Delaware | 001-36514 | 77-0629474 |
(State or Other Jurisdiction of Incorporation) | (Commission File No.) | (I.R.S. Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit Number | Description of Document |
99.1 | Press Release of GoPro, Inc. dated August 3, 2017 to report its financial results for its second quarter ended June 30, 2017 |
GoPro, Inc. | ||
(Registrant) | ||
Dated: | August 3, 2017 | By: /s/ Brian McGee |
Brian McGee Chief Financial Officer (Principal Financial Officer) |
Exhibit Number | Description of Document |
99.1 | Press Release of GoPro, Inc. dated August 3, 2017 to report its financial results for its second quarter ended June 30, 2017 |
• | QuikStories launched on July 27. The new GoPro app feature automatically pulls footage from a HERO5 camera and creates ready-to-share videos on your phone. QuikStories are polished, shareable videos featuring customizable music, filters, and effects. “We believe QuikStories is a game changer - it represents our biggest leap forward in ease-of-use since the invention of the GoPro, itself,” said Founder and CEO Nicholas Woodman. |
• | Second Quarter revenue was $297 million, up 34% year-over-year and 36% quarter-over-quarter. Adjusted EBITDA was $5.1 million. |
• | Sharp focus on inventory and channel management resulted in a 39% reduction in inventory quarter-over-quarter; forward weeks of supply in the channel is down 25%. Both position us well for upcoming product launches. |
• | Global sell-thru of cameras increased 18% sequentially. Additionally, camera sell-thru above $300 was up 13% year-over-year, including 7% in EMEA and 194% in Japan. According to GfK, camera unit sales in Japan are up 164% and dollar sales are up 147% year-over-year in the second quarter. |
• | HERO5 Black was the best-selling digital image camera in the U.S. in the second quarter, according to The NPD Group’s Retail Tracking Service. |
• | More than 50% of GoPro’s revenue was generated in markets outside of the U.S. in the second quarter. |
• | Demand for GoPro was high on Amazon Prime Day (July 11). A HERO Session bundle sold more than ten-times the weekly run-rate; HERO5 Black was offered with no discount and moved the equivalent of a full week of normal sell-thru in just one day. |
• | The Quik mobile video editing app was installed 5.6 million times in the second quarter, a year-over-year increase of 84%. Second quarter monthly active users were up 112% year-over-year. China represents Quik’s second largest user base globally. Capture App (now the GoPro App) total monthly shares in the second quarter were up over 30% year-over-year. |
• | GoPro gained 1.6 million new social media followers in the second quarter. Instagram followers were up 39% year-over-year to 13.7 million in the second quarter, with a 94% increase in international followers. Facebook video views of GoPro content reached 58.3 million in the first half of 2017, up almost 60% year-over-year. YouTube videos of GoPro content in the first half of 2017 have seen a 65% increase in median organic viewership per video year-over-year. |
• | GoPro was honored with the prestigious Red Dot design award, taking Best-of-the-Best in Product Design for both Karma and HERO5 Black. |
• | GoPro’s drone, Karma, was the #2 selling drone brand in the U.S. in the second quarter, according to the NPD Group’s Retail Tracking Service. |
Three Months Ended June 30, | |||||||||||
