Earnings call transcript Q4 2022

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Operator

Good afternoon. Thank you for attending the GoPro Q4 2022 Earnings Call. My name is Matt, and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. [Operator Instructions]

pass President over of to Christopher our like Vice Clark, Corporate now the to conference host, I'd Communications. Christopher, please go ahead.

Christopher Clark

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

read website. and the our about quarter full our fourth be outlook, performance to section please management For Investor detailed information posted detailed year and will commentary Relations XXXX the of GoPro's

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

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

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

on about based and update not any statements information new to our results result available or date a information we of outlook as business undertake obligation of is events. future do these commentary and as Our today's the

time-to-time the Commission XXXX, December differ Securities may and the annual and report ended Form the on To from better on Exchange you from year understand cause our is reports to could XX, recent most in risks for file we our uncertainties and refer SEC. actual results that file to commentary. We which XX-K other with with the

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

provide to we to we enable to manage how evaluate results this perform our analyze investors operations operating operating We comparisons similar choose reporting and own to internally manner non-GAAP of results. information our use and to a in

GAAP Investor be press of to of the issued release is on Relations reconciliation A operating in expenses website. this section found afternoon, that posted our the non-GAAP which was can

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

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

Nicholas Woodman

and Thank us Chris, Thanks, hi, today. joining you for everybody.

we to each Before posted Q&A, of we brief to that encourage you the have I detailed I commentary our Relations remarks website, get which some management read. summarize Investor to section of the

inspired of world's most worn film all. product, the wrist creative QX of and GoPro humans. most congratulate XXXX, consider be surfing, inspiring XX-millimeter our to millions to XX-year it's been designed the we we've who serving on contributed incredible to today, to to Gratitude brands first the I In thank our a want GoPro's from and while first at popular history. far past one active, and camera anniversary, come and celebrated XX-year everybody how present, to world's

year in macroeconomic subscription-based marked XXXX, The business strategy challenges. by a strength our evident of was brand and

business to subscription high-margin line. is serving a meaningfully powerful as bottom our financial Our engine, contributing

margin. million of $X.X bringing service run an exceeding XX% with annual XX% revenue target to year-over-year of our subscription gross million, our $XXX rate to subscribers In XXXX, we grew and annual XX% and million to GoPro $X.XX

the helped The and positive stock We a million. repurchased we our deliver million $XX of paid $XXX exited $XXX cash of growth with in and million and subscription us off in business year debt EBITDA. strong profitability balance

channels, and GoPro.com from was business full for from Direct-to-consumer throughout contributing year our each from meaningfully with overall XX% benefited XX%, the in year. retail complementary to XXXX of and the XXXX, XX% our revenue and direct-to-consumer revenue of respectively. XX% QX up

XXXX, revenue in our grew addition, growth X% growth estimate constant GoPro.com revenue. was business in subscription XX% In XX% GoPro.com We over XXXX driven services and in by currency.

quarter approximately and results margin been or On constant versus XX.X% by the above impacted GoPro's stronger results and revenue year been actual higher have companies, the approximately actual EBITDA X% would would for Like currency actual the a a to US X% many XX% that $XX we revenue were million dollar. Gross nearly versus for basis, results. have year estimate results. XX%,

and we the Considering challenges, business subscription-based and global model reflect execution FX our our of XXXX results of the macroeconomic our believe teams. strong strength the

laser-focused opportunity. our successfully a what growth believe understanding on high-margin The our is behavior, focus are consumer channel subscription increased we is we're and this and engagement to on drive GoPro's future we LTV. significant has of of GoPro leveraging building direct-to-consumer based and

see While to value subscribers. add we existing this new for in significant still further opportunities and early journey,

million, a when $XXX million Our we well will growth long-term GoPro's end to XXXX investing strong ongoing GoPro is to believe critical cash the for plan profitability $XXX the maintain economy position while with position that in and opportunities global year of recovers.

experience in non-owners subscriber This a and technology broader new and will a will subscription premium includes the owners alike drive hardware and that base target to court growth, consumer with lineup and believe ultimately, a mobile, and out tier. We're innovation we cloud LTV. retention desktop people, that GoPro our rolling expanding synced investing

and GoPro imaging capture on in I’m has well-positioned us of lives our and model based for we and our brand, future, give that in likely exciting people business, most ways. businesses I many As XX the active become face to challenges strength business people despite in world’s most serving near-term creative are help proud the with reflect and with subscription our innovation to This that purpose as share XXXX. the our for, GoPro digital including known we solutions well that as combines them the years their purpose; our of confidence

meantime, an serve GoPro the towards we’re will In today. we where more believe do significantly than exciting innovating we people tomorrow

are questions. to take we now ready Operator,

Operator

first [Operator from Absolutely. The with of question the line Instructions] is Anna Glaessgen Jefferies.

