GPRO - Earnings call 3 2023

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Operator

Hello, everybody, and welcome to the GoPro Third Quarter 2023 Earnings Conference Call. My name is Sam, and I will be coordinating your call today. [Operator Instructions] I will now hand you over to your host Christopher Clark, VP of Corporate Communications, to begin.

So Christopher, please go ahead.

Christopher Clark

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

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

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

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

change undertake a result Additionally, update that today as events. could based any as today. assumptions any these statements understand and statements information new uncertainties on are To made risks we do any better obligation results from at the actual time, results December to XX, not This most XX-K file future ended or with we forward-looking and could of of means that commentary, year to other Exchange you on the and SEC. which time file for reports refer cause is Securities annual our report with may recent on XXXX, to time Commission Form our to differ from the the that we and

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

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

Nicholas Woodman

I'm May initiated today. subscriber drive positive next excited against us we and we will strategy joining and we're making a for growth everybody, thanks, the growth in progress the XXXX, to years. revenue, profit X strategy and the over Chris, Thanks, meaningful believe share expansion TAM

reminder, a to cameras pricing drive lower increased post-pandemic reach better the marketing new consumers reintroduction to level-priced sales, unit return a entry pre-pandemic included to of serve this retail to expanding global awareness, to As presence channel strategy GoPro shopping behavior. customers, GoPro's drive

the September, In further subscribers. casual million the we industry. $XXX And million, performance features earnings and QX launched GoPro was both and In both earnings quarter for as midpoint ended revenue Revenue and non-GAAP loaded flagship camera, XXXX, for powerful per exceeded new Black, establishing the professional target our we and with new on and $X.XX. was share value benchmark $XXX guidance. non-GAAP X.X our share HEROXX our of per with users

As exceeding I our a This was result of of expectations. both mentioned, cameras, our and for revenue the Black price guidance. point quarter entry-level ahead HEROXX was

without our SKUs demonstrating XX% entry-level of TAM-expanding revenue, Our cannibalizing camera high-end their SKUs. potential generated

by channel XX% or and presence. XX% channel retail XX% Total and retail XX% grew Total retail sold grew XXXX year-over-year, year-over-year million our total units $XXX unit of grew sell-through sequentially retail grew on sales respectively, quarter camera Third into revenue renewed year-over-year. XX%, revenue. to camera focus growing aided XX% our

doors new end tracking approximately already X,XXX we're that and new Last happy added by to quarter, doors XXXX, today. a of that of shared we retail of the retail I'm target X,XXX globally goal, adding as of ahead having report

enable with each account work these retail point-of-purchase merchandisers, enhanced refreshed retailers to in premium location. presence, improved Our includes brand and in-store representation management

when we increase X,XXX to doors, an which of of total our XX% growth bringing this in approximately to is target Our XXXX would initiated more from retail strategy globally, XXXX. be additional than this XX,XXX open more May stores year than

we each growing TAM, the XXXX. over our and leverage years, cameras We next X built at be introduce our retail quarter the expect to which and of further believe several address cases expand camera to beginning SKUs new we distinct will plan and of in To and contribute new earnings use these revenue second profiles, network improved types of XXXX. will in margin XXXX to materially

presence In continue we addition experience we in than where the XX to retail, gopro.com, scaling at shopping at countries. to enhance more our sell

direct-to-consumer which significant ecosystem, service. revenue, also in revenue a including is camera subscription of GoPro.com and complete XX% where end-to-end QX, it's our representing about includes can our sales our subscription While consumers software channel, learn

as subscription target to on growth We with XX% for revenue continues representing subscribers, X.X stream high-margin a and Our year-over-year. subscribers GoPro. perform finished million QX solution service both high-value a for

attach growth strong, subscriber additional Subscriber between and we to with XXXX X.X XXXX. remained expect in million rates finish and and million X.X subscribers with retention

to Quik As an charge. no additional desktop desktop app month, The bring added ability and mobile OS benefit footage convenience sync the and edits Mac of any camera. later version from and to our app a management between for automatic simplicity import GoPro will of for tools, subscribers, apps, we're media users, desktop editing manual this along with editing at desktop plus Quik launching the

the version XXXX. Windows Quik to of the of plan quarter desktop in We second launch a app

desktop-based their original camera. $XX captured plus at app subscription launch, premium an footage premium that both GoPro As new of tier to plus the with unlimited continue premium $XX we're original for tier will video the and at tier captured cloud storage quality. Pro introducing plus subscribers increased new $XX cloud of enjoy any GoPro footage with the desktop part storage stabilization a HyperSmooth advanced includes Quik a feature,

for advanced our an to as whether exciting or content new solution Quik establish they're app creation consumers, GoPro end-to-end just started desktop creator. We getting they're further expect an

space. convenient we're will believe Our this we and investments in in as for point ongoing starting GoPro an innovative innovator auto help a AI creators, computer new editing represents the experience making and vision maintain