($ in thousands, except per share amounts) | 2017 | 2016 | % Change | ||||||||
Revenue | $ | 296,526 | $ | 220,755 | 34.3 | % | |||||
Gross margin | |||||||||||
GAAP | 35.6 | % | 42.1 | % | (650) bps | ||||||
Non-GAAP | 36.2 | % | 42.4 | % | (620) bps | ||||||
Operating loss | |||||||||||
GAAP | $ | (24,983 | ) | $ | (109,377 | ) | (77.2 | )% | |||
Non-GAAP | $ | (9,250 | ) | $ | (89,298 | ) | (89.6 | )% | |||
Net loss | |||||||||||
GAAP | $ | (30,536 | ) | $ | (91,767 | ) | (66.7 | )% | |||
Non-GAAP | $ | (12,914 | ) | $ | (72,595 | ) | (82.2 | )% | |||
Diluted net loss per share | |||||||||||
GAAP | $ | (0.22 | ) | $ | (0.66 | ) | (66.7 | )% | |||
Non-GAAP | $ | (0.09 | ) | $ | (0.52 | ) | (82.7 | )% | |||
Adjusted EBITDA | $ | 5,120 | $ | (76,757 | ) | (106.7 | )% |
• | Third Quarter 2017 |
• | Revenue of $300 million +/- $10 million |
• | GAAP and non-GAAP gross margin to be 37% +/- 1% |
• | GAAP operating expenses of between $131 million and $133 million |
• | Non-GAAP operating expenses of between $115 million and $117 million |
• | GAAP EPS to be $(0.24) +/- $0.05 |
• | Non-GAAP EPS to be $(0.06) +/- $0.05 |
• | 2017 |
• | GAAP operating expenses below $570 million |
• | Non-GAAP operating expenses below $495 million |
Three months ended | Six months ended | ||||||||||||||
(in thousands, except per share data) | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||
Revenue | $ | 296,526 | $ | 220,755 | $ | 515,140 | $ | 404,291 | |||||||
Cost of revenue | 190,894 | 127,753 | 340,942 | 251,575 | |||||||||||
Gross profit | 105,632 | 93,002 | 174,198 | 152,716 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 55,497 | 93,049 | 121,663 | 170,028 | |||||||||||
Sales and marketing | 56,678 | 84,888 | 124,534 | 164,337 | |||||||||||
General and administrative | 18,440 | 24,442 | 41,199 | 49,163 | |||||||||||
Total operating expenses | 130,615 | 202,379 | 287,396 | 383,528 | |||||||||||
Operating loss | (24,983 | ) | (109,377 | ) | (113,198 | ) | (230,812 | ) | |||||||
Other income (expense): | |||||||||||||||
Interest expense | (3,784 | ) | (516 | ) | (4,598 | ) | (659 | ) | |||||||
Other income, net | 222 | 1,176 | 383 | 1,012 | |||||||||||
Total other income (expense), net | (3,562 | ) | 660 | (4,215 | ) | 353 | |||||||||
Loss before income taxes | (28,545 | ) | (108,717 | ) | (117,413 | ) | (230,459 | ) | |||||||
Income tax expense (benefit) | 1,991 | (16,950 | ) | 24,273 | (31,233 | ) | |||||||||
Net loss | $ | (30,536 | ) | $ | (91,767 | ) | $ | (141,686 | ) | $ | (199,226 | ) | |||
Net loss per share: | |||||||||||||||
Basic | $ | (0.22 | ) | $ | (0.66 | ) | $ | (1.02 | ) | $ | (1.44 | ) | |||
Diluted | $ | (0.22 | ) | $ | (0.66 | ) | $ | (1.02 | ) | $ | (1.44 | ) | |||
Weighted-average shares used to compute net loss per share: | |||||||||||||||
Basic | 136,288 | 138,942 | 139,575 | 138,243 | |||||||||||
Diluted | 136,288 | 138,942 | 139,575 | 138,243 |
(in thousands) | June 30, 2017 | December 31, 2016 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 149,755 | $ | 192,114 | |||
Marketable securities | — | 25,839 | |||||
Accounts receivable, net | 95,872 | 164,553 | |||||
Inventory | 126,708 | 167,192 | |||||
Prepaid expenses and other current assets | 29,515 | 38,115 | |||||
Total current assets | 401,850 | 587,813 | |||||
Property and equipment, net | 71,833 | 76,509 | |||||
Intangible assets, net and goodwill | 175,460 | 179,989 | |||||
Other long-term assets | 72,828 | 78,329 | |||||
