GPRO - Earnings call transcript Q2 2018

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Operator

Good day and welcome to GoPro's Second Quarter 2018 Earnings Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jeff Brown, SVP Corporate Communications and Government Affairs. Please go ahead, sir.

George Brown

Thanks, operator. welcome Second and Conference XXXX everyone, Call. afternoon, to Quarter GoPro's Earnings Good are Woodman; CEO, McGee. me GoPro's With today Nicholas and Brian CFO,

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

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

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

is metrics second and numbers income discussed the a In XXXX. the for this slides, the addition These GAAP replay revenue, release, containing to are webcast on slides we are Relations today's today reference. related call, as statement call of posted and quarter posted unless live well website data GoPro otherwise earnings All that link other to financial detailed your during for conference than Investor not noted. as

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

Nicholas Woodman

GoPro and Today, of will Thanks, on context Jeff, how new some positioned and for products the of through launch provide afternoon, you good is take quarter second we this everyone. well performance highlights our year. later three

exit track, an to regions into are a on profitable sell-through year executing. solid is and will And indicating we profitable importantly, in we XXXX. GoPro will improved strong our XXXX. believe is plan the in profile margin second all GoPro of half is We demand, with believe be the translate

the GoPro NPD we HEROX reestablished camera U.S. HEROX HEROX Black U.S. combination March, the was for which at of highest category the million, scores strongest a the by all as ever. a revenue driven with our success XX% Group, were several held by cameras entry-level received Black Sales position as satisfaction of sequentially. new quarter Second launch the in the in camera of well gap, two-quarter HERO, After years. our And camera of five flagship Black. up in top $XXX HEROX According the action best-selling lineup has XX% in were customer The GoPros. Black volume. and the to good-better-best the dollar in action represents HERO, quarter, the our second

camera XX% the a of fusion roughly U.S. dollar with market captured on has spherical even basis. Our distribution limited

quarter. future action plan by selling Europe innovation. and role market dollar increased action of volume. GfK, share volume. GoPro's leadership to a and camera according play GoPro year-over-year held forward Asia cameras XX% sell-through the to second top of In with proud In Japan, In four in drive XX% both the category Korea, are We the grew to to five by the unit

Finally, second notable quarter, during the two we reached milestones.

first sold its GoPro the launch of XX camera since First, millionth XXXX. Hero camera in our HD

the Second, Black Black best-selling HEROX which time. Silver than previous been These more launched in achieved since faster it its XXXX. HEROX this record strength milestones brand. have making reflect the of our launch three million HEROX enduring the demand in in X XXXX, GoPro cameras months sold, than global and bestseller

explain, industry-wide capacitors. and will passive components we well-known such As monitoring are shortage resistors of a closely Brian as

While team working represents provide have factored This operations to scale to large risk industry-leading the consumer secure the the companies, closely to guidance electronics supply. an is will manufacturer fortunate shortage shortly. the into contract Brian with we're

tariffs the imposed in Another United manufactured impacted on impasse goods has is China. issue we China. GoPro trade between closely are been not watching States To-date, the by and

XXX,XXX the two-year Instagram. we social have dialed our is well and consumer third in in we to strategy. during to more presence advertising following and having as high marketing for of calls, the organic demand GoPro's analytics previous adding increase on significantly is it's and GoPro currently has at YouTube jumped last driven levels impact. noted Engagement an As see a increases driven conversion digital up and holidays, And our focus to double sale. improved overall and sharp ahead website quarter traffic our drive as by are spend on from second strong holidays. than has quarter, at normally increase awareness a a digit only steady GoPro's

or we related market for to the this sell-through in resulted left GoPro our drop packed significant challenge we've products opportunity cameras is XX% that to primary year focus on top at significant priority Understandably, active attributable generation a us. cameras. was into there represents the note second users quarters This This prices. Educating innovation lot roughly is the of new execution. a previous audience for in are important in It's HEROX App their HEROX of a a a sell-through. drive our instance, original monthly using to upgrades. four to identified on premium in QX older that incredible For engaged

understand a and a looking of good-better-best plan that, confidence profile pricing the for are fourth strong. offering, to execute on and that a quarter. hand ahead Now To second With improved forward predictable GoPro inventories I'll XXXX. in and Brand complete we sensitivity are global we an have GoPro margin and that tracking executing Channel our and this year product need half. engagement, continue to into believe will the it lows in a summarize, sell-through towards track. profitable to to awareness, consumer with we historic products launch are We Brian. exit profitable translate is

