GoPro Inc (GPRO)’s 4th Quarter and FY 2014 Financial Results Conference Call Transcript

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Compelling content like this has helped to grow our Facebook fan base to 8.3 million followers in the quarter, while our Instagram audience grew 162% year over year and now stands at 4.1 million followers. Testaments of the strength of the GoPro movement: “GoPro is a top 10 brand channel on Instagram”, “To make GoPro content even more accessible, we’re expanding distribution of the GoPro channel to additional platforms. Yesterday, we announced that in the spring the GoPro channel will come to Roku a market leader in over the top streaming devices. And to take things further, we’re bringing GoPro to live television. Responding to demand for broadcasters, we’ve partnered with Vislink to enable the broadcast of GoPro perspectives during live televised events. We introduced our live GoPro solution mid-January with a national hockey league during their all-star weekend and reached approximately 2 million television viewers, that very same weekend, ESPN integrated GoPro live feeds into their broadcasts of the Winter X Games, reaching over 30 million viewers, nearly 32 million viewers in its debut weekend. That’s a hell of a start and an indicative of a significant opportunity for GoPro on live television.

As the GoPro movement grows, and consumers increasingly associate GoPro with highly engaging content, we’re seeing other brands and businesses leverage the movement to their own benefit. One snowstorm recently hit the Eastern United States, the weather channel began promoting a site were viewers were encouraged to submit GoPro captured blizzard footage and last moth [inaudible] started a program at select resorts where they loaned GoPros to guests encouraging them to share their best vacation moments on a website dedicated to GoPro content.

This movement represents a tangible competitive advantage, it virally expands awareness and enthusiasm for our brand while defending our position against potential competitors. GoPro succeeds because millions of passionate customers capture and share their lives on our platform. And as their numbers and content sharing grows, so does the momentum of the movement and the momentum of our business. This was most evident in Q4 when we enjoyed our best sales performance to date, shipping an average of 1,000 cameras an hour throughout the quarter, talk about momentum. With that said, let’s talk about our Q4 performance.

The launch of the Hero4 in October stands as the most successful product launch in our history, we sold a record 2.4 million capture devices in the fourth quarter, reflecting the strength of our brand, product design and execution. According to NPD GoPro capture devices accounted for 3 of the top 5 products by dollar share and once again grabbed the number 1 spot as the best selling product in the combined digital camera and camcorder category. NPD also reported that GoPro helped 7 of the top 10 spots in accessories. Our sales performance during our holiday quarter reflects a solid return on our channel marketing investments. In October we rolled out new 12 linear foot POP kiosks in select North American retailers, featuring a larger brand presence, larger video screens and significantly increased shelf space. The new POP is proving a hit and retail costumers report significantly improved sale through when compared with our smaller 2 and 4 foot POPs.

Looking outside the Americas, GoPro had a strong fourth quarter in both EMEA and Asia Pacific. From Q3 to Q4 our revenue growth in EMEA and APAC significantly exceeded that of our America’s region. Research firm GFK reports that in these markets GoPro enjoys a significant double digit market share lead over our closest competitors. International expansion is a priority and we’re happy with the progress we’ve made to date. In 2014 we established a sales and marketing headquarters in Europe and expanded sales and marketing efforts in Latin America, Australia, Japan, Korea and China. In November we announced the strategy for Brazil which includes a in-region product assembly to improve margins and reduce retail pricing for consumers, the early results are promising based on Hero3+ sales and in March we will introduce Hero4 to the Brazilian market. In mid-January, we took our first steps into China with the country’s 2 largest web retailers Tmall and JD as well as with selected offline retailers. We are happy with the initial sales results in both online and offline channels and see positive indication that GoPro has the opportunity to succeed in China, one of the world’s largest consumers markets.

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