Investor Relations

GoPro Announces Second Quarter 2016 Results

July 27, 2016

Sell-Thru Outpaced Sell-in by Over 50% for The Second Consecutive Quarter
HERO4 Silver Best-Selling Digital Imaging Camera in U.S. for 7th Consecutive Quarter
HERO5 and Karma to Launch Ahead of Holiday Season
Maintains Full-Year Revenue Guidance of $1.35 Billion to $1.5 Billion

SAN MATEO, Calif., July 27, 2016 /PRNewswire/ -- GoPro, Inc. (NASDAQ: GPRO) announced financial results for its second quarter ended June 30, 2016.

"GoPro is well-positioned for the second half of the year.  We now have a simple product line, a clean retail channel and clear indications of strong consumer demand," said GoPro Founder and CEO, Nicholas Woodman. "HERO5 and Karma will contribute to the largest introduction of products in our history, all in time for what we believe will be GoPro's most exciting fourth quarter, ever -- a quarter where we expect to return to profitability."

Recent GoPro Highlights Include

  • Since the May rebranding of Quik and Splice, these mobile apps have doubled their combined monthly active users to 3.7 million and doubled the amount of shared content each month. Combined, these apps have 37 million cumulative downloads.
  • The GoPro Mobile App was downloaded 2.6 million times in the second quarter, totaling over 30 million cumulative downloads; Q2 installs of GoPro Studio was 1.5 million, totaling over 17.7 million cumulative installs, with average daily video exports up 15.3% year-over-year to over 43,500.
  • According to The NPD Group's Retail Tracking Service, GoPro accounted for 6 of the top 10 products, including the top 3 spots, on a unit basis in the digital camera/camcorder category in the U.S. in the second quarter. HERO4 Silver remains the best-selling digital image camera on a unit and dollar basis for the seventh consecutive quarter. By our estimate, Session continues to be the #2 best-selling camera on a unit basis.
  • According to NPD, GoPro's second quarter combined digital camera/camcorder unit share increased 110 basis points year-over-year to 21.3% in the U.S.
  • According to GfK, GoPro's second quarter digital imaging unit share in Europe increased 110 basis points year-over-year to 9.4%. GoPro accounted for 4 of the top 5 camcorders in Europe on a unit basis.
  • Revenue was up 20% to $221 million sequentially, driven by an 8% increase in units shipped to 759,000 and an 11% increase in average selling price. On a year-over-year basis, average selling price increased 14%.
  • Unit sell-thru was up approximately 10% sequentially and was more than 50% higher than sell-in for the second quarter in a row, resulting in an estimated 35% sequential reduction in channel inventory.
  • Inventory declined $50 million, or 36%, from the first quarter to $90 million, our lowest inventory level since the second quarter of 2014.
  • GoPro announced an exclusive partnership with Reliance Digital, India's largest Consumer Electronics retailer, that will put GoPro's cameras, mounts and accessories, on the shelves of up to 1,800 Reliance Digital across India.
  • GoPro is an official partner of MotoGP, a global race series with a TV audience of 280 million homes and a social following of 15 million. GoPro now sponsors nine-time world-champion MotoGP racer, Valentino Rossi.
  • GoPro has signed content partnerships to create episodic content with some of the world's most recognized brands including Ford, Wimbledon, and Real Madrid. The first series, produced with Ford Motor Company titled "Unstoppable Life," profiles GoPro athletes who demonstrate the perseverance and determination on their respective life journeys.
  • GoPro's professional VR camera Odyssey, designed for Google's Jump platform, is being used to capture the Democratic and Republican National Conventions. News organizations including Bloomberg, TIME, The Washington Post, are using Odyssey to shoot the conventions in 360-degree, stereoscopic video.
  • Launched GoPro Care to U.S. consumers, a fee-based service offering a range of support options, including extended warranty and accidental damage coverage.
  • Lauren Zalaznick was appointed to GoPro's Board of Directors. A 12-year executive at NBCUniversal, Ms. Zalaznick has devoted her career to transforming the cultural landscape in media, and has been named one of Time's 100 Most Influential People and Fortune's 50 Most Powerful Women.
  • GoPro entered into a multi-year, global agreement with Red Bull that includes content production, distribution, and cross-promotion through which GoPro will become Red Bull's exclusive provider of point-of-view imaging technology. Content will be distributed across both Red Bull and GoPro's digital distribution networks, including The GoPro Channel, Red Bull TV, RedBull.com and in the Red Bull Content Pool, Red Bull's media service platform.

