Q2 2024 GoPro Inc Earnings Call

Yeah.

[music].

Cameron: Good afternoon. Thank you for attending the GoPro second quarter 2024 earnings call. My name is Cameron, and I'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to your host, Chris Clark, Vice President of Corporate Communications, GoPro. You may proceed.

Chris Clark: Thank you, Cameron. Good afternoon, and welcome to GoPro's second 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 second quarter 2024 performance as well as outlook, please read our Q2 2024 earnings press release and the management commentary we posted to the investor relations section of GoPro

Chris 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 the 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.

Chris 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 31, 2023, which is on file with the Securities and Exchange Commission and as updated in filings with the SEC, including the quarterly report on Form 10-Q for the quarter ended June 30, 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.

Chris 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. Unless otherwise noted, all income statement-related numbers that are discussed in the management commentary and remarks today, other than revenue, are non-GAAP.

Nicholas Woodman: Thanks, Chris, and thanks, everybody, for joining us today. In Q2, we achieved our sell-through goal of more than 600,000 units and reduced channel inventory slightly in the quarter as we head into the second half of the year. GoPro exceeded guidance with revenue of $186 million, a gross margin of 30.7%, and a non-GAP EPS loss of $24.7 million. Subscription and service revenue grew 8% year-over-year to $26 million, driven by 4% growth in subscribers to 2.53 million and a 4% increase in ARPU due to improving retention.

By 4% growth in subscribers to two $5 3 million.

And a 4% increase in <unk> due to improving retention rates.

Nicholas Woodman: We also continue to expand our global retail presence, adding approximately 800 new doors across all regions, with the strongest door count continuing in EMEA, along with expansion in Latin America. We've now added more than 5,000 new retail doors since May of 2023, when we prioritized growing our brand at retail globally. Our retail expansion plans are on track with the door count growth expectations we've previously discussed.

We also continued to expand our global retail presence, adding approximately 800, new doors across all regions with the strongest door count.

Coming continuing in EMEA, along with expansion in Latin America.

We've now added more than 5000, new retail doors since may of 2023, when we prioritize growing our branded retail globally.

Our retail expansion plans are on track with the door count growth expectations, we have previously discussed.

Nicholas Woodman: A Q2 win is our partnership with SoftBank Group's SBC&S Corporation to expand distribution in Japan, ensuring GoPro products are more widely available, while also improving in-store merchandising and brand exposure. SBC&S will distribute GoPro cameras and accessories through its own SoftBank stores, as well as retailers throughout Japan, including two of Japan's largest consumer electronics retailers, Yodabashi and Yamada. While our Q2 results largely met or exceeded expectations, we're not satisfied with the way 2024 has taken shape. We previously shared that 2024 would be a transitional year.

Q2 win is our partnership with Softbank group's SB CNS Corporation to expand distribution in Japan, ensuring gopro products are more widely available while also improving in store merchandising and brand exposure.

S. B CNS will distribute gopro cameras and accessories through their own softbank stores as well as retailers throughout Japan, including two of Japan's largest consumer electronics retailers Yoda Bashi and Yamana.

While our Q2 results largely met or exceeded expectations, we're not satisfied with the way 2024 is taking shape.

We previously shared that 2024 would be a transitional year.

Nicholas Woodman: However, lower-than-expected consumer confidence, increased competition, and our executional challenges are resulting in reduced unit revenue and profitability expectations for the year. We believe we can achieve profitability in 2025 through a combination of new product launches and significantly reduced operating expenses, which will begin in the second half of 2024 and continue in 2025, details of which Brian addresses in his comments.

However, lower than expected consumer confidence increased competition and our execution challenges are resulting in a reduced unit revenue and profitability expectations for the year.

Nicholas Woodman: We are seeing growth in the digital imaging market driven by new product introductions, catering to consumers' growing interest in alternative forms of capture beyond the phone, including growth in 360-degree cameras, where we believe we can recover significant share in 2025. We believe broadening our product portfolio is key to growing our business and restoring long-term profitability. Much like how Garmin has built a successful, diversified business by addressing the specialized GPS-driven and data capture needs of various markets, we believe GoPro has the opportunity to leverage our category leadership in digital imaging to deliver a broader range of specialized image capture solutions in markets we currently serve as well as new ones where our brand, Our previously announced expansion into tech-enabled motorcycle helmets is an example of that, and we are pursuing similar exciting opportunities across a number of sectors.