Brian McGee

Nick. Thanks, for of the performance year. start remainder an quarter of with the second then and overview the for I'll I'll guidance our offer

GoPro performance solid demand for and and sheet attributable was second expense Our to balance quarter cameras, management. strong

from quarter, sequentially. For margin quarter up of million, second Gross for the was XX% second quarter XX%. the XXXX, the $XXX X% year-ago revenue but was down

share. was On Our $X.XX million, EBITDA second second resulting was million, the $XX net inventory in of our quarter from a $X first per ended GAAP net quarter half million well second $XX loss improvement loss a in sequential negative quarter decrease three in loss net products in sequential launch second second quarter since lowest This per non-GAAP We the us Adjusted XXXX. share. basis, a the million. with a a planned decrease $X.XX of leaves quarter, loss $XX net a million, was quarter of XXXX. of million, $XX improvement inventory for new the the inventory our of $XX the level of sequential positioned our substantial XX%

believe cost sustained doubling to of quarter. was million or at expenses $XXX $XXX year-ago XX% marketing remains Our product full second track second reduction compared advertising million the roadmap a million, the reduce maintaining expenses our operating the to expense. $XX quarter resulted efforts We year the increasing a to the Headcount in XXXX below on $XX our quarter, GoPro of management in to quarter non-GAAP despite expense around and operating end while million XXX. in

with at were at XX $XXX at of end second end receivable XX%. June quarter. Cash $XX up from million accounts of line and sheet, was the the sequential increase balance of the in the the million, investments to the quarter, $XXX first Turning million revenue

revenue did Camera HEROX for of HEROX was cameras. demand the into nearly $XXX, to sequentially total of dive our over which divided Black our HERO our street is quarter proving in our detail $XXX I'll Street more to solid camera quarter. demand million. end cameras, cameras, ASP shipped accounted XX% not of ASP our the of in and Black on and performance. shipped the units units HEROX second defined as second reported lead business Now, by our Black camera Black that Due flat drove cannibalization units totaled camera and shipped. We high camera HEROX XX% approximately for revenue X.X

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

a end-of-life XX% forward to year-over-year. camera weeks. XX% inventory to We cameras estimate of we increased global ten lineup estimate at core sell-through sold Excluding unit our of decreasedXX% discount, weeks approximately

HERO weeks of decline the forward inventory Black significantly cameras expect end the We by inventory of HEROX of to quarter. channel Black, third HEROX and and absolute

guidance I drones, quarter, on we sold thousand remainder will sell in nearly expect second all of units few the we we'll the a for move that XXXX. quarter. Karma third During to our of leaving the now

macro monitoring shortages closely availability resistors such of and passive and are as we guidance, contemplate we capacitors. As components,

of created As chain has the press, been a challenges. components widely major has passive supply reported in shortage

to for Jabil our Our their mentioned has on scale towards with the cameras. strategically largest base contract manufacturer supply earnings the this components issue who call work

experiencing our In are due on new addition, the components to increases we shortages. cameras for temporary certain price

But reports, of be last may I to have guidance. is read all other factored this into into As XXXX. is in that expected our shortage industry-wide to want the clear very you