Your line open. is now

Anna Glaessgen

guys. my Hi, question. for good afternoon Thanks taking

And I research it Could about want be and justifies First, here. on would would seeing additional bit subscribers? features little what that to that options premium subscription talk more start this that you it? the the the give a you're

Nicholas Woodman

second to and want rates with Brian, subscription I’ll part. business attach do current and you take start the

Brian McGee

subscription year with Yeah. great. ended Anna. subscribers and the X.XX that’s million up our XX%, current business, Yeah. was we On Thanks, revenue sounds XX%. about That up

the fact it's points excited we're margin. XX So XX to business subscription about very of that and gross our

attach XX% of buys retail, the retail we If greater XXXX. that we tax as of XX% to than store our XX% the gopro.com, subscription cameras. up rates was at unpack in bundle kind of low app And attached with substantially a to so store remember a attach comes then to increased in year and little that are part The our on a XXXX from just someone bit, for signs largely all continue nearly for in and everyone expanding subscription.

one subscribers the who I as to think who the we that XX in saw who gopro.com the initial to that we XXXX on when retail the XX just growth And and year retail proposition, point, on great. substantial side to XX at upgraded bundle look from given and and of a to paid paid one through in is up. add So came and came those the most value the now XXXX which came

retention across essentially those Our the stayed of cohorts rate all have same.

XX seeing up to now is that XX. in uptick we're from nice so the a moving cohort And ARPU and Page

backdrop, So Nick. as to I’ll turn a over it

Nicholas Woodman

Yes.

as on success that consumers based GoPro.com buy retail, So their and cameras with GoPro at people cameras as we're converting having subscribers. who them converting become buy their at the to those that well

a they'd lot consumer have they about We learn We've of the aren't more a some a to why to lot what like parallel, subscribing to see we do they what then want lot learned GoPro. engagement. And from our see. research from most. people and What in value of perhaps subscribers

from combining no years Quik had app product we for support, ago. million some monthly after updates, had data setting active desktop. hundreds monthly desktop with product some really and the that have for ago, called actually of time that at that And that desktop it was was X users of some app, then see no market previous It app of we also still encouraging users. application thousands desktop active some in with have that And that We of whatsoever. we setting that years we're years a the to

a desktop for is it's that. recent our clear sign there from a that research significant consumer and demand confirms So GoPro application more

launch and and this the And pricing subscribers, We're a it the premium they're if upsell past that But that interested it. is the cloud research really because synced indicates is will existing new willing But provide represent in all subscription value mobile of will apps that they're current us. we'll experience what's about for. our GoPro and still to for significant that subscription definitely desktop great to a to also pay it amount is be application an GoPro confirms subscribers, benefits and not opportunity a of more subscribers tier. excited premium

even have do own subscriptions to GoPro. to like that add I'd experience a And people don't we selling that

we of any are so the on learnings a to capturing available editing GoPro, we've footage to desktop for nice and mobile benefits leverage not. app. benefits mentioned growth those a going they own regardless to them be with and As and here be footage don't and we the or it's the seen with they're mobile phone camera, the extending or that premiums that editing cloud that GoPro call, can people making their taking whether app And Quik that and application

we going initiative is more And market. it's an to and have that So and desktop in be this out focused something cloud important when more full we're the suite for on mobile TAM-expanding the us.

Anna Glaessgen

you turning probably bit several terms Got for we balance, been and now? are units. about lot. guidance, sell-through to at in And destocking double-digit where it. a XQ quarters implies normalized seeing that little have a sell-in a in a of drop big-box Thanks then more retailers Can the talk particularly

Brian McGee

before let Yes. about Actually, guidance, Yes. bit. I talk little get QX me a into start QX

came earnings we midpoint very the guided, how on how by guided we're to the close and environment we Given about of what revenue pleased pretty we and bottom-line. with out the XX% to beat

for the So, very we that of cash. increased quarter, proud and

tale and a sell-through. is This of comparing sell-in

fourth If And consumer. the with look market most you was about of quarter basis, is The the was more America. down in that at pressure a actually US North sell-through X% under on year-over-year. definitely

America North and a definitely down which of XX% were that's issue. kind sell-in quite been out. again, were we kind an down a Europe, course, XX% But in balanced So, respectively. of the more, bit and sell-through On of basis, mostly

Now, was look helped negative of the if some trends. GoPro.com flat year-over-year. at to it, actually news we good the retail offset and is

