GoPro Announces First Quarter 2019 Results
SAN MATEO, Calif., May 9, 2019 /PRNewswire/ -- GoPro, Inc. (NASDAQ: GPRO) announced financial results for its first quarter ended March 31, 2019.
"GoPro grew first quarter revenue 20% year-over-year thanks to strong global demand for our products," said founder and CEO Nicholas Woodman. "We are innovating in all areas of our business and driving disciplined expense and inventory management. We believe this, combined with the release of exciting new products, will drive continued growth and as a result we are raising revenue and full-year non-GAAP profitability guidance for 2019."
Recent GoPro Highlights
-- Revenue for Q1 2019 was $243 million, up 20% year-over-year. Excluding
our aerial business, revenue would have increased 27% year-over-year.
-- GAAP gross margin for Q1 2019 was 33%, up from 22% in the same period a
year ago. Non-GAAP gross margin for Q1 2019 was 34%, up from 24% in the
same period a year ago.
-- Q1 2019 GAAP net loss was $24 million, or a $0.17 loss per share.
Non-GAAP net loss was $10 million, or a $0.07 loss per share.
-- GoPro reduced Q1 2019 GAAP and non-GAAP operating expenses by $19
million and $3 million, a year-over-year reduction of 16% and 3%,
respectively.
-- Cash and investments totaled $133 million at the end of Q1 2019.
-- GoPro.com represented over 10% of revenue in Q1 2019, growing 90%
year-over-year.
-- GoPro's Plus subscription service surpassed 220,000 active paying
subscribers as of May 8, 2019, up over 10% since our Q4 2018 Earnings
Release dated February 6, 2019, and up more than 50% year-over-year.
-- In the US, GoPro captured 89% unit share and 97% dollar share of the
action camera category in Q1 2019, up from 86% and 95%, respectively,
year-over-year according to the NPD Group. HERO7 Black was the No. 1
selling camera in all of digital imaging by unit volume, and GoPro's
three HERO7 cameras were the top-three selling action cameras according
to the NPD Group.
-- In Europe, in