Below is transcript of the GoPro Inc (NASDAQ:GPRO)’s 4th quarter and FY 2014 financial results conference call, held on February 5th, 2015, at 5:00 p.m. EST.
GoPro Inc (NASDAQ:GPRO), formerly Woodman Labs, Inc., develops hardware and software solutions to alleviate consumer pain points associated with capturing, managing, sharing and enjoying engaging content. The Company’s mountable and wearable cameras and accessories, which the Company refer to as capture devices, enable professional-quality capture and exceptional versatility.
Company Representatives:
Nina Richardson, Chief Operating Officer
Anthony Bates, President and Director
Nicholas Woodman, Chief Executive Officer and Chairman
Jack Lazar, Chief Financial Officer
Analysts:
Paul Coster, JP Morgan
Sean Naughton, Piper Jaffray
Benjamin Bollin, Cleveland Research
Alex Gauna, JMP Securities
Charlie Anderson, Dougherty & Company
Joseph Wolf, Barclays Capital
Jim Duffy, Stifel, Nicolaus & Co., Inc.
James Faucette, Morgan Stanley
Brad Erickson, Pacific Crest Securities
Jeremy David, Citigroup
Operator:
Please stand by, we’re about to begin. Good day and welcome to the GoPro’s fourth quarter and full year 2014 financial results conference call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Jeff Brown, Vice President of Corporate Communications. Please go ahead, sir.
George “Jeff” Brown – Vice President of Communications
Thank you. Good afternoon, and welcome to GoPro’s fourth quarter and full year 2014 earnings conference call. With me today are GoPro’s CEO, Nicholas Woodman; our President, Tony Bates; our Chief Financial Officer, Jack Lazar; and Chief Operating Officer, Nina Richardson.
Before we begin, I’d like to remind you that statements on this call including, but not limited to those about our projected future and financial results including revenue and expenses, economic and market trends, our future plans, prospects and growth possibilities, the continued adoption of our products, the anticipated benefits of our long term strategy, our customers, competitive position, market share, and leadership position in various markets constitutes forward looking statements.
These forward looking statements and all other statements that may be made on this call are not historical facts. They’re subject to a number of risks and uncertainties that may cause actual results to differ materially. These forward looking statements speak only to today’s call, and we do not undertake any obligation to update these forward looking statements. We refer you to the financial prospectus that we filed with the Securities and Exchange Commission on November 20th, 2014 in particular to the section entitled risk factors, and to other reports that we may file from time to time with the SEC for additional information on factors that can cause actual results to differ materially from current expectations.
We report net income and and basic and diluted net income per share in accordance with GAAP and additionally 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. We have chosen to provide this information to enable investors to provide comparisons of our operating results in a manner similar to how we analyze our own operating results. The reconciliation of GAAP to non GAAP financial data can be found in the earnings press releases, press release we issued today. What ask, we ask that you review this information in conjunction with this call.
All numbers that are disclosed in today’s conference call, other than revenue, are non GAAP unless otherwise noted. In addition to the earnings press release, we have posted slides containing detailed financial data and metrics for the fourth quarter and full year 2014. Both of these documents and a link to the webcast for today’s earnings conference call are posted on the events and presentations page of the GoPro investor relations website and your reference, for your reference. In the interested time I would like to invite those participating in the Q&A portion of the call to please limit yourself to one question each. Now, I’ll turn the call over to GoPro’s CEO, Nicholas Woodman. Nick?
Nicholas Woodman – Chief Executive Officer and Chairman
Hi everyone and thanks for joining the call. Needless to say GoPro had a great fourth quarter capping off our most exciting year ever. We’re extremely pleased with our results and excited about our outlook for 2015 and beyond. I’m going to steal a little bit of Jack’s thunder by sharing some of our financial results upfront as I’m so proud of them. In the fourth quarter, GoPro grew revenue by 75% year over year to $634 million, more revenue than we generated in all of 2012. Our growth margin dollars nearly double year over year to $304 million resulting in earnings per share of .99 cents. And we ended the year with a cash balance of $422 million. Beyond the great financial posts in Q4 and 2014, we’re excited of how GoPro has evolved from an enabling piece of technology into a global content sharing movement that transcends age, gender and nationality. GoPro enabled the world to capture and share experiences like never before. And the resulting perspective in a immersive content allows us to see our world like never before. The limitless points of view our cameras an accessories enable make it easy for people to capture virtually any life experience.
