarter well our QX

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

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

are profit we could commentary, differ to with with December XX-K Exchange and XXXX, statements the ended results you we to noted, share with annual as on on basic non-GAAP found with to as today margin, and on filings is on otherwise reconciliation on EBITDA, these revenue from well loss, be This and expense, at diluted basis. forward-looking of can other issued our income today. SEC, are could and XX, as for to today afternoon, and non-GAAP. the understand obligation Today, are net discussed management year net that adjusted our and release a most Investor GAAP this the the uncertainties Form quarterly Form on the XXXX. we is report may commentary Securities statement-related XX-Q any events. cause file for which remarks XX, of which operating report GAAP the our and actual and time, discuss information any in risks gross updated quarter the that of was recent any in as the update website. that a the made Relations posted Commission refer Unless means undertake of or assumptions all numbers June results future per ended in change as new To expenses statements better result not press section A based do that accordance Additionally, loss operating including non-GAAP than and profit

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

service head half thanks, inventory reduced more us In of and guidance and Chris, of QX, achieved and to $XXX units the than a X% growth everybody, Thanks, of we gross slightly ARPU X% improving in grew of year. $XX for $X.XX. channel joining in our GoPro loss $X.XX revenue the year-over-year second sell-through XX.X% into XXX,XXX Subscription million the as we million, margin million, driven and revenue to increase retention exceeded EPS in to due of today. rates. and by quarter goal non-GAAP subscribers with X%

America. We've retail since globally. retail approximately the Latin brand more continue also X,XXX XXXX across continuing along to now presence, retail with when doors global May added count all our regions, in expand growing with expansion new EMEA, coming, XXX adding of strongest we doors We new prioritized at store our in than

retailers as in-store well cameras will own as expectations improving exposure. merchandising expand widely SoftBank and Group's also throughout SoftBank stores accessories X GoPro we've SB Our and retailers, while distribution of Japan's with C&S available, Yodobashi including consumer Japan, through brand largest count partnership products retail win more with their are C&S electronics and distribute Yamada. are door A to GoPro plans track ensuring expansion in the QX our Japan, on growth discussed. is SB previously Corporation

a transitional previously our with not the taking We XXXX would way satisfied shared shape. we're exceeded expectations, year. is be QX largely results While that met or XXXX

profitability confidence, lower-than-expected expectations profitability believe through challenges a for can second details and combination competition year. the executional achieve increased which resulting his launches We XXXX However, a operating of we of unit in new consumer and revenue continue product in the are half our begin and in XXXX, of in and Brian XXXX addresses will significantly commentary. expenses, reduced reduced which in

business seeing Much in markets, ones broadening we of diversified broader leverage imaging where we to including a growing driven in capture are like a product the brand currently as growth We needs alternative digital successful our consumers' cameras portfolio introductions, GoPro our where in significant opportunity profitability. is long-term has GPS our the digital and and in specialized driven in has by phone, as believe in well product can interest our the recover new growth XXXX. We market, beyond to data believe range Garmin XXX-degree leadership capture how growing share deliver forms key category image business believe solutions specialized restoring new by addressing catering we of capture imaging the we serve various markets built to of resonates. to

previously Our motorcycle we the is across pursuing exciting this, of example of similar are in a and helmets expansion opportunities number announced tech-enabled an segments.

unique believe as who in both factor an form we fully next of we our Our new significantly rollout as will new expect camera value Hero's entry-level of customers consumers $XXX with flagship to the who our of design HERO new to well are with new exciting that brand that enhanced the new characteristics and Black, along launch see the month entirely products camera, features new starts capabilities. HEROXX existing wow

than low-margin Importantly, material HERO will impact have margin our on GoPro's camera this a and margin cameras, in XXXX. current the totally believe redesigned we new positive ground be gross to is $XXX entry-level up product better from a our

beyond, a are and profitable to GoPro business. committed XXXX as to ahead we operating Looking

too otherwise. for Our value brands products our accept and strong and are too creation us to opportunity significant

success growth executing GoPro. to is road our to XXXX long-term for map while plan profitability strategy believe expenses, and XX reduced significantly we operating key Our that deliver is diversification through on restoring

the Now, and our us Brian will details outlook. through on take share second quarter