X.X that and Turning to were sell-through XXXX XXXX in sell-through as camera and a consumer on million units estimate X.X million, respectively. units we demand X.X million basis, XXXX, measured

camera half we second believe the units units sell-through half, X will units For XX% X approximately or over of first period be the units estimate flat In In sell-through growth sell-through was approximately growth. XXXX, XX% we or year-over-year. million believe be we XXXX, XXXX. X year-over-year or million will in million the same

camera of XXXX. we As second entry-level (XX:XX) half the an a in lapped reminder,

during the growth entry-level the camera unit an second in half XXXX to expected holiday Our attributable is GoPro season. the of in part availability of

will point million In first the believe the second quarter X.X increase cameras. to growth XXXX cameras full for due of sell in in higher and the we million We half second will to slightly half cameras ASPs we X.X street year. compared addition, sold in price believe

the depending believe inventory the channel operating in profitable be the our be XX% million, resulting the we expense million point, to for as slightly for $XX channels to X supply to catches to be meeting plus have will reducing XXXX, to to XXXX, there to includes together, gross the expenses be non-GAAP but summary, million However of expected be to for cash demand $XX revenue to in is a similar profitability million to may fourth supply margin historically be XXXX global XXXX, this we X or fill of due ability million range half the EBITDA be and we cash fluctuate support million take to million demand Directionally, to $XXX we supply quarter expenses quarter be the up, percentage for to expect and approximately to $XXX approximately the be half the to million plus be flow. our GoPro be the on expense million exiting between to cash on our tax supply. or and in fill we $XX be and revenues inventory translates of XXXX positive ready point, to the million. depleted half XXXX; With be provides dynamic of a million we $XXX plan opportunity expenses to us low gross million, of second in below XX% the EBITDA million, This quarter of and minus perspective, In $XXX more positive of currently these sales $XXX situation, to second operating a quarter non-GAAP $XXX to to tax XXXX; And in into in gross to improved exit minus than we plus a $X factors expect XXXX, Putting first an non-GAAP $XX sequentially. of a second to first that XXXX. $XXX marketing; of million, QX significant to million, to million, third to $XXX following: XXXX between in of or profitable $XXX expect percentage to believe levels $XX operating basis. year. a channel $XXX $X.X up for along timing with rate million, minus all margin we From basis, operator, questions. margin are the increase of roadmap loss year on the

Operator

you. with JPMorgan. Paul Coster Thank go to We'll first

Paul J. Chung

Hi, our Coster. questions. for this Thanks taking is Paul Chung for on

Thanks (XX:XX). first that. So for

ensure of So as OpEx you're you come about marketing marketing expense you been reductions you get $XXX talk can in investment? the to million return on targeted? continued just to And your pickup on has your et best head you hit expense, kind down, given track mentioned your do cetera. The count how where

Nicholas Woodman

that. for thanks Paul, Hi

and ways, but just during globally stations, of much in get we spaces, building people public home during pre-IPO big ways, and billboards is brand prouder. and many that louder to GoPro's running many that this and really where has includes it excited years, not brand GoPro's in experience digital and leveraging multiplatform spend out brand IPO was our distribute period which marketing about gained and Our train we're increased

experience so we got this period and that see we've yet got in area online levels impact. and we've speaking, holiday August. at only an the during seeing we're proven And only it's normally Digitally exposure

well the conversion in awareness we're seeing great lot the in website working. terms traffic our that that's So to performance driving in lead of is on social for and sale and significantly a exposure marketing our as up we're improved of website and on indications GoPro and seeing holidays the

Paul J. Chung

like pretty color great? could nicely, was you're And benefit any regions Okay, you be some Looks you EMEA there, in seeing would the maybe if then great. about talk but of up FX where pockets strength?

Brian McGee

FX, really inventories Yeah. Actually were less channel job EMEA with of one lowest. down. a good Paul, They of this the actually done is has getting Brian.

North from demand was where And so low we and up HEROX and on most In we and needed through feed APAC on that's and HEROX America, perspective. older channel. products products. and channel sold HEROX was the a to Even kind Black overall bit HEROX that up challenged of were a inventory our to pull to their probably HEROX fulfill had for channel actually HEROX. (XX:XX) demand also Black, we nicely help

across demand then and particularly for we our products, flagship Black the So, had board strong HEROX HEROX Black.

