Q1 2024 GoPro Inc Earnings Call
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Lauren: Hello and welcome to the GoPro First Quarter 2020 Earnings Call. My name is Lauren, and I'll be coordinating your call today. There will be an opportunity for questions at the end of the presentation. If you would like to ask a question, please press the star noted by one on your telephone keypad. I will now hand you over to your host, Chris Clark, VP of Corporate Communications, to begin. Please go ahead.
Hello, and welcome to the gold price that's cool such once he 'twenty earnings call.
Lauren: My name is Lauren and I'll be coordinating new cold today.
Christopher Clark: That'd be the opportunity for questions at the end of the presentation.
Christopher Clark: If you would like to ask a question. Please press star Boardwalk and your telephone keypad.
Lauren: I'll now hand, you over to hoist, Chris Clark VP corporate communications cheap again. Please go ahead.
Lauren: Yeah.
Christopher Clark: Thank you, Lauren. Good afternoon, and welcome to GoPro's first 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 first quarter 2024 performance as well as outlook, please read our Q1 2024 earnings press release and the management commentary we posted to the investor relations section of GoPro
Christopher Clark: Thank you Lauren good afternoon, and welcome to <unk> first quarter 2024 earnings Conference call.
Christopher Clark: With me today are Gopro, CEO, Nicholas Woodman, and CFO and COO, Brian Mcgee.
Christopher Clark: Today's agenda will include a brief commentary from Nick followed by Q&A for detailed information about our first quarter 2020 for performance as well as outlook. Please read our Q1 2024 earnings press release, and the management commentary, we posted to the Investor Relations section of <unk> website.
Christopher Clark: 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.
Christopher Clark: Before I pass the call to Matt 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.
Christopher Clark: 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.
Christopher Clark: 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 is updated in filings with the SEC, including the quarterly report on Form 10-Q for the quarter ended March 31st, 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.
Nick: To better understand the risks and uncertainties that could cause actual results to differ from our commentary we are.
Christopher Clark: We refer you to our most recent annual report on Form 10-K for the year ended December 31 2023.
Christopher Clark: This is on file with the Securities and Exchange Commission and is updated and filings with the SEC, including our quarterly report on Form 10-Q for the quarter ended March 31 2024.
Christopher Clark: 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.
Christopher Clark: 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.
Christopher Clark: Unless otherwise noted all income statement related numbers that are discussed in the management commentary and our remarks today other than revenue are non-GAAP.
Christopher Clark: A reconciliation of GAAP to non-GAAP operating expenses can be found in the press release that was issued this afternoon, which is posted in the Investor Relations section of our website. Unless otherwise noted, all income statement-related numbers that are discussed in the management commentary and our remarks today, other than revenue, are non-GAAP. Now, I'll turn the call over to GoPro's founder and CEO, Nicholas Woodman.
Christopher Clark: Now I will turn the call over to <unk> founder and CEO Nicholas Woodman.
Christopher Clark: Okay.
Nicholas D. Woodman: Thanks, Chris, and thanks, everybody, for joining us today. GoPro exceeded guidance in Q1, delivering revenue of $155.5 million, a non-GAP gross margin of 34.4%, and a non-GAP EPS loss of $0.21. We ended Q1 with 2.5 million subscribers, a 6% year-over-year increase. Today's earnings call marks the one year anniversary of the start of our multi-year transition to expand our TAM by restoring our brand presence at retail, scaling our marketing efforts in our core markets, and substantially broadening our product portfolio to serve more people who want to capture, create, and share content in ways that go beyond the phone.
Nicholas D. Woodman: Thanks, Chris and thanks, everybody for joining us today.
Nicholas D. Woodman: Gopro exceeded guidance in Q1, delivering revenue of $155 5 million.
Nicholas D. Woodman: non-GAAP gross margin of 34, 4% and non-GAAP EPS loss of 21.
Nicholas D. Woodman: We ended Q1 with $2 5 million subscribers, a 6% year over year increase.
Nicholas D. Woodman: Today's earnings call marks the one year anniversary of the start of our multiyear transition to expand our Tam by restoring our brand presence at retail scaling our marketing efforts in our core markets and substantially broadening our product portfolio to serve more people who want to capture create.
Nicholas D. Woodman: And share content in ways that go beyond the phone.
Nicholas D. Woodman: GoPro's brand resonates with a broad range of end users, from active consumers to professional athletes, influencers, and film and television professionals who rely on their GoPros to capture unique content that stands out. We see an opportunity to be the world's most exciting brand focused on enabling differentiated alternative forms of content creation across a broad range of markets and use cases. To date, we've been primarily serving this wide range of users and use cases with the world's most versatile camera, the HERO camera.