Europe was margin the in XXXX to increased America. by camera and our North above XX.X% of Revenue XX.X% $XXX compared guidance, was midpoint XXXX. driven Nick. the million, HEROXX X% quarter QX Gross in second our in for of largely Black demand Thanks,

Our a subscriber X% X.XX up sequentially. in and slightly quarter, increased year-over-year growth to base the million

from GAAP million slightly year-over-year. compared in annual and grew prior that cameras line QX X% year-over-year a revenue, was rates XX% in Retail rates. Our per above $X.XX growth. in approximately X.XX sold product XXXX. total attach was down year-over-year. $XXX Subscribers primarily X% $XXX non-GAAP losses XX% XX% XX%, from offset sequentially channels highlights. X% including Aggregate to XX% with subscriber improvement retention rates to XXX,XXX and $XXX was million, second year-over-year improved flat units, a million, of million was retention in XX%, down was $XXX and subscribers. Guildford.com grew Channel across XXX,XXX cash share inventory DSP decreased Subscription total or resulted revenue XX,XXX was launches new recurring subscription year-over-year. service X% Sell-through base revenue. premium-plus ARPU of the per significant to loss loss share Notable to revenue represents or $XX $X.XX. revenue quarter. attach Subscription sequentially, revenue of annual was approximately was product quarter million was performance units. inventory all in $XX reduction year advance in

been for GoPro. XXXX noted, clearly challenging has year a Nick As

Moreover, product negatively were by fluctuation revenue factoring of XXXX on delay camera concerns relative when at to in delayed of expected $XX of impacted we're camera have XXX-degree continued promotion. This sales for foreign decline launches, price competition $XX in QX million approximately is impact Japan. to not GoPro.com, effect globally, is rate needed cumulative sales and impact China a more The prior product The launches in and We consumer range in to new delayed macroeconomic by recently, $XXX our increased into further products million. launch spending of million expected a guidance. been globally, to XXXX. XXXX exchange

Our down million above XXXX XX% in of from in expectation range unit on to $XXX to the in $X.X XX% prior range as the million year, of based and respectively. to factors million $XXX the and $X.X be revenue million, or the for sales

overall totally and cameras existing new new our However, that new as to factor with are introduce our flagship new form track are new signs digital shrew as in XXXX. market noted, Including we customers, believe both XXX capabilities of the camera a growth September. X and XXX-degree enhanced features imaging new on in significantly as a in Nick attributes and and excite well that will we camera seeing

essentially imaging is XXX-degree result our XXX digital half QX guidance the growing of to faster. XXX-degree category growing, no inventory As our mentioned, of remaining in out sold XXXX which second cameras XXXX. and reflects XXXX of in the We sales category plus camera date we is

as this represent renewed revenue of digits of XXXX mid-single represented revenue to X% category camera XXXX could percentage XXX-degree a category much in and and the in revenue reference, For XXXX, GoPro. making -- for of XX% growth as

We XXXX plus committed from million profitable operating midpoint to million, projected $XXX to minus are reduce XXXX level. being million, XXXX nearly or $XX plan to reduction and a the expenses of in $X of

line to marketing, $XX million driven XXXX, by operating expenses. nonrecurring expenses to We reduction in other sight $XX expenses by the approximately technology expenses have in of be of and a to development expected is reasonable operating which million and reducing salary XXXX from reductions

opportunities a anticipated summary, expenses In our including ahead, our ways through to remains X growing launches to month, we diversification. will significant reduce continue expansion year transition next addition, XXXX. In look and TAM of with of footprint for global further our product but in camera XXXX

to a Nick we committed As are business. profitable operating as stated, GoPro

products XXXX, second us gross take significantly Operator, to improve XXXX and prioritize for in into to a To too to brand of return operating combined profitability. and XXXX half to creation we our to we now and opportunity questions. ready end, Our too the accept with are are carry margin lower strong value otherwise. significant in expect expenses that

