GoPro, Inc.

Ladies and gentlemen, good day and welcome to GoPro's first quarter 2021 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Christopher Clark, Vice President of Corporate Communications. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and welcome to GoPro's first quarter earnings conference call. With me today are GoPro 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 keys 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 and 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 on Form 10-K for the year ended December 31, 2020, which may be updated in future filings with the SEC. 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 on a non-GAAP basis. We believe that non-GAAP information is useful because it can enhance the understanding of our ongoing economic. 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 commentaries and slides containing detailed financial data and metrics for the first quarter of 2021. The management commentary and slides, as well as a link to today's live webcast and a replay of this conference call are on the GoPro Investor Relations website for your reference. All income statement-related numbers that are discussed today during the call, other than revenue, are non-GAF unless otherwise noted. Now I'll turn the call over to GoPro's founder and CEO, Nicholas Woodman.

Thanks, 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 results and forward-looking guidance, the commentary includes meaningful color about our business. I will now share some brief remarks, and then we'll go directly into Q&A. First, I want to congratulate our team for driving GoPro's subscription business past 1 million subscribers, an exciting milestone we achieved in April. This represents growth of 80% year-to-date and 180% year-over-year. Equally exciting is that 1 million GoPro subscribers represents approximately $50 million of high-margin annual recurring revenue for GoPro. I also want to congratulate our team on growing direct-to-consumer sales at GoPro.com to 40% of total revenue for the quarter, up from 33% in Q4 2020. This also helps drive margin and subscriber growth, as more than 90% of camera purchases at GoPro.com result in a subscription attached. This is the new GoPro. We've evolved from a hard unit sales centric business to a successful consumer direct subscription centric business with a significant opportunity to grow margin and profitability with continued subscriber growth. Turning to our Q1 financial performance, revenue in the first quarter of 2021 was $204 million, an increase of 71% year over year. Direct-to-consumer revenue via GoPro.com exceeded $80 million, or 40% of revenue, representing GoPro.com's second-highest quarter ever, topped only by the Q4 2020 holiday quarter. ASPs rose to a record $366 as demand for our premium products increased in Q1 across all geographies. This had a positive impact on gross margins and non-GAAP EPS. In Q1, GoPro generated non-GAAP EPS of $0.03. Our year-over-year non-GAAP profitability improvement was $54 million. Non-GAAP gross margin in Q1 was 39%, up from 34% in Q1 2020. As I mentioned, This is the new GoPro. Brian and I will now take questions.