GPRO - Earnings call transcript Q2 2019

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Operator

Good day, everyone. Welcome to GoPro’s Second Quarter 2019 Earnings Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Christopher Clark, Vice President of Corporate Communications. Please go ahead sir.

Christopher Clark

operator. Thanks, everyone. afternoon, Good GoPro’s XXXX to conference second welcome earnings quarter call. And Nicholas today CFO, are me Woodman; GoPro’s With CEO, and Brian McGee.

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

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

are obligation Additionally, do based update statements any today on We a any made of as information not as statements undertake new or to events. assumptions these today. of forward-looking result future

concerning in which and file reports that report year annual Information Securities on factors from risk for December in other time-to-time ended our the is Commission is our most the Exchange may XX-K SEC. Form available we file recent the XXXX, with XX, with on and

operating and gross can profit diluted profit may non-GAAP GAAP with enhance per margin, performance. loss, we useful of ongoing loss basis. non-GAAP the information and economic and expense, Today, basic is well our it net believe because We as additionally a net that on accordance as in understanding discuss and share

reporting and operations. choose enable how of in to we manage found the provide operating A this to use own We results. results to internally afternoon. non-GAAP comparisons reconciliation was be issued investors GAAP this manner our information of press perform similar can to We to to operating operating non-GAAP a evaluate release in that analyze expenses our

as on to conference replay webcast first financial Investor this quarter your call a press well have reference. website slides, for detailed slides GoPro for we posted of are the release, and In the These link and data posted Relations today’s a as earnings the addition to live containing XXXX. metrics

related otherwise numbers today during statement discussed that not unless noted. call GAAP, other revenue, than are are All the income

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

Nicholas Woodman

are will Brian And take quarter you short, Brian a growing profitable. and in performance. and discuss In are afternoon. good I we as million XXXX second tightening will guidance our through are X% year-over-year. we growth $XXX Chris, Thanks, by Today, raising the few GoPro’s was we representing and increasing minutes, revenue full-year guidance and XX%. XX% our Revenue the quarter growth sequentially EPS full-year in mid-point and

Excluding Black year-over-year, per up year-over-year our was improvement draw HEROX X% high-end. to $X.XX $X.XX and video ASP’s Black year-over-year continues to business, aerial the with our revolutionary revenue helped flagship grew drive leading market earnings X% customers share its versatility to for excluding HEROX an aerial and stabilization Demand durability, positive $XXX.

second than And White. million milestone in in demand since HERO in the sold retail also GoPro HEROX HERO This the more XXXX. higher quarter, helped and than for achieve the a demand we launched cameras first HEROX we surpassing Silver HD XX significant saw quarter expected

addition In to continues GoPro.dom to retail, thrive. our at strong performance

to about we for believe upcoming our the position our our partners be channel inventory second XX% quarter, during later we previewing e-commerce appropriate XX% in to we believe all jump year-over-year, expand lineup, and holiday we And is year-over-year. distributors record X% the globally the of in leadership and product at very and QX. are Thanks continued products and sequentially well-positioned regions, year. launch In quarter. upcoming our products for conversion revenue year-over-year this fall traffic E-commerce a after excited increased XXX% grew retail continued new we'll the saw able demand web are levels innovation and

one selling HEROX NPD the of XX% Black U.S. Group, GoPro our our number category share continues and lead dollar to volume. in according competition. the second as GoPro we unit sell-through not of impact camera digital captured did imaging all QX, to to by markets in see and in result globally in an a was of In the quarter

in action dollars the category. increased according our XX% by in cameras by increased and units the four year-over-year top plus through grew our and QX GoPro selling in were year-over-year grew HEROX share XX% In by Spherical of APAC units X% category camera line through year-over-year sell GoPro and and Japan, sell Fusion dollars year-over-year to China, the In Camera, respectively. XX% by to GfK, units by from X% the our XX% And in in quarter. GoPro sell-through