Paul J. Chung

on you is about expect margins, question XXXX exiting throughout forward. How last we quarters moving Thanks. the of the you the And mentioned Okay. gross XXs should gross year? XQ think margins fluctuating between

Brian McGee

half for some be increasing in you're XX% selling and selling been second we that's then the selling product think in margin we're kind seeing the the we so a in would said all what HEROX price and I to new benefit also cost while fourth that we've but We XXs about said out saw up inch of of of new we'd Well, new products XX it a we we still historically. product, XXXX, due points we've exiting Black so the QX, in $XXX came high-XXs of weighted points, narrating are be at channel and and have right? as mixture percent to the or quarter, February, back HEROX coming, at you been it high said some better of that And much full particularly and $XXX are now products. than

So, that's why you're seeing the improvement. margin

Nicholas Woodman

margin innovation consumer not a of and significantly that our products new capability expense, on margin consumers. at to improving we're this rather building products is though like new our our good-better-best we're into products. improving I'd fourth for lot gaining the Yeah, one quarter, We're though each of add even our profile

that's So, I new that to just season. we're our and store very excited important on customers for have about note the think very holiday products we this

Paul J. Chung

you. Thank great. Okay,

Operator

We'll take Suva with Citi. our next from question Jim

Timothy Young

in shortages This shortage or your behalf you ago? Suva. think revenue Hi. a the impacts component quarter for the Jim calling about the from Young margin compared mentioned talk Is and Can of shortage XXXX? better is question. of worse about on the half you should how comments? in we getting to Tim prepared second And the Thanks taking

Brian McGee

of gave shortage Tim. since It call. call. component the I'll a on take this. the has last airtime Yeah. Thanks, worse bit actually We the gotten little

out note it. you guys about talking think of few kind I ago even a a put weeks

And quarter. we so wanted and frame kind properly. to of very fourth supply than this little in the Demand is strong coming is like later we'd bit

supply XXXX. good into have We pipeline going

maybe up, not fourth although can we we're catch think working time, we quarter. but on in for that So, the

upside, every we point profit. we of have $XX get So that million to about be we would have ship fair But sell-in. if would would units would out do it's sell-through generate than that to means able we more XXX,XXX about that

So we're have line think we that's on that note. important of to the very think on for million, achieving I a X.X pretty I sight good year. the And and that comfortable

Nicholas Woodman

is all course. factored And into of guidance this of

Brian McGee

And actually our question was about XXXX. our its cost and percentage on was first point. half, factored margin, on think there, actually the second component guidance quarter asked goes the in which you that's away the X what impact We was in another of impact into that in

Timothy Young

my Okay. you. That's all Thanks. Thank questions.

Operator

Uerkwitz Oppenheimer Andrew go Company. now We'll & to with

Andrew Uerkwitz

shortage it the product year? Or would gets on of mix? I or the a the different mentioned have into of is, of this, the you the missed it questions. here Hey, may product guess, be have can from very kind two favorable put affect shortage, way, I mix your I your thanks, component if supply worse gentlemen. One unfavorable the beginning half call. shortage back just How potentially

Brian McGee

for sell-in don't sight see we of pretty X.X we million where worsening. As a just think it in the on line We basis I've said, I units. have good are

is the manufacturer. Jabil pretty contract good have who visibility biggest We in with

timing have get pipeline is more I there's fill XXXX. in if to the the in channel but able to be quarter, anything when and what we So the about would mentioned fourth fulfill product to product would we of QX it

Andrew Uerkwitz

Got you.

Okay.

Brian McGee

we're said, not with we've and downside. comfortable we upside guided anything so, if was As how it and

Nicholas Woodman

stop. the think us comes our to covering and of GoPro that I'd help It GoPro for importance saying shortage a to demand Yeah, just demand. really full ability total between have demand be I line about that revenue top build in early really like we gap record pulling our supply point that recognize to showing and QX in of the not on is problem, as were meet confident the that to does of exists. thus significant potentially as risk downside down we is can recognize so in revenue and upside enough them guiding not the of them components some these supply sell-in current that. to and It's much we that towards see explain demand

Andrew Uerkwitz

that. cameras I was like it, you're higher it if means the appreciate thinking it way newer No, with making Because I component is ASP. not about the the shortages seemed there

So, your effectively it sounds that with leaving here? guidance (XX:XX) about you're upside like what on and appropriately thinking table you're the doing

Nicholas Woodman

only building with ASPs. cameras new We higher are actually

longer no building older we're our cameras. So,

Brian McGee

Yeah.