Nicholas D. Woodman: Gopro brand resonates with a broad range of end users from active consumers to professional athletes influencers and film and TV professionals, who rely on their gopro to capture unique content that stands out.
Nicholas D. Woodman: We see an opportunity to be the world's most exciting brand focused on enabling differentiated alternative forms of content creation across a broad range of markets and use cases.
Nicholas D. Woodman: To date, we've been primarily serving this wide range of users and use cases with the world's most versatile camera the hero camera.
Nicholas D. Woodman: And while the HERO camera has done an amazing job in its role and will continue to be our flagship for some time, we believe we can expand our TAM in business by developing a broader range of products that more specifically meet the needs of our customers while also targeting entirely new market segments. In 2026, we expect to have in the market the broadest, most differentiated lineup in our history. We are developing a full spectrum of specialized, diversified products to serve consumers' capture needs in more convenient and enjoyable ways than ever before, at price points ranging from entry-level through professional.
Nicholas D. Woodman: And while the hero camera has done an amazing job and its role and we will continue to be our flagship for some time. We believe we can expand our tam business by developing a broader range of products, but more specifically meet the needs of our customers, while also targeting entirely new market segments.
Nicholas D. Woodman: In 2026, we expect to have in market the broadest most differentiated lineup in our history.
Nicholas D. Woodman: We are developing a full spectrum of specialized diversified products to serve consumers capture needs in more convenient and enjoyable ways than ever before at price points ranging from entry level through professional.
Nicholas D. Woodman: Rather than compete in the digital imaging market with Me Too products, we intend to grow GoPro with fun and exciting alternative capture solutions that enable consumers and professionals in unique value-added ways. We see a long runway of totally new specialized products that can merge with our software solutions to establish GoPro as the world's leading alternative capture company. As an example of this TAM expansion strategy through specialization and diversification, in February 2024, we completed the acquisition of Foresight Helmet System, an Australian maker of tech-enabled motorcycle help.
Nicholas D. Woodman: Rather than compete in a digital imaging market with me too products, we intend to grow gopro with fun and exciting alternative capture solutions that enable consumers and professionals and unique value added ways.
Nicholas D. Woodman: We see a long runway of totally new specialized products that converged with our software solutions to establish gopro as the world's leading alternative capture company.
Nicholas D. Woodman: As an example of this Tam expansion strategy through specialization and diversification in February 2024, we completed the acquisition of fore sight helmet systems and Australian maker of Tech enabled motorcycle helmets.
Nicholas D. Woodman: As discussed in our Q4 earnings call, we believe tech and enabling motorcycle helmets and combining them with a value-added software experience represents a meaningful opportunity for GoPro to extend its technical and marketing capabilities to create differentiated solutions within a $6 billion motorcycle helmet market, of which we believe we can target a SAM of approximately $3 billion. We are excited to expand our brand into this new product category and expect to announce our first helmet products in the second half of 2025.
Nicholas D. Woodman: As discussed in our Q4 earnings call, we believe tech, enabling motorcycle helmets and combining them with a value added software experience represents a meaningful opportunity for gopro to extend its technical and marketing capabilities to create differentiated solutions within a $6 billion motorcycle helmet market.
Nicholas D. Woodman: Of which we believe we can target a sam of approximately 3 billion.
Nicholas D. Woodman: We are excited to expand our brand into this new product category and expect to announce our first helmet products in the second half of 2025.
Nicholas D. Woodman: We also intend to partner with leading helmet brands as an OEM supplier to help them tech enable their own premium. We have enormous respect for leading brands and look forward to working with them to help drive innovation together. And that's just on the hardware front.
Nicholas D. Woodman: We also intend to partner with leading helmet brands as an OEM supplier to help them tech enabled their own premium skus, we have enormous respect for leading brands and look forward to working with them to help drive innovation together.
Nicholas D. Woodman: We are also excited to build upon our synced mobile, desktop, and cloud software experience to make GoPro an even more powerful, yet simple solution for anyone wanting to create engaging content, regardless of what camera they use. We see this as a long-term opportunity, and we believe our 2.5 million subscribers and high retention rates are testament to that opportunity and our ability to execute. In February, we rolled out the initial release of our quick desktop app for Mac OS and our new Premium Plus subscription.
Nicholas D. Woodman: But that's just on the hardware front. We also are excited to build upon our sink mobile desktop and cloud software experience to make gopro and even more powerful yet simple solution for anyone wanting to create engaging content, regardless of what camera they use.