Nicholas Woodman: Our rollout of new products starts next month with the launch of our new, significantly enhanced flagship camera, HERO 13 Black, along with our new $199 entry-level HERO camera that features an entirely new design that we fully expect to wow both consumers who are new to the brand as well as existing customers, who we believe will see value in the unique characteristics of HERO's exciting new form factor and capability. Importantly, our new $199 Hero camera is totally redesigned from the ground up to be a better margin product than our current low margin entry-level cameras.

Nicholas Woodman: And we believe this will have a material positive impact on GoPro's gross margin in 2025. Looking ahead to 2025 and beyond, we are committed to operating GoPro as a profitable business. Our brand and products are too strong, and our value creation opportunity too significant, for us to accept otherwise. Our plan is to deliver 2025 profitability through significantly reduced 2025 operating expenses, while executing on our roadmap diversification strategy that we believe is key to restoring growth and long-term success for GoPro. Now, Brian will take us through details of the second quarter and share our outlook.

Brian Mcgee: Revenue in the second quarter of 2024 was $186 million. 9% above the midpoint of our guidance.

Brian Mcgee: Largely driven by increased demand for our flagship Hero 12 Black camera in Europe and North America, gross margin was 30.7% compared to 31.6% in Q2 2023. Our subscriber base increased to 2.53 million in a quarter, a 4% growth year-over-year, and up slightly according to, Our subscriber base represents approximately $125 million in annual recurring revenue. And cash was flat sequentially; a significant inventory reduction in advance of new product launches offset losses in the quarter.

Brian Mcgee: Notable second quarter performance highlights. Subscription and service revenue grew 8% year-over-year to $26 million, primarily from improved retention rates that resulted in 4% ARPU growth. Subscribers grew 4% year-over-year to 2.53 million, including 33,000 Premium Plus subscribers. Aggregate annual subscription retention was 68%, a 7% improvement year over year.

Brian Mcgee: Subscription to the tax rate from cameras sold across all channels was 45% in line with prior year tax. Retail revenue was $137 million, or 74% of total revenue, down 17% year-over-year. GoPro.com product revenue was $23 million, or 12% of total revenue. GDFP was $323, compared to $342 in Q2 2023. Gap loss per share was 31 cents, and non-GAP loss per share was 24. Sell-through was slightly above 600,000 units, down 9% year over year. Channel inventory decreased sequentially to approximately 700,000 units.

Brian Mcgee: As Nick noted, 2024 has clearly been a challenging year for GoPro. We've been impacted by delayed product launches, needed consumer spending when products were not on price promotion, the continued decline of camera sales at gopro.com, macroeconomic concerns globally, increased competition globally, and more recently, foreign exchange rate fluctuations in China and Japan. Moreover, we're factoring in a further launch delay of our new 360-degree camera into 2025. This is expected to negatively impact revenue in a range of $20 to $25 million in Q4 2024 relative to prior guidance. Cumulative effect of delayed product launches for 2024 is expected to impact sales by approximately $100 million.

Brian Mcgee: Our expectation, based on the above factors, is for unit sales in 2024 to be in the range of $2.6 million to $2.7 million, and revenue in the range of $850 million to $870 million, or down 15% and 13% from the prior year, respectively. However, as Nick noted, we are seeing signs of growth in the overall digital imaging market and are on track to introduce two new cameras in September, including our new flagship with significantly enhanced capabilities and our new 199 stereo camera that features a totally new form factor and attributes that we believe will excite both new and existing customers, as well as a new 360-degree camera in 2025.

Introduced two new camera in September.

<unk>, our new flagship.

And then secondly, enhanced capabilities and a new 199 I'm sure a camera that features a totally new form factor and attributes that we believe will excite both new and existing customers.

As well as the new 360 degree camera in 2025.