Silicon welcomed Vince influential brings of engineering Engineering. content of while Sony, Apple, Microsoft. blend for the Vice GoPro's unique our experience in experiences excited Flex Amazon, to at hardware to new UX to delivered help enrich of many accessories. roles and we're passionate content innovation cutting-edge and and unique use our and AI a reinforce having Vince HP, him recently product holding Senior commitment and to their technologies, as software, To and more President their excellence, in customers GoPro, GoPro's efforts cameras we NetApp, augment He's and and about cameras utility discover Graphics, Nakayama

progress Monster both the GoPro through visibility the Moto sponsorships An benefit is demonstrates we our for well of World sport. GP, with series FIA partnerships, as Super and Drift retail front, that Motorsports Cross, and content serve, example Supercross, incredible the and the now marketing other brand is many the content we're serve. legitimizes authentically recently marketing channel with align Championship, produce official expanded that as Karting the athlete along making expanded event collaboration slate partners MXGP, with driving World On themselves our markets in the Motocross the our solid Formula increased in together, Nitrocross. with other AMSOIL Pro Energy brand and we through Championship awareness GoPro's this action activations of partner: aligned verticals of we products the camera and and Off-road, Series Championships, These in sponsorships GoPro as performance

we thank approximately recently, and foster engagement passionate XXX which respect for about our to third-party employees. not recognition. future, yields rates that to their U.S. by our possible excellence. an workplace consistently culture Most and be without excited them high want of were would accountability, a I We're commitment We approach employee recognized

adding Outside software is and excited News Work the for enhance expanding we're as in the continuing steady GoPro making one & our best as Magazine's forward to Places We're XX to We're while places years. strong. recognition the season. looking X Best launching of work, network, Demand World for Report new of and one to past subscription of the progress XXXX margin-accretive holiday offerings. upcoming to our hardware retail to

yield profit strategy year and of and subscriber our unit, the XXXX XXXX. in rest revenue, the believe We well us meaningful positions will for growth and

to some Brian on pass Now over our color I'll QX share outlook call the to

Brian McGee

Thanks, Nick.

third The level we now frame our we in where high first I'd evolve strategy like XXXX. we operating represented and May TAM full our expansion as the business. quarter at a quarter to growth XXXX are of that under implemented

outlook the to to be growth today expected estimated second to approximately year-over-year camera we sell-through the We increased X XXXX. unit be in on XXXX fourth Through and in full since We the we ahead of written count by returned growth provided quarter fourth our our of are year XX% tracking Based in XX% commentary, sales on October, XX% door quarter up of at are for the units quarter. our million expect quarter. to unit what in estimated earnings revenue third unit call. and the year-over-year 'XX QX

non-GAAP non-GAAP to the in to plans positive very quarter. the and quarter early to be on in working. profitability returned growth GoPro a to We basis and third our signs expect that return are profitability profitable These fourth are

Our entry-level projected has put our initially products pressure more than margin. near-term success in selling of on

point QX continue cameras newly of expected lower We products, come designed the are -- with our quarter expect replacement XXXX. that through XXXX entry-level replaced and price margin are product to pressure a of current at in to entry-level build lower-cost costs second low-margin

invest accessories in system-on-chip, to continue innovation, in hardware, We software. notably and

business. also marketing expanding in fuel driving soon, while areas other and the are to we And capabilities sales of efficiencies growth

tightened last estimated We XXXX, our have be from expenses $XXX during at report. million operating for to earnings prudently down expect we which $XXX million,

We and balance inventory to continue particularly metrics, our DSO. sheet tightly manage

quarter XX inventory. We of approximately exiting expect to million days to $XXX the inventory fourth be reduce or below

year. repurchases to buybacks in including $XX fourth expect minimum of we exit $XXX a the cash share of or stock the million quarter for $XX of million And XXXX with in million,

fourth Our guidance and so the more reflects for our excitement and even future. the for XXXX quarter

XXXX, million billion revenue more we million XXXX. units X.X grow over X.X expect That put to sorry, would a a of range to X.X $X.X XX% ahead $X.X of Looking than -- in to range to to billion. or

