GoPro, Inc. Q4 FY2025 earnings call

• Congratulated Brian McGee on his appointment to president and COO, and Brian Tratt to CFO. - Launched new products in 2025: 360 camera Max 2, Hero camera, Fluid Pro AI gimbal; new software functionality. - Progress on AI training program: working with select AI partners, expecting to recognize revenue in Q1 2026 and payout to subscribers later in 2026. - Advancing tech-enabled motorcycle helmet program with AGV. - U.S. International Trade Commission reaffirmed GoPro's design patent rights. - Introduced GP3 processor, which is a 5 nanometer SOC with significant improvements in power efficiency, thermal performance, low-light performance, etc., and expected to be a growth catalyst in Q2 2026.

Fiscal 2025 improved substantially over 2024 in a number of key areas, including operating expense reductions of 93 million, flat gross margins of 34% despite a $20 million impact due to IEPA tariffs, inventory reduction of 35%, all culminating in an improvement in cash flow from operations of $104 million. In the fourth quarter of 2025, revenue was $202 million versus our guidance of $220 million plus or minus $5 million. Revenue from our retail channel was $482 million or 74% of revenue compared to 75% of 2024 revenue. Revenue from gopro.com channel which includes subscription and service revenue was $170 million or 26% of revenue compared to 25% of 2024 revenue. Subscription and service revenue was flat year over year at $106 million or 16% of revenue. 2025 Street ASP was $357 and 8% improvement year over year. GROSS MARGIN WAS 33.8% COMPARED TO 34.1% IN THE PRIOR YEAR, DESPITE NEGATIVE IMPACTS RELATED TO HYPOTERUS OF APPROXIMATELY $20 MILLION INCURRED IN 2025. OPERATING EXPENSES REDUCED 93 MILLION FROM 354 MILLION TO 261 MILLION, A 26% DECREASE YEAR-OF-A-YEAR. and non-GAAP loss per share was 59 cents and 30 cents respectively compared to prior year loss per share of $2.82 and $2.42 respectively. 2024 GAAP and non-GAAP loss per share were impacted by $1.93 per share due to the establishment of a 295 million tax valuation allowance that was recorded in 2024. Adjusted EBITDA was 29 million, negative 29 million, compared to negative 72 million in the prior year. Cash flow used in operations was 21 million compared to cash used in operations of 125 million in 2024, a $104 million improvement. Turning to 2026, our outlook is prefaced by highlighted uncertainty that exists due to volatility and tariff rates, memory pricing, memory availability, consumer confidence, competition, component supply chain, and global economic uncertainty. To provide color on our expectations and priorities for the year, we expect revenue to grow in 2026 to a range of $750 million to $800 million or nearly 20%. Growth at the midpoint based on the existing lineup of products. The introduction of several new products starting in Q2 and additional AI content licensing this year. We expect subscription and service revenue to grow approximately 10% due to improvements in ARPU growth of 10% and improvements in attach rates and retention rates, which is slightly offset by subscribers, projected to be down 7% year-over-year to 2.2 million. We expect operating expenses to be in a range of 220 million to 230 million, down from 261 million in 2025, or a 14% reduction. The anticipated decrease is primarily due to a reduction in litigation expenses, our prior restructuring actions, which resulted in reduced employee related costs in 2025 and a continued strong focus on expense management. The cumulative effect of our planned actions is expected to result in a reduced operating expense range in 2027 of between $200 million and $210 million. We expect memory price increases, both DRAM and NAND, to impact margin by approximately 500 basis points year over year. We expect to have enough memory to meet our unit and revenue goal for 2026. Today, we announced a $50 million financing, of which we closed 25 million. In addition, we amended loan covenants for ADL and debt agreements. The details of which can be found in the 8K we filed concurrent with today's earnings. We expect our liquidity position to be adequate. And we expect to end 2026 with approximately 50 million plus or minus 5 million in cash, along with an additional 35 million available under our ABL facility and 25 million available under our recent financing agreement. We expect adjusted EBITDA to be in a range of 10 million to 20 million in 2026, an improvement from losses of 29 million in 2025 and 72 million in 2024. Relative to our prior outlook of trailing 12 month adjusted EBITDA of 40 million for 2026. It's worth noting that memory pricing impacted the trailing 40 million EBITDA by $40 million for a total impact of nearly 60 million in 2026. In closing, we believe our strategy is working. We are in the midst of an exciting innovation cycle with the launch of leading products, continued AI content licensing, and other services expected over the next several years that we believe will bolster our market position while expanding our TAN. We expect to continue operating expense reduction initiatives in 2026 that we initiated in 2024 to mitigate memory cost increases. We believe we will restore revenue growth and deliver adjusted EBITDA in a range of 10 million to 20 million in 2026.

• 2026 revenue expected to grow to range of $750 million to $800 million (~20% growth). - Subscription and service revenue expected to grow ~10% due to ARPU growth and improved attach/retention rates, offset slightly by projected subscriber decrease to 2.2 million. - Operating expenses expected to be in range of $220 million to $230 million (14% reduction from 2025). - Adjusted EBITDA expected to be in range of $10 million to $20 million in 2026, improvement from prior years.

Volatility and tariff rates, memory pricing, memory availability, consumer confidence, competition, component supply chain, and global economic uncertainty.

Q: No questions registered at this time.

A: Operator noted no questions waiting, and management provided closing remarks about excitement for Q2 and GP3-based cameras launch