Brian Mcgee: As we mentioned, the digital imaging category is growing, of which the 360 category is growing faster. We sold out of our remaining 360 degree camera inventory in Q4 2023, and our 2024 results to date plus second half guidance reflects essentially no sales of 360 degree cameras in 2024. For reference, the 360-degree camera category represented mid-single digits of revenue, a percentage of revenue in 2022 and 2023, and could represent as much as 5% to 10% of revenue in 2025, making this a renewed growth category for GoPro.

As we mentioned the digital imaging category with growing of which the 360 category is growing faster.

We sold out of our remaining 360 degree camera inventory.

In Q4, 2023, and 2024 result to date clock second half guidance reflects essentially no sales of 360 degree cameras.

In 2024.

For reference the 360 degree camera category represented mid single digits of revenue.

Percentage of revenue in 2022, and 2023 and could represent as much as 5% to 10%.

Now in 2025, making this the renewed growth category for Gopro.

Brian Mcgee: We are committed to being profitable in 2025 and plan to reduce 2025 operating expenses to 320 million plus or minus five, a reduction of nearly $50 million from the midpoint of projected 2024 levels. We have a reasonable line of sight to reducing operating expenses by $50 million from 2024 to 2025, which is expected to be driven by a reduction in nonrecurring technology development expenses of approximately $20 million and reductions in Marketing, Salary Expenses, and Other Operating Expenses.

We are committed to being profitable in 2025 and plan to reduce 2025 operating expenses to $320 million, plus or minus 5 million a reduction of nearly $50 million.

The midpoint of our projected 2024 level.

We have reasonable line of sight.

To reducing operating expenses.

$5 million to $50 million from 2024 to 2025, which.

It is expected to be driven by a reduction in nonrecurring technology development expenses of approximately 20 million.

And reductions in marketing salary expenses and other operating expenses.

Brian Mcgee: In addition, we will continue to look for ways to reduce expenses further in 2025. In summary, 2024 remains a year of transition, but without, but with significant opportunities ahead, including our two camera launches next month and our growing global footprint of our anticipated TAM expansion to product diversification. As Nick stated, we are committed to operating GoPro as a profitable business. Our brand and products are too strong, and our value creation opportunity too significant, for us to accept otherwise.

In addition, we will continue to look for ways to reduce expenses further in 2025.

In summary, 2024.

It remains a year of transition.

Without.

But with significant opportunities ahead, including our two camera launches next month.

Nick: And a growing global footprint of our anticipated Tam expansion through product diversification as Nick stated, we are committed to operating in gopro as a profitable business or brand and products or too strong and a value creation opportunity too significant for us to accept the otherwise.

Brian Mcgee: To that end, we expect gross margin to improve in the second half of 2024 and carry into 2025, combined with significantly lower operating expenses in 2025 to prioritize a return to profitability. Operator, we are now ready to take questions.

Nick: To that end, we expect gross margin to improve in the second half of 2024 and carry into 2025 combined with significantly lower operating expenses in 2025 to prioritize a return to profitability.

Speaker Change: Operator, we're now ready to take questions.

Operator: Thank you. We will now begin the question and answer session. 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 that question, please press star followed by two. Again, to ask another question, press star one.

Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star followed by one on your telephone keypad.

Operator: Any reason you would like to remove that question. Please press star followed by two again.

Ask a question press Star one and as a reminder, if you were using a speaker phone. Please remember it's a pick up your handset before asking your question and we will pause briefly as questions are registered.

Operator: And as a reminder, if you're using a speakerphone, please remember to pick up your handset before asking a question. And we will pause here briefly as questions are registered. The first question is from the line of Erik Woodring with Morgan Stanley. You may proceed. Erik, your line might be muted. In this case, the next question comes from the line of Alicia Reese with Wedbush Securities. You may proceed.

The first question is from the line of Erik Woodring with Morgan Stanley.

Proceed.

Speaker Change: Craig your line might be muted.

Speaker Change: And in this case the next question comes.

Speaker Change: The line of Alicia Reese with Wedbush Securities You May proceed.

Alicia Reese: Hey guys, thanks for taking my question. I wanted to see if you could talk a little bit about what's driving the delays, whether they're on the design side or the manufacturing side, and what you're doing to alleviate those issues, and what level of confidence you have that they will be alleviated by next year.

Alicia Reese: Thank you.

Alicia Reese: Hey, guys. Thanks for taking my question.

