GoPro's (GPRO) CEO Nicholas Woodman on Q2 2015 Results - Earnings Call Transcript

Jul. 21, 2015 9:40 PM ETGoPro, Inc. (GPRO)
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GoPro, Inc (NASDAQ:GPRO) Q2 2015 Earnings Conference Call July 21, 2015 5:00 PM ET

Executives

Jeff Brown - VP of Communications

Tony Bates - President

Nicholas Woodman - CEO

Jack Lazar - CFO

Analysts

Joseph Wolf - Barclays

Paul Coster - JP Morgan

Erinn Murphy - Piper Jaffray

Simona Jankowski - Goldman Sachs

Will Power - Robert Baird

Charlie Anderson - Dougherty & Company

Tavis McCourt - Raymond James

Gus Richard - Northland

Brad Erickson - Pacific Crest

James Faucette - Morgan Stanley

Jeremy David - Citigroup

Alex Gauna - JMP Securities

Operator

Good day and welcome to the GoPro Second Quarter 2015 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 Communications. Please go ahead.

Jeff Brown

Thank you. Good afternoon and welcome to GoPro's second quarter 2015 earnings conference call. With me today are GoPro's CEO, Nicholas Woodman; our President, Tony Bates and our Chief Financial Officer, Jack Lazar.

Before we begin, I would 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 marketing trends, our future plans, prospects and growth opportunities, 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 constitute forward-looking statements.

These forward-looking statements and all other statements that may be made on this call are not historical facts, are 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 undertake these forward-looking statements.

We refer you to our annual report Form 10-K for the year ended December 31, 2014 which is on file with the Securities and Exchange Commission. 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 our current expectations. We report net income and basic 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 perform comparisons of operating results in a manner similar to how we analyze our own operating results.

A reconciliation of GAAP to non-GAAP financial data can be found in the earnings press release we issued today. 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 second quarter of 2015. Both of those documents and a link to the webcast for today's earnings conference call are posted on the events and presentations page of the GoPro’s Investor Relations website for your reference.

In the interest of time, I would like to remind 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

Good afternoon and thanks for joining us on a call that marks our one year anniversary as a publically traded company. In June of 2014 we took GoPro public and investors joined us for a year of exciting growth and thanks to the breadth of our vision and the execution of our team that growth continues. Today I will review highlights from our second quarter as well as some of our recently announced project. Tony will update you on our international progress, software and services and GoPro entertainment. Jack will then cover our second quarter financial and provide guidance for the third quarter. We will than take your questions.

We're excited to report another quarter of great execution and terrific results. Year-over-year second quarter revenue grew 72% to $420 million and resulted in an EPS of $0.35. Our performance was driven by the growing strength of our global brand new products and the continued success of our HERO4 line of cameras and accessories.

According to NPD and United States combined camera camcorder market for the second quarter GoPro accounted for three of the top five products on a dollar basis and four of the top five on a unit basis. And recently we have launched two exciting new products that focus on improving ease of use and broadening our appeal to consumers. On June 1st we debuted HERO + LCD which delivers the quality and accessibility of our entry level HERO with the convince of a touch display. This new device also adds Wi-Fi and Bluetooth and is our first product to enable short form editing on camera with its trim and save feature. And earlier this month we unveiled HERO4 Session the lightest, smallest and most convenient GoPro yet. Session’s breakthrough design packs GoPro's Emmy award winning image quality and our renowned durability into an all new form factor that is 50% smaller and 40% lighter than other HERO4 cameras. We are excited to welcome Session to our family of Premium GoPro products which has expanded from just one device a year ago to three devices today.

HERO4 Session stand out because of its simplicity, one button control makes it faster and easier than ever to get the shot and batter life is dramatically enhanced because when session isn’t recording it power itself off. It's innovative water proof design eliminates the need for a separate housing reducing complexity and vastly improving audio performance. All of these results in a stunning new capture solution that we believe appeals to both new and existing customers. In the words of Wall-Street journal, Session is the best camera on the market for documenting the rough and tumble of family life. I can personally attest to that. Session is now my favorite GoPro for chasing my family around.

In the past year GoPro has made enormous progress in expanding our business. Our reach and our value proposition to consumers. While we have a clear vision for our business and benefit from great execution were also enjoying strong tailwinds from adjacent industries and consumer mega trends.

Today GoPro is both an enabler and a beneficiary of four of the biggest trends in technology and entertainment. The first trend is user generated content, as consumer spend more time communicating digitally GoPro has become one of the most popular forms of visual expression. Beyond the entertainment value UGC represents a powerful promotional engine driving our Virtuous Cycle and creating awareness and demand for our products. We believe that as consumer affinity for sharing personal content scale so did GoPro's opportunity. The second major trend propelling GoPro is social media which represents a global audience for shared GoPro content. Facebook, Instragram, Youtube these platform succeed because of people's desire to consume entertaining content. And GoPro is enabling some of the most engaging content the world has ever seen.

