Q1 2022 GoPro Inc Earnings Call
Yeah.
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 one on your telephone.
I would now like to pass the conference over to our host Janine Uber Vice President of Investor Relations.
Leanne. Please go ahead.
Thank you Matt Good afternoon, everyone and welcome to <unk> first quarter 2022 earnings Conference call.
With me today are CEO , Nicholas Woodman, and CFO and CFO , Brian Mcgee.
Today's call will include a brief introduction from neck, followed by Q&A.
For detailed information about our first quarter 2022 performance and our outlook. Please read the management commentary was posted to the Investor Relations section of <unk> website.
Before I pass the call to Nick I would 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 31, 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 a 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 <unk> Web site 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 will turn the call over to <unk> founder and CEO Nicholas Woodman.
Yeah.
Thanks, Julian and hi, everybody. Thank.
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 <unk> black camera.
A premium high margin high ASP accessory.
And new desktop software that furthers our position as the world's 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 GAAP and non-GAAP EPS of four and 9% respectively.
The first quarter of 2022 represents gopro seventh consecutive quarter of profitability.
On a non-GAAP 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%.
<unk> subscribers grew 85% year over year to $174 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.
Yes.
Certainly.
If you would like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to remove a question. Please press star followed by two again to ask a question press Star one.
As a reminder, if you are using a speakerphone. Please remember to pick up your handset before asking your question.
Cause you briefly as questions registered.
The first question is from Anna <unk> with Jefferies. Your line is now open.
Hi, good afternoon, thanks for taking our question.
I guess first starting off with expectations for unit.
It's shipped in 2022 can you talk about what's embedded here in terms of the.
Recent product launches that were just announced versus the legacy.
Franchise the flagship product.
Like the hero.
And subsequent launch it there.
Yeah, Hi, Ana This is Brian let me start.
Our guidance for 2022 and units are consistent with what we talked about in February .
From a unit standpoint, low single digits.
And then continued increases in afcs do too.
Continued shift of product to the high end.
And a big growth in our subscription business. We also expect a total of four new cameras.
2022, I think we've talked about to on our last call. So we just announced two in the first half and we have two more new one coming in the second half so that gives us.
We've got good confidence in that.
Numbers and also point out if you look at kind of how we guided Q2.
Historically, we have less sequential lift of between 10% to 20%.
On the unit and were up 17% in Q2, which is driving the 240.
Revenue.
Guidance, we can plus or minus five.
And Tobey.
Units will be down on a year over year basis up sequentially.
AFP there will be.
A little bit sequentially, that's more mixed.
But up year over year quite healthily.
And we expect.
Good growth in Ftes in 2022, so those are the main drivers.
For Q2, and then we get to Q4 and we have two new products. We typically are up on a sell through basis, 30% to 50%.
Year over year.
And the way we.
Modeled it with demand planning, we have a lot of data on customer demand and how many skus, we have and price points of Skus. So we're very comfortable with the 22 outlook guidance for Q3 Q.
Q2, Q3 and Q4.
Great. Thanks.
And then one follow up here you know, it's great to see that the retail subscriber attach rate continues to increase.
39% in the quarter.
What are the key levers here that could continue to narrow the gap toward.
Subscriber and how are you thinking about.
Improving that conversion within the retail channel.
Yes.
Great question.
Brian maybe I'll turn it over.
Then you can pile on.
Yes.
A primary driver of why we've been able to improve that conversion rate.
From last years, 18% to 39% in Q1 of this year.
It's because we've done a much better job of.
Incorporating.
The benefits of being a subscriber into the quik, App, which is our gopro app.
And getting those benefits in front of.
Users that have bought their gopro at retail.
And it's just.
And day more clear to people why the what the benefits are and why.
They should consider becoming a subscriber and.
And we're not done.
Later this year.
The App will continue to evolve and make the subscriber benefits even easier.
Easier for people to experience.
And then ultimately we think that's going to have a positive impact on converting them to being subscribers.
Today, we're primarily telling people and they're converting and in the future we're going to be making it more experiential for people and we think thats going to.
Convert even better.
And then as well.
We're going to continue to improve the.
The convenience of taking advantage of the subscription benefits for our users via the App. So we expect.
Even today as we're seeing strong usage trends and we're really happy to see how <unk>.
Subscribers, who are taking advantage of the benefits, we think that thats going to increase over time as we make the whole experience even more.
