Earnings call transcript Q1 2023

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Operator

Hello, everybody, and welcome to GoPro's First Quarter 2023 Earnings Conference Call. My name is Sam, and I'll be coordinating your call today. [Operator Instructions].

I will now hand you over to your host, Christopher Clark, Vice President of Corporate Communications, to begin.

So, Christopher, please go ahead.

Christopher Clark

Sam. you, Thank and conference everyone, GoPro's quarter first Good welcome earnings call. XXXX afternoon, to

today Nicholas With and GoPro's are me CEO, McGee. COO, Woodman; Brian CFO and

Today's Nick introduction a agenda Q&A. by from will include followed brief

please section about information posted XXXX our commentary first For website. read Investor detailed management Relations our the the GoPro's performance quarter and outlook, of to we

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

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

any Additionally, events. undertake to new update results made that could future on based change a information these at or statements any assumptions obligation as and are result not as forward-looking any of today. do means statements of This time today we

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

GAAP and that revenue, income made issued non-GAAP expense, our GAAP numbers than on are Today, are diluted of Unless on well with can Investor loss, as of the share a may net per reconciliation net that basic non-GAAP related expenses found A website. to management in profit gross other non-GAAP. we in and the margin, today, adjusted posted be the all noted, discuss Relations press accordance this operating in and and basis. commentary discussed profit afternoon, EBITDA, is as was remarks which operating and loss release otherwise section statement

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

Nicholas Woodman

you, everyone Chris. today. for you us Thank Thank joining

I take Brian we commentary is which to accelerate to everybody growth that will questions. and the revenue, units, management spend cover posted EBITDA commentary our subscribers, reading IR I that adjusted some management and highlights the our posted from our briefly strategy time believe website, encourage updated on going earnings. I'm before of in our includes details

QX inventory well Pacific our of for demand year-over-year. was outperformance our by was channel below in led XX% Sell-through QX during guidance product units flat North our channel the We units, exceeded of rest approximately our expectations. America Demand better above XXX,XXX nearly units direct-to-consumer XXX,XXX Asia and Regionally, XXX,XXX and than previous for and in the on year. quarter up us expected setting GoPro.com. XX,XXX to the reduced units, nearly

ended contribute X.XX We subscription our to and quarter service revenue. generating revenue and to $XX the represented quarter, up year-over-year year-over-year. million revenue XX% million high-margin of which Our subscribers, GoPro was meaningfully in XX% up continues bottom-line, with XX% in the

We retention represent renewal and continue subscriber our year to to nearly XX%. renewal first between XX% of annual subscribers, who was count. second In see XX% improvements our in of to between year was QX, XX% total XX%

in X.XX $XXX service between subscribers, X.X million year in and which to expect We with should subscription the finish for result million the million year. revenue and

GoPro.com's was improvement. at in-app year-over-year subscription marketing a our camera and via subscription retail approximately our XX% This subscribed now, even to XXXX, For QX consumers from rate subscribers who rate GoPro.com, generated app of benefits. new have is In improved channel subscriber largely XX%. a due than our XX%, more retail above later via we than more remaining with GoPro attach year via purchased a attach

in EBITDA their will retail consumers go-to-market believe and in adjusted accelerate subscribers, time money having from world on the spending strategy units, and growth an essentially revenue, moved of With we pandemic stores, the more and updated earnings.

a and share the brief retailers spending I'll XXXX online frame we help when their were severely success to pandemic, for the retrospective during shifted in opportunity, changes physical operating position consumers on conditions. To early either GoPro made this or restricted under closed