Nicholas Woodman

channel looking We're new towards heading we at a product. is old historic mentioned, lows. as product transition And inventory units our our of those our very from to good

as have during on of won't newer products shelf be selling-through as well and much we'll product selling-in you So, primarily quarter. fourth the older our our

Andrew Uerkwitz

color. I could one appreciate follow-up. if do I And that Excellent. just then

of how about product what has about? some operating of thinking that either areas development? of changed and structure, kind the can the focus of that's in share the or expense the are What's got improved more With you tangible R&D how kind kind things of you focused new

Nicholas Woodman

getting their analytics understanding narrowed to well our consumer a the primarily to company groups more learn focus focused of Well, it's interests. great And through spent customers, app their to on is know about a being sensitivities, lot cloud for as work targeting the through we've better, amount much do. as a experience customer and camera there outreach our effort that really

innovation maintain for our still healthy able development budget, products year. we've even reduced R&D though, deliver budgets exciting and So consumers and product operating we've to to to continue every been

year, for new at understand products new since we excites why products consumers new for we've we us first good-better-best to shared moving got more our that's as Because than very customers for Now, a price time and every this really points importance important forward. three new – the focus also of XXXX. that's products delivering season excited we're holiday the cameras where the nothing

our to out appropriately, thinning in priced So, with quarter. forward a when inventory new exciting products these we're channel you factor the coupled in strong looking fourth

Andrew Uerkwitz

Great. Thank the you. time Appreciate gentlemen.

Nicholas Woodman

you. Thank

Brian McGee

Thanks.

Operator

America now to go Merrill We'll Ryan of Bank Goodman with Lynch.

Ryan Goodman

guys. questions. the for Thanks Hey,

First fact on one with I the that. to on want is three just ask that coming you're out new just products.

it high and the was going So be refresh. I under a end to was impression mid

to on just So me HERO? in walk this I should why the maybe do fill guess, So, decision to can six into less? that on is a be level months the well? as thinking you're entry yeah, And color on the just you refresh or curious through doing we gap that for launch going just the

Nicholas Woodman

point. Sure. March The was price want have camera We the the was because Session Session a gap we've HERO a really more as not than numerous a times we back there, decision wants shared had had camera $XXX a in did they clear data we a And consumer HERO camera. camera. HERO launch that at to

sell-through point is I an of cannibalize globally to a and call want would saw HERO we concern opportunity price GoPros HERO out at drive release camera that it as $XXX investors. higher to so done was the the that. not And price to has some

we selling ability $XXX, $XXX felt sell-through so those We confident rates come in be. have of years have HERO forecast forecasts cameras, and to to $XXX, our

same the So And to products. user across generation, want our experience that new look a all really We have forward to is having we going holiday we're of this launch important. consistent all the a sharing of that's same of user to advancements cameras the many as of terrific. experience products

in lower to HERO We and also related well. camera margin of cost manufacturing benefit opportunities to the saw the terms as

and as camera well. this is to level benefit to GoPro's holiday a So the entry consumer launching season new margin a

Ryan Goodman

shortage. one follow-on, the another just one then And on great. Okay,

margins in of factor? to can understand also a So, much to hit margin Because unit is a going I getting about it number talking XXXX, million of in should X% of first near you which at and the this XX%. term exiting the is factor you in the a mentioned X but me go you're to much there's be away how how like that half help guess,

that's think bit you've higher be in any past? a I little the than would about helpful. there color just talked So

Brian McGee

Sure, Ryan.

let's parse little a So this bit.

is So the million X number sell-through.

