Good afternoon. Thank you for attending the GoPro Q4 2022 earnings call. My name is Matt, and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Christopher Clark, Vice President of Corporate Communications. Christopher, please go ahead. Thank you, operator. Good afternoon, everyone, and welcome to GoPro's Q4 and full year 2022 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 Nicholas, followed by Q&A. For detailed information about our fourth quarter and full year 2022 performance and our outlook, please read the detailed management commentary we posted to the investor relations section of GoPro's website. Before I pass the call to Nicholas, 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, including but not limited to any continued impact from the COVID-19 pandemic or the war in Ukraine. This means that results could change at any time. Our commentary about our business results and outlook is based on the information available as of today's date, 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 31st, 2021, which is on file with the Securities and Exchange Commission and in other reports we may file from time to time with the SEC. Today, we may discuss gross margin, operating expense, net profit and loss, EBITDA, as well as basic and diluted net profit and loss per share in accordance with GAAP and on a non-GAAP basis. We believe that non-GAAP information is useful because it can enhance the understanding of our ongoing economic performance. We use non-GAAP reporting internally to evaluate and manage our operations, and we choose to provide this information to enable investors to perform comparisons of operating results in a manner similar to how we analyze our own operating results. 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. In addition to the earnings press release and management commentary, we have posted slides containing detailed financial data and metrics for the fourth quarter and full year 2022. The management commentary slides, as well as a link to today's live webcast and a replay of this conference call are posted on the investor relations section of GoPro's website for your reference. Unless otherwise noted, all income statement related numbers that are discussed in the management commentary, other than revenue, are non-GAAP. I'll turn the call over to GoPro's founder and CEO, Nicholas Woodman. Thanks, Chris. Hi, everybody. Thank you for joining us today. Before we get to Q&A, I have some brief remarks that summarize the detailed management commentary we posted to the investor relations section of our website, which I encourage each of you to read. I first want to congratulate and thank everybody at GoPro, past and present, who contributed to GoPro's incredible 20-year history. In Q4 2022, we celebrated our 20-year anniversary, and it's been inspiring to consider how far we've come from our first product, a 35 millimeter film camera designed to be worn on the wrist while surfing, to today, one of the world's most popular brands serving millions of the world's most active, creative, and inspired humans. Gratitude to all. The strength of our brand and subscription-based business strategy was evident in 2022, a year marked by macroeconomic challenges. Our high-margin subscription business is serving as a powerful financial engine, contributing meaningfully to our bottom line. In 2022, we grew GoPro subscribers 43% year-over-year to 2.25 million, exceeding our annual target of 2.2 million and bringing our subscription and service revenue to an annual run rate of $100 million with 70%-80% gross margin. The growth in our subscription business helped us deliver profitability and positive EBITDA. We paid off debt of $125 million and repurchased $40 million in stock. We exited the year with a strong cash balance of $367 million. 2022 benefited from our complementary direct-to-consumer and retail channels, with each meaningfully contributing to our business throughout the year. Direct-to-consumer revenue from GoPro.com was 40% of overall revenue in Q4 and 38% for the full year of 2022, up from 33% and 34% respectively. In addition, our GoPro.com business grew 5% in 2022 over 2021, driven by 52% growth in subscription and services revenue. We estimate GoPro.com revenue growth was 12% in constant currency. Like many companies, GoPro's results for the year and quarter were impacted by a stronger US dollar. On a constant currency basis, we estimate that revenue for the year would have been approximately $50 million higher, or 5% above actual results. Gross margin would have been nearly 41% versus 38.1% actual results, and EBITDA to revenue approximately 13% versus 9% actual results. Considering the global FX and macroeconomic challenges, we believe our 2022 results reflect the strength of our subscription-based business model and the strong execution of our teams. The future of GoPro is subscription-based, and we're laser-focused on what we believe is a significant high-margin growth opportunity. GoPro's focus on building our direct-to-consumer channel has increased our understanding of consumer behavior, and we are successfully leveraging this to drive engagement and LTV. While still early in this journey, we see significant opportunities to add further value for new and existing subscribers. Our 2023 plan is to maintain GoPro's ongoing profitability and end the year with a strong cash position of $325 million-$350 million while investing in critical long-term growth opportunities that we believe will position GoPro well for when the global economy recovers. We're investing in the people, technology, and innovation that we believe will drive subscriber growth, retention, and ultimately LTV. This includes expanding our hardware lineup to court a broader consumer base and rolling out a synced mobile, cloud, and desktop experience