GoPro, Inc.

Good day and welcome to the GoPros Q4 2020 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Christopher Clark. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone, and welcome to GoPros fourth quarter and full year earnings conference call. With me today are GoPros CEO Nicholas Woodman and CFO and COO Brian McGee. Before we get started, I'd like to remind everyone that our remarks today may include forward-looking statements. Forward-looking statements and all other statements that are not historical facts are not guarantees of future performance and are subject to a number of risks and uncertainties which may cause actual results to differ materially. Additionally, any forward-looking statements made today are based on assumptions as of today. including but not limited to uncertainty related to the duration and impact of the COVID-19 pandemic. This means that results could change at any time, and our commentary about business results and outlook is based on the information available as of today's date. We do not undertake any obligation to update these statements as a result of new information or future events. Information concerning our risk factors is available in our most recent annual report on Form 10-K for the year ended December 31st, 2019, and quarterly report on Form 10-Q for the quarter ended September 30th, 2020, each of which is on file with the Securities and Exchange Commission, and is updated in future filings with the SEC, including the annual report on Form 10-K for the year ended December 31st, 2020. Today we may discuss gross margin, operating expense, net profit and loss, as well as basic and diluted net profit and loss per share in accordance with GAAP and additionally on a non-GAAP basis. We believe that non-GAAP information is useful because it can enhance the understanding of our ongoing economic performance. We use non-GAAP reporting internally to evaluate and manage our operations. We choose to provide this information to enable investors to perform comparisons of operating results in a manner similar to how we analyze our own operating results. A reconciliation of GAAP to non-GAAP operating expenses can be found in the press release that was issued this afternoon and which is posted on our website. In addition to the earnings press release, we have posted management commentary and slides containing detailed financial data and metrics for the fourth quarter and full year 2020. The management commentary and slides, as well as the link to today's live webcast and a replay of this conference call, are posted on the GoPro Investor Relations website to your reference. All income statement-related numbers that are discussed today during the call, other than revenue, are non-debt unless otherwise noted. Now I'll turn the call over to GoPro's founder and CEO, Nicholas Woodman.

Thank you, Chris, and good afternoon, everyone. Before we get started, I'd like to encourage everybody to read the commentary we posted earlier today to the GoPro Investor Relations page on our website. In addition to providing an overview of our quarterly and annual results, plus forward-looking guidance, the commentary provides our thoughts on our business going forward. I will now share some brief remarks, and then we'll go directly into Q&A. in 2020 we evolved gopro into a more efficient subscription oriented direct-to-consumer business we grew our gopro subscriber base by 145 percent year-over-year to 601 000 subscribers and generated more than 200 million in cash flow from operations in the second half of the year this represented 33 percent of our second half revenue and contributed to a year-end cash balance of $328 million. Strong Q4 performance resulted in $0.39 of non-GAAP EPS for the quarter and $0.08 of non-GAAP EPS for the year. We achieved this with disciplined expense management, an approach we are committed to maintaining. Our 2020 performance amidst the pandemic demonstrates GoPro's enduring relevance as a personal experience sharing solution for consumers and powerful creative tool for professionals. Looking ahead, our plan is to continue super serving our core customers with outsized GoPro subscriber benefits while expanding our relevance to users of other cameras and smartphones through software subscription offerings. We believe we can maintain our rapid pace of innovation, launching exciting new hardware and software products backed by significant world-class marketing, all within reasonable spend levels that are directionally in line with 2020. We're excited about 2021, even amidst the pandemic. We've proven time and again that GoPro can thrive during challenging times. We believe the steps we're taking to strengthen our business today will benefit us in spades when the world eventually rebounds from the pandemic in earnest. But fortunately, as a business, we do not have to wait for that to happen. I want to thank our employees around the world for their resilience and adaptability throughout 2020. Your dedication and world-class execution is why we are well positioned for the future. And now, operator, we're ready to take questions.