GoPro, Inc. Class A Aktie

Hello, everyone. Thank you for joining us, and welcome to the GoPro First Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Robin Stoecker, Director of Corporate Communications. Please go ahead.

Thank you, Rebecca. Good afternoon, and welcome to GoPro's First Quarter 2026 Earnings Conference Call. With me today are GoPro's CEO, Nicholas Woodman; CFO, Brian Tratt; and President and COO, Brian McGee. Today's agenda will include brief commentary from Nick and Brian, followed by Q&A. For detailed information about our first quarter performance, please read our Q1 2026 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 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 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, 2025, 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 disclosed in the management commentary other than revenue are non-GAAP.

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

Thanks, Robin, and thanks, everybody, for joining us today. As Robin mentioned, Brian and I will share brief remarks before going into Q&A. And I want to encourage all on the call to read the detailed management commentary we posted on our Investor Relations website. In April, we announced that GoPro is formally exploring opportunities in the defense and aerospace sector, having engaged Oliver Wyman, a global leader in defense sector consulting to assess addressable market segments, product synergies and go-to-market strategies.

GoPro cameras have long been used in demanding defense, government and aerospace applications where versatility, durability, industry-leading video stabilization and image quality are mission-critical, and we believe there is a meaningful, scalable opportunity to formalize and grow our presence in these sectors.

Following the April announcement of our work with Oliver Wyman, we received several inbound inquiries related to M&A. To capitalize on this interest, GoPro's Board of Directors has authorized the company to engage in a strategic process and to engage a financial adviser to assist with that process and evaluate strategic alternatives in order to maximize shareholder value.

We believe there is unrealized value in GoPro's technology, IP, brand, product development and scaled manufacturing capabilities, and we look forward to exploring how M&A could unlock that value to the benefit of our shareholders. Testament to GoPro's credibility as a mission-proven tool for defense and aerospace applications is NASA's use of GoPro cameras on the Artemis II mission.

On April 1, the Orion Spacecraft launched with modified GoPro cameras mounted externally on its solar array wings and off-the-shelf GoPro cameras were used inside the ship to capture content for a National Geographic documentary about the mission. Everyone at GoPro is deeply honored that our cameras played even a small role in the historic Artemis II mission is incredibly meaningful to all of us.

Turning to Q1. We advanced several partnership initiatives designed to broaden GoPro's reach and appeal. In January, we announced an exciting partnership with ASUS, a leading Taiwanese multinational technology company and launched a co-branded ASUS ProArt GoPro Edition laptop. The laptop was purpose-built by ASUS to support GoPro content creator workflows. ASUS has shared that early traction has far exceeded their expectations for the ProArt line, reinforcing the strength of GoPro's brand in technology collaborations.

And in March, we announced our partnership with DICK'S Sporting Goods and integration with their GameChanger app, the #1 rated youth sports app for scorekeeping and live streaming, which has more than 9 million active users. This partnership combines GoPro's industry-leading video quality with GameChanger's live streaming service, making it easy for families to capture and share game day live.

The GameChanger GoPro product bundle available online at DICK'S Sporting Goods brings together everything families need for seamless, high-quality live streaming of the game. Millions of existing GoPro HERO13 through HERO7 Black and MAX owners can now pair the GoPro they already own with the game day app to start streaming live sporting events.

And just last month, we debuted our new MISSION 1 Series of professional 8K and 4K open-gate compact cinema cameras at the National Association of Broadcasters Trade Show, the largest television industry trade show in the U.S. The launch of the MISSION 1 Series marks GoPro's most significant push into the professional and prosumer creator markets, featuring a new 50-megapixel 1-inch sensor and GoPro's new ultra-efficient next-generation GP3 processor, the MISSION 1 Series cameras deliver category-leading resolutions, frame rates, run time and thermal performance for mission-critical reliability and extreme use cases.

The new lineup includes 3 camera models, MISSION 1 PRO, MISSION 1 PRO ILS and MISSION 1. The response to our MISSION 1 Series of products has been overwhelmingly positive. Recent press coverage has consistently highlighted the camera's industry-leading specs, image quality, compact and durable design plus the outright performance and value the cameras deliver relative to dramatically more expensive cinema cameras.

At the NAB Show, our new cameras earned 3 prestigious awards from leading industry outlets, 1 of 6 RedShark Best in Show Awards, 1 of 10 ProductionHUB Awards of Excellence, and the MISSION 1 PRO ILS was the sole winner of the CineD Best-of-Show Award in the camera category. These awards go to all of GoPro's employees whose dedication and passion made the MISSION 1 Series cameras possible. Thank you, team, and congratulations.

We expect the MISSION 1 Series products to enable GoPro to gain meaningful share in our core markets as well as in new professional and prosumer markets. The MISSION 1 Series products will be available May 28 at GoPro.com and select authorized retail partners globally, including Best Buy and Walmart and high-end imaging retailers, B&H and Adorama.

As we shared, Q1 and the past few weeks marked an exciting array of new partnerships, business opportunity explorations and product launches that we believe can help diversify and grow our business. We've just entered a new era of professional performance capability with the launch of our new MISSION 1 Series of cameras, and we're excited for the impact they can have on our business.

Now I'll turn the call over to Brian Tratt to walk you through details of our Q1 financial results.

Thanks, Nick. Turning to our financial results. Revenue in Q1 2026 was $99 million, within our guidance range and compared to $134 million in the prior year period. Macro challenges in the consumer electronics sector, including rising memory costs, supply chain constraints and fluctuating tariffs prompted us to take some discrete actions in the quarter that impacted gross margins and earnings per share for the period.

Despite these pressures, some of which materialized in the last week of the quarter, we made meaningful progress on the metrics within our control. Cash used in operations improved $21 million year-over-year to $37 million. Operating expenses declined year-over-year, and we continue to reduce both owned and channel inventory sequentially and year-over-year.

Additional first quarter performance highlights include revenue from our retail channel was $61 million or 61% of revenue compared to 70% of Q1 2025 revenue. Revenue from our GoPro.com channel, which includes subscription and service revenue was $38 million or 39% of revenue compared to 30% of Q1 2025 revenue.

Subscription and services revenue was flat year-over-year at $27 million or 27% of revenue. Subscription attach rate from cameras sold across all channels was 51% compared to 49% in Q1 2025. Street ASP was $371, a 6% improvement year-over-year. Operating expenses were $59 million compared to $62 million in the prior year period, a 6% decrease year-over-year.

The following results reflect the discrete actions mentioned previously. Gross margin was 4.5% compared to 32.3% in Q1 2025. Excluding the discrete actions, gross margin would have been approximately 31%. Net loss was $58 million compared to prior year net loss of $19 million.

GAAP and non-GAAP loss per share were $0.50 and $0.35, respectively, compared to a prior year loss per share of $0.30 and $0.12, respectively. Excluding the discrete actions, non-GAAP loss per share would have been $0.20. Adjusted EBITDA was negative $50 million compared to negative $16 million in the prior year period.

