Earnings call transcript: GoPro Q1 2025 revenue at high end of guidance

GoPro Inc., currently valued at $95.47 million in market capitalization, reported its financial results for the first quarter of 2025, revealing a revenue of $134 million, hitting the high end of its guidance. The company also highlighted a 4% year-over-year growth in subscription and service revenue, reaching $27 million. Despite a challenging market environment, GoPro managed to reduce its non-GAAP operating expenses by 26% and halved its adjusted EBITDA loss to $16 million. The company’s strategic initiatives in product innovation and operational efficiency were underscored during the earnings call. According to InvestingPro analysis, GoPro’s stock appears undervalued based on its Fair Value calculation.

Key Takeaways

• Revenue reached $134 million, aligning with the high end of guidance.
• Subscription and service revenue increased by 4% year-over-year.
• Non-GAAP operating expenses decreased by 26%.
• GoPro plans to launch the Max Two 360 camera in 2025.
• The company is focusing on supply chain diversification and cost reduction.

Company Performance

GoPro demonstrated resilience in Q1 2025 by achieving revenue at the high end of its guidance, despite a decline in sell-through units from 530,000 to 440,000. With a trailing twelve-month revenue of $801.47 million and a gross profit margin of 33.94%, the company is navigating competitive pressures, particularly in Asian markets, where revenue fell significantly. GoPro’s strategic focus on innovation and operational efficiency is beginning to yield positive results, though InvestingPro data shows a revenue decline of 20.29% over the last twelve months.

Financial Highlights

• Revenue: $134 million, at the high end of guidance
• Subscription and service revenue: $27 million, up 4% year-over-year
• Non-GAAP operating expenses: $62 million, down 26%
• Adjusted EBITDA loss: $16 million, reduced by nearly 50%
• Gross margin: 32.3% (35.5% excluding one-time inventory sale)

Outlook & Guidance

GoPro has provided a revenue guidance of $145 million for Q2 2025, with a margin of plus or minus $10 million. The company expects to end the year with $75 million in cash and no debt, alongside a subscriber base of 2.4 million. Looking ahead to 2026, GoPro aims for unit and revenue growth, supported by upcoming product launches like the Max Two 360 camera. Analyst targets compiled by InvestingPro range from $0.30 to $1.00 per share, reflecting mixed sentiment about the company’s growth prospects. For deeper insights into GoPro’s valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

CEO Nicholas Woodman expressed confidence in GoPro’s financial and brand strength, stating, "We are well positioned to match the financial strength of GoPro to that of our incredible brand." CFO Brian McGee highlighted the impact of cost-reduction initiatives, noting, "The initiatives we undertook in 2024 to reduce operating expenses and improve gross margins are bearing fruit."

Risks and Challenges

• Supply chain diversification remains a priority as GoPro seeks to reduce dependency on China.
• The company faces significant competition in Asian markets, impacting revenue.
• Tariff impacts and pricing strategies are ongoing concerns for maintaining profitability.
• Market saturation in the action camera segment poses a challenge to growth.
• Intellectual property protection is crucial, with ongoing trials at the US International Trade Commission.

Q&A

During the earnings call, analysts questioned the impact of tariffs and supply chain diversification on GoPro’s cost structure. Additionally, the reduced performance in Asian markets and potential pricing strategies to mitigate tariff impacts were discussed, highlighting GoPro’s strategic focus on maintaining competitiveness and profitability.

Full transcript - GoPro (GPRO) Q1 2025:

Cameron, Moderator: Good afternoon. Thank you for attending the GoPro First Quarter twenty twenty five Earnings Call. My name is Cameron, and I’ll be your moderator for today. And I would now like to pass the conference over to your host, Robin Stecker, Director of Corporate Communications at GoPro. You may proceed.

Robin Stecker, Director of Corporate Communications, GoPro: Thank you, Pam. Good afternoon, and welcome to GoPro’s first quarter twenty twenty five earnings conference call. 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 and A. For detailed information about our first quarter twenty twenty five performance as well as outlook, please read our Q1 earnings press release and management commentary we posted to the Investor Relations section of GoPro’s 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’s CEO, Nicholas Woodman and CFO and COO, Brian McGee. 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. 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. 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 ks for the year ended 12/31/2024, which is on file with the Securities and Exchange Commission and other reports that we may file from time to time with the SEC. 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.

Now I’ll turn the call over to GoPro’s Founder and CEO, Nicholas Whitman.