We with year-over-year. of expect XX,XXX XXXX to XX% growth or doors approximately approximately end

basis XXXX, XX% plus following points gross approximately other XXXX, entry-level XXX XXX points points from factors: We move, XXXX QX identified product basis and in basis component in expect minus by savings, XX to by to improvements. XX%, from our price approximately and approximately the subscription the the protection XXXX margin price growth lower-cost basis incurred or basis introduction from XX XX improve from strategic of for of in in cost driven points product points

expenses $XXX from executing to million we in in And in approximately million We Successfully XXXX growth, million $XXX to expense approximately and growth. XXXX. result these tax against XXXX. $X.X assumptions would expect non-GAAP expect margin expansion revenue in subscriber to modestly operating grow be

to million to expected in over expect $XX and $XX non-GAAP in leverage a $XX $XX In income, XXXX. improvement to we generate range million million addition, earnings in of a is net XXXX, substantial million solid

profitability expansion of in will be and first strong XXXX fourth we will And the enter results growth capital ready XXXX exciting enables allocation a us releases quarter XXXX. profitability growth our catalyst to improvement and In full in momentum This of strategies we our plan. by software to and and our and quarter TAM XXXX. take believe the increase pleased in -- with summary, that look are now developments expanding We quarter forward to are and operator, we for first questions.

Operator

first comes question from Woodring Morgan Instructions] Our from Stanley. [Operator Erik

Erik Woodring

have that about you just a for obviously, the or would That's how best, overall XQ think environment? of Can products there holiday Brian, growth be X actions have of would better and specifically, up tracking specific the just dissect to you sell-through lower do million about And however hear Maybe point. by I demand consumer that and us units, follow-up. detail you you're Nick that then period? just on I how helpful. point I And If characterize you the XX% price more this could guidance believe. bit year-over-year, at give two. versus being kind health driven really of a GoPro's kind a great

Brian McGee

start in me. Maybe behind I and then come can Nick can

in HEROXX of out year-over-year point performance We We sequentially. sales a little even we sell-through. increase been. in bit, out frankly, units was more, saw exceptionally XX% entry-level charts of of our mean up it products. And in good. where price the to I terrific retail historically nearly they've to were frame of up Black and quite Just off moved kind and XX% performed QX the maybe well, XX%

of side well. very retail is the doing So it

that fourth expect continue We in the quarter. to

over for growth performance HEROXX what do HEROXX will we're the have well, we'll to in and just on did the and Erik. seeing date our we quarter, based expectation

in XX% that's but product. But mentioned, about mean, business hit I cash from as to entry And up last we continue the unit ] more drive we'll the to and the that's our result We of think bit get driving little year. level, entry-level we reduces tags we volume units. I thing our is other fourth that's had quarter helping it some, drive a or XX% be subscribers drive nearly substantially of drive that's still that, why I and yes, see so And a of the flow. on margin. inventory and will [

cost So margins from that's XXX it's mentioned, expect to next products price selling that 'XX. a QX with in as got new year we perspective, of that, profile and that entry-level replace points. an positive we're lifts one appropriate our point And today basis I about

need gopro.com retail and be can we tracking that it So sell-through kind the where for of quarter. and I between far our say to to way, so date to are framing

now the like. We're Cyber the holiday holiday to seen. and with into Black into and We and the coming have Friday right, Monday get that,

But our And indications so far, we that's have partners who retail also going very too are great well. from excited.

don't I Nick, have anything add? to if So more know, you

Nicholas Woodman

I'd ago. be follow-on -- Black's the well so gates add, strong great and HEROXX was a really year compare Black's and mean, out to Black HEROXX I a momentum. really that have come to HEROXX good it proven with of performance see maintain launch sales that Yes.

of great this partners have it's product before it haven't our the think that we not So that's being a pandemic. also a the since see and alike. improvement. consumers retail received been well But media support we way And we only really that in that's to by year, had due to phenomenal

So off. partners That's great retail retail focus more our strategy to our work with is it's great to that a indicator and more on our see. presence paying closely

strength products our as then noted exceeding And our has entry-level really cannibalizing prepared without remarks, products. been our but we in of my expectation, the higher-end

proven TAM entry-level products our true. end, would the that expectation expand price to bring eroding our high new So has without the in and customers, be

a great a season of type great in it's this at holiday every last price giver, us gift the -- better year for point, compared a lineup year. much it with have going we puts So into buyer position every every because

So good we're feeling really

Erik Woodring

next what help guess we period, it holiday you given and the year some for in you both maybe question Thank bogeys second is would all Brian. you, fairly me. yet of baseline you're maybe set helpful. really and XXXX. the of entirety just us passed That's -- kind Okay. so some understand very really give of your for I to gives you confidence these setting Just of my seasonal. in some guidance kind And is advance? for business that how that color. us the And haven't transactional come you've us for be to specific for XXXX very And far but conclusions helpful. kind that's confidence year? you of And next for these Can

Brian McGee

let's Well, worries. No Yes. see.

units full on the of continued to going this year see doing a entry than that. growth we'll level year were because think have we're we I selling to more

So that's 'XX, alone into and thousand seeing that hundred going demand. several we're units

it, to or, of So going this kind started of We that's mid May continue. really this year. call

it's putting to full kind increase kind in So HEROXX. demand demand. of a in strong bet just We're of seeing year

to that expect We continue.

