GoPro, Inc.

Good day and welcome to the GoPros Q2 2021 earnings conference call. Today's conference is being recorded. At this time, I would like to turn things over to Mr. Christopher Clark, Vice President of Corporate Communications. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and welcome to GoPros second quarter earnings conference call. With me today are GoPros CEO, Nicholas Woodman, and CFO and COO, Brian McGee. Our agenda for today will include a brief introduction from Nick, followed by Q&A. For detailed information about our second quarter performance and our outlook, please read the management commentary we've posted on GOPRO's Investor Relations website. Before I pass the call to Nick, 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 31, 2020, which is on file with the Securities and Exchange Commission and in other reports that we may file from time to time 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 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 and management commentary, we have posted slides containing detailed financial data and metrics for the second quarter of 2021. 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 for your reference. All income statement related numbers that are discussed today during the call, other than revenue, are non-GAAP unless otherwise noted. Now I'll turn the call over to GoPro's founder and CEO, Nicholas Woodman.

Thanks, Chris, and good afternoon, everyone. GoPro had a very strong Q2, our fourth consecutive profitable quarter on a non-GAAP basis. We grew revenue, improved margins, and increased cash thanks to our expanding direct-to-consumer and subscription businesses. Q2 also benefited from our strong retail relationships, which drove substantial unit sell-through as the world continues to find its way through the pandemic. Revenue in the second quarter increased 86% year-over-year to $250 million. Direct-to-consumer revenue from GoPro.com totaled $88 million, up 48% year-over-year and up 7% sequentially. And GoPro was profitable on both a gap and non-gap basis in the second quarter, generating EPS of $0.10 and $0.12, respectively, with margins increasing to 40% and operating profits improving by $47 million year over year. Our subscription businesses continue to impress, with GoPro subscribers growing 211% year over year and 23% sequentially to 1.16 million subscribers, and subscriber revenue grew 143% year over year. And while it's still early days, we're excited to share that as of this report, the Quick app has exceeded 100,000 paying subscribers, a milestone reached in nearly half the time it took us to achieve the same number of GoPro subscribers. Our Q2 results reflect not only the strength of our strategy, but also the strength of our people. by embracing a flexible work culture that champions our employees desire to live and work from wherever they feel most productive we've been able to thrive over the last year and a half we're excited to continue supporting our employees in their pursuit of the ultimate life work balance an approach we've seen consistently yield strong business results as a result of our better than expected q2 momentum We are raising our revenue, margin, and earnings outlook for the second half and 2021, as outlined in our management commentary. Please be sure to visit our investor relations page at gopro.com and give it a read. Brian and I will now take questions.