 



Three Months Ended June 30,

($ in thousands, except per share amounts)


2016


2015


% Change










Revenue


$

220,755


$

419,919


(47.4)%

Gross margin







GAAP


42.1%


46.3%


(420) bps

Non-GAAP


42.4%


46.4%


(400) bps

Operating income (loss)







GAAP


$

(109,377)


$

46,138


(337.1)%

Non-GAAP


$

(89,298)


$

65,845


(235.6)%

Net income (loss)







GAAP


$

(91,767)


$

35,031


(362.0)%

Non-GAAP


$

(72,595)


$

50,715


(243.1)%

Diluted net income (loss) per share







GAAP


$

(0.66)


$

0.24


(375.0)%

Non-GAAP


$

(0.52)


$

0.35


(248.6)%

Adjusted EBITDA


$

(76,757)


$

75,349


(201.9)%

Business Outlook

GoPro is providing the following guidance:

  • Revenue between $1.35 billion and $1.5 billion for 2016
  • GAAP and non-GAAP gross margin of 40% +/- 1% for the second half of 2016
  • GAAP and non-GAAP net income profitable for the fourth quarter of 2016

Upcoming Events

Management will participate in an investor conference on August 9, 2016. GoPro will furnish a link to the webcast of this event on its investor relations website, http://investor.gopro.com.

Conference Call

GoPro management will host a conference call and live webcast for analysts and investors today at 2 p.m. Pacific Time (5 p.m. Eastern Time) to discuss the Company's financial results.

To listen to the live conference call, please dial toll free (888) 208-1361 or (913) 312-0949, access code 4241073, approximately 5 minutes prior to the start of the call. A live webcast of the conference call will be accessible on the "Events & Presentations" section of the Company's website at http://investor.gopro.com. The webcast will be recorded and the recording will be available on GoPro's website, http://investor.gopro.com, approximately two hours after the call and for 90 days thereafter.

About GoPro, Inc. (NASDAQ: GPRO)

GoPro, Inc. is transforming the way people visually capture and share their lives. What began as an idea to help athletes self-document themselves engaged in their sport, GoPro has become a standard for how people capture themselves engaged in their interests, whatever they may be. From extreme to mainstream, professional to consumer, GoPro enables the world to capture and share its passion in the form of immersive and engaging content.

GoPro, HERO, and Karma, and their respective logos are trademarks or registered trademarks of GoPro Inc. in the United States and other countries. All other trademarks are the property of their respective owners.

For more information, visit www.gopro.com or connect with GoPro on FacebookInstagram, LinkedIn, Pinterest, Twitter, YouTube, and GoPro's The Inside Line.

GoPro's Use of Social Media

GoPro announces material financial information using the Company's investor relations website, SEC filings, press releases, public conference calls and webcasts.  GoPro may also use social media channels to communicate about the Company, its brand and other matters; these communications could be deemed material information. Investors and others are encouraged to review posts on GoPro's pages on Facebook, Instagram, LinkedIn, Pinterest, Twitter, YouTube, GoPro's investor relations website and The Inside Line.

Note Regarding Use of Non-GAAP Financial Measures

GoPro reports gross profit, operating expenses, operating income (loss), net income (loss) and diluted net income (loss) per share in accordance with U.S. generally accepted accounting principles (GAAP) and on a non-GAAP basis. Non-GAAP items exclude, where applicable, the effects of stock-based compensation, acquisition-related costs, restructuring costs and the tax impact of these items. Additionally, GoPro reports non-GAAP adjusted EBITDA. A reconciliation of preliminary GAAP financial measures to non-GAAP financial measures, as well as a description of items excluded from the calculation of non-GAAP financial measures, is presented in the financial statement portion of this release. GoPro also provides future estimated ranges of revenue and gross margin on a GAAP and non-GAAP basis.