Excluding the discrete actions, adjusted EBITDA would have been negative $25 million. We ended the quarter with inventory of $72 million, a 25% decrease year-over-year and an 8% decrease from Q4 2025.

Channel inventory declined 20% from the prior year quarter and 6% sequentially. Given the macro challenges in the consumer electronics sector and the strategic process we've initiated to evaluate opportunities for the sale of the company, we will no longer be providing forward-looking guidance and withdrawing our full year guidance at this time.

In summary, we're encouraged by the early positive response to our MISSION 1 line of cameras. And as Nick mentioned, we're excited about the strategic momentum building around our defense and aerospace exploration with Oliver Wyman and the plan to engage a strategic adviser to evaluate strategic alternatives, both of which we believe can unlock unrealized value in GoPro's technology, IP and brand.

Operator, we're now ready to take questions.

[Operator Instructions] Your first question comes from Erik Woodring with Morgan Stanley.

It's Dylan Liu on for Erik. I have a couple, if I may. So today, you just announced strategic alternative process, which include the sale of the company or a merger to maximize the value for shareholders. So Nick, I think your Class B shares give you about like 63% of the outstanding voting power of GoPro, meaning any sale or merger ultimately requires your personal approval. Can you clarify whether you are personally supportive of a full sale of the company? And if so, what price or strategic outcome would you need to see to vote in favor of such a transaction?

Thanks for the question. Yes, I am fully supportive of evaluating strategic opportunities for the company to unlock value for shareholders. So this effort has my full and complete support.

Got it. And in the press release, you mentioned the strategic review was triggered by several unsolicited inbound strategic inquiries received after the defense and aerospace announcement in early or mid-April. So can you describe the nature of these inquiries? Are they primarily from defense/aerospace acquirers interested in GoPro's technology or from financial or strategic buyers in your core consumer imaging market? And does the Board or you have a preference for one type of buyer over the another?

Well, without sharing too much detail, I can share that there's been interest from various sectors, various types of interested parties. So it's not just defense or not just financial. And the range of interest led us to make the decision that we should run a process to evaluate what kind of value we could unlock on behalf of shareholders.

Got it. That's clear to me. And just one follow-up, if I may. So GoPro, you just announced the MISSION 1 Series, and this is a brand-new product line. So would you mind giving us a sense of the sell-in potential of this product? And I think you sized that low light capable camera segment as a TAM. It's about like 2 million to 2.5 million units annually.

But could you describe the specific customer segments that you're targeting with MISSION 1 Series? Who are the major competitors that we're taking shares of? And how should we think about the pricing, the 600 to 700 selling price relative to incumbent solutions?

Sure. Yes, the MISSION 1 line is very interesting because it plays in several different categories. First and foremost, we're marketing it to its strength as the world's most compact cinema camera line, whether it's the entry-level MISSION 1 camera for $599 or the MISSION 1 PRO for $699 or the PRO ILS with an interchangeable lens system also for $699. The resolutions, the frame rates, the image quality is all at the professional level.

So they truly are compact cinema cameras that we think are going to unlock exciting new perspectives for professional filmmakers, television series producers, commercial producers as well as influencers and tip of spear professional level content creators.

But at the same time, the price points, the convenience, the versatility, the durability make them ideal as very high-end alternatives for people that are currently using action cameras for creating whatever content they're creating, but want to do so at a much higher end with a much more professional output. And then for aspiring consumers that want the most capable action cameras in the world, the MISSION series line definitely can be used for that purpose. So a portion of that market, we think, will gravitate up towards the MISSION Series because of how well they work just as an everyday camera, but the cameras are definitely targeting a higher-end professional user.

And we think that the price points relative to cameras that are far more expensive, but don't match the resolution and frame rates of the MISSION 1 line, we think the cameras are a relative bargain. And especially when you look at the capabilities of the ILS model, which enables people to use a vast array of commercially available Micro Four Thirds lenses or lenses that they might already own and truly get just an incredible range of different looks that you can create, whether it's macro to telephoto, to full cinema lenses, I think we're going to see a lot of staggeringly impressive content being created with the new MISSION 1 Series line. So it's a step-up for us across the board in performance and pricing. Yet at the same time, it's not a complete departure from our existing markets because at the end of the day, they're very relatable as GoPros to the average consumer.

We have reached the end of the Q&A session. I will now turn the call back to management for closing remarks.

Thank you, operator, and thank you, everyone, for joining today's call. To close, Q1 and the last few weeks have been a period of meaningful momentum marked by new partnerships, expanding business opportunities and significant product launches that we believe can both diversify and grow our business.

And importantly, we believe there is unrealized value in GoPro's technology, IP, brand, product development and scaled manufacturing capabilities, and we look forward to exploring how a potential sale of the company could unlock that value to the benefit of our shareholders. Thank you, everyone. This is Team GoPro signing off.

This concludes today's call. Thank you for attending. You may now disconnect.

Good afternoon. Thank you for attending the GoPro Fourth Quarter and Fiscal Year 2025 Earnings Call. My name is Cameron, and I'll be your moderator for today. [Operator Instructions].

I would now like to pass the conference over to your host, Robin Stoecker, Director of Corporate Communications with GoPro. You may proceed.

Thank you, Cameron. Good afternoon, and welcome to GoPro's Fourth Quarter and Full Year 2025 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&A.

For detailed information about our fourth quarter and full year 2025 performance as well as outlook, please read our Q4 and full year 2025 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. 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-K for the year ended December 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 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.

Thanks, Robin. Thanks, everybody, for joining us today. As Robin mentioned, Brian and I will share brief remarks before going into Q&A. And I want to encourage all on the call to read the details on management commentary we posted on our Investor Relations website.

I'd like to begin by congratulating Brian McGee. GoPro's current EVP, CFO and COO, on his appointment to the role of President and COO. In his expanded role as President, Brian will further strengthen company-wide alignment and execution enabling cross-functional teams to move faster and more cohesively towards our strategic goals.

Brian is a very talented and passionate operator with a collaborative approach to problem solving and strategy development. I'm very excited for what GoPro can accomplish with Brian in his new role.

I'm also pleased to share that Brian Tratt, GoPro's current VP of Finance will serve as our CFO. Brian Tratt has served as an integral part of GoPro's finance team for 13 years and has earned the respect and trust of the entire GoPro organization. I'm excited for him to bring his deep understanding of our business and his fresh perspectives to the CFO role, leading our accounting and finance teams. These leadership changes will become effective on March 17.

In 2025, we broadened our hardware and software offerings, delivering on the first stage of our mission to diversify our business and expand our TAM. During the year, we launched our new 360 camera Max tube delivering the only true 8K video resolution in the Consumer 360 camera category, featuring durable twist and go replaceable lenses, trademark GoPro durability and versatility and the new ecosystem of sixteen 360 centric accessories.

