GoPro Inc (GPRO) 2022 Q1 法說會逐字稿

Good afternoon. Thank you for attending the GoPro First Quarter 2022 Earnings Call. My name is Matt, and I'll be your moderator for today's call. (Operator Instructions) I would now like to pass the conference over to our host, Jalene Hoover, Vice President of Investor Relations. Jalene, please go ahead.

Thank you, Matt. Good afternoon, everyone, and welcome to GoPro's First Quarter 2022 Earnings Conference Call. With me today are GoPro's CEO, Nicholas Woodman; and CFO and COO, Brian McGee. Today's call will include a brief introduction from Nick, followed by Q&A. For detailed information about our first quarter 2022 performance and our outlook, please read the 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, including, but not limited to, uncertainty related to the duration and impact of the COVID-19 pandemic.

This means that results could change at any time. Our commentary about our business results and the outlook is based on the information available as of today's date, and 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 annual report on Form 10-K for the year ended December 31, 2021, 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, EBITDA 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, and 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, which is posted on the Investor Relations section of our website.

In addition to the earnings press release and management commentary, we have posted slides containing detailed financial data and metrics for the first quarter of 2022. The management commentary slides as well as a link of today's live webcast and a replay of this conference call are posted on the Investor Relations section of GoPro's website for your reference. Unless otherwise noted, all income statement-related numbers that are discussed today during the call other than revenue are non-GAAP.

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

Thanks, Jalene, and hi, everybody. Thank you for joining us today. I want to recognize today was a tough day in the market, but we are happy to be able to report that what we believe is good news for GoPro investors. As we shared in the management commentary, which we posted to the Investor Relations section of our website, we hit the ground running in 2022, launching new camera SKUs derived from our industry-leading HERO10 Black camera, a premium high-margin, high-ASP accessory and new desktop software that furthers our position as the world leader in software-based video stabilization. We are excited to be making significant progress against our strategy to further diversify our product portfolio addressing specific use cases to expand our TAM.

We also delivered solid business performance in the quarter with revenue of $217 million gross margin of 42% and GAAP and non-GAAP EPS of $0.04 and $0.09, respectively. The first quarter of 2022 represents GoPro's seventh consecutive quarter of profitability on a non-GAAP basis, a trend we expect to continue throughout the year. First quarter 2022 delivered year-over-year growth across key financial metrics, including revenue, which increased by 6%; operating profit, which increased by 162%; and net income, which increased by 214%. GoPro subscribers grew 85% year-over-year to 1.74 million, and we are seeing positive usage trends that make it clear subscribers are taking advantage of their subscription benefits.

We initiated our $100 million share repurchase program, buying back 10 million of shares during the quarter, and we grew our cash balance year-over-year ending with $450 million. All in all, we had an exceptional Q1, and I want to thank everyone at GoPro for their world-class execution. We've much to be excited about as we look forward to the rest of the year.

Operator, we are now ready to take questions.

(Operator Instructions) The first question is from Anna Glaessgen with Jefferies.

I guess, first, starting off with expectations for units shipped in 2022. Can you talk about what's embedded here in terms of the recent product launches that were just announced versus the legacy franchise flagship products, like the HERO and subsequent launches there?

Anna, this is Brian. Let me start. Our guidance for 2022 in units is consistent with what we talked about in February. From a unit standpoint, low single digits, and then continued increases in ASPs due to continued shift of product at the high end and a big growth in our subscription business. We also expect a total of 4 new cameras in 2022. I think we talked about 2 on the last call. So we just announced 2 in the first half, and we have 2 more new ones coming in the second half. So that gives us real good confidence in the numbers.

And I'll also point out, if you look at how we guided Q2, historically, we have sequential lift of between 10% to 20% on units, and we're up 17% in Q2 which is driving the $240 million revenue guidance we gave, plus or minus 5. And there'll be -- units will be down on a year-over-year basis, up sequentially. ASPs will be down a little bit sequentially, that's more mix, but up year-over-year quite healthily.

And we expect good growth in ASPs in 2022. So those are the main drivers for Q2. And then you get to Q4, and we have 2 new products. We typically are up on a sell-through basis of 30% to 50% year-over-year. And the way we've modeled it with demand planning, we have a lot of data on customer demand and how many SKUs we have and price points of SKUs. So we're very comfortable with the '22 outlook guidance and for Q2, Q3 and Q4.

