GoPro Announces Second Quarter 2017 Results
SAN MATEO, Calif., Aug. 3, 2017 /PRNewswire/ -- GoPro, Inc. (NASDAQ: GPRO) announced financial results for its second quarter ended June 30, 2017.
"GoPro is building momentum," said Founder and CEO Nicholas Woodman. "Strong demand combined with our cost management and margin initiatives contributed to GoPro's EBITDA positive performance in the second quarter. HERO6 and Fusion, our 5.2K spherical camera, are on course to launch later this year and we continue to track toward our goal of full-year, non-GAAP profitability in 2017."
Recent GoPro Highlights:
-- 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 $300 was up 13% year-over-year, including 7% in
EMEA and 194% in Japan. According to GfK, camera unit sales in Japan are
up 164% and dollar sales are up 147% year-over-year in the second
quarter.
-- HERO5 Black was the best-selling digital image camera in the U.S. in the
second quarter, according to The NPD Group's Retail Tracking Service.
-- More than 50% of GoPro's revenue was generated in markets outside of the
U.S. in the second quarter.
-- Demand for GoPro was high on Amazon Prime Day (July 11). A HERO Session
bundle sold more than ten-times the weekly run-rate; HERO5 Black was
offered with no discount and moved the equivalent of a full week of
normal sell-thru in just one day.
-- The Quik mobile video editing app was installed 5.6 million times in the
second quarter, a year-over-year increase of 84%. Second quarter monthly
active users were up 112% year-over-year. China represents Quik's second
largest user base globally. Capture App (now the GoPro App) total
monthly shares in the second quarter were up over 30% year-over-year.
-- GoPro gained 1.6 million new social media followers in the second
quarter. Instagram followers were up 39% year-over-year to 13.7 million
in the second quarter, with a 94% increase in international followers.
Facebook video views of GoPro content reached 58.3 million in the first
half of 2017, up almost 60% year-over-year. YouTube videos of GoPro
content in the first half of 2017 have seen a 65% increase in median
organic viewership per video year-over-year.
-- GoPro was honored with the prestigious Red Dot design award, taking
Best-of-the-Best in Product Design for both Karma and HERO5 Black.
-- GoPro's drone, Karma, was the #2 selling drone brand in the U.S. in the
second quarter, according to the NPD Group's Retail Tracking Service.
Results Summary:
Three Months Ended June 30,
($ 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)%
Business Outlook
GoPro is providing the following guidance:
-- 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
Upcoming Event
Management will participate in an investor conference on September 7, 2017 in New York. 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 (877) 681-3376 or (719) 325-2452, access code 7396825, 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 makes it easy for people to celebrate and share experiences. We believe life is more meaningful when shared. We build cameras, software and accessories that help the world share itself in immersive and exciting ways.
GoPro, HERO, Karma, Quik, QuikStories 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 Facebook, Instagram, LinkedIn, Pinterest, Twitter, YouTube, and GoPro's The Inside Line.
For more information, visit www.gopro.com or connect with GoPro on Facebook, Instagram, 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, gross margin, 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. Additionally, GoPro reports non-GAAP adjusted EBITDA. Non-GAAP items exclude, where applicable, the effects of stock-based compensation, acquisition-related costs, restructuring costs, non-cash interest expense and the tax impact of these items. 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, gross margin, operating expenses on a GAAP and non-GAAP basis and Adjusted EBITDA.
Note on Forward-looking Statements
This press release may contain projections or other forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements in this press release include, but are not limited to, expectations regarding our business outlook for the third quarter of 2017 and calendar year 2017. 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 the risk that our reduction in operating expenses may impact our ability to meet our business objectives and achieve our revenue targets and may not result in the expected improvement in our profitability, the fact that our future growth depends in part on further penetrating our addressable market and also growing internationally, and we may not be successful in doing so; any inability to successfully manage frequent product introductions (including our 2017 roadmap for new hardware and software products including major new software features) and transitions, including managing our sales channel and inventory and accurately forecasting future sales; our reliance on third party suppliers, some of which are sole source suppliers, to provide components for our products; our dependence on sales of our cameras, mounts and accessories for substantially all of our revenue; the effect of a decrease in the sales or change in sales mix of these products; the effect of a decrease in sales during the holiday season; the fact that an economic downturn or economic uncertainty in our key U.S. and international markets may adversely affect consumer discretionary spending and demand for our products; any inability to anticipate consumer preferences and successfully develop and market desirable products; the risks associated with the entrance into the consumer drone market and the re-launch of our drone in February 2017; the effects of the highly competitive market in which we operate; the fact that we may not be able to achieve revenue growth or profitability in the future; 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, 2016, which is on file with the Securities and Exchange Commission and as supplemented by Item 1A Risk Factors in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017. 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, 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
GoPro, Inc.
Preliminary Condensed Consolidated Balance Sheets
(unaudited)
(in
thousands) June 30, December 31,
2017 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
======== ========
GoPro, Inc.
Preliminary Condensed Consolidated Statement of Cash Flows
(unaudited)
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
======== ======== ======== ========
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, non-GAAP operating expenses, non-GAAP net income (loss) 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 other charges 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 (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-term operations. Historically, we computed a non-GAAP tax rate
based on non-GAAP pre-tax income on a quarterly basis, which considered
the income tax effects of the adjustments above.
-- 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.
GoPro, Inc.
Reconciliation of Preliminary GAAP to Non-GAAP Financial Measures
(unaudited)
Reconciliations of non-GAAP financial measures are set forth below:
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)
====== ======== ======== =========
Reconciliations of non-GAAP financial measures for business outlook are set forth below:
(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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SOURCE GoPro, Inc.