GoPro continues to be a top brand channel on Youtube where subscribers were up 40% year-over-year to 3.1 million in Q2. On Instagram GoPro remains the fourth most engaging brand with GoPro channel subscribers now totaling 5.8 million. For the second quarter subscribers are up 140% year-over-year and 23% sequentially. On Facebook GoPro’s following was up more than 16% year-over-year in Q2 with now approximately 8.8 million fans worldwide. This combined with increased GoPro content distribution to Facebook resulted in over 40 million views during the quarter. And viewership drives conversation. Our tracking shows that the social conversation around GoPro is growing rapidly. Year-to-date we have doubled the number of hashtag GoPro mentions in social channels to roughly 45,000 a day. Even more encouraging is the progress we’re seeing from our outreach to women; women participating in the GoPro conversation has risen from 9% to 27% year-to-date.

A third trend benefiting GoPro is Virtual Reality. With our recent acquisition of VR content enabling software and our continued development of spherical capture devices, we believe GoPro is exceptionally well positioned for the Virtual Reality movement. As leaders such as Google, Facebook and Microsoft seek to establish VR as a media platform of the future, all are looking to GoPro to enable compelling content to drive consumer interest and engagement. In May, GoPro announced two new products that will play a significant role in the creation of content for Virtual Reality. The first is the six camera spherical array for capturing high resolution video and photos for virtual and augmented reality. The resulting images are stitched into a six case spherical image using GoPro software and viewed on VR and AR headsets like Facebook’s Oculus, Google Cardboard, and Microsoft’s HoloLens.

Our second breakthrough in VR technology is Odyssey, GoPro’s 16 camera array. This array developed by GoPro was announced in partnership with Google in May. Odyssey provides high quality 360 degree video and enables a number of use cases ranging from education to entertainment. Odyssey is compatible with Google’s Jump platform and will be available through an early access program in Q3. The fourth trend benefiting GoPro is Quadcopter. In May we announced that we will be launching our own Quadcopter in the first half of 2016. Our product development team is having a blast testing and refining this differentiated product, one that we believe will be the ultimate accessory for your GoPro.

It’s exciting to think about how well positioned GoPro is to take advantage of these opportunities. It’s thanks to our aggressive approach to innovation and the incredible pace in execution of our teams. We run hard, we run fast and its working.

With that I’ll hand it over to President, Tony Bates.

Tony Bates

Thanks Nick. Today I am going to provide a brief update on three key aspects of the business; first, we report on our growth in international markets where our investments are showing strong returns; second, our strategies for simplifying the user experience with improved software and services; and third, an overview of what we’re planning at GoPro Entertainment. I’ll start with international markets, which accounted for over 50% of our revenue for the second quarter in a row. We are investing in people and programs to expand our global business. In the past 18 months, we have opened new offices in Amsterdam, Munich, Shanghai, Shenzhen and most recently London and Melbourne. We continue to put people on the ground to work closely with our distributor network. And last week GoPro was named best consumer electronics partner by Pixon’s, the largest consumer electronics retailer in the UK.

We expanded global awareness with our multiyear partnership with MotoGP, a sport with an enormous following outside of the U.S. Earlier this month, the initial broadcast of our titled race the GoPro Motorrad Grand Prix of Deutschland was watched live by more than 9 million viewers across Europe, millions more saw the race on subsequent broadcast and online. Each GoPro course preview video has generated more than 0.5 million views. Last week we announced another milestone demonstrating our global reach. GoPro is the official camera of the Tour de France. GoPros mounted on riders and bikes provide never before seen perspectives on the world’s most prestigious cycling event. GoPro is enabling content for major broadcasters including NBC in addition to streaming highlights on our YouTube, Facebook, Vine and Instagram channels.

Next, a quick update on China where we are very pleased with our progress. China has become a top 10 revenue generating countries for GoPro and our store track count grew 31% sequentially. Later this quarter, we will launch a simplified Chinese user interface for our HERO4 line of cameras and a simplified Chinese version of our mobile app. Around the globe we have significantly increased the number of retail locations that sell GoPro products. We now have more than 20,000 store fronts outside of the U.S. and over 40,000 worldwide. For the first six months of the year, GoPro points of purchase display shipments are up 40% year-over-year, with strong growth in Europe, Asia and Latin America. Not only are there more displays but they’re bigger. Total linear feet of new displays increased over 75% year-over-year. While our international growth has been strong in 2015 we’re also seeing strong results in the U.S. attributable to a great brand, great products and great sales execution. In June Target honored us with their Partner Award of Excellence, another reflection of our sales team’s terrific work.

Next I'll focus on software and services. A critical area of focus for GoPro, with the HERO4 Session launched we instituted updates to both the GoPro app for mobile devices and GoPro Studio to desktop. The new mobile experience improves both pairing and connectivity while also supporting the features of our newest capture devices. Today GoPro Studio has been downloaded over 11 million times. And the GoPro app has been downloaded over 18 million times. We continue to make good progress on our software initiatives. We are now in the final phases of development and testing of a new mobile app that’ll allow users to seamlessly trim and share the best photo and video moments captured on a GoPro. We expect to launch this experience before the end of summer. We are also testing an alpha version of our cloud service which will support a seamless offloaded of content from GoPro cameras to be managed and viewed on other devices.