Instructions]. [Operator

next your line is In Woodring with question line muted. question Stanley. first of Alicia Wedbush might The with this Morgan line from the be from Erik, Securities. Reese of case, the the comes Erik

proceed. may You

are you what or you're a year? side, of by what and whether the little bit level I you what wanted next driving manufacturing see design to could issues to be side alleviated talk and was delays, alleviate doing the that about if those will there have the confidence

not launching pushing due performance and our to that to and our best is a deliver we've level product commitment achieved and for. are innovation to seeking experience quality possible known of product until for GoPro the the customers delays The

XXX that we characteristics stimulate to mean to the appealing have when think products, engage we But confident be and market by they're to launch will are that market going be So, it's competitively. What going the unfortunate next it is in level. them characteristics month. consumers. is The people launch excite it's and And super we to believe, X to product news it And Black good the super, its new entry-level our is fare good on delays. factor excite the next very are really really I of HEROXX I'm did on product that we terms and a week, obvious that launch will of it we relates that number customers as then about do going is that when product of capability very we'll the unique well. product, how existing excited that time that as X, entry and our feeling of a importantly, significant MAX we at we track new in about. enhancements camera, on form has one in

digital growing a that category. are a imaging the we category. We is established category significant in that. that XXX in noted, is role And imaging, in growing a XXX, cameras market overall, digital previously were leader Brian playing and As

through all camera Our the it sold of XXXX. MAX end the category until was at we leader

sold the As on that noted, recognizing units not Guildford.com in other and XXXX out. of any cameras we are revenue now that small than number Brian we're XXX sold

confidence significant revenue launch. we're for, it lot of share in of that to opportunity terms the XXXX, recoup have and a And we launching XXX we're So, opportunity well very in well category set that. up really that for XXXX in full confidence and in represents known a of very

that we launch products, do would the see. not very when we're we in that. end, So like execution the But to confident the on

of couple if may. follow-ups, I A

anything and So to any manufacturing components, correct? that clarify, no parts procuring, just there were with issues on

XXX-degree our actually At any supply No. or the the the in an is least for issue of not cameras 'XX. chain camera

driving Just innovation.

exciting. That's Okay.

that you? still to about a XXX year since there half What's in that follow-up, to On go, you have this concerns share? as know the sellouts concern of XXX and the do you not would losing are that landscape the second would or market wanting competitive have the year of any the

Well, of we're market that mean, market. I we're course, into going on share products selling lose to the

product what opportunity But terms and our products of on missed of we recoup It mis-execution our as market fare new to in in up revenue. confidence a anticipated. strategy sales our the of restore is. a XXXX part against ability we due time launching not will opportunity on believe believe go-to-market how lot our product and competition with and stacks that's our So, gives in to how percentage and a share our meaningful XXX quickly us as the

Brian As somewhere in and X% anticipating noted, XXXX. XX% coming revenue XXX our between we're of from

of the we rebound have. significant So that that gives a opportunity you sense

I GoPro that important think it's established note to category. this

very and category and leading for brand feel the GoPro hear and that consumers strong. strong channel is in a awareness as the very we So, is from see demand from

XXX-category of like, category. are though as the We from not GoPro it's wow, going established XXX. out entering the to where be nowhere So, we

us So bush the no the the with own for opportunity But on inroads planned have that to beating quick to come category opportunity back no around the the is there into beating back make around that in the on we that's we a front, that. XXXX. we for XXXX. execution also product to miss our have bush significant as There's

line the with from is Oppenheimer. question next Martin The of Yang

Can sources pipeline would 'XX? you in and or between into maybe of savings dig cost 'XX? cost How say cuts development and compare the costs development 'XX you the

is that projections due $XX in XXXX. nonrecurring XXXX. million would have I engineering were XXXX $XX we in that that prepared won't incurred mentioned in million remarks, basically that of we Well, from expenses operating to reduce expenses About my development down in

the as basically of cameras perspective. lot are a in well into behind now from So, innovation going beyond that's 'XX that 'XX as us and

