GoPro, Inc. (NASDAQ:GPRO) Q1 2024 Earnings Conference Call May 7, 2024 5:00 PM ET Company Participants Chris Clark - VP, Corporate Communications Nicholas Woodman - CEO Brian McGee - CFO and COO Conference Call Participants Andrew Uerkwitz - Oppenheimer Operator Hello and welcome to the GoPro First Quarter 2024 Earnings Call. My name is Lauren, and I'll be coordinating your call today. There will be opportunity to questions at the end of the presentation. [Operator Instructions] I would now hand you over ou ...

Financial Performance - Revenue for the three months ended March 31, 2024, was $155.469 million, a decrease of 11% compared to $174.720 million in the same period of 2023[17]. - Gross profit for the quarter was $53.038 million, slightly up from $52.502 million year-over-year[17]. - Net loss for the quarter was $339.088 million, significantly higher than the net loss of $29.869 million in the same quarter of 2023[17]. - The company reported a basic and diluted net loss per share of $2.24 for the quarter, compared to $0.19 in the same quarter of 2023[17]. - For the three months ended March 31, 2024, subscription and service revenue was $25.9 million, representing 16.7% of total revenue[25]. - GoPro's total deferred revenue as of March 31, 2024, was $58.4 million, slightly down from $59.1 million as of December 31, 2023[25]. - GoPro reported a net loss of $339.1 million for the three months ended March 31, 2024, compared to a net loss of $29.9 million in the same period of 2023, resulting in a basic and diluted net loss per share of $(2.24) compared to $(0.19) in 2023[59]. - The company recorded an income tax expense of $298.2 million for the three months ended March 31, 2024, primarily due to a valuation allowance on deferred tax assets, compared to an income tax benefit of $8.3 million in the same period of 2023[62]. Assets and Liabilities - Total current assets decreased to $369.509 million from $482.591 million as of December 31, 2023[13]. - Cash and cash equivalents at the end of the period were $133.658 million, down from $222.708 million at the beginning of the period[19]. - Total liabilities decreased to $350.843 million from $412.105 million as of December 31, 2023[14]. - The company's cash and cash equivalents decreased to $46.4 million as of March 31, 2024, down from $69.9 million as of December 31, 2023, a decline of 33.5%[30]. - GoPro's total cash equivalents as of March 31, 2024, were $87.2 million, down from $152.8 million as of December 31, 2023, a decrease of 42.8%[30]. - The company reported a total of $27.3 million in other long-term assets as of March 31, 2024, significantly down from $311.5 million as of December 31, 2023, a decline of 91.2%[35]. - GoPro's accrued expenses and other current liabilities decreased to $89.3 million as of March 31, 2024, from $110.0 million as of December 31, 2023, a reduction of 18.7%[40]. - The warranty liability as of March 31, 2024, was $7.0 million, down from $7.2 million as of December 31, 2023, indicating a decrease of 2.8%[42]. Research and Development - Research and development expenses increased to $44.612 million from $38.185 million year-over-year, indicating a focus on innovation[17]. Inventory and Sales - Inventory increased to $131.252 million from $106.266 million as of December 31, 2023, suggesting potential challenges in sales[13]. - As of March 31, 2024, GoPro's total inventory increased to $131.3 million from $106.3 million as of December 31, 2023, representing a 23.5% increase[33]. - Revenue from sales arrangements with multiple performance obligations is allocated based on relative standalone selling prices, with revenue recognized upon transfer of control[25]. - Revenue from the Americas was $76.6 million, down from $89.5 million year-over-year, while EMEA revenue increased to $52.0 million from $46.0 million[76]. Acquisitions and Investments - GoPro completed the acquisition of Forcite Helmet Systems for a total consideration of $14.0 million, with $7.5 million allocated to developed technology and $5.9 million to residual goodwill[28]. - The gross carrying value of purchased technology increased by $7.5 million due to the acquisition of Forcite Helmet Systems[38]. Stock and Equity - The stock repurchase program authorized up to $140 million, with $60.4 million remaining as of March 31, 2024[47]. - The average price per share for stock repurchases in the three months ended March 31, 2023, was $5.62, totaling $5.0 million[48]. - As of March 31, 2024, the Company had 2,586 thousand stock options outstanding with a weighted average exercise price of $8.13[51]. - The Company has implemented a new 2024 Equity Incentive Plan effective February 15, 2024, succeeding the 2014 Plan[49]. - The 2024 Employee Stock Purchase Plan allows eligible employees to purchase shares at 85% of the fair market value[49]. - GoPro's total unearned stock-based compensation as of March 31, 2024, was $51.8 million, expected to be recognized over a weighted-average period of 2.32 years[57]. - The company had 25.7 million potentially dilutive shares not included in the diluted shares calculation for the three months ended March 31, 2024, compared to 29.9 million in 2023[61]. Restructuring and Charges - The company recorded restructuring charges of $2.3 million related to severance in Q1 2024, with an expected impairment charge of approximately $3.2 million for ceasing the use of certain office space[80]. - The company anticipates approximately $2.1 million of office space charges through January 2027 as part of its restructuring plan[80]. Market and Credit Risk - GoPro's cash and cash equivalents are held with high-credit-quality financial institutions, with balances exceeding FDIC insurance limits, indicating a concentration of credit risk[70]. - GoPro has not entered into any foreign currency exchange contracts or derivatives to manage foreign currency risk, which primarily involves the Euro, British pound, and other currencies[137]. Other Financial Metrics - The estimated fair value of GoPro's single reporting unit exceeded its carrying value by 34% as of March 31, 2024, based on market capitalization[24]. - GoPro's market capitalization declined from $2.23 on March 31, 2024, to a low of $1.69 on April 22, 2024, affecting the fair value assessment[24]. - The Company continues to monitor its forecasts and market capitalization to assess potential goodwill impairment charges[24]. - The estimated fair value of the 2025 Convertible Senior Notes was $85.6 million as of March 31, 2024, compared to $82.3 million as of December 31, 2023, reflecting an increase of 4.0%[31]. - The Company issued $125.0 million in 1.25% Convertible Senior Notes due 2025, with a total issuance of $143.8 million after over-allotments[45]. - The outstanding principal on the 2025 Notes was $93.8 million as of March 31, 2024, with an effective interest rate of 0.5%[46]. - The Company repurchased $50.0 million of the 2025 Notes for $46.3 million in November 2023, recognizing a gain of $3.1 million[46]. - The Company has a revolving credit facility of up to $50.0 million under the 2021 Credit Agreement, with an outstanding letter of credit of $5.2 million as of March 31, 2024[43][44]. - As of March 31, 2024, the Company could borrow up to $44.8 million under the 2021 Credit Agreement, with no borrowings made to date[44].

