GoPro Q1 2025 Earnings Call Transcript

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May 12, 2025

Key Takeaways

  • GoPro delivered Q1 revenue of $134 million, reaching the high end of guidance, while subscription ARPU rose 5% and aggregate retention hit a record 70%.
  • Non‐GAAP operating expenses fell 26% year over year to $62 million, driving a nearly 50% reduction in adjusted EBITDA loss to –$16 million and a 27% year‐over‐year inventory decline.
  • Q2 guidance calls for $145 million in revenue (down 22% YoY), a non‐GAAP loss per share of $0.07, and roughly 20% unit sell‐through decline to ~500,000 units.
  • GoPro has successfully diversified camera production out of China (e.g., Thailand manufacturing) to eliminate US tariff exposure on cameras and plans modest global price increases (<5%) to offset remaining accessory tariffs.
  • Asia Pacific sell‐through plunged 54% YoY, driven by weaker consumer spending and intensified competition in China, Japan, and South Korea.
AI Generated. May Contain Errors.
Earnings Conference Call
GoPro Q1 2025
00:00 / 00:00

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Operator

Good afternoon. Thank you for attending the GoPro First Quarter twenty twenty five Earnings Call. My name is Cameron, and I'll be your moderator for today. And I would now like to pass the conference over to your host, Robin Stecker, Director of Corporate Communications at GoPro. You may proceed.

Robin Stoecker
Robin Stoecker
Director of Corporate Communications at GoPro

Thank you, Pam. Good afternoon, and welcome to GoPro's first quarter twenty twenty five earnings conference call. With me today are GoPro's CEO, Nicholas Woodman and CFO and COO, Brian McGee. Today's agenda will include brief commentary from Nick and Brian followed by Q and A. For detailed information about our first quarter twenty twenty five performance as well as outlook, please read our Q1 earnings press release and management commentary we posted to the Investor Relations section of GoPro's website.

Robin Stoecker
Robin Stoecker
Director of Corporate Communications at GoPro

Before I pass the call to Nick, I'd like to remind everybody that our remarks today may include forward looking statements. Following this brief introduction is management commentary from GoPro's CEO, Nicholas Woodman and CFO and COO, Brian McGee. This commentary 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.

Robin Stoecker
Robin Stoecker
Director of Corporate Communications at GoPro

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 ks for the year ended 12/31/2024, which is on file with the Securities and Exchange Commission and 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, 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 other than revenue are non GAAP.

Robin Stoecker
Robin Stoecker
Director of Corporate Communications at GoPro

Now I'll turn the call over to GoPro's Founder and CEO, Nicholas Whitman.

Nicholas Woodman
Nicholas Woodman
Chief Executive Officer and Chairman at GoPro

Thanks, Robin, and thanks, everybody, for joining us today. As Robin mentioned, Brian and I will share brief remarks before going into Q and A, and I want to encourage everyone to read the detailed management commentary we posted on our Investor Relations website. In the first quarter, we hit our marks for revenue, launched new hardware and software products and are on track to launch exciting new products later this year. Our focus for the balance of 2025 and into 2026 is to continue making strategic investments in product innovation to return GoPro to growth, vigorously protecting our IP and further diversifying our supply chain, including exploring domestic production for some products. During the first quarter, we launched several new hardware and software products, including our updated 360 degree camera app experience, and we introduced a refreshed Max camera positioning us to recapture share in the three sixty market and setting the stage for the launch of Max two later this year.

Nicholas Woodman
Nicholas Woodman
Chief Executive Officer and Chairman at GoPro

We also released a limited edition polar white colorway of HERO 13 black, bringing a fresh new look to our flagship camera. And we recently released the highly anticipated anamorphic lens mod for HERO 13 black, offering creators and professional filmmakers a cost effective solution for capturing stunning cinematic video. Our new anamorphic lens mod joins our previously released ultra wide lens mod, macro lens mod, and auto detectable ND filters, which significantly enhance Giro 13 black's versatility and performance. The GoPro subscription continues to be a highlight with strong aggregate retention numbers above 67% over the past six quarters. ARPU improved 5% year over year, and aggregate subscription retention in q one set a record at 70%, up from 69% both sequentially and year over year.