So, very with we're pleased outcome. that

also at about we up commentary, XXX,XXX I'll wanted QX, and our XXX,XXX. units through in note ended As about in to we management sell

little a new Mini product bit line So, little historically, just in a quarter. where inventory we've actually the -- of bit with with kind up HEROXX a in short. introduced because been of late Channel and is we

in So, since actually were year-over-year out pull channel that and inventory. and that down

But XX,XXX healthier the exiting a we of us be year. put in kind and to wanted less position

down of out X% we'll midpoint Sell-through impacting is in So, that quarter. actually the QX, is that first come our which sell-in guide. normalizing actually on our the in to see

sell-in. So, as the as not bad

QX get QX. healthy, trying has So, their GoPro own it's own in consumer thing, business the impacted not then it's the channel to just retailers their and and they're a trying to in manage inventory -- us aspect, inventories

QX. I some in that they're going getting down down normalize think and pretty to low in starts get QX QX into to at you're levels getting because to or

that we much that's out. second as So, half a as the market to of kind see hopefully, we playing And of stronger XXXX. how get

Anna Glaessgen

Thanks. Great.

Operator

Woodring Morgan for you your from with Stanley. the line Erik of next question. Thank The question is

line open. now Your is

Unidentified Analyst

on for Maya is This you. thank Erik. Hi,

where land of subscribers starting, XXXX? will kind do you for Just believe year-end

Brian McGee

Yes.

whole the expect do to We macro for going be the just about So, market. complexity of QX. in we the on up XXX,XXX in didn't up. It guidance because year give that's will be subscribers

going to do We the expect but year, to growth. have we that. We're not for to guidance give expect end

million subscription expect at from from thing XXXX that to is in $XXX think $XX XXXX. of will or out least we we'll in be revenue other the I million have and so service up about point

So still a we'll we'll see growth, and the subscriber subscriber adding nice have be revenue growth. tiers. to We'll

margin. subscription and As better Nick generate will have nice amount had said, a upsell, a which higher dollar

forward looking that. to So,

Unidentified Analyst

would into how how December the Great. or pricing the And as a And Thank do trending follow-up, expect from see just to that kind do you continue the March you then you environment that of you. environment? quarter, characterize the pricing quarter?

Brian McGee

Yeah.

we're numbers. pricing the promotional to environment able think in I QX and come were in within our

think or pricing minus as the takes That's QX. in environment the I in in not it's plus the period. quarter. about QX and account, currency in But only XX%, quarter. the XX% expect first promotional we into constant margins, the more a we will promotional That expect bit,

Unidentified Analyst

you. Thank Great.

Operator

you question. Thank is from with Jim for question your next Citi. of the The line Suva

Your line now open. is

Jim Suva

big weather Thank quarter that being to canceling you. getting airports from of there be point some diving or when behavior? on – Brian Thank again and and purchasing also challenged also, in you. of B. any Nick, in people trips, post-COVID, people has changes just whether A scuba GoPro, and stuck I'm behaviors to now turning the And impact. like that travel like back December if go to pretty wondering, vacations, pre-COVID exciting they it skiing, was starting point and terms are and are

Brian McGee

could, I Jim.

start me or Nick, you want do to? and Let then want do to go, me you

Nicholas Woodman

I'll half. take take the first half, the second

Brian McGee

right. All

to think October. November half, like sales traveling we as a lot good Europe. first I Jim, people travel the really and On of September, saw in were

So really ebbed kind a bit off December. our strong there. business has It in been of

travel? honestly, the that's bigger bigger back than followed issue, is a I quite North had, think, on the their think America and impact by I coming retail the consumer inventory necessarily

COVID. ebbs They're come to China, the China, as being And in then people want of in was with trying a and through number of fourth China flows, or they're in But kind out to travel that. out quarter going of restricted of countries.

I flights have Europe and a into China, been the COVID current given As dramatically reduced matter to, UK I saw situation. fact, just of think, from basically

market. XX% of XX% represents – So, and historically about travel or of have China that the

up, an bit from places kind perspective say, Europe and area been a GoPro. travel challenged, of a I that's that's So but the little propped been places, America more North the use would

Nicholas Woodman

increase using when the Yeah. the down. behavioral an seeing their usage And since on of of start app the definitely GoPro COVID with travel front, we're GoPro’s, shut connecting customers

steadily GoPro And shared XX unique app year, back cameras since. had in the we've we seen because that, Quik approximately to that great, $XX.X XXXX, during million We which in XXXX, number connect GoPro is million. the about it climbing was

think how travel people's and to and camera between encouraging and account app really from also that's your benefiting is correlation So see the footage GoPro your the we're most the improved works increased camera GoPro increased cloud the to GoPro activity, the charging. We usage. now auto app, camera while increased your uploads, overall recent experience how well with

access, SD now with enjoy that subscriber, you cleared complexities. a to after upload GoPro a you're you're or If previous offloading complete, now and without can dealing is your card and is share ever content edit, computer automatically