really do products going we to expect And would are new other going coming well should to we -- that year. have they're that some next

well So going as into new what year we've at X products coming 'XX. today least next as got

$XXX of we're alone that reach seeing it's our happen $XXX that lower are. got full add XX% unit below. price expand year. another volume, the is consumer points pricing where at as and good. lifting demand we from the That below We'll versus to meet and they So perspective, doors, between and next continue We've year that

of So that's another and doors. aspect where go we more adding

a engagement with driving up. We'll lot we're more subscription. And subscription drive

year. the in expect We

So we're consumer demand we're going demand. with us, now so far QX of QX and seeing positive ahead on retail momentum us, with behind strong really where

can the we think and to moves playing made So of 'XX, out go, XXXX. expect to in I be continue we midyear look we've yes, ahead

little about And we then year margin us to on that's do And top about for that's then it XX%. and that substantial really line innovation, as as a OpEx margin. support the next improvement and for to a talked that drive we've bit I out. the goes we bottom pretty improve talked goes profit I key how right up and line -- getting laid

Operator

And Instructions] our comes Yang [Operator next Martin from question Oppenheimer. from

Martin Yang

first about on those year, you second retention. years Can is question First comment sharing ago? maybe the appreciate rate. Really or you a rates retention changed how . retention year versus X year

Brian McGee

now the they've is Brian. from XX% and is been XX%. Retention to holding XXs year up to in this to Martin, gone have XX% in XX% year rates X, to and generally at the increasing, -- year first Yes. X

So we're that. pleased very with

signed in that's even X%. We web. seen within from rates those improved retention up who XX%, the And have, improvement that, on have about

the an because encouraging more years are year of have retention far, X reporting and year-over-year. that's year so But rates get So well into the we'll work kind trend, start op can this, we'll be up attach as we retention. next well. And to into rates, as the third continued as stores on which as improve we on

the right So well. things have subscription to direction move as on continued in

Martin Yang

do your have . raise be it for is it. that or rate service. where are you that a feel rate lower And lower-cost the to What want plans rate? attach Got attach XX% models you subscription to Or attach

Brian McGee

to GoPro.com, adding desktop add insight and -- rate subscribe positive Well, We access subscription who combined rate. of response very done retention it a we're for they'll actually consumer perspective. to consumer -- that's why insights. been on We've lot will work app. right, think a currently, premium in buys. from GoPro, in and between service people -- and attach retail a That's that and have for the to rate the comes it's XX%, We

drives hopefully, increased time. only over but So that not rates attach retention

just applications over subscribers and we'll time, have to drive So kind to that and we services it and add other enhances attach that's service -- continue and to the retain of really

Martin Yang

maybe Can Last they that of the from out is upcoming drive product with for any market, Are niche-specific me design? other cameras 'XX. the feedback for more the you or come will generally it. up coming inspiration for available customer question designs? new source Got a to about new you the maybe talk

Nicholas Woodman

And more to bit doing missing as maybe little so Yes, consumers I'll purchase. products factors, to many would a what would so understand from categories years, new us, see identifying capabilities and better new We're want well, our case. everything. through for take many current a that. what experience in that just tailor a Thanks. to GoPro research more it's them our use consumer compel . form that specific we've of are for been

goes we're next expand the that in we to TAM. both that. of that directions. We're on I point, can have consumers, we're not level nail think more that year. getting price that a unique just going hit a it price nail product if in it's we usability product and going at to use for points to excited about our that it better launch a we cases that the and at also think GoPro that's -- to we really appropriate for QX functionality that right that working it's understanding we margin And We've attract but we're entry-level new shared different be

the is time. and we up-sell Not them a we think that other to lead user experience engagement going user, with increased be to that believe to is phenomenal potential really their also going products to phenomenal for them successful going point, but to be only is over the price which entry-level GoPro, to helping be

have And growth. really we consumers going then coming end, to and further products drive think help that new the at excite we high are

is So year it's we're spectrum it's products, new targeting across and going be really the to that a -- time. next exciting

Operator

closing management I'd And . the for call there like back to further questions. hand remarks. any are no to team the

Nicholas Woodman

thank today's you, joining for everyone, you, operator, and call. Thank

while to trying is As we're network, Demand I and about subscription We're hardware software continuing our looking margin-accretive launching forward in XXXX, new hero, This holiday to said like earlier, simple. to give season. to make upcoming out those enhance GoPro. progress expanding steady still you we're offerings. And joining excited the and our making strong. signing everyone. that retail holiday perfect you of will off. a Team is gift it's today's figure call, look for to the GoPro Thanks season again this

Operator

call. conference Thank for joining. today's everyone, concludes This you,

disconnect. now may You

GoPro (GPRO) 7 Nov 232023 Q3 Earnings call transcript