Convenient for them. So net net we're really happy with how things are going and we have a lot of untapped.
To continue to continue to improve.
Yes.
Let me maybe add to that from our perspective subscription as Gopro financial engine.
We grew subscriber growth, 85% year over year.
Up to $19 million, 73% growth at 70 to 80 points of margin. So it's very profitable.
Mmm.
Out again by greater than 50% over 2022, that's a big increase in at the 70 to 80 point margin that delivers a lotta margin dollars you over here to the bottom line.
Great and I'm, sorry, if I may want one more follow up here I. Appreciate you know the the color on the number of subscribers or the percentage.
Subscribe it who are using the cloud for storage I guess do you have any color on how this is <unk> by cohort and you know storage usage and as an indicator of maintaining the subscription.
Yeah, two pieces of good news is as I mentioned that.
The same so.
Basically identical and how much contact people put it in the cloud whether it came from retail or go for dot com. So they're they're comparable from that perspective, the other really good.
Indicator is what's coming from retail.
Is from all cameras, it's not just the flagship it's actually in proportion flex it.
10 zero nine O eight and Mac and they're being added proportionately so even people who are buying zero eight and.
An older cameras are actually subscribing that shows you that there's a real benefit to the subscription for.
People were buying Joseph.
It's not just the flagship it's it's across the board, it's mostly flagship <unk> dot com because that's what we mostly sell <unk> dot com to collect it but.
<unk>, it's proportional which is great.
Great. Thanks, so much.
Thank you.
The next question is from Martin Yang with Oppenheimer.
Your line is now open.
Hi, Good afternoon, and thank you for taking my question. My first question is related to the question asked by previous analyst. So when you think about different ways to cope birds users into subscribers.
How 'bout different channels for conversion soldiers amble, the upcoming desktop editing <unk> is that a driver for future conversion into twenty-three.
Yes.
[noise] go ahead [laughter] yeah the the.
Our upcoming desktop App will.
Certainly be a driver for subscription because it will.
<unk>.
Consumers, who prefer to use.
A desktop.
For managing editing and getting the most out of their content, where as today, where mobile focused and that doesn't work for everybody into.
Interestingly as you go higher up the passion curve for personal content creation.
People tend to shift to a desktop platform because you can it's a more convenient more powerful platform obviously for for managing your and editing your content. So we're excited about that we've shared on previous calls that we [noise].
We used to have a desktop application.
We long ago Sunsetted.
But we still have seen a.
Very significant use of that.
Application, even though you know we don't support it anymore, which is obviously a clear sign that there's healthy demand for a updated desktop offering from Dora.
And that will sink with your mobile and cloud go pro experience and be quite powerful inconvenient. You think it's gonna be very well received by people. So we're really excited about it. So yeah. So we do think that.
Our desktop App will be a subscription driver and another important driver obviously is increasing unit sales over time.
As Brian noted and that's a really important point that we're seeing similar subscription rates.
Amongst owners of all of our cameras, whether it's 0809.
Our flagship 10 Black Max.
It's really encouraging.
To see that.
The subscription is appealing to.
People, who are buying in a different price points different performance levels.
And it also bodes well for our strategy to increase our <unk>.
Product portfolio of cameras and potentially.
Enter new product categories.
That were not currently in to address the needs of a specialized users. We've shared that we don't see any reason why gopro can't return to the 4 million and greater.
Number of units sold through a year.
And we're targeting 3.3 this year, but.
Both through an organic resurgence of sell through you know when [noise].
The economy, and geopolitical and and traveled on the normal C.
Returns to the World, we think that we're going to be a really good position and then you layer on top of that the the <unk>.
Broader portfolio that were product portfolio hardware portfolio that we're building.
We feel really confident about our ability to grow our our our unit volume which will clearly.
Translate into.
Accelerated subscription growth.
Which is really exciting to think about because it.
Brian noted subscription is the financial engine of Gopro It has such a significant margin.
And EBITDA impact on our business.
That it's it's it frankly can be quite transformative as we look a few years out so.
All all very exciting to think about.
I appreciate your insight.
Thank you.
The next question is from Nick Todorov with Longbow Research.
Your line is now open.
Yeah, Thanks, and good afternoon Guy.
Nick first question for you can you talk about the terms of the new cameras, I guess, probably for the ones that you've announced far and maybe help us sized dose stamps and I would like to I would like to hear from you talk about the added value of hero bones versus using the camera that is already done already.
