GoPro, Inc. (GPRO) August 2025 Conference Transcript

Hello, everyone. Welcome to our virtual Farsight Chat with GoPro at Oppenheimer's 28th Technology, Internet, and Communications Conference. Today, we have the pleasure to host the CEO of GoPro, Nick Whitman, and the CFO, Brian McGee. Thank you and welcome to our conference. Before we start, Brian would like to make a forward-looking statement. Thanks, Martin.

Yeah, before we get started, I'd like to remind everyone that our remarks today 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 our commentary about business results and outlook is based on the information available as of today's date we do not undertake any obligation to update these statements as a result of new information or future events information concerning the company's risk factors is available on this most recent annual report on form 10k for the year ended December 31st, 2024, and our most recent Form 10-Q, which was filed yesterday with the SEC and is updated in future filings. With that, I turn it back to you, Martin.

Thanks, Ryan. I would like to start the conversation with a more general overview of the market. Nick, what's your current read on the size and growth trajectory of the action camera market? over the next three to five years? Well, the action camera market today,

we estimate to be around 3 million units globally. We are the U.S. leader in that market. And we also participate in the 360 camera market, which we estimate to be approximately 2 million units globally. And we've started to participate in that again earlier this year with the reboot of our Max camera, which we shared on our earnings call yesterday. We've recouped about 10% market share with that product. And we're launching our Max 2 camera later this year, which we believe will help us recoup even more share and help grow unit growth and profitability and lead to profitability in the fourth quarter of this year, as we shared. And then another important area in an adjacent product category that makes sense for GoPro to play in, but we do not participate today, is the higher-end low-light camera category for vloggers and prosumers and professionals. Uh, that's an exciting opportunity for us to, uh, participate in starting next year. Uh, and that's currently a 2 million plus camera category, uh, again, that we do not participate in today. So in those three categories alone, uh, action camera, 360 and, uh, prosumer low light, You've got 7 million plus units and growing, and we only participate in a 3 million segment of action cameras, and we lightly participate with our current Max 360 camera. So that's a significant amount of TAM expansion opportunity for us throughout the rest of this year again by more aggressively moving into the 360 space with MAX 2 and then entering the low-light prosumer space next year. In addition to that, we are moving into technology-enabled motorcycle helmets, which we think is a no-brainer market for incorporating technology that motorcyclists are already using today, whether it's GoPros attached to their helmet or communicators attached to their helmet so they can communicate with other riders in their ride group or listen to music or send and receive calls, what have you. We see those technologies collapsing into a helmet, both for improved safety, performance, and overall value. That's just a market where GoPro is already very strong, and it makes sense for us to leverage our imaging technology and software expertise to differentiate and potentially disrupt in that market. And as we've shared, that has a SAM of approximately $3 billion globally. So there's a lot of TAM expanding opportunities for GoPro in the near, mid, and long term that we're very excited about.

That makes sense. And then among those new opportunities, the 2 million units on 360 camera, 2 million prosumer, and then 3 billion motorcycle helmet, is there any international markets you will call out that represent the biggest growth opportunity for you in the next few years?

Well, I'll let Brian add, but this is a global opportunity for us, and we're excited to partner with other brands where possible to help us realize the full extent of the opportunity as quickly as possible and as authentic a manner as possible, which is why in the area of motorcycle helmets, we chose to partner with AGV, who is the GoPro, if you will, of motorcycle helmets, renowned for their fit performance, worn by MotoGP championship, winning MotoGP riders. It's just the creme de la creme of motorcycle helmets, and we recognize that it would make a lot of sense for GoPro to partner there for not only the authenticity, but also just the quality of product, the design, the fit, and consumer confidence that this was going to be a really high-quality product. So that's an example of how we're attacking many new growth opportunities, but where possible, we're doing it in the most efficient and effective manner that we can so that we can run as many multiple new product programs as possible in parallel. I would add that what we've shared publicly is not the extent of our product roadmap. It's not the extent of our opportunity to launch new products into new markets and expand our CAM, that roadmap is quite extensive. What we've shared publicly is the near-term products that we intend to launch and do so in a profitable manner with an adherence to the OPEX targets that we have that we believe are going to enable GoPro not only to grow our top line over the next couple of years, but our