We also launched our new LIT HEREO counter an ultracompact lightweight reg-rugged action and lifestyle camera that has the widest field of view lens in its class and an integrated light enabling captivating photos and video in even no light, pitch black scenarios.

And we launched our new professional grade gimbal, Fluid Pro AI, a best-in-class multi-camera AI subject tracking gimbal that's compatible with GoPro cameras, smartphones, and point and shoot cameras weighing up to 400 grams.

In addition, we launched a steady cadence of new software functionality, including new 360 content editing features such as AI-powered subject tracking and cloud-based 360 editing via our Quik mobile app. Additionally, we launched a GoPro reframe plug-in for DaVinci Resolve low-light noise enhancements in the GoPro Player desktop app and Apple Projected Media Profile support for the highest fidelity video playback in Apple VisionPro.

And in Q4, we made progress on several strategic initiatives, including GoPro's AI training program and development of our tech-enabled motorcycle helmet with our partner and leading Italian motorcycle helmet brand, AGV. We're pleased to share a meaningful update on our AI training program. We're now working with select AI partners providing them access to authentic, high-quality GoPro content contributed by U.S. subscribers who opted in to monetize their GoPro cloud base content for AI model training. We plan to recognize revenue from the program in Q1.

And later this year, we'll make our first monetary payouts to participating GoPro subscribers whose content was selected. The program creates value for all stakeholders. All partners gain real-world video to train their models, participating GoPro subscribers earn money through a revenue share and GoPro benefits from a new scalable, high-margin revenue stream.

Since launching the program in Q3 2025, we've seen strong subscriber enthusiasm with more than 500,000 hours of diverse, high-quality video content submitted to date and steady growth as we continue expanding the program to more subscribers globally. We expect to close further agreements with additional third-party licensing partners throughout 2026.

Shifting gears, we continue to advance on our tech-enabled motorcycle helmet program, developed jointly in partnership with AGV. Together, GoPro and AGV are leveraging each other's design, engineering and brand strength to deliver significant innovations that enhance safety, performance and enjoyment for motorcycles -- all wrapped to do a helmet design that is simply stunning in every regard.

We look forward to providing investors with more substantial updates on this program later this year. and we plan to publicly share a few product teasers in the near future. So stay tuned for that.

Turning to recent developments. On February 26, the U.S. International Trade Commission reaffirmed our design patent rights by issuing exclusion and cease and desist orders against Insta360, blocking their infringing products from the U.S. market. This decision, combined with the Patent Trial and Appeal Board's rulings last year upholding multiple patents covering our Hypers technology, validates what we've always known. GoPro is built on original innovation.

Our patent portfolio now exceeds 1,500 U.S. patents, and we will continue to defend against competitors who choose to copy rather than create. Our commitment to innovation has driven many advancements in digital imaging from the world's far and away best in-camera video stabilization, HyperSmooth, to industry-leading image quality, resolutions and frame rates, best-in-class wide angle field of use and more, all in rugged and versatile small form factor cameras.

Our custom GP2 processor played an important role in many of these innovations and helped power our flagship cameras to market-leading positions. At the same time, GoPro imposed a few constraints that limited how far we could push our canners in certain areas of performance, specifically power efficiency, thermal performance and low light use cases.

Most notably, GP2's low-light constraint hampered GoPro's ability to compete in the fast-growing premium low-light capable camera category, a market segment, we estimate to have been approximately 2 million to 2.5 million units annually in 2025.

Enter GP3, GoPro's soon to be released next generation processor, which is designed to deliver industry-leading power efficiency, run times and thermal performance, along with best-in-class, low-light performance not yet seen in a small form factor camera or even many professional cameras.

As we announced earlier this week, our new exclusive GP3 processor represents the most significant advancement in processing power and image quality in GoPro's history. Whereas GP2 was a 12-nanometer SoC, GP3 is a 5-nanometer SoC that delivers more than 2x the pixel processing power of GP2, resulting in industry-leading resolutions and frame rigs that go far beyond what the competition is capable of. GP3 also features a dedicated AI NPU that enables significant gains in low-light image quality when combined with low-light image sensors and industry-leading power efficiency and thermal performance that significantly outperforms the competition.

To quantify how efficient and far ahead is in our own internal testing, we are seeing camera run times ranging from 40% to 90% longer than the competition and similarly impressive thermal performance advantages over the competition in addition to demonstrably better image quality.

To say that we're fired up about GP3 and the new GP3 based cameras were launching in Q2 would be an understatement. We expect GPI to serve as a pivotal growth catalyst for GoPro - setting new performance benchmarks for the digital imaging industry as a whole, enabling Gulf to lead in our existing core and gain meaningful share in new professional product categories, including the quickly growing low-life camera segment, beginning this Q2.

I encourage you to visit the news section of gopro.com to check out several jaw-dropping images captured with one of our soon-to-be released GP3 cameras. I think you'll agree with me that GoPro is about to enable a new dimension of performance and capability. Rationally speaking, despite ongoing macroeconomic pressures facing the consumer sector, including tariffs and rising memory and supply constraints, we are working towards strengthening our operating profile as Brian will outline while also advancing our next product cycle with meaningful technological enhancements.

We believe we are at the start of a new era of technological and performance leadership for GoPro, with a clear opportunity to grow revenue and operating income, as Ben will share in his remarks. We are highly motivated by what's ahead for GoPro. We want to thank our employees, suppliers, retail and distribution partners and our shareholders for your support. We're very excited for what's to come.

Now I'll turn the call over to Brian

Thanks, Nick. Fiscal 2025 improved substantially over 2024 in a number of key areas, including operating expense reductions of $93 million, flat gross margins of 34% despite a $20 million impact due to EPA tariffs, inventory reduction of 35%, all culminating in an improvement in cash flow from operations of $104 million.

In the fourth quarter of 2025, revenue was $202 million versus our guidance of $220 million, plus or minus $5 million, and we generated positive adjusted EBITDA of $1 million. Cash flow from operations was positive again for the third quarter in a row at $16 million, a $41 million improvement year-over-year.

Sell-through was at the midpoint of guidance at 625,000 camera units, which resulted in a 30,000 unit decrease in channel inventory.

Looking back on the year, notable financial performance highlights include revenue from our retail channel was $482 million, or 74% of revenue compared to 75% of 2024 revenue. Revenue from gopro.com channel, which includes subscription and service revenue was $170 million or 26% of revenue compared to 25% of 2024 revenue.

Subscription and service revenue was flat year-over-year at $106 million or 16% of revenue. 2025 Street ASP was $357 and an 8% improvement year-over-year. Gross margin was 33.8% compared to 34.1% in the prior year. despite negative impacts related to EPA tariffs of approximately $20 million incurred in 2025.