Nicholas Woodman
Nicholas Woodman
Chief Executive Officer and Chairman at GoPro

We expect subscriber and revenue growth to resume in tandem with a return to camera unit growth in 2026 and as we add new editing and content management features that help subscribers get more out of their GoPro content. Our patent portfolio protects our IP, and we are committed to taking action to protect these assets when necessary. GoPro welcomes fair competition, but we will litigate to protect our IP when we believe it is being infringed. In January 2025, the US International Trade Commission held a five day trial regarding a complaint we filed against one of our competitors with the goal to enforce certain GoPro patents related to our cameras and digital imaging technology. We look forward to the ITC's ruling, which is now expected in July of this year.

Nicholas Woodman
Nicholas Woodman
Chief Executive Officer and Chairman at GoPro

This quarter, we continue to diversify our supply chain to position GoPro as favorably as possible amidst highly variable tariffs, and we expect to offset tariff costs with modest price increases, continued supply chain diversification outside of China, and potentially with the production of certain products in The United States. We are continuously assessing the evolving international trade situation to mitigate the impact of tariffs on our business. We are pleased to report that the OpEx reduction work we began in 2024 is largely behind us and is starting to yield improvements in our operating model. Operating expenses were down 26% to $62,000,000 from $83,000,000 in Q1 twenty twenty four. Next, we are excited to provide an update on our tech enabled motorcycle helmet initiatives.

Nicholas Woodman
Nicholas Woodman
Chief Executive Officer and Chairman at GoPro

As we shared in 2024, when we acquired Foresight Helmet Systems, GoPro plans to launch tech enabled motorcycle helmets, which we believe will help us grow a meaningful business with a SAM of approximately 3,000,000,000. To help us realize this opportunity, we recently kicked off a joint development partnership with AGV, a leading premium Italian motorcycle helmet brand known for legendary performance, styling, and safety. This partnership between GoPro and AGV represents the exciting potential of two powerhouse brands coming together to bring meaningful innovation, improved safety, and performance to the world of motorcycling, leveraging each other's design, engineering, and brand strengths. We look forward to sharing updates as we move closer towards launching our first product together. Overall, GoPro's performance in q one and our outlook for q two demonstrate our progress in operating as a leaner, more efficient organization, which is beginning to positively impact our financial results.

Nicholas Woodman
Nicholas Woodman
Chief Executive Officer and Chairman at GoPro

And we continue to advance our mission to deliver innovative and differentiated products to our existing markets as well as new adjacent markets in order to expand our TAM and drive growth in revenue and profitability. Our product road map is on track, and we believe that consumers will be very excited about the innovation we intend to bring to market in 2025 and 2026. Now I'll turn the call over to Brian.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

Thanks, Nick. We exceeded our expectations in the first quarter on revenue, earnings, sell through, operating expenses, and inventory targets, all while reaching a new high in aggregate retention for subscribers. In addition, we relaunched our max three sixty camera and delivered a new colorway for our flagship camera during the quarter, and we are on track to launch our next three sixty camera this year. First quarter revenue was $134,000,000 which was at the high end of our guidance of $125,000,000 due to stronger sell through in the quarter. Subscription and service revenue grew 4% year over year, primarily from 5% ARPU growth as a result of continued improving aggregate retention rates, which reached a record 70%.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

Q1 twenty twenty five non GAAP operating expenses of $62,000,000 decreased 26% year over year. We continue to have a strong focus on operating expense controls while retaining investments in our product roadmap. Notable first quarter performance highlights include: revenue from our retail channel was $94,000,000 or 70% of Q1 twenty twenty five revenue compared to 68% of Q1 twenty twenty four revenue. Growth in our retail channel mix was primarily driven by sales to our big box retailers. Revenue from our gopro.com channel, which includes subscription and service revenue, was $40,000,000 30 percent of q one twenty twenty five revenue compared to 32% q one twenty twenty four revenue.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