GoPro customers units GfK, in and in sell $XXX five price based top to which at on our according XX% respectively margin us the Europe importantly market products XX% in and and than of year-over-year and $XXX increased cameras in time. our preference through the category we our cameras XX% for GoPro and price held had dollars and demonstrating In help above share three performance can expand data, points believe demand higher over above more for band,

Travel Adventure achieved And QX HEROX rate any excitement generate which outside our to through we click highest Campaign launched campaign of products, the additional the launch. our of in Spring for

second total During to bringing X XX nearly the following quarter, approximately by million. social increased million our followers our

Notably GoPro’s reached monthly of XXXX. is social ahead in conversions it where an growth rate XX% new all-time follower was and high

year-over-year million XX% quarter We was YouTube of all high continue our organic GoPro see up on non-paid to content the platforms viewership views and XXX setting. performance across record with in

views, organic XXX quarterly for accounted our ever. million highest total YouTube

no channel performing registered June, highest in ever. XX is momentum YouTube month million our organic views making accident. our This And it

ever customers and that an to strategy We of viewership. continue understanding is our improve interests result drive engagement and our the continues sharpening marketing to

for simplify software, the to experience our both advance Turning we continue and customers. to mobile

our Quik the goal owners app benefit represents will merged the functionality improved rapidly of intend from to but is the and app This milestone not users It Quik important use share we set to transition who to over now their scale for GoPro experience. the app. and just app GoPro to advancing to yesterday, majority as relevance non-GoPro an one-app app app these consolidated as to GoPro mobile a GoPro smartphone create simplified owners we a and the well. of appeal users The Quik which are into editing footage. feature the non-owners app Just the of edits new to

to is serve We owners larger extend monetize software an these to we believe path goal over our represents brand engage new addressable to market time. Our total important a today. and non-GoPro do than

subscription, make GoPro steady progress Turning continue to service. we subscription to with Plus our

steady reported our value, Plus. advancing of since As more yesterday, awareness in We’ve on the to and progress XXX,XXX adoption subscribers paid earnings than grew XX% last made call. we of

markets. we which incremental and starting GoPro Plus began we increasingly GoPro.com accelerated optimized cart yesterday, driving for high for subscription Plus April, at selling the rolled additional customers In add given international GoPro.com. out In margin full the are a to of allow Plus important their we XX checkout growth is benefits nature this to of annual experience offering. Plus at at to These June, to subscriptions service to the shopping improvements

To ended we through summarize continued wanted July. our where QX, up we and right to be momentum

track exciting us for we launch We believe a that are on great product up sets fall an for half. second

continued momentum now, sell-through Brian. believe profit our are operating the and channel raising our we that turn of the And of into and upcoming half in for expansion our over translate we launch, we to strength Given and this outlook can XXXX. levels top I'll XXXX second both the momentum, line inventory call

Brian McGee

second XXXX. begin Nick. an our performance for overview for discuss then outlook quarter the of our and with I'll Thanks,

to our revenue of XX% guidance between $X.XX guidance are We approximately to XX% XXXX EPS by grow are share. and increasing we $X.XX midpoint to X% and increasing revenue or our annual $X.XX now billion and billion expect the per

give We more approximately you at continue positive I'll my the color prepared $XXX of and remarks. that on to expect for XXXX end of EBITDA million

In revenue and continue execute to the the second we business XXXX, quarter delivering profitability. of growth on

expenses revenue, and business. prior financial guidance. noteworthy. XX% X% the line all were and X% year-over-year increased year-over-year business. Several second our our earnings quarter Street for increased results in excluding with sequentially, excluding margin, aerial year-over-year Revenue operating metrics ASP X% are for aerial Our our

income points and sell-through selling expenses non-GAAP meaning year-over-year respectively. improvement by GAAP than on a months Margins $X.XX more X% demand every XX% and year-over-year increased $XX operating products. improved profitable the for XX to approximately reduced at past share, above improved to was $XXX non-GAAP million Based per over share turned $X.XX net two months. while and inventory million consistently $X.X price per of GAAP and XX%. has year-over-year loss data, we’re or XX% more X% cameras

million. Camera Turning quarter days ending XX period inventory. were and Production, balance manage receivable quarter, bound sheet accounts continue days. we equivalents In the with approximately tightly the uncertainty the around DSOs to $XXX the maintaining at the Cash million million in $XXX to for ended inventory proactively XX our were U.S. increased and of tariffs, we light $XXX

performance Now in let's detail. discuss quarterly more business our

million quarter of second of estimate sell-through line camera our one was unit the expectation approximately with for We XXXX in units.