Operating expenses reduced $93 million from $354 million to $261 million, a 26% decrease year-over-year. GAAP and non-GAAP loss per share was $0.59 and $0.30, respectively, compared to prior year loss per share of $2.82 and $2.42 respectively. 2024 GAAP and non-GAAP loss per share were impacted by $1.93 per share due to the establishment of a $295 million tax valuation allowance that was recorded in 2024.

Adjusted EBITDA was $29 million negative $29 million compared to negative $72 million in the prior year. Cash flow used in operations was $21 million compared to cash used in operations of $125 million in 2024, a $104 million improvement.

Turning to 2026. Our outlook is prefaced by highlighted uncertainties at a grip due to volatility and tariff rates, memory pricing, memory availability, consumer confidence, competition, component supply chain and global economic uncertainty. To provide color on our expectations and priorities for the year, we expect revenue to grow in 2026 to a range of $750 million to $800 million or nearly 20%.

Growth at the midpoint based on their existing lineup of products. The introduction of several new products coming in Q2 and additional AI content licensing this year. We expect subscription and service revenue to grow approximately 10% and due to improvements in ARPU growth of 10% and improvements in attach rates and retention rates, which are slightly offset by subscribers projected to be down 7% year-over-year to $2.2 million.

We expect operating expenses to be in the range of $220 million to $230 million, down from $261 million in 2025. And or a 14% reduction. The anticipated decrease is primarily due to a reduction in litigation expenses our prior restructuring actions, which resulted in reduced employee-related costs in 2025 and a continued strong focus on expense management.

The cumulative effect of our planned actions is expected to result in a reduced operating expense range in 2027 of between $200 million and $210 million. We expect memory price increases, both DRAM and NAND to impact margins by approximately 500 basis points year-over-year. We expect to have an enough memory to meet our unit and revenue goals for 2026.

Today, we announced a $50 million financing, of which we closed $25 million. In addition, we amended loan covenants for ABL and debt agreements. The details of which can be found in the 8-K we filed concurrent with today's earnings. We expect our liquidity position to be adequate, and we expect to end 2021 with approximately $50 million plus/minus $5 million in cash along with an additional $35 million available under our ABL facility and $25 million available under our recent financing agreement.

We expect adjusted EBITDA to be in a range of $10 million to $20 million in 2026, an improvement from losses of $29 million in 2025 and $72 million in 2024. Relative to our prior outlook of trailing 12-month adjusted EBITDA of $40 million for 2026, it's worth noting that memory pricing impacted the trailing $40 million -- EBITDA by $40 million for a total impact of nearly $60 million in 2026.

In closing, we believe our strategy is working. We are in the midst of an exciting innovation cycle with the launch of leading products, continued AI content licensing and other services expected over the next several years that we believe will bolster our market position while expanding our TAM.

We expect to continue operating expense reduction initiatives in 2026 that we initiated in 2024 to mitigate memory cost increases. We believe we will restore revenue growth and deliver adjusted EBITDA in the range of $10 million to $20 million in 2026.

[Operator Instructions]. The first question comes from the line of Erik Woodring with Morgan Stanley.

Well, there are currently no questions registered at this time. [Operator Instructions]. Once again, there are currently no questions registered so as a brief reminder. [Operator Instructions]. There are no questions waiting at this time.

I would now like to pass the conference back to the management team for any closing remarks.

Thank you, operator, and thanks, everybody, for joining today's call. As we shared, we are excited for the year ahead and particularly for this Q2 and the launch of our new G3-based cameras that we believe will mark a new era of technical and performance leadership for GoPro, which we believe will ultimately result in revenue and profit growth for the company. Be sure to stay tuned to our social channels for product eases and more as we approach the launch of our new products. Thanks again, everyone. This is team GoPro signing off.

That concludes today's call, and thank you for your participation, and enjoy the rest of your day.

Hello, everyone, and welcome to the GoPro Third Quarter 2025 Earnings Call. My name is Charlie, and I'll be coordinating the call today. [Operator Instructions]

I will now hand over to your host, Robin Stoecker, Director, Corporate Communications of GoPro, Inc. to begin. Robin, please go ahead.

Thank you, Charlie. Good afternoon, and welcome to GoPro's Third Quarter 2025 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&A. For detailed information about our third quarter as well as outlook, please read our Q3 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. 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-K for the year ended December 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 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.

Thanks, Robin, and thanks, everybody, for joining us today. As Robin mentioned, Brian and I will share brief remarks before going into Q&A, and I want to encourage all on the call to read the detailed management commentary we posted on our Investor Relations website.

The third quarter marked significant progress in our strategy to grow our business by developing our hardware and software offerings, and diversifying our hardware and software offerings. In Q3, we launched 3 new hardware products and several new software products that helped us exceed our Q3 revenue guidance. Our teams are executing with efficient precision, and we're excited to build on this momentum. As you'll hear from Brian, we believe we have turned an important corner, and we expect to return to unit revenue and profitability growth on a year-over-year basis this Q4 and for 2026. Our innovation machine is accelerating to increase our TAM beyond the 3 million unit action camera category.

In Q3, we launched our highly anticipated MaX2 360-camera, our new ultra-compact LIT HERO camera and Fluid Pro AI, our new multi-camera compatible gimbal designed for creators that own multiple types of cameras and need one gimbal to meet their multi-camera stabilization needs. MaX2 360-camera opens up a new growth segment, which we estimate the TAM to be nearly 2 million units annually. We're excited to regain market share with the launch of our MaX2 360-camera, and we're fully further expanding our TAM with LIT HERO, with its playful aesthetic, ease of use and versatility, making it especially appealing to a younger demographic looking to capture and share moments on the go.

Additionally, the low-light capable camera segment, which we estimate the TAM to be 2 million to 2.5 million units annually, represents a significant opportunity for GoPro as we do not currently participate in this market, but plan to. Our tech-enabled motorcycle helmets initiative is progressing and collaboration with AGV is already underway. Both teams are working closely to deliver innovative safety and performance features combined with the fun of effortlessly capturing immersive GoPro video while riding. We look forward to providing updates as development progresses.

Starting with MAX2, what a game changer. Its industry-leading 360 technology combines with its True 8K video resolution to capture up to 21% more resolution than the competition. MAX2 also features convenient and durable twist-and-go replaceable lenses, making it easy to swap out a lens in the field without tools or calibration, an inconvenience inherent with competitive products. And we recently launched an innovative and expansive new line of 16 360-centric accessories and mounts that expand MAX2'S creative potential and versatility. Early customer feedback has been resoundingly positive with many praising MAX2'S superior image quality, ease of use and durability.

And in September, GoPro won a 2025 Technology & Engineering Emmy Award in recognition of our innovative 360 technology, which is core to our 360 cameras and software. This is GoPro's third Emmy for innovations related to digital imaging and our first in the 360-technology category. We believe MAX2 will help grow share in the global 360-camera market. MAX2 is now available online and on shelf at retailers globally.