This resulted in some of the world’s most engaging content. Content that goes on to drive awareness of our brand and business and inspires others to capture and share engaging experiences of their own and it’s snowballing. In 2014, more than 3.9 years of content with GoPro mentioned in the title was uploaded to YouTube. Up significantly from the 2.8 years of contented, content posted during 2013. The GoPro channel on YouTube generated over 98 million views in the fourth quarter alone, an increase of 34% year over year. While total minutes viewed for the quarter was up 59% year over year. This performance was enabled by video hits such as originally produced The Adventure of Life of 4K series, which has received more than 40 million views since being launched.
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.
In 2014, over half a billion dollars of our revenue came from outside of the Americas. We see international expansion as a key part of our revenue growth strategy going forward. On the product front, we continue to improve the ease of capturing and sharing compelling content. Yesterday, we released a firmware update for Hero4 cameras that introduces exciting new features, including 720t video capture at 240 frames per second and time-lapse video: a mode that simplifies the capture and sharing of time-lapse content. Both of these powerful features illustrate our dedication to innovation and improving our customer’s experience and demonstrate that a GoPro is a smart device capable of receiving perio, periodic updates that enhances its value. And its important that a GoPro continues to improve as it needs to match the breath of our vision because it’s a big one.
We see a future in which GoPro serves a platform for people around the world to visually express themselves like never before. A future in which their shared experience and collective content in our platform is as valuable to GoPro as YouTube is to Google or Instagram is to Facebook. With that, I’m going to turn the call over to Jack to discuss our financials
Jack Lazar – Chief Financial Officer
Thank you, Nick, and thanks all of you for joining us today. If you’ve not already done so, I’d encourage you to download from the investor section of our website the financials slides we posted concurrent with the press release earlier today. Our prepare, my prepared remarks will be focused on the financial overview of Q4 and the whole year 2014 as well as our related business trends. I’ll then provide our guidance for the first quarter of 2015.
The movement that Nick described in his remarks is happening and our 2014 financials results demonstrate how beneficial this could be for our shareholders. Over the past 3 years, GoPro has experienced exceptional growth is evidenced by a revenue compound annual growth rate of over 80% and a unit compound annual growth rate of over 65%. Across Silicon Valley there’s very few companies with over a billion dollars in revenue and growth rates in [inaudible] GoPros.
Our full year 2014 revenue of $1.4 was up 41% from 2013 providing further evidence of the large and growing market share we’re addressing. Gross margin for 2014 was 45.1% compared to 36.9% in 2013 demonstrating our commitment to the development of innovative cost effective products and solutions. Our operating income was $259.6 million or 18.6% an increase of 1$48.9 million from the 2013 and within our long term target model range of 18 to 20%. Adjusted EBITDA was $293.4 million or 21% of revenue and up almost 120% year over year. Earnings for diluted shares for the full year of 2014 were 1 dollar and 32 cents, up 164% from 2013.
Our fourth quarter results were quite exceptional, the strong reception for our new line of capture devices was broad-based and we’re please with our profitability metrics. Fourth quarter revenue of $633.9 million was up 75% year over year and gross margin of 48% exceeded our long term target model range of 42 to 44%. Gross margin increased 600 basis points year over year and 350 basis points sequentially. Operating income for the fourth quarter was $193.2 million or 30.5% of revenue an increase of $118.8 million from Q4 2013 and an operating profit for Q4 alone was 75% higher than that of our full year in 2013.
Adjusted EBITDA was $202.9 million or 32% of revenue, up 148% year over year. In earnings per share for the fourth quarter were .99 cents up 200% from the .33 cents recorded in the fourth quarter of 2013. We continue to be focused in our long term operating model while also making the investments required to consistently achieve it.
Let’s take a more detailed look at our performance for Q4. Our revenue growth for the quarter was driven primarily by a 68% year over year increase in the capture devices sold. During the quarter we shipped approximately 2.4 million capture devices to our retail and distribution partners throughout the world, with the vast majority being our newly launched Hero4 line of products. As Nick mentioned, we also achieved a remarkable milestone as we shipped on average over 1 thousand units per hour, every day of Q4.
[inaudible] across all regions with year over year on our revenue increases 78%, 72% and 69% in the Americas, EMEA and APAC respectively. EMEA and APAC sales were also [inaudible] which were our best selling products during the quarter on both revenue and unit basis. Overall AFPs in the quarter increased for both our capture devices and our stand alone accessories. Revenue from our direct sales channel increased 85% year over year to $391.6 million driven by strong sell through and sell in with our domestic and big box retailers. Sales to our distributors increased 61% year over year and made up 38% of our fourth quarter revenue.