Financial Performance (Q1 2024) - Revenue was $155.5 million[7], with GoPro.com contributing $49.2 million[8], representing 31.6% of the total revenue[8] - Non-GAAP gross margin was 34.4%[7, 25] - Non-GAAP operating expenses were $83.3 million[7, 25] - Non-GAAP operating loss was $29.9 million[7, 25] - Non-GAAP net loss was $31.7 million[7, 22], resulting in a diluted net loss per share of $0.21[7, 23] - Adjusted EBITDA was a loss of $29.3 million[7, 27] Revenue Channels (Q1 2024) - GoPro.com revenue comprised $49.2 million[8], which is 31.6% of total revenue[8] - Retail channel revenue was $106.3 million[8], accounting for 68.4% of total revenue[8] GoPro.com Revenue Breakdown (Q1 2024) - Hardware revenue through GoPro.com was $23.3 million[8], representing 47.4% of GoPro.com revenue[8] - Subscription and service revenue from GoPro.com was $25.9 million[8], accounting for 52.6% of GoPro.com revenue[8]

EXHIBIT 99.1 GoPro Announces First Quarter Results Revenue of $155 million was 7% Above Guidance GoPro Subscribers Grew 6% Year-over-Year to 2.5 million Subscription and Service Revenue was $26 million, up 12% Year-over-Year SAN MATEO, Calif., May 7, 2024 - GoPro, Inc. (NASDAQ: GPRO) announced financial results for its first quarter ended March 31, 2024 and posted management commentary, including forward-looking guidance, in the investor relations section of its website at https://investor.gopro.com. "GoPro ...

GoPro is taking steps to get back on track.GoPro (GPRO 1.99%) stock is trading at an all-time low and is down 60% in the past year. It's been a challenging period for the action-camera maker as it attempts to reach profitable growth.Results for 2023 disappointed investors. Revenue of $1 billion was down 8% year over year. Management said intense competition forced the company to lower pricing. This directly impacted margins and led to a $32 million adjusted net loss last year.The GoPro subscription business ...

