GoPro Inc (GPRO) 2018 Q4 法說會逐字稿

Good day, and welcome to GoPro's Q4 Financial Results 2018 Earnings Results Conference Call.

Today's conference is being recorded.

At this time, I would like to turn the conference over to Chris Clark, Head of Corporate Communications at GoPro.

Please go ahead.

Thanks, operator.

Good afternoon, everyone, and welcome to GoPro's Fourth Quarter and Full Year 2018 Earnings Conference Call.

With me today are GoPro's CEO, Nicholas Woodman; and CFO, Brian McGee.

Before we get started, 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 the actual results to differ materially.

Additionally, any forward-looking statements made today are based on assumptions as of today.

We do not undertake any obligation to update these statements as a result of new information or future events.

Information concerning our risk factors is available in our most recent quarterly report on Form 10-Q for the quarter ended September 30, 2018, which is on file with the Securities and Exchange Commission and in 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 as well as basic and diluted net profit and loss 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 choose to provide this information to enable investors to perform comparisons of operating results in a manner similar to how we analyze our own operating results.

A reconciliation of GAAP to non-GAAP operating expenses can be found in the press release that was issued this afternoon.

In addition to the earnings press release, we have posted slides containing detailed financial data and metrics for the fourth quarter 2018.

These slides as well as a link to today's live webcast and a replay of this conference call is posted on the GoPro Investor Relations website for your reference.

All income statement related numbers that are discussed today during the call, other than revenue, are not GAAP, unless otherwise noted.

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

Thanks, Chris, and good afternoon.

Today, Brian and I will take you through GoPro's fourth quarter 2018 performance and share thoughts on our outlook for 2019.

In 2018, GoPro demonstrated improved execution with a focus on disciplined operating expense and inventory management.

Our investments in consumer research and analytics delivered a positive return, as we grew our understanding of our customers, how they are segmented and how they'd likely respond to new products, pricing and marketing campaigns.

This resulted in an improved ability to predictably forecast our business throughout the year.

In 2018, we grew our Plus subscription business and increased our social following, thanks to a better understanding of our customer community.

And we've restored growth and profitability during the fourth quarter on the back of exciting new products and expanded global marketing.

GoPro is starting the New Year with positive momentum that we believe will translate into growth and profitability in 2019.

In the fourth quarter, revenue was $377 million, up 13% year-over-year.

Earnings per share was $0.30.

And cash increased to $198 million, up nearly $50 million sequentially.

Revenue for the full year was approximately $1.15 billion.

In 2018, global unit sell-through grew 9%.

And in Q4, we grew sell-through 20% year-over-year.

We experienced significant gains in both EMEA and APAC, where we see continued opportunity to increase consumer awareness of GoPro.

Market share data continues to underscore GoPro's strong brand and leadership position in the category.

In the U.S., according to NPD Group, in the fourth quarter, GoPro captured 87% unit share and 97% dollar share of our category.

Also in the U.S., GoPro's HERO7 cameras were the top 3 selling cameras in our category, and the top 5 were all GoPros.

GoPro also made significant market share gains internationally in Q4.

According to GfK, in Europe, in the $199 and above price band, GoPro grew to 91% unit share and 90% dollar share, up from 83% and 84%, respectively, year-over-year.

And 4 out of the top 5 selling cameras in our category were GoPros.

GoPro also grew share in APAC during Q4.

According to GfK, in Japan, GoPro held 57% unit share, up from 50% in Q4 of 2017.

And in China, despite macroeconomic headwinds, in Q4, GoPro unit sell-through grew by 2% year-over-year.

In Korea, GoPro grew market share to 36% unit share and 53% dollar share, up from 28% and 44%, respectively, year-over-year.

And in Thailand, an important travel market, GoPro's sell-through dollars increased by 154% year-over-year, and GoPro captured 88% unit share and 91% dollar share.

During the fourth quarter, in the 360-camera category in the U.S., Fusion captured 38% dollar share according to NPD.

In January, we released an update for Fusion, which increases its maximum resolution to 5.8K and adds 24 frames per second video for film and TV professionals.

And turning to services.

In 2019, we plan to grow our Plus subscription service through enhanced benefits and expanded user awareness.

Our research indicates that several key features significantly increase consumer interest in subscribing, and we just launched 2 of them in an expanded Plus offering on January 30.

