GPRO - Earnings call transcript Q1 2018

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Operator

Good day and welcome to GoPro's First Quarter 2018 Earnings Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Lara Sasken, Senior Director of Corporate Communications. Please go ahead.

Lara Sasken

Good afternoon, everyone, and welcome to GoPro's first quarter 2018 earnings conference call. GoPro's Woodman; are McGee. CFO, today me CEO, and Nicholas Brian With

we to include today like started, forward-looking everyone Before I'd remarks remind get that our statements. may

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

that are this call, release discussed our as and can issued otherwise to We to the well choose afternoon. are reports from other found believe a of GAAP provide do ongoing use it to and operating in expenses or may a profit Information file with on basis. non-GAAP GAAP comparisons statements which recent we forward-looking was gross to in to internally XX-K with unless a may be to assumptions and time on of related we year operating income loss, Form other any as as update perform information during than in non-GAAP reporting accordance manner statement investors because today of reconciliation based the these similar XXXX, our press non-GAAP XX, the on of additionally is non-GAAP Commission file that to We time information for this our own on is economic made manage to SEC. revenue, result ended noted. useful can We operations. today understanding and December net the profit statements margin, undertake with new future not and numbers results discuss concerning of share factors We All enhance basic Additionally, operating any in Today, our most obligation today. the A that is expense, loss we non-GAAP the analyze per our Report performance. as net are Exchange results. Securities events. diluted and Annual risk available how enable in evaluate operating information and that

the XXXX. the the to and to today's slides website. slides data GoPro posted a Relations have for quarter and the are of first and Events financial addition earnings earnings release, Investor metrics These webcast posted containing link In call press Presentations conference on the we page for detailed

Nick? Now, I'd turn like call and over to GoPro's Woodman. CEO, to the Founder Nicholas

Nicholas Woodman

take find through afternoon. Today, which I will performance, recent Good Brian GoPro's you and we encouraging.

balance camera say inventory and weeks of expect are X% the increased of million, our proving the weighted products for year-over-year. the well sell-through million year, quarter products. strong While recognizing growth trend we us reduced the gross XXXX, by in half scheduled are Revenue $XXX channel demand and with global first to cash $XXX is there in cash second toward good introduction higher-margin of pleased second the the is in increase second and that was in the off XX%, for positions quarter robust We to ended year. margin our half the with a the We that revenue a to that of quarter. start in for GoPro unit

for our more to Walmart our detail but Target on to quarter the financial Brian of HEROX to results our large line entry-level $XXX topics Black four in the Black point in at selling summarize with new quarter. HERO were by retail we sell-through HERO year. and distribution will expanding are the partners the like highlight strong driven I offer of want QX. launch with our expectations, potential and performance, Our that second and end of and along is HEROX the

and quarter, working once is during EMEA the First, in America, and strategy Latin North time-tested good-better-best share our America. Sell-through momentum we product grew again. APAC, gained

we is global Second, on marketing increase a beginning a positive March, In sell-through. recent impact QX. in in advertising have our positive and impact ramped to early our began seeing

marketing of to QX the and ramp We will rest the throughout year. during continue

Third, XXXX. supply a new, in in way we since driving the the XXXX of of lowest second for $XXX been are of sub-$XXX weeks channel, we the the reduction more year million year. down and our million against the products OpEx clearing Fourth, executing it's are than since half higher-margin target, full cumulative

this maintaining successful marketing translate We In and a while roadmap GoPro. believe our growing into we results expect summary, and spend. robust product for happy a XXXX our QX to achieve global momentum we're can this with

meaningful an that stats and well believe increased Sequentially, China, and strong sales tough and share in see GfK, increased misconception, Japan, tracked as and by to from Next, XX% grew by in in Thailand, action share. And GoPro the restoring leadership ongoing We market led according U.S. Korea region, a our growth due XX% a from to and Unit dollar first year-over-year summary, in camera comp call dollar share XX% GoPro camera, had in down want better this year-over-year. XXXX I'll I at led we quarter, performing consumers And a According spherical us results. excited And category XX% continue China against we growth at XX%. see our to to GoPro's common to in in in quarter share. market, in North Japan analytics towards has in the To APAC. which is the According and NPD to growth price all grew GoPro in understanding in by to shipping XX% price action GfK, provide dollar Group, share began on GoPro's for unit to QX reflected category. a about with XX% long-term November. significant push. given XX% also were an dollar profitability. and out XX% is share these not its our Asia-Pacific share their XX% Fusion, points, points held has our at a NPD, in that EMEA. all brief progress a impact the our We're low Europe. first where, for and Fusion, growth except captured and GoPro behavior, GoPro quarter, to unit important has year-over-year. now, business, again, opportunity purchase GfK, opportunity unit America summary contrary According end to GoPro. on maintained roadmap The start, the of its promotional of category focus sales our share In competition very sales the in Fusion unit XX% first unit Korea, demonstrate camera

