Thank you, Sam. Good afternoon, everyone, and welcome to GoPro's first quarter 2023 earnings conference call. With me today are GoPro's CEO, Nicholas Woodman; and CFO and COO, Brian McGee. Today's agenda will include a brief introduction from Nick followed by Q&A. For detailed information about our first quarter 2023 performance and our outlook, please read the 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 everyone that our remarks today may include forward-looking statements. Forward-looking statements and all other statements that are 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-K for the year ended December 31, 2022, 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 and remarks made today, other than revenue, are non-GAAP. Now I'll turn the call over to GoPro's Founder and CEO, Nicholas Woodman.

Thank you, Chris. Thank you everyone for joining us today. I'm going to briefly cover the highlights from our posted management commentary before Brian and I take questions. I encourage everybody to spend some time reading the details of our management commentary that is posted on our IR website, which includes our updated strategy that we believe will accelerate growth in units, subscribers, revenue, adjusted EBITDA, and earnings. Demand for our product during Q1 exceeded expectations. Sell-through was approximately 575,000 units, nearly 10% above our previous guidance of 525,000 units and flat year-over-year. Regionally, North America and Asia Pacific led our Q1 outperformance and demand was better than expected in our direct-to-consumer channel on GoPro.com. We reduced channel inventory in the quarter by nearly 95,000 units to below 600,000 units, setting us up well for the rest of the year. Our high-margin subscription and service revenue continues to contribute meaningfully to our bottom-line, generating $23 million in revenue in the quarter, which was up 24% year-over-year and represented 13% of revenue. We ended the quarter with 2.36 million GoPro subscribers, up 36% year-over-year. We continue to see improvements in retention of annual subscribers, who represent nearly 90% of our total subscriber count. In Q1, our first year renewal was between 60% to 65% and second year renewal was between 70% to 75%. We expect to finish the year with between 2.45 million and 2.6 million subscribers, which should result in $100 million in subscription and service revenue for the year. For more than a year now, we have generated more new subscribers via our retail channel than via GoPro.com, even with GoPro.com's subscriber attach rate remaining above 90%. In Q1 2023, our subscription attach rate from consumers who purchased a camera at retail and later subscribed via our app was approximately 50%, a 23% year-over-year improvement. This is largely due to improved in-app marketing of GoPro subscription benefits. With the world having essentially moved on from the pandemic and consumers spending more of their time and money in retail stores, we believe an updated go-to-market strategy will accelerate growth in units, subscribers, revenue, adjusted EBITDA, and earnings. To help frame this opportunity, I'll share a brief retrospective on the changes we made in early 2020 to position GoPro for success during the pandemic, when consumers shifted their spending online and physical retailers were either closed or operating under severely restricted conditions. Back then, we effectively reduced GoPro retail presence by approximately 30% globally; significantly reduced GoPro's marketing budgets; increased GoPro flagship camera pricing by $100 in response to supply chain constraints; we exited our higher volume, lower price point entry-level SKU in response to supply chain constraints; and we shifted to a much more direct-to-consumer business model, growing direct sales at GoPro.com as a percentage of revenue from approximately 10% in 2019 to 38% in 2022. This strategy benefitted GoPro, driving ASPs, increasing profitability and rapidly growing our subscriber base. We added 2 million subscribers during this time and generated more than $260 million of adjusted EBITDA between 2021 and 2022, which enabled us to repay $125 million in debt, repurchase $40 million of our stock, and end 2022 with cash of approximately $370 million. We achieved this despite a decline in camera unit sell-through of more than 30%. But now, in our post-pandemic world, we see an opportunity to adjust our go-to-market strategy to increase units to 3.2 million in 2023, 3.5 million to 4 million units by the end of 2024, and over 4 million units by the end of 2025. We believe this investment in our retail channel will also have a meaningful impact on subscriber growth and profitability, and drive adjusted EBITDA of over $300 million over the combined 2024 and 2025 period. The key points of our updated go-to-market strategy, which we kicked off this week, include: Restoring pricing of our products to 2019 levels with an MSRP reduction of $100 for our flagship HERO11 Black, HERO11 Mini, HERO10 Black, and HERO9 Black cameras. Reductions in inbound freight and product costs along with an improved supply chain are helping to enable this price adjustment from a margin perspective, as will the introduction of new, higher-priced, higher-margin SKUs in the future. Re-introducing an entry-level price point SKU with HERO9 Black to drive meaningful volume and subscriber growth. Restoring our world-class presence at retail by increasing global distribution to best-in-class retailers. And eliminating camera discounts at the time of purchase at GoPro.com. Thanks to the strength of in-app subscriber conversion of retail consumers as well as improvements in subscriber retention, we believe we can generate more subscribers with growth in retail sales than if we continue our pandemic-driven strategy of focusing primarily on GoPro.com sales for subscriber growth. As I mentioned, we believe this improved strategy will drive unit sell-in and sell-through to an improved 3.2 million units in 2023, 3.5 million to 4 million units in 2024, and above 4 million units in 2025. We believe GoPro subscribers will grow to 2.45 million to 2.6 million in 2023, 2.7 million to 2.8 million subscribers in 2024, and 2.9 million to 3.1 million subscribers by the end of 2025. We believe we will generate significantly improved adjusted EBITDA of approximately $300 million over the combined 2024 and 2025 period and we will use these proceeds to accelerate the repurchasing of stock while also investing in growing our business. Our updated pricing and go-to-market strategy has been well received by retail partners and we're excited to grow our business and brand through this important channel. In addition to our updated go-to-market strategy, we're also excited to introduce several new products later this year, including the Q4 launch of our brand new desktop editing experience that will be included in the current GoPro subscription at no additional charge to subscribers. The GoPro desktop app will sync your editing projects with the GoPro Quik mobile app to make transitioning between apps seamless. Our research indicates that GoPro camera owners will highly value our desktop app and that it should help further improve our already notable subscriber conversion and retention rates. We're also excited to launch a new premium GoPro subscription tier in Q4, targeting both GoPro camera owners as well as non-owners. We believe GoPro can serve as a convenient solution for getting the most out of your personal content, no matter what camera you use, and we're excited to leverage our software and service offerings to expand GoPro's Total Addressable Market. Speaking of serving non-GoPro camera owners, our Quik subscription, which caters mostly to non-GoPro owning consumers looking for a convenient content editing and organizational app, continues to see organic growth despite limited marketing support. At the end of Q1 2023, we had 289,000 Quik subscribers paying $10 per year to access the app's mobile editing tools. We're excited to build on this organic success with the upcoming Q4 launches I mentioned above. The go-to-market changes we are implementing come at a time of strength in demand, but also recognize where the world is potentially headed, economically. Pandemic-related supply challenges are easing, and lower product and freight costs are enabling us to shift value back to the consumer with more accessible pricing and an entry-level SKU, both of which we expect will bolster growth in units, subscribers, revenue, and adjusted EBITDA that we will use to drive innovation and significantly increase share buy backs. This is a very exciting time at GoPro and we believe our best days are ahead of us.