For $4.99 a month, Plus now includes unlimited cloud storage, supporting source video and photo quality, and increased discounts on accessories at GoPro.com.

What this means is everything our Plus subscribers capture with their GoPro will now move automatically from their camera to their Plus cloud account at the highest possible quality.

This is on top of our "You Break It, We Replace It" damage guarantee and VIP customer support.

This is a ton of value for $4.99 a month.

And while it's still early, we've seen a significant increase in free trials since the rollout.

This week, we expect to surpass 200,000 paying subscribers, an increase of 8% since we last reported at the end of Q3 2018 and a greater than 50% increase year-over-year.

We will be launching more features to enhance the value of Plus throughout the year.

Another priority for 2019 is to work more closely with our retail partners, both in North America and abroad.

We're making investments in merchandising and retail advertising to be front and center in their stores, driving a bigger brand presence for GoPro.

We are also growing awareness in emerging markets like India.

And we're focused on scaling our CRM efforts to stimulate upgrades within our existing user base.

And we continue to innovate in how we engage our customer community.

For the launch of HERO7 Black, we introduced the HERO7 Black Million Dollar Challenge, where we asked owners of HERO7 Black to shoot our highlight video for us.

We received more than 25,000 submissions from HERO7 Black users and awarded an equal share of $1 million to 56 customers.

As of January 31, the highlight reel has been viewed more than 25 million times across all platforms with more than 3 million social engagements.

Without a doubt, this initiative has helped us deepen our relationship with our global community.

I'll wrap up by sharing that we're encouraged by the momentum we're seeing in our business.

Our 2019 plan is to capitalize on this momentum, expanding growth and profitability with the commitment to keeping operating expenses at or below $400 million.

GoPro's brand has never been stronger, our products never better.

And we are fired up for the year ahead.

And with that, I'll turn it over to Brian.

Thanks, Nick.

Let's turn to an overview of our performance for the fourth quarter and full year of 2018 and guidance for 2019.

Strong demand for our newest generation HERO7 cameras, in particular our flagship HERO7 Black camera, coupled with disciplined management of our operating expenses resulted in a profitable fourth quarter and second half of 2018 on both a GAAP and non-GAAP basis.

Adjusted EBITDA was positive for the year at $22 million.

For the fourth quarter of 2018, revenue was $377.4 million, an increase of 13% year-over-year.

During 2018, revenue grew each quarter on a sequential basis, resulting in total revenue of approximately $1.15 billion for the year.

Gross margin was in line with our estimate for the quarter at 38.4%, up 520 basis points sequentially.

Non-GAAP operating expenses were $395 million for the year, a 17% decrease from 2017.

We achieved this while driving innovation in our product road map and increasing our marketing spend.

As noted, we returned to profitability in the fourth quarter.

GAAP and non-GAAP EPS were $0.22 and $0.30, respectively.

Compared with the year-ago fourth quarter, non-GAAP net income increased by $84 million.

We ended the year with headcount of 891, which is in line with our expectations and 30% below the fourth quarter of 2017.

Turning to the balance sheet.

Cash and investments were $198 million as of December 31, up $49 million sequentially.

Ending inventory of $116.5 million was the lowest fourth quarter inventory level since 2013.

Our DSOs on accounts receivable was 31 days.

And we ended the fourth quarter in a positive net cash-to-debt position.

Now let's discuss our quarterly business performance in more detail.

Camera units shipped in the fourth quarter totaled 1.4 million, an increase of 4% year-over-year, principally due to the demand of our flagship HERO7 Black camera, which accounted for over 70% of our camera revenue and 60% of camera units shipped in the quarter.

For the year, camera units shipped were 4.3 million, flat to 2017.

Fourth quarter street ASP was $267, a 9% increase year-over-year.

Street ASP is defined as total reported revenue divided by camera units shipped.

Revenue in all reported regions grew sequentially in the fourth quarter.

Revenue from our Asia-Pacific region achieved a record $103 million, a 49% year-over-year increase, while revenue from Europe increased 30% year-over-year to $117 million.

Revenue from North America declined 11% on a year-over-year basis, driven primarily by the exit of our aerial business.

For 2018, revenue of approximately $1.15 billion was down 3% year-over-year.

2018 total revenue, excluding our aerial business, would have increased by 3% year-over-year.