that will target GoPro owners and non-owners alike with a new premium subscription tier. As I reflect on our 20 years in business, I'm most proud of the innovation GoPro has become known for, as well as our purpose: serving the world's most active and creative people with digital imaging solutions that help them capture and share their lives in exciting ways. This purpose combines with the strength of our brand, our people, and our subscription-based business model to give us confidence that we are well-positioned for the future, despite near-term challenges that many businesses, including GoPro, are likely to face in 2023. In the meantime, we're innovating towards an exciting tomorrow where we believe GoPro will serve significantly more people than we do today. Operator, we are now ready to take questions. Absolutely. If you would like to ask a question, please dial star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. The first question is from the line of Anna Gaskar with Jefferies. Your line is now open. Hey, good afternoon, guys. Thanks for taking my questions. First want to start on this premium subscription tier. Could you talk a little bit more about the research that you're seeing that justifies it, and what would be the additional features and options that it would give these subscribers? Brian, do you wanna start with attach rates and current subscription business, and I can take the second part. Yeah, no, that's, that sounds great. Yeah, thanks, Anna. You know, on our, on our current subscription business, we ended the year with about $2.25 million subscribers. That's up 43%. Revenue was up 52%. We're very excited about our subscription business and the fact that it's 70 to 80 points of gross margin. If we kinda unpack that a little bit, just for everyone to remember, on GoPro.com, our attach rates are greater than 90%, as we largely bundle a subscription with our cameras. The exciting part of kind of the year was continued attach in retail. Someone buys at a retail store and then comes to the app store and signs up for a subscription. That increased substantially from low 20% attach in 2021 to nearly 35% attach in all of 2022. We saw substantial growth on the retail side, given the, you know, the value proposition, which is great. I think, just to kinda add to that point, as we look at kind of the, you know, subscribers from GoPro.com who came in on the bundle and those who, you know, came in retail and paid the initial $50 to the ones who now, through most of 2021 and 2022, paid $25 and upgraded to $50, when that one year came up, our retention rates across all of those cohorts have essentially stayed the same. We're seeing a nice uptick in, you know, our ARPU from the cohort that paid $25 and now is moving up to $50. As a backdrop, I'll turn it over to Nicholas. Yeah. Based on, you know, the success that we're having with converting both people that buy their cameras at GoPro.com and as well as consumers who buy their cameras at retail, converting them to become GoPro subscribers, you know, we had a lot of engagement. We've learned a lot from our subscribers about what more they want to see from GoPro, what they value the most. In parallel, we do a lot of consumer research to learn perhaps why some people aren't subscribing and what they'd like to see. We're combining that also with data that we have from a previous desktop app that we had in the market some years ago. It was actually called Quik for Desktop. At the time of sunsetting that app some years ago, we had 1 million monthly active users of that desktop app, and it was really encouraging to see that for years after sunsetting that desktop application with no product updates, no product support whatsoever, we still had hundreds of thousands of monthly active users. It's a clear sign that there's significant demand for a desktop application from GoPro and our more recent consumer research confirms that. It also confirms that the launch of a desktop application that is synced to GoPro subscribers cloud and mobile apps will definitely re-represent value that they're willing to pay a premium subscription amount for. What's great is it'll be an upsell because we'll still provide the current GoPro subscription pricing and benefits to existing subscribers and new subscribers if they're not interested in the more premium tier. All of our research and past experience indicates that this is a significant opportunity for us. We're really excited about it. I'd like to add that we do have experience selling subscriptions to people that don't even own a GoPro. As we mentioned on the call, we've seen nice growth with the Quik mobile app, we're going to be taking those learnings and extending them to the desktop application and premium tier and be making that available to people that don't own a GoPro so that they can leverage the app and cloud benefits and mobile editing benefits for, you know, editing their phone footage or footage that they're capturing with any camera regardless of whether it's a GoPro or not. This is an important TAM expanding initiative for us, and it's something that we're gonna be more and more focused on when we have the full mobile cloud and desktop suite out in the market. Got it. Thanks for that. Then turning to guidance, you know, 1Q implies probably a double-digit drop in units. Can you talk a little bit about where we are in terms of seeing a more normalized sell-in and sell-through balance, particularly at the big box retailers that have been destocking for several quarters now? Yep. Yeah, actually, let me start, before I get into Q1 guidance, talk about Q4 a little bit. You know, given the environment and how we guided, we're very pleased with how revenue came out pretty close to the midpoint of what we guided to, and we beat earnings by about 33% on the