Comes with with most high end drones.
The as far as time goes you know.
It's more or less the same answer I, just shared which is we're targeting 3.3 million units this year.
We are confident that we can continue to grow that number.
Back to levels of 4 million or greater over time.
Like pre pandemic gopro and some of that will be our organic and somebody that'll be inorganic through us expanding the breath of our our hardware offerings.
Both in terms of camera and potentially product categories that were not in yet.
Our strategy is as we've shared to address.
User.
Segments that.
Might be considered niche by other businesses, but for to go pro.
We've proven that.
Niches add up to a pretty significant hole.
And that's how we built this business built this brand to be as <unk>.
Durable as it's been over the years.
You know the history of Gopros, we started out building cameras for surfers, and then mountain bikers and race car drivers and.
Moto enthusiasm and skiers and on and on and on and eventually people interested in.
Professional content creation Influencers bloggers.
And today, you've got go pro which is really a business built on stitching together. Many many many niche use cases specializing our products for those missions cases, and you've got a very diversified customer base.
That we're building for solving problems that no other company assault me.
<unk>.
We're addressing the needs of some of the most passionate people on the planet, who have very specific problems with him trying to solve and there is a bit of our secret sauces to how we build such a terrible business and so our strategy with derivatives.
Derivative products like bonds.
That is to just continue to build on those niches into.
And a safe predictable manner.
Grow our business rather than swinging for the fences with big mass market.
Winners, we're excited about hitting singles and doubles, it's historically work really well for the business and you know as in baseball you attach that occasionally go for a double and you catch a hold of it and accidentally hit a home run. So we're definitely leaving ourselves open for that opportunity as well and I say all of this.
Want to remind everybody that we.
We still are going to be.
Wowing are.
Our customers with our new flagship cameras every year.
Because that's the core of our business.
But you know at the periphery and on top of that we can leverage that technology to produce.
Lower cost to develop derivative cameras that can help us incrementally grow our business as well so I would put the the the bones.
Product into that category of a smaller yet important and influential user group that we think we can super serve better than anybody else given our technology and your question about why would somebody put this camera bonds or.
On their small cinematic drone as opposed to the cameras that are built into some drones.
It comes down to image quality, an outright performance of the camera.
And.
The the F. P. B first person view drone cinematography community has spoken loudly that they want smaller lighter gopros to Mount on their small fast agile drones.
[noise] because they want the best image quality and they see go pro is the company that's building the best cameras for their needs.
To the point, where.
Drone cinematographers, we're buying hero tens stripping them down voiding the warranty and then in closing them in.
You know homemade cases.
And flying them as a do it yourself lightweight gopro solution and we've just been seeing enough of that over the years.
Getting enough feedback from.
Cinematographers that they'd be excited if we would build something like that for them. So we did it.
Yeah. That's that's that's part of why I say, we we think that we are the only company, but one of the only companies that can serve these enthusiasts in this way.
And it feels great to finally be responding to all the demand all the request that we've had over the years to build a specialized camera like that for this important group.
[noise] got it thanks for the detailed answer makes sense.
A question on kind of assumptions around sicker have growed it implies quite a pick up in units. So maybe can you help us understand how old are you assuming how much of growth in the second half will come from some of the new products that you know what are they could be a little bit more mass markets in order to dry.
The units versus growth from the traditional <unk> flagship line.
How much of the grilled should we think about coming up from the new product versus the legacy and the second half.
New products will drive most of the growth on the new products I would expect the flagship.
And then there's one other which we have a very good historical analytics on for driving demand. So uhm. If that's why we're pretty comfortable with what the demand outlook would be between Q3 and Q4 obviously the older cameras still play a role.
10, nine and a bit of it and Max which has continued to do it really well so the new products.
Ah Ah Ah Ah more mass appeal.
Versus.
More of an issue like.
The bank.
[noise] got it okay, and if I can squeeze one financial question.
You made a comment in the prepared remarks about the success and the expansion of the accessory portfolio, Brian what can you share from a financial standpoint to them to help us understand how much accessories add to it or a S P or sales or any other metric help us frame.
Yeah, we're we're.
Growing Ah our expectations to grow accessory for sure we're gonna break out how big it is but it is significant.
Part of our business and it's Martin accretive.
To the company. So it's positive there is also a significant benefit to our subscribers.
