Q1 2025 GoPro Inc Earnings Call
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Unknown Executive: Good afternoon. Thank you for attending the GoPro first quarter 2025 earnings call.
Unknown Executive: 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.
Unknown Executive: If you would like to ask a question, please press star one on your telephone keypad and I would now like to pass the conference over to your host Robin Stecker, Director of Corporate Communications at GoPro. May I proceed?
Robin Stecker: Good afternoon and welcome to GoPro's first quarter 2025 earnings conference call.
Robin Stecker: With me today are GoPro's CEO, Nicholas Woodman, and CFO and COO, Brian McGee. Today's agenda will include brief commentary from Nick and Brian, followed by Q&A.
Robin Stecker: For detailed information about our first quarter 2025 performance, as well as outlook, please read our Q1 earnings press release and management commentary posted to the investor relations section of the website. Before I pass the call to Nick, I'd like to remind everybody that our remarks today may include forward-looking statements. Following this brief introduction is management commentary from GoPro CEO Nicholas Woodman and CFO and COO Brian This commentary may include forward looking statements. Forward looking statements and all other statements that are not historical facts are not guarantees of future performance and are subject to a number of risks and uncertainties, which may cause actual results to differ materially.
Robin Stecker: 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.
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.
Robin Stecker: 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, 2024, which is on file with the Securities and Exchange Commission and other reports that we may file from time to time with the SEC.
Better understand the risks and uncertainties that could cause actual results to differ from our commentary. We refer you. We refer you to our most recent annual report on Form 10-K for the year ended December 31, 2024, which is on file with the Securities and Exchange Commission and other reports that we may file from time to time with the SEC.
Robin Stecker: Today, we may discuss gross margin, operating expense, net profit and loss, adjusted EBITDA, as well as basic and diluted net profit and loss per share in accordance with GAAP and on a non GAAP basis. A reconciliation of GAAP to non-GAAP operating expenses can be found in the press release that was issued this afternoon, which is posted on the Investor Relations section of our website. Unless otherwise noted, all income statement related numbers that are discussed in the management commentary, other than revenue are non-GAAP.
Today, we may discuss gross margin operating expense net profit and loss adjusted EBITDA as well as basic and diluted net profit and loss per share in accordance with GAAP and on a non-GAAP basis a.
. .
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.
Thank you. Thank you.
Unless otherwise noted all income statement related numbers that are discussed in the management commentary other than revenue are non-GAAP.
Cameron: Good afternoon. Thank you for attending the GoPro first quarter 2025 earnings call. My name is Cameron and I'll be your moderator for today
Nicholas Woodman: Now, I'll turn the call over to GoPro's founder and CEO, Nicholas Woodman. Thanks, Robin. And thanks, everybody, for joining us today.
Cameron: Now I'll turn the call over to go cause founder and CEO Nicholas Woodman.
Speaker Change: Thanks, Robin and thanks, everybody for joining us today.
Nicholas Woodman: As Robin mentioned, Brian, I will share brief remarks before going into q&a. And I want to encourage everyone to read the detailed management commentary we posted on our investor relations website.
Speaker Change: As Robin mentioned, Brian I will share brief remarks before going into Q&A, but I want to encourage everyone to read the detailed management commentary will be posted on our Investor Relations website.
Nicholas Woodman: In the first quarter, we hit our marks for revenue, launch new hardware and software products, and are on track to launch exciting new products later this Our focus for the balance of 2025 and into 2026 is to continue making strategic investments in product innovation to return GoPro to growth, vigorously protecting our IP and further diversifying our supply chain, including exploring domestic production for some products. During the first quarter, we launched several new hardware and software products. including our updated 360-degree camera app experience, and we introduced a refreshed Max camera, positioning us to recapture share in the 360 market and setting the stage for the launch of Max 2 later this year.
Speaker Change: In the first quarter, we hit our remarks for revenue.
Speaker Change: <unk>, new hardware and software products and are on track to launch exciting new products later this year.
Speaker Change: Our focus for the balance of 2025 and enter 2026.
Speaker Change: Continued making strategic investments in product innovation to return gopro to grow vigorous.
Speaker Change: Vigorously protecting our IP.
Speaker Change: And further diversifying our supply chain, including exploring domestic production for some products.
Speaker Change: During the first quarter, we launched several new hardware and software products, including our updated 360 degree camera App experience and we introduced our refreshed Max Kim positioning us to recapture share in the 360 market and setting the stage for the launch of Mats to later this year.
