GoPro, Inc.

afternoon thank you for attending today's third quarter 2024 earnings call my name is cameron and i will 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 if you would like to ask a question please press star 1 on your telephone keypad and i would now like to pass the conference over to your host christopher clark vice president of corporate communications you may proceed thank you cameron

Good afternoon and welcome to GoPRO's third 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 third quarter 2024 performance, as well as outlook, Please read our Q3 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 September 30, 2024. Today, we may discuss 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. Today, Brian and I will share brief remarks before going into Q&A, and I want to encourage all on the call to read the detailed management commentary we posted to our investor relations website. In Q3, GoPro exceeded guidance with revenue of $259 million. Subscription and service revenue grew 11% year-over-year to $27.5 million. primarily driven by ARPU growth of 9% and overall subscriber growth of 2%. EPS was breakeven on a non-GAAP basis, and EBITDA was 5 million, a 39 million improvement sequential. Despite these directionally positive Q3 results, this continues to be a challenging year for GoPro. As we navigate global macroeconomic headwinds impacting consumer discretionary spending, the previously mentioned delay of our new 360-degree camera and competition. While GoPro welcomes fair competition as it encourages innovation and fosters a vibrant market for consumers, the principles of fair competition are not served by companies that seek to profit from the hard work, investment, and innovation of others. We will litigate in the interest of protecting our inventions, and we understand the time and cost associated with defending our IP. GoPro has invested substantial time, effort, and money into a culture of innovation over the past 20 years, researching and developing leading-edge technologies that have enabled new ways of capturing and new categories of cameras. whether that's being the first to enable ultra wide angle perspectives in consumer cameras, inventing market leading in camera video stabilization, or pioneering convenient 360 degree capture. This culture of innovation has allowed us to build a patent portfolio consistently recognized by industry experts for its quality, depth, and variety. Our patent portfolio is in place to protect our inventions and IP, and we are committed to taking action to protect these assets when necessary. Earlier this year, we filed a complaint with the US International Trade Commission and a lawsuit in the US District Court for the Central District of California against one of our competitors with the goal to enforce certain GoPro patents related to our cameras and digital imaging technology. Again, GoPro welcomes fair competition, but we will litigate to protect our IP when we believe it is being infringed. As we shared in our Q2 earnings, the consumer digital imaging market is growing, driven by new products catering to consumers' growing interest in alternative forms of capture beyond the phone. We are seeing growth in the action camera market, 360-degree cameras, and other new types of cameras. We believe our product roadmap positions us to participate in these growth areas and more. To better position ourselves to participate in this growth as a profitable company in 2025 and beyond, we've taken a more aggressive approach to reduce 2025 operating expenses significantly below what we shared on our last earnings call. We are now targeting 2025 operating expenses of $250 million a reduction of approximately $110 million from 2024. I want to be clear. We are not cutting our way to profitability. We are changing our approach to operate in a leaner, more focused manner that we believe will be sustainable and strategic for long-term success and improved financial performance. We are reducing our operating expenses to the lowest level since before going public, while pursuing a product roadmap we believe will drive innovation, differentiation, and growth. In September, we launched two new products. Our flagship Hero 13 Black is loaded with leading-edge technology, performance, and convenience that includes a suite of innovative new lens mods that massively enhance a user's creative potential. We also launched our new entry-level camera, the Tiny Hero Camera. Priced at $199, Hero is our most affordable camera, making it ideal for travelers, creators, families, kids, adventure seekers, and gift givers looking for the simplest, lightest 4K GoPro. And importantly, Hero has been newly designed from the ground up to yield a better profit margin than our previous entry-level cameras. And we continue to execute on the global retail expansion strategy we announced in May 2023, having added approximately 6,300 new doors since then, bringing our total doors to over 25,000. In Q3, we added more than 1,200 doors globally, including approximately 500 Sam's Club stores in the U.S., Expanding our global retail footprint to this level not only allows us to reach more consumers with our current products, but also serves as an important foundation for future launches as we expand our product offerings. In summary, we are working through our business challenges and feel good about our go-forward strategy. We are reducing 2025 operating expenses to the lowest level since before going public while pursuing a product roadmap we believe will drive innovation, differentiation, and growth. We are excited to operate GoPro in a leaner manner as we believe it will yield better execution, efficiency, and improved financial performance. Now, I'll pass the call to Brian to share some details on our financials and outlook.