Thank you. Our first question comes from Erik Woodring of Morgan Stanley. Erik, your line is now open. Please go ahead.

Hi. This is Sabrina on behalf of Erik. Thank you for taking my question. Could you elaborate on the reasons behind your changes to the pricing strategy? I know you've mentioned some already, but I'd like to hear more in-depth about whether we should consider this a structural change and what exactly has changed.

Sure. The rationale behind it is that, as I mentioned, we did a great job adjusting our go-to-market strategy for the pandemic. But ironically that same go-to-market strategy that worked so well when consumers weren't going to stores and stores were closed and people were shopping online more, that strategy that allowed us to thrive during that period has been holding us back in this post-pandemic world where people are spending a lot more time, a lot more money in retail. They're shopping in stores as a form of entertainment. And we recognize that there's a lot of opportunity there that we need to address to fully maximize the potential of our business. And the response from retailers has been great. I mean, they're thrilled to have us adjusting our pricing to pre-pandemic levels to drive higher volume. Our data shows that the financial model that results is far superior than not taking this action. And a big enabler is that we have such strong conversion rates of camera purchasers converting into subscribers via the GoPro app that, as I mentioned, retail is now the largest source of new subscribers, whereas during the pandemic, GoPro.com was the biggest source of subscribers. So, all of the stars are aligning to create an opportunity for us to grow at retail again, drive more volume, convert subscribers via our app, and, in many ways, have the best of all worlds. So, it's an exciting time. And when you look at the outlook that we have for the company through 2025, it's very compelling.

Yes, Sabrina, I would like to add to what Nick mentioned. We have gathered a vast amount of data over the years, including various pricing adjustments since around 2016 and 2017. We've analyzed our historical sell-through data regarding past price reductions and promotional offers, giving us valuable insights into the effects of changing prices by $100. Additionally, we have examined our historical sell-through volumes across different pricing tiers and the tiers we plan to introduce from 2023 to 2025. When combined with our marketing investments, we can assess the direct brand investments made with retail partners and overall demand. Lastly, we aim to expand distribution, which was previously reduced by about 30%, as Nick pointed out. I am pleased to report that while we have this data, what truly matters are the results. Over the past few days, we have tracked the performance from our largest retail partners in the U.S. and Europe, and while we anticipated a certain percentage increase in units, it has actually surged to double or triple what we expected. It’s still early, just a couple of days in, but we are definitely observing a positive demand trend in both the U.S. and Europe. From a modeling standpoint, we anticipate double-digit unit growth this year as well as in 2024 and 2025. We believe this growth will continue, supported not only by pricing but also by new product introductions, which I won't detail now but are forthcoming and will enhance our overall offering. As I mentioned in my prepared remarks, our average selling price should decrease to around $350 in 2023, but we expect it to recover slightly in 2024 and more in 2025. Modeling this, we foresee double-digit unit growth, which will drive significant revenue increases and restore profitability, pushing margins back into the upper 30% in 2024 and 2025, leading to meaningful EBITDA that we plan to use for substantial stock buybacks. This summarizes our strategy.