Note on Forward-looking Statements

This press release may contain projections or other forward-looking statements regarding future events, including but not limited to, those regarding our business outlook for the second half of the year and full year of 2016. These statements involve risks and uncertainties, and actual events or results may differ materially. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are our dependence on sales of our cameras and accessories for substantially all of our revenue and the effect of a fall in sales during the holiday season; the fact that we do not expect to continue to grow in the future at the same rate as we have in the past, that we may fail to manage our growth, and profitability in past periods might not be indicative of future performance; any inability to successfully manage frequent product introductions and transitions or to anticipate consumer preferences and successfully develop desirable products; the risks associated with our expected entrance into the consumer drone market; the effects of the highly competitive market in which we operate; the risks related to inventory, purchase commitments and long-lived assets; difficulty in accurately predicting our future customer demand; the importance of maintaining the value and reputation of our brand; and other factors detailed in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2015, which is on file with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof or as of the date otherwise stated herein. GoPro disclaims any obligation to update these forward-looking statements.

GoPro, Inc.
Preliminary Condensed Consolidated Statement of Operations
(unaudited)






Three months ended


Six months ended

(in thousands, except per share data)

June 30, 2016


June 30, 2015


June 30, 2016


June 30, 2015









Revenue

$

220,755



$

419,919



$

404,291



$

783,028


Cost of revenue

127,753



225,579



251,575



424,955


Gross profit

93,002



194,340



152,716



358,073










Operating expenses:








Research and development

93,049



58,453



170,028



107,890


Sales and marketing

84,888



63,494



164,337



119,863


General and administrative

24,442



26,255



49,163



61,914


Total operating expenses

202,379



148,202



383,528



289,667


Operating income (loss)

(109,377)



46,138



(230,812)



68,406


Other income (expense), net

660



122



353



(2,122)


Income (loss) before income taxes

(108,717)



46,260



(230,459)



66,284


Income tax expense (benefit)

(16,950)



11,229



(31,233)



14,501


Net income (loss)

$

(91,767)



$

35,031



$

(199,226)



$

51,783










Net income (loss) per share:








Basic

$

(0.66)



$

0.26



$

(1.44)



$

0.39


Diluted

$

(0.66)



$

0.24



$

(1.44)



$

0.35










Weighted-average shares used to compute net income (loss) per share:








Basic

138,942



133,150



138,243



132,716


Diluted

138,942



146,781



138,243



147,720


 

GoPro, Inc.
Preliminary Condensed Consolidated Balance Sheets
(unaudited)





(in thousands)

June 30,
2016


December 31,
2015





Assets




Current assets:




Cash and cash equivalents

$

163,512



$

279,672


Marketable securities

115,688



194,386


Accounts receivable, net

65,016



145,692


Inventory

89,889



188,232


Prepaid expenses and other current assets

38,057



25,261


   Total current assets

472,162



833,243


Property and equipment, net

66,525



70,050


Intangible assets, net and goodwill

192,532



88,122


Other long-term assets

133,161



111,561


   Total assets

$

864,380



$

1,102,976






Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable

$

63,642



$

89,989


Accrued liabilities

151,102



192,446


Deferred revenue

11,605



12,742


   Total current liabilities

226,349



295,177


Long-term liabilities

40,641



35,766


   Total liabilities

266,990



330,943






Stockholders' equity:




Common stock and additional paid-in capital

687,894



663,311


Treasury stock, at cost

(35,613)



(35,613)


Retained earnings (accumulated deficit)

(54,891)



144,335


   Total stockholders' equity

597,390



772,033


   Total liabilities and stockholders' equity

$

864,380



$

1,102,976


 

GoPro, Inc.
Preliminary Condensed Consolidated Statement of Cash Flows
(unaudited)






Three months ended


Six months ended

(in thousands)

June 30, 2016


June 30, 2015


June 30, 2016


June 30, 2015

Operating activities:








Net income (loss)

$

(91,767)



$

35,031



$

(199,226)



$

51,783


Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:








Depreciation and amortization

9,482



6,422



17,804



11,791


Stock-based compensation

17,404



18,189



33,135



44,690


Excess tax benefit from stock-based compensation

(227)



(22,072)



(917)



(28,139)


Deferred income taxes

(3,166)



(5,066)



(13,494)



(6,656)