first Another momentum media worldwide, up X.X million quarter, and gained indicator X.X social million awards. social In GoPro industry metrics GoPro's bringing of the more XX followers, year-over-year. our total than is to million our approximately

measure growing Our is bringing in On a saw our with brand of social total Instagram, platform, which an engagement interaction rate, XX and organic GoPro's XX% a increase has our XX% content, year-over-year. of us quarter, the million. and of community's followers we to fastest up sequentially gone XXX,XXX

Stories. to this at than year-over-year. million times and X% share And YouTube App subscribers GoPro momentum, XXX week to from GoPro to FX that GoPro more to social Facebook's this Instagram viewed content a Facebook. well. was with is social co-developed on conference, In the performing closing, up our media, more directly there's year-over-year. This Our GoPro increased their Building showcased is on from Instagram great feature users a feature content partnership come allows channel X% highlight

higher-margin global our scaling it sets with our marketing stage for half for new, are With We inventories I'll of are campaigns, to we coming second expense are the XXXX. down in sub-$XXX that, operating We the this, year. products and the positioning Brian. million believe turn over ourselves channel target, combined

Brian McGee

Thanks, Nick.

first of per a was net was loss X% Adjusted EBITDA from XXXX. year-over-year. million, a a On loss Let's of of of performance and HERO net for same guidance turn million, and XXXX. our share in for $XX a $XXX to cameras improvement $X.XX in first GAAP year. the $XX in loss million demand first period compared for HEROX loss XX% non-GAAP HEROX XXXX, an Net for basis and by million rest XXXX overview to On an basis, $X.XX launched $XX.X the share. prior our Revenue million a on the basis, the year-over-year, $XXX of from of $X.XX, quarter quarter quarter $XX XXXX. of improvement negative grew Cash shipped was $XXX a investments Camera was the first camera. resulting was year-over-year, a per entry-level our Black were driven non-GAAP improvement the XX% million in quarter of year the net and recently million units improvement an ago.

our As $XX had up to asset-backed credit of facility. borrow ability we under XX, March to XXXX, the million

of cash the expect in half $XX balances increase We sequential of inventory XXXX. second to We second and ended of quarter million, the decrease a $XXX million. with quarter

to are half products second of managing XXXX. us the positioned in well inventory higher-margin sales our We for our of leave

XXXX. of operating around the roadmap increasing efforts quarter or resulted million while XXXX, compared and track our million quarter sustained $XXX reduce GoPro in to a Our in full-year to cost reduction to of management maintaining $XX We XXXX first of OpEx a first XX% non-GAAP million on below is expenses believe the $XX product marketing.

XXXX. from down of nearly is count employees now head a Additionally, X,XXX in X,XXX, peak below

the receivable million, at reported the sheet, and accounts $XX QX were down days. DSOs balance March to XXXX, end $XXX was Turning XX of from at million XX at

our bonus which payments, This the offset by from the operating a quarter protection, XXXX, During IRS result by the of million. million. approximately receipt working $XXX cash price of restructuring of tax $XX the settlement reduced losses, was first partially and balance of was capital,

cash improvements in as result our working expect to losses of increase in second we quarter a lower and mentioned, previously As capital. balances the

Now, detail I'll business performance. dive on into more our

in Karma, HERO our shipped revenue defined Asia, points up which both According camera increase XXX,XXX. accounted HEROX reported cameras the down ASP, Black span. $XXX experienced for Asia and street our and in quarter $XXX, due sales as in total camera. of to XXXX HEROX dollars units Black gains Europe. totaled primarily resulted units lower Camera percentage XX% for to shipped XX% moves the in demand in of the units of in was XX and over an First our shipped, price share to solid solid in year-over-year by $XXX GfK, of camera entry-level Price first picked We GoPro sales sales share incentives in to divided taken December quarter and quarter.