Finally, I'll offer some highlights on the progress of our GoPro Entertainment initiatives. Today the primary mission of GoPro Entertainment is to inspire people with great content and in doing so power the virtual cycle that drives consumer demand for our products. In-house productions and high quality user generated content are played from the GoPro network. A collection of popular platforms like Facebook, Instagram, Pinterest, Roku, YouTube, Xbox and others. This curated content experience helps to define our brand and to encourage adoption by our growing number of consumers who want to tell their own stories of a GoPro.

GoPro content has the potential to generate additional revenue streams overtime. Yesterday we unveiled GoPro Licensing. A Content Licensing Portal that marketing professionals can use to search, sort and license content from GoPro's rapidly growing library. The tool also offers an opportunity for our vast community of GoPro contributors including athletes, musicians, professionals and consumers to earn money and rewards for their content.

In summary we're delivery on our promises. We are executing on our core business. We're expanding outside of addressable market with domestic and international initiatives. We're improving the consumer experience with upgrades in software and services and driving new revenue streams with our content. It's been a great year so far. And we're looking forward to many more new and exciting developments in the second half of 2015.

And with that I'll hand over to our CFO, Jack Lazar.

Jack Lazar

Thanks Tony 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 financial slides we posted concurrent with our press release earlier today. My prepared remarks will be focused on the financial overview of Q2, as well as our related business trends. I’ll then provide our guidance for the third quarter of 2015.

We're very pleased with the company's performance in the second quarter as the results were better than anticipated. Our financial results reflect strong revenue, gross margin and EPS and we successfully launched two new products, the HERO4 Session and the HERO+ LCD. And Q2 was also our second highest revenue quarter ever and units shipped were up over 90% year-over-year.

Our second quarter revenue of 419.9 million was up 72% year-over-year and above our guidance range of 380 million to 400 million. Gross margin for the quarter was 46.4% compared with 42.2% in the second quarter of 2014, representing a 420 basis points increase.

Operating income for the second quarter was $65.8 million or 15.7% of revenue, an increase of $48 million or 270% year-over-year. Adjusted EBITDA was $75.3 million or 17.9% of revenue, up a 193% year-over-year. Earnings per diluted share for the second quarter were $0.35, up from $0.08 in Q2 of 2014 and above our guidance of $0.24 to $0.26.

We are beginning to see attractive returns from some of our recent product development efforts. Coupled with our ongoing investments in new areas such as quadcopter, virtual reality, software and entertainment, we're really enthusiastic about the future.

Let's take a closer look at our Q2 performance. Our revenue growth for the quarter was driven primarily by 93% increase in capture devices sold year-over-year. And during the quarter we shipped approximately 1.6 million capture devices to our retail and distribution partners throughout the world. This was our fourth consecutive quarter of shipping over 1 million capture devices. And over the last four quarters we've shipped 40% of our 16.3 million cumulative historical units.

Revenue from our direct sales channel increased 53% year-over-year to a 197.8 million, driven by continued strong sell-through [ph] and sell-in with our BIGBOX and online retailers. Sales to our distributors increased 93% year-over-year to $222.1 million, due primarily to strengthening international demand for our products.

On a product basis we continued to see strong consumer demand for our HERO4 products. The HERO 4 black and silver, both priced at $399 and above were our best sellers during the quarter and once again made up over 50% of our total units and revenue. Our guidance going into the quarter was for strength in international channels, particularly APAC and our Q2 results reflect this. EMEA and APAC revenue increased 105% and 183% year-over-year respectively. These results reflect the success of our international investment and execution and the popularity of our product worldwide. Second quarter revenue by geography was as follows, Americas was 212.4 million or 50%, EMEA was 137.2 million or 33% and APAC was 70.4 million or 17% of revenue. Second quarter gross margin increased 420 basis points year-over-year to 46.4%, due primarily to the favorable product mix shift towards our higher end capture devices -- higher margin capture devices. Sequentially, the 120 basis points increase in gross margin was driven by product mix and cost reductions.

Future gross margin was above our long-term target model range of 42% to 44%. We did not experience any noticeable camera pricing pressures during this quarter. ASPs decline slightly year-over-year due to an almost doubling of distribution revenue, the continued expansion of our product line to include entry level HERO capture devices and increased MBF funds related to our Q2 product launches. This was partially offset by large year-over-year increase in revenue from products with $399 and above price point, as our premium product continue to be well received by consumers. Operating expenses of 129.1 million were up 51% year-over-year. Sales and marketing expenses were up 44% year-over-year, demonstrating continued operating leverage from these efforts. Consistent with the prior periods, R&D investments drove the overall increase in OpEx and were up 64% year-over-year. Our continued aggressive investment in R&D reflects our long-term commitments to the development of next generation capture devices, a recently announced Quadcopter and our software and entertainment initiatives.