Nicholas Woodman: We also released a limited edition core white colorway of Hero 13 black, bringing a fresh new look to our flagship camera. And we recently released the highly anticipated anamorphic lens mod for Hero 13 Black, offering creators and professional filmmakers a cost effective solution for capturing stunning cinematic video. Our new Anamorphic Lens Mod joins our previously released Ultra-Wide Lens Mod, Macro Lens Mod, and auto-detectable ND filters, which significantly enhance Hero 13 Black's versatility and performance.
Speaker Change: We also released a limited edition core white color way of hero 13, black, bringing a fresh new look to our flagship camera.
Speaker Change: And we recently released the highly anticipated anamorphic lens, Bob for hero, <unk> block offering creators and professional filmmakers.
Speaker Change: Effective solution for capturing stunning cinematic video.
Speaker Change: Our new anamorphic landmark joins our previously released ultra wildland smart macro lens Mod and auto detectable <unk> filters, which significantly enhanced euro 13, blacks versatility and performance.
Nicholas Woodman: The GoPro subscription continues to be a highlight with strong aggregate retention numbers above 67% over the past six quarters. R2 improved 5% year over year and aggregate subscription retention in Q1 set a record at 70% up from 69% both sequentially and year over year. We expect subscriber and revenue growth to resume in tandem with a return to camera unit growth in 2026. And as we add new editing and content management features that help subscribers get more out of their GoPro content.
Speaker Change: The Gopro subscription continues to be a highlight with strong aggregate retention numbers above 67% over the past six quarters.
Speaker Change: <unk> improved 5% year over year and aggregate subscription retention in Q1 set a record at 70% up from 69% both sequentially and year over year.
Speaker Change: We expect subscriber and revenue growth to resume in tandem with a return to camera unit growth in 2026, and as we add new editing and content management features that help subscribers get more out of their gopro content.
Nicholas Woodman: Our patent portfolio protects our IP and we are committed to taking action to protect these assets when necessary. GoPro welcomes fair competition, but we will litigate to protect our IP when we believe it is being infringed.
Speaker Change: Our patent portfolio protects our IP and we are committed to taking action to protect these assets when necessary.
Speaker Change: Gopro welcomes fair competition.
Speaker Change: But we will mitigate to protect our IP when we believe it is being infringed.
Nicholas Woodman: In January 2025, the U.S. International Trade Commission held a five-day trial regarding a complaint we filed against one of our competitors with the goal to enforce certain GoPro patents related to our cameras and digital imaging technology. We look forward to the ITC's ruling, which is now expected in July of this year.
Speaker Change: In January 2025, the U S International Trade Commission held a five day trial regarding our complaint we filed against one of our competitors with the goal to enforce certain gopro patents related to our cameras and digital imaging technology.
Speaker Change: We look forward to the Itc's ruling, which is now expected in July of this year.
Nicholas Woodman: This quarter, we continue to diversify our supply chain to position GoPro as favorably as possible amidst highly variable tariffs. And we expect to offset tariff costs with modest price increases, continue to supply chain diversification outside of China, and potentially with the production of certain products in the United States. We are continuously assessing the evolving international trade situation to mitigate the impact of terrorists on our business.
Speaker Change: This quarter, we continued to diversify our supply chain to position gopro as favorably as possible.
Speaker Change: It's highly variable tariffs and we expect to offset tariff costs with modest price increases continue to supply chain diversification outside of China.
Speaker Change: And potentially with the production of certain products in the United States.
Speaker Change: We are continuously assessing the evolving international trade situation to mitigate the impact of tariffs on our business.
Nicholas Woodman: We are pleased to report that the OPEX reduction work we began in 2024 is largely behind us and is starting to yield improvements in our operation. operating expenses were down 26% to $62 million from $83 million in Q1 2024.
Speaker Change: We are pleased to report that the Opex reduction work, we began in 2024 is largely behind us.
Speaker Change: It's starting to yield improvements in our operating model.
Speaker Change: Operating expenses were down 26% to $62 million from $83 million in Q1 2024.
Nicholas Woodman: Next, we are excited to provide an update on our tech enabled motorcycle helmet. As we shared in 2024, when we acquired Foresight Helms GoPro plans to launch tech enabled motorcycle helmets, which we believe will help us grow a meaningful business with a SAM of approximately $3 billion. To help us realize this opportunity, we recently kicked off a joint development partnership with AGV, a leading premium Italian motorcycle helmet brand known for legendary performance, styling, and safety. This partnership between GoPro and AGV represents the exciting potential of two powerhouse brands coming together to bring meaningful innovation, improve safety and performance to the world of motorcycling, leveraging each other's design, engineering and brand.