Nicholas Woodman, Founder and CEO, GoPro: Thanks, Robin, and thanks, everybody, for joining us today. As Robin mentioned, Brian and I will share brief remarks before going into Q and A, and I want to encourage everyone to read the detailed management commentary we posted on our Investor Relations website. In the first quarter, we hit our marks for revenue, launched new hardware and software products and are on track to launch exciting new products later this year. 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 three sixty market and setting the stage for the launch of Max two later this year.

We also released a limited edition polar 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 Giro 13 black’s versatility and performance. The GoPro subscription continues to be a highlight with strong aggregate retention numbers above 67% over the past six quarters. ARPU improved 5% year over year, and aggregate subscription retention in q one 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. 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. In January 2025, the US 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.

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, continued 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 tariffs on our business. 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 operating model. Operating expenses were down 26% to $62,000,000 from $83,000,000 in Q1 twenty twenty four. Next, we are excited to provide an update on our tech enabled motorcycle helmet initiatives.

As we shared in 2024, when we acquired Foresight Helmet Systems, GoPro plans to launch tech enabled motorcycle helmets, which we believe will help us grow a meaningful business with a SAM of approximately 3,000,000,000. 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, improved safety, and performance to the world of motorcycling, leveraging each other’s design, engineering, and brand strengths. We look forward to sharing updates as we move closer towards launching our first product together. Overall, GoPro’s performance in q one and our outlook for q two 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 road map 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. Now I’ll turn the call over to Brian.

Brian McGee, CFO and COO, GoPro: Thanks, Nick. We 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 three sixty camera and delivered a new colorway for our flagship camera during the quarter, and we are on track to launch our next three sixty camera this year. First quarter revenue was $134,000,000 which was at the high end of our guidance of $125,000,000 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%.

Q1 twenty twenty five non GAAP operating expenses of $62,000,000 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 was $94,000,000 or 70% of Q1 twenty twenty five revenue compared to 68% of Q1 twenty twenty four revenue. Growth in our retail channel mix was primarily driven by sales to our big box retailers. Revenue from our gopro.com channel, which includes subscription and service revenue, was $40,000,000 30 percent of q one twenty twenty five revenue compared to 32% q one twenty twenty four revenue.

Subscription and service revenue grew 4% year over year to 27,000,000, primarily from 5% ARPU growth as a result of improving aggregate retention rates as well as improvements to a record of 70%. Subscription attach rate from camera sold across all channels is 49% compared to 48% in q one twenty four. Non GAAP operating expenses were $62,000,000 compared to $83,000,000 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 $16,000,000 We ended the quarter with inventory of $96,000,000 a 27% decrease year over year and reflecting the first Q1 sequential decline in inventory since 2018.

Sell through was approximately 440,000 units compared to 530,000 units in the prior year period. 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 and South Korea. Channel inventory decreased sequentially by approximately 40,000 units. 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 $5,000,000 1 time sale, gross margin would have been 35.5% in line with guidance and above Q1 twenty twenty four of 34.4%.

Reported gross margin was 32.3% in the first quarter of twenty twenty five. First quarter operating expenses decreased 26% year over year to 62,000,000 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 twenty twenty five with $70,000,000 in cash, cash equivalents and marketable securities, which included a $25,000,000 draw on our ABL. Excluding the $25,000,000 draw, cash would have been down $58,000,000 sequentially compared to our cash usage of $89,000,000 in the first quarter of twenty twenty four.

Cash used in the first quarter of twenty twenty five was primarily due to adjusted EBITDA of negative $16,000,000 and working capital changes of 36,000,000 Sequential working capital changes were primarily due to a $63,000,000 decrease in accounts payable and other liabilities and a $5,000,000 increase in prepaid expenses and other assets, partially offset by a $24,000,000 decrease in inventory and a $9,000,000 decrease in accounts receivable. In the second quarter of twenty twenty five, we plan to repay the $25,000,000 ABL draw. Headcount ended at six fifty nine full time employees, down 30% from our prior year of September. Turning to our outlook. For the second quarter, we expect revenue to be $145,000,000 at the midpoint of guidance, non GAAP loss per share of $07 and a nearly $30,000,000 improvement in 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 reductions. Additionally, we are focused on further operational efficiencies to drive down costs and expand our supplies supply chain outside of China. At current tariff rates, we expect the tariff impact in 2025 will be approximately $8,000,000 on our cameras, which is expected to be fully offset by modest product price moves of less than 5% globally. This expected $8,000,000 impact for 2025 is further mitigated by the fact that we are still selling through inventory at end of the United States before April. As we continue to actively manage the balance sheet and expect to further reduce inventory sequentially by $20,000,000 to approximately $75,000,000 and increase cash net of debt by $25,000,000 sequentially as we operate working capital more efficiently.