GAAP net income for the second quarter was 35 million or $0.24 per diluted share and this compares to GAAP -- to a GAAP net loss of 19.8 or [Audio Gap] $0.24 per diluted share for Q2 of 2014. Shares outstanding of 146.8 million for the quarter decreased sequentially by 1.8 million, due primarily to a 4.7 million share contribution back to the company by our CEO.

Turning to the balance sheet, we ended the quarter with cash, cash equivalents and marketable securities of 517 million, up 25 million or 5.1% sequentially, due primarily to cash flow from operations. Cash and cash equivalents and marketable securities increased 412.1 million year-over-year and at the end of the second quarter represented over 45% of GoPro’s total assets. Cash flow from operations for Q2 was 65.9 million. Accounts receivable was 118.6 million, and increased 12.6 million or slightly less than the sequential revenue growth. DSO of 25 days in Q2 was sequentially flat, inventory increased by 55.2 million sequentially and returns were 4.7. The substantial portion of the increased inventory relates to new products we’re bringing to market in our efforts to prepare for the holiday season. In the second quarter, our capital expenditures were 16 million and depreciation was 6.4 million.

I’ll now move on to our guidance for the third quarter. After a great first-half for the year, we’re also quite optimistic about the remainder of 2015. Channel inventory levels, both in the U.S. and abroad look healthy. On a year-over-year basis we anticipate increased revenue across all channel and geos with particular strength in EMEA and APAC and with our distribution partners. Accordingly, we anticipate revenue of between 430 million and 445 million for the third quarter and at the midpoint of this guidance it represents a 56% year-over-year increase. In the third quarter we expect our product and channel mix to remain favorable and our family of three premium $399 and above devices to continue making up of over 50% of our units and revenue and our gross margin will continue to be above our long-term target. For the third quarter we anticipate our gross margin will be 46% plus or minus 50 basis points, up from the 44.5% in the prior year comparable quarter.

We will continue to invest prudently in the people, product and infrastructure necessary to pursue our growth and our vision. To support our ongoing investments in broadening family of capture devices and accessories, as well as our entry into new market, we anticipate our operating expenses will be between 140 million and 145 million with once again the majority of growth coming from R&D. We estimate our effective tax rate to be approximately 24% with fully diluted shares outstanding of approximately 149 million. Accordingly, we anticipate EPS to be in the range of $0.29 to $0.32.

So with that Stephanie, I think we’re ready to take Questions.

Question-and-Answer Session

Operator

[Operator Instruction] and we will go to Joseph Wolf with Barclays.

Joseph Wolf

I have a question about product releases, I think was at one of the first quarters and the maybe the first quarter where you release a product before the fourth quarter. And I'm wondering if that tells us something about a new seasonality that you’re trying to achieve whether we should or we should continue to expect a set of new products throughout the remainder of 2015.

Nicholas Woodman

Good question as we've shared within the past, we cautioned anybody about getting to use to any typical cadence for product releases from us. When we see an opportunity to introduce a product that we believe has significant new value preposition to consumers we'll do it. And if that’s outside of the typical fourth quarter holiday release schedule so be it, we're very focused on pushing forward our customer’s experience making it easier and more convenient use our products and help our customers achieve success in capturing and sharing their lives with a GoPro. So I wouldn’t look at this a signal of any shift that may or may not be repeatable, you'll just have to trust us that we're going to continue to develop great product in the interest of our customers.

Tony Bates

Joe I will add one thing on that which is one of the nice things about releasing the product early the time that it gave us an opportunity to actually get ready for the holiday season. So having Session out now is nice, we can start building up some inventory and you see some of that happening on the balance sheet. I think it just makes us better prepared and a better operating business.

Joseph Wolf

Just a quick follow up it's only been a week or so. But what's the -- getting any feedback on the Session sale?

Nicholas Woodman

We're getting initial feedback on Session, obviously we're very pleased with the product and we think it will be will receive. One of the things that we are seeing that is kind of nice, again this is a small data set so I really wouldn’t interfere too much out of this at this point. But we do see it as being relatively additive to the premium products. So that’s a nice data point up front that maybe because there is lot of the early people who probably -- folks that own GoPros and just want to get the next one, but it maybe that the product mix is gravitating to this 399 and above level which has always good in our mind. Best products are going to provide the best experience for the customer.

Joseph Wolf

Great I've got more questions. But I will keep to the rules.

Tony Bates

I would add just one more thing to Nick’s again that I think that the momentum that we're seeing with Session out-of-the-gate. Given the fact that we launched the products in July which is not a typical time to launch consumer product. The momentum we're seeing is testament to the strength of GoPro's brand and that we don’t have to fortunately wait for fourth quarter holiday season to launched a product and get a strong positive response from the marketplace. Thanks to the strength of our global distribution network and strength of the brand it seems that we're capable of launching a product at any time of the year. So we're happy with what we're seeing.