I wanted to see if you could talk a little bit about what was driving the delays whether they're on the design side or the manufacturing side.

Speaker Change: And what youre doing to alleviate those issues.

Speaker Change: Level of competency have said that they will be alleviated by next year.

Speaker Change: Oh.

Nicholas Woodman: Thanks, Alicia. The delays are due to pushing innovation and seeking to deliver the best possible product experience for our customers and our commitment to not launching a product until we've achieved the level of quality and performance that GoPro is known for.

Alicia: Thanks Alicia.

Speaker Change: The delays are due to.

Speaker Change: Our pushing innovation and seeking to deliver the best possible product experience for our customers and our commitment to not launching a product until.

Speaker Change: We've achieved that.

Speaker Change: The level of quality and performance that Gopro is known for.

Speaker Change: So it's unfortunate.

Speaker Change: That we did have.

Speaker Change: The two product delays the good news is that when we do launch the products one of them.

Speaker Change: Next week the next our next month.

Speaker Change: We're we're.

Speaker Change: Very confident that theyre going to excite and engage consumers.

Speaker Change: Zero 13, Black is on track and will launch on time and as.

Speaker Change: That's very significant.

Speaker Change: Capability enhancements that that product that we are super Super excited about and on our entry level product.

Speaker Change: It has a number of unique characteristics in a new form factor that we think is really going to excite people and stimulate the market at the entry level, but importantly.

Speaker Change: Its characteristics will we believe will be very appealing to existing customers as well.

Speaker Change: What I mean by that will be obvious when we launch it.

Speaker Change: Next month, and then as it relates to.

Speaker Change: Our new 360 camera Max too.

Speaker Change: We are feel.

Speaker Change: Feeling really good about that product in.

Speaker Change: In terms of how it's going to fare in the market competitively as Brian noted.

Speaker Change: 360 is a growing category in digital imaging digital imaging is growing overall and 360 cameras are playing significant role in that and were previously a market leader in that category, we established that category. Our Max camera was the category leader.

Speaker Change: Until we sold through at all at the end of 2023.

Speaker Change: As Brian noted, we're not recognizing any revenue.

Brian: In 2024, and 360 cameras other than the small number of units that we sold on Gopro Dot com that are now sold out. So 2025 represents a very significant revenue opportunity.

Speaker Change: And opportunity to recoup a lot of share in the $3 60 category that we're really well known for.

Speaker Change: And we're very well set up for that launch.

Speaker Change: And in terms of confidence of launching it in 2025, we have full confidence in that so.

Speaker Change: Not the execution that we would like to see.

Speaker Change: But in the end when we do launch the products, where we're very confident in that.

Speaker Change: Thanks, and a couple of follow ups, if I may so just to clarify there were no.

Speaker Change: Issues with with.

Speaker Change: Part citizen manufacturing on anything on that procuring.

Speaker Change: Any components correct no Alicia pie chain has done an issue sure.

Speaker Change: The 360 degree camera or any of our cameras actually.

Speaker Change: And the 24 9 billion just driving innovation.

Speaker Change: Yeah.

Speaker Change: Okay, Okay great.

Speaker Change: Yes, that's exciting in that case.

Speaker Change: I can't wait to see what you guys come out with on the 360.

Speaker Change: As a follow up wondering wanting to know that since there are sellouts in that this year and you still have the second half of the year to go.

Speaker Change: Do you have any concerns about losing market share what's the competitive landscape in the 360 is that would would or would not concern you.

Speaker Change: Okay.

Speaker Change: Well I mean of course, we're going to lose market share.

Speaker Change: Oh go ahead.

Speaker Change: Product that we're selling into the market so.

Speaker Change: That's a missed opportunity due to mis execution on our part.

Speaker Change: And not launching our products on time as as anticipated.

Speaker Change: But in terms of the opportunity in 2025.

Speaker Change: With how our product stacks up against the competition and how we believe our new products will fare and what we believe our go to market strategy is it gives us a lot of confidence in our ability to quickly recruit market share and restore 360 sales as a meaningful percentage of revenue as Brian noted.

Speaker Change: <unk>.

Brian: We're anticipating somewhere between 5% and 10% of our revenue coming from 360 in 2025, so that that gives you a <unk>.