Moving global sell-through our performance, decreased GoPro's unit by to according internal retail approximately to X%. year-over-year estimates, on

XX%. approximately camera priced cameras on to at of for inventory more cameras $XXX the discount, global sequentially line year-over-year we end-of-life XX% importantly, above, XX basis forward increase increase a at X% by estimate and weeks our core sell-through estimate estimate we decrease and Excluding of Overall, sell-through a unit year-over-year. And we in decreased channel sold inventory weeks.

straight in now North America. end in And weeks for cameras. four in the four decline camera believe three expect guidance to held action of further GoPro remainder quarter. best-selling We the and the row, digital to was to camera North in XXth held inventory America. Europe the I the quarter, we a will of In second years on more category NPD, In the the by GoPro top move overall for than GoPro the XXXX. market, of the APAC, according cameras top imaging

second $XXX million $XXX million. XXXX, expect we to revenue be between For of and the quarter

upper-XXs. in We percentage expect gross the margin be to

million, operating expenses expect sequentially, advertising. to primarily above $XXX We slightly due be up to

tax non-GAAP of expect million. $X.X We expense

expect For of XXXX. to to grow revenue XXXX, we the in same relative period second the half

We new proportion from shift into second same of expect the the benefited QX. to compared XXXX, in QX new of half will of products the lower revenue products. XXXX to period represent XXXX. By in a contrast, QX introduction XXXX revenue timing

introduction We to of due to recover upper-XXs higher-margin products. expect the the gross to margin new,

a non-GAAP to returning are the we XXXX, between tax non-GAAP operator, of narrow and non-GAAP ready to a in $X second to profitability resulting basis, first questions. for half, be of a expectation on we with expenses take that, $X profitability loss be million unprofitable an million. expect We With in the year. From half the expect to perspective, in

Operator

our Thank Coster you. from And today first we'll with question take Paul JPMorgan.

Paul J. Chung

Thanks Coster. Thanks. question. for taking Hi. This Chung my is Paul on for

can licensing can expand significantly exposure your on end different you you some with market cases. your Jabil? use pretty like So new Looks with expand relationship

business kind partnership? how size we become. It then to can to this want of some as pretty this just opportunity going when margin So expect royalty-based seems be And big contribution well. high from can

Nicholas Woodman

soliciting other some us Jabil, to to Hi. developing without of of products those in that ourselves. licensing area time. forward expressing and our a an on the share that, our we shared customers would extend know-how through interest risk noted, deals we opportunity it business share we manufacturers, Thanks. technology out we but of those contract new more it an at one able IP appropriate any Yeah, And and came And don't as for to going have products relationship. to. our is that the And that information into interesting of for the taking we news us of be on look is a to

Paul J. Chung

Okay. into you examples managing guys just just last sell-through to looks And how your inventory give it channel on like of relative the visibility then some has year? Can levels, have improved. you your been

Brian McGee

on customers also data to use analytics. and what Yeah. one NPD kind used We've and determine products get consumers of the Obviously, of year. lot GfK, a goals top of our It's done a lot Hi, We've Paul. to Yeah. lot a going of our report. for are to This we is want. we Brian.

so helped. all really And that's

I enabled which have on call. I price the our mentioned and the think APAC us particularly also share, Europe, in moves increase to

was price Clearly, price $XXX with band. about XX%. EMEA to Asia price point. in And resonating the at the that actually, Black is $XXX HEROX that up screen points XX in was point up the

growth. more So had in $XXX. Nick the also way HERO to at prepared end product lower end. we where about we upper well point We do because saw expect And much range see didn't that in the Session. of at much We're sell regions we as remarks, last too price had in both the year we EMEA, think competition in the versus I mentioned particular, excited see,

So that's how we're it. doing

Paul J. Chung

Great. Okay.