Great. And then one follow-up here. It's great to see that the retail to subscriber attach rate continues to increase, 39% in the quarter. What are the key levers here that could continue to narrow the gap towards the DTC subscriber? And how are you thinking about improving that conversion within the retail channel?

Great question.

Great question.

Brian, maybe I'll take it first and then you can pile on. Yes, the -- a primary driver of why we've been able to improve that conversion rate from last year's 18% to 39% in Q1 of this year is because we've done a much better job of incorporating the benefits of being a subscriber into the Quik app, which is our GoPro app, and getting those benefits in front of users that have bought their GoPro at retail. And it's just night and day more clear to people why they -- what the benefits are and why they should consider becoming a subscriber.

And we're not done. Later this year, the app will continue to evolve and make the subscriber benefits even easier for people to experience. And then ultimately, we think that's going to have a positive impact on converting them to being subscribers. Today, we're primarily telling people and they're converting. And in the future, we're going to be making it more experiential for people, and we think that's going to convert even better. And then as well, we're going to continue to improve the convenience of taking advantage of the subscription benefits for our users via the app. So we expect -- even today as we're seeing strong usage trends and we're really happy to see how subscribers are taking advantage of the benefits, we think that, that's going to increase over time as we make the whole experience even more convenient for them. So net-net, we're really happy with how things are going and we have a lot on tap to continue to improve.

Yes. And let me maybe add to that. From our perspective, subscription is GoPro's financial engine. And we grew subscriber growth 85% year-over-year, up to $19 million, 73% growth. That's 70 to 80 points of margin. So it's very profitable. And as we look out through the year, we expect to be over $80 million in subscription and service revenue in 2022. And as you look at the -- also, this is in, what I would call, an investment year for subscriptions at retail.

We've increased retail attach, as we said, to 39% from about 18% a year ago by marketing to the retail cohort to convert them via the app with promotions and price points, and that's also resulting in improved conversion. But this cohort we know also behaved similarly, almost identically actually, to those who are taking subscriptions at GoPro.com. And so we expect to have very similar retention rates and renewals that will be at a $50 full price point in 2023. Now this is an amplifier to our subscription revenue and margin in '23, where we think revenue will grow again by greater than 50% over 2022. That's a big increase, and at the 70 to 80 points of margin, that delivers a lot of margin dollars year-over-year to the bottom line.

Great. And sorry, if I may, one more follow-up here. Appreciate the color on the number of subscribers -- or the percent of subscribers who are using the cloud for storage. I guess, do you have any color on how this is looked by cohort and storage usage and as an indicator of maintaining the subscription?

Yes. Two pieces of good news is, as I mentioned, they behave the same. So they're basically identical on how much content people put in the cloud, whether it came from retail or GoPro.com. So they're comparable from that perspective. The other really good indicator is what's coming from retail is from all cameras. It's not just the flagship. It's -- actually in proportion, its flagship with HERO10, HERO9, HERO8 and MAX, and they're being added proportionately. So even people who are buying HERO8 and older cameras are actually subscribing. That shows you there's a real benefit to the subscription for people who are buying GoPros. It's not just a flagship, it's across the board. It's mostly flagship on GoPro.com because that's what we mostly sell, on GoPro.com, the flagship. But via retail, it's proportional, which is great.

The next question is from Martin Yang with Oppenheimer.

My first question is related to the question asked by the previous analyst. So when you think about different ways to convert users into subscribers, how about different channels for conversion, for example, the upcoming desktop editing suite, is that a driver for future conversion in '23?

Yes. The -- well, our upcoming desktop app will certainly be a driver for subscription because it will court consumers who prefer to use a desktop for managing, editing and getting the most out of their content, whereas today, we're mobile-focused and that doesn't work for everybody. Interestingly, if you go higher up the passion curve for personal content creation, people tend to shift to a desktop platform because you can -- it's a more convenient, more powerful platform obviously for managing your -- and editing your content. So we're excited about that.

We've shared on previous calls that we used to have a desktop application that we long ago sunsetted. But we still have seen very significant use of that application even though we don't support it anymore, which is obviously a clear sign that there's healthy demand for an updated desktop offering from GoPro. And that will sync with your mobile and cloud GoPro experience and be quite powerful and convenient. We think it's going to be very well received by people. So we're really excited about it. So yes, we do think that our desktop app will be a subscription driver.