We estimate that camera unit sell-through for 2018 was approximately 4.8 million units, representing 9% growth year-over-year.

In the fourth quarter, we estimate that unit sell-through grew 20% year-over-year.

Sell-through growth was solid in the quarter, but slightly behind our expectations of 5 million units due to lower-than-expected December sell-through of HERO7 Silver and White cameras.

HERO7 Black was the top selling camera across all regions in the quarter without discounting.

Our ending channel inventory significantly improved over the prior year, declining, we believe, by approximately 20% year-over-year.

We are pleased that our channel inventory is primarily HERO7 cameras, in particular HERO7 Black, representing a favorable channel mix of cameras as compared to the prior 3 years.

As previously announced, we plan to move most of our U.S.-bound camera production out of China.

And today, we are happy to share that in Q2, we will begin ramping up U.S.-bound camera production in Guadalajara, Mexico.

We will maintain production in China for non-U.

S.-bound cameras, and China remains an important consumer market and strategic hub for GoPro.

While the threat of tariffs served as a catalyst to improve supply chain efficiency, this approach makes strategic sense regardless of tariffs, and we expect to generate modest savings to boot.

On a non-GAAP basis, 2018 largely played out as we had discussed a year ago, returning to profitability in the second half.

Gross margin recovered to the upper 30s in the fourth quarter, and operating expenses came in below our target of $400 million.

I will now provide guidance for 2019.

Framing 2019, we expect both unit sell-in and unit sell-through to grow year-over-year.

We expect our mix of cameras to continue to shift to the high end.

And as a result, we expect ASPs to increase.

And we expect to grow our Plus subscription service through enhanced offerings and expanded marketing efforts.

We expect revenues to grow each quarter on a year-over-year basis.

Our overall expectation based on the above is for 2019 revenue to grow between 5% to 8%.

We expect margin to be 37% plus or minus 1%.

We expect non-GAAP tax expense to be approximately $2 million to $2.5 million and other income and expense to be approximately $10 million in expense.

We are using a fully diluted share count of approximately $144 million.

We believe the combination of revenue growth, margin improvement and flat operating expenses should lead to profitability in 2019, with non-GAAP EPS in a range of $0.20 to $0.40 per share.

More specifically, for the first half of 2019, we expect revenue to be $510 million to $550 million or growth of 5% to 13% over the first half of 2018, gross margins in a range of 36% plus or minus 1% or an 800 basis point improvement over the first half of 2018, operating expenses of $190 million to $195 million.

To summarize, we are pleased with our performance in 2018.

With this momentum and continued focus in 2019, we expect to deliver positive EBITDA, grow revenue, increase cash and be profitable.

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

(Operator Instructions) Our first question is coming from Paul Coster with JPMorgan.

Nick, you talked about authenticity of the product and reacquainting yourselves with your core demographic.

And I'm just wondering if you can talk to us a little bit about that.

And to what extent should investors be concerned -- on one hand, very pleased you're doing that in terms of the nature of relationship with that community.

But on the other hand does it limit growth?

Thanks, Paul.

I think we have done a much better job of relating with our core customer and recognizing that we have a lot of core customers out there, both who are in our existing ownership community and as well as core customers that we haven't reached yet.

And when we say core, we don't mean core sports or extreme or anything like that.

I understand that, that's the core that people go to pretty quickly in their minds.

But what we mean is better understanding our -- the customer segments that have a genuine need for GoPro.

So rather than trying to spread our marketing dollars too thin to try to reach and relate to everyone, we're more focused on better understanding the customers that are encountering problems that GoPro serves as a solution for and better addressing those customer segments both with our products and with our marketing messages so that we can do a more effective job at educating them and converting them into paying customers.

We're seeing a higher percentage of upgrades with HERO7 Black than we have in prior releases, which is exciting.

This is helping us drive SKU shift towards HERO7 Black, which is helping drive ASP, and is also helping drive some of the overall unit growth that we're seeing.

This is a trend that we're watching closely, and we will give some periodic color on it.

But we're not going to share specifics or begin reporting on this metric.

But we are encouraged by the uptick in upgrades, which tells us we're doing a great job of reengaging our existing customer base as well as attracting new customers, and we believe it's indicative of just how phenomenal a product HERO7 Black is.

But all that said, we are also very focused on attracting, engaging and educating totally new customers as well.