Part of the deal on the subscription with financial I mean.
50, Bucks and then they get $100 off the camera up to 50% off on accessories.
And a significant amount of our accessories that are sold actually there to that group. So they're engaged with go pro and combined quite a bit of accessories. So that's a powerful force on the business, but also build the relationship with the customer and keep them in a <unk> of a subscriber.
And why are we have healthy retention rates.
It's it's a positive and almost 70 direction.
One thing I'd like to answer Nicolai.
One thing I would like to add Nicolette ear your question about.
Bones in future cameras is that I should add that we're really happy with the sell through that we're seeing.
Since the launch of bonds and our other new camera skew the hero 10, Black creator addition, Ah both those cameras or selling through either in line for cats are forecast or above.
What we had expected in terms of sell through so.
Great job congratulations to go pro team on successfully launching these two new products results. So far really good really encouraged by that.
And then you made a comment about how.
But we are looking for quite an uptick later in the year and what were these cameras that were coming out.
How are they gonna support that Brian do you want to add.
To your answer about how we're not expecting anything out of the ordinary for Q4 as it relates to our historical performance.
Yeah, Ah kind of tests on that with and it's question too but.
We expect typically in any year, we have a lift fell through left in queue for sequentially from Q3 of 30% to 50%.
And it's slower if we have a lower number of units an entire if we have more units.
Went into the market.
Particularly knowing what we're gonna put into the market so that gives us.
A very good understanding of demand and demand profile and where are we should be lining up as we look ahead to Q3 and Q4.
Got it things guys. Good luck.
Thank you the.
The next question is from Eric Woodring with Morgan Stanley inline is now open.
Hi, This is Patrick on for Eric Thanks for taking the questions. This afternoon. So if we look back over the last three years second quarter selling grows sequentially by all of them more than 30% and I believe you guys regarding to an 18% sequential selanne growth.
So we're just looking to better understand what are some of the drivers that are limiting shell and growth on the second quarter.
[noise], Yeah, we typically see it as from a unit perspective, 10% to 20% sequentially from Q1.
That's a number that's never been the kind of.
<unk>, you've got not in the last three years.
And so.
We're up 70% and Q2.
Expect appeared about 607.
75000.
Sell through and a quarter so.
And that's up more and we expect to pull channel inventory down.
Again in queue too because that is the truth.
True success in the second half.
We see more unit.
Coming so.
[noise] we're in line with what are normal that's gone from the principal perspective.
Okay, great. Thanks for the color there and then one more from my end, if you're just kind of like at the U S. Dollar in the recent strength. How are you thinking about you know potential pricing action in in international markets as you work to offset both currency and component cost inflation.
Yeah mm mm included in our guidance, 4.5% plus or minus 50, Bips, that's down sequentially from 40 to at least 1% maybe.
The one and a half it's gonna be currently related with the strength of the dollar in March and April .
Component costs are also included in our guidance as far as pricing goes.
And moved up the price curve and if you try to move prices up I think that's gonna have a deteriorating effect on demand there'll be more of a negative actually been a positive.
So that I don't think I'm really makes sense. The other thing is.
We have such a large subscription business.
We've got a little bit of air cover their from a margin perspective cause that's gonna grow as well and Q2.
The margin profile, that's what caused the financial <unk>, it's gonna it helps to keep margins in the forties as we continue to grow that so we can buffer a little bit here component prices incorrectly.
Because we have diversified business between.
Hardware and cameras and accessories, and what we're able to deliver on the market on subscription. It really is a diversified way of looking at the business.
Great appreciate the caller. Thank you.
Thank you.
Next question is from Jim Sulu with Citigroup. Your line is now open.
Thank you I have kind of a strategy question for Nick and then a financial question for Brian So Nick this year with the launch of the creator as well as bones is it kind of fair to think that now the cadence has turned into a little bit of a kick and talk.
Cadence like kick first half of the year more specialized needs and talk second half of the year consumer a bigger market appeal, if I understand it correctly, how it's playing out this year and then the last part of that is is the bones.
If I remember right, it's like only available in the U S or is that maybe just upon launch and then later on more global I, just find that kind of interesting and then for Brian on financial.
Is there anything we should be aware of in our modeling going forward, whether it be inflation for research design engineers employees Merrick increases you know we've lived in a tough world of Covid for a long time and not much merit increases for employees or convert that are coming due already.
That could impact opex or.