And another important driver obviously is increasing unit sales over time. As Brian noted, and it's a really important point, that we are seeing similar subscription rates amongst owners of all of our cameras, whether it's HERO8, HERO9, our flagship, 10 Black, MAX. It's really encouraging to see that the subscription is appealing to people who are buying in at different price points, different performance levels. And it also bodes well for our strategy to increase our product portfolio of cameras and potentially enter new product categories that we're not currently in to address the needs of specialized users. We've shared that we don't see any reason why GoPro can't return to the 4 million and greater number of units sold through a year.

We're targeting 3.3 million this year, but both through an organic resurgence of sell-through when the economy and geopolitical and travel normalcy returns to the world, we think that we're going to be in a really good position, and then you layer on top of that the broader portfolio that we're -- product portfolio, hardware portfolio that we're building, we feel really confident about our ability to grow our unit volume, which will clearly translate into accelerated subscription growth, which is really exciting to think about. Because it -- as Brian noted, subscription is the financial engine of GoPro. It has such a significant margin and EBITDA impact on our business that it frankly can be quite transformative as we look a few years out. So all very exciting to think about.

The next question is from Nik Todorov with Longbow Research.

Nick, first question for you. Can you talk about the TAMs of the new cameras, I guess, probably for the ones that you've announced so far and maybe help us size those TAMs? And I would like to hear from you talk about the added value of HERO Bones versus using the camera that is already -- that already comes with most high-end drones.

The -- as far as TAM goes, it's more or less the same answer I just shared, which is we're targeting 3.3 million units this year, and we are confident that we can continue to grow that number back to levels of 4 million or greater over time, like pre-pandemic GoPro. And some of that will be organic and some of that will be inorganic through us expanding the breadth of our hardware offerings both in terms of camera and potentially product categories that we're not in yet. And our strategy is, as we've shared, to address user segments that might be considered niche by other businesses. But for GoPro, we've proven that niches add up to a pretty significant hole, and that's how we built this business and built this brand to be as durable as it's been over the years.

The history of GoPro as we started out building cameras for surfers and then mountain bikers and racecar drivers and moto enthusiasts and skiers and on and on and on, and eventually, people interested in professional content creation, influencers, bloggers. And today, you've got GoPro which is really a business built on stitching together many, many, many niche use cases specializing our products for those niche use cases. And you've got a very diversified customer base that we're building for and solving problems that no other company is solving. We're addressing the needs of some of the most passionate people on the planet who have very specific problems that they're trying to solve. And therein as a bit of our secret sauce as to how we've built such a durable business. And so our strategy with derivative products like Bones is to just continue to build on those niches and to -- in a safe, predictable manner grow our business rather than swinging for the fences with big mass market winners.

We're excited about hitting singles and doubles. It's historically worked really well for the business. And as in baseball, you occasionally go for a double and you catch a hold of it and accidentally hit a home run. So we're definitely leaning ourselves open to that opportunity as well. And I say all of this -- and I want to remind everybody that we still are going to be wowing our customers with our new flagship cameras every year because that's the core of our business. But at the periphery and on top of that, we can leverage that technology to produce lower cost to develop derivative cameras that can help us incrementally grow our business as well. So I would put the Bones product into that category of a smaller yet important and influential user group that we think we can super serve better than anybody else given our technology.

And your question about why would somebody put this camera Bones on their small cinematic drone as opposed to the cameras that are built into some drones. It comes down to image quality and outright performance of the camera. And the FPV, first-person-view drone cinematography community has spoken loudly that they want smaller, lighter GoPros to mount on their small, fast, agile drones because they want the best image quality, and they see GoPro as the company that's building the best cameras for their needs to the point where drone cinematographers we're buying HERO10s, stripping them down, voiding the warranty and then enclosing them in homemade cases and flying them as a do-it-yourself, lightweight GoPro solution. And we've just been seeing enough of that over the years and getting enough feedback from cinematographers that they'd be excited if we would build something like that for them, so we did.

And that's part of why I say we think that we're the only company -- or one of the only companies that can serve these enthusiasts in this way. And it feels great to finally be responding to all the demand, all of the requests that we've had over the years to build a specialized camera like that for this important group.

Got it. Makes sense. A question on kind of the assumptions around second half growth. It implies quite a pickup in the units. So maybe can you help us understand how are you assuming -- how much of growth in the second half will come from some of the new products that -- whether they could be a little bit more mass market in order to drive the units versus growth from the traditional, the HERO flagship line. How much of that growth should we think about coming up from the new products versus the legacy in the second half?