Predictability is obviously very helpful.

I'm just wondering if that also associates with the narrower product lineup.

And you talked about the great success with the HERO7 Black, but Silver and White relatively less.

So does this sort of point towards an even narrower product lineup in 2019?

Well, I think it comes down to customer segmentation and understanding that there are price point customer segments and there are use case customer segments.

And traditionally, GoPro has been focused primarily on one general use case, which is helping people capture their active lifestyles in a general sense.

And our -- we've been more narrowly focused than on price points and hitting certain price points and feature sets for those consumers.

And we've recognized that when we -- it all comes down to value.

And when we super-serve a customer segment with super-value, we see our customers shift towards that particular product.

And through our consumer insights research, we've learned that HERO7 Black is so strong that it's actually pulling customers up from the $199 price band, which is something that we hadn't seen as much of before in previous product launches.

So there is a magnetic pull to value.

HERO7 Black is super-valued.

And so we're -- this is why we're seeing so many of our customers shift to this model, which is -- you could spend too much time focusing on White and Silver without acknowledging the importance of our ability, the significance of our ability to pull customers up to HERO7 Black.

It's beneficial to us on every level.

It's helping us return to growth, expanding profitability, expanding ASP.

But there is another important factor, which is when we are selling such a high percentage of our customers HERO7 Black, which is by far the best user experience we've ever created, that's creating a much more -- better user experience, a more satisfied customer and is helping the -- drive endorsement of the product, which we understand is very important for our brand and for our business.

So net-net, we think this shift to HERO7 Black is really important.

I could give a little color as to the future of how we see marketing and also product development.

I don't see it narrowing.

I see it an opportunity to actually expand over time by identifying additional customer segments that can benefit from GoPro.

And then we can go and super-serve those additional segments that we have not yet addressed today.

And our next question is from Andrew Uerkwitz with Oppenheimer & Co.

Nick, could you expand on that a little bit more on expanding kind of customer base?

I know last year, you guys started to reach out towards kind of the travel, tourist segment.

One, how is that going?

And any color on how that changes your marketing strategy in 2019?

Yes.

Travel is a very big market for GoPro.

It is the activity that the majority -- that the largest segment of our customers participate in.

And as we all know, travel these days is becoming more and more experience-driven, less sitting around the hotel pool and more about getting out and experiencing the cultures that we visit in a more active way.

And so that's just a ripe opportunity for GoPro to serve as a meaningful solution for more active travelers.

Indicative of this is, we shared in our prepared remarks that Thailand is seeing significant growth of 169% year-over-year in units.

It's a strong travel market for us in Southeast Asia.

And we've had a significant marketing push, as we mentioned last year, to position GoPro as a travel solution for consumers.

That's going to continue.

It's something you'll see from us seasonally.

And in terms of expanding segmentation-based marketing, you'll see more of that.

If you're paying attention to our social feeds, you're seeing more of that.

And then this also translates into our product development.

GoPro's vision is to serve as a solution for active people to capture their active lifestyles.

And we recognize that we've done a very good job of that with the HERO camera lineup.

But that doesn't mean that there aren't other customer segments and other consumer challenges yet to be solved.

And so we're working closely with consumers and doing our research to identify where GoPro can be even more relevant to additional customer segments.

And rather than try to grow GoPro by being more broadly relevant, we're actually focused on being more specifically relevant to customers that we haven't specifically solved for yet.

That's all I can say about that.

But I just want to hammer home the point that we see an opportunity for expanded product development, reaching more customers rather than being narrowly pigeonholed as might otherwise be considered.

Sure.

I appreciate that color.

I'm just going to push a little bit here.

Do you think going forward, this innovation is more kind of software integration based?

Or are there certain hardware features you think you need to kind of deliver or expand on to be able to deliver these new functionalities to customers?

Both.

And I think -- this brings up a point -- it feels terrific to be now into 2019 with momentum, stable footing, which gives us the ability to constructively build on the momentum that we've got in the business and to look for ways to grow our business and frankly spend our time and energy on that as opposed to firefighting as we've had to do in years past.

So we're already seeing -- feeling the benefits of that in our business, and we're ahead already this year of where we've been in previous years.

And that translates into invigorated energy for product development and engaging our customers and asking them what's next, because we've got the bandwidth and the energy for it.