We're also excited about a second new camera we launched in Q3, LIT HERO, an ultracompact lifestyle camera designed for "whatever, whenever" capture with its built-in photo and video light. LIT HERO opens up creative possibility in any setting, day or night, and delivers a fun retro-inspired look to the images it captures. And the third new hardware product we launched in Q3 is Fluid Pro AI, our advanced multi-camera, AI subject tracking gimbal designed for today's multi-camera content creators looking for a high-performance gimbal that meets their multi-camera needs. Fluid Pro AI is compatible with all GoPro cameras, smartphones and point-and-shoot cameras up to 400 grams, making it remarkably versatile for capturing smooth, professional-looking content while vlogging, capturing sports or documenting life's most meaningful moments. Fluid Pro AI represents an exciting opportunity for GoPro to participate in the global gimbal market.

As we enter the holiday season, GoPro now offers a diversified line of 8 industry-leading camera SKUs that range from an MSRP of $199 to $649, more than 70 versatility expanding camera mounts and accessories and an industry-leading mobile app and subscription experience that adds enormous convenience and value to GoPro subscribers. And we're just getting started. We believe our current offerings serve as an incredible foundation to build on with the planned launch of several exciting new products in 2026 that we believe will result in revenue, profit and market share growth across our business.

Turning to software. In Q3, we launched several new 360-related editing tools that make immersive 360 content creation easy for everyone. And we updated our Quik mobile app with several new 360 editing features, including AI-powered subject tracking, convenient POV and selfie modes and cloud-based 360 editing. These powerful new features significantly enhance the convenience and creative experience for MAX and MAX2 owners and GoPro subscribers.

Our subscription model continues to exceed our expectations, contributing enormous value to both subscribers and our bottom line. We anticipate renewed subscriber and associated revenue growth in 2026, fueled by camera unit growth and the launch of new editing and content management features that we expect to significantly enhance convenience, capability and value. And we continue to see strong engagement from subscribers, opting into our AI training program, which will earn them 50% of the third-party licensing revenue we expect to generate on their behalf. GoPro subscribers have contributed more than 270,000 hours of video content during the AI training program's invitation-only outreach period, which began in July 2025.

We are in discussion with several AI data licensees to address their demand for authentic real-world video content for AI model training. We believe this program represents a meaningful opportunity over time for both our subscribers and GoPro, and we look forward to sharing progress as the program continues to evolve. As Brian will detail, we've amended our Second Lien Credit Agreement to address volatility in tariff rates. Given our commitment and expectation to achieve the minimum $40 million in trailing 12-month adjusted EBITDA by year-end 2026, I'm personally backing our commitment with a $2 million equity infusion into the company.

In summary, we're executing against our strategy, and we're seeing the results, improved product diversification via the launch of industry-leading hardware and software products and an expected return to unit revenue and profitability growth in Q4 2025. We expect to build on this momentum in 2026 with the launch of several new innovative and differentiated products and services that we believe will lead to consistent quarterly camera unit and revenue growth on a year-over-year basis and a swing from losses in recent years to solid adjusted EBITDA profitability in 2026. Many thanks to all of GoPro's incredibly talented, passionate and committed employees. Your execution is enabling us to realize our vision to the benefit of our customers and investors alike.

Now I'll turn the call over to Brian to share some details on our financials and outlook.

Thanks, Nick. For the third quarter of 2025, revenue was $163 million and gross profit was 35.2%, in line with guidance. We achieved a second consecutive quarter of positive cash flow from operations of $12 million, a $14 million improvement year-over-year. Demand for our cameras as measured via sell-through was 5% better than we predicted. Channel inventory declined 30% from the prior year quarter and has reduced for 4 consecutive quarters as we prepare for the upcoming holiday quarter.

As we look to the fourth quarter, our outlook is prefaced by highlighting by heightened uncertainty that exists due to volatility in tariff rates, consumer confidence, competition, component supply chain and global economic uncertainty. For the fourth quarter, we expect revenue growth at the midpoint of guidance of 10% to $220 million, non-GAAP net income per share of $0.03, plus or minus $0.02 and adjusted EBITDA positive $12 million compared to a prior year adjusted EBITDA loss of $14 million, a $26 million improvement. All of these expected improvements are due to the actions we took in 2024 to launch new products in the second half of 2025, reduce operating expenses, diversify our supply chain and drive product cost reductions, which were partially offset by higher tariffs.

We estimate street ASP in the fourth quarter to be approximately $350, up slightly year-over-year. We expect unit sell-through to be down 18% year-over-year at the midpoint of guidance to 625,000 units and channel inventory to be nominally up sequentially. We continue to actively manage the balance sheet and expect to further reduce inventory sequentially in the fourth quarter. In addition, we expect to end the year with cash and cash equivalents in the range of $60 million to $65 million, along with an additional $50 million available under our ABL facility.

We expect gross margin in the fourth quarter to be 32% at the midpoint of guidance, down compared to the prior year quarter of 35%, primarily due to tariffs. Excluding tariffs, gross margin in the fourth quarter 2025 would be approximately 37%. We expect fourth quarter 2025 operating expenses to be $63 million at the midpoint of our guidance range, a more than 25% reduction from the prior year quarter due to lower spending on wages from lower headcount, reduced marketing and lower engineering expenses. We expect shares outstanding to be approximately 177 million in the fourth quarter.

As we look ahead to 2026, we expect the following: to grow units and revenue in 2026 based on both our existing lineup of products as well as new products and services expected to be introduced next year. Our expectation is to grow units and revenue each quarter in 2026 on a year-over-year basis. Full year 2026 operating expenses to be approximately $250 million, slightly down year-over-year to continue to offset approximately half of our expected tariff costs of $45 million in 2026 with modest price increases and continued supply chain diversification. Subscription ARPU growth of 5% and to end 2026, up 2% to 2.4 million subscribers.

Our liquidity position to be more than adequate during 2026, and we expect to end 2026 with approximately $80 million in cash, plus or minus $5 million, along with an additional $50 million available under our ABL facility. To experience some margin pressure year-over-year due to tariffs and increasing component prices, which we expect to partially offset with improvements in supply chain. As detailed in the management commentary in our filing, we have amended our debt agreement due to changes in tariff rates. We expect adjusted EBITDA to be greater than $40 million in 2026, an improvement from losses of $18 million in 2025 and $72 million in 2024.

In closing, we believe our strategy is working. We are in the midst of an innovation cycle with the continued launch of new products and services expected over the next several years. Combined with the initiatives we undertook in 2024 to reduce operating expenses and improve supply chain in 2025, we believe we will restore unit and revenue growth and deliver strong adjusted EBITDA of at least $40 million in 2026.

Operator, we are now ready to take questions.

[Operator Instructions] Our first question comes from Erik Woodring of Morgan Stanley.