higher XX% we a as decline products which of should in the the sell Europe of a we decline position into weeks We second in year-over-year as saw our enter head believe than we the exceeded of In further our as sell-through year While in quarter. to improve more launch is half good premium are XX% margin fall. and represents the in. our in particular, inventories sell-through inventory this profitability channel contributed in

quarter. and than during shipped HEROX HEROX of increase during anticipated revenue and totaled XX% X% represented the a X.X quarter our camera cameras the white for units second stronger Camera experienced Black silver over million, year-over-year. we demand

street a X% X% business. was $XXX, a increase ASP increase quarter excluding and Second year-over-year aerial our year-over-year

beginning was X% support camera by revenue North primarily respectively aerial June bound as XX%, ramping We a Street Geographically total reported U.S. Latin grew is which offset shipped. XX% QX. divided sales at in which Guadalajara, XX% began unit to in was America in business, in America Mexico and ASP our driven and Europe. camera defined partially by production decline growth Asia-Pacific by our excluding

the U.S. We in expect half Mexico our cameras production of be most of second in bound in to XXXX.

previously, move most supply in to Mexico of impact supports and to our of As efficiencies cost as recognize some decision possible production as goal our the tariffs savings well stated bound our U.S. chain. mitigate our to

color we guidance, half year. you of XXXX. the for to increasing the are the Turning second will full-year give guidance I more on

from outlook it QX quarter. in to the continues previous track sell-through in business was is be July. and Product Our improving strong on

skewed positive per to and retail partners cameras lineup. to expect to on We’re half second the be continue for both and high ASPs of given $XXX channel we year. camera as from mix remain a the to fall outlook our a encouraged expect we end And result, above further feedback the product on

Plus our continue subscription our expect XXXX We to enhancing through grow expansion and service international to marketing. increased in offering,

approximately be the between above, growth. Margins expense XX% non-GAAP tax its approximately based to income to our be approximately million, million million, $X.XX expenses basis diluted to shares, share $XX be XX of XX% grow XXX EPS $X.XX share, to million Our $XXX prior or $X.XX and other the billion and improvement X% an expense XX.X% X% revenues to EPS be billion expectation fully points, to to $X.X minus $X in non-GAAP operating range $X.XX to over be to full-year to for approximately of count expense, of million breakeven. on between guidance plus per GAAP in

the $X.XX in for share. $X of to earnings a or specifically million, a and of $XXX range we earnings of minus XX.X% half of gross be revenues $X.XX second plus More $X.XX expenses of non-GAAP million of or to $X.XX basis share $XXX points, range million, XXXX, minus GAAP expect XX per operating margin to plus to in $XXX per million

ready quarter our with questions. million. With for approximately of continued positive cash above pleased $XXX performance XXXX, in to increased are and we XXXX that we deliver second expect with to full-year and operator, execution $XXX this the of EBITDA million summarize the take are momentum we To

Operator

[Operator you. We today Andrew Uerkwitz Oppenheimer. Instructions] with hear Thank will from first

Andrew Uerkwitz

think your retail higher from getting mix? Hey the like How end better. like about thanks Is it we assuming partners questions. delivered silver however you're second my in better white in gentlemen you're June you're seeing is feedback than do this will still should that for half It data. QX something the in and quarter, that or that cameras expected, seems taking sounds something your that

Nicholas Woodman

and Silver second expected the the did Andrew. quarter it X of but better at Thanks expense in Black. white do than wasn't

line. Just sell-through And be entire so that the a feedback net from clear, that's positive we're getting selling to just it's data. more of