Operator

And we'll go now to Paul Coster with JP Morgan.

Paul Coster

Thank you for taking my questions or question, it looks like you're now distributing GoPro product to 40,000 stores worldwide and according to my note there was only 25,000 last quarter. Am I right that you added 15,000 new outlets in the single quarter? And if you did, can you kind of elaborate on the nature of those outlet and sort of sell through volumes in them? Thank you.

Jack Lazar

And while I’d love to tell you that we've added that many more -- 15,000 more in a quarter. Now basically what it was, was an annual update so we went public we had disclosed that we had about 25,000 locations around the world in over a 100 countries and we've now just updated it to over 40,000. So I think you would look at this more the evolution over the last year and of course we're still evolving and adding more doors worldwide but I think that’s a pretty good progress for the last year.

Tony Bates

I'll just add the other focus is very important, it's not just the amount of stores, it’s the amount of linear feet that we’re also growing. So if you think about the work we're doing its penetrating new retailers with more store count but also getting more space in those stores. It's been a hard work with very positive progress.

Paul Coster

So okay it's not 15,000 but you're adding and you're not seeing a sort of diminishing return on the new stores it sounds like they are pretty accretive in sense of liner feet and unit volumes sell through per stores, is that a correct statement?

Jack Lazar

Yes absolutely, I think it reflected in the results right you see it translate into the growth. It's still out primary sale motion and you see that certainly being accretive, yes.

Tony Bates

No concerns that were saturating the market Paul.

Operator

And we go now to Erinn Murphy with Piper Jaffray.

Erinn Murphy

Great thank and congratulations on the first half. I guess my question is on China, sounds like you really hit the ground running there. Any inside through on what's tracking well there form a product’s perspective. And then you mentioned it being in a top 10 revenue country for you today. How do you think about that longer term, what’s the kind of bigger longer term potential of that market? Thank you.

Tony Bates

So what I would say is look from a standing start we’re really pleased with the results. I won’t give you too much color on kind of the mix, but definitely if you look at our ability to charge a premium, which we are, we think we have a great product and it’s deserving, so we’re seeing the returns on that. So, we thought pretty good about it, we’re going to continue to add stores. We have kind of a similar mix to what we see in the rest of the world. So I think that’s very strong. I think the other instinct thing that’s different and I talked about this last time is that as you know and perhaps a lot of people on the core know is China is quite different in terms of the way that people buy product, especially consumer electronics products. So you got to play both side, you’ve got a mixture of both offline retail and we talked about our growth, 35% quarter-on-quarter. We also have to work with the major online players. And we make sure we went and did that before we launched in market of both the JVs, the Alibaba and Amazon. And then the last point is quite unique and different in the customer [ph] is that, the Chinese consumer is more and more predominantly buying through their mobile device and that’s why a very important milestone we talked about coming up is to get a much more localized product. So we think that we’re doing all the right things to continue to execute well given the type of things we do in the market.

Erinn Murphy

And then just how many doors you physically have today in China?

Tony Bates

We haven’t disclosed that, we just giving you the growth rate.

Erinn Murphy

Okay, got it.

Tony Bates

But we’re pleased with our approach so far.

Operator

And we’ll now go to Simona Jankowski with Goldman Sachs.

Simona Jankowski

Just wanted to ask you a question on gross margins, which were up sequentially even though looks ASPs were down sequentially. So just wanted to understand the dynamics behind that margin expansion? And then just related to that, how do the margins of the new products compared to the average?

Nick Woodman

So as far as margins are on a product-by-product basis, Simona, we actually don’t get into that level of granularity. I think when you look at ASPs you have to remember there is -- you guys don’t get the full picture of ASPs because you’re simply taking -- you probably taking revenue and dividing it by units. There is a lot other things that go into that that pie, there is standalone accessories that we sell, there is some software that we do, licensing, and things like that. And so there is a lot of pieces there. I did make the comment very specifically on the call though that camera ASP, we didn’t see any changes or any significant change in camera ASP so it’s actually quite small.

So if you couple that with the fact that we’re getting more leverage out of our supply chain, we’re doing a better job of designing our products to be more cost effective in the channels themselves. I think that overall was delivering certainly the year-over-year 400 plus basis point increase in gross margins, but also the sequential increase is also coming from there. So you get kind of a product mix piece and you’re getting a supply chain piece all combined together is just making -- it’s making the gross margins work right now.

Operator

[Operator Instructions] And we go now to Will Power with Robert Baird.

Will Power

Just want to follow up little bit I guess on the Session which looks like an exciting new product for you. Any color with respect to where distribution is to-date and any type of supply constraints you’re seeing or expecting with that device?

Nick Woodman

I can comment a little bit on that. I mean as far as distribution, this is a worldwide launch. So this is a pretty exciting product certainly encourage you if you haven’t already to go watch the launch video that’s on our Web page. And also I think the team put together an awesome video of how the product itself works, the product -- the Session product video which I’d also encourage you to look at. But the worldwide launch, it’s available all over. I know I’ve seen in the local stores here and it’s gone overseas too. As far as the channel itself I mean I think it’s going to get pushed everywhere.