Nick, maybe if I just start on 4Q sell-through, I think it was saying that you expect sell-through to be down, I think it was 18% year-over-year. Can you just talk about kind of the puts and takes there? You launched 3 new cameras this year versus 2 last year. I think the timing of the launches this year was a little later than last year. So just why we're seeing sell-through down as opposed to others because there's no flagship camera. Just any detail you could help us understand there, please?

Yes, you nailed it. I had to be a little hesitant. It's clear that we didn't launch a new flagship HERO camera this year in Q3 for Q4 sales. And what I can say is, that is strategic in preparation for 2026 launches. So a little bit of patience now, yields, we believe, significant upside in 2026. So it's a bit of -- we've got something special planned. So we appreciate market patience, investor patience, and we think that this decision is going to significantly help us grow units, revenue and profits in first half of 2026.

And to give us a little more context, I have to be a little bit careful as it relates to competition, obviously, but we believe that by focusing on a bigger upgrade, we can have a more significant outcome than if we were to have launched a product in the third quarter of this year.

Okay. All right. Super. Looking forward to that. And I was going to ask you a question on innovation. And so realizing you just made that comment, but I'd love if you could just talk where you think kind of the camera innovation can, needs or should go from here? Obviously, you got 360 into the market. That's great. You've launched a lifestyle camera. You have the gimbal system. You've talked about the motorcycle helmets.

Again, without disclosing things that -- obviously, for competitive reasons, where do you think there are differentiated end markets or use cases that are compelling from here? Whatever you can share would be super helpful.

It's clear that the opportunity for growth is in diversification and meeting more of the specific needs of the market, not through one SKU. Traditionally, the HERO camera, the product that GoPro was built on, was a bit of a Swiss Army knife that did it all for everybody. And that was terrific for a time. But as consumer and professional demands have grown and become more specialized, and we've seen the end customer want to not have a do-it-all Swiss Army knife as much as they want additional tools, multiple tools, multiple cameras that help them achieve more specifically the solution for whatever capture scenario they're solving for.

So that's terrific for us because that can expand the TAM, help us relate GoPro to more end users and not burden any one product with the burden of doing everything for everyone. So what I would say is diversification, diversification, diversification. You're seeing that already in our product line, and you'll see that scale in 2026. And we believe that will result in TAM expansion, unit growth, subscriber growth and sustained profitability growth.

Yes. Nick, I think on top of that, GP3 processor is also market-leading in its capability and what we're able to do with that from an imaging and innovation perspective. So that's another area where we're leading with the product that will come out -- products that will come out with next year using that processor.

Yes. What Brian just alluded to is 2026 will be the year of GP3. Our current cameras are based on a GP2 processor. And 2026 is the debut of our line of GP3-based processors that will take GoPro and the industry to the next level of performance.

Okay. Super. And then maybe last one for me quickly, is just I appreciate all the color on 2026. I guess at a high level, kind of how are you -- or what are you assuming the world looks like in 2026? Obviously, there's a lot of uncertainty even as it just relates to like the holiday period coming up. So like what gives you the degree of confidence to kind of guide the way that you did? And how are you kind of embedding the world view in 2026 underlying that guidance? That's it for me.

Yes, I'll start and then...

Go ahead.

What I was just going to say -- to add to what I said about market demand for diversification, that's how we see consumers behaving today. That's -- all of our research shows that there's clearly an opportunity to diversify our product lineup to better meet the diversified needs of the market. That's what the road map delivers in 2026.

And when you combine that diversification with the next-generation GP3 processor from GoPro, that is going to, we believe, make GoPro a market leader in all of the important categories that we're participating in. So the demand that we see for our products today, we see increasing as we enter this new era of performance and capability at GoPro next year.

Brian, you can add to that.

Yes. I think on top of that, I'll add even in the fourth quarter of this year, which arguably is challenging with consumer and everything else that's going on, we remain on track for our sell-through and sell-in targets for the fourth quarter. So -- and now we have newer products in 2026 that are going to add to that. So that's pretty exciting as we look ahead actually to have both unit growth and revenue growth finally now in the fourth quarter as we have 2 new products or 3 new products in now -- this year and more coming next year.

Yes. And just to be clear, the cadence of launching new products next year will be steadily throughout the year. So that's also something to look forward to as opposed to being so back-end loaded.

Thank you. We have no further questions registered on today's call. So I'll hand back over to the management team for any further or final remarks.

Thank you, operator, and thank you, everyone, for joining today's call. To summarize, we're executing well against our strategy to launch industry-leading hardware and software products with improved product diversification expected to restore unit revenue and profitability growth this fourth quarter and throughout 2026.

Thank you, everyone. This is Team GoPro signing off.

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect.

Good afternoon. Thank you for attending the GoPro Second Quarter 2025 Earnings Call. My name is Cameron, and I'll be your moderator for today. [Operator Instructions]

And I would now like to pass the conference over to your host, Robin Stoecker, Director of Corporate Communications. You may proceed.

Thank you, Cameron. Good afternoon, and welcome to GoPro's Second Quarter 2025 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&A.

For detailed information about our second quarter as well as outlook, please read our Q2 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. 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-K for the year ended December 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 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.

Thanks, Robin, and thanks, everybody, for joining us today. As Robin mentioned, Brian and I will share brief remarks before going into Q&A, and I want to encourage all on the call to read the detailed management commentary we posted on our Investor Relations website.

In Q2, we reached the high end of our revenue guidance, delivered compelling new hardware and software products and are on track to launch exciting new products in the second half of the year. Our ongoing focus on efficiency drove operating expenses down 32% year-over-year, achieving our highest gross margin since Q3 2022.

In addition, we refreshed our Board of Directors and executed a capital raise. GoPro continues to hit its marks. Last week, we announced that GoPro raised $50 million in debt financing to bolster our balance sheet as we prepare to repay approximately $94 million in convertible debt due this November. Our priorities for the balance of 2025 and into 2026 continue to be managing operating expenses, protecting our IP and launching new products, which we believe will return GoPro to both unit and revenue growth and improved profitability starting in the fourth quarter of this year.

Turning to product highlights. During the second quarter, we launched HERO13 Black Ultra Wide Edition, a special edition of our flagship HERO13 Black camera bundled inbox with our ultra-wide lens mod pre-installed on the camera, making it simple to capture low distortion, incredibly wide-angle 177-degree perspectives that make you feel like you're fully immersed in the moment.

We also introduced a limited-edition Forest Green colorway of HERO13 Black, oering a bold, nature-inspired aesthetic designed to appeal to outdoor enthusiasts. On the software front, we added new easy and powerful 360 editing tools to the GoPro App, including MotionFrame and POV. MotionFrame makes it simple to reframe your 360 content into easy-to-share clips by using your phone to look around and reframe what part of your 360 video or photo you want to share.