Product Launch and Features - GoPro's HERO12 Black camera launched in September 2023, features 5.3K video at 60 FPS, 27-megapixel photo resolution, and improved HyperSmooth 6.0 stabilization[17] - The HERO11 Black camera features 5.3K video at 60 FPS and cloud connectivity for automatic uploads, enhancing user experience[22] - The HERO12 Black includes advanced features such as 10-bit color video, 27-megapixel photo resolution, and improved battery performance with the Enduro Battery[96] Subscription and Revenue Growth - GoPro had 2.5 million subscribers as of December 31, 2023, representing a 12% year-over-year growth[22] - The Premium+ subscription launched in February 2024, offering 500 GB of cloud storage and enhanced editing features[19] - Subscription and service revenue grew by 18.4% year-over-year to $97.5 million, with 2.5 million GoPro subscribers as of December 31, 2023, an 11.5% increase year-over-year[105] Revenue and Sales Performance - GoPro.com revenue accounted for 30% of net revenue in 2023, down from 38% in 2022, while retail sales accounted for 70% in 2023, up from 62% in 2022[27] - Annual revenue decreased from $1.09 billion in 2022 to $1.01 billion in 2023, with a net loss of $53.2 million in 2023 compared to a net income of $28.8 million in 2022[42] - Total revenue for 2023 was $1.005 billion, an 8.1% decrease from 2022, primarily due to a reduction in MSRP across the camera lineup and a shift to lower price tiers[114] Market Strategy and Competition - GoPro's strategy focuses on expanding its total addressable market through new camera types, accessories, and subscription offerings[20] - The company competes with major brands like Canon, Nikon, Samsung, and Sony, emphasizing its durable and versatile product design[33] - GoPro's marketing strategy includes leveraging user-generated content, which has reached over 26 billion views on TikTok tagged with GoPro[32] Financial Challenges and Losses - The company experienced a decline in camera sales and attach rates, which could adversely affect subscriber growth and overall profitability[43] - The company incurred an operating loss in 2023, with an accumulated deficit of $249.3 million as of December 31, 2023, emphasizing the need for effective expense management[53] - Net loss for the full year 2023 was $53.2 million, compared to net income of $28.8 million in 2022, and Q4 2023 net loss was $2.4 million compared to net income of $3.1 million in Q4 2022[105] Research and Development - Research and development expenses were $165.7 million in 2023, up from $139.9 million in 2022 and $141.5 million in 2021, with expectations for continued substantial expenses in 2024[44] - GoPro's investments in new camera features and software offerings are expected to drive revenue growth and expand its total addressable market[97] Operational and Supply Chain Risks - The company relies on third-party suppliers for components, with risks of supply shortages and long lead times affecting production capabilities[45] - The company expects to continue facing challenges related to supply chain disruptions, including equipment breakdowns and labor shortages, which could adversely affect sales and financial performance[46] - Economic downturns and inflationary pressures may adversely affect consumer spending and demand for the company's products, impacting financial performance[43] Stock and Financing - The company has a stock repurchase program authorized for up to $140 million, with $70,382 remaining available for repurchase as of December 31, 2023[92] - The company has $93.8 million in aggregate principal amount of convertible senior notes due in 2025 after repurchasing $50.0 million of the notes for $46.3 million in cash[75] - The company’s credit facility imposes restrictions that may limit its ability to operate and pursue business opportunities, including acquisitions[76] Environmental, Social, and Governance (ESG) Initiatives - The company published its 2023 Sustainability Snapshot, highlighting ongoing efforts to reduce carbon footprint and improve corporate social responsibility (CSR) initiatives[58] - There is increasing scrutiny regarding the company's Environmental, Social, and Governance (ESG) practices, which could lead to additional costs and reputational risks[58] Inventory and Cash Management - Inventory balances decreased from $127.1 million in 2022 to $106.3 million in 2023, reflecting a decrease of $20.8 million[149] - Cash and cash equivalents as of December 31, 2023, were $222,708,000, a slight decrease from $223,735,000 in 2022[129] - The company expects operating expenses and inventory purchases to be a significant use of cash balances moving forward[137]