Nicholas D. Woodman: We see this as a long term opportunity and we believe our $2 5 million subscribers and high retention rates are testament to that opportunity and our ability to execute against it.
Nicholas D. Woodman: In February we rolled out the initial release of our Quik desktop App for Mac OS and our new premium plus subscription tier.
Nicholas D. Woodman: The Quick Desktop app, which is available at no additional charge to GoPro subscribers, brings the simplicity and convenience of automatic edits to the desktop, along with powerful yet convenient manual editing tools, synced editing between mobile and desktop apps, and the ability to import footage from any camera. We're planning to launch a Windows desktop app later this year. Our new Premium Plus $99 subscription tier includes an advanced desktop-based HyperSmooth Pro video stabilization feature, plus increased cloud storage for footage captured with any camera. GoPro subscribers at both the original $49.99 premium tier and the new $99.99 premium plus tier enjoy unlimited cloud storage of footage captured with their GoPro at original quality.
Nicholas D. Woodman: The quik desktop App, which is available at no additional charge to gopro subscribers brings the simplicity and convenience of auto Adam.
Nicholas D. Woodman: Of automatic edits to desktop users.
Nicholas D. Woodman: Along with powerful yet convenient manual editing tools synced editing between mobile and desktop apps and the ability to import footage from any camera.
Nicholas D. Woodman: We're planning to launch a windows desktop App later this year.
Nicholas D. Woodman: Our new premium plus $99 subscription tier includes an advanced desktop based Hyperscale Pro video stabilization feature plus increased cloud storage for footage captured with any camera.
Nicholas D. Woodman: Gopro subscribers at both the original 49, 99 premium tier and new 90, 999 premium plus tier enjoy unlimited cloud storage of footage captured with their gopro at original quality.
Nicholas D. Woodman: We've already added more than 20,000 premium plus subscribers, with nearly 80% having upgraded from the $49.99 annual premium tier. A solid start that we are excited about. In addition, our aggregate annual subscription retention rate increased to a new high of 69% in the first quarter, up 6% year over year.
Nicholas D. Woodman: We've already added more than 20000 premium plus subscribers with nearly 80% having upgraded from the 49 99 annual premium tier a solid start that we're excited about.
Nicholas D. Woodman: In addition, our aggregate annual subscription retention rate increased to a new high of 69% in the first quarter up 6% year over year.
Nicholas D. Woodman: We also made significant progress expanding our global retail presence during Q1. We added approximately 1000 new retail doors and, importantly, deepened relationships with key partners to improve in-store merchandising and brand exposure to excite consumers and drive sales. Since Q2 2023, we've added more than 4,200 doors and believe we're on track to add an additional 3,000 to 6,000 new doors by the end of 2025, enhancing our go-to-market capabilities for our expanding product roadmap.
Nicholas D. Woodman: We also made significant progress expanding our global retail presence. During Q1, we added approximately 1000, new retail doors, and importantly, deepened relationships with key partners to improve in store merchandising and brand exposure to excite consumers and drive sell through.
Nicholas D. Woodman: Since Q2 2023, we've added more than 4200 doors and believe we're on track to add an additional 3000 to 6000, new doors by the end of 2025, enhancing our go to market capabilities for our expanding product roadmap.
Nicholas D. Woodman: As mentioned previously, the bulk of our door count increase over the last year has been in EMEA, where in Q1 we saw a greater than 50% lift in retail channel sell-through year over year. This is a clear and positive sign that our strategy to grow retail channel sales is working.
Nicholas D. Woodman: As mentioned previously the bulk of our door count increase over the last year has been in EMEA, where in Q1, we saw a greater than 50% lift in retail channel sell through year over year.
Nicholas D. Woodman: This is a clear and positive sign that our strategy to grow retail channel sales is working.
Nicholas D. Woodman: In addition to growing the door count, we are refreshing our point of purchase merchandisers, expanding our in-store brand presence, and enhancing account management throughout the retail channel. For example, in North America, we're in the process of updating our end cap displays with Best Buy. This started with installing our larger eight-foot end cap displays in all Best Buy premium experience tours that feature a camera experience shop, which we completed in mid April.
Nicholas D. Woodman: In addition to growing door count we are refreshing our point of purchase merchandisers, expanding our in store brand presence and enhancing account management throughout the retail channel.
Nicholas D. Woodman: For example in North America, we're in the process of updating our end cap displays with best buy.
Nicholas D. Woodman: This started with installing our larger eight foot end cap displays in all best buy premium experience tours that feature a camera experience shop, which we completed in mid April.