Tony Bates

Yeah, it’s [indiscernible] strategy recyclement, it’s all about premium products and it’ll have the time distribution across the -- on a global basis. I think we are very prepared for this on a global launch. And so I think your question was about inventory, look it’s very early to tell but we fell very good about where we are.

Nick Woodman

There were no challenges to manufacturing or getting the product out of the channel.

Tony Bates

Just to add, this is one of the things that we really benefited on over the last year. As we’ve grown good reason to go public and get bigger and strong. We’re able to add the resources, the teams, the people, that can do all the product planning, that can do get the product out on a timely basis and set up the supply chain so that you can get product out one time. We’ve grown a lot of people in the company in the last year, there is just more people focused on making these great events happen and we’re seeing the positive results of that.

Operator

And now to Charlie Anderson with Dougherty & Company.

Charlie Anderson

Nick I have a question for you on the Quadcopter, I wonder if you’re thinking about this market relatively to your normal GoPro capture device market, the sizing of that market over the long term do you think that it’s similar, larger smaller, kind of your thoughts on how that will evolve?

Nick Woodman

It’s a good question. I think that for the first few years, it's going to be a subset of our overall market opportunity in terms of unit volume. I think that -- it all comes down to accessibility and ease of use when selling consumer solutions and frankly what the value proposition and what problem is it solving for a consumer. And I think that definitely with the introduction of Session, we have made a GoPro so much easier to use and so much more relevant to somebody in their daily life that I think we're going to see Session appeal to a big new audience, GoPro customers as well as the existing customers who are looking for an additional GoPro to add to their capture solution.

So as we grow that overall customer base for our cameras, I think that the number of customers we'll be able to attract for quad is on a unit volume base and it can be smaller than that, but still very significant and we're confident that GoPro has an opportunity to take a leadership role in the quad -- consumer quad space. And then down the road as quad gets smaller, easier to fly, lower cost, I think it's quite possible that we see the numbers grow dramatically. But I think in the mid -- near to mid-term, I think that we're going to see larger numbers on unit basis from our camera business.

Operator

And we’ll go now to Tavis McCourt with Raymond James.

Tavis McCourt

Hey guys. It's Tavis. Can I get a clarification that doesn't count as a question hopefully, and that is, were there any Session volumes that were shipped in Q2 and are there any new products unannounced included in the Q3 guidance? And my question was regarding the currency, Jack. I think most customers companies are going to be talking about that quite about this quarter and wondering if that had any impact on your quarter and whether you've raised prices selectively to toss that in the currency impact. Thanks.

Jack Lazar

Okay, got it. So you're asking first about Session, whether was there any Session in the quarter. There was a small anonymous Session in the quarter. We're not going to be getting into the specifics, but as far as product that are unannounced in the third quarter that we would have felt well those would be unannounced. So we can’t talk about products that are unannounced, but we will -- we've pretty excited about the stuff that we have right now between the HERO+ LCD and the Session, that's clearly a great opportunity in the upcoming quarter. Short currency -- currency I would say, most of our business is denominated in dollars. So we are probably a little less exposed than most. We did have to deal with some fluctuations in the EURO and particular during the quarter and we do periodic adjustments to our recommended resale pricing and that did actually happen in this last quarter where we had to bump them up. I think it was in Europe and Australia. And so -- that would have already flowed through. I'm sure it had some impact but it's not something that we're actually pointing to as a driver or a tractor of the business.

Operator

And we go now to Gus Richard with Northland.

Gus Richard

Thanks for taking my question. When you look at your growth opportunities, you've got drones, virtual reality and GoPro Entertainment. Can you give qualitative commentary on which ones of those you think will provide that most growth next year and maybe the year after that?

Nicholas Woodman

It's a good question. I think that we are very optimistic about the growth of our core business, the capture devices and accessories as our bread and butter and now being sold in over 40,000 locations worldwide and with a brand -- global brand that's proven strong enough to sell well in China out of the gates, combined with the increase in our product line, with products like HERO+ LCD at the more entry level and HERO4 Session in our -- a new addition, exciting new innovative addition to our premium line of products.

We have a much more compelling product line up for consumers so that -- when we look at that across the globe, I think we're going to have a pretty good growth story next year in our core business. And then as we've shared, we're announcing -- we're releasing a quadcopter in the first half of 2016. And of course we're very optimistic about our ability to excite the consumer with the differentiated quadcopter capture solution. And we think that again our distribution coupled with our brand GoPro is going to really helped take quads even more mainstream then they are today and provide a much improved out of box user experience. That said we expect that to obviously trail our core capture business but it will be a nice additive and then I think virtual reality is an exciting new opportunity that's frankly going to take a bit of time to develop, right. I mean it's still early days and I think everybody involved in this space from an industry perspective is very excited about what we’re going to be able to achieve with virtual reality, but there is still ways to go in terms of making it ready for the consumer, so that’s going to be a bit further out.