So between new sales HEROX by is already what channel in et we cetera, fill in what that plus HEROX, the the is new product. on

the we X Our all some the the okay? is So with of to a combination on to products is hopefully the basis limited we units, X.X think demand think, upside. million total through year sell-through million at moment about ability supply

XXXX And is this shortage plus but inventories one one cost half, on go impact into right. what the XX% think product will also exit mentioned, percentage end basically solid about minus about percentage exiting historical on means of in of component fourth on to I because is But we'll the or into the for for the Right? based are lows channel point. within ready XXXX, sell we have that to year, at so second pipeline we XXXX. the the or with a again up what in quarter point And going we we're guidance exiting guidance

Ryan Goodman

you. Thank Okay.

Operator

take now Stanley. from question Morgan We'll with Anderson Yuuji a

Yuuji Anderson

my Great. Thanks question. for taking

that sell-through is I on some first think guidance you're the this you're year. time expecting this that the providing explicit

that? drives providing in of confidence you're kind that to hear the that now level high just So curious what

Brian McGee

have has camera, so A two look fourth at down in an a to the biggest comes thanks we of a two I difference points. compare is XX% couple consistent if just We we're got there have units QX last that's QX QX. perspective. year Yuuji. down, in from good. increase didn't We've level and One didn't that's – the Historically, in, product. I entry to that And where absolute go. so quarter sell-through we're Yeah, very

products units And did more compare Session X.X The and million think million see seeing about an all quite did HERO. and entry displays product. to years, it in against demand, the of XXXX. prior of didn't in lift than quarter the HEROX, that the we're that so is X we we the if with reason also we And already which units going that we fourth sell-through selling two we in have given against new frankly, and then see versus HEROX level we're I Black have a

already talked on seeing that about And That's year-over-year cameras, the fact that in mainline numbers. our what's that we sell-through my demand remarks can deliver all the we us if are So giving lift. we're basis. prepared actually the exclude confidence the cameras XX% on EOL I up these

Yuuji Anderson

higher Got it. And the Appreciate slightly expected. on came lot QX question also just than the I color, that makes quick then, a in a of margins, sense. gross believe

outperformance there? into and what led through can that the that you So guided going just walk a little just to bit bridge between you what quarter

Brian McGee

outperformance HEROX Channels were exceptionally particularly Europe. HEROX and in HEROX. depleted did demand for was really The well.

gave commentary had as I We North there, Asia. think well America as earlier. that I HEROX channels was strong fill on to

higher region. fact, of Asia, other the versus matter HEROX a HEROX had As sales actually that and region of

EMEA. Black and then So in very strong Asia HEROX

Nicholas Woodman

just newer would line in old the leave year we're that I their sell-through in years add flagship second forecasting for price out QX historical Yuuji, with older year. did that the products products are we not in where achieved one rates we at we've And and that have rates where had

is by So like fourth need our achieve anything seen levels heroic we levels don't we've sell-through before. achieve to sell-through we to that need supported targets quarter. to historical that that The for this achieve or any

Yuuji Anderson

Thanks much the Got color. it. so for

Operator

our question And last will come from with Wittine Research. Longbow Joe

Joe H. Wittine

Black of were XX% HEROX and me squeezing Black units. for HEROX Thanks in.

there's can some comparison what HERO. previously So that represented? level of understand level mostly to or I XXs remaining units entry think it I you high the of too, any call has give your XX% entry is XX% us but Karma

Brian McGee

is this Brian. Joe Hey,

point I think held and historically mix. has $XXX the the the of price dollar lion's share $XXX

This quarter consistent. We've last be that QX held expect And the tightly was XX% years. two over and we to XX%. that pretty

HERO then a of mix XX%, right it's bit the a we very would right, of and is and alluded mix of we're as terms Session the again he'd at product, to, consistent, at the on levels combination In expect. basis But low-end. Nick, running little a other with demand the HEROX historical

Joe H. Wittine

it. got Okay

And after at sheet Amazon so or it related, have do and right it that Prime you it half I wondering, so production an somewhat I going looked your retailers? Sessions was participating away inventory like balance inventory July, the about extra in lingering Day, like bestsellers was didn't round, were of that in was were sound for the