Speaker Change: A sense of.

Speaker Change: The significant rebound opportunity that we have and I think it's important to note that gopro established this category.

Speaker Change: So awareness for Gopro as a leading brand in the category is very strong demand that we see and hear and feel from the channel and from consumers is very strong. So it's not as though we're going to be entering the $3 60 category from out of nowhere.

Speaker Change: We're like Oh, Wow Gopro is entering 2016, we established a category.

Speaker Change: So that's.

Speaker Change: A significant opportunity for us to make.

Speaker Change: Quick inroads back into the category with the product that we have planned for 2025.

Speaker Change: There is no credit history that product once it comes out.

Speaker Change: Yeah I'll leave it there is no there's no there's no there's no beating around the bush on the execution Miss on our front, we are on that but there is also no.

Speaker Change: Beating around the bush as to the opportunity that we have to come back in 2025.

Speaker Change: Understood Alright, thanks for answering my questions.

Speaker Change: Thank you.

Speaker Change: The next question is from the line of Martin Yang with Oppenheimer. You May proceed.

Martin Yang: Hi, Good afternoon. Thank you for taking my question can you maybe dig into the cost cuts or sources of cost savings in 'twenty five.

Speaker Change: You know what.

Speaker Change: <unk>.

Speaker Change: How would you say the development pipeline and development cost compare between 'twenty four 'twenty five.

Speaker Change: Okay.

Martin Bryan: Yeah, Hi, Martin Bryan.

Speaker Change: Well in my prepared remarks, I mentioned that we would reduce operating expenses.

Speaker Change: Down $50 million from our projections in 2024.

Speaker Change: About $20 million of that is due to basically nonrecurring engineering development expenses that were incurred in 2020 for that.

Speaker Change: Don't have in 2025, so a lot of innovation that's going into cameras.

Speaker Change: 20th score is about 25 and beyond are basically behind us now from.

Speaker Change: That perspective.

Speaker Change: And so.

Speaker Change: We've got the opportunity now to <unk>.

Speaker Change: To me the annual rate based on the spending we've gotten in 'twenty four and the 25.

Speaker Change: <unk>.

Speaker Change: In addition, we'll review.

Speaker Change: Reductions in marketing and some salary expenses.

Speaker Change: Across the company as well as other <unk>.

Speaker Change: Operating expenses.

Speaker Change: To continue to reduce.

Speaker Change: Oh I'll add that.

Speaker Change: As a reminder, during Covid, we were able to take operating expenses down below 300 million in 2020. So we have ways to go drive for efficiencies and an operating result, but but this time without really impacting our roadmap because a lot of the heavy lifting.

Speaker Change: We've had to do for 'twenty five 'twenty six.

Speaker Change: Behind that.

Speaker Change: From a.

Speaker Change: Kind of a perspective right.

Speaker Change: Okay.

Speaker Change: My second question is regarding.

Speaker Change: Your perception of your consumer profiles.

Speaker Change: Any updates now.

Speaker Change: Who do you consider your coal camera users and would you consider.

Speaker Change: As a.

Speaker Change: Incremental users you could.

Speaker Change: Actually gain from competitors or a problem.

Speaker Change: From.

Speaker Change: Okay.

Speaker Change: Market data, you're currently does not address.

Speaker Change: Yeah.

Nicholas Woodman: Our primary customers are content creators, bloggers, active consumers, sorry, we call them active capturers, who are interested in both participating in active lifestyles and capturing content during their activities and experiences, either for personal review or for sharing socially, as well as our customers include professionals, whether they're the world's top influencers, creating content for their personal brands, film, and television. As we noted in our prepared remarks, the written version, the new The producers and directors just decided to use GoPro, which was phenomenal, so thank you very much to them. And, in terms of an opportunity for growth and expanding our TAM and growing top line margin and subscription.

Speaker Change: Uh Huh are our primary customers are content creators bloggers active consumers.

Speaker Change: Sorry, we call them active captures.