Understood. Thank you for the information. My second question is about consumer demand. I know you mentioned that it was stronger in the U.S. and Europe. Could you discuss the linearity throughout the quarter? Were there any changes in behavior that you observed in April? Additionally, what factors are being considered in your 2023 outlook? Thanks.

Yes, when I spoke at your conference in early March, I mentioned we could reach up to 575,000 units in sell-through for the quarter, and we actually hit that high end. The quarter wasn't linear at all, as March showed a 33% increase compared to January and February. We continue to see strong demand throughout the quarter, and April met our expectations. We've also seen solid performance on GoPro.com, with growth in the U.S., Europe, and Asia. Reaching 3.2 million units will be supported by our entry-level products, and we're experiencing significant growth with the HERO11 Black. We're really excited about the results from our pricing strategy.

Perfect. Thank you.

Our next question comes from Martin Yang at Oppenheimer. Martin, your line is now open. Please go ahead.

Hi. Good afternoon. Thank you for taking my question. First, I want to ask about the hardware. How would you size or would you model additional benefits for hardware margins for higher volume embedded in your longer-term outlook? And do you benefit anything from recently declined component cost?

Hi, Martin. Yes, we've seen a decrease in component costs, especially in memory, as well as in other areas. This is expected to have a positive impact on our numbers starting in the second half of the year. I will need to address more expensive inventory during the first half. We anticipate some cost reductions continuing into 2024. Additionally, some of the entry-level product price points we plan to introduce are not yet at optimized costs, which may lead to a slight margin hit. However, we will convert these products to cash, which is included in our outlook. In 2024, we expect to maintain entry-level products but at cost points that will be margin positive, unlike the current situation in 2023. This positions us well, along with the introduction of newer products in 2024 and 2025, to enhance our overall demand and product profile. All these factors should lead to margins increasing between 36% to 40%. If currency returns to 2021 levels, which is roughly a 10% impact, margins could reach around 39% to 43%. Further weakening of the dollar would be advantageous for us, bringing us back to our previous levels.

Got it. Thanks. And the second question is on subscribers. So, do you see or do you have a relatively lower ARPU for subscribers coming from the retail channel? Is there a meaningful difference? If there is, are both channel subscribers from both channels going to converge over time or will there be a sustained gap between ARPU from the two sets of subscribers?

Yes, good question. The ARPU between the two are pretty close actually. So, they're going to both converge to the pricing, it's not going to collapse to be the same, whether it be subscriber on GoPro.com or you subscribe via the app post retail purchase. And so, we'll see ARPU up over time, because as people move from kind of the entry-level price point of $25 and then upgrade to $50, that will have a positive effect on ARPU. And speaking of which, we gave a range of outcomes for subscribers. And we assumed that at the low end, it's about a 35% retail attach, and on the high end, it's about 40%. Our guidance of 2.5 million is kind of in the middle of that. And Q1, we said was nearly 50%, which was amazing, up a lot, I mean 23% year-over-year from an attach perspective on retail. That's a bit of an anomaly, because we have a lot of demand in Q4 that turns into subscribers in Q1 and we have a low base obviously of sell-through in proportion to the people coming in. You'll see that normalize a little bit more down to about 40%, I think, in Q2 and Q3 and maybe a little bit less in Q4 where it flips the other way where we sell a lot and the sell-through is big, but the people who buy don't convert until Q1. So, the seasonality is a bit opposite in subscriber growth quarter-to-quarter versus our revenue growth, if that makes sense. So, we're still pretty excited, 35% to 40% still pretty darn good attach, and obviously, we'll do more to continue to grow that, as Nick had said. But those are the assumptions behind how we came up with the range. And those same assumptions were used for estimating '24 and '25.

Got it. Thank you. Really appreciate the details. That's all the questions from me.

And there are no further questions. So, I will return it to management for any closing remarks.

Wow, showstopper. Well, thank you, operator. And thank you everybody for joining today's call. As I said earlier, this is a very exciting time at GoPro and we believe our best days are ahead of us. It's time to grow again, and we're really excited about our new go-to-market strategy and it's great to see such compelling results straight out of the gates. So, stay tuned for more from us. And until then, thank you. This is Team GoPro, signing off.

And this concludes today's call. Thank you everyone for joining. You may now disconnect your lines.