Nicholas D. Woodman: And by mid July, we expect to have completely refreshed all of our merchandising displays in all Best Buy stores. Additionally, we're working closely with Best Buy to train select blue shirt employees on GoPro products to help them maximize GoPro sales in their top stores. Having a passionate and knowledgeable in-store salesperson can have a significant impact on our joint business, and we're very excited to be a part of this exclusive sales program with Best Buy, one of the world's largest consumer electronics retailers.
Nicholas D. Woodman: And by mid July we expect to have completely refreshed.
Nicholas D. Woodman: All of our merchandising displays in all best buy stores.
Nicholas D. Woodman: Additionally, we are working closely with best buy to train select blue shirt employees on gopro products to help them maximize gopro sales in their top stores.
Nicholas D. Woodman: Having a passionate and knowledgeable in store salesperson can have a significant impact on our joint business and we're very excited to be a part of this exclusive sales program with best buy one of the worlds largest consumer electronics retailers.
Nicholas D. Woodman: We believe growing our brand presence in thousands of new doors over the coming years will help maximize awareness of our brand and present our expanding product portfolio in the best possible way. As we previously highlighted in our Q4 2023 earnings commentary, we've been reinvigorating our efforts to drive awareness of our brand and all the major verticals that we serve. In Q1, our brand was prominently displayed at snow-focused events like the X Games and Free Ride World Tour, mountain biking with the Red Bull Hardline and DarkFest events, and two-wheel motorsports events including Supercross and MotoGP.
Nicholas D. Woodman: We believe growing our brand presence and thousands of new doors over the coming years will help maximize awareness of our brands and present, our expanding product portfolio in the best possible way.
Nicholas D. Woodman: As we previously highlighted in our Q4 2023 earnings commentary, we've been reinvigorating our efforts to drive awareness of our brand in all the major verticals that we serve.
Nicholas D. Woodman: In Q1, our brand was prominently displayed and snow focused events like the X games and free REIT World Tour in mountain biking, with the Red Bull hard line and dark first events and in two wheel motor sports events, including Super Cros and Moto GP.
Nicholas D. Woodman: We are also leveraging select events as platforms to host retail super clinics to grow engagement and product knowledge amongst key retailers that serve these important markets. There are many exciting initiatives underway at GoPro as we work to expand our camera business by growing our brand, strengthening our presence at retail, and developing a significantly broader offering of specialized, diversified products. Given consumers' growing appetite for content creation, we believe we are well-positioned to leverage our unique hardware and software ecosystem to serve consumers in exciting ways and grow our business over the long term, firmly establishing GoPro as the world's leading alternative capture company offering content capture and creation solutions that go well beyond the phone.
Nicholas D. Woodman: We are also leveraging select events as platforms to host retail super clinics to grow engagement and product knowledge amongst key retailers that serve these important markets.
Nicholas D. Woodman: There are many exciting initiatives underway at Gopro as we work to expand our Tam by growing our brands strengthening our presence at retail and developing a significantly broader offering of specialized diversified products.
Nicholas D. Woodman: Given consumers' growing appetite for content creation, we believe we are well positioned to leverage our unique hardware and software ecosystem to serve consumers in exciting ways and grow our business over the long term.
Nicholas D. Woodman: Firmly establishing gopro as the world's leading alternative capture company offering content capture and creation solutions that go well beyond the phone.
Nicholas D. Woodman: This transformation will take time, however. We expect that it won't be until 2025, as we enter the third year of our growth strategy, that we will show improved revenue and profit. We believe 2025 will be the first full year that we benefit from our investments and efforts, with an expected door count of 26 to 29,000 retailers and well on our way to having the broadest, most differentiated product portfolio in our history in 2026.
Nicholas D. Woodman: This transformation will take time however.
Nicholas D. Woodman: We expect that it won't be until 2025 as we enter the third year of our growth strategy that we will show improved revenue and profit growth.
Nicholas D. Woodman: We believe 2025 will be the first full year that we benefit from our investments and efforts with and expect the door count of 26 to 29000 retailers and well on our way to having the broadest most differentiated product portfolio in our history in 2026.
Nicholas D. Woodman: Due to the development process taking longer than expected, the launch of our new entry-level camera will push from Q2 to Q3 in 2024, and our new 360 camera will push to late Q4. This is expected to negatively impact revenue in a range of $65 to $85 million in 2024.
Nicholas D. Woodman: Due to the development process, taking longer than expected the launch of our new entry level camera will push from Q2 to Q3 in 2024.
Nicholas D. Woodman: And our new 360 camera will push to late Q4.