New products will drive most of the growth. On the new products, I'd expect the flagship, and then there's one other which we have very good historical analytics on for driving demand. So Nick, that's why we're pretty comfortable with what the demand outlook would be between Q3 and Q4. Obviously, the older cameras still play a role, 10, 9 and a bit of 8 and MAX, which has continued to do really well. So the new products are of more mass appeal versus more niche-like the Bones.

Got it. Okay. And if I can squeeze one financial question. You made a comment in the prepared remarks about the success and the expansion of the accessory portfolio. Brian, what can you share from a financial standpoint to help us understand how much accessories add to either ASP or sales or any other metric that help us frame that?

Yes. We're growing our expectations to grow accessories this year. We don't break out how big it is, but it is a significant part of our business and it's margin-accretive to the company. So it's positive there. It's also a significant benefit to our subscribers. Part of the deal on the subscription, it's financial. I mean, they pay $50 and then they get $100 off the camera, a 50% off on accessories. And a significant amount of our accessories that are sold actually are to that group. So they're engaged with GoPro and buying quite a bit of accessories. So that's a powerful force on the business that also builds the relationship with the customer and keep them in as a subscriber and why we have healthy retention rates. So it's a positive in almost every direction.

Yes. One thing I'd like to add, Nikolay, to your question about Bones and future cameras is that I should add that we're really happy with the sell-through that we're seeing since the launch of Bones and our other new camera SKU, the HERO10 Black Creator Edition. Both those cameras are selling through either in line our forecast or above what we had expected in terms of sell-through. So great job. Congratulations to the GoPro team on successfully launching these 2 new products. Results so far are really good. We're really encouraged by that. And then you made a comment about how we're looking for quite an uptick later in the year and what were these cameras that were coming out, how are they going to support that. Brian, do you want to add to your answer about how we're not expecting anything out of the ordinary for Q4 as it relates to our historical performance?

Yes. I kind of touched on that with Anna's question too. But yes, we expect -- typically, in any year, we have a lift -- sell-through lift in Q4 sequentially from Q3 of 30% to 50%. And it's lower if we have a lower number of units and its higher if we have more units to put into the market, particularly knowing what we're going to put into the market. So that gives us a very good understanding of demand and demand profiles and where we should be lining up as we look ahead to Q3 and Q4.

The next question is from Erik Woodring with Morgan Stanley.

This is Patrick on for Erik. So if we look back over the last 3 years, second quarter selling grew sequentially by a little bit more than 30%. And I believe you guys are guiding to an 18% sequential sell-in growth. So we're just looking to better understand what are some of the drivers that are limiting sell-in growth in the second quarter?

Yes. We typically see it from a unit perspective 10% to 20% sequentially from Q1. That's -- our number has never been as high as what you've got not in the last 3 years. And so yes, we're up 70% in Q2 and expect to do about 675,000 sell-through in the quarter. So that's up and it's up more, and we expect to pull channel inventory again in Q2 because that sets us up to success in the second half where we see more units coming. So we're in line with what our normal lifts are from a sequential perspective.

Okay. Great. And then one more from my end. If you just kind of look at the U.S. dollar and the recent strength, how are you thinking about potential pricing action in their national markets as you work to offset both currency and component cost inflation?

Yes. Included in our guidance of 40.5% plus or minus 50 bps, that's down sequentially from 42%, at least 1%, maybe up to 1.5%, it's going to be currency-related with the strength of the dollar in March and April. Component costs are also included in our guidance. As far as pricing goes, we've already moved up the price curve. And if we try to move prices up, I think that's going to have a deteriorating effect on demand. It will be more of a negative actually than a positive. And so that I don't think really makes sense. The other thing is we have such a large subscription business that we get a little bit of recovery there from a margin perspective because it's going to grow as well in Q2. And with the margin profile, that's why I call it the financial engine for GoPro, it's going to -- it helps to keep margins in the 40s as we continue to grow that. So we can buffer a little bit here on component prices and currency because we have a diversified business between hardware and cameras and what accessories and what we're able to deliver in the market on subscription. It really is a diversified way of looking at the business.

The next question is from Jim Suva with Citigroup.