Nicholas Woodman: As I shared, we sold our last 360 Max camera into the channel at the end of 2023, certainly going to help us win back share. And we believe at a meaningful level that is going to meaningfully contribute to top line and bottom line growth. So that's a very big lever for us. Then you get into our other products of which I can speak of the Hero line of Hero 13 Black which is launching next month, you know, that's really going to allow people in terms of expanded capability and how we're just continuing to build on the Hero camera's ability to not only serve, you know, active consumers that are looking to use Hero 13 Black as a way to document their active lifestyle, but also the growing vlogger market, the pro content creator, the influencer who are all looking for, you know, differentiated looks for their content to help keep their brand and their content fresh and their audiences engaged.

Speaker Change: Who are interested in both.

Speaker Change: Participating in active lifestyles and capturing content during their activities and experiences either for personal review or sharing socially as well as our customers include.

Speaker Change: Professionals.

Speaker Change: Whether they're in the world's top influencers, creating content for.

Speaker Change: Their personal brands.

Speaker Change: Film and television as we noted in our.

Speaker Change: Our prepared remarks.

Speaker Change: The written version.

Speaker Change: The new twisters.

Speaker Change: Locke Buster film features gopro being used throughout.

Speaker Change: The film and Theres a lot of great.

Speaker Change: Presentation in there for us, which by the way is not a paid relationship or anything like that the producers directors just decided to use gopro, which was phenomenal. So thank you very much to them.

Speaker Change: And in terms of.

Speaker Change: And opportunity for growth and expanding our Tam and growing top line margin.

Shannon: Script Shannon.

Shannon: The opportunity is to diversify our product road map.

Shannon: Significantly beyond.

Speaker Change: What we offer today the consumers.

Speaker Change: Hero camera is a phenomenal tool a bit of a Swiss army knife, if you will.

Speaker Change: But there is an opportunity for us to develop a broader range of products that more specifically address the needs not only of the markets that we serve today.

Speaker Change: But also new markets as well.

Speaker Change: We ask a lot of the hero camera.

Speaker Change: Intended originally to be all things to all people and it has done a phenomenal job of that but as you can imagine there is an opportunity to create a.

Speaker Change: Products that are more tailored for some of the more specific needs of some of our customers.

Speaker Change: The four.

Speaker Change: For a foray into tech enabled motorcycle helmets is an example of that.

Speaker Change: It's serving a market where our brand is very strong.

Speaker Change: But doing so with that.

Speaker Change: A totally new tech enabled helmet product.

Speaker Change: That that more specifically needs meets the needs of motorcyclists today.

Speaker Change: Perhaps then attaching separate third party accessories to the helmet.

Speaker Change: So in that way, we can create more value more performance and more convenience.

Speaker Change: For a market, where our brand is strong, but maybe we don't have the most.

Speaker Change: <unk> our tailored.

Speaker Change: Product solution that would allow us to grow even more in that market.

Speaker Change: We're targeting other.

Speaker Change: Similar types of product opportunities in markets that we already serve than when youre getting into blogging and more professional content creation a roadmap contemplates.

Speaker Change: That as well.

Speaker Change: And so on software, but I can't go into any more detail about it but what I would say is an important word for investors to think about gopro is diversification.

Speaker Change: And better leveraging this global brand that we have to serve consumers in more ways, but what I would add is that we are committed to doing so as a profitable company.

Speaker Change: It is especially in today's.

Speaker Change: Environment, it's critical that gopro be profitable in 2025, while also maintaining a rollout of new products that are going to help us grow the business grow margin and grow profitability over the long term.

Speaker Change: Yeah, Hey, Mike I might add to that Hum.

Martin: Hey, Martin in addition.

Speaker Change: As we look at market data some of the kind of at least in North America and Europe.

Speaker Change: The point and shoot category.

Speaker Change: Growth category and that's it.

Speaker Change: Area, where our hero care of $199 hero camera is really going to target into so we're seeing that growth and given the you know the consumers.

Speaker Change: You know.

Speaker Change: Now they've got they've got to watch the dollar. So we know that there's a market there and we're seeing that grow and so that's going to fit really nicely into that space.

Speaker Change: And I'll remind you that on our subscription business, we're attaching at the entry level price point about 25% to subscription.

Speaker Change: Perfect and then the last one which we talked about earlier with the 360 category.

Speaker Change: Could represent a pretty significant.

Speaker Change: The increase in revenue growth for 2025.

Speaker Change: Basically zero.

Speaker Change: In 2024.