Fourth quarter revenue by geography was as follows: Americas was $407.6 or 64% of revenue, EMEA was $163.9 million or 26% of our revenue and APAC was $62.4 million or 10% of revenue. EMEA and APAC regions combined made up 36% of Q4 revenue up 71% from Q4 2013 due to the strong sales of Hero4 products. This geographic mixed percentage of revenue was relatively in line with Q4 2013 and significantly up from the 27% recorded in Q3 of 2014. Fourth quarter gross margin increased 600 basis points and year over year and 350 basis points sequentially to 48% due primarily to favorable product and channel mix related to the holiday sales of our Hero4 products. This sequential improvement in gross margin percentage provided us an incremental .12 cents of quarterly EPS. Operating expenses of $111.1 million were up 43% year over year and 15% sequentially. Over 85% of the year over year increase in the operating expenses was on RND and sales in marketing, with RND being the largest area of growth.
We continue to aggressively invest in new capture devices and our software platforms to enable improved user experience and future [inaudible] of content. GAAP net income for the quarter was $122.3 million or .83 cents per diluted share and this compares with GAAP net income of $43.7 million or .33 cents per diluted share for Q4 2013. Turning the balance sheet, we ended the quarter with cash, cash equivalents and marketable securities of $422.3 million, up $184.5 million sequentially due primarily to net proceeds received from our [inaudible] and cash from operations. During 2014 our cash balances increased over 300% to $422 million. A cash receivable of $184 million increased $61.3 million or 50% compared with Q4 of 2013 with a corresponding DSO decrease to 26 days from 30. Days of inventory decreased 6 days to 42 from 48 in Q4 of 2013 and during our fourth quarter our cash flow from operation was $43.2 million, our capital expenditures were $4.6 million and depreciation and [inaudible] was $5.2 million.
I’ll now move on to our guidance for the first quarter. After a very strong fourth quarter we’re also quite optimistic with our prospects as we enter this new year. We’ve been closely tracking our channel inventory levels and the initial full quarter of [inaudible]. We believe that the overall channel inventory levels are healthy going into Q1. We expect continued strong sell in and sell through in the first quarter as seasonally adjusted demand remains brisk. In the first quarter we anticipate revenue from our distribution channel will be particularly strong and geographic strength in both EMEA and APAC regions. As a result, we currently anticipate revenue of between of $330 and $340 million for the first quarter, representing a year over year increase of approximately $100 million or 42% at the mid point of this guidance.
The fourth quarter gross margins were well in access of our long term model of 42 to 44% due to favorable channel and product mix. In addition, the seasonal higher, higher volumes in the fourth quarter provided us a benefit as we amortized our 6 operations costs over a larger number of units.
In the first quarter we continue to expect our gross margins will be at or above our long term target model but we’ll reflect the seasonality and greater concentration of distribution revenue. Accordingly we anticipate our gross margin will be 44.5% plus or minus 50 basis points and at the mid point of 340 basis points from the 41.1% gross margin we recorded in the prior year comparable quarter. We will continue to invest prudently in the people, products and infrastructure necessary to support our growth and our vision. To support our ongoing investments in a broadening family of capture devices, accessories, software and services we anticipate our operating expenses will be $115 million plus or minus $2.5 million with substantially all of the growth coming from RND. Our tax rate is estimated to be at 29% based on fully diluted shares outstanding of about $150 million. Accordingly we anticipate EPS to be in the range of .15 to .17 cents. So with that, let me hand it back over to Nick.
Nicholas Woodman – Chief Executive Officer and Chairman
Thank you, Jack. Before I go further I want to share an announcement related to our executive team. Our Chief Operating Officer, Nina Richardson has decided to leave us to pursue board roles and other opportunities. Nina came to GoPro in 2012 to help us scale operations and product development and she’s been fabulously successful in doing that and more. More than just a terrific executive and leader, Nina is a terrific human being and its been a privilege and a blast to work with her for the past 2 years. Going forward Tony, Jack and I will take up the reins for Nina’s organization. Nina, from all of GoPro, we love you and we appreciate all that you have done for us, a huge thank you.