Nicholas D. Woodman: This is expected to negatively impact revenue in a range of $65 million to $85 million in 2024.
Nicholas D. Woodman: Importantly, our exciting new flagship Hero camera and all of its innovation and performance enhancements remain on track for a scheduled launch later this year. While 2024 will be challenging from a revenue and profitability perspective, we believe we have the right long-term strategy to expand GoPro into new markets in order to drive growth and profitability. We recognize that this will require patience, but we believe that this patience will be rewarded over the long term.
Nicholas D. Woodman: Importantly, our exciting new flagship hero camera in all of its innovation and performance enhancements remains on track for a scheduled launch later this year.
Nicholas D. Woodman: While 2024 will be challenging from a revenue and profitability perspective, we believe we have the right long term strategy to expand gopro into new markets in order to drive growth and profitability.
Nicholas D. Woodman: We recognize this will require patients.
Nicholas D. Woodman: But we believe that this patience will be rewarded over the long term.
Operator: Operator. We are now ready to take questions. If you would like to ask a question, then please, use Star, followed by one on your telephone keypad, two with.
Nicholas D. Woodman: Operator.
Speaker Change: We are now ready to take questions.
Operator: Okay.
Speaker Change: Thank you.
Operator: If you would like to ask a question, then please press star followed by 1 on your telephone keypad. To withdraw your question, please press star followed by 2. Please also ensure that your phone is unmuted locally.
Operator: If you'd like to ask a question. Please press star one.
Operator: To withdraw your question. Please press star two.
Operator: Please ensure that you cite is that muted lately.
Operator: As a reminder, that is staff led by one to ask a question. We will pause for a moment to allow questions to be registered. As a reminder, that is Starfleet Boy 1 to ask a question. Our first question comes from Erik Woodring from Morgan Stanley. Erik, please go ahead. Hi, thank you.
Operator: As a reminder.
Operator: Wanted to.
Speaker Change: I'll ask a question.
Operator: We will push for maybe the last question Keith you registered.
Operator: As a reminder, star one to ask a question.
Kansey: Hi, thank you for taking my question. This is Kansey on behalf of Erik Woodring.
Erik William Richard Woodring: Our first question comes from Eric which bring from Morgan Stanley Eric. Please go ahead.
Nicholas D. Woodman: So just wanted to ask you alluded to a delay in the launch of your new entry-level camera to the third quarter. So could you please walk us through what's unfolding behind the scenes? Like, what's the main factor that's causing the delay? And when did you realize this delay and how significant it was, and what gives you confidence that all of your other product launches remain on track this year? I have a follow-up question as well.
Kansey: Hi, Thank you for taking my question. This is Kathy on behalf of Eric Woodring.
Nicholas D. Woodman: So just wanted to ask you alluded to a delay in the launch of <unk>.
Nicholas D. Woodman: <unk> level camera to the third quarter. So could you please walk us through.
Nicholas D. Woodman: Unfolding behind the scenes like what's the main factor that is causing this delay and when did you re.
Nicholas D. Woodman: Realize this delay and how significant it was and what gives you confidence that all of your other product launches remain on track with Sierra and I have a follow up.
Nicholas D. Woodman: Okay.
Nicholas D. Woodman: Yeah.
Nicholas D. Woodman: I think the main focus for our 360 product, as with any of our products, is to launch the highest quality and experience possible. So we're taking more time to get that experience to live up to the brand promise for our customers.
Nicholas D. Woodman: <unk>.
Nicholas D. Woodman: The main focus for our 360 product as with any of our products is to launch the.
Nicholas D. Woodman: The highest quality.
Nicholas D. Woodman: Experience possible. So we're taking more time to get that experience.
Nicholas D. Woodman: To live up to the brand promise.
Nicholas D. Woodman: And the same goes for our entry-level product. Our flagship New Hero camera remains on track, and obviously, we're very excited about that. That's going to be a terrific new product that's going to really impress people with a number of new features and capabilities. And I just want to reiterate that that product remains on track. And what gives us confidence in the timeline for our various products is specifically that we're giving ourselves more time to launch these products at a performance and quality level that people have come to expect from GoPro.
Nicholas D. Woodman: For our customers.
Nicholas D. Woodman: And same goes for our entry level product.
Nicholas D. Woodman: Our flagship new hero camera.
Nicholas D. Woodman: <unk> remains on track and obviously, we're very excited about that.
Nicholas D. Woodman: And to be a terrific new product, that's going to really impress people with a number of new features and capabilities.