Speaker Change: Next we are excited to provide an update on our tech enabled motorcycle helmet initiatives as.
Speaker Change: As we shared in 2024, when we acquired fore sight helmet systems.
Speaker Change: <unk> plans to launch Tech enabled motorcycle helmets, which we believe will help us grow our meaningful business with a Sam of approximately $3 billion.
Speaker Change: To help us realize this opportunity we recently kicked off a joint development partnership with AEG, a leading premium Italian motorcycle helmet brand known for legendary performance styling and safety.
Speaker Change: This partnership between Gopro in HGV represents the exciting potential of two powerhouse brands coming together to bring meaningful innovation improves safety and performance to the world of Motorcycling, leveraging each other's design engineering and brand strengths.
Nicholas Woodman: We look forward to sharing updates as we move closer towards launching our first product together.
Speaker Change: We look forward to sharing updates as we move closer towards launching our first product together.
Nicholas Woodman: Overall, GoPro's performance in Q1 and our outlook for Q2 demonstrate our progress in operating as a leaner, more efficient organization, which is beginning to positively impact our financial results. And we continue to advance our mission to deliver innovative and differentiated products to our existing markets, as well as new adjacent markets in order to expand our TAM and drive growth in revenue and profitability. Our product roadmap is on track, and we believe that consumers will be very excited about the innovation we intend to bring to market in 2025 and 2026.
Speaker Change: Overall <unk> performance in Q1, and our outlook for Q2 demonstrate our progress and operating as a leaner more efficient organization, which is beginning to positively impact our financial results.
Speaker Change: And we continue to advance our mission to deliver innovative and differentiated products to our existing markets as well as new adjacent markets in order to expand our Tam and drive growth in revenue and profitability.
Speaker Change: Our product roadmap is on track and we believe that consumers will be very excited about the innovation and to bring to market in 2025 and 2026.
Brian Mcgee: Now, I'll turn the call over Thanks, Nick. We've exceeded our expectations in the first quarter on revenue, earnings, sell through, operating expenses, and inventory targets, all while reaching a new high in aggregate retention for subscribers. In addition, we relaunched our max 360 camera and delivered a new colorway for a flagship camera during the quarter. And we are on track to launch our next 360 camera this year. First quarter revenue was $134 million, which was at the high end of our guidance of $125 million due to stronger sell-through in the quarter. Subscription and service revenue grew 4% year-over-year, primarily from 5% ARPU growth as a result of continued improving aggregate retention rates, which reached a record 70%.
Brian: Now I will turn the call over to Brian.
Brian: Thanks, Matt.
Brian: <unk> expectations in the first quarter on revenue earnings fell through operating expenses and inventory targets, all while reaching a new high and aggregate retention for subscribers. In addition, we relaunched our Max 360 camera and delivered a new color way for our flagship camera during the <unk>.
Brian: And we are on track to launch our next 360 camera for sure.
Brian: Quarter revenue was $134 million, which was at the high end of our guidance of $125 million due to stronger sell through in the quarter.
Brian: Scripps and service revenue grew 4% year over year, primarily from 5% ARPA growth as a result of continued improving aggregate retention rates, which reached a record 70%.
Brian Mcgee: C1 2025 non gap operating expenses of 62 million decreased 26% year over year. We continue to have a strong focus on operating expense controls, while retaining investments in our product roadmap. Notable first quarter performance highlights include revenue from our retail channel with 94 million or 70 percent of Q1 2025 revenue compared to 68 percent of Q1 2024 revenue. growth in our retail channel mix was primarily driven by sales to our big box retail. Revenue from our gopro.com channel, which includes subscription and service revenue was 40 million 30% of Q1 2025 revenue, compared to 32% Q1 2024 revenue, subscription and service revenue grew 4% year over year to 27 million, primarily from 5% ARPU growth as a result of improving aggregate retention rates.
Brian: Q1, 2025, non-GAAP operating expenses of $62 million decreased 26% year over year.
Brian: We continue to have a strong focus on operating expense controls, while retaining investments in our product roadmap.
Brian: Notable first quarter performance highlights include <unk>.
Brian: Revenue from our retail channel was $94 million or 70% of Q1 2025 revenue compared to 68% of Q1 2020 for revenue.
Brian: Growth in our retail channel mix was primarily driven by sales to our big box retailers.
Brian: Revenue from our Dot Com channel, which includes subscription and service revenue was $40 million, 30% of Q1, 2025 revenue compared to 32% Q1, 2024 revenue subscription and service revenue grew 4% year over year to $27 million, primarily from 5% offer.