Nina Richardson – Chief Operating Officer
Nick, thank you for such a nice tribute, I certainly enjoyed my time at GoPro. This has been an executive dream, having the privilege to be part of such great organization, in such an exciting time of growth and expansion. I’m incredibly proud of my team and all they’ve accomplished over the past 2 years, they’re terrific. Each and everyone is a solid, experienced and talented executive and I have full confidence in their ability to continue to excel under the leadership of Tony, Jack and you. Thanks, it’s been really great.
Nicholas Woodman – Chief Executive Officer and Chairman
Alright, thank you Nina. And I want to add that the performance we’ve outlined today is attributable in many ways to the processes and people that Nina has brought to GoPro, again thank you, Nina. Operator, we are now ready for questions.
Operator
Thank you, ladies and gentlemen if you would like to ask a question at this time please signal by pressing *1 on your telephone. If you are using a speaker phone pleas make sure your mute function is turned off to allow your signal to reach our equipment. We ask please that you limit yourself to one question. Again that is *1 for questions and we’ll pause for just a moment. We’ll go first with Paul Coster with JP Morgan.
Paul Coster – JP Morgan
Thanks for taking my question. As we think about growth for ’15, and I’m sure you expect growth, you may not be prepared to be very specific about the quantity of growth this year but could you perhaps give us some sense of where are you expecting the growth to come from principally? Is it from international expansion, is it from new product, products extensions? New business segments or is it just simply largely going to be growing as first time adoption of the products we know today?
Jack Lazar – Chief Financial Officer
Hey Paul, is Jack. Well I think you did a pretty good job in summarizing the places where our growth is going to come from. There’s just a variety of places, you know, one of the things that you know and other who we’ve spoken to, we think that shipping now, you know 5.2 million units in the last year is just a very small number in the grand scheme of consumer electronics and other markets that we’re going after. So, whether it’s international growth, which obviously we’re going to see quite a bit of in this first quarter or whether is through new products and other things that we bring to market. We just think that there’s some really large opportunities, our results this year showed that, we fell pretty confident that it’s going to happen again in the upcoming year.
Operator
Our next question will come from Sean Naughton with Piper Jaffray, please go ahead.
Sean Naughton – Piper Jaffray
Sorry about that I was on mute, I apologize. Just an, looking forward and based on you know what you’re talking about on the international expansion, could you just maybe remind us. You know, are there any dramatic differences in the margins on those two particular, those three different segments that you have? And then maybe remind us about the distribution versus the the direct margins as well. Thank you.
Jack Lazar – Chief Financial Officer
Hey Sean, Jack. I think it’s kind of a combined question there so I think you’re asking about margins on original bases and basically on distribution. A lot of our international [inaudible] today are actually through distribution so they kind of go hand in hand it’s not exactly one to one but, but it’s relatively close. We do see, when we ship through distribution you can imagine that is a lower margin sale for us because there’s multiple layers above. So that’s one of the reasons why the, we pointed to in the gross margin a decline down to the guidance that we provided. Distribution is actually, probably the biggest piece of it in the first quarter. So, we see that those distributors have a lot of value, that’s a great investment to provide them that incremental margin. But obviously we’re still running this thing at margins that are over 300 basis points greater that it was being [inaudible] at this time last year. So, I think the overall geographic and distributer mix is something that we’re pretty happy with and it’s working pretty well for us.
Anthony Bates – President and Director
I just have one thing, [inaudible] to give an example, we talk about we just made our first [inaudible] to China and [inaudible] was so different mix of online and offline and you see that trend so that’s another key factor when we think about margin going forward.
Operator
And once again that is *1 if you do have a question. We’ll take our next question from Ben Bollin with Cleveland Research.
Benjamin Bollin, Cleveland Research
Good afternoon. Thanks for taking the call. When you look at your content and your strategy, uhm you’re talking about the live content angle now. Uhm how you monetize that? How does it contribute to the model, and when do you see the content becoming a meaningful opportunity?
Nicholas Woodman – Chief Executive Officer and Chairman
Nick Woodman here. That’s a good question it relates to the live broadcast um, in terms of live television and enabling live [inaudible] perspective to be included in televised events, GoPro largely benefits from increased brand exposure and getting consumers excited about perspectives that are possible with a GoPro and also the validation that occurs when they see GoPro perspectives used in live television, hugely validated for the brand and an incredible promotion opportunity for GoPro. I wouldn’t think of those as revenue events, is more GoPro being used by professional broadcasters as an enabling technology to improve the show for the fans at home and we get a huge brand boost from that when it happens and then I’ll turn the second part of your question over to our president Tony Bates.