For the second quarter of twenty twenty five, we expect to deliver revenue of $145,000,000 plus or minus $10,000,000 down 22% year over year. We estimate three days in the second quarter to be approximately $370 up nearly 15% year over year. We expect unit sell through 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 sequentially. 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 twenty twenty five operating expenses to be $60,000,000 plus or minus $1,000,000 a 36% reduction from the prior year quarter due to lower spending on wages, some lower headcount, reduced marketing and lower nonrecurring engineering expenses related to completion of GP3.

We expect non GAAP loss per share in the second quarter of $07 at the midpoint of guidance and expect shares outstanding to be approximately $57,000,000 Turning to the balance sheet, we expect cash net of debt to improve $25,000,000 in the second quarter. 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 three sixty 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 Max two three sixty camera in 2025. We expect our full year twenty twenty five operating expenses to improve further to a range of $240,000,000 to $250,000,000 down more than $100,000,000 or 30% year over year. We expect to offset tariff costs with modest price increases, continuous supply chain diversification outside of China and potentially produce certain products in The United States.

We expect subscription ARPU growth, subscription cost improvements and to end the year with 2,400,000 subscribers. We now expect to end 2025 with $75,000,000 in cash with no debt and a $50,000,000 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 are bearing 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 business. Operator, with that, we are ready to take questions.

Cameron, Moderator: Thank you. We will now begin the question and answer session. The first question is from the line of Eric Woodring with Morgan Stanley. You may proceed.

Eric Woodring, Analyst, Morgan Stanley: Hey, good afternoon guys. Thank you for taking my questions. I have two. 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?

Mike, 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 stronger sell through was 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 2Q at all? And then I have a quick follow-up, please.

Brian McGee, CFO and COO, GoPro: Sure. 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, sell through did did well, and and our sales ended up coming in more, back end loaded, which is why Aviso was a bit higher. So we didn’t we didn’t see that, happen in the quarter.

Eric Woodring, Analyst, Morgan Stanley: 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. Obviously, reduced overall channel inventory. But can you just maybe help us understand exactly what happened kind of that gap in 1Q and then extend that conversation to Asia, just revenue down over 50% year over year.

Just just kinda help us contextualize. Is that mostly competition, or are there other factors there? Thanks so much.

Brian McGee, CFO and COO, GoPro: Yeah. In my prepared remarks, we 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. The US had, the best, sell through. It was down the least, as we reported.

And and some of the sell in, was due to, in the quarter, we had that one time $5,000,000, 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 too at at, pretty favorable, price points. We Okay.

Super. Thank you for that color, Brad. More we have no more inventory to do that with. That and that’s partly why our margins are up sequentially to 35 and a half percent. So we’re selling mostly between

Eric Woodring, Analyst, Morgan Stanley: Thank you so much, Brian.

Cameron, Moderator: The next question is from the line of Alicia Reese with Wedbush Securities. You may proceed.

Alicia Reese, Analyst, Wedbush Securities: 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. I’m just wondering how much of your inventory headed to The U. S.

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?

Brian McGee, CFO and COO, GoPro: Yeah. Good question. On on the tariff front, actually, the amount on cameras into The US is zero because we’ve diversified all of our camera production outside of China. And what comes from The US is manufactured in Thailand, so that’s about a 10% tariff rate versus about a 50% 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 in a quarter.

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 three 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 rest balance the rest of the world for capacity. And tariffs 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 tariff front.

Alicia Reese, Analyst, Wedbush Securities: And I have a couple more questions, if I may. I was wondering if you could talk a little bit more about what’s going what are the dynamics happening currently in Asia over the past couple quarters? It’s been pretty weak. So just wondering if you could highlight that and what the difference was in The Americas in the quarter.

Brian McGee, CFO and COO, GoPro: Yeah. In 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. 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 and South Korea. And The US started to shore up in a much better way in in the last quarter, and our expectation is that it’ll continue in q two.

So that’s kind of the moving parts geographically.

Alicia Reese, Analyst, Wedbush Securities: Fair enough. And lastly, I was wondering if you had any plans to do, like, a reverse stock split or anything of that nature to to change the stock price from here.

Brian McGee, CFO and COO, GoPro: 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.

Alicia Reese, Analyst, Wedbush Securities: Understood. Thanks so much for the time.

Brian McGee, CFO and COO, GoPro: Thank you.

Cameron, Moderator: There are no additional questions waiting at this time. I would now like to pass the conference back over to the management team for any closing remarks.

Nicholas Woodman, Founder and CEO, GoPro: Thank you, operator, and thank you, everybody, for joining today’s call. 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. This is Team GoPro signing off.

Cameron, Moderator: That concludes today’s call. Thank you for your participation, and enjoy the rest of your day.

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