Other

397



127



1,162



2,956


Net changes in operating assets and liabilities

22,417



33,243



82,811



55,716


Net cash provided by (used in) operating activities

(45,460)



65,874



(78,725)



132,141










Investing activities:








Purchases of property and equipment, net

(3,973)



(16,062)



(12,192)



(21,269)


Purchases of marketable securities



(32,958)





(112,326)


Maturities and sales of marketable securities

23,864



21,943



78,093



34,446


Acquisitions, net of cash acquired

(59,313)



(52,606)



(104,353)



(57,706)


Net cash used in investing activities

(39,422)



(79,683)



(38,452)



(156,855)










Financing activities:








Proceeds from issuance of common stock, net

302



6,135



4,405



17,139


Excess tax benefit from stock-based compensation

227



22,072



917



28,139


Payment of deferred acquisition-related consideration

(594)





(950)




Payment of credit facility issuance costs

(136)





(3,221)




Payment of deferred public offering costs







(903)


Net cash provided by (used in) financing activities

(201)



28,207



1,151



44,375


Effect of exchange rate changes on cash and cash equivalents

(122)



468



(134)



(1,559)


    Net increase (decrease) in cash and cash equivalents

(85,205)



14,866



(116,160)



18,102


Cash and cash equivalents at beginning of period

248,717



323,165



279,672



319,929


Cash and cash equivalents at end of period

$

163,512



$

338,031



$

163,512



$

338,031










 

GoPro, Inc.
Reconciliation of Preliminary GAAP to Non-GAAP Financial Measures
(unaudited)






Three months ended


Six months ended

(in thousands, except per share data)

June 30, 2016


June 30, 2015


June 30, 2016


June 30, 2015









GAAP net income (loss)

$

(91,767)



$

35,031



$

(199,226)



$

51,783


Stock-based compensation:








Cost of revenue

412



350



769



633


Research and development

7,086



3,710



13,096



7,245


Sales and marketing

3,679



2,932



6,883



5,998


General and administrative

6,227



11,197



12,387



30,814


   Total stock-based compensation

17,404



18,189



33,135



44,690










Acquisition-related costs:








Cost of revenue

222



295



444



517


Research and development

2,218



612



3,503



699


Sales and marketing



33



22



66


General and administrative

235



578



1,104



578


   Total acquisition-related costs

2,675



1,518



5,073



1,860










Restructuring costs:








Cost of revenue





364




Research and development





2,655




Sales and marketing





2,678




General and administrative





811




   Total restructuring costs





6,508












Income tax adjustments

(907)



(4,023)



(4,825)



(11,999)


Non-GAAP net income (loss)

$

(72,595)



$

50,715



$

(159,335)



$

86,334










Non-GAAP diluted net income (loss) per share

$

(0.52)



$

0.35



$

(1.15)



$

0.58


 

GoPro, Inc.
Reconciliation of Preliminary GAAP to Non-GAAP Financial Measures

To supplement our unaudited selected financial data presented on a basis consistent with GAAP, we disclose certain non-GAAP financial measures, including non-GAAP gross profit, gross margin, operating expenses, operating income (loss), net income (loss), earnings (loss) per share and adjusted EBITDA. We also provide forecasts of non-GAAP gross margin and non-GAAP diluted earnings per share. These non-GAAP measures are not in accordance with, nor serve as an alternative for GAAP.  We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our GAAP results of operations. These non-GAAP measures should only be viewed in conjunction with corresponding GAAP measures.

In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of our core operating performance on a period-to-period basis. The excluded items represent stock-based compensation and charges that are primarily driven by discrete events that we do not consider to be directly related to core operating performance.  We use non-GAAP measures to evaluate the core operating performance of our business, for comparison with forecasts and strategic plans and for calculating return on investment. In addition, management's incentive compensation is determined using non-GAAP measures. Since we find these measures to be useful, we believe that investors benefit from seeing results reviewed by management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with our GAAP financials, provide useful information to investors by facilitating:

  • the comparability of our on-going operating results over the periods presented;
  • the ability to identify trends in our underlying business; and
  • the comparison of our operating results against analyst financial models and operating results of other public companies that supplement their GAAP results with non-GAAP financial measures.