Anthony Bates – President and Director
Just to reaffirm what Nick just mentioned, the results really reflect I think the [inaudible] of the content enable strategy that we in the beginning and just in terms of live is just another way to really capture the imagination to what’s possible with GoPro. Just to expand a little bit, when we think about the revenue that comes from media, it isn’t our focus today. Our focus today is continuing to excite and amaze folks in terms of what’s possible with a GoPro and that again reflects in our results. Our focus has been one to show what’s possible with a GoPro as we continue to increase our distribution channels, Nick already mentioned it we talked about Roku, expect that to come in spring. That’s just another channel but I’d also point to obviously the great results you continue to see in both viewership and sharing that we see in YouTube and quite some increase that we put our focus on other social channels Facebook, obviously, we mentioned Instagram and there’s two phenomenon that we see, one is the additional viewership that we see in those channels but more importantly the way people have started to share GoPro content in a much more social way and so that again reinforces and benefits the content enabling strategy we have around media.
Operator
We’ll take the next question with Alex Gauna with JMP Securities, please go ahead.
Alex Gauna – JMP Securities
Thanks for taking my question. Congratulations on the blowout results. I’m just curious, in terms of what you learned, in terms of that smashing debut performance with the National Hockey League and also with the Winter X games. This live opportunity, what new directions can you go in, what are the technology challenges, and what can you do with the technology to make those experiences even better?
Nicholas Woodman – Chief Executive Officer and Chairman
Great question, I think that you know, we’re just in the early days of enabling live GoPros perspectives on television, we haven’t even officially debuted the product and made it available yet, stay tuned for more news on that, but, you know, in the first weekend alone we saw the NHL using [inaudible]. Of course the X Games, EPSN using it in the X Games and it was a huge success from was effectively the first live debut of the product and as you know anything that’s live is live and so we were thrilled with how much both networks used GoPro live perspectives and as a viewer at home it was the most exciting Winter games I’ve ever seen because for the first time we were able to regularly see the action from the perspective of the athlete and you could tell as the program went on and ESPN got more comfortable with how fabulous the image quality coming from the GoPro was they used it more and more and more so that was really encouraging to see and I think what we’re going to see is, you know, other broadcast professionals are watching this programming and they’re seeing what this other networks are doing with a GoPro and they’re seeing how the show is enhanced so one can imagine that GoPro live on television could benefit in many of the same ways the rest of the brands company has is that the more that broadcasters use GoPros to enhance programming, the more other will be inspired to do the same and we could see a faboulous expansion of the GoPro movement to television and not just digitally distributed content as we’re seeing it today.
Anthony Bates – President and Director
Another thing to add is that obviously we’ve showcased in sports events but I think this technology [inaudible] translates across of all forms of live television and everyone is seeing different perspectives and so [inaudible] happen to do in a very form pack is really enabled that solution.
Operator
And our next question today will come from Charlie Anderson with Dougherty & Company. Please go ahead.
Charlie Anderson – Dougherty & Company
Yeah, thank you for taking my question. I wonder if you could speak a little bit to channel inventory in Europe. I know it’s a little bit tougher with the distributors, but where you see that, and also in terms of mix, what have you seen in Q4 in mix in international versus US? And then as you’ve been in China for a few weeks, what’s that mix kind of look like?
Jack Lazar – Chief Financial Officer
Hey Charlie, this is Jack. As far as the overall international I would say that we keep pretty, it’s multilevel distribution obviously but we do keep pretty good tabs in that we do quite a lot of research both through external sources and through our partners themselves. So, for example, you know we get data from our distributors that tells us what’s being sold through, what they have on inventory but we also started an effort to get closer to the retailers throughout Europe so we actually are getting some pretty good information and learning a lot. Obviously we feel like uhm, the sell through is good and the sell in has been you know, not enough to keep up and that’s one of the reasons why we’re seeing particular strength in the first quarter in the EMEA and in the APAC regions. So, I think that that’s a, that’s pretty telling. Mix wise, I think we’re still in an early stage to make general statements, to make long standing statements about what the mix is going to be in the future.
Clearly, we mentioned in North America we have the number one selling product of the fourth quarter according to NPD, we are seeing a pretty favorable mix obviously from a sell in basis because you can see that in our Q4 numbers. But even at a sell through basis, the mix is actually quite good and I think we’re very very happy with the way in which that’s worked out, so we, one other thing I’d point you to is that we did point out, and I think this is consistent for Europe as well as in the US. Our two best selling products both on a unit and revenue basis this last quarter were the Hero4 Black and the Hero4 Silver, so. Hopefully that gives you an idea.