Speaker Change: Thanks, Brian that's it for me.

Speaker Change: The next question is from the line of Eric Woodring with Morgan Stanley You May proceed.

Eric Woodring: Hey, guys. Thanks for taking my question sorry about earlier.

Speaker Change: Yes, maybe this question is for you Nick I understand pointing to a better 2020 for 2025 and 2020 for obviously a challenging period of consumer demand.

Speaker Change: When you talk about our commitment to profitability in 2025 can you just maybe give us a little bit of a flavor of the underlying drivers that get you. There obviously, you've talked about improving margins cutting costs, but Chile. The expectations that maybe we said today that you are getting back to growth in 2025 or <unk>.

Speaker Change: I didn't necessarily say that and I know you don't necessarily want to commit to that but do you have any comments on how we should think about the top line.

Speaker Change: Sitting here today for 2025, and then I have a follow up to the sky.

Speaker Change: Yes.

Speaker Change: We will grow the business, we will grow top line, we will grow margin.

Speaker Change: Because we will be introducing products that we simply just do not have in the market today I mean, it's a.

Speaker Change: Hmm.

Speaker Change: We are completely absent from the $3 60 market today.

Speaker Change: Minus whatever inventory is still selling through the channel.

Speaker Change: As I shared we sold our last.

Speaker Change: 360, Max camera into the channel at the end of 2023.

Speaker Change: So aside from a smattering of sales through Gopro Com, we've had essentially no revenue.

Speaker Change: 360 category in 2024.

Speaker Change: So simply by re entering that category with what we believe is going to be a very competitive.

Speaker Change: Industry, leading product in that market.

Speaker Change: <unk>.

Speaker Change: That is.

Speaker Change: Certainly going to help us win back share and we believe at a meaningful level that is going to meaningfully contribute to top line.

Speaker Change: Bottom line growth. So that's that's a very big lever for us.

Speaker Change: And then as well.

Speaker Change: Our entry level camera, which we're super Super Super excited about.

Speaker Change: Has a accretive margin for us relative to the entry level products that we've been selling previously which were legacy products that we.

Speaker Change: Reduced MSRP on over time, but they were they were never designed to be sold at an entry level price point. So their margin was.

Speaker Change: Very compromised, whereas our new $199 hero camera.

Speaker Change: Is designed from the ground up to be sold is $199 product.

Speaker Change: As a result has much better margin so that's going to be a major contributor.

Speaker Change: So the bottom line, while also being a major contributor to the brand and topline growth just thanks to the what we believe is going to be a very strong market appeal for that product.

Speaker Change: Then you get into our other products of which I can speak of the hero line with hero <unk> Black which is launching next month.

Speaker Change: Yeah.

Speaker Change: That's that's really going to allow people in terms of expanded capability in and how we're just continue to build on the hero cameras ability to not only serve active consumers that are looking to use euro 13, black as a way to document their active lifestyles, but also the growing blogger market.

Speaker Change: Pro content creator the Influencer, who are all looking for a.

Speaker Change: Differentiated looks for their content to help keep their their brand and their content fresh and their audiences engage here with <unk> Black we believe hits this right on the head.

Nicholas Woodman: Hero 13 Black, we believe, hits this right on the head. This will become more obvious, of course, at launch in a month, but that's going to benefit us, we believe, throughout 2025, and then, of course, we have more products on tap for 2025 that we believe is going to continue with the momentum.

Speaker Change: This will become more obvious of course at launch in a month, but that's going to benefit us we believe throughout 2025.

Speaker Change: Then of course, we have more products on tap for 2025 that we believe is going to continue with the momentum.

Speaker Change: I would say.

Speaker Change: The silver lining.

Speaker Change: <unk>.

Speaker Change: 2024 is that it sets us up for so much new.

Speaker Change: Product and new revenue generating opportunities in 2025 debt, yes, we're targeting growth, yes, we're targeting profitability and when we combine these new product launches with the momentum that we believe is going to bring with significantly reduced opex.

Speaker Change: That's a recipe we believe for ensuring profitability in 2025, Eric the brand is strong our products are too strong an opportunity is too significant.

Speaker Change: Especially in this macroeconomic environment.