Total assets | $ | 721,971 | $ | 922,640 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 76,208 | $ | 205,028 | |||
Accrued liabilities | 151,317 | 211,323 | |||||
Deferred revenue | 15,036 | 14,388 | |||||
Total current liabilities | 242,561 | 430,739 | |||||
Long-term debt | 125,817 | — | |||||
Other long-term liabilities | 40,771 | 44,956 | |||||
Total liabilities | 409,149 | 475,695 | |||||
Stockholders’ equity: | |||||||
Common stock and additional paid-in capital | 827,382 | 757,226 | |||||
Treasury stock, at cost | (113,613 | ) | (35,613 | ) | |||
Accumulated deficit | (400,947 | ) | (274,668 | ) | |||
Total stockholders’ equity | 312,822 | 446,945 | |||||
Total liabilities and stockholders’ equity | $ | 721,971 | $ | 922,640 |
Three months ended | Six months ended | ||||||||||||||
(in thousands) | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||
Operating activities: | |||||||||||||||
Net loss | $ | (30,536 | ) | $ | (91,767 | ) | $ | (141,686 | ) | $ | (199,226 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||||||
Depreciation and amortization | 11,467 | 9,482 | 23,160 | 17,804 | |||||||||||
Stock-based compensation | 11,235 | 17,404 | 24,360 | 33,135 | |||||||||||
Excess tax benefit from stock-based compensation | — | (227 | ) | — | (917 | ) | |||||||||
Deferred income taxes | 156 | (3,166 | ) | (1,894 | ) | (13,494 | ) | ||||||||
Non-cash restructuring charges | 1,834 | — | 2,800 | — | |||||||||||
Non-cash interest expense | 1,530 | — | 1,530 | — | |||||||||||
Other | 2,133 | 397 | 3,763 | 1,162 | |||||||||||
Net changes in operating assets and liabilities | (9,247 | ) | 22,417 | (61,399 | ) | 82,811 | |||||||||
Net cash used in operating activities | (11,428 | ) | (45,460 | ) | (149,366 | ) | (78,725 | ) | |||||||
Investing activities: | |||||||||||||||
Purchases of property and equipment, net | (4,946 | ) | (3,973 | ) | (10,112 | ) | (12,192 | ) | |||||||
Maturities of marketable securities | — | 19,279 | 14,160 | 71,302 | |||||||||||
Sale of marketable securities | — | 4,585 | 11,623 | 6,791 | |||||||||||
Acquisitions, net of cash acquired | — | (59,313 | ) | — | (104,353 | ) | |||||||||
Net cash provided by (used in) investing activities | (4,946 | ) | (39,422 | ) | 15,671 | (38,452 | ) | ||||||||
Financing activities: | |||||||||||||||
Proceeds from issuance of common stock | 591 | 620 | 6,629 | 5,265 | |||||||||||
Taxes paid related to net share settlement of equity awards | (1,927 | ) | (318 | ) | (8,210 | ) | (860 | ) | |||||||
Proceeds from issuance of convertible senior notes | 175,000 | — | 175,000 | — | |||||||||||
Prepayment of forward stock repurchase transaction | (78,000 | ) | — | (78,000 | ) | — | |||||||||
Excess tax benefit from stock-based compensation | — | 227 | — | 917 | |||||||||||
Payment of deferred acquisition-related consideration | — | (594 | ) | (75 | ) | (950 | ) | ||||||||
Payment of debt issuance costs | (5,250 | ) | (136 | ) | (5,250 | ) | (3,221 | ) | |||||||
Net cash provided by (used in) financing activities | 90,414 | (201 | ) | 90,094 | 1,151 | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | 838 | (122 | ) | 1,242 | (134 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | 74,878 | (85,205 | ) | (42,359 | ) | (116,160 | ) | ||||||||
Cash and cash equivalents at beginning of period | 74,877 | 248,717 | 192,114 | 279,672 | |||||||||||
Cash and cash equivalents at end of period | $ | 149,755 | $ | 163,512 | $ | 149,755 | $ | 163,512 |