Sure count not only for kind of like going forward. Thanks, gentlemen.
On the tick tock are we changing our launch cadence.
I would say I would read into that.
It makes sense, what you said, but.
At the same time, we are likely to continue to surprise and delight too with future product launches. So.
Listen for perhaps some clues and what we share but I don't think you can be as a definitive is the way that you laid it out.
And then in terms of bonds being a U S launch.
Being very thoughtful about how the rollout.
Some products.
Ah versus others, which are you know more.
Sure to have mainstream appeal and so forth like that with bonds. We wanted to learn it is about speed the market.
We were able to get that product out a lot quicker if we focused on the U S.
And then learn about demand and grow from there so chalk it up to being.
Clinton market and thoughtful about how we approach what we see is an important.
Opportunity for us to Super serve a very influential group of content creators that are helping keep go pro at the at the forefront of some of the most exciting.
Exciting content that is being generated for those of you on the call who aren't aware.
The majority of really Wow.
Shots that you're seeing from drones. These days are being.
Being captured with much smaller.
Lighter more agile drones.
That people are flying with pilots are flying with.
<unk> that they were that give them a first person view as though they're sitting in the cockpit of the drug.
And their mounting stripped down gopros and now bones to their drones to capture.
Film quality footage.
It's.
The majority of really Wow drone shots. These days are not being captured with the larger heavier slower less nimble drones that.
That you may have been familiar with when we were making drones ourselves. So the world has changed the default and it's great to see Gopros still being the camera of choice for capturing these.
Amazing aerial perspective.
Great. Thanks, Nick that's perfect and Brian anything about converts or [laughter].
Backs or marriage or on the piano.
Yeah.
Sure Yeah, I'm a convert.
We paid down or convert 125 million April 15th.
So we reduced our debt Ironically, we made over $150 million of cash flow and the last year and that enabled us to.
Can I have your that up and pay it off we do expect cast and a year between 450 and $480 million.
And will exit this year or exit two two at about 330. So as is typical in the second half we generate.
Most of our free cash flow.
It's worth noting that we remain the number one large employer upside magazine.
Part of the reason for that well, there's lots of reasons, but you mentioned merit, we actually did a pretty sizeable merit increase to.
Our employee base this year.
Double but typically done that's.
Factored into our guidance of 340 $345 million, a opex in a year as well as any installation Mary uhm aspects too to the business.
If it contained in in there so and also point out that kind of goes with the number one large employer our retention rates with employees glue.
Globally has been exceptional.
And that's been a great great teamwork, great continuity, and we were really really clean.
Retention rate.
Great. So just to be clear, Brian it sounds like to convert the.
The balance sheet, we see today still has it in it but now in the quarters paid off so we should make that adjustment going forward am I correct.
Yeah, you should remove $125 million from short term debt.
And cash within the 330.
You too.
Great. Thank you gentlemen, so much for the details and clarification. It's greatly appreciate it and share count should be about 178 million chairs.
And Q2 as well.
Yeah.
Thank you.
Last question comes from Paul chunk of J P. Morgan.
Mine is now open.
Hi, guys. Thanks for taking my question so.
We're hearing some softness from from a mere consumers across different products.
Looks like a mirror did quite well for you in the quarter, but what are you. What are you seeing here to start to to anything you want to call out.
And other trends, you're seeing and maybe other reason looks like Asia also had a good quarter.
Yeah, Both Asia and you said it was up 11% a year over year in Q1 in Europe is up 24% quite strong.
America was down a bit.
<unk>, maybe later in the quarter.
You know people talk about rates in the market.
The worst thing good fell through right now.
We were gone for 675000.
Thousand units and.
To that and yeah actually is running just to.
This morning running.
Running slightly ahead of.
We have them pegged for the quarter. So we're still thing really good solid demand in Europe .
As well as Asia, and North America, I think it's still a little slow, but that's starting to pick up some of the new products and help the creator edition and bone.
Are doing well exceeding where we thought we would be so all those are collectively helping to drive the.
Business.
Gotcha, and then for your guidance or you're kind of breaking in any sort of rebound and travel related activity and do you have any.
Data on how travel trends kinda provide uplifts in certain channels and how that impacts the overall business in general.
If that were to pick up <unk>.
Yeah, if we.
We haven't factored in travel travel.
Travel domestically.
Domestically in the U S, but international travel has not picked up and that's where we're gonna see that particular left because.