Nicholas D. Woodman: And I just want to reiterate that that product remains on track and what gives us confidence in the timeline.
Nicholas D. Woodman: For our various products as spur.
Nicholas D. Woodman: Specifically that we're giving ourselves more time to launch these products at a performance and quality level that people have come to expect from Gopro.
Unknown Executive: Yeah, and actually, maybe I'll come over the top on that one before the next question.
Nicholas D. Woodman: Yes.
Nicholas D. Woodman: And then maybe I'll come over the top maybe I'll come over the top on that one before the next question.
Unknown Executive: You know, the quality piece is really important. And, you know, I'd argue HERO 12 Black is arguably the best quality product we put out in the market, based on the accolades from people who use it. But it manifests itself in different ways.
Unknown Executive: Quality piece.
Unknown Executive: Really important.
Unknown Executive: I would argue a hero 12 block.
Unknown Executive: Arguably the best quality product, we put out in the market.
Unknown Executive: From the accolades from people, who use it but it manifests itself in different ways Mike.
Unknown Executive: Like, you know, it's got the lowest return rate of any camera we've ever seen. It also has the lowest warranty rates. The warranty rates are always small anyway, but they're cut in half or better. The call volumes and the customer support are less than half of what they would be with other cameras. So, you know, the team's done a great job improving the quality of the products we put out, and that's what our customers expect. So we'll continue to do that and make sure they're ready when they're ready.
Unknown Executive: It's got the lowest return rate of any camera.
Unknown Executive: It has the lowest warranty raytheon warranty rates or other small anyway.
Unknown Executive: Cut in half or better.
Unknown Executive: On the call volumes into customer support.
Unknown Executive: Less than half of what they would be in other cameras. So yes.
Unknown Executive: The team has done a great job improving the quality of the products, we put out and that's.
Unknown Executive: That's what our customers expect so.
Unknown Executive: We will continue to do that and make sure they're ready when they are ready.
Unknown Executive: Okay.
Unknown Executive: Yes, sounds good. So just as a follow-up, even if we adjust for the push out for the, (inaudible) I'm high in the below. So how much of that is macro driven, but or micro driven, like how would you describe this as elongating replacement cycles or a pause? Yeah, maybe I'll start on this one, and Nick can...
Speaker Change: Yes sounds good.
Speaker Change: Thanks Shannon.
Unknown Executive: Just on the just as a follow up if even if we adjust for the push out for the <unk> like your revenue guidance is.
Nick: Hi, Hello, CFO, so how much of that is macro driven by or micro driven like how.
Speaker Change: Would you would you ascribe to Ellen gating replacement cycles or a pause in demand for new product launches. Thank you.
Unknown Executive: Yeah, maybe I'll start on this one and Nick can come into it. We've anticipated that retail would grow this year. And in fact, you know, retailers are reporting flat to down revenue in their businesses, largely due to macroeconomic factors. In addition, we're seeing retailers also carrying less inventory. And the economic conditions, I think in the U.S. and China are good examples of that. We're seeing it reported almost every day.
Speaker Change: Yes, maybe I'll start on this one.
Nick: Come into it.
Unknown Executive: We anticipated that retail would grow in there this year and in fact, many retailers are reporting flat to down revenue in their businesses.
Unknown Executive: Largely due to macroeconomic factors.
Unknown Executive: We're seeing retailers also carrying less inventory.
Unknown Executive: And the economic condition in the U S and China are good examples of.
Nick: Is that Youre seeing reported almost every day on the flip side, we have been able to grow.
Unknown Executive: On the flip side, we've been able to grow in Europe, and it was up 13% year over year in the quarter. And that was through expanding our door count and our distributors. I think we added twice the number of distributors over the last year. And the increase in distribution of doors in Europe has overcome or helped offset the impact of the larger macroeconomic environment in Europe.
Unknown Executive: Europe.
Unknown Executive: 13% year over year in the quarter and that through expanding our door count and our distributors.
Unknown Executive: Twice the number of distributors over the last.
Unknown Executive: And the increase in distribution and doors in Europe have overcome or helped to offset the impact of larger.
Unknown Executive: Economic environment in Europe. So we are seeing positive development from that perspective on getting door count.
Unknown Executive: So we are seeing, you know, positive developments from that perspective on getting door count. And I guess the other one I'll point out is our subscription business continues to be a bright spot. We had 48% attached in Q1, a new record 69% annual aggregate retention rate. And so, yeah, still at 2.5 million subs. And we're adding, as Nick said, 20,000 plus premium plus subscribers. So definitely, people who are buying the cameras are engaged and staying engaged with the subscription and with the product.