Andrew Uerkwitz

the discussion Got pretty current any we for sounds sort channel going then you it that for fall. partners there about this it. are been your should could share And excited Has thing? how think promotions like of on if products, forward

Nicholas Woodman

on of what us well new I Well obviously I comment appropriate product. inventories July is QX share introduction sell-through but strong and sell-through can't the strong in continued in that achieve helps the the line for position new channel us product that. can

really been positive our transition on far well product reaction a product has the Our line. and for the are retailers new to so works all strategy universally

on and specifically line We consumers whereas success would learned was really Black tremendous both HEROX dependent we've strategy that holiday to HEROX a future excitement our products our entire built say this is Black it and amount But being and year what the far and into from flagship product star. as about perpetuate in I'd current our star. away performance last line. runaway the more excite our is the year

but build a So us momentum XXXX carry is where as stronger our XXXX strong a the and both de-risk each SKUs then well. into lineup going we of to strategy think overall got be the de-risking that we quarter, the maintain importantly we've contributor much and help can we're grow by upon having that QX believe and

Andrew Uerkwitz

And Great, Brian think mix appreciate may to how the but just early about another it one. the two thank I I you. the be that to quick half XXXX? similar should if quarters too could in second between know color. we

Brian McGee

two that. QX has ahead that street model both be quarters of the this the I Between way the think is wouldn't

is I think So more five QX. in we the of some upside think

Andrew Uerkwitz

Super it. Thank helpful. Got you gentlemen.

Operator

Eric Woodring next hear from We’ll Morgan with Stanley.

Eric Woodring

Hey they photographers was guys. average you of wondering kind up, you the some afternoon subscribers profile consumer. of are of talk they could just about good if the Plus or see that I your signing like

have Just a that curious and on then I follow-up.

Nicholas Woodman

first subscription the customers. what's of churn what's to them in to they what's them of to features compelling for a and sign done to We've to churn, up compelling know are subscriber compelling case consumer paid data have lot what some them interested, a what driving of don't convert that research the free trial the on place, We and is what's conversion level. do We stay them understand most at out. compelling to in

understanding And so motivations of the we're subscribers. of our better getting a

seen improvements improving the and the the can and subscription the of the you've really to ease by and of value adding so growth service sign obviously accelerated adding benefits out And nature to this service service margin customers us high service contributing which globally of the up make all course which rolling discoverability for we is to is given our consistent more of have. important us the the

a forward advancements We year have for hopefully the continued growth. this to of planned acceleration more later look and reporting on

Eric Woodring

as notes, Awesome I X% relates think that look much. quite weren't it first thanks. then just ASP they to be up first the would in ASPs year-over-year performance the I guys And half, just if back up in my said at half, you

curious XQ white of you or any silver if there about Just product if talked a in and factors? of more other because mix doing okay are that's

Brian McGee

that bit silver really most was business, a not do it’s a issue it QX. And being in the Eric, just to has it. the between QX that little mix Hi with and with systemic more timing drove stronger of And white and quarter. in more

after that seeing we’re year above is yes. on So that, still $XXX expect to the came we be that

Eric Woodring

very thank much. you Great,

Operator

Instructions] [Operator Research. Nik Todorov with next Longbow from We'll hear

Nikolay Todorov

on Hi for for order guys. go we taking to an to some second Thanks ASP the the the can really good and Congrats strong guidance, it Brian get full-year. in XXX lift the half outlook. in the into that implies to question. results if

should just second units or XXX. some quarter the ASP closer us here about street on half? the third the you mentioned Specifically third Can just think be how in fourth in a we you that at the should quarter versus colors give quarter to

Brian McGee

X%, because QX, improvement would the as our we're that's right differences right up the of between comfortable But revenue the about to the feel in QX, it’s growth midpoint right, we we go X%, take the the be guided the for upper I of also that we to lift, we about would continue to talked what second if from migration half. fall. with end margin as end into about second the can the half by and level we ASP the growth and half first for Yes QX by growth and be driving year-over-year whole the be model kind driving second way that half timing the would sequentially going second half unit see way about to unit

earnings driving in We're lot holding OpEx and the of that's leverage a half. second