'XX And the opportunity into innovate on spending 'XX. so, 'XX to we we've got to found the in based now continue and

company across other review marketing the expenses and addition, to reductions well in as In expenses we'll some as operating salary reduce. to continue

that, during were down add expenses I'll just as in take below that able a reminder, XXXX. think operating I to $XXX million COVID, we

and NRE this heavy we So, efficiencies the had for right? map time to operating of drive because have a of is perspective, 'XX, lot results. behind a impacting the really ways 'XX lifting do us to an kind road we've But without from

you My a incremental users potentially second and market consider currently the profiles. consider regarding Is competitors core any your camera users is who perception from address? your do there consumer who does that of could question gain on from you you as update do or you not

Our content primary customers are creators, bloggers, active consumers.

brands, active them influencers, they're their active in are both and creating their who Sorry, personal during as we our captures experiences, call world's personal interested socially, television. customers in top professionals, or in as sharing and well content participating for include and whether content review activities capturing lifestyles film for either the

which, the directors that, is As not like blockbuster producers for a we or that us, noted and which in used paid there great Twisters the by was being the product film, remarks, presentation GoPro relationship the phenomenal. to our decided a version, GoPro, anything use throughout the prepared and just written there's lot of new features in film, way,

needs intended a to the originally there's well. serve not We opportunity ask And you that. products beyond knife, of thank and markets if to terms the needs a products line margin subscription, HERO range to it's camera be things road you our HERO army in diversify phenomenal new of lot and Swiss there's the but product very all for the and people, of It's customers. a But growth an in So, more we of opportunity much only that as our what to we develop you growing consumers. for tailored but are of can that to is a tool, done the broader significantly the address a is them. job map imagine, TAM opportunity us bit offer more more opportunity phenomenal some today some our of of camera. to to of all today, specifically as will, that and expanding an a markets top also an create specific for

motorcycle tech-enabled separate perhaps brand doing today, market meets an foray strong. accessories Our tech-enabled serving very so the is a that. into totally helmet needs that product of the But example It's third-party a our new specifically to than more where of helmets with is motorcyclists helmet. attaching

product you're more don't we on So, any types serve. map create brand that well similar more in other even tailored that rollout detail say brand leveraging more diversification But can't would product road add are to and that that when have and word convenient GoPro about in way, company, have long-term. as what XXXX, getting but or to is while creation, doing market contemplates we that and I can we that profitable GoPro is market. grow we more and more for opportunities maybe maintaining already the in in would for about forth. and but global of consumers grow our allow critical it's it, business, performance products think most a more a profitability I we that to investors to serve to this us value, content is also of our help as grow go in going convenience more that an committed into so targeting are strong, a we're what so over us Then better the would ways. is today's solutions I And margin in where the into blogging that especially professional important new and markets so environment, be profitable grow

South America going really $XXX where is the HERO a and data, at market point and addition, category North as least an is camera into. look growth the to Europe, category here target Martin, that's area and at Dakota In shoe we in

So, And that we're they've consumers given a seeing of dollars. got the growth. lot

there we a it So, that market seeing know and we're grow. is there,

basically going subscription, to XX% was so the XXXX we one about entry-level I'll on increase point, the our into terrific. subscription growth fit business, XXXX. price taxing could last talked we're And of a And in then in to that nicely really significant space. represent the kind And that's about from is which at that which revenue for you pretty earlier category, remind XXX X

The next of Stanley. Woodring is from Erik question the Morgan line with

you to for you period there? pointing obviously, is the can that you, we about just Obviously, that, necessarily talk and have today and in but a in to When consumer a didn't bit demand. we little of commit But XXXX? think a that you I back the how do XXXX, then sit that. any improving get of for XXXX? XXXX you XXXX I for I to you growth today I the margins, top follow-up about to comments just here that, And expectations a set cutting know drivers a understand necessarily question this XXXX, to that Maybe about Nick. have maybe say -- we a line talked should of challenging better want give you've commitment on costs. us don't underlying profitability flavor going you're as

Yes.