Unknown Executive: And I guess the other one I'll point out is our subscription.
Unknown Executive: <unk> business continues to be a bright spot we had 48% attached in Q1.
Unknown Executive: Our new record, 69% annual aggregate retention rate.
Unknown Executive: And so.
Unknown Executive: Yes, it's still at $2 5 million subs and we're adding.
Unknown Executive: Nick said 20, plus premium plus subscribers so.
Unknown Executive: Definitely people, who are buying the cameras are engaged in.
Unknown Executive: Against subscription and with the products.
Speaker Change: Thank you.
Operator: Our next question comes from Andrew Northcutt from Oppenheimer. Andrew, please go ahead.
Unknown Executive: Our next question comes from Andrew <unk> from Oppenheimer Andre. Please go ahead.
Andrew Ellison-Martin: Hi guys, this is Andrew Ellison-Martin. I just have two questions today.
Andrew Northcutt: Hi, guys. This is Andrew on for Brian I, just have two questions today.
Nicholas D. Woodman: Well, you said that 80% of the premium plus subscribers have upgraded from the original premium tier. So where did the other 20% come from that I'm following up on?
Andrew Northcutt: When you said that 80% of the premium plus subscribers have upgraded from the original premium tier.
Nicholas D. Woodman: So where does the other 20% comes out.
Andrew Northcutt: And then I have follow up.
Nicholas D. Woodman: And the other 20% were people who were new to a subscription, and they bought the Premium Plus subscription for $100.
Andrew Northcutt: And the other 20% where people who are new to our subscription and they bought the premium plus subscription or a hunter at all.
Nicholas D. Woodman: Okay, got it. And then, you know, in the prepared remarks, or the measurement commentary, rather, you cite a little bit of increasing competition. Could you give us a little more details on the competitive pressure? Is that coming from, you know, heavier discounting, feature differentiation? Any extra detail would be great.
Nicholas D. Woodman: Okay got it and then.
Nicholas D. Woodman: In the prepared remarks made some commentary there.
Nicholas D. Woodman: You cited a little bit of increasing competition could you give us a little more details on the competitive pressure is that coming from heavier discounting feature differentiation.
Nicholas D. Woodman: Any extra detail would be great.
Nicholas D. Woodman: Okay.
Nicholas D. Woodman: Yeah, we've seen some increased competition in our poor hero camera category specifically through discounting. And discounting is questionable, whether that's at a sustainable level for our competitors, but that's what's been impacting the core hero camera business specifically is extremely discounted product, which tells you that they were likely having trouble moving that product without discounting, and the sell-through data that we were seeing was indicating that as well. And then in the 360 space, you know, we haven't come out with a new Max 360 camera since Max's launch in 2019. And during that period, the 360 category has grown considerably.
Nicholas D. Woodman: Yes.
Nicholas D. Woodman: Seeing some increased competition in our core hero camera category specifically through.
Nicholas D. Woodman: Discounting.
Nicholas D. Woodman: And discounting is questionable whether that's at a sustainable level.
Nicholas D. Woodman: For our competitors.
Nicholas D. Woodman: But thats.
Nicholas D. Woodman: That's what's been impacting the core hero camera business, specifically is extremely discounted product, which.
Nicholas D. Woodman: It tells you that they were likely having trouble.
Nicholas D. Woodman: Moving that product without discounting.
Nicholas D. Woodman: Sell through data that we were seeing.
Nicholas D. Woodman: Seeing was indicating that as well.
Nicholas D. Woodman: And then in the 360 space.
Nicholas D. Woodman: Sure.
Nicholas D. Woodman: We haven't come out with a new.
Nicholas D. Woodman: <unk> 360 cameras.
Nicholas D. Woodman: Max's launch in 2019 and during that period.
Nicholas D. Woodman: 360 category grew considerably and so we're really excited.
Nicholas D. Woodman: And so we're really excited for Max too and excited to take back a considerable share. We believe with the launch of that product, unfortunately, that product pushing out to late Q4 doesn't help us on that front until then. But that's another area where, you know, we've been absent with new product introductions for a few years, and Max, too, represents a significant opportunity for us to take back share there over time. Those are the two primary areas of competition that we've been seeing.
Nicholas D. Woodman: For Macs too.
Nicholas D. Woodman: We're excited to take back considerable share we believe with the launch of that product Unfortunately that product pushing out to late Q4.
Nicholas D. Woodman: It doesn't help us on that front until then.
Nicholas D. Woodman: But that's another area where.