bottom line. Very proud of that for the quarter, and we increased cash. This is a tale of comparing sell-in and sell-through. If you actually look at it on a sell-through basis, the fourth quarter was down about 8% year-over-year. Most of that was in North America. The U.S. market is definitely under more pressure with the consumer. That's definitely been an issue. On a sell-in basis, of course, we were down quite a bit more, mostly in North America and Europe, which were down 21% and 24% kind of respectively. Again, the sell-through kinda balanced out. If we look at it, the good news is GoPro.com helped to offset some of the negative retail trends and was actually flat year-over-year. We're very pleased with that outcome. As I also note in our management commentary, we wanted to sell through about 950,000 units in Q4, and we ended up at about 900,000. A little bit short. channel inventory actually is in line with kind of where we've been historically, and up a little bit just because of, you know, we introduced a new product with HERO11 Mini late in the quarter. Sans that, pull that out, and actually we're down year over year in channel inventory. We wanted to be 50,000 less and put us in a healthier position kind of exiting the year. We'll actually see that come out in Q1, which is impacting our sell-in in the first quarter. Sell-through is actually normalizing to about down 9% on the midpoint of our guide, so not as bad as the sell-in. The channel inventory aspect, the consumer and retailers trying to get their own inventories healthier, that's not a GoPro thing. It's they're trying to just manage their own business. Has impacted us in Q4 and then in Q1. I think that starts to normalize because we're getting down to some pretty low levels in Q2, or ending Q1 and getting into Q2. That's kinda how we see that playing out, and hopefully, as a much stronger market as we get to the second half of 2023. Oh, great. Thanks. Thank you for your question. The next question is from the line of Erik Woodring with Morgan Stanley. Your line is now open. Hi. Thank you. This is Mayon for Eric. Just starting, where do you believe kind of year-end subscribers will land for 2023? Yeah. We didn't give guidance for the whole year, just because of the macro complexities that's going on in the market. We do expect subscribers to be up. It'll be up about 100,000 in Q1, we expect, and that, we're not gonna give guidance for the year, but we do expect to have growth. I think the other thing we'll point out is we expect to have at least $100 million of revenue from subscription and service in 2023. That'll be up from about $82 million or so in 2022. We'll see nice revenue growth. We'll still have subscriber growth, and we'll be adding to the subscriber tiers, as Nicholas had said, which will have a nice upsell, generate a higher subscription dollar amount, and better margins. Looking forward to that. Great. Thank you. Then just as a follow-up, how would you kind of characterize the pricing environment from the December quarter? Do you expect that to continue trending into the March quarter, or how do you see that, the pricing environment? Yeah. I think the pricing environment, we were promotional in Q4, and we're able to come in within our numbers. I think Q1 will be it's not as promotional as Q4. That's always a more promotional period. The margins we expect of about 36% plus or minus a bit, and that's 39% in constant currency in the first quarter, that takes into account the pricing environment we expect in the quarter. Great. Thank you. Thank you for your question. The next question is from the line of Jim Suva with Citi. Your line is now open. Thank you. Brian and Nicholas, the December quarter also was pretty challenged in terms of, like, weather and airports and people being stuck and canceling vacations and just getting from point A to point B. I'm wondering if that had some impact. Also post-COVID, now that people are starting to travel again, are their behaviors turning back to pre-COVID of purchasing a GoPro, like when they go on big, exciting trips, whether it be skiing, scuba diving, or any changes in behavior? Thank you. I could, Jim, let me start and then. Do you wanna go, Nicholas, or you want me to? I'll take the second half. You take the first half. All right. On the first half, Jim, I think we saw really good travel and sales in like September, October, November, as a lot of people were traveling to Europe. Our business has been really strong there. It kinda ebbed off a bit in December. I think the bigger issue is, quite honestly, is the North America and the consumer, followed by retail, cutting back on their inventory. That's had, I think, a bigger impact than necessarily travel. China kind of in the fourth quarter was going through ebbs and flows with COVID. Now they're trying to come out of that, as people wanna travel in China or out of China, they're being restricted in a number of countries. As a matter of fact, I saw flights to, I think into Europe and UK have basically been reduced dramatically from China, just given the current COVID situation. China represents about 20% of the or historically has 20% of the travel market. That's been an area that's been a little bit more, more challenged. But the North America piece, the Europe piece is kinda propped up, I would say, from a travel perspective and use of GoPro. Yeah. On the behavioral front, we're definitely seeing an increased usage of customers using their GoPros, connecting with the GoPro app, since the start of COVID, when, you know, travel shut down. We shared that in 2022 we had approximately 15 million unique GoPro cameras connect to the GoPro Quik app during the year, which is great because in 2020 that number was about 12.1 million. We've seen it steadily climbing back since. So that's really