Brian: Growth as a result of improving aggregate retention rates.
Brian Mcgee: as well as improvements to a record of 70%. subscription to tap straight from camera sold across all channels is 49% compared to 48% and q1 Non-GAAP operating expenses were $62 million, compared to $83 million in the prior year period. GAAP and non-GAAP loss per share was $0.30 and $0.12, respectively. Adjusted EBITDA loss was reduced by nearly 50% year-over-year to negative $16 million. We ended the quarter with inventory of 96 million, a 27% decrease year over year, and reflecting the first Q1 sequential decline in inventory since 2018. fell through with approximately 440,000 units compared to 530,000 units in the prior year period.
Brian: As well as improvements.
Brian: To a record of 70% subscription.
Brian: Subscription attach rate from camera sold across all channels was 49% compared to 48% in Q1 24.
Brian: non-GAAP operating expenses were $62 million compared to $83 million in the prior year period, GAAP and non-GAAP loss per share was 30 and 12.
Brian: Prospectively.
Brian: Adjusted EBITDA loss was reduced by nearly 50% year over year.
Brian: A $16 million.
Brian: We ended the quarter with inventory of $96 million or 27% decrease year after year.
Brian: In the first Q1 sequential decline in inventory since 2018.
Brian: Sell through was approximately 440000 units compared to 530000 units in the prior year period.
Brian Mcgee: This was due to unit cell food decreases in Asia Pacific, which were primarily driven by consumer related macroeconomic issues and competition across the region, most notably in China, Japan, and South Korea. channel inventory decreased sequentially by approximately 40,000 During the quarter, we took the opportunity to sell out of a slower moving product and convert that inventory into cash more quickly impacting gross margin, excluding this 5 million one time sale, gross margin would have been 35 and a half percent in line with guidance and above Q1 2024 of 34.4%. reported gross margin was 32.3% in the first quarter of 2025.
Brian: This was due to unit sell through decreases in Asia Pacific, which were primarily driven by consumer related macroeconomic issues and competition across the region, most notably in China, Japan, South Korea.
Brian: Channel inventory decreased sequentially by approximately 40000 units.
Brian: During the quarter, we took the opportunity to sell out of a slower moving product and convert that inventory into cash more quickly impacting gross margin, excluding the $5 million onetime sale gross margin would have been 35, 5% in line with guidance and above Q1 2024.
Brian: Or a 34, 4% reported gross margin was 32, 3% in the first quarter of 2025.
Brian Mcgee: First quarter operating expenses decreased 26% year-over-year to $62 million. The decrease was primarily due to restructuring actions resulting in reduced employee-related costs, a reduction in marketing and advertising-related activities, and the completion of our newest system on TIP, DP3, as well as a strong focus on expense management while retaining our product roadmap, partially offset by legal costs to defend our IP. Turning to the balance sheet, we ended the first quarter of 2025 with $70 million in cash, cash equivalents and marketable securities, which included a $25 million draw on our ABL. Excluding the $25 million draw, cash would have been down $58 million sequentially, compared to our cash usage of $89 million in the first quarter of 2024.
Brian: First quarter operating expenses decreased 26% year over year to 62 million. The decrease was primarily due to restructuring actions, resulting in reduced employee related costs.
Brian: A reduction in marketing and advertising related activities and the completion of our newest system on chip <unk> three as well as a strong focus on expense management, while retaining our product roadmap, partially offset by legal costs to defend our IP.
Brian: Turning to the balance sheet, we ended the first quarter of 2025% to $70 million in cash cash equivalents in marketable securities, which included a $25 million draw on our ABL.
Brian: The $25 million draw cash would have been down $58 million sequentially compared to a cash usage of $89 million in the first quarter of 2024.
Brian Mcgee: past use in the first quarter of 2025 was primarily due to adjusted Yvette Dobb, negative 16 million and working capital changes 36 million. sequential working capital changes were primarily due to a $63 million decrease in accounts payable and other liabilities and a $5 million increase in prepaid expenses and other assets partially offset by a $24 million decrease in inventory and a $9 million decrease in accounts receivable. In the second quarter of 2025, we plan to repay the $25 million OVL draw. Red count ended at 659 full time employees down 30% from our prior year of 937 Turning to our outlook for the second quarter, we expect revenue to be $145 million at the midpoint of guidance.
Brian: Cash used in the first quarter of $2025, primarily due to adjusted.
Brian: EBITDA negative $16 million and working capital changes of $36 million.
Brian: Sequential working capital changes were primarily due to a 63 million.