Nicholas D. Woodman: We've been absent with new product introductions for a few years and Max two represents a significant opportunity for us to take back share there over time those are the two primary.
Nicholas D. Woodman: Areas of competition that we've been seeing.
Unknown Executive: Yeah, Nick, I'd add on to that. And the price discounting continues, actually, in China, as well. And the combination of the economy in China and folks buying more local brands versus GoPro, which is, I think, a phenomenon we're seeing across the Chinese market with other brands. So that's definitely impacted us as well.
Speaker Change: Yes, Nick I'd add onto that.
Unknown Executive: The price discounting continue actually in China.
Unknown Executive: As well.
Unknown Executive: The combination of the economy in China and.
Unknown Executive: Folks buying more local brands from Gopro, which is I think a phenomenon we're seeing.
Speaker Change: Cross the China market with other brands, so that's definitely impacted us as well.
Unknown Executive: Yes.
Nicholas D. Woodman: Yeah, I would say a bright spot, or a few bright spots with regard to competition. Our upcoming new entry-level camera that we're launching in Q3 has received really positive feedback from retailers and distributors, and as well as athletes and influencers that we've shared that product with. So, we're very encouraged by the TAM expanding potential this entry-level product will have. It's a different type of product than we've made before, and it's really in response to consumer research that we did for what not just entry-level, but what consumers in general want to see from GoPro. So we think we're hitting it on all marks with that product.
Speaker Change: Yes, I would say a bright spot.
Nicholas D. Woodman: A few bright spots with regards to competition is.
Nicholas D. Woodman: Our upcoming new entry level camera that we're launching in Q3.
Nicholas D. Woodman: Has received really positive.
Nicholas D. Woodman: Feedback from.
Nicholas D. Woodman: Retailers and distributors and as well at least and Influencers that we've shared that product with.
Nicholas D. Woodman: So we're very encouraged by.
Nicholas D. Woodman: The Tam expanding potential this entry level product will have its a different type of product that we've made before.
Nicholas D. Woodman: And it's really in response to your consumer research that we've done for.
Nicholas D. Woodman: What.
Nicholas D. Woodman: Not just entry level, but what consumers in general want to see from Gopro.
Nicholas D. Woodman: Hitting it on all marks with that product.
Nicholas D. Woodman: And that's coming in Q3. And then, as well, our new flagship Hero camera, as I previously mentioned, is on track for launch later this year. And we think that it's going to redefine the Hero camera category with its features and capabilities. And then, of course, when we do launch Max 2, towards the end of Q4, we're expecting that to be very competitive as well. So on all fronts, we think that we're well positioned, but we've got a little bit of a ways to go to get to launch those products.
Nicholas D. Woodman: And Thats coming in Q3, and then as well.
Nicholas D. Woodman: Our new flagship hero camera as I previously mentioned is on track for launch later this year and we think that that's going to be you're redefining.
Nicholas D. Woodman: The hero camera category with its features and capabilities and then of course, when we do launch Max too.
Nicholas D. Woodman: Towards the end of Q4, we're expecting that to be very competitive as well so.
Nicholas D. Woodman: On all fronts, we think that we're well positioned but.
Nicholas D. Woodman: We've got a little bit of ways to go to get to launch those products.
Nicholas D. Woodman: Okay.
Andrew Ellison-Martin: Perfect. I appreciate the call. Thank you.
Speaker Change: Perfect got it thank you.
Speaker Change: Thank you.
Operator: We have no further questions, so I will now hand over to the management team for closing remarks.
Andrew Ellison-Martin: Nathan asked the question.
Speaker Change: Backups to the management team for closing remarks.
Nicholas D. Woodman: Well, thank you, operator, and thank you everyone for joining today's call. As we mentioned, we believe that we have the right long-term strategy to expand GoPro into new markets in order to drive growth and profitability. However, we recognize that this will require patience, but we believe that patients will be rewarded over the long term. Thank you very much, everybody, for joining today. This is Team GoPro.
Speaker Change: Well. Thank you operator, and thank you everyone for joining today's call as we mentioned we believe that we have the right long term strategy to expand gopro into new markets in order to grow to drive growth and profitability.
Nicholas D. Woodman: We recognize that this will require patients, but we believe that patients will be rewarded over the long term.
Speaker Change: Thank you very much everybody for joining today. This is team gopro signing off.
Operator: This concludes today's call. Thank you for joining us, everyone. You may now disconnect your line.
Speaker Change: This concludes today's call. Thank you for joining everyone. You may now disconnect your lines.
Nicholas D. Woodman: This is Team GoPro.
Speaker Change: Okay. This is team gopro signing off.