GoPro, Inc. Q3 FY2024 earnings call

• Q3 2024 revenue of $259 million exceeded guidance.
• Subscription and service revenue grew 11% year-over-year to $27.5 million, primarily due to 9% ARPU growth and 2% subscriber growth.
• EPS was breakeven on a non-GAAP basis, and EBITDA was $5 million, a $39 million sequential improvement.
• Facing challenges from global macroeconomic headwinds affecting consumer discretionary spending, delay of the new 360-degree camera, and competition.
• GoPro will litigate to protect its IP, having filed a complaint with the U.S. International Trade Commission and a lawsuit against a competitor regarding IP infringement.
• Launched the HERO 13 Black flagship camera and the entry-level HERO camera in September 2024.
• Continued global retail expansion, adding over 6,300 new doors since May 2023, bringing total doors to over 25,000.

In Q3 2024, GoPro's revenue totaled $259 million. Subscription and service revenue grew 11% year-over-year to $27.5 million, representing a significant portion of the overall revenue. The subscription and service segment contributed $27.5 million out of the $259 million total revenue, with growth driven by ARPU growth and subscriber growth.

• For 2025, unit and revenue are expected to be lower than 2024 due to macroeconomic headwinds, competition, and delay of the new 360-degree camera.
• Street ASP is anticipated to be in the range of $335 to $345 in 2025, a 5% improvement over 2024.
• Gross margin is expected to improve from 34% in 2024 to a range of 35% to 36% in 2025.
• 2025 operating expenses are targeted at $250 million, a reduction of approximately $110 million from 2024.
• First quarter 2025 operating expenses are expected to be approximately $60 million, a nearly 30% year-over-year decrease.

• Exposure to global macroeconomic headwinds that impact consumer discretionary spending.
• Delay in the launch of the new 360-degree camera, which could affect market performance.
• Intense competition, including potential IP infringement by competitors, which may impact market share and financial performance.

Q: What do you consider as the ideal outcome of the U.S. ITC investigation?

A: The ideal outcome is that the ITC would recognize the infringement, validate the validity of GoPro's patents and IP, and prevent infringing products from being sold into the U.S. market.

Q: Is there any timeline or expected date for the investigation to conclude?

A: We expect a conclusion in 2025.

Q: If you were to rank the different headwinds you outlined, what would be the most impactful to the 2025 outlook will it be the least impactful? And how do you reconcile the number of retail doors that you have grown over the year to that reduced outlook?

A: Macroeconomic factors are among the biggest headwinds, followed by getting the new 360 camera to market and then competition. The 25,000+ retail doors are beneficial, but not fully leveraging them currently due to not having the full product suite; expected to benefit more in 2025 with new products.

Q: Do you see most of the share erosion happening on the 360-degree camera category or do you see more happening for the main camera, the action camera category?

A: The biggest share erosion is in the 360-degree camera category due to the delay of the new 360 camera, with some erosion also in the action camera category, but the biggest revenue impact is from not launching the MAX 2 360 camera.