I have kind of a strategy question for Nick and then a financial question for Brian. So Nick, this year with the launch of the Creator as well as Bones, is it kind of fair to think that now the cadence has turned into a little bit of a tick and talk cadence, like tick first half of the year, more specialized needs; and talk second half of the year, consumer bigger market appeal, if I understand it correctly, how it's playing out this year? And then the last part of that is, is the Bones -- if I remember, it's like only available in the U.S or is that maybe just upon launch and then later on, more global? I just found that kind of interesting.

And then for Brian, on financial, is there anything we should be aware of in our modeling going forward whether it be inflation for research design engineers, employees, merit increases? We've lived in a tough world of COVID for a long time and not much merit increases for employees or converts that are coming due or anything that could impact OpEx or share count, not only for -- kind of like going forward.

On the tick talk, are we changing our launch cadence, I would say I wouldn't read into that. It makes sense what you said, but no. At the same time, we are likely to continue to surprise and delight you with future product launches. So listen for perhaps some clues in what we share, but I don't think you can be as definitive as the way that you laid it out. And then in terms of Bones being a U.S. launch, we're being very thoughtful about how we roll out some products versus others, which are more sure to have mainstream appeal and so forth like that.

With Bones, we wanted to learn. It was about speed to market. We were able to get that product out a lot quicker if we focused on the U.S. and then learn about demand and grow from there. So chalk it up to being quick to market and thoughtful about how we approach what we see as an important opportunity for us to super serve a very influential group of content creators that are helping keep GoPro at the forefront of some of the most exciting content that's being generated.

For those of you on the call who aren't aware, the majority of, really wow shots, that you're seeing from drones these days are being captured with much smaller, lighter, more agile drones that people are flying with, pilots are flying with, goggles that they wear that give them a first person view as though they're sitting in the cockpit of the drone. And they're mounting stripped down GoPros, and now, Bones to their drones to capture film quality footage. It's -- the majority of really wow drone shots these days are not being captured with the larger, heavier, slower, less nimble drones that you may have been familiar with when we were making drones ourselves. So the world has changed. It's evolved. And it's great to see GoPros still being the camera of choice for capturing these amazing aerial perspectives.

Great. Nick, that's perfect. And Brian, anything about converts or OpEx or merit on the P&L that you are aware?

Sure. Yes. On the convert, we paid down our convert $125 million April 15, so we reduced our debt. Ironically, we made over $150 million of cash flow in the last year, and that enabled us to tidy that up and pay it off. We do expect cash to end the year between $450 million and $480 million, and we'll exit this year -- or exit Q2 at about $330 million. So as is typical, in the second half, we generate most of our free cash flow. It's worth noting that we remained the #1 large employer by Outside Magazine. Part of the reason for that -- well, there's lots of reasons, but you mentioned merit.

We actually did a pretty sizable merit increase to our employee base this year. It was, I think, double what we have typically done. That's factored into our guidance of $340 million to $345 million of OpEx in the year as well as any inflationary aspects to the business. We think it was contained in there. So I'd also point out that it kind of goes with the #1 large employer, our retention rates with employees globally has been exceptional. And that's been great, its great teamwork, great continuity. And we're really, really pleased with retention rate.

Great. So just to be clear, Brian, it sounds like the convert the balance sheet we see today still has it in it, but now in the quarter it's paid off, so we should make that adjustment going forward. Am I correct?

Yes. You should remove $125 million from short-term debt, and cash would end at $330 million for Q2. And share count should be about 178 million shares in Q2 as well.

The last question comes from Paul Chung of JPMorgan.

So we're hearing some softness from EMEA consumers across different products. It looks like EMEA did quite well for you in the quarter. But what are you seeing here to start Q2, anything you want to call out and other trends you're seeing in maybe other regions? It looks like Asia also had a good quarter.

Yes. Both Asia -- Asia was up 11% year-over-year in Q1 and Europe was up 24%, quite strong. America was down a bit. So we saw some softness there maybe later in the quarter as people think about rates in the market. We're seeing good sell-through right now. We're going for 675,000 units. And we're tracking to that. And EMEA actually is running -- just ended with you this morning, running slightly ahead of where we have them pegged for the quarter. So we're still seeing really good solid demand in Europe as well as Asia. And North America, I think it's still a little slow, but that's starting to pick up. Some of the new products have helped. The Creator Edition and Bones are doing well or exceeding where we thought we would be. So all those are collectively helping to drive the sell-through in the business.