Operator
Our next question will come from Joseph Wolf with Barclays. Please go ahead.
Joseph Wolf – Barclays Capital
Hi, thanks. I wanted to ask a question about the uhm ease of use for customers, you mentioned some new tools for capturing video. But if you look out and see customer comments and reviews, there’s talk about battery life issues and uhm just the editing tools. And I was wondering how you, what kind of things we can expect over the course of the next couple months to address those issues.
Nicholas Woodman – Chief Executive Officer and Chairman
Good question, Nick Woodman here. Well, battery life in an ongoing challenge for any consumers electronics device, as uhm devices become more powerful, processing becomes more intensive and we’re all a bit slaved to the development of new battery technologies that would provide for longer run time, it’s something that we all want as, so it’s something that we look at very closely and, you know, years ago there was nothing that GoPro could do about it because we very a very small company without a lot of leverage. And without a lot of engineering talent and that’s changing and GoPro is becoming a bigger player in the consumer electronics space and we’re hiring incredibly talented engineers, who are helping us shape the future, I wouldn’t say that this is going to happen in the next few months, in fact I’m going to go as far as to say that it’s not going to happen in the next few months. But we do feel that we uhm have the opportunity battery performance of the GoPro in the future, but to be frank, it is incredible that you can capture the quality of footage, 4K video, at 30 frames per second, cinema quality content for an hour with a Hero4, it’s stunning. You tell that to a professional, they’re blown away.
Unfortunately the consumer has different expectations, everything should work better than it does and we’re not satisfies either so we will continue to improve but it’s really darn impressive when you stop and consider what a Hero4 can do today. In terms of making it easier for our customers to upload their content easily, access it when they’re on the go with their mobile device, more easily editable into short, consumable formats of content, that they can share more easily, that is one of the primarily focuses of GoPro today, I can’t tell you the timeline for the new product and services related to that but I can take you, tell you that we’re making significant investments, we’re hiring fabulous people and what I know from behind the scenes, I’m incredibly upbeat about the development that I’m seeing and the user experience that we’re going to roll out for consumers to address this problem, so stay tuned for that but just know that we see that as a big big part of GoPro’s future and how we continue to grow the company.
Operator
Our next question will come from Joseph Wolf with Barclays. Please go ahead.
Jim Duffy – Stifel, Nicolaus & Co., Inc.
Thanks. Hi, everyone. Compliments to the team on the strong execution in 2014. Nina, best of luck.
Nina Richardson – Chief Operating Officer
Thank you.
Jim Duffy – Stifel, Nicolaus & Co., Inc.
My questions, looking across 2015, Nick, what are the priority areas, priority areas for investment? And then related to that, with cash balances building cash generation capacity strong, have potential acquisitions become more top of mind?
Nicholas Woodman – Chief Executive Officer and Chairman
Good question. We believe that we have a huge opportunity at GoPro. I mean, we have got a fantastic brand, that resonates with consumers around the world for the simple reason that the world is filled with people that have interests and passions, filled with people that would like to see themselves living out those interests and passions. And before GoPro it was very difficult for anybody to capture footage of themselves doing what they love to do in life, we’ve made that easy and low and behold we built a fabulous business around the string consumer demand for our product and services.
Having said that, we’re not resting on our laurels and patting ourselves in the back with the success of the products that we’ve launched to date, we have a very big vision for this business, for this brand, where we see GoPro as a platform to truly help the world visually express it themself in a new way and on a more regular basis share compelling short format content of one’s personal experiences. This is the future and to be clear, we need to invest in that and so areas of investment for us are in people, are in uhm the developing of our roadmap, which is quite impressive and along with that, yes, absolutely comes a potential acquisition opportunities, you know it would only be prudent if we were looking at ways to accelerate the realization of our vision and so that is something that we take very seriously and you know, didn’t go and raised this money just to sit on it.
We raised this money last year to put it to work and help growing this business and, but to be said, you know, we’re going to do it prudently. This business is 13 years old and we have not had a history of throwing money around, we’ve been very prudent in our approach on how we spend our money and that will continue to be the case. But to be sure there’s more and more opportunities coming our way.