Financial Data and Key Metrics Changes - In Q4 2023, revenue was $295 million, below the guidance of $325 million, primarily due to lower-than-expected demand trends in North America [11] - Non-GAAP earnings per share for Q4 was $0.02, with gross margin outperforming guidance by 140 basis points [11][12] - The company expects gross margin to improve from 32% in 2023 to a range of 35.5% plus/minus 50 basis points in 2024 [12] Business Line Data and Key Metrics Changes - Retail channel unit sell-through grew by 25% from May 2023 to the end of the year, while GoPro.com revenue, excluding subscription and services, decreased to 14% of total revenue from 33% in the prior year [6][7] - Entry-level camera sell-through represented 28% of the product mix in Q4, up from zero in the prior year [8] Market Data and Key Metrics Changes - The company added over 3,200 new retail doors since May 2023, exceeding its target for the year [10] - The subscriber base closed 2023 with over 2.5 million subscribers, representing a 12% year-over-year growth [16] Company Strategy and Development Direction - The company initiated a multi-year Total Addressable Market (TAM) expanding strategy aimed at long-term revenue, subscriber, and profit growth [6] - Plans to launch four new camera SKUs in 2024, with a focus on expanding product offerings and entering the motorcycle helmet market through the acquisition of Forcite Helmet Systems [13][14] Management Comments on Operating Environment and Future Outlook - Management noted that the strategic shift in pricing and marketing has created a groundswell of opportunity at retail [7] - The company is optimistic about the potential for subscriber growth and the impact of new product launches on overall revenue [16][18] Other Important Information - The company plans to refresh point-of-purchase merchandisers and enhance in-store brand presence to support retail growth [10] - The Quik desktop app for macOS and a new Premium+ subscription tier were launched to enhance subscriber offerings [17] Q&A Session Summary Question: Clarification on 2024 revenue guidance - Management indicated that they are currently only guiding for Q1 and that sell-through is performing well, with expectations of 550,000 units [20][21] Question: Incremental TAM from Forcite acquisition - Management acknowledged some cannibalization but emphasized the potential for expanded TAM through integrated technology in helmets [24][26] Question: Long-term growth for subscriber base - Management noted improvements in Average Revenue Per User (ARPU) and indicated that subscriber growth is tied to unit growth over time [30][31] Question: Gross margin outlook for 2024 - Management confirmed that key components for margin improvement remain the same, including new product costs and tariff savings [35][36]

Q4 2023 Preliminary Earnings Results Summary February 7, 2024 Copyright © 2024. GoPro, Inc. All rights reserved. SAFE HARBOR STATEMENT This presentation may contain projections or other forward-looking statements within the meaning Section 27A of the Private Securities Litigation Reform Act. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “should,” “will”, “plan” and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward ...

Financial Data and Key Metrics Changes - Revenue for Q3 2023 was $294 million, exceeding guidance, with non-GAAP earnings per share at $0.04 [7][8] - Retail channel revenue grew 12% year-over-year to $231 million, representing 78% of total revenue [8] - Non-GAAP profitability was achieved in Q3 2023, with expectations for continued profitability in Q4 [18][19] Business Line Data and Key Metrics Changes - Total camera unit sales grew 31% sequentially and 16% year-over-year, with entry-level products generating 19% of camera revenue [8][11] - The launch of HERO12 Black contributed significantly to sales, with strong performance compared to HERO11 [28] Market Data and Key Metrics Changes - GoPro.com represented 22% of revenue in Q3, indicating a strong direct-to-consumer sales channel [11] - Subscriber count reached 2.5 million, reflecting a 20% year-over-year growth [11] Company Strategy and Development Direction - The company is focused on expanding its total addressable market (TAM) through new product introductions and increased retail presence [6][10] - Plans to introduce several new camera types starting in Q2 2024, targeting distinct use cases and improved margin profiles [10][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand environment, particularly for entry-level products, which are expected to drive unit sales and subscriber growth [26][32] - The company anticipates revenue growth in 2024, projecting units to reach 3.3 million to 3.5 million, with revenue between $1.1 billion and $1.2 billion [20][21] Other Important Information - The company is investing in innovation, particularly in AI and software, to enhance customer experience and product functionality [13][41] - GoPro has been recognized as one of the best places to work, reflecting a strong workplace culture [16] Q&A Session Summary Question: Can you characterize the demand environment and growth drivers? - Management noted strong performance in Q3, with significant contributions from HERO12 Black and entry-level products, indicating a positive retail environment [25][28] Question: What gives confidence in the 2024 guidance? - Management highlighted expected continued growth in entry-level products and strong demand for HERO12, along with new product launches planned for 2024 [31][32] Question: How have retention rates changed? - Retention rates have improved, with first-year rates increasing to 60%-65% and second-year rates holding at 70%-75% [36] Question: What are the plans to raise the attach rate for services? - Current attach rate is 40%, with plans to enhance subscription offerings to improve retention and attach rates [38] Question: What is the inspiration for new camera designs? - New designs are based on consumer research and market trends, aiming to meet specific use cases and improve user experience [40][41]

Q3 2023 Preliminary Earnings Results Summary November 7, 2023 Confidential information. Copyright © 2023. GoPro, Inc. All rights reserved. SAFE HARBOR STATEMENT This presentation may contain projections or other forward-looking statements within the meaning Section 27A of the Private Securities Litigation Reform Act. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “should,” “will” and variations of these terms or the negative of these terms and similar expressions are intended to iden ...