Nicholas Woodman

of we're $XXX, sharing that have add we of at price because I removed have, that But variation ratios point of all those factor. Session contributing of seeing would that that design selling because of a both we general related the form it's the data obviously the now now better is HERO a prefer the ability factor that understand the years also sales points. and years HERO cameras, from have all to it's lineup impact to have lineup, form another our we the same we during And benchmark repeating actions sell-through much many years, bit. a that present, we to have, $XXX are past. from form all going and didn't Session our sell-through factor – data, HERO because the $XXX, some of history is cameras, for clear we it have data getting, Whereas past the from our itself to were consumers the that data Yeah, the consumers

have that the retrospect, in didn't we visibility now So just do. we

Paul J. Chung

on you to kind absolute and you. an my question then then do of gaining last And Americas And in And market you think this are how Thank your Japan. is, can you. like Korea users looks kind getting overseas Got surpass you're of time your momentum over product? adopt basis?

Nicholas Woodman

in to stores, which regardless our example, around where was going of of displays a for significant packaging. take approach years, all positioning smaller that them were we been American example. into necessary, the better Japan, – user market. to in our previous control done that on selling interface making And in And the everything of to of modifications play we we the our of it, products how merchandising apps. with really at better translation of sell. consumers in years over particular the Voice for stores very getting display a the products we've packaging Previously, our so important of couple made in bit, that strategy and retail, we've for camera, has big out our and and up at world, job can from available them our They're displays displays XX on localized if localizing standard part our and then languages. to rest Again, now put much the past world, was of an as the is retail them Japan, Localization a well. available go-to-market right pick

those So, that's gone great our in growing sell-through regions. way towards a

that strategy and We're We're in the at just found As to you that and relevant home country, showing brand localized. is to consumer. places, our world-class regions the you we're And GoPro's that showing we lifestyle. marketing from it but your more and big really world, we're States of to images only featuring not a strongest so spend to so for a And is well, really demand to back brands and brand their more GoPro in faces we've local drive our marketing, to them themselves living in is point, is been, the get the and more them going drive some starting dollars XXXX we in the because with United a results. one GoPro awareness and consumer that first as those time, while products well, that against that's spend marketing important part brand reasonable that's of to far have demand. our terrific just is momentum seeing certain have prices now drive

Paul J. Chung

much. very you Thank Great.

Operator

with Longbow And next we'll to Research. Joe go Wittine

Joe H. Wittine

Thanks. Nick, said... Nice guide. you

Brian McGee

you. Thank

Nicholas Woodman

you. Thank

Joe H. Wittine

I little sounds the hope ...in throughout quarter, obviously bit said gained think, give your encouraging. remarks, prepared which you a momentum more you I sell-through, color. can

quarter product down think is driven by refresh? that perhaps driven Thanks. seasonality what inter-quarter. quarter you an whether trying a or an to I'm comment improvement by to Specifically, was it get apples-to-apples organic throughout apples-to-apples saw or the late is you

Nicholas Woodman

awareness product a I is Yeah, was more. because we had the HEROX that $XXX. throughout Black one, we said, at whole which believe what instantaneously. doesn't mean And we now $XXX gaining Black of the and exactly multiple momentum that's world I that just meant things, at becomes lower products, that that we those When HEROX they aware of price launched were $XXX and quarter,

promotions around simplify So, the significant doing awareness some new made see we incremental gates the prices work also sell-through as that an out with importantly, spikes making began and to we pretty our the experience. sell-through. in the but and effect of opportunity then marketing take we've And you remarks, marketing until and first a in experience from user in prices we started have retailers to in as Those grows, And momentum additions And early channel. the can hold, advancements picks then app obviously been also the all the running in driving little saw and There's QX. our great are I spend lag to price you prepared increasing And up. drop, and increases actually market then see March. to the better that. of customers it start we getting bit advocacy from happy start to then a as see began shared sell-through, sell-through advertising in more we when seeing

season to a that, progressively growing but lineup, capitalize on So, believe going do that important up marketing for strong We're our OpEx we spends we and the going the to the target. can to and use great groundswell further to to something during that within our of got going during we been nice It's momentum fourth are demand as our second holiday quarter it sub-$XXX quarter. leading again that third million on spends see increasing it's ramp be was we momentum because during we're intentional. and we've the then then a and quarter build continue we again and the

Brian McGee

a of from competition $XXX regions, we from were moving market, is take that an EMEA think, relative the to add Yeah, Brian. to the back and U.S. stronger have to Joe, APAC this lot in in we that perspective, a expand product room able two international the and, regions we Black, HEROX I'll share

well another well. So, important as was I with reiterate resonate I'll and, think again, that move that Europe should HERO, in

Joe H. Wittine

September I of typical or timing fundamentally anything versus October? cutoff switch Is to versus just the issue, kind half second Excellent. year's launch. And launch or there of to is timing then gears different the this on it wanted a

Brian McGee

nothing Yeah, sell whatever is, for we magical to they in new of that. the September it's right, to products quarter, reality September timing. October, in through a to or The sell more There's QX. in October in have

of more timing a a it's So, few between weeks. thing

Joe H. Wittine

jump. the with new a meaningful a then margin, And in such gross product improvement? that, Okay. drive mix on what will It's big

Brian McGee

Yeah.