encouraging to see the correlation, between people's, you know, increased activity, increased travel, and increased camera and app usage. We think we're also benefiting from the improved overall GoPro experience and how well the camera works with the app, how your GoPro now auto-uploads your most recent footage to your GoPro cloud account while the camera is charging. If you're a GoPro subscriber, you know, now your SD card is automatically cleared after that upload is complete, and you can now access, edit, share, and enjoy your content, without, you know, ever offloading to a computer or dealing with previous complexities. We're seeing overall improved engagement, improved user success rates, and that's also we believe contributing to that 15 million active camera connects in 2022. To your question, Jim, there's a direct correlation between people getting out more and people getting more use of and seeing more value in their GoPros, and we're seeing that, you know, through purchases as well. Unfortunately, that's somewhat tempered by, you know, the macroeconomic challenges and consumer confidence, as it relates to, you know, their spending. It's really good to see the overall GoPro community becoming more and more active as we move further and further from the pandemic. Thanks for the color. My last question is the equilibrium of retailers working down basically everything on their shelves, not just GoPro, but everything, but can you comment on when we're gonna hit the equilibrium for the GoPro product on the channel side, you feel? Yeah. I know that there's some retailers who are hitting out of stock too, and we can see that. They're getting down to a point where they're gonna have to shore up the inventory balances. I think we'll get through Q1 with our guide, and we'll pull channel inventory down another 50,000 units. I think at that point, we're probably pretty darn close to the equilibrium level. I think it starts to normalize in Q2. Thank you, Brian, and thank you, Nicholas, so much for the details. Thank you. Thank you for your question. As a reminder, it is star one on your telephone keypad to register your question. The next question is from the line of Martin Yang with Oppenheimer. Your line is now open. Hi, good afternoon. Thank you for taking my question. My first question is on margins. Do you expect any non-foreign exchange-related headwinds to dissipate in the rest of 2023 that could potentially improve your margins? Yeah. We, we, in our management commentary, put down what our current assumptions are for FX, and we're just holding to that. I'm not hedging one way or the other on FX and trying to provide a directional element. I can say in Q1, and I'll repeat it, we think we'll be at 36% ±5.05. That equates to about 39% margins relative to 2022. Actually, if you went back to 2021, it'd be even better. Margins have still been a headwind for the company at these levels. Does that imply inflation or component costs associated margin headwinds was roughly two points? Yeah. I mean, if we... Oh, you mean from 2021? No, it'd be more on currency too, and then a little bit on component pricing, so it's 1%-2%. Components have come up. That's an area that is probably at some point gonna come under pressure too. You'll start to see components coming down. Haven't seen that yet, other than maybe memory, but I think, I think that's some tailwind probably given the current environment as we work our way through 2023. Got it. Thank you. My next question is about the direct to consumer or GoPro.com sales contribution in the fourth quarter. Usually in the previous years, we see, during the December quarter, GoPro.com have a slight dip in revenue contribution relative to previous quarters, maybe from, you know, high 30s or 40% down to mid-30s. This quarter, it was really strong. Is there any particular factors that's driving up the GoPro.com sales in 4Q? Yeah. I think there's a couple factors, actually it'll play into 2023 as well. One is we obviously have the better pricing on GoPro.com, and I think that's the word on that slide getting out. We can measure part of that. Retail coming back, probably helped on the D2C front. That was good on the holiday. I think we had quite a bit of promotional activity on GoPro.com, so we weren't being bashful on driving sales, and margin and subscribers. This is... the sub aspect to this is very important because that's where we get some real good lifetime value going into 2023, 2024, 2025 with those customers. Of course, our revenue from subscription and service being, you know, $22 million in the quarter and about $82 million on the year really helps on the GoPro.com front. As we look ahead, as we drive more than $100 million of subscription and service revenue and continue to drive GoPro.com, you'd probably be over 40% on our D2C business in 2023, right? The directional trend is moving that way, partly because we've got a very good competitive position on GoPro.com, but also the growth of subscription and service revenue. Got it. Thank you very much. Thank you for your question. There are no additional questions waiting at this time, I'll pass the call back to the management team for any closing remarks. Thank you, operator, and thanks everyone for joining us today. As we mentioned, we're really excited for the year ahead, despite macroeconomic challenges. We're investing in the people, technologies, and innovation to continue releasing market-leading hardware and software products that we believe will continue to grow our subscription business and position us well for when the global economy recovers. Here's to the start of GoPro's 21st year as a market-leading company. Let's go. This is Team GoPro signing off. That concludes the conference call. Thank you for your participation. You may now disconnect your line.