Brian: It's all a decrease in accounts payable and other liabilities and a $5 million increase in prepaid expenses and other assets, partially offset by a $24 million decrease in inventory and then $9 million decrease in accounts receivable.
Brian: In the second quarter of 2025, we plan to repay $25 million.
Brian: Ill drop.
Brian: Headcount ended at 659 full time employees down 30% from our prior year of <unk>.
Brian: 937.
Turning to our outlook.
Brian: For the second quarter, we expect revenue to be $145 million at the midpoint of guidance.
Brian Mcgee: NAMGAP loss per share of seven cents, and then nearly $30 million improvement and adjusted EBITDA year over year. All these improvements are due to the actions we took in 2024 to reduce operating expenses, diversify supply chain, and drive product cost reduction. Additionally, we are focused on further operational efficiencies to drive down costs and expand our supply chain outside of China. At current tariff rates, we expect the tariff impact in 2025 will be approximately $8 million on our campaign. which is expected to be fully offset by modest product price moves at less than 5% global. This expected eight million impact for 2025 is further mitigated by the fact that we are still selling through inventory, the end of the United States before As we continue to actively manage the balance sheet and expect to further reduce inventory sequentially by $20 million to approximately $75 million and increase cash net of debt by $25 million sequentially as we operate working capital more efficiently.
Brian: non-GAAP loss per share of seven cents, and then nearly $30 million improvement in adjusted EBITDA year over year.
Brian: All of these improvements are due to the actions we took in 2024 to reduce operating expenses diversified supply chain and drive product cost reductions.
Brian: Additionally, we are focused on further operational efficiencies to drive down costs.
Brian: Our supply supply chain outside of China.
Current tariff rates, we expect the tariff impact in 2025 would be approximately $8 million on our cameras.
Brian: As expected to be fully offset by modest product price move less than 5% globally.
Brian: This expected impact for 2025 is further mitigated by the fact that we are still selling through inventory that endo.
Brian: The United States before April.
Brian: As we continue to actively manage the balance sheet.
Brian: And expect to further reduce inventory sequentially by $20 million to approximately $75 million and increased cash net of debt by $25 million sequentially as we operate working capital more efficiently.
Brian Mcgee: For the second quarter of 2025, we expect to deliver revenue of 145 million plus or minus 10 million down 22% year over year. We estimate street ASD in the second quarter to be approximately $370, up nearly 15% year-over-year. respect unit seltzer to be down 20% on a year over year basis to approximately 500,000 units and channel inventory to reduce by approximately 60,000 units. We expect gross margin in the second quarter to be 35.5% at the midpoint of guidance up nearly 500 basis points versus the prior year quarter. We expect second quarter 2025 operating expenses to be $60 million plus or minus $1 million, a 36% reduction from the prior year quarter due to lower spending on wages, some lower headcount, reduced marketing, and lower non-recurring engineering expenses related to completion of GP3.
Brian: For the second quarter of 2025, you expect to deliver revenue of $145 million, plus or minus $10 million down 22% year after year.
Brian: We estimate to the ASP in the second quarter to be approximately $370.
Brian: Nearly 15% year over year.
Brian: Back to unit sell through to be down, 20%, I mean year over year basis to approximately 500000 units and channel inventory to reduce by approximately 60000 units sequentially.
Brian: We expect gross margin in the second quarter, there would be a 35, 5% at the midpoint of guidance of nearly 500 basis points versus the prior year quarter.
Brian: We expect second quarter 2025, operating expenses to be $60 million, plus or minus $1 million is 36% reduction from the prior year quarter due to lower spending on wages from lower head count reduced marketing and lower nonrecurring engineering expenses related to the completion of GP.
Brian: Sorry.
Brian Mcgee: respect non gap loss per share in the second quarter of seven cents at the midpoint of guidance next and expect shares outstanding to be approximately 57 million spending to the balance sheet we expect cash net of debt to improve 25 million in the second quarter.
Brian: We expect non-GAAP loss per share in the second quarter of <unk>.
The midpoint of guidance.
Brian: And expect shares outstanding to be approximately $57 million.
Brian: Turning to the balance sheet, we expect cash net of debt to improve to $25 million in the second quarter.
Brian Mcgee: Looking at 2025 commentary, overall, we expect units and revenue in 2025 to be lower than 2024, primarily driven by an uncertain macro environment, competition, and the delay of our new 360 camera partially offset by FX due to a weaker US dollar. to provide some color on expectations for the balance of 2025. We expect to introduce Max2 360 camera in 2025. respect our four year 2025 operating expenses to improve further to a range of 240 million to 250 million down more than 100 million or 30% year over year. We expect offset tariff costs with modest price increases, continuous supply chain diversification outside of China, and potentially produce certain products in the United States.