• | 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. |
• | 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 (loss) 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), the impairment of acquired intangible assets (if applicable), 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 these costs are not related to our core operating performance or reflective of ongoing operating results in the period, and the frequency and amount of such costs are inconsistent and 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, stock-based compensation expenses and facilities consolidation charges recorded in connection with restructuring actions announced in the first and fourth quarters of 2016 and the first quarter of 2017. We believe that excluding these costs 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. |
• | Non-cash interest expense. In connection with issuance of the Convertible Senior Notes in April 2017, we are required to recognize non-cash interest expense in accordance with the authoritative accounting guidance for convertible debt that may be settled in cash. We exclude this incremental non-cash interest expense for purposes of calculating non-GAAP net income (loss). We believe that excluding non-cash interest 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. Beginning in the first quarter of 2017, we have implemented a cash-based non-GAAP tax expense approach (based upon expected annual cash payments for income taxes) for evaluating operating performance as well as for planning and forecasting purposes. This non-GAAP tax approach eliminates the effects of period specific items, which can vary in size and frequency and does not necessarily reflect our long- |
• | Adjusted EBITDA excludes the amortization of point-of-purchase (POP) display assets because it is a non-cash charge, and is similar to the depreciation of property and equipment and amortization of acquired intangible assets. |
Three months ended | Six months ended | ||||||||||||||
(in thousands, except per share data) | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||
GAAP net loss | $ | (30,536 | ) | $ | (91,767 | ) | $ | (141,686 | ) | $ | (199,226 | ) | |||
Stock-based compensation: | |||||||||||||||
Cost of revenue | 415 | 412 | 910 | 769 | |||||||||||
Research and development | 5,390 | 7,086 | 11,072 | 13,096 | |||||||||||
Sales and marketing | 1,995 | 3,679 | 4,686 | 6,883 | |||||||||||
General and administrative | 3,435 | 6,227 | 7,692 | 12,387 | |||||||||||
Total stock-based compensation | 11,235 | 17,404 | 24,360 | 33,135 | |||||||||||
Acquisition-related costs: | |||||||||||||||
Cost of revenue | 1,195 | 222 | 2,430 | 444 | |||||||||||
Research and development | 946 | 2,218 | 2,082 | 3,503 | |||||||||||
Sales and marketing | — | — | — | 22 | |||||||||||
General and administrative | 1 | 235 | (22 | ) | 1,104 | ||||||||||
Total acquisition-related costs | 2,142 | 2,675 | 4,490 | 5,073 | |||||||||||
Restructuring costs: | |||||||||||||||
Cost of revenue | 25 | — | 418 | 364 | |||||||||||
Research and development | 1,702 | — | 7,381 | 2,655 | |||||||||||
Sales and marketing | 361 | — | 5,603 | 2,678 | |||||||||||
General and administrative | 268 | — | 1,409 | 811 | |||||||||||
Total restructuring costs | 2,356 | — | 14,811 | 6,508 | |||||||||||
Non-cash interest expense | 1,530 | — | 1,530 | — | |||||||||||
Income tax adjustments | 359 | (907 | ) | 20,798 | (4,825 | ) | |||||||||