XX in million XXXX. seeing to that we improved also, contributing we're camera rates. So active that's improved overall And user engagement, believe, success connects

getting question, more getting your of we're well. more in correlation value and people a direct people purchases And seeing and through that as to Jim, their between out there's GoPros. more seeing use But

by we that's becoming the and and And from as overall to more unfortunately, but further really somewhat good more it confidence the macroeconomic pandemic. to spending, as tempered challenges move community active relates see it's their GoPro the further and consumer

Jim Suva

is, shelves, down for retailers on question you side, the everything. not we're last hit you my GoPro the working And color. when can equilibrium the the channel but everything comment basically But the to on product for going on their Thanks equilibrium GoPro, of just feel?

Nicholas Woodman

stock there's can too, out that retailers see we and hitting of know who I that. Yes. some are

have they're the going up to balances. getting So sort to a to down inventory point where they're

we'll QX get close equilibrium with point, And XX,XXX darn guide, pull our we're we'll that inventory channel at think think down another and to I to units. level. I pretty the probably

So, normalize I QX. to it in think, starts

Jim Suva

Brian, you, for much Thank the you, thank and Nick, details. so

Operator

the next Thank with line is you question Instructions] your The [Operator from Martin Yang question. of for Oppenheimer.

now is line Your open.

Martin Yang

for of on could rest margins. the question you Thank to question. margins? exchange my Good that headwinds expect in XXXX you related My afternoon. improve first your any potentially taking is dissipate Hi. non-foreign Do

Brian McGee

-- Yes. I are relative if assumptions provide and actually, one say what to can in XXXX, the FX took back holding We're XX%, a and to repeat we -- QX, it, be margins to hedging plus down just went our and directional that you I'll other element. way X, or about trying XX% think or at our better. minus we'll to but we're it'd commentary, management equates we be in even FX XXXX, that. I'm current for on to not X.XX,

a been these still at company for have margins headwind So the levels.

Martin Yang

imply costs points? headwinds margin was associated component does So roughly inflation that or two

Brian McGee

if on the little component Yes. pricing. it'd no, XXXX, I currency bit more you to we -- mean a be from then on and mean

So X% to it's X%.

come So some under than probably pressure you’ll we get come tailwind that environment -- memory. at current to look think But our area yet seen way that's other some down. up an to components coming maybe too, that I have start the is probably, haven't I through as components see to and point, given XXXX that's going

Martin Yang

Got fourth the contribution quarters, direct-to-consumer question the see it. dip or about a down Usually, during contribution to high Thank slight or My mid-XXs. maybe from relative December sales have quarter, you. previous the years, in to XXs is previous GoPro.com in in the XX% we revenue quarter. next GoPro.com

strong. factors sales in there driving really was is that particular GoPro.com the it any XQ? quarter, This Is up

Brian McGee

Yes.

And actually, as will I it into play XXXX think there's of couple a factors. well.

So pricing I out, that's the of GoPro.com a can one by giving is, think the on that on we word that. and have obviously better part we measure

front. DTC the on helped probably back coming Retail

the on holiday. good was that So

a promotional think on we GoPro.com. I of had activity bit quite

and in being subscribers. driving sales were bashful and margin we So

get sub where good very XXXX real XXXX, into lifetime to XXXX, with this those because value important, we the is going customers. aspect that's some So

And helps the course, being the really the revenue then, front. in and service on quarter from on our GoPro.com about subscription million million of and $XX year $XX

And on $XXX we our we've got partly competitive subscription also position BXC more and service so and we’ll million continue XX% revenue but way trend business we as over very the service probably drive GoPro.com, right? because on that look to a GoPro.com, drive than of ahead, in directional is moving of growth subscription as and XXXX, revenue. This be good

Martin Yang

Got you very it. Thank much.

Operator

at waiting question. additional Thank your time. you There for questions no are this

back to closing the I'll for call So management pass the remarks. any team

Nicholas Woodman

Thank us for operator, joining today. and everyone, you, thanks,

we're As business innovation macroeconomic the technologies for well and the for despite hardware year economy investing we products excited ahead really market We're continue continue subscription software recovers. and position us in the mentioned, to leading our grow and when challenges. people, believe releasing will we that to global

of the GoPro's XXst leading a here's So as market to start company. year

Let's team This signing GoPro off. go. is

Operator

conference you call. the concludes for your That Thank participation.

You disconnect your may now lines.

GoPro (GPRO) 2 Feb 232022 Q4 Earnings call transcript