And POV is a fast and simple way to create immersive see what I saw POV videos from your 360 content. These new tools add to the growing 360 editing experience in the GoPro App and lay the groundwork for the upcoming launch of our Max 2 360 camera. Our software ecosystem continues to create value for our users, particularly for our subscribers. Our subscription attach rate from cameras sold across all channels was 56% compared to 45% in Q2 2024, a 24% improvement. Aggregate retention has been above 67% for the past 7 quarters.

We believe ongoing software enhancements, coupled with increased camera sales from the launch of new products later this year and in 2026, will resume subscriber growth in 2026. And on July 30, 2025, we announced a new opt-in program that enables U.S. subscribers to monetize their GoPro cloud-based video content by making it available to help train AI models. GoPro subscribers can opt in to make their user-generated content available for GoPro to license to leading technology companies seeking diverse real-world footage to enhance the performance and accuracy of their AI models.

GoPro subscribers will earn 50% of the license revenue that GoPro expects to generate on their behalf. The GoPro subscriber community's vast data lake contains more than 450 petabytes of cloud-based high-quality video content, which translates into more than 13 million hours of video. This vast trove of video content represents a valuable opportunity for AI developers to train their models with a rich and varied data set across a wide range of experiences and environments. We are excited to participate in the demand for authentic real-world video to train AI models while growing a new diversified revenue stream for GoPro.

Industry analysts expect the AI data licensing market for photo and video content to reach $1.3 billion in 2025 with a projected 20% CAGR. And now an update on our IP projection efforts. On July 10, 2025, the United States Administrative Law Judge, ALJ with the International Trade Commission, or ITC, issued an initial determination that one of our China-based competitors, Insta360, violated federal law by importing and selling products that infringe a patent covering GoPro's iconic HERO camera design in the United States. We are pleased with the ALJ's recommendation that the commission issue both a cease and desist order against further infringing acts and an inclusion order barring further importation of Insta360's infringing products.

We are also pleased with the initial determinations validation of multiple patent claims covering GoPro's industry-leading HyperSmooth video stabilization. The case is ongoing. And the next phase is a review by the commission where we believe we have the opportunity to gain further rulings in GoPro's favor. The commission is expected to issue its final determination on all of GoPro's infringement claims on or before November 10, 2025, and any resulting exclusion orders would go into effect in January 2026, subject to presidential review.

And in Q2, we refreshed our Board of Directors with the addition of 3 seasoned executives. Mick Lopez brings decades of strategic and financial governance expertise from leadership roles at Vista Outdoors, L3Harris, IBM and Cisco Systems. Emily Culp is the Chief Brand and Strategy Officer of BodyHealth and adds value expertise in omnichannel marketing and consumer brand strategy, and Mike Dennison is CEO of FOX Factory Holding Corp, and brings a deep understanding of global manufacturing and product innovation to GoPro's Board. We believe their diverse industry experience and insights will be instrumental to GoPro's efforts to grow our TAM, revenue and profitability going forward.

We believe GoPro is poised to return to revenue growth and deliver meaningful adjusted EBITDA in the second half of 2025 and into 2026, while expanding our TAM by participating in key growth categories. GoPro remains the U.S. market leader in the estimated global 3 million unit action camera category. New growth areas include the 360 camera segment, which we estimate to be nearly 2 million units annually. We're excited to regain share in this 360 market with the launch of our Max 2 360 camera later this year.

Additionally, the low light capable camera segment estimated at $2 million to $2.5 million units annually represents a significant opportunity for GoPro as we do not currently participate in that market. And GoPro's tech-enabled motorcycle helmet development in partnership with AGV remains on track. We expect to bring meaningful innovation, improved safety and performance to the world of motorcycling, which we believe represents a meaningful business opportunity for GoPro with a SAM of approximately $3 billion.

To summarize, we are excited to launch an expanded diversified suite of hardware and software products in the second half of 2025 and throughout 2026, which we believe will enable GoPro to grow into markets that we're not participating in today. We expect to resume revenue growth in the fourth quarter and expect second half adjusted EBITDA to be approximately $20 million compared to a prior year period loss of $9 million, a nearly $30 million improvement. GoPro's teams are focused and highly motivated to realize the exciting opportunities that lie ahead.

Now I'll turn the call over to Brian McGee.

Thanks, Nick. In the second quarter, revenue was $153 million or 6% higher than the midpoint of our guidance of $145 million. Gross margin improved to 36% compared to 30.7% in Q2 2024. Non-GAAP operating expenses were $63 million, a 32% reduction year-over-year. Adjusted EBITDA improved 83% or $28 million year-over-year to negative $6 million in Q2 2025 and non-GAAP EPS net loss per share improved from negative $0.24 in Q2 2024 to negative $0.08 in Q2 2025. We continue to have a strong focus on operating expense controls while retaining investments in our product road map.

Notable second quarter performance highlights. Revenue from our retail channel was $111 million or 73% of Q2 2025 revenue compared to 74% in the second quarter of 2024. Revenue from our GoPro.com channel, which includes subscription and service revenue was $41 million or 27% of Q2 2025 revenue compared to 26% of the second quarter of 2024. Subscription and service revenue was flat year-over-year at $26 million. Subscription attach rate from cameras sold across all channels was 56% compared to 45% in Q2 2024, a 24% improvement.

Q2 2025 ASP was $374, a 16% improvement year-over-year. Gross margin was 36% compared to 30.7% in the prior year quarter. The margin improvement of over 500 basis points was primarily due to less price discounting activity and an increase in subscription and service revenue as a percentage of total revenue, partially offset by tariff costs. Non-GAAP operating expenses were $63 million compared to $93 million in the prior year period, a 32% decrease year-over-year. The year-over-year decrease was primarily driven by a decrease in advertising and marketing-related activities, restructuring actions resulting in reduced employee-related costs and the completion of our newest system on-chip GP3.

GAAP and non-GAAP loss per share was $0.10 and $0.08, respectively. Adjusted EBITDA was negative $6 million compared to a negative $33 million in the prior year period. Cash flow from operations was $9 million, an improvement of $8 million year-over-year compared to cash provided by operations of $1 million in the second quarter of 2024. We ended the quarter with inventory of $84 million, a 12% decrease sequentially and a 30% decrease since Q4 2024.

Sell-through was approximately 500,000 units compared to 600,000 units in the prior year period. Channel inventory decreased sequentially by approximately 60,000 units, in line with guidance. Our outlook is prefaced by highlighting uncertainty that exists due to volatility and tariff rates, consumer confidence, competition and global economic uncertainty. For the second half, we expect revenue of approximately $390 million, plus or minus $20 million, non-GAAP net income per share of $0.04 positive, plus or minus $0.04 and adjusted EBITDA of positive $20 million compared to a prior year loss of $9 million, a nearly $30 million improvement. We anticipate adjusted EBITDA in Q3 to be breakeven.

In addition, we expect to resume revenue growth in the fourth quarter of 2025. All of these expected improvements are due to the actions we took in 2024 to launch new products in the second half of '25, reduce operating expenses, diversify our supply chain and drive product cost reductions, which are partially offset by higher tariffs.