The following are explanations of each type of adjustment that we incorporate into non-GAAP financial measures:

  • Stock-based compensation expense relates to equity awards granted primarily to our workforce. We exclude stock-based compensation expense because we believe that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In particular, we note that companies calculate stock-based compensation expense for the variety of award types that they employ using different valuation methodologies and subjective assumptions. These non-cash charges are not factored into our internal evaluation of net income as we believe their inclusion would hinder our ability to assess core operational performance. We believe that excluding this expense provides greater visibility to the underlying performance of our business operations, facilitates comparison of our results with other periods, and may also facilitate comparison with the results of other companies in our industry.
  • Acquisition-related costs include the amortization of acquired intangible assets (primarily consisting of acquired technology), as well as third-party transaction costs incurred for legal and other professional services. These costs are not factored into our evaluation of potential acquisitions, or of our performance after completion of the acquisitions, because they are not related to our core operating performance, and the frequency and amount of such costs vary significantly based on the timing and magnitude of our acquisition transactions and the maturities of the businesses being acquired.
  • Restructuring costs primarily include severance-related costs recorded in connection with our global workforce reduction in January 2016. We believe that excluding this expense provides greater visibility to the underlying performance of our business operations, facilitates comparison of our results with other periods, and may also facilitate comparison with the results of other companies in our industry.
  • Income tax adjustments relate to the tax effect of the adjustments that we incorporate into non-GAAP measures in order to provide a more meaningful measure of non-GAAP net income (loss). We believe that these adjustments provide us with the ability to more clearly view trends in our core operating performance.
  • Additionally, adjusted EBITDA excludes the amortization of point-of-purchase (POP) display assets because it is a non-cash charge, and similar to depreciation of property and equipment and amortization of acquired intangible assets.

Reconciliations of non-GAAP financial measures are set forth below:


Three months ended


Six months ended

(dollars in thousands)

June 30, 2016


June 30, 2015


June 30, 2016


June 30, 2015

GAAP gross profit

$

93,002



$

194,340



$

152,716



$

358,073


Stock-based compensation

412



350



769



633


Acquisition-related costs

222



295



444



517


Restructuring costs





364




Non-GAAP gross profit

$

93,636



$

194,985



$

154,293



$

359,223














GAAP gross profit as a % of revenue

42.1%



46.3%



37.8%



45.7%


Stock-based compensation

0.2



0.1



0.2



0.1


Acquisition-related costs

0.1





0.1



0.1


Restructuring costs





0.1




Non-GAAP gross profit as a % of revenue

42.4%



46.4%



38.2%



45.9%


















GAAP operating expenses

$

202,379



$

148,202



$

383,528



$

289,667


Stock-based compensation

(16,992)



(17,839)



(32,366)



(44,057)


Acquisition-related costs

(2,453)



(1,223)



(4,629)



(1,343)


Restructuring costs





(6,144)




Non-GAAP operating expenses

$

182,934



$

129,140



$

340,389



$

244,267


















GAAP operating income (loss)

$

(109,377)



$

46,138



$

(230,812)



$

68,406


Stock-based compensation

17,404



18,189



33,135



44,690


Acquisition-related costs

2,675



1,518



5,073



1,860


Restructuring costs





6,508




Non-GAAP operating income (loss)

$

(89,298)



$

65,845



$

(186,096)



$

114,956


 


Three months ended


Six months ended

(in thousands)

June 30, 2016


June 30, 2015


June 30, 2016


June 30, 2015

GAAP net income (loss)

$

(91,767)



$

35,031



$

(199,226)



$

51,783


Income tax expense (benefit)

(16,950)



11,229



(31,233)



14,501


Interest (income) expense, net

117



155



(217)



220


Depreciation and amortization

9,482



6,422



17,805



11,791


POP display amortization

4,957



4,323



9,700



8,871


Stock-based compensation

17,404



18,189



33,135



44,690


Restructuring costs





6,508




Adjusted EBITDA

$

(76,757)



$

75,349



$

(163,528)



$

131,856


 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/gopro-announces-second-quarter-2016-results-300305039.html

SOURCE GoPro, Inc.

Investor, Peter Salkowski (855) GOPROHD or (855) 467-7643, investor@gopro.com; Media, Jeff Brown (650) 332-7600 x 9997