So I can't share any more detail except that we are excited to expand GoPro as a solution set for consumers, both in terms of hardware and as well software.

We believe we can do that with -- in an exciting way within our OpEx of $400 million.

We're very focused on keeping OpEx at that level or below.

And we're going to be making significant advancements in our services business as we shared with -- recently on January 30.

With Plus, we expanded that offering to include unlimited storage, increased discounts at GoPro.com, as our research has indicated that those features and other features that we'll be releasing later in the year can have a significant impact in consumer desire to subscribe.

So lots of innovation coming from GoPro this year.

(Operator Instructions) Our next question will be from Yuuji Anderson with Morgan Stanley.

And I apologize, because I hopped on a little late here.

But I was hoping if we can get some color on what to expect for Q1 there.

Just a couple of things.

Given the unit sell-through results for 4.8 million versus, what, I think what you were previously forecasting was 5 million units.

Should we be expecting additional -- or more channel drawdown in Q1 than what you were originally expecting?

And then the second part to that would be, I believe you gave a forecast for expectations for 1 million unit sell-through in the previous quarter, for -- obviously for the March quarter.

Could you please update us?

This is Brian.

On sell-through, to end your question, we think it's at least 950,000 units, maybe more, maybe -- we're tracking that.

We can see exactly where we are at in the month of January, and we can project forward into February and March.

So we feel pretty good about that number.

So that's very much in line with history, actually a little bit better, quite frankly, than last year, given the strength of HERO7 Black and the growth we've seen.

With respect to the first quarter, kind of similar to last year.

We provided kind of full year and first half guidance.

But I'll kind of start with units and ASP.

Compared to the kind of first half of 2018, at the midpoint of our guidance, we expect unit growth of about 2% and ASP growth of about 8%.

So that would put ASPs into the $280 range, and that's on the strength of HERO7 Black.

We continue to see that mixed shift to the higher end.

Turning to revenue.

If we look at the split between Q1 and Q2, right now the Street -- Q1 Street consensus is about 21% of revenue for the year.

That's a little bit on the high side of historical revenue contribution for Q1 for GoPro.

So without going into specifics between Q1 and Q2, I'd say that the current consensus is a little bit high on Q1 and a little low on Q2.

So kind of balance that out a little bit.

And as a reminder, Q2 is typically our second biggest quarter behind Q4.

So I think that's kind of important to point out.

Net-net is that for the first half, we expect revenue growth of 5% to 13% year-over-year.

Q1 revenue growth is expected to be much stronger than Q2 revenue growth.

So that's kind of how we kind of position the quarters, if that helps.

Okay.

Yes, that's helpful.

And just a quick follow-up.

Just update us on product launch cadence for this year, because considering you launched the HERO, I believe, in Q2 of last year, should we be expecting a Q2 product launch as well?

I cannot share any information on products that launch until we launch them, Yuuji.

And our next question is from Nikolay Beliov (sic) [Todorov] with Longbow Research.

A question on gross margin.

Brian, if I recall correctly, in the September quarter, you said that fourth quarter gross margin should be close to 39%, 40% and you should expect that to maintain sequentially into the first quarter at least.

Now then the fourth quarter margin took a little bit of a hit because of the discounting.

And now given this guide of 36% in the first half, could you please give us some color why you expect some weakness?

Inventories are down and channel is leaner.

So I just wonder is there any price protection or anything else playing that into factor?

No, no price protection.

Actually if you kind of look historically, I think a better metric for the company is to look at the year for gross margin and not get very specific quarter-to-quarter.

We tend -- just because the volume with the second half being much higher than the first half, we get the benefit of that additional volume that this works its way into absorbing just fixed cost.

So we tend to increase our margins throughout the year, and it levels out to where we put guidance of about 37% plus or minus a percentage point.

Okay.

Is that how we should think about -- in terms of long-term range, because I think you haven't updated that for a while?

Last time it was like, I think 31 -- 39% to 41%?

I think the long-term range is probably in the 36% to 39%.

I think there is more we can do on product cost.

But also point out, our Plus service has been growing nicely.

And with that growth, that actually has quite a bit of operating leverage on both margin and the bottom line to the company.

And so continuing to drive Plus as a service, and our paid subscribers grew 50% year-over-year.

We want to grow significantly in '19.