Eric: We're going to be getting very serious about opex reductions to.

Eric: Sure, it's not a nip and tuck.

Speaker Change: Scenario for 2025, but our profitability year that we'd look to grow on a into 26 and beyond and so as a part of that we're looking at transformational ways to operate the business.

Speaker Change: Recognizing it's time.

Alicia Reese: Okay, no, I love all that color. Thank you.

Speaker Change: Okay, No I love all of that color. Thank you.

Speaker Change: And then maybe if I follow up on that Nick.

Speaker Change: It is rare for you to talk about competition as much as I felt that you've talked about at the last two quarters, obviously FX headwinds play a role in that but is there something about the competitive environment that is different today again, maybe outside of some of the stock outs that you have in and things like 360 Sam.

Alicia Reese: And then maybe I'll follow up on that, you know, Nick, it's rare for you to talk about competition as much as I felt you talked about in the last two quarters. Obviously, FX headwinds, you know, play a role in that. But is there something about the competitive environment that is different today, again, maybe outside of some of the stock outs that you have in things like 360 cams and FX? We'd just love to know if anything is changing under the hood there. And that's it for me.

Speaker Change: And FX. So just love to know if anything is changing under the hood, there and thats. It for me. Thanks.

Speaker Change: We missed the products launch.

Speaker Change: <unk> led to us missing a year in the market and a growing category in which we were a.

Speaker Change: Both pioneer and market leader.

Speaker Change: Essentially seeding the category of our competition. So yeah competition is.

Speaker Change: A more important topic this year than it's been before.

Speaker Change: Unfortunately, it is self inflicted.

Speaker Change: Largely.

Speaker Change: But we are extremely passionate about the $3 60 category.

Speaker Change: Extremely.

Speaker Change: <unk> about our opportunity to regain share and we are extremely committed to restoring gopro to a leadership position in the category.

Speaker Change: That's why you're hearing.

Speaker Change: So much more about competition on this call.

Speaker Change: Because it's a bigger factor this year than it has been before.

Speaker Change: And.

Speaker Change: We've got a we got a restore our our leadership position in 2025.

Speaker Change: Got you so it's not necessarily about competitor.

Speaker Change: Perfect.

Nicholas Woodman: I would just clarify, though, that we are not basing our 2025 profitability on regaining a leadership position in 2025. That is not. Of course, we're going to do everything that we can to reclaim a leadership position as it relates to market share, but our 2025 profitability is not dependent on it. My passion for the space, with the understanding that it's going to take time for us to get back to a leadership position in that category, but we're determined to do it.

Speaker Change: I would just for clarification, though we are not basing.

Speaker Change: Our 2025 profitability on regaining a leadership position in 2025 that is not.

Speaker Change: Of course, we're going to do everything that we can.

Speaker Change: To reclaim a leadership position as it relates to market share.

Speaker Change: But our 2025 profitability is not dependent on that I, just want to make that clear don't don't don't confuse my.

Speaker Change: My passion for the space.

Speaker Change: With the understanding that it's going to take time for us to get back to a leadership position in that category, but we're determined to do it.

Speaker Change: Okay I got you. Thank you so much mix in the data.

Eric: Thanks, Eric.

Speaker Change: Okay.

Operator: There are no further questions at this time. I would like to pass this conference back over to the management team.

Speaker Change: There are no further questions at this time I would like to pass the conference back over to the management team for any closing remarks.

Nicholas Woodman: Thank you, Operator, and thank you, everyone, for joining today's call. Our brand, products, and opportunity are too strong, as is our value creation opportunity, too significant for us to accept otherwise. 2025. Thank you, everybody. This is Team GoPro signing off.

Speaker Change: Thank you operator, and thank you everyone for joining today's call.

Speaker Change: As we shared passionately we're committed to operating gopro as a profitable business in 2025.

Speaker Change: Our brand products.

Speaker Change: An opportunity or two strong as is our value creation opportunity too significant for us to accept otherwise.

Speaker Change: We're excited by our new product launches coming up next month.

Speaker Change: And we are committed to being profitable in 2025. Thank you everybody. This is team gopro signing off.

Speaker Change: That concludes the Gopro second quarter 2024 earnings call. Thank you for your participation and enjoy the rest of your day.