Got you. And then for your guidance, are you kind of baking in any sort of rebound in travel-related activity? And do you have any data on how travel trends kind of provide uplift in certain channels and how that impacts the overall business in general, if that were to pick up meaningfully?

Yes. We haven't factored in travel. Travel is up domestically in the U.S., but international travel has not picked up. And that's where we're going to see the bigger lift because as international travel increases, now we're selling to cruise, we're selling to duty free stores, so -- across Europe and then in destination spots in Asia. So we don't have that market right now. That's been eviscerated once COVID hit. And so as that comes back, travel represented, historically as we were running 4 million units, about 10% of what we sold. So it's a sizable tailwind once that comes back.

Okay. Great. And then your sub count for the year was reiterated. Just talk about the visibility into that target, 2.2 million bogey. What incremental features can we expect here? And what are some of the most attractive features that are keeping subs engaged on the platform. I think you mentioned like storage was a key feature.

Nick, do you want that? Or do you want me to take it?

Yes. We've shared that it's a major initiative for us this year to move our editing tools from our mobile app into the cloud, which is going to make the experience far more convenient, fast and ultimately successful for our users. That's a big one that's going to drive engagement. As you -- as we noted, it's great to see 72% of users storing footage in the cloud -- I should say subscribers storing footage in the cloud, and helping them more conveniently make use of that is obviously going to have a very high positive impact we think on engagement, utilization of the experience.

And then we're just going to continue to chip away at doing a better job of incorporating the benefits into the app experience, into the camera experience so that it just starts to work more and more intuitively for our users, which will also -- for our subscribers, which will also help them get more out of being a subscriber.

And I also shared, I think the first question of the day, that we're going to be, by the end of the year, doing a much better job of helping all of our camera owners experience subscription benefits for a period, which we think will really help drive conversion. We're doing a great job converting today, but we're just telling people about the benefits. There's nothing experiential about it today. So they have to take our word for it before they become a subscriber. That's going to be dramatically improved later this year. So we're excited about that.

And then the other really big thing that I've shared several times today is that the expansion of our hardware product portfolio to court more users in -- who have needs that go beyond what we address today. We think we can grow our TAM by doing so, obviously grow revenue, but most importantly, grow subscription. Because since we are seeing such a strong conversion rate amongst buyers of all of our cameras, we're confident that as we introduce more cameras and grow our TAM and bring in new customers that we otherwise wouldn't have, that we can convert them to subscribers at similar rates that we're doing today.

And I also think that long term, there's an opportunity for GoPro to begin selling new types of products than from what we sell today to expand TAM further, staying within the guidelines and strengths of our brand and courting the same types of consumers that we are today. But there's no reason why we can't leverage additional products other than cameras to bring in new subscribers as well. So that represents an exciting long-term growth opportunity for us. I think it would be shortsighted to -- and too limiting to think of GoPro only -- GoPro unit as we think of getting back to 4 million and above units is only being cameras. We don't see it that way.

Great. And then last question. So cash guidance here, pretty good, suggests strong free cash flow for the year. It sounds like you're in a good place with inventory having enough for the releases later this year. So can you -- how much cash do you need to run the business? I mean, free cash flow seems like it's stabilizing and becoming pretty high quality. Can you materially buy back a lot of shares from here?

Sure. Yes. As we exit -- well, we put together a $100 million -- authorized $100 million buyback. We bought $10 million so far. So yes, we have the opportunity to buy more back as we get through this year and into 2023. So yes, it can go materially higher if we continue to generate the kind of cash -- free cash flow that we're doing. I mean, our numbers imply we're going to be $180 million, $190 million EBITDA this year, right, up from $170 million-something last year.

And look ahead, just what I said on subscription alone on '23, because it's just math and how this thing layers out, that's another big chunk of margin that goes into gross profit in the bottom line in '23. So we can -- I would see more expansion in '23 from a buyback perspective than '22 because I want to realize it and then pay it out. And then remember, in '25, we have to pay back the second convert that's due in November, which is $145 million.

There are no additional questions waiting at this time. So I will pass the conference over to the management team for closing remarks.

Thank you, operator, and thank you, everyone, for joining today's call. We look forward to connecting with you at a slate of upcoming events later this quarter and on our next earnings call in August. Until then, this is team GoPro signing off.

That concludes the GoPro First Quarter 2022 Earnings Call. Thank you for your participation. You may now disconnect your lines.