Brian: Looking at 2025 commentary.
We expect units and revenue and 25 to be lower than 2024, primarily driven by an uncertain macro environment competition.
Brian: Lay out our new 360 camera, partially offset by FX due to a weaker U S dollar.
Brian: To provide some color on expectations for the balance of 2025.
Brian: Expect to introduce Max to 360 camera in 2025.
Brian: We expect.
Brian: Our full year 2025 operating expenses too.
Brian: Through further to a range of 240 million to $250 million down more than $100 million or 30% year over year.
Brian: We expect to offset tariff costs with modest price increases continuous supply chain diversification outside of China and potentially produce certain products.
Brian: Other states.
Brian Mcgee: respects subscription ARPU growth, subscription cost improvements, and end the year with 2.4 million subscribers. We now expect to end 2025 with $75 million in cash. with no debt and a $50 million available ABL facility. This improvement from our last report is driven by continued reductions in operating expenses and improvements in FX from a weaker U.S. dollar. The initiatives we undertook in 2024 to reduce operating expenses and improve gross margins of Bering fruit. We are focused on launching new products while preserving cash to repay our debt in 2025 and launching a significant number of new products in 2025 and 2026 to restore growth and profitability to our Operator.
Brian: We expect subscription <unk> growth subscription cost improvements and to end the year with $2 4 million subscribers.
Brian: We now expect to end 2025 was $75 million in cash.
Brian: With no debt.
Brian: And $50 million available ABL facility.
Brian: <unk> from our last report it was driven by continued reductions in operating expenses and improvements in FX from a weaker U S dollar.
Brian: The initiatives, we undertook in 2024 to reduce operating expenses and improved gross margins are bearing fruit.
Brian: Focused on launching new products, while preserving cash to repay our debt in 2025 and launching a significant number of new products in 2025, and 2026 to restore growth and profitability to our business.
Brian: Operator with that we're ready to take questions.
Erik Woodring: With that, we are ready to take questions. The first question is from the line of Erik Woodring with Morgan Stanley. You may proceed. Hey, good afternoon, guys. Thank you for for taking my questions. I have two.
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. If for any reason you would like to remove that question. Please press star followed by two.
Speaker Change: Again to ask a question press Star one and as a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking a question that we will pause here briefly as questions are registered.
Speaker Change: The first question is from the line of Erik Woodring with Morgan Stanley You May proceed.
Erik Woodring: Hey, good afternoon, guys. Thank you for taking my questions I have two.
Brian: Brian I guess, maybe I'll start with you just can.
Brian Mcgee: Brian, I guess maybe I'll start with you just, can you maybe help us understand the sources of stronger sell through in the quarter? Like, I guess my question is, do you have any triangulation data? Or can you look at any kind of linearity data or even channel feedback to help determine how much that that stronger sell through was, you know, pull forward ahead of potential pricing increases? How much was real demand? And how much is factored? How much of that type of behavior is factored into Q2Q at all?
Brian: Can you maybe help us understand the sources of stronger sell through in the quarter.
Brian: I guess my question is do you have any triangulation data or can you look at any kind of linearity and channel feedback to help determine how much that stronger sell through was.
Brian: Pull forward ahead of potential pricing increases how much was real demand and how much is factored how much of that type of behavior is factored into Q <unk> at all and then I have a quick follow up please.
Brian Mcgee: And then I have a quick follow up, please. Sir, I don't think we saw any pull forward demand in the quarter. It was pretty linear throughout. So our sales came later in the quarter, as you know, Seltzer did, did well and, and our sales ended up coming in more back end loaded, which is why DSO was a bit higher.
Brian: Sure.
Brian: We saw any pull forward demand in the quarter.
Brian: It was pretty linear throughout so our sales came later in the quarter.
Brian: Sell through did did well and our sales ended up coming in more <unk>.
Brian: And loaded which is why our DSO was a bit higher so we didn't we didn't see that.
Brian Mcgee: So we didn't, we didn't see that happen in the Okay, super helpful. And then, and I might just be reading this wrong, but I think your sell through in the United States was down 10% year over year, but sell in was up 7% year over year.
Brian: And in the quarter.
Brian: Okay Super helpful.
Brian: Then.
Brian: I might just be reading this wrong, but I think.
Brian: Your sell through in the United States was down 10% year over year, but sell in was up 7% year over year.