Jack Lazar – Chief Financial Officer
Yeah, and just to add one thing to that. You know, you have a series of people here that have joined Nick over the years that actually have a fair amount of experience doing M&A and those types of things and we’re all very aware of the pluses and minuses of doing M&A, so I think any approach that we would take if we were to take it would be very thoughtful and one were we would obviously keep what’s, keep in mind what’s best for the share holders.
Operator
As a reminder that is *1 if you do have a question. We’ll go next to James Faucette with Morgan Stanley, please go ahead.
James Faucette – Morgan Stanley
Thanks very much. I just wanted to ask about your distribution and wondering if you can give a breakdown, by geography, of how far you think you are in terms of your distribution or potential distribution in places just around the world, just trying to get a sense for how much further you think you can go and reach. Thanks.
Jack Lazar – Chief Financial Officer
Well, I think, you know. This is one of those things that we brought up, when, I was discussing this earlier when I was talking about the international piece. This is actually one of the really big opportunities because uhm, we’re now working not just with the distributors, we’re working actually with the end direct retailers too and that combination, we’re addressing by having more and more people on the streets to learn what customers want and so, that enables us to now only do a better job in marketing the products but actually getting into more doors. There’s plenty of doors that we can go after, there’s no doubt about that, you can go all over Europe and you’ll find a lot of places where you can’t get a GoPro and we look at that as a massive opportunity for the company. And the in APAC we’re even in an earlier stage, I mean, it’s really a long ways away. Uhm, outside of Australia where we’ve done pretty well, but even Australia there’s plenty of places to go. So while I’m not going to quantify, we clearly wouldn’t be talking about it if we didn’t think this was really and truly a very large opportunity internationally.
Operator
We’ll take the next question from Brad Erickson with Pacific Crest Securities please go ahead.
Brad Erickson – Pacific Crest Securities
Hello, thanks for taking my question. When you look at the challenges that face you, I guess on the software development side, where are you most optimistic at this point? And what areas concern you most around driving a path towards being able to monetize the media portion of the business?
Anthony Bates – President and Director
Yeah, just on the software side I would point you back to a little bit of what Nick has already talked about, we are very confident wanting the team that we’re building and the roadmap that we can continue to address you know, pin points around, one making it much easier first to capture your content to manage that and increase as you make it simpler for you to edit and correct great high quality [inaudible] content and the of course share that and we feel very good about that. It’s work, no doubt and we’re going to continue to invest in that. Jack mentioned already in [inaudible] investment on making it RNB up 85% year on year end so we’re very committed to that and I would really separate the two pieces when we talk about monetization. We see that as a potential for us to want to help improve the experience that we talked about but over time the potential for monetize those services and then when we talk about media, I want to reaffirm what we’re about today, is really content enabling our business, more and more people see the power of what you can do with a GoPro [inaudible] the strategy I outlined and then over time we love to see whether there’s potential to monetize that content. But that’s not the focus, right now the focus is really driving a great scene of software experience.
Nicholas Woodman – Chief Executive Officer and Chairman
And yeah, this is Nick again. Just to add to that. Since going public we’ve let you guys know that there’s a [inaudible] to this, right? And that first and foremost, you have to enable the capture for great content, then you have to enable the easy management and editing of that content to increase the rate of sharing so that you increase the pool of content that you have from what to aggregate and then redistribute the best of as GoPro branded programing, the GoPro channel and so, the one gets the other and we’re obviously doing very well in the capture front with the sale of our devices and what you’re going to see from us in the future is a new user experience related to the managing and editing of that content to facilitate more sharing and then from that, we will have an expanded media opportunity.
I just want to be clear that you’re hearing a very consistent message from us and we feel very good about our progress and execution today.
Operator
Our next question today will come from Jeremy David with Citigroup. And as a reminder that is *1 if you do have a question. Please go ahead, Mr. David.
Jeremy David – Citigroup
Hi good afternoon to GoPro and thanks for taking my question. Congrats on the quarter. I want to ask you a question about the seasonality you got into in Q1. So, you’re getting Q1 revenue of $330 million, $340 million. That’s down about 47% quarter to quarter at the midpoint, last year, I think your revenue was down about 35% quarter over quarter in Q1. So that’s a big difference. And I’m scratching my head to reconcile the guidance and your comment that seasonality, that inventory are healthy in the channel without detail. Any help you could provide would be helpful and if you can also comment a little bit on seasonality through the year, should be expect 2015 to be similar to 2014? Or is there anything we should be aware of? Thank you.
