GoPro, Inc.

Good afternoon. Thank you for attending the GoPro first quarter 2022 earnings call. My name is Matt and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to our host, Jalene Hoover, Vice President of Investor Relations. Jalene, please go ahead.

Thank you, Matt. Good afternoon, everyone, and welcome to GoPRO's first quarter 2022 earnings conference call. With me today are GoPRO's CEO, Nicholas Woodman, and CFO and COO, Brian McGee. Today's call will include a brief introduction from Nick, followed by Q&A. For detailed information about our first quarter 2022 performance and our outlook, please read the management commentary we've posted to the investor relations section of GoPRO's 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. Our commentary about our business results and the outlook is based on the information available as of today's date, and 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, 2021. 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, EBITDA, as well as basic and diluted net profit and loss per share in accordance with GAAP and additionally on the 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, and 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, which is posted on the investor relations section of our website. In addition to the earnings press release and management commentary, we have posted slides containing detailed financial data and metrics for the first quarter of 2022. The management commentary slides, as well as a link to today's live webcast and a replay of this conference call, are posted on the investor relations section of GOCO's website for your reference. Unless otherwise noted, all income statement related numbers that are discussed today during the call, other than revenue, are non-GAAP.

now i'll turn the call over to gopro's founder and ceo nicholas whitton thanks jillian and hi everybody thank you for joining us today i want to recognize today was a tough day in the market but we are happy to be able to report that what we believe is good news for gopro investors as we shared in the management commentary which we posted to the investor relations section of our website we hit the ground running in 2022 launching New camera SKUs derived from our industry-leading Hero 10 black camera, a premium high-margin, high-ASP accessory, and new desktop software that furthers our position as the world leader in software-based video stabilization. We are excited to be making significant progress against our strategy to further diversify our product portfolio, addressing specific use cases to expand our TAM. We also delivered solid business performance in the quarter with revenue of $217 million, gross margin of 42%, and gap and non-gap EPS of four and nine cents respectively. The first quarter of 2022 represents GoPro's seventh consecutive quarter of profitability on a non-gap basis, a trend we expect to continue throughout the year. First quarter 2022 delivered year-over-year growth across key financial metrics, including revenue, which increased by 6%, operating profit, which increased by 162%, and net income, which increased by 214%. GoPro subscribers grew 85% year-over-year to 1.74 million, and we are seeing positive usage trends that make it clear subscribers are taking advantage of their subscription benefits. We initiated our $100 million share repurchase program, buying back $10 million of shares during the quarter, and we grew our cash balance year over year, ending with $450 million. All in all, we had an exceptional Q1. And I want to thank everyone at GoPro for their world-class execution. We have much to be excited about as we look forward to the rest of the year. Operator, we're now ready to take questions.