GoPro, Inc.

Good afternoon, thank you for attending the GoPro second quarter 2024 earnings call. My name is Cameron and I'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to your host, Chris Clark, Vice President of Corporate Communications with GoPro. You may proceed.

Thank you, Cameron. Good afternoon and welcome to GoPro's second quarter 2024 earnings conference call. With me today are GoPro CEO Nicholas Woodman and CFO and COO Brian McGee. Today's agenda will include brief commentary from Nick, followed by Q&A. For detailed information about our second quarter 2024 performance, as well as outlook, please read our Q2 2024 earnings press release and 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. This means that results could change at any time, and we do not undertake any obligation to update these statements as a result of new information or future events. To better understand the risks and uncertainties that could cause actual results to differ from our commentary, we refer you to our most recent annual report on Form 10-K for the year ended December 31st, 2023, which is on file with the Securities and Exchange Commission and as updated in filings with the SEC, including the quarterly report on Form 10-Q for the quarter ended June 30th, 2024. Today we may discuss gross margin, operating expense, net profit and loss, adjusted EBITDA, as well as basic and diluted net profit and loss per share in accordance with GAAP and on a non-GAAP basis, 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. Unless otherwise noted, all income statement-related numbers that are discussed in the management commentary and remarks today, other than revenue, are non-GAAP. Now I'll turn the call over to GoPRO's founder and CEO, Nicholas Woodman.

Thanks, Chris, and thanks, everybody, for joining us today. In Q2, we achieved our sell-through goal of more than 600,000 units and reduced channel inventory slightly in the quarter as we head into the second half of the year. GOPRO exceeded guidance with revenue of $186 million, gross margin of 30.7%, and non-GAAP EPS loss of 24 cents. Subscription and service revenue grew 8% year-over-year to $26 million, driven by 4% growth in subscribers to 2.53 million and a 4% increase in ARPU due to improving retention rates. We also continue to expand our global retail presence, adding approximately 800 new doors across all regions, with the strongest door count continuing in EMEA along with expansion in Latin America. We've now added more than 5,000 new retail doors since May of 2023 when we prioritized growing our brand at retail globally. Our retail expansion plans are on track with the door count growth expectations we've previously discussed. A Q2 win is our partnership with SoftBank Group's SBC&S Corporation to expand distribution in Japan. ensuring GoPro products are more widely available while also improving in-store merchandising and brand exposure. SBC&S will distribute GoPro cameras and accessories through their own SoftBank stores, as well as retailers throughout Japan, including two of Japan's largest consumer electronics retailers, Yodobashi and Yamada. While our Q2 results largely met or exceeded expectations, we're not satisfied with the way 2024 has taken shape. We previously shared that 2024 would be a transitional year. However, lower than expected consumer confidence, increased competition, and our executional challenges are resulting in a reduced unit revenue and profitability expectations for the year. We believe we can achieve profitability in 2025 through a combination of new product launches and significantly reduced operating expenses, which will begin in the second half of 2024 and continue in 2025, details of which Brian addresses in his commentary. We are seeing growth in the digital imaging market, driven by new product introductions, catering to consumers' growing interest in alternative forms of capture beyond the phone, including growth in 360-degree cameras, where we believe we can recover significant share in 2025. We believe broadening our product portfolio is key to growing our business and restoring long-term profitability. Much like how Garmin has built a successful diversified business by addressing the specialized GPS-driven and data capture needs of various markets, we believe GoPro has the opportunity to leverage our category leadership in digital imaging to deliver a broader range of specialized image capture solutions in markets we currently serve, as well as new ones where our brand resonates. Our previously announced expansion into tech-enabled motorcycle helmets is an example of this, and we are pursuing similar exciting opportunities across a number of segments. Our rollout of new products starts next month with the launch of our new significantly enhanced flagship camera, Hero 13 Black, along with our new $199 entry-level Hero camera that features an entirely new design that we fully expect to wow both consumers who are new to the brand as well as existing customers who we believe will see value in the unique characteristics of HERO's exciting new form factor and capabilities. Importantly, our new $199 HERO camera is totally redesigned from the ground up to be a better margin product than our current low margin entry level cameras. And we believe this will have a material positive impact on GoPro's gross margin in 2025. Looking ahead to 2025 and beyond, we are committed to operating GoPro as a profitable business. Our brand and products are too strong and our value creation opportunity too significant for us to accept otherwise. Our plan is to deliver 2025 profitability through significantly reduced 2025 operating expenses while executing on our roadmap diversification strategy that we believe is key to restoring growth and long-term success for GoPro. Now, Brian will take us through details on the second quarter and share our outlook.