profitability in a meaningful way as well. I want to move on to 360 camera. You recently discussed some of the software updates on 360 video editing capabilities ahead of the Max 2 launch. So do you find software taking a more important role in the 360 camera category? Absolutely. I mean, software

is taking a more important role in all of our camera categories in so far as making it easier for our customers to make use of the content that they're capturing. That's why the GoPro subscription has been so successful with our cameras auto offloading any new content you capture to the cloud. You can do all your editing in the cloud. You can share directly from the cloud. You never even have to download your content onto your phone or computer. And the software features that make that all the more seamless and less time consuming for subscribers and non-subscribers alike is incredibly important, very much so in 360 cameras, because the majority of content creation and sharing is not 360, right? It's a subset of the entire 360 image that's being incorporated into a traditional video or shared as a clip socially. And helping people achieve those, identify the best framing of their 360 content and apply the desired effects in the most convenient way possible is a huge part of the value add. And that's just in consumer. Then when you think about 360 cameras being used for real estate or construction or other industries, that is a software experience that the hardware makes it possible to capture. But then the software half of the experience is what really allows an end user to make use of that content. So software will be increasingly important, and it's important to remember that, by and large, the software experiences that we're working on to expand the utility of our hardware products will tie back into subscription. Not necessarily only the GoPro subscription, because for certain markets, they're going to have different enough needs that we would offer them a different subscription. But software in general from GoPro, for the most part, will tie back into subscription, which has proven to be a very successful part of our business.

And how do you plan to communicate that point on software to the potential customers who may be new to 360 or who are using other 360 cameras?

Well, the software experience is marketed as one with the hardware experience, depending on your audience. So there's not a big delineation between marketing the capabilities of the camera, between hardware and software. It's just about the overall experience. So when somebody is learning about, say, Max 2 from a consumer perspective, what's done in hardware, what's done in software is almost irrelevant. It's more about marketing the overall value proposition to the end user, because at this point, the software experience is such a significant, arguably more than half of the overall product experience. So the marketing thereof is just unibody, if you will, with the hardware.

Yeah, that makes a lot of sense. And when it comes to other new products like the low-light presumer camera you highlighted and a tech-enabled motorcycle helmet, when should we expect revenues to come to GoPro and how competitive are those markets currently?

I bet it is. Again, that's why we've chosen to partner with AGV, because in general, the motorcycle helmet industry is made up of fantastic brands that are building fantastic products. Um, there's not an enormous amount of tech in, uh, incorporated in, uh, the motorcycle helmet industry. That, that was made very clear to us when we researched the opportunity and built our business case in the first place. And that's very exciting, right? Because therein lies GoPro's opportunity to be a tech enabler in that industry. Um, and we recognize that AGV has a lot to gain by working with us. And we have a lot to gain by working with them. And we hope to gather to move the industry forward and to play a leadership role in that. But that is a competitive industry. But we feel like our go-to-market strategy and partnership with AGV is a smart one. And I can't share with you, well, I'm not going to share with you when revenue, when we'll give you revenue estimates for that. But what I can share is starting next year, we'll start to update investors with more substantial tangible updates on our motorcycle helmet program that I think will get everybody very excited. And then in the category of low light prosumer cameras, very competitive space. However, we believe that we've got some unique differentiating opportunities where we're going to be delivering a lot of value in a unique GoPro way to consumers that's going to allow us to participate in that market in a meaningful way and over the long-term grow market share that you would expect from GoPro. But most importantly, I think for investors is just to know that that category of digital imaging is growing quickly. We are not participating in it at all. And so that represents a lot of low-hanging fruit for the company starting in 2026.