Brian Mcgee: Obviously, you reduce overall channel inventory, but can you just maybe help us understand exactly what happened, kind of that gap in one cue and then extend that conversation to Asia, just revenue down over 50% year over year, just kind of help us contextualize, is that mostly competition or are there other factors there? Thanks so much. Yeah, and my prepared remarks and talked about Asia being down 54%. And that was mostly macro as well as competition. We saw from a country perspective, we were down in China, Japan and South Korea were the most impacted countries in the Asia Pacific region.
Brian: Obviously, you reduced overall channel inventory, but can you can you just maybe help us understand exactly what's happened kind of that gap and <unk> and then extend that conversation to Asia, just revenue down over 50% year over year, just kind of help us contextualize is that mostly competition or are there other factors there. Thanks so much.
Brian: Yeah in my prepared remarks, we talked about Asia being down 54% and that was.
Brian: Mostly macro as well as competition we saw.
Brian: From a country perspective, we were down in China.
Brian: Japan and South Korea.
Brian: Most impacted countries.
Brian: The Pacific region.
Brian Mcgee: The US had the best sell through, it was down the least, as we reported. And some of the sell in was due to in the quarter, we had that one time $5 million sale of products in the quarter. So we, you know, took out some inventory to convert it to cash. And so that would be the kind of delta there. That's expected to sell through pretty quickly to a pretty favorable price. We have no more inventory to do that with. That's partly why our margins are up sequentially to 35 and a half. So we're selling mostly 13 minutes.
Brian: The U S had the best sell through was down the least as we reported and and some of the sell in.
Brian: Due to.
Brian: In the quarter, we had that one time $5 million.
Brian: Sale of products in the quarter. So we took out some inventory to converted to cash and so that would be the kind of delta there that's expected to sell through pretty quickly too.
Brian: Pretty favorable price points.
Speaker Change: Okay Super Thank you for that color around the more we have no more inventory to do that way and that's partly why our margins are up sequentially to 35, 5%.
Brian: So we're selling mostly 13 and 12.
Unknown Executive: Okay, thank you so much, Brian.
Okay. Thank you so much Brian.
Alicia Reese: The next question is from the line of Alicia Reese with Wedbush Securities. You may proceed. Thank you for taking my question. So I'm wondering if you could dig in a little bit on the tariff situation. Obviously, some of the quarter will get the 145% tariff from China, but obviously, the rest of the quarter, hopefully, into the following quarter will have 30% or thereabouts.
Speaker Change: The next question is from the line of Alicia Reese with Wedbush Securities You May proceed.
Speaker Change: Thank you for taking my question. So I'm wondering if you could dig in a little bit on the tariff situation.
Speaker Change: Some of the quarter, we will.
Speaker Change: We will get the 145% increase tariffs from China, but obviously the rest of the quarter hopefully into the following quarter, we will have 30% or thereabouts I'm just wondering how much of your inventory headed to the U S is coming from China, how much youre able to diversify in the quarter and.
Brian Mcgee: I'm just wondering how much of your inventory headed to the US is coming from China, how much you're able to diversify in the quarter, and how much price elasticity there is on the products you have out right now. Yeah, good question. On the tariff front, actually the amount on cameras into the U.S. is zero because we've diversified all of our camera production outside of China. And what comes from the U.S. is manufactured in Thailand, so that's about a 10% tariff rate versus about 150% tariff rate just prior to today. Accessories would have a little bit of tariff, but with the reduction in rates today, that goes to only a couple million and a quarter.
Speaker Change: How much price elasticity there is on the products you have out right now.
Speaker Change: Yeah. Good question.
Speaker Change: Tariffs.
Speaker Change: Actually the amount of cameras and to the Iraqi zero.
Speaker Change: Because we have diversified our camera production outside of China.
Speaker Change: And what comes from the U S.
Speaker Change: Manufactured in Thailand, So that's about a 10% tariff rate, especially with about 150% tariff rate just.
Speaker Change: Just prior to today.
Speaker Change: Accessories would have a little bit of tariff, but with the reduction in rates today that goes to only a couple of known in the quarter and those would be offset by.
Brian Mcgee: And those would be offset by small price increases. And the elasticity around that, we're not moving prices very much. We only have to move 3 or 4% globally to offset the cost of the tariff, which we will do. So we find ourselves in a pretty good position from a supply chain perspective from a camera production into the United States. And we use China for balance the rest of the world for capacity. And tariff should be, we'll continue to migrate accessories out of China into mostly Vietnam. So we've done a pretty good job insulating ourselves on the test.
Speaker Change: Small.
Speaker Change: Price increases and the elasticity around that we're not moving pricing is very much there.
Speaker Change: Only have to move three or 4% globally.