International travel increases that now or swelling to cruise is going to give you free stores, so across Europe, and then and destination spots in Asia. So we don't have that market right now that's been a dispirited once COVID-19 hit and so does that comes back.
Jack.
Travel represented.
<unk>, that's when we were running swore million units about 10% of what we felt so it's a it's a cycle tailwind once that comes back.
Okay, Great and then your your sub count for the year was reiterated.
You know just talk about the visibility into that target $2 to.
A million bogey you know what.
Incremental features can we expect here and what are some of the most attractive features that are keeping subs engaged on a platform I. Thank you both.
Thank you mentioned like storage is a key key feature.
You want that you want me to take it.
Yeah.
We've shared that it's a major initiative for us this year too.
Move our editing tools from our mobile app into the cloud.
Which is going to make the experience far more convenient fast.
And ultimately successful for our users that's a that's a that's a big one that's gonna drive engagement as he is.
As we noted is great cause you 72% of users.
Storing footage in the cloud I should say of subscribers storing footage in the cloud and helping them more convenient you said that is obviously going to happen.
Very high.
Positive impact, we think an engagement.
[noise] utilization.
Of the experienced [laughter].
We're just going to continue to chip away at doing a better job of incorporating.
The benefits into the App experience into the camera experience. So that it just starts to work more and more intuitively for our users, which will also for our subscribers, which will also help.
Get more out of being a subscriber and I also shared.
I think the first question of the day that we.
We are going to be by the end of the year doing a much better job of helping.
All of our camera owners experienced subscription benefits.
<unk> for a period.
Which we think will really help drive conversion when he was a great job converting today, but will just telling people about the benefits there's nothing experiential about it today. So they have to take our word for it before they become a subscriber that's gonna be dramatically improved.
Later this year. So we're excited about that.
And then the other you know really big thing that I've I've shared several times a day.
The expansion of our hardware product portfolio to court.
Court.
More users in who have you know.
Need that go beyond what we address today, we think we can grow our cam by doing so obviously grow revenue, but most importantly, gross subscription because since we're seeing such a strong conversion rate amongst buyers of all of our cameras or confidence.
That is we introduce more cameras.
And grow our tan and bring in new customers that we otherwise wouldn't have that we can.
Ah convert them to subscribers similar rates that were doing today.
And I also think that longterm, there's an opportunity for gopro to begin selling.
New types of products than from what we sell today to extent <unk> expand Tam further staying within the guidelines and strengths of our brand.
And courting the same.
Types of consumers that we are today, but there's there's no reason why we can't leverage additional products.
Other than cameras to bring in new subscribers as well so that that that represents a exciting long term growth opportunity for us I think it would be.
Short sighted too and too limiting to think of go pro.
<unk> a go pro unit as we think of you know getting back to $4 million above unit says only being <unk>.
Cameras, we don't see it that way.
Great and then the last question.
<unk> so.
Cashed gardens here pretty pretty good suggest strong free cash flow for the year. It sounds like you're you're in a good place with inventory have enough for the releases later this year.
So so can you you know how much cash you need to run the business I mean.
Casually seems like it's stabilizing becoming pretty high quality can you materially by back a lot of shares from here.
Thank you.
Oh sure that as we exit while we.
Put together 100 million dollar authorized $100 million buyback rude, but.
So far so we know we have the opportunity to buy more back asked me get through this year and into 2023. So yeah I can go materially higher if we continue to generate the kind of cash free cash flow that that we're doing in our numbers imply we're going to.
B.
Hundred and 890 million EBITDA for sure right up from.
Yeah, 170, something last year and you know look ahead, just want I sit on subscription alone I'm twenty-three cause it's just math and how this thing layers out that's another you know.
Big chunk of margin that goes into.
Gross profit and the bottom line and 23. So we can we can and I would see more expansion in 2003.
Spector, then 22, because I'm gonna you know.
Realize it and then and then pay it out and then I remember 25.
You have to tell you about the second convert.
In November which is $145 million.
Okay. Thank you.
Thank you.
There are no additional questions waiting at this time, so past the conference over to the management team for closing remarks.
Thank you operator, and thank you everyone for joining today's call. We look forward to connecting with you at a slate of upcoming events later this quarter and on our next earnings call in August .
Until then this is team go pro signing off.
That concludes the go pro first quarter of 2022 earnings call. Thank you for your participation you may know disconnect your lines.