um another topic on new products and new innovation we're starting to see more emerging content created for example smart cameras or cameras on smart glasses and how do you evolve your portfolio of hardware and software to ensure that you stay relevant as new form factors and

new use cases emerge yes the consumer interest in digital imaging continues to grow uh that's good for us, creates a lot of opportunities. One of the principles of our business strategy is to build solutions, not things, to build tools, not toys. And we're more and more focused on utility and need as opposed to building products for entertainment. A number of our customers use GoPros for training, professional use cases, whether it's content creation or R&D of other product developments, you know, whether it's, you know, used in rocket labs or in other engineering exercises where they want to document. And a GoPro is the easiest way to deploy a small, rugged, mountable, go anywhere, capture or anything, camera. The more that we can build tools, not toys, the more that we can focus on utility in consumer, but also beyond consumer, that's a real opportunity for us to continue to diversify, grow into new markets, differentiate, leverage our expertise to camera enable experiences or products that otherwise weren't camera enabled before. There's a lot of opportunity there as the world becomes more and more open to embedded cameras, content capture, and utilization thereof. So what I would say is diversification, diversification, diversification is how we protect GoPro over the long term against the potential for mainstream adoption of convenient cameras that help you capture, say, like your point of view, like a pair of glasses, it's important for investors to remember that while that's compelling, that's only one of the very many ways that a GoPro is used. And then additionally, for quite some time, we expect GoPro to have a performance and quality advantage over much smaller form factor, albeit very convenient, but limited in quality. quality, capability, and versatility solutions, diversification, utility, and versatility are super, super important to our business strategy going forward.

And then when you think about when do you choose to make a decision to break into new categories,

what do you need to see first? Well, sometimes we benefit from seeing other businesses growing and seeing consumer adoption. It's been a while since we've actually had that opportunity because previously GoPro was always the first mover into some new product categories. We were establishing the market. It was all our marketing, all our product innovation, all of our advertising to drive awareness. We're seeing the opportunity, whether it's in 360 or in low-life prosumer as an example, where there's clear growth and there's clear opportunity for us to leverage our technology and our brand, our global distribution to participate in that growth. So that's kind of a no-brainer. There's other areas, again, like motorcycle helmets, where we're the first to identify, hey, this makes sense. And so we go and we do our research and we interview potential customers, existing customers, participants in the category, resellers of product, and potential partners like AGV to make sure that other people see this same opportunity that we do. And if we get enough of a positive feedback loop that reinforces like, hey, this is a no-brainer, and if it fits in with our budgets to go pursue, and we believe that we are ready to commit in a manner that is just that, committed for the long term, then we're all in. And that's the case with motorcycle helmets. So right now in the business, it's a nice balance of clear and viable opportunity through available market data growth categories. and the other side of the scale of a little bit more venture-minded products that we think, given all of our years of experience, have a very high probability of success.

That makes sense. In between the hardware innovation, software features, and subscription services, you know, growth strategy, how do you prioritize between those? You know, which one would you put at a higher priority than the other? And what's the balancing act in between?

Sorry, the subscription opportunities and what was the first?

Yeah, the first is hardware innovation and then software features and then subscription services, how you're balancing all three in your growth strategy.

Yeah, they go hand in hand. And it's rare that – I can't even remember the last time, honestly, that we reviewed a hardware opportunity that didn't have subscription tied to it, primarily because to really create a fulsome product experience as a solution, you have to have software be equal parts to the hardware in terms of the solution. And then that organically creates a subscription opportunity. So, yeah, it's interesting. I haven't been asked that question, but I think it's a great question because what it does is just highlights the fact that in today's hardware, In today's world of hardware product development, you're going to be hard-pressed to not find a software component that's organically expanding the capability and value of that hardware experience. And then the question is, well, does it make sense to charge for that? That's the software side of that experience. Can you do so authentically and not upset the end user who feels like, hey, I should be getting this for free? And that's where being in the content creation, management, editing, leveraging of content business for a purpose, there's a lot going on there that I think in consumer and user minds really warrants a subscription component, which I think is why you're seeing GoPro subscription do so well as it relates to attach rate and retention, because it's real value and the end user recognizes that.