business. will We the grow

line. We will grow top

just be we channel. the do whatever through We introducing today. margin XXX mean, is products today, market we inventory will still absent minus have because selling the not from simply I completely market the in are grow we will that

of at shared, our end MAX the camera I the XXXX. last channel we As into sold XXX

aside from essentially sales in XXX the XXXX. of from smattering no a through had category GoPro.com, revenue So, we've

a bottom-line is us market. believe contribute help going what reentering believe category meaningful going we that back certainly simply product that competitive to And to is that share. be and win in with by meaningfully is top-line very growth. That at to So a level to industry-leading we going

at which which that's on legacy camera, the margin us be were a selling over never for big well, were they then And time, been previously, us. products So as that to entry-level we've we're super, excited MSRP very super, entry-level relative sold lever super accretive point. designed an our to price has we but an product reduced entry-level about, that for

margin. compromised, the product, as designed is much up be from has very whereas to and new our their So, margin result, $XXX HERO better was camera ground as a $XXX sold a

profitability. a their use of launching for get to sets product new the believe so just HEROXX we're brand to their consumers continuing So, head. then, into while be course, not only thanks targeting to in and but and we capability audience we that's believe, expanded product. Then believe camera's then a a growth, XXXX XXXX new we're really we to we how yes, blogger month, to for bottom XXXX. on engaged. going this I strong silver with these brand going to combine reduced This that's more their people we OpEx, of that going fresh also contributor course, continue allow XXXX. and the we're influencer, active HEROXX profitability build for the when product is being would with serve to to be market, targeting ensuring that a of is the momentum. I products, and Black, HERO looking is to of contributor to launch their all is have XXXX our brand And the to document of which in the the we also is much Erik, black going for lining us benefit significantly that momentum strong. in looks believe, And who launches more going the too it terms for differentiated believe, bring up the can growth, keep major are that of as going hits active say market looking on top the month, that obvious, become that's we us, HERO we creator, throughout line right just ability for a major very it's to content next and appeal opportunities the, products to as to HEROXX line pro line, in tap speak new growing yes, way other the believe with you content of Black, that's which their that lifestyle, will at recipe, help are on a content but the revenue-generating what

too Our strong. products are

to is getting reductions about opportunity year for we ensure too especially nip-and-tuck macroeconomic grow into serious Our look very this be OpEx not to XXXX, going significant, profitability and to We're it's in that a environment. a on scenario 'XX beyond. but

part And at as we're ways to operate transformational that, looking business, so, the a of recognizing its time.

about Okay. I'd the have different is just cams there? I And in you've outside about it me. XXX follow And is competition love anything that on that you hit like of that, there about today, you to of play a know again, talk much then I up things if some to as quarters. something that's maybe FX stock-outs changing if the FX. for rare maybe in under and competitive environment as X in the is for role talked that. last Nick, But it's Obviously, thought headwinds the

We product we launch, a a pioneer leader missed in category essentially growing the a seeding market which in which the were both or to competition. category us a in and missing market year led

why about year category. the but factor we've is are we we leadership regain important competition it it's largely, topic call more category. than position XXX opportunity share, been bigger than passionate our bullish Extremely restore much it's extremely it's on the Unfortunately, to about extremely more before. about hearing in to and That's got this year in committed so been to a yes, a because has to a this before. leadership self-inflicted you're XXXX. So competition restoring our are And GoPro this position

Got you.

your consider to necessarily products not self-inflicted? it's So,

basing on not Just leadership a in for is XXXX. we clarification, regaining are not. position That profitability XXXX though, our

do to leadership we're market it as to to my leadership make clear. that do want on but position to for course, our going Don't confuse to that the position back determined reclaim that. category. can to Of time get with we're is relates to going everything XXXX dependent we a just us the it. in space I to that not profitability it's But that take for understanding share, a passion

I questions back further management closing remarks. any this the to would time. pass over at no the to are conference There team like for

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

we as As we GoPro a business XXXX. passionately, operating to profitable are shared committed in

and Our We're strong, excited coming we brand, new everybody. is GoPro are committed too product being by is launches Thank for are opportunity and to up opportunity our team as off. significant next too This our accept otherwise. us profitable XXXX. month creation to products signing you, value in

Second concludes day. your That you GoPro enjoy the and your Earnings Call. the participation, of for rest XXXX Thank Quarter