XX% GoPro entry-level revenue much at significantly sales GoPro percentage in flagship SKU response lower business effectively from presence to XXXX chain supply reduced by and reduced our Back in a budgets; approximately a direct-to-consumer higher we growing we to to XX% then, in increased as of direct marketing globally; XX% approximately chain GoPro's shifted $XXX response constraints; exited retail camera we constraints; point GoPro.com price supply in volume, more model, to XXXX. pricing

our $XXX base. enabled ASPs, profitability than repay subscribers adjusted rapidly to million decline increasing million end and during of X We $XX added $XXX and than This and this XXXX which time more of sell-through subscriber our XXXX EBITDA achieved $XXX of strategy driving and We XXXX, a repurchase GoPro, of million cash between with stock million growing benefitted despite generated in in unit more us approximately million. debt, camera XX%. this

units see and end believe this over $XXX end world, investment the meaningful drive over adjusted our combined XXXX adjust period. XXXX. the We in a go-to-market have and strategy of and million But to million XXXX, our increase million on growth X.X units impact now, we will X subscriber also X the opportunity post-pandemic million EBITDA and of retail to an in million by to XXXX, by to X.X channel units our in over XXXX profitability, of

this include: points our strategy, we off week, updated key of The go-to-market kicked which

freight price adjustment costs our chain to are our with HEROXX enable for HEROXX as the and will cameras. Black, new, helping from this MSRP Restoring Black higher-margin an pricing higher-priced, $XXX of to with levels products the introduction of Black product supply in and along improved HEROX perspective, a margin in of SKUs reduction Mini, future. flagship an HEROXX XXXX Reductions inbound

to an growth. point drive Re-introducing with Black meaningful and price volume HEROX entry-level SKU subscriber

presence retailers. distribution best-in-class world-class by retail increasing our Restoring global at to

retail believe sales can for conversion as more as discounts retail purchase sales subscribers subscriber we our in subscriber GoPro.com. camera than if GoPro.com strategy on at growth pandemic-driven improvements eliminating time well subscriber of of focusing with of And growth. consumers the strength generate the we continue we in to primarily in-app at of Thanks retention,

we mentioned, believe million strategy million in to X million an will X.X sell-in improved and drive I X XXXX, 'XX, sell-through unit units units million to and As above in XXXX. X.X units improved in this

We and believe end subscribers subscribers X.X the will X.X to GoPro to million X.X grow million million million in to XXXX, XXXX, X.XX to XXXX. by subscribers of million in X.X million X.X

to adjusted business. improved we stock of will period the growing significantly XXXX over we while proceeds approximately also believe the repurchasing and our and We generate combined of these in million $XXX accelerate investing use will XXXX EBITDA

strategy received through retail business by we're this and well excited and pricing to grow go-to-market has channel. partners updated our important been Our and brand

current several addition included we're launch new later GoPro In additional between subscribers. including will to make the excited editing The to no the mobile app with QX to app projects the subscription editing products at also strategy, sync apps our to updated charge introduce this will in year, desktop your that seamless. brand transitioning be new GoPro of GoPro our Quik go-to-market experience desktop

desktop already it further retention and camera Our and that subscriber owners research our notable indicates that will highly rates. app conversion improve should help value GoPro our

subscription We no the matter and most GoPro for personal to use, camera service and GoPro's well excited new a owners also GoPro camera content, of premium non-owners. targeting we're convenient our can offerings We're out your as believe launch getting to in what as both tier as a to software you QX, excited serve GoPro solution expand leverage TAM.

of editing success QX At Speaking Quik we end content had marketing looking I growth organizational and with support. XXX,XXX We're non-GoPro subscription, the to to for consumers upcoming on QX continues a non-GoPro tools. the launches to convenient mentioned of camera per owning see editing organic limited app's above. organic Quik owners, serving subscribers our year mostly which the paying mobile caters app, build this access to excited XXXX, $XX despite

an implementing lower costs accessible are shift but The in and potentially go-to-market easing, and of the enabling product freight headed, supply recognize time are to and Pandemic-related strength pricing us also a challenges back the demand, changes are consumer more is with value at come world where economically. to significantly we are expect exciting share backs. growth believe we our and and This of of units, revenue at that time very use a us. we is which in will ahead will we increase best days entry-level adjusted EBITDA GoPro buy to and innovation SKU, both bolster subscribers, drive

Operator, we questions. ready to are take now

Operator

question Our Instructions] first Erik, of [Operator open. Morgan from now go comes Erik Stanley. your you. ahead. Please Thank Woodring line is