So it has more of a contribution on margin and bottom line than it does on top line at the moment.

So that's a key focus for the company.

And in addition, we're driving more of the high end.

That's driving ASP, and overall, that's our highest margin, at least on a dollar basis, on the high end, right, on HERO7 Black.

So think about it like that.

Yes.

Okay, that's helpful.

Can you give us some color to the extent you can on channel inventory by geography?

What I'm just curious is the channel in growth markets like Asia and Europe significantly leaner than North America?

I think -- if I look at channels just in aggregate, HERO7 Black is in the 8- to 10-week range.

And that's actually -- since I have been here like 3 years, we've never been in -- had the #1 product in that kind of range of weeks of inventory forward-looking.

So we feel good about that.

And I don't have it split by region, but I think all the regions are pretty much in line with that forward-looking weeks of inventory.

Okay.

And last question.

Seems like HERO7 Silver and White were a little bit trailed expectations or maybe not.

But can you give us some sense of what kind of lessons you learned from those 2 product launches just qualitatively?

That's it from me.

Well.

We learned -- as I shared on the previous answer that consumers are attracted to value.

They are attracted to certain price points, but they are also attracted to value.

And when they see outsized value even at a higher price point, they've shown with HERO7 Black that they're willing to trade up to it.

And I mentioned that -- as I've been mentioning, we're doing a lot more customer research these days.

So we've been making significant investments over the past year.

And one of the data points that we've learned is that we used to see $299 customers trade up to $399 based on value.

But when we build enough value into that $399 price point, we even see $199 customers trade up, which is something that we haven't seen as much of before.

So I would say that it's very important that we continue to build value into all of our products.

But we're seeing a new opportunity to continue to drive customers to the $399 price point and have that play a bigger role as a SKU mix and fortunately drive ASP when we get that product right.

So that's encouraging.

(Operator Instructions) We'll take our next question from Jim Suva with Citi.

When you guided your EPS for 2019, if I heard correctly, it was like $0.20 to $0.40.

A quick question for you.

When we think about the linearity, given the product launch and your promotions and importantly your supply chain shifting it to Mexico from China, can you help us about -- think about the linearity kind of the quarters as we progress for the year?

Obviously, the December quarter is the strongest.

But would we be looking at similar cadence as what we've seen in past history?

Or did the shift of the supply chain and promotions impact that in a way that we should model more accurately?

Jim, this is Brian.

The shift in supply chain won't affect the quarterly outcome.

The teams get that worked out pretty well.

We start production in Q2, as we said in our prepared remarks.

I think the other thing I mentioned is on a cadence, we expect year-over-year revenue growth to happen in every quarter in 2019 over 2018, and that would imply a pretty similar cadence to kind of historical with obviously Q4 being the biggest, Q1 probably being the lowest.

So it will move in that direction.

Okay.

Then my quick follow-up on cash flow and inventory.

Is it similar then kind of what you just described where we should think about seasonality in it or with the change in procurement and supply chain.

I'm only imagining or guessing here that maybe you need to build a little bit of buffer inventory as you start to ramp up the new production or maybe I'm off on that and maybe it sorts itself out within a quarter, and so we don't need to worry about it.

Yes, I think it sorts itself out in the quarter.

As I said in our prepared remarks, we think we'll end cash in the year above $200 million, so we'll grow cash.

There's always differences that happen in terms of working capital quarter-to-quarter.

But I think if you look at it on annual cadence, we would expect cash to grow.

And I think the bulk of that would be in Q4, which should be consistent with kind of last 2 years.

But yes, I don't think the change in supply chain, just given the scale we have with our CMs is going to impact the inventory.

That concludes our question-and-answer session.

I'd like to turn the conference back over to management for additional or closing remarks.

Thank you, operator.

I'd like to close by sharing that it feels great to be entering 2019 with momentum after such a strong fourth quarter.

Our brand is in great shape, and HERO7 Black is generating a ton of consumer excitement and satisfaction around the world.

Happy customers makes for a happy and successful GoPro.

And I want to shout out a big thank you to all 900 GoPro employees around the world for everything they do to make this such a special company.

We're helping the world capture and share itself in exciting ways.

And we're having a ton of fun doing it.

Thanks very much for joining today's call everyone.

This is team GoPro signing off.

And this concludes today's conference.

Thank you for your participation.