GoPro's Q1 2025: Contradictions Surrounding Tariffs, Subscription Growth, and Market Challenges

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Revenue and Sell-Through Performance:
- GoPro reported first-quarter 2025 revenue of $134 million, which was at the high-end of its guidance of $125 million due to stronger sell-through in the quarter.
- The revenue growth was driven by strong sell-through and the launch of new hardware and software products.

Operating Expense Reduction:
- Q1 2025 non-GAAP operating expenses were $62 million, a 26% decrease year-over-year.
- This reduction was primarily due to restructuring actions, reduced employee-related costs, and a reduction in marketing and advertising related activities.

Subscription Retention and ARPU Growth:
- Subscription and service revenue grew 4% year-over-year to $27 million, primarily from 5% ARPU growth.
- The growth was attributed to improving aggregate retention rates, which reached a record 70%.

Inventory and Cash Management:
- GoPro ended the quarter with inventory of $96 million, a 27% decrease year-over-year, reflecting the first Q1 sequential decline in inventory since 2018.
- The company's cash position improved, with $70 million in cash, cash equivalents, and marketable securities, despite a $58 million sequential decrease excluding a $25 million draw on its ABL.

Tariff Diversification and Price Adjustments:
- GoPro has diversified its camera production outside of China, reducing tariff impacts.
- The company plans to offset tariff costs with modest price increases, continued supply chain diversification outside of China, and potentially producing certain products in the United States.