Additionally, we are focused on further operational efficiencies to drive down costs and expand our supply chain outside of China. We expect the impact on tariffs on our cameras and accessories in 2025 to be approximately $18 million, up from $8 million in tariff rates due to the increase from 10% to 20%. We expect to offset approximately 50% of the full tariff impact by modest product price moves we have already made of less than 5% globally.

We continue to actively manage the balance sheet and expect to further reduce inventory sequentially in Q3 2025 by $10 million to approximately $75 million. For the third quarter of 2025, we expect to deliver revenue of $160 million, plus or minus $10 million, down 38% year-over-year. We estimate Street ASP in the third quarter to be approximately $370, up nearly 26% year-over-year. We expect unit sell-through to be down 25% year-over-year to approximately 500,000 units and channel inventory to be flat sequentially. We expect gross margin in the third quarter to be 35.5% at the midpoint of guidance, flat versus the prior year quarter.

We expect third quarter 2025 operating expenses to be $60 million, plus or minus $1 million, a 34% reduction from the prior year quarter due to lower spending on wages from lower headcount, reduced marketing and lower nonrecurring engineering expenses related to the completion of GP3.

Non-GAAP tax expense by quarter in 2025 is expected to be $1.5 million in the third quarter and a credit of $1.2 million in the fourth quarter. Non-GAAP tax expense is expected to be $2.9 million for 2025. Cash tax is expected to be between $0.5 million and $1 million in 2025. We expect non-GAAP loss per share for the third quarter of $0.04 at the midpoint of guidance and expect shares outstanding to be approximately 159 million in Q3 and 171 million in Q4.

To provide additional color on our expectations for the priorities of the balance of 2025, we expect to introduce 2 new cameras, including our Max 2 360 camera. We expect full year 2025 operating expenses to remain in the range of $240 million to $250 million, down more than $100 million or 30% year-over-year. We expect to offset approximately half of our expected tariff costs with modest price increases and continued supply chain diversification outside of China, while also exploring the production of certain products in the United States.

We expect subscription ARPU and subscription cost improvements and end the year with 2.4 million subscribers. We expect our liquidity position to be more than adequate going into 2026 as we expect to end 2025 with approximately $80 million in cash, along with an additional $50 million available under our ABL facility. Our liquidity position ending 2025 reflects the repayment of approximately $94 million in convertible debt that we fully paid off in November '25 from our escrow account.

The initiatives we took -- undertook in 2024 to reduce operating expenses and improve gross margins are bearing fruit. We are focused on launching new products in 2025 and 2026 to restore growth and profitability for our business beginning in Q4 2025 and into 2026.

With that, operator, we are now ready to take questions.

[Operator Instructions] And the first question is from the line of Erik Woodring with Morgan Stanley.

I have 2, if I may. Maybe just first one to start, Nick. I'd love if we could maybe just take a step back and kind of help us better understand between all the kind of headwinds that you discussed amongst tariffs and uncertainty and competition and whatnot. Can you just maybe help us understand where you believe kind of consumer spending intentions, especially on more discretionary products is kind of tracking? Is it improving? Is it worsening? Is it kind of running in place?

And how does that differ by region? What I'm really just trying to get an understanding of is kind of the backdrop that you guys are currently selling into, realizing that there are other challenges like not having a 360 camera on market today, but just isolating the market? And then I have a follow-up, please.

Yes. Consumers are definitely becoming choosier about where they're spending their money. And fortunately, that aligns with our product ethos, which is build solutions, not things. And so for a lot of our customer base, a GoPro is an important tool, whether they're a professional or aspiring content creator or they're an adventurer or an athlete who uses a GoPro for training or more towards the lighter duty use side of things on the family front, GoPro's importance as a life capture and sharing solution.

So we're seeing pretty stable demand, which is good. Tariffs are definitely taking a bite out of gross margin. But as Brian noted, we're managing that pretty well with just modest price increases, and we feel pretty good about maintaining demand going forward, but it certainly is an area of uncertainty.

And then as it relates to upcoming product launches, we are optimistic about where our products are going to land competitively and the unit growth and profitability that they'll drive and even more so as we go into 2026, and we continue to build on that product launch momentum, we're feeling really good about the products that we've got slated for the rest of not only 2025, but 2026 as well, where we think we're going to be really hitting the mark with what consumers are looking for from the casual consumer who may be more pinched economically speaking, but definitely landing a bull's eye, we think, with the more premium and pro-minded consumer that's going to be very excited, we believe, about the products that we have on tap for them. So it's a mixed bag, Erik. But overall, we're feeling pretty good about how GoPro is positioned going forward.

Erik, I'd add on that, that our sell-through for the quarter is actually trending to what our projections are. So Nick might have alluded to that, but the demand side of the business is tracking for the quarter.

Okay. Okay. That's super helpful, guys. And then my follow-up, I wanted to ask about the Max camera market, the 360 market. The last Max camera you guys launched was 2019. I realize, obviously, you can't really find one today because you're coming out with the Max 2. If we look back over, whatever, call it, the last 5 years, what was GoPro's share in that 360 market? And how has this market changed in the last few years, whether that's technology or price points or more competition or less competition? I'd just love to know each of those.

Yes. Erik, when we launched Max back -- I think, '19-ish, obviously, we had the bulk of the share and the bulk, meaning 80%, 90% arguably of that market. And we didn't refresh it. We're late in refreshing. And in that time period, we've had competition actually come into that market. And Max eroded over time. As you know, we launched it a little bit. I think we even took 10% share back in the North American market by relaunching it.

So that was good. But the Max 2 refresh is an important milestone for the company to get us back into the market. And we've seen that market grow from a few hundred thousand units a year to 1.5 million, 2 million units now estimated. So there's definitely a large opportunity for the company to participate in a very fast-growing market with the refresh of our product.

Erik, I would just add to recount what we mentioned in our prepared remarks is that there are other growth areas as well that we're going to be targeting that we're very excited about markets we don't participate in today. One of them is the more premium low-light camera category, which is estimated now to be more than 2 million units. And GoPro's brand and technology is primed for us to participate in that market in a meaningful way. That's another very exciting growth opportunity that we're looking forward in the nearer term.

And that was our last question. I would now like to pass the conference back over to management for any closing remarks.

Thank you, operator, and thank you, everyone, for joining today's call.

To summarize, we're excited for the second half of 2025 and into 2026 as we intend to bolster our position in existing markets and enter new markets with the launch of new products, which we believe will combine to enable GoPro to resume revenue and profit growth beginning in Q4 of 2025.

We look forward to addressing investors during our fireside chat at the Oppenheimer Investor Conference tomorrow at 2:05 p.m. Eastern Time, which will be webcast and available on our Investor Relations website.

Thank you very much, everyone. This is team GoPro signing off.

That concludes today's call. Thank you for your participation, and enjoy the rest of your day.