Joe H. Wittine

(XX:XX). pricing? more it the something of there Is is you'd just the And more seasonal seems efficient typical in scale economies expect. think stop I'll or BOM than functionally benefit It and

Brian McGee

There's actually a of things. number

will in benefit. in had which the we We'll one, actually major be than half. have really is that's so actually, carries each second right the in half, overall a Fusion, second point, won't Karma a is We'll first more the the For zero product average That more margin And we for have probably actually selling gross higher lot which in better product half corporate the margin. margin. in have subscription, the launch. largest which driver cost price

Joe H. Wittine

Are you able the now, on Karma to GM headwind right Brian? quantify

Brian McGee

said GM much we quite that HERO as lower improve the even we'll margin, that we've so today don't on say zero. well. is And is headwind how basically it's Karma before. selling, Karma frankly, we're And, but

Joe H. Wittine

Excellent. Thanks, guys.

Nicholas Woodman

Thank you.

Operator

go Next Suva with to Citi. we'll Jim

Unknown Speaker

year, you're XXXX? lower the do maintained Additionally, per on what to specifically for you the can programs below guidance Hi. you level the marketing you Thanks doing Tim (XX:XX) going the taking (XX:XX) $XXX give forward? Young $XXX step-up while Suva. for Jim us on On Thank This OpEx you OpEx the drive believe is behalf you. million year an million given OpEx, question. is the of right in in opinion mentioned calling

Brian McGee

By there. by I X,XXX OpEx, believe were million so about in the at Brian. I back is so from of at drive half third us XXXX, million. we first continued Well, of all, money quarter we saved $XXX peaked of aerial years, were efficiencies down business. that amount We're substantial sub-X,XXX. we're at in over more go we people. in the XXXX We If to shuttered XXXX. this operating the We've two Yeah, already $XXX business,

many plus and more to focusing actually more camera business, lines business, efficient more having that makes as in be core in able our as the without us efficient product well. So we're

things. combination believe we the of right to it's those the And, level million business. operate So yes, is a all being sub-$XXX

Unknown Speaker

you. Thank

Operator

And next we'll Oppenheimer Co. to Uerkwitz go & Andrew with

Andrew Uerkwitz

thanks, my call. guys, Hey, for taking

and the year talk expectations course future? the the two you into quick subscription your questions shaping how about see for and of you Just here. that the over Could up service

Nicholas Woodman

the beginning year But awareness early of Okay. We're It's it from entirely an we're consumers of increase good subscription an identified the now to I this feeling get the They of growing offering. focused going our so the that funnel at and And days. happy GoPro about customer XX%. and for business refining Plus important value willing days, an it's out of business more for and traction for our early It's experience gates, is service. driving new but out we're noted, on within XXX,XXX to opportunity pay It's And our community are that subscribers. area to important to are us. us learning it's value we've the the focus service going a And forward. getting it as the service. an for grown they that that XXX,XXX. the they're of even once exists lot. be We're that subscription in we've clear

Andrew Uerkwitz

is Facebook, on then focused you integration announced with VR/AR. And it. Got Stories. obviously, week Instagram this

Could Fusion. there see the there video Facebook? have guys You drive integration XXX or to any a help future collaborations with deeper we

Nicholas Woodman

more things any and other than can't we're into that detail but working are that. there we about, Instagram excited on go that Facebook we're we with As shared,

Andrew Uerkwitz

last Got Thank then it. a And question. you. just

They're there every think the I year mean, still? I kind every you of guys you a kind think launch single fill well such launching could competition. good great. of of make cameras need that you to really ahead really single you they're the are feel without Or year? just pockets cameras. Do flagship