Jack Lazar – Chief Financial Officer
Hey Jeremy, it’s Jack. Thanks for the question and uhm, I appreciate the insight. I think you kind of have to look at it a different way or at least the way I look at it is a little bit differently. So, the way I look at it is, we’re growing 42%, I think is the mid point of the guidance and so from that perspective, we grew 41% all last year. That seems like a pretty good situation for the company and you know, $100 million in growth, in revenue in one quarter, year over year is actually a pretty good situation. I can only tell you that we’re very pleased with the way this looks going into the year. We’re particularly pleased with the international side of things and how that’s going and yet we also know that there’s the opportunities domestic [inaudible] significantly enlarge, so, frankly we’re pretty happy with the way this outlook is and we look forward to delivering it in the quarter.
Operator
And once again that is *1 if you for questions we’ll go next to James Faucette with Morgan Stanley. Please go ahead.
James Faucette, Morgan Stanley
Yes, thanks for the follow up question, I just wanted to circle back once again on the point of distribution and that kind of thing, and understanding that you have a lot of opportunity outside the US. One of the questions I guess I had was that I think there have been some comments earlier this year perhaps indicating that you might think you might grow a little slower internationally than originally anticipated. Just wondering, was that interpretation of previous comments accurate? And if so, what has changed, has modified your plans to grow internationally? Thanks
Jack Lazar – Chief Financial Officer
Well, yeah. It’s a fair question and thanks for the question, James. What I’d tell is that if you look back at maybe things we said during the year, we have been pretty consistent about it all year, that there was a level of inventory in the channels before we started gathering the information that we gathered now in the earliest part of the year that made it more difficult to actually show sell and growth, right? I don’t think there’s challenges growing internationally other than going out and executing and working closely with our distribution partners and in some cases as I think we’ve mentioned, we’ve taken people like [inaudible] direct but we’re rally just doing all that we can do to actually grow out the doors and the opportunities overseas so hopefully this is pretty consistent with what we’ve said, that internationally is very big opportunity for us.
Operator
We’ll take a follow up question from Alex Gauna with JMP Securities, pleas go ahead
Alex Gauna, JMP Securities
Hey, Jack, to follow-up on two questions ago, you’ve done a pretty good job of exceeding your expectations last couple of quarters. I’m kind of wondering in this last December quarter, what was the greatest variance that came in stronger than you expected? And what maybe could go better than expected in Q1? I’m also curious. With Q1, you gave some answers that year over year growth is comparable for that first quarter to what you did for the full year 2014. Is that really how you’re setting the bar there? Or are there other insights setting that guidance to be greater than normal seasonality for you? Thanks.
Jack Lazar – Chief Financial Officer
Yeah, so, Alex, the big thing that happened in Q4 was this tremendous [inaudible] of demand. I mean, we really saw a lot of the uhm pull from all of our customers. We move a lot of units in this last quarter and frankly I think it’s a testament to the operations team within the company because if you look at it we really were able to fulfill demand while being careful about making sure that people weren’t over you know over ordering on product and so I just think we saw it across the board, there are some reasons why we weren’t able to get some stuff, probably as fast as we wanted to but caught up as the quarter went by but overall we just see a lot of demand for these products that our engineering teams put together, the Hero4s that are frankly quite good in our view. I think uhm, looking at Q1, there’s all sorts of variances that could possibly, that could possibly happen but we have to give you our view as of today and what we think is the most likely situation for the quarter. When I look out there, I mean, we obviously have to keep tracking things like sell through so that we can get the proper level of the sell in, but remember, one of the things we’ve been pretty [inaudible] about is that we just want to make sure that we’re priming the channel to meet the demand and we know that long term, 5.2 million units in a year is really a small number compared to what we should be able to do. And given that we just want to have controlled growth as we go forward, so, hopefully that helps a little bit.
Operator
Ladies and gentlemen that does conclude our question and answer session, I would now like to turn the call to management for any closing comments.
Nicholas Woodman – Chief Executive Officer and Chairman
Thank you again everyone for joining the conference call, Nick Woodman here, before we go I want to let anyone know that we’re going to be at the Morgan Stanley technology media and telecom conference being held in San Francisco on March 4th. On behalf of our 100,000+ employees around the world, thank you for your ongoing support and interest in GoPro, this is team GoPro signing off.
Operator
Once again that does conclude today’s conference. Thank you for your participation.