And then on the media front, we’re already starting to see terrific progress with the release of our licensing portal, GoPro Licensing. But as we shared -- the strength of our core business is such that it's going to take some time for the media revenue to become a substantial revenue strength for us, but it's exciting to see the progress that we’ve made and that we’ve now actually productize of the licensing side of our business and we’re open for business. So we’re really excited about it and I want to give special shout out to Zander Lurie and his leadership and the rest of the GoPro entertainment team that got this terrific new licensing platform out for us, we’re very pleased and way to go Zander and GoPro entertainment.

Jack Lazar

Maybe just on the licensing, that’s really a cases of -- we’ve talked about to many callers, we’ve seen they are not interest where it really make sense for us to essentially create a platform and perhaps that’s the right view to think about the entertainment opportunities to move forward and I know there were a lot of questions about it, but this is a case where we have enough interest, that people woke up and were calling us, it was time to make a self-service automated, professional platform, that you target professionals and so, it's early days. But that’s the type of opportunities that we will see and as we move forward and so we will try and capitalize those as we go.

Operator

And we’ll go now to Brad Erickson with Pacific Crest.

Brad Erickson

Just wanted to circle back on the content licensing piece, curious are there any metric -- there were some media reports that were speculating some metrics in terms of what you might be coming to market with, wondering if you're going to offer any clarity around that in terms of the number of videos in the portal over certain period of time anything along those lines? And then would also be curious just obviously could this be a contributor into ’16 would be helpful? Thanks.

Tony Bates

Just there is kind of base going, what we announced in the last few calls [ph] we have 600 pieces content, incredibly premium, high value content again targeted at professionals. We’ve had a number of inbound and so we -- this is just the beginning of that, but at the same time we were very proud of the content and the platform that we’ve created. So I would say we will generate and we will have more content available that will be one of the metrics, but primarily it's going to be gauging the interest that we see from the professionals out there want to use that, the marketers, advertisers and so on. We’re not providing any data just yet, we’ll see how that goes. I wouldn’t expect that to be a very large contributor, but it's testing an interesting opportunity for us.

Operator

And we’ll go now to James Faucette with Morgan Stanley.

James Faucette

Most of my questions has been answered; one question I do want to touch on is if we look at Europe or EMEA in -- sequentially in the June quarter it was down a little bit as oppose to the other regions. And I am just wondering if you can speak to little bit as what the seasonality might be there or if there was any impact from price changes, I am just trying to get a feel for kind of why that geography looked different sequentially than the rest of the world? Thank you very much.

Jack Lazar

Jim, its Jack. I think you're talking about individual movement here than a relatively small. As you said it’s down slightly, year-over-year the number is huge. So we’re pretty happy with the year-over-year numbers and frankly the year-to-date numbers. I mean just look at the six months, the six months numbers year-over-year they are pretty impressive. So I think it's a more timing than anything else, if we go into the upcoming quarter, we made some comments about where we see the strength in revenue and overall it looks pretty good and the opportunities that we’re finding in EMEA are quite attractive, some of the things we’re seeing in APAC are quite attractive. So I think just overall there is pretty good opportunities internationally.

We try to message this at the beginning of the year that we thought international was one of the big opportunities. I think the team has done a great job of going out and executing. You heard Tony mentioned some of the places where we opened up offices over the last years. We’re really grown our international footprint quite a bit. But I think it now looks to be working pretty well.

Operator

And we’ll go not to Jeremy David with Citigroup.

Jeremy David

So video space of new POPD [ph] space grew over 75% year-over-year in the first six months, I think you obviously building new orders and your expanding shelf space. So I think BestBuy grew your shelf space quite a lot in the second half last year, if there are more opportunity for you to expand even more at BestBuy and other large big bucks relaters in U.S. in the second half of ’15 and is the 75% year-over-year growth in linear of POPD space, so you got sustainable at what point does that trend down? Thanks.

Nicholas Woodman

Let me take the first part and then maybe you can comment on the long-term growth. There is definitely more opportunity BestBuy is one of our BIGBOX retailers, we have tremendous strength in some of the others to target more market. As you heard me talk about Target, we just won an award as being a great partner. So we’re traditionally U.S. but as we certainly see that in BIGBOX. But I would just say this is a strategy that we seek and actually play out globally as well. So just like we’ve seen with BestBuy, really started it with a large displays to model this. Best part about it, it drives you grow that on a global basis. You don’t quite get the concentration around one large retail like you have in the U.S. but on a country basis, particularly in Europe you see the ability for us to do that. So we’re in the early days of that, I think in terms of it is sustainable, at some point you could argue that every single retailer and the maximum linear feet. But we are long way from that right now, certainly on a global basis. So we feel very good about this kind of market approach and it seems to be playing out well.

