GoPro, Inc. (NASDAQ:GPRO) Q3 2018 Earnings Conference Call Transcript

Nov 01, 2018 • 05:00 pm ET

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GoPro, Inc. (NASDAQ:GPRO) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, everyone, and welcome to the GoPro Third Quarter 2018 Earnings Results Conference. Today's call is being recorded.

And now I'd like to turn the conference over to Christopher Clark, Director of Communications.

Executive
Christopher Clarke

Thanks, operator. Good afternoon, everyone, and welcome to GoPro's Third Quarter 2018 Earnings Conference Call. With me today are GoPro's CEO, Nicholas Woodman; and CFO, Brian McGee.

(Forward-Looking Cautionary Statement)

Now I'd like to turn the call over to GoPro's founder and CEO, Nicholas Woodman. Nick?

Executive
Nicholas Woodman

Good afternoon. Today, we will provide highlights of our third quarter performance, including an update on the launch of our HERO7 line of cameras. Third quarter revenue was $286 million, and we increased our cash to nearly $150 million. We remain on track to be profitable for the second half of 2018 and expect to exit the year with low channel inventory, putting us in a good position for Q1 2019.

GoPro made significant market share gains internationally in Q3. According to GfK, in Europe, in the $150-and-above action camera market, GoPro held 84% unit share and 85% dollar share, up from 78% and 80%, respectively, year-over-year. GoPro also grew share in APAC during Q3. According to GfK, in Japan, GoPro held 58% unit share and 71% dollar share of our category. And in Korea, GoPro held 47% unit share and 61% dollar share. This represents GoPro's highest dollar share in Japan and Korea since the beginning of 2016.

In the US, according to NPD Group, in the third quarter, GoPro held 87% unit share and 96% dollar share of our category. And the top six action cameras sold in the US were all GoPros. And for the 19th straight quarter, a GoPro was the best-selling camera of any type in North America, and you can bet that we are focused on making it 20 quarters or five years straight in Q4. The biggest news coming out of the third quarter was the successful launch of our new flagship, HERO7 Black, which has achieved the strongest month-1 unit sell-through of any new camera in our history. HERO7 Black was announced on September 20 and gained immediate international momentum from a wave of positive press, including several editor's choice awards. And while we're happy to receive such strong recognition from the media, we think it's our users' overwhelmingly positive reviews and endorsement that confirm HERO7 Black is a hit.

On social channels, consumers are expressing their enthusiasm for HERO7 Black's standout new features. Most notably, HyperSmooth, gimbal-like video stabilization; TimeWarp Video and HERO7 Black's significantly improved audio performance. Consumer interest in these new features helped drive our digital engagement rate to the highest month-1 levels of any GoPro launch. And as HERO7 Black makes its way into more consumer hands, we're seeing an increase of positive user reviews that are virally shaping the dialogue and driving awareness and purchase intent in the most authentic way: by word-of-mouth. The feedback is widespread and easy to find by searching for #hero7black or #hypersmooth on