Yeah, you know, I'd add, Martin, on that front, we've seen retention rates obviously improve over the years, right? So people are staying in it at the year three or four, 80% are staying in. And then attach rates have moved from low 40s now up to 56%. And part of that is we've also made a lot of quality improvements in the product. The app quality enhancement have led to better reviews and ratings. We've had a lot better success rate in iOS and improvements there, which are getting us better ratings. the combined grid feature providing a lot more contextual cloud backups and they're working and it's upselling. As a result, we're starting to see an upward trend actually in media unit engagement, which means the frequency of use is actually starting to improve as well. It's an integral part of of what we do as a solution the hardware software plus the subscription they all

really go together i want to double down on subscriber growth here so how do you think about the key drivers for subscriber growth longer term um you know maybe we can get going to more specific breakdown of the key components such as pricing new hardware sales user chair and software

features or more? Yeah, well, unit growth today, camera sales, hardware sales are really the primary driver of new subscriber acquisition, right? And then that combined with better retention can yield growth. And retention comes in the form of, as Brian just mentioned, and ever-improving software experience, be it convenience, speed to completion of whatever your task is, reliability, and so forth. And that's something that we continue to invest in. And we've got a very, I believe, well-thought-through software roadmap that is targeting the things that really matter most to improving retention. I mean, retention is already pretty darn good. But always, if you'd asked us a year or two or three years ago, we would have said it's pretty darn good. But we keep investing in, we keep improving the retention. And frankly, kudos to the team. It's remarkable. And we expect it to continue to improve. Um, the, in the future, starting in 2026, uh, we're going to be launching some software experiences that we believe have the potential to drive subscribers, um, in a, in a manner that's decoupled from a hardware sale, uh, helping existing camera owners and even subscribers get more out of their experience with an additional subscription that's what I can say is really tailored to a specific interest of theirs. And as well, the software experience can really position any of the GoPros that we sell as a tool for them, as a must-have device at the hardware level for their activity, but then they really need the software experience side of it to get the most out of it. And then we're going to be targeting additional software experiences that can help expand the TAM for any given hardware, any given camera that we sell today. I'd say real estate and construction is another example of that, say, in the 360 market. That's something that we can and will do a much better job of in the near future. So those are three examples of software, both expanding the appeal of our hardware, the utility of our hardware, while also potentially driving subscription growth amongst existing hardware owners, not just new customers who come into our ecosystem.

Got it. So we'll be watching for a big software feature update or feature edition come 2026.

Yes, next year should be interesting on that front.

And when you think about the customers of a different hardware, you have a lower priced camera, you have the flagship, and then you have the Max 360 cameras. What are the different customers responding to subscription? Do they have different behavior in attach rates, in retention, if any?

Yeah, Martin, that's a good question. Even on the lowest end of our cameras, our 199 Hero, we see about a 25% attach rate. And they follow the same profile of retention. That says that the bulk of what we sell is Hero 13, its flagship, and that has a higher retention rate, so we blend out into the mid-50s now. But we're seeing it across all cameras, more on the more expensive ones, because I think people may have more disposable income to invest there. But that's one of the things that's really nice is it's not just tied to one camera. It's across the whole breadth of what we offer to the consumer is they're all participating and staying in at about the same rate. So that's a really encouraging and that's a trend that's continued over the last year or so. So it's not a, oh, it's a one-off kind of fluke. It's very, very consistent.

Yeah. And just one more thing I'd like to add as I was listening to Brian and I realized that I don't think we've ever really made this clear to investors, but owners of multiple GoPros have one subscription. So if you buy a second or a third GoPro for a different perspective or a different use case, that all ties into your existing GoPro subscription at no additional cost. And so that really also helps with the engagement and stickiness and the retention that I don't think we've ever touched on before. So I think it's just a good point to make.

That makes sense. The unlimited cloud storage is very appealing, especially when you have multiple. And then the user churn, when you think about, you know, why or when they churn, you know, what are the common reasons? How do you plan to improve the retention?

There are a handful of software feature-related deficiencies or things people want to see that should work better, faster, more conveniently. I won't divulge those for competitive reasons, but we're actively investing in improving that part of the experience to address that. And then outside of that, it's largely that an end user just doesn't use their GoPro enough, and they don't see the value of paying $50 a year for something that they're not making use of. And so that's another reason, one of many, why we're very much focused on improving the utility, the tool-like aspects of our hardware and software experience, and target more people who can use and or need a GoPro to be more successful in whatever activity or profession or use case that they might be thinking about using a GoPro for, right? tools, not toys, then that means that over time we can increase the importance, the value proposition of our hardware and software products to the end users that we sell to, and which we believe should have a positive impact on retention over time as well.