Nicholas Woodman

lot GoPro Well, on see the earnings our is And and doing. customers see from on older that to us that make as And products, of what years, our a very or need products from to important learned we're them over shared a a that's us we've purchase. one they on that easier. to discount previous and couple is one focused their things a upgrade of get lessons love call, we consider excited, new lifestyle

years going strategy strongest the been where that going we're to forward. have back wow Our customer, and we

Andrew Uerkwitz

you so And much, Got it. Thank guys. quarter. you. excellent Thank

Nicholas Woodman

much. you so Thank

Operator

And go Company. Charlie Anderson with to next we'll Dougherty &

Charlie Lowell Anderson

marketing for is much variable here. taking kind spend of so It sounds OpEx, thanks questions. the my within Yeah, like

you back as guys half, wonder taking know when I the the sales you and and how you're should about look mentioned grow. to spend in long-term marketing forward just I So we view, growing and I think going But that's as Then And you terms follow-up. to think how just we if want the kind overall. how to of speak revenue. a it relates to business R&D about model in of as curious I've got well percent of revenue, I'm OpEx a wonder

Brian McGee

hi, Yeah, Charlie. This is Brian.

the prepared I think back remarks. I'll kind to go of

includes sizeable channel of to good the $XXX That's it a products that great increase getting consumers. marketing. be and product We the products below in and gets million the helps the company, of making That sell in roots doing expenses. pretty kind into operating expect of hands back marketing around to great through

continue to that model. going with we're So

We more the and to continue operate more believe efficiently can that advancement. in marketing business we actually drive continue future to the

to And going that's in how the top efficient so the on operate to line business. and and we'll more in OpEx keep try line. is SG&A get to R&D go the then roadmap, we'll

Nicholas Woodman

very marketing to to significant at be realize we strong bigger those the business spends, in support, there's an indication not grew going where bit overseas When it would years, with Something you States, continue a over see little, marketing we and you which to to of look the add regions overseas have we're even real here I regions some that good this grow. further. marketing, necessarily going a spent budgets but opportunity up grow of marketing we against It's to of just remarkably it where And relates to more opportunity down quite but is that United OpEx in a forward. that for a revenues a any, the the previous are that marketing brings even some year, if business. point, strong opportunity to as have we

the across see to clear so marketing measuring more to across better we that increase spend effective note important And our every our We're the we're job demand of board awareness spend. It's we're that on doing and drive globally. marketing spend for board, to over spend. the our getting opportunity we much and much time, dollar But opportunity. a it's also getting return more there's with

as even we're we dollar. that So, every feel budgets, more ramping for we're getting

in regard. in headed direction the right it's that So,

Brian McGee

Charlie, actually add, out one on lower R&D we've the cost on of for a Yeah, overall, basis to company kind to better and job a SG&A. geo just geographies of other broadening thing an done

quite So, that's a also helped bit.

We we engineering for there an China; we for engineering. Bucharest, opened operations have R&D in office software and have Manila;

So, good but company where increase cost actually are more able the been examples at those we've the a effective point. to of in of level effort

Charlie Lowell Anderson

to Just it Great. do metric I'm impact the channel you top And that clean I down just fill sell-through what QX mentioned would does you matches Do sell-in then QX? XX% HERO parts channel inventory of now curious, of QX, was think relative regard to quick the sell-through? you up some think helpful And the those some as and the on of – gave. then a to real moving new be maybe retailers the that, you on channel, degree coming understand.

Brian McGee

expect, in. cleanest clean. through getting Yeah, in. more than again, in to more sell several inventories are even sold QX, was we years, The channel Europe's it's we sell than now. was the QX, In would sold probably been in probably through more

up gains. there. So, share very with well, of the North market Asia, we're in shape pretty good cleaning particularly some is America and

about we're good channel. QX or up going we'll up in in where where to on end we QX So, believe we're feeling end

Nicholas Woodman

are products selling those shelf, towards points backlog the to the very it really, for And of it's and products that products. important products products we a year, on half it's new of second new clean clear the those which in are in older QX, we channels up when several levels. consumer and end introduction the But the terrific the launch is on not of

in immediate ways well the benefiting but is as us as preparation sell-through many So, in many, for in QX.

Charlie Lowell Anderson

much. so Thanks Great.

Nicholas Woodman

Thank you.