Unidentified Analyst

so, much one is, Hi. This around what think on changes taking just them, you talk that some And is question. with about -- if maybe I pricing about can Sabrina we Thank strategy? And for first know the the as your you in-depth more the is the you Erik. And changed? reasons structural? touched but on should so of for

Nicholas Woodman

stores same us people pricing did adjusting in behind more for pandemic. need as holding stores lot this lot they're great. that when from to shopping so strategy entertainment. back of potential They're were world there's to closed Sure. shopping levels pre-pandemic form to that I go-to-market our in fully consumers that, ironically And well The there mentioned, that job thrive rationale retail. has And mean, that in to we a address it higher been us and the recognize we the time, we money that as to our stores that response weren't great are going go-to-market more lot strategy maximize thrilled have strategy online allowed works were opportunity a volume. more, a is the of been a that people spending during business. adjusting to and our period retailers post-pandemic where a to us of has drive I But

that is now biggest big strong retail that, not financial new [indiscernible] largest we source such as that of shows pandemic, the I of the And via subscribers, data the enabler GoPro whereas is app than camera mentioned, Our rates GoPro.com converting is results the taking subscribers. into superior this source subscribers during action. is of far have conversion that a the model

of app, all to the opportunity create best convert are more have to an at again, and, many in our us subscribers stars all drive volume, So, ways, retail the for worlds. of grow aligning via

time. And exciting company an when we the it's have look for it's the that you at outlook XXXX, compelling. very So, through

Brian McGee

what Yes. tag to I'll said. on Actually, Nick Sabrina, maybe

like data our and really going we've XXXX, have cetera. of over data sell-through amount evaluated we've of to impact number provides XXXX, an what's moves et made past extensive price And have list a prices move of since into we promotional the historical back when years, insight that drops we also offers, price -- and we've $XXX. immense We sell-through that the of

through tiers what to you investment then, And measure and enter partners of demand. add sell-through Secondly, marketing we've and retail evaluated we volume on our tiers through it, and the into pricing in XXXX. can on as investment XXXX different top brand historical plan on direct overall kind well, we is in of

guess expected a in some retail a lift And across the expand partners say I what couple I severely U.S. Europe, do on early so we're we positive had lastly, was impact And but of as data, about pleased results. it's in, mentioned, the result It's back, percentage actually a seeing certain matters that the units, couple are U.S. definitely can of thought. what distribution, what we'll because the and which in that far. we thing days. largest and we we double Europe XX%. It's or to the days, from while demand fact lifting say much as I'm as triple last measure our is days have And and in over while other Nick is cut pretty the

say 'XX to expect year, would double-digit and perspective, also that unit have this from I'd modeling as this at look a we 'XX. you growth

more 'XX ASPs, prepared I down a but offering. able extends it's little should remarks, coming, bit I in just go products about have the think So, to overall we'll well. expand won't that get 'XX, that, bit we'll ASP said we're to we 'XX. but little in that'll but actually as through, and pricing, lift as also back in it $XXX, into the not in new a average that's be And up

as -- out. kind So model you of that

'XX, units, lot to stock. lead meaningful growth 'XX, to use buy into we So, going drive back profitability, then we'll the and back that's revenue to double-digit in a which and upper as improve of EBITDA, expect margins we significant XX%-s

of a kind in nutshell. the So that's strategy

Unidentified Analyst

bit about -- Understood. we so you talk is, I My have were know wondering stronger that the color. for all could second little demand. Thank said things you if question a your much then, consumer the XXXX April? in outlook? baked And how linearity behavior U.S. Europe. what the any and in saw changes there But was that you quarter? being through Thanks. is into of you Were

Brian McGee

quarter. to was units we could early up sell-through Yes, I as as actually, your mentioned in had in be at the when I much conference XXX,XXX March,

In the we at I had January March on fact, about we -- quarter and were what the where of wasn't linear from hit said. high February. that number end XX% Actually From lifted in all.

we through to it seeing So, April was in the Asia see good starting strong continued And Europe U.S. to yes, be. quarter. to and actually continue -- we've we're about well. to doing we demand needed see And where do GoPro.com. well strength the

getting So, units, to right very and HEROXX to to going million drive products, now to help be Black. end on entry-level growth low going we're the contribute, that's X.X our strong -- seeing is growth

the move. So, results we're pretty price excited by what seeing we're on the of

Unidentified Analyst

you. Thank Perfect.