Subscription and service revenue grew 4% year over year to 27,000,000, primarily from 5% ARPU growth as a result of improving aggregate retention rates as well as improvements to a record of 70%. Subscription attach rate from camera sold across all channels is 49% compared to 48% in q one twenty four. Non GAAP operating expenses were $62,000,000 compared to $83,000,000 in the prior year period. GAAP and non GAAP loss per share was $0.30 and $0.12 respectively. Adjusted EBITDA loss was reduced by nearly 50% year over year to negative $16,000,000 We ended the quarter with inventory of $96,000,000 a 27% decrease year over year and reflecting the first Q1 sequential decline in inventory since 2018.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

Sell through was approximately 440,000 units compared to 530,000 units in the prior year period. This was due to unit sell through decreases in Asia Pacific, which were primarily driven by consumer related macroeconomic issues and competition across the region, most notably in China, Japan and South Korea. Channel inventory decreased sequentially by approximately 40,000 units. During the quarter, we took the opportunity to sell out of a slower moving product and convert that inventory into cash more quickly impacting gross margin. Excluding this $5,000,000 1 time sale, gross margin would have been 35.5% in line with guidance and above Q1 twenty twenty four of 34.4%.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

Reported gross margin was 32.3% in the first quarter of twenty twenty five. First quarter operating expenses decreased 26% year over year to 62,000,000 The decrease was primarily due to restructuring actions resulting in reduced employee related costs, a reduction in marketing and advertising related activities and the completion of our newest system on TIP, DP3, as well as a strong focus on expense management while retaining our product roadmap, partially offset by legal costs to defend our IP. Turning to the balance sheet. We ended the first quarter of twenty twenty five with $70,000,000 in cash, cash equivalents and marketable securities, which included a $25,000,000 draw on our ABL. Excluding the $25,000,000 draw, cash would have been down $58,000,000 sequentially compared to our cash usage of $89,000,000 in the first quarter of twenty twenty four.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

Cash used in the first quarter of twenty twenty five was primarily due to adjusted EBITDA of negative $16,000,000 and working capital changes of 36,000,000 Sequential working capital changes were primarily due to a $63,000,000 decrease in accounts payable and other liabilities and a $5,000,000 increase in prepaid expenses and other assets, partially offset by a $24,000,000 decrease in inventory and a $9,000,000 decrease in accounts receivable. In the second quarter of twenty twenty five, we plan to repay the $25,000,000 ABL draw. Headcount ended at six fifty nine full time employees, down 30% from our prior year of September. Turning to our outlook. For the second quarter, we expect revenue to be $145,000,000 at the midpoint of guidance, non GAAP loss per share of $07 and a nearly $30,000,000 improvement in adjusted EBITDA year over year.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

All these improvements are due to the actions we took in 2024 to reduce operating expenses, diversify supply chain and drive product cost reductions. Additionally, we are focused on further operational efficiencies to drive down costs and expand our supplies supply chain outside of China. At current tariff rates, we expect the tariff impact in 2025 will be approximately $8,000,000 on our cameras, which is expected to be fully offset by modest product price moves of less than 5% globally. This expected $8,000,000 impact for 2025 is further mitigated by the fact that we are still selling through inventory at end of the United States before April. As we continue to actively manage the balance sheet and expect to further reduce inventory sequentially by $20,000,000 to approximately $75,000,000 and increase cash net of debt by $25,000,000 sequentially as we operate working capital more efficiently.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

For the second quarter of twenty twenty five, we expect to deliver revenue of $145,000,000 plus or minus $10,000,000 down 22% year over year. We estimate three days in the second quarter to be approximately $370 up nearly 15% year over year. We expect unit sell through to be down 20% on a year over year basis to approximately 500,000 units and channel inventory to reduce by approximately 60,000 units sequentially. We expect gross margin in the second quarter to be 35.5% at the midpoint of guidance, up nearly 500 basis points versus the prior year quarter. We expect second quarter twenty twenty five operating expenses to be $60,000,000 plus or minus $1,000,000 a 36% reduction from the prior year quarter due to lower spending on wages, some lower headcount, reduced marketing and lower nonrecurring engineering expenses related to completion of GP3.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