Speaker Change: Offsetting the cost.
Speaker Change: Tariff, which we will do so.
Speaker Change: We find ourselves in a pretty good position from a supply chain perspective.
Speaker Change: From a camera.
Speaker Change: Production.
Speaker Change: And then I states and we use China for rest of the balance of the rest of the world.
Speaker Change: For capacity and.
Speaker Change: Tariffs would be we'll continue to migrate.
Accessories out of China into mostly Vietnam.
Speaker Change: So we've.
Speaker Change: <unk> done a pretty good job insulating.
Speaker Change: Sales on the tariff front.
Brian Mcgee: And I have a couple more questions, if I may, um, I was wondering if you could talk a little bit more about, um, what's going, what are the dynamics happening currently in Asia, um, over the past couple quarters, it's been, um, pretty weak. So, just wondering if you could highlight that and what the difference was in the Americas in the quarter. Yeah, in Asia, China has been the biggest impact. And there's been more of a, I'll call it nationalistic trend to buy more local. We've seen that across a number of brands, not just our own.
Speaker Change: And then I have a couple more questions if I may.
Speaker Change: I was wondering if you could talk a little bit more about what go ahead, what are the dynamics happening currently in Asia Pac.
Speaker Change: Past couple of quarters its been.
Speaker Change: Pretty weak so just wondering if you could highlight what the difference was in the Americas in the quarter.
Speaker Change: Yeah.
Speaker Change:
Speaker Change: In Asia, China has been the biggest impact and then more of a I'll call. It nationalistic tend to buy more local.
Speaker Change: We've seen that across a number of brands not just alone.
Brian Mcgee: And there's definitely more competition that's happening in China and macroeconomic issues that are happening, particularly in, as I mentioned, China, but also Japan and South Korea.
Speaker Change: And there is definitely more competition, that's happening in China macroeconomic issues that are happening, particularly and as I mentioned, China, but also Japan and South Korea.
Brian Mcgee: And the US started to shore up in a much better way. And in the last quarter, and our expectations that will continue in Q2. So that's kind of the moving part of the geographic Fair enough.
Speaker Change: In the U S.
Speaker Change: Started to show up.
Speaker Change: In a much better way.
And the last quarter and our expectation is that will continue in Q2.
Speaker Change: So that's kind of the moving parts geographically.
Speaker Change: Fair enough and lastly, I was wondering if you had.
Brian Mcgee: And lastly, I was wondering if you had any plans to do like a reverse stock split or anything of that nature to change the stock price from here. Well, hopefully our performance that we continue to hit our numbers and drive top line growth with new products, margins continue to improve year over year, OPEX is down, and making more money and driving, you know, more cash flow would help move the stock up as well. Understood.
Speaker Change: Any plans to do like a reverse stock split or anything of that nature to it.
Speaker Change: And.
Speaker Change: To change the stock price from here.
Speaker Change: Well hopefully our performance that we continue to hit our numbers and drive.
Speaker Change: Top line growth with new products margins continue to improve year over year Opex is down.
Speaker Change: And making more money and driving.
Speaker Change: No more cash flow would help move the stock up as well.
Speaker Change: Understood. Thanks, so much for the time.
Unknown Executive: Thanks so much for the time. Thank you.
Speaker Change: Okay.
Unknown Executive: There are no additional questions waiting at this time.
Speaker Change: There are no additional questions waiting at this time.
Unknown Executive: I would now like to pass the conference back over to the management team for any closing remarks. Thank you, operator. And thank you everybody for joining today's call.
Speaker Change: I would now like to pass the conference back over to the management team for any closing remarks.
Speaker Change: Yeah.
Speaker Change: Thank you operator, and thank you everybody for joining today's call.
Nicholas Woodman: With our leaner operating model and exciting new products we have planned for the balance of 2025 and 2026, we believe we are well positioned to match the financial strength of GoPro to that of our incredible brand. We're very much looking forward to realizing this on behalf of our customers, our employees, and our investors. Thank you, everyone.
Speaker Change: With our leaner operating model and exciting new products, we have planned for the balance of 2025 and 2020. We believe we are well positioned to match the financial strength that gopro to that of our incredible brand.
Speaker Change: We're very much looking forward to realizing this on behalf of our customers our employees and our investors.
Speaker Change: Thank you everyone. This is team gopro signing off.
Unknown Executive: This is TV GoPro, signing off. That concludes today's call. Thank you for your participation and enjoy the rest of your day.
Speaker Change: Yeah.
Speaker Change: That concludes today's call. Thank you for your participation and enjoy the rest of your team.