Nikolay Todorov

September and Okay. got more last growth And from the perspective? a that just looking unit X% at that okay -- then unit it you fourth the was X% I'm expect quarter easy an and be do around year centered quarter to because comp

Brian McGee

up will I in quarters. both be units Yes, think

Nikolay Todorov

kind the Is lastly high of of launching. least function right, ASP seems in be that's you to also a is Okay. at historically that All there helpful. implied. fourth guys is quarter And that's what's are the that like going product something,

maybe mentioned is a $X.XX a to fact you HEROX probably Nick the you're ahead Black think or potential I Fusion? going of even there's for that just tier refresh probably camera the for

Nicholas Woodman

are to Multiple our roadmap products to contribute going this. in

Nikolay Todorov

are sales you guys Got And the GoPro.com? Okay. much absolute sharing how values it. in to

Brian McGee

We in under slightly in up the second and didn't. did we XX% We grow quarter, year-over-year. the above quarter first were that XX%

So Web execution the on site. performance solid and

Nikolay Todorov

me, And from Okay. sorry. last one I'm

and was that that's So want million you right. I XX% sure sell-through to was make mentioned year-over-year. just down X about units

Brian McGee

mentioned point and correct. that than And above price as prepared out more that's I'd in remarks also up we Yes, $XXX our point XX%.

bringing continued end the the with and the into innovation market are for the to proposition driving our value we higher consumers. we're and execution So that's

Nikolay Todorov

guys. Good thanks. luck it, Got

Brian McGee

Thanks.

Nicholas Woodman

Thank you.

Operator

hear from Securities, we will from And Wedbush Alicia Reese.

Alicia Reese

engage can addressable app go to market roughly are was could how questions. and users and if on non-GoPro on Quik into you're wondering how them a many the going expand your you the about that color potentially and more some bit perhaps detail you for taking I guys, just thanks give little us Hi apps way? if the

Nicholas Woodman

majority opportunity improve Quik The app GoPro Quik using why into of for one discovery non-GoPro owners app users owners the simplification experience to an is of our GoPro we which GoPro more our app hand for which a and us one of software app and are users, customers. the is of app get to combined on the Quik overall our

we're don't combined being majority for we two app ability content may is about of GoPro engage owners a are a or non-GoPro shows that it solution and apps that the have provide positive consumers to really own now a never GoPro. that users Quik excited So valuable those and yet own the

it us better serve them how opportunity affords and creates software. these so to And about we the can learn customers through

And we our And non-GoPro brand that technical from has our that it's to solution capabilities the historically interesting started HEROX can leverage have with that belief and that's as app monetize think and non-user we GoPro brand a can when $XXX them over app product. is admission you ticket to to time. GoPro our our use. free, a as And Quik now then owners free providers the and white benefit at

to And and spend to aren't that and tools, big $XXX or that so us brands $XXX from our free somewhere there's that XX. But ticket services target can between maybe GoPro may are we solutions $XXX. the field and enough about services free passionate between in that be interested opportunity that consumers this buying enter hardware of they

Alicia Reese

thank and That’s Great from all you. me.

Nicholas Woodman

you. Thank

Operator

other back with to like I'd And for remarks. turn no management questions, closing to things

Nicholas Woodman

we're the half holiday about coming and upcoming feel We the product our momentum strong year operator. that's very second fall. you, about got the quarter and this enthusiastic new of line Thank great and we've

of wowing off. New for to see in customers, so Conference look to us and Citi Investors City this around This to there. achieve be Thanks is much the strength for soon. Xth we position hope you at forward York on Team today's fans and call. September world signing helping to you partners our the joining everyone thanks So and will GoPro

Operator

And again conference. today’s that will Thank all you conclude joining for us.

GoPro (GPRO) 1 Aug 192019 Q2 Earnings call transcript