And another question on subscription, in the most recent results, you highlighted a very significant improvement in the subscription touch rate what changed or what are the changes you did

you implement that resulted in such improvement yeah martin um i kind of touched on this you know a bit before we've made a lot of you know improvements enhancements in the app uh we're getting better reviews ratings ios upload success rate has improved um a lot and that we did about a year ago. Some of the combined grid features providing more contextual cloud backup upsells, and so people are using it more, cameras have as well as uploading from their phone. And again, we're seeing an increased use and frequency of the camera, which is a nice result. And so I think all that, I think you're seeing more core users coming in as well to the company and to our products. And I think all that is laddering up to a much more improved attach rate. And like I said before, it's gone from low 40s to now hit 50, basically two quarters in a row, and now 56. So it's definitely an upward trend. We're also seeing, we must be doing more in the app too, because we're seeing a lot of people who would have downloaded the app and maybe they didn't get the subscription after they bought their camera at retail we're seeing a lot more coming through gopro.com as well so that's also been a nice you know improvement uh from a margin perspective for sure because we we garner the full benefit of of the sale but um we're definitely seeing more coming through gopro.com and that's

encouraging sign as well that makes sense another thing that jumped out at me in recent quarters is you highlight this uh ai model training opportunity maybe can you give us more context for the program that enable subscribers to monetize their content via the ai model training for other people maybe you know generally talk about how you come up with such an idea how do you prepare to help subscribers and potential AI companies to understand what GoPro has to offer?

I think we're down to three and a half, four minutes, so I'm going to give an uncharacteristically quick answer. Yeah, we got pulled into this opportunity by conversations that were initiated by other big tech firms that wanted access to our customers' cloud data lake of video content for AI training. So this opportunity came to us. This wasn't something that we thought up, which was very cool. And so when we dug in and built a business case for it, we determined that, of course, this has to be opt-in. And with over 13 million hours of content in the cloud that is bang on what a number of AI technology companies, the type of content that they're looking to access for AI training, that's a pretty significant opportunity, not just for GoPro, but for our subscribers. So we're really excited about this. I would say stay tuned. And as we've shared, we're inviting some of our biggest users into the program to help us kick it off, to help us learn about it, and then to provide case studies for other tech firms to understand how successful it can be for them. So we're excited. So more on that soon. Brian, anything to add?

I think the TAM is quite big and it's growing fast, $1.3 billion, we think, from industry research and growing at about 20%. So as we resume growth, start growing units, revenue, and you just get more content going into the cloud, I think we'll also see an increase in content in the cloud as we put out new 360 products. There'll be much more content that will be generated in the cloud. And then as we do some of the other offerings in 2026, it's just going to feed into this flywheel of, you know, camera sales, camera usage, get content in the cloud, cloud editing, and then this AI model. So it's a great opportunity for us to also improve retention, quite frankly, with subscribers and they get to benefit 50% on whatever they, whatever is used.

And last one is maybe putting a last question on the capital allocation. Once you paid off your convertible later this year and when you're entering a year of growth and profitability, how do you evaluate a priority in capital allocation and where those buybacks sits in the packing order?

Yeah, well, let's just say the first priority is to continue to grow revenue and stay profitable. That's, I think, the most important. And then we'll evaluate, I think, growth opportunities as part of that while staying within a reasonable OPEX envelope, as we've talked about. And just given the structure, I'd probably repurchase debt before I would buy stock. But we'll go figure that out once we have the money. And if you look at it from that 26 perspective, in the financing agreement we just did for the new $50 million raise, it has a $40 million covenant for EBITDA. So we feel good about being able to make that number in 26. And we're excited to get back into growth mode profitability and having the free cash flow, quite frankly, to make those fun choices. It's time.

Well, it's time, and it's time, I guess.

I see no further questions from the audience. Thank you again for your time and insights today, and I wish you all have a good rest of the day. Thank you, Martin. Thank you so much for having us.