Jack Lazar

Yes I will just give you the typical example, I was in Target few days ago and I stopped and looked at the POP there, it's a three foot POP and that’s a typical Target POP and it works well, could we increase that in size and probably move volume? Yes we absolutely probably could, it just takes time to roll all these things out and that’s what we're working on and I think we've done a pretty good job of rolling out the POP strategy over the last few years.

Tony Bates

Yes maybe one of thing to add, if you think about what's going on in the company as well. We touched on that a couple of times, we're expanding the amount of products and we have more [indiscernible] in the line-up, we talked about quads and so the key of our distribution strategy is also to make sure that we can support all of their product and that means growing the liner feet. And so far so good it was -- the estimated did really well. So that actually is what gives us confidence as we enter into the new market like the quadcopter market.

Operator

And we go now to Joseph Wolf with Barclays.

Joseph Wolf

Thanks I guess just have final question thanks for getting me in here. You talked a little bit about one of some of your curious thoughts on your commercial side of the market and revenue opportunities connected with that. The marketing spend you did on Tour de France and how that turns into or the broadcast, I'm not asking this very cleanly, sorry. Can we think about a revenue stream coming from the broadcast in the commercial side of the business as an addition to the retail side of the business based on some of the announcements that you’ve made that would be meaningful or was that really just to drive the overall retail sale?

Nicholas Woodman

That’s a good question. This is Nick here, I think initially you are right that these broadcast deals -- sponsorship deals, GoPro very much benefits by growing brand awareness through the integration of GoPro capture technology into these fantastic sports and helping to provide more immersive, engaging broadcast of the sports on television and online. And goes to great lengths towards validating our brands to see GoPro worn on these top riders at the very highest level of the sport and being embraced and actually really enhancing the viewing experience is massive for our brand. Now where it goes from there is that we have increased opportunities to do this with more and more venues, more and more events. And no promises but with that come to the opportunity potentially monetize some of these broadcast in innovative new second screen ways helping people tap into their favorite events or celebrities in a way is never possible before. So we definitely -- it's a layup on the brand promotion side with an expanding option on the monetization side that we may be able to realize in the future.

Operator

And we'll go to Alex Gauna with JMP Securities.

Alex Gauna

Great thanks for taking my questions. Congratulations on shredding another quarter. I'm just curious about what you're saying about your global footprint, your expansions of retail presence, my observations are that the competition is actually going reverse. I seemed to be seeing a lack of completion, is that accurate? Can you give me some color behind what you are seeing in your channels in terms of the off-sensible competition either there or not there?

Nicholas Woodman

We share your view. We're in a leadership position, we work very, very hard. On the call I mentioned that we run fast and we run hard and it’s working. And I frankly share your feeling that we've outpaced the competition we run at an exhausting pace and this is all we do. We are over 1,300 employees that are manically focused on our vision and we all come to work every day with that shared vision and this is all that we think about, all that we work on and you see it in the execution. And that’s a very difficult thing for somebody to compete with and I think you're seeing that play out at retail. I mean look at what we did with HERO4 Black and Silver just last fourth quarter and then we quickly came out with HERO+ LCD and then the upper cut nobody was expecting as HERO4 Session and we're not done yet.

And it's getting easier from the perspective that we're able to attract incredible talent GoPro being a public company now makes it easier to recruit. We're more visible, it's easier to get people excited about coming to work with us and help us realize the vision. So as much trouble was competition was having with us over the past few years, I expect it to become even more difficult for them because our pace of innovation is increasing. So thanks for noticing and it feels good.

Alex Gauna

One more if I could, you gave a shout out to your GoPro Entertainment team. And I am wondering what was it that they did deserving a shot out? Obviously, you’ve got great content already. But what about the system you put in place has differenced it, if you could?

Nicholas Woodman

Well, they’re executing, that’s -- at the end of the day that’s what matters. They’re delivering on our vision. They’ve got a ton of programs in parallel that they’re working on and they’re shipping product. And that is not easy to do at a company at this scale, this pace, to come out with such compelling product -- new platform like this, licensing portal in such short order and I just -- Zander is building that team up from scratch. And so to be building the race car as you driving it in the race is no small feat and they’ve executed fabulously.

Tony Bates

Yes, I’ll just add a little bit. I think being with drive when I think about the team that we’re assembling and Zander hats off when we recruited him into the company, he’s really building a great team, it’s at next point in its execution and it’s the quality of the content that we produce. We’ve made sure that we’ve stayed very true to being authentic in GoPro and wowing our audience on a global basis and they just do a tremendous job.

Operator

And this concludes our question-and-answer session. I’ll now turn the call back to CEO, Nick Woodman for closing remarks.

Nicholas Woodman

Okay. Well, thanks to everyone for joining our call today. Before we go, I want to let everybody know that we’ll be at the Pacific Crest, Oppenheimer, Citibank, B. Riley, Stifel and Deutsche Bank Conference in August, and September. It’s been a great first year as a publicly traded company and we’ve never have more fun growing this business. On behalf of more than 1,300 employees, many thanks for your ongoing support everybody. This is team GoPro signing off.

Operator

This concludes our conference. Thank you for your participation.

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