Operator

Martin, your ahead. is Instructions] next [Operator from open. question go Yang Martin begin. comes to Please line now Oppenheimer Our over

Martin Yang

my taking for you question. Thank afternoon. Good Hi.

to How And for recently for additional in your or margins higher cost? embedded declined you want volume component ask hardware. from you would benefit would you longer-term outlook? the hardware model size I First, anything about benefits do

Brian McGee

see half. Hi, have I've come entry-level we -- affect the in Martin. products aren't in of half. work our second more the but we'll to memory, -- in mostly either. -- got some reduction price well, seen well. through Yes, And will first hit cost today that price expensive discrete inventory numbers that with continue the would component points And to positively points some down, We to optimized start as particularly 'XX. the costs into introduce we'll cost at also

a take would margin hit cash, actually product that our continue margin would versus in we with outlook. but right to that's positive not And at expect but a bit 'XX. in we'll there, embedded of convert so, we'll 'XX, be cost now entry-level, And points in and to

round margins to have well you'd levels, between that for see company. kind XX%, go XXXX newer currency overall we'll up in of products us, help XX%. that kind XX% out have to all 'XX, if as And for that leads of So, to range. the of XX% demand about to XX% 'XX and And that -- goes going back margins to it's the and and some in profile the we kind product

also So, benefit the to if should weaken dollar we would back further, us, be. to that used where

Martin Yang

it. Got question the on is And subscribers. Thanks. second

are sets from subscribers going If difference? relatively the channel? lower between do ARPU have ARPU to converge subscribers So, time a both you you subscribers? from Is will channel see from channels or for over or there do a retail meaningful coming the be both there of gap two is, there a sustained

Brian McGee

question. between Yes, two are pretty good ARPU The the close actually.

So, to the via collapse or going whether the to not same, subscriber app GoPro.com converge going on to pricing, purchase. be it be both it's the post subscribe they're you retail to

that of over move up the And people to so, upgrade because a ARPU as then of we'll see on $XX, price from entry-level point time, kind ARPU. effect will and $XX positive have

subscribers. it's at on the end, we of we And high which, and about a assumed of outcomes retail about the a low XX% it's for attach, end, range speaking And XX%. gave that

obviously million guidance was XX%, X.X base And the have of a of and middle into from attach amazing, a bit because XX% I in mean on QX QX in. is a was QX, proportion to we have that. That's we a lot, coming we in in in of of Our nearly low year-over-year of an turns up said people an which perspective demand subscribers retail. the lot that anomaly, of sell-through kind

lot the don't I think, people bit the we to flips little where QX in You'll and normalize and big, sell is more a a QX. see it other down bit maybe until in QX but sell-through way less who and convert about where the buy that little QX XX%, a

a is seasonality the in growth, if sense. So, that versus bit quarter-to-quarter revenue our opposite subscriber growth makes

assumptions those to were range. XX% excited, darn to to still said. that, obviously, pretty came do had as still are good we're we'll 'XX the estimating But more and And attach, for same Nick the So, we used up 'XX. XX% those continue with pretty how grow assumptions behind and

Martin Yang

That's all me. appreciate from it. you. details. questions the Really Got Thank the

Operator

are questions. Instructions] [Operator there And no further

So, I'll any back to hand for closing remarks. management

Nicholas Woodman

Well, thank call. today's everybody you, operator. you for showstopper. And Wow, thank joining

and As our It's exciting ahead our excited GoPro great we're of time I said at straight to and earlier, see best results compelling new this time go-to-market is about of we such are gates. grow again, very us. a really days strategy it's and believe to the out

signing And us. is So, you. This for then, Team stay until more GoPro, tuned from off. thank

Operator

today's everyone And Thank concludes this call. for you joining.

You may disconnect now your lines.

GoPro (GPRO) 9 May 232023 Q1 Earnings call transcript