Non-GAAP net loss | $ | (12,914 | ) | $ | (72,595 | ) | $ | (75,697 | ) | $ | (159,335 | ) | |||
Non-GAAP diluted net loss per share | $ | (0.09 | ) | $ | (0.52 | ) | $ | (0.54 | ) | $ | (1.15 | ) |
Three months ended | Six months ended | |||||||||||||||
(dollars in thousands) | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||
GAAP gross profit | $ | 105,632 | $ | 93,002 | $ | 174,198 | — | $ | 152,716 | |||||||
Stock-based compensation | 415 | 412 | 910 | 769 | ||||||||||||
Acquisition-related costs | 1,195 | 222 | 2,430 | 444 | ||||||||||||
Restructuring costs | 25 | — | 418 | 364 | ||||||||||||
Non-GAAP gross profit | $ | 107,267 | $ | 93,636 | $ | 177,956 | $ | 154,293 | ||||||||
GAAP gross profit as a % of revenue | 35.6 | % | 42.1 | % | 33.8 | % | 37.8 | % | ||||||||
Stock-based compensation | 0.1 | 0.2 | 0.2 | 0.2 | ||||||||||||
Acquisition-related costs | 0.4 | 0.1 | 0.4 | 0.1 | ||||||||||||
Restructuring costs | 0.1 | — | 0.1 | 0.1 | ||||||||||||
Non-GAAP gross profit as a % of revenue | 36.2 | % | 42.4 | % | 34.5 | % | 38.2 | % | ||||||||
GAAP operating expenses | $ | 130,615 | $ | 202,379 | $ | 287,396 | $ | 383,528 | ||||||||
Stock-based compensation | (10,820 | ) | (16,992 | ) | (23,450 | ) | (32,366 | ) | ||||||||
Acquisition-related costs | (947 | ) | (2,453 | ) | (2,060 | ) | (4,629 | ) | ||||||||
Restructuring costs | (2,331 | ) | — | (14,393 | ) | (6,144 | ) | |||||||||
Non-GAAP operating expenses | $ | 116,517 | $ | 182,934 | $ | 247,493 | $ | 340,389 | ||||||||
GAAP operating loss | $ | (24,983 | ) | $ | (109,377 | ) | $ | (113,198 | ) | $ | (230,812 | ) | ||||
Stock-based compensation | 11,235 | 17,404 | 24,360 | 33,135 | ||||||||||||
Acquisition-related costs | 2,142 | 2,675 | 4,490 | 5,073 | ||||||||||||
Restructuring costs | 2,356 | — | 14,811 | 6,508 | ||||||||||||
Non-GAAP operating loss | $ | (9,250 | ) | $ | (89,298 | ) | $ | (69,537 | ) | $ | (186,096 | ) |
Three months ended | Six months ended | ||||||||||||||
(in thousands) | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||
GAAP net loss | $ | (30,536 | ) | $ | (91,767 | ) | $ | (141,686 | ) | $ | (199,226 | ) | |||
Income tax expense (benefit) | 1,991 | (16,950 | ) | 24,273 | (31,233 | ) | |||||||||
Interest expense (income), net | 3,652 | 117 | 4,413 | (217 | ) | ||||||||||
Depreciation and amortization | 11,467 | 9,482 | 23,160 | 17,805 | |||||||||||
POP display amortization | 4,955 | 4,957 | 10,120 | 9,700 | |||||||||||
Stock-based compensation | 11,235 | 17,404 | 24,360 | 33,135 | |||||||||||
Restructuring costs | 2,356 | — | 14,811 | 6,508 | |||||||||||
Adjusted EBITDA | $ | 5,120 | $ | (76,757 | ) | $ | (40,549 | ) | $ | (163,528 | ) |
(in thousands) | Q3 2017 | Full year 2017 | ||||
GAAP operating expenses | $ 130,000 - $ 133,000 | $ | 570,000 | |||
Estimated adjustments for: | ||||||
Stock-based compensation | 13,500 | 55,000 | ||||
Acquisition-related costs | 1,500 | 4,000 | ||||
Restructuring costs | 1,000 | 16,000 | ||||
Non-GAAP operating expenses | $ 115,000 - $ 117,000 | $ | 495,000 |
Q3 2017 | ||
GAAP net loss per share | $ (0.29) - $ (0.19) | |
Estimated adjustments for: | ||
Stock-based compensation | 0.10 | |
Acquisition-related costs | 0.02 | |
Restructuring costs | 0.01 | |
Non-cash interest expense | 0.01 | |
Income tax adjustments | 0.04 | |
Non-GAAP net loss per share | $ (0.11) - $ (0.01) |
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