Brian McGee

Prime we It was that inventory sheet for Amazon to Day. balance got on our

Joe H. Wittine

Okay. a And go tariffs, the list, not then actually in do and to HS codes effect? so these do you're situation, fluid million understand codes affected added is more included into if $XXX what on the with it's but plan get the respect

Brian McGee

I this a fit move two impacted the Interesting, for couple down also by talking way, how two at locations and supply locations Jabil outside of talking and of have about wouldn't into be think bill GoPro that if we I that think tariffs. can that quickly would we ago at may I pretty that Yeah. source but actively issue. about weeks was just China. They We're looking comes

Nicholas Woodman

these ourselves to there even be protecting to for outside of regions benefits may go against frankly, cost And even tariffs. reasons

this looking look ways for and continue down, our is drive we efficiently the to operate costs something that to more business team as So is at.

Joe H. Wittine

I'm commentary, view be surprise such that the biggest historically has gross the of was far in going just obviously risk great. I'm the Okay, what kind a number, been me. comment Of to so big model do because GM to accosting last that hitting I'm asked? curious the question up step the to begs advance, it's to is margin more. one Since the biggest XXXX you

Brian McGee

is about what fourth talked XX% we the we're exiting have at Well, products in quarter. with the we

have a are. I what darn points the good are. points on handle what think We pretty the know we cost price

So and is from roadmap that And modeling second we been our perspective, the good historical going products. visibility I those you what have good the have over I perspective. think of then be pretty margin then from think into has half, our cost pretty to

to I have better we So maybe us ability visibility say, that the than think gives maybe previously. some

Nicholas Woodman

in channel, premium had GoPro customers' saw pricing of HEROX about price The Session last because lot fourth terrific, our which our We products. $XXX. that color their We which that. sell-through a left in QX, us pricing us in that fourth relates suffered drop of inventory products margin the and little to a year that significant lower sensitivity price was to and quarter our problem a sensitivity in those really the sell-through row only add of Black prices when lowering we XXXX. by during did led that QX taught to for snapback, margin. just year fact QX original we to Joe, forced out to HEROX as second and the forced that a is it the quarter but and erode reason us price this a lower of And that And to overage not

will intent. purchase $XXX, Now do we will the this points shown at that holiday consumers' History drives all again, that we products not price $XXX that that has season. introduce new

hit won't to our exit which and low can erode year we us we inventory, prices to the think sell-through us channel of won't that course allow targets, with margin. require which lower So will

we've that's single great is to excite think maintain a biggest into our price reason and because So, in that drop. why are new XXXX got consumers products going that confident I the won't we're through and to force margin going ability

Joe H. Wittine

Thanks, guys.

Nicholas Woodman

you much. very Okay. Thank

Operator

like today's any turn conference back the to or additional concludes management session. I'd question-and-answer that to for remarks. closing And

Nicholas Woodman

investors QX to thanks and our that certainly Thank Well, execution. you, operator. To to is close, recognize of address everybody. we what our is like I'd concern

As price in QX fact learned year. In that spent the is points. sell-through out when the learning new we've our only our result we've we customers new products clear. this to at see And every products second is left products of we year you've couple year that and years the three to from and We've we're old us need to premium good, a challenges heard, the excite launch prices. We've year, their cameras data original sensitivity better, pricing about a seen best launching new their shared, as performance desires consumers. at for we're executing last of

recovery believe be since Something where years believe two QX, done XXXX, have will able we strong The this margin. a haven't maintain we we last us to up for entry more set allow and a executing importantly, for been a we're into XXXX. deliver plan to We predictable much gross this will us phase, Thank our today's for GoPro our And performance return you GoPro. call indicates and profitability. period joining and on team recovery recent to I very to exiting believe growth is This everyone. signing off.

Operator

call. your participation. you for today's concludes Thank This

You now may disconnect.

GoPro (GPRO) 2 Aug 182018 Q2 Earnings call transcript