Operator

Yuuji Morgan next Stanley. with And to go we'll Anderson

Yuuji Anderson

What question. QX? Great. to mix from Should shift in we shift more Two an versus much your a the expect newer of unit or my is over taking Thanks quick ones expectations camera? so for for incremental QX me.

Brian McGee

should hold quarter HEROX on sell-in the where been at Session. QX in as first it's have we interesting, pretty as the think and well the HERO sell-through much mix I in because $XXX

of as Session the product over out pretty expect then we here, lineup. so which broader proportion the happen quick new convert as $XXX And channel, HERO the that that to to and through of will sells a gets

the So now that for and right – argue distributed. we're and level HERO, mix I'd through for for at at it's product where selling

Yuuji Anderson

it. Got

rest the it like sequentially then? the group should up So, with come of sounds HEROX

Brian McGee

still strong Yeah, there's HEROX demand for HEROX. and

Yuuji Anderson

on other mentioned facility? just balance the Okay. Got my credit is QX. you in include how question Will then increasing And you it. cash plan the using that

Brian McGee

credit But don't facility. No. we facility – I think need credit think, $XX the available. was, I The I – what million, forget said

on We have We drawing don't to operating the enough business. cash plan on it. operate

Yuuji Anderson

That's me. Thanks much. it Okay. so from

Brian McGee

Thanks.

Operator

our And Merrill comes Goodman question Bank of Lynch. Ryan today from America with last

Ryan Goodman

the for taking Thanks Hey. questions.

channel. on one the follow-up So,

in some it's given of questions. You've in came couple did revenue percent last color the been distribution pretty the of on us on as good high That's as of see that But years. at I XX%. a couple

thinking on that a Walmart then function to just I Should ready be much that? of follow-up HERO? rollout and that. of curious, So, Is getting Target And one the that? too for what's driving

with Let's start that.

Brian McGee

did frankly. international, quite due we've the Yeah, quarter, Asia. picked to market share. in up on we And as distribution, and that's well Europe mentioned, largely International

sold more and Black HEROX we lot HEROX a internationally. So

Ryan Goodman

it HEROX That there. activity some one a had elevated Black. there just There discounting a off HERO couple $XX like helps after other looked Great. launched, discount with One was the of was I there. weeks is in Okay. for

channel? So any HEROX a any helpful. just something Was about that that. out the color would you the a was how response to on demand to that Thanks plans? wondering kind Just in for of think the Was should Black can we be lot. was strategy there us HERO discounting or that after give preparation impact

Brian McGee

QX I Yeah, promotions. QX, and Friday, we'll normal call Day, some et cetera, Cyber discounting Father's in Dads, Black grads, Monday. in particularly do and some what

promotional the we QX course are quarter. normal the be things good even business. of in those a tends So year to last plan

more We cannibalizing that's HERO the course. so normal don't and related HEROX And the the wasn't product see HEROX Black. HERO to It launch product. of

Nicholas Woodman

mainstay that HEROX very not what are cannibalistic getting is showing stress to that's $XXX being and Black of think I And Yeah, selling Black to just is signs HERO at you're party products. at. again, these HEROX well. And and other joining the

Operator

back over Thank turn now the to management closing everyone. like to remarks. I'd conference for you,

Nicholas Woodman

the benefited proven $XXX for good factor, to we're to had second today's OpEx touch Thanks the higher-margin we're joining second, everyone. growth releasing execution to today, very for much prices our that marketing once made by to and Great and strongest products This the at our our obviously a be Well, with up while and call, going this and operator. that and that they're touch We growth GoPro about forward restored much removed lineup. price much HERO now sell-through Session, that we've it half well GoPro's off. signing on and years, momentum believe profitability. displays simple. are the is forward Session where make form than us it's optimistic capitalize continuing backed share us on HERO the loving our focused consumers they've our great GoPro that in as quarter lineup more reasons new, it GoPro demand believe $XXX, our was million. improved $XXX, now And during restored for second gains we One, $XXX efforts Thanks, this is got upon. we'll our team significant sum successful sell-through we are global for going QX, from look even and position points quarter strategy forward. QX Sell-through and love can more built market product and We're well. clear; products the consumer below marketing displays camera for brand bodes our priced keeping we increasing again strategy

Operator

call. you Thank today's concludes this your participation. all for And

You may lines. your disconnect now

GoPro (GPRO) 3 May 182018 Q1 Earnings call transcript