We expect non GAAP loss per share in the second quarter of $07 at the midpoint of guidance and expect shares outstanding to be approximately $57,000,000 Turning to the balance sheet, we expect cash net of debt to improve $25,000,000 in the second quarter. Looking at 2025 commentary, overall, we expect units and revenue in 2025 to be lower than 2024, primarily driven by an uncertain macro environment, competition and the delay of our new three sixty camera partially offset by FX due to a weaker US dollar. To provide some color on expectations for the balance of 2025, We expect to introduce Max two three sixty camera in 2025. We expect our full year twenty twenty five operating expenses to improve further to a range of $240,000,000 to $250,000,000 down more than $100,000,000 or 30% year over year. We expect to offset tariff costs with modest price increases, continuous supply chain diversification outside of China and potentially produce certain products in The United States.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

We expect subscription ARPU growth, subscription cost improvements and to end the year with 2,400,000 subscribers. We now expect to end 2025 with $75,000,000 in cash with no debt and a $50,000,000 available ABL facility. This improvement from our last report is driven by continued reductions in operating expenses and improvements in FX from a weaker U. S. Dollar.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

The initiatives we undertook in 2024 to reduce operating expenses and improve gross margins are bearing fruit. We are focused on launching new products while preserving cash to repay our debt in 2025 and launching a significant number of new products in 2025 and 2026 to restore growth and profitability to our business. Operator, with that, we are ready to take questions.

Operator

Thank you. We will now begin the question and answer session. The first question is from the line of Eric Woodring with Morgan Stanley. You may proceed.

Erik Woodring
Erik Woodring
Managing Director - Equity Research at Morgan Stanley

Hey, good afternoon guys. Thank you for taking my questions. I have two. Brian, I guess maybe I'll start with you. Just can you maybe help us understand the sources of stronger sell through in the quarter?

Erik Woodring
Erik Woodring
Managing Director - Equity Research at Morgan Stanley

Mike, I guess my question is do you have any triangulation data or can you look at any kind of linearity data or even channel feedback to help determine how much that stronger sell through was pull forward ahead of potential pricing increases? How much was real demand? And how much is factored how much of that type of behavior is factored into 2Q at all? And then I have a quick follow-up, please.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

Sure. I don't think we saw any pull forward demand in the quarter. It was pretty linear throughout. So our sales came later in the quarter as, you know, sell through did did well, and and our sales ended up coming in more, back end loaded, which is why Aviso was a bit higher. So we didn't we didn't see that, happen in the quarter.

Erik Woodring
Erik Woodring
Managing Director - Equity Research at Morgan Stanley

Okay. Super helpful. And then and I might just be reading this wrong, but I think your sell through in The United States was down 10% year over year, but sell in was up 7% year over year. Obviously, reduced overall channel inventory. But can you just maybe help us understand exactly what happened kind of that gap in 1Q and then extend that conversation to Asia, just revenue down over 50% year over year.

Erik Woodring
Erik Woodring
Managing Director - Equity Research at Morgan Stanley

Just just kinda help us contextualize. Is that mostly competition, or are there other factors there? Thanks so much.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

Yeah. In my prepared remarks, we talked about Asia being down 54%, and that was mostly macro as well as competition. We saw, from a country perspective, we were down in China, Japan, and South Korea, were the most impacted countries in the Asia Pacific Region. The US had, the best, sell through. It was down the least, as we reported.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

And and some of the sell in, was due to, in the quarter, we had that one time $5,000,000, sale of products, in the quarter. So we, you know, took out some inventory to convert it to cash. And so that would be the kind of delta there. That's expected to sell through pretty quickly too at at, pretty favorable, price points. We Okay.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

Super. Thank you for that color, Brad. More we have no more inventory to do that with. That and that's partly why our margins are up sequentially to 35 and a half percent. So we're selling mostly between

Erik Woodring
Erik Woodring
Managing Director - Equity Research at Morgan Stanley

Thank you so much, Brian.

Operator

The next question is from the line of Alicia Reese with Wedbush Securities. You may proceed.

Alicia Reese
SVP - Equity Research at Wedbush Securities

Thank you for taking my question. So I'm wondering if you could dig in a little bit on the tariff situation. Obviously, some of the quarter will get the 145% tariff from China, but obviously the rest of the quarter hopefully into the following quarter will have 30% or thereabouts. I'm just wondering how much of your inventory headed to The U. S.

Alicia Reese
SVP - Equity Research at Wedbush Securities

Is coming from China? How much you're able to diversify in the quarter? And how much price elasticity there is on the products you have out right now?

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

Yeah. Good question. On on the tariff front, actually, the amount on cameras into The US is zero because we've diversified all of our camera production outside of China. And what comes from The US is manufactured in Thailand, so that's about a 10% tariff rate versus about a 50% tariff rate just prior to today. Accessories would have a little bit of tariff, but with the reduction in rates today, that goes to only a couple million in a quarter.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

And those would be offset by small price increases. And the elasticity around that, we're not moving prices very much. We only have to move three or 4% globally to offset, the cost of the tariff, which we will do. So, we find ourselves in a pretty good position from a supply chain perspective, from a camera, production, into The United States, and we use China for rest balance the rest of the world for capacity. And tariffs should be we'll continue to migrate accessories out of China into mostly Vietnam.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

So we've done a pretty good job insulating ourselves on the tariff front.

Alicia Reese
SVP - Equity Research at Wedbush Securities

And I have a couple more questions, if I may. I was wondering if you could talk a little bit more about what's going what are the dynamics happening currently in Asia over the past couple quarters? It's been pretty weak. So just wondering if you could highlight that and what the difference was in The Americas in the quarter.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

Yeah. In in Asia, China has been the biggest impact, and there's been more of a, I'll call it, nationalistic trend to buy more local. We've seen that across a number of brands, not just our own. And there's definitely more competition that's happening in China and macroeconomic issues that are happening, particularly in, as I mentioned, China, but also Japan and and South Korea. And The US started to shore up in a much better way in in the last quarter, and our expectation is that it'll continue in q two. So that's kind of the moving parts geographically.

Alicia Reese
SVP - Equity Research at Wedbush Securities

Fair enough. And lastly, I was wondering if you had any plans to do, like, a reverse stock split or anything of that nature to to change the stock price from here.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

Well, hopefully, our performance that we continue to hit our numbers and drive top line growth with new products. Margins continue to improve year over year. OpEx is down. And making more money and driving, you know, more cash flow would help move the stock up as well.

Alicia Reese
SVP - Equity Research at Wedbush Securities

Understood. Thanks so much for the time.

Brian McGee
Brian McGee
Executive VP, CFO & COO at GoPro

Thank you.

Operator

There are no additional questions waiting at this time. I would now like to pass the conference back over to the management team for any closing remarks.

Nicholas Woodman
Nicholas Woodman
Chief Executive Officer and Chairman at GoPro

Thank you, operator, and thank you, everybody, for joining today's call. With our leaner operating model and exciting new products we have planned for the balance of 2025 and 2026, we believe we are well positioned to match the financial strength of GoPro to that of our incredible brand. We're very much looking forward to realizing this on behalf of our customers, our employees, and our investors. Thank you, everyone. This is Team GoPro signing off.

Operator

That concludes today's call. Thank you for your participation, and enjoy the rest of your day.

Executives
    • Robin Stoecker
      Robin Stoecker
      Director of Corporate Communications
    • Nicholas Woodman
      Nicholas Woodman
      Chief Executive Officer and Chairman
    • Brian McGee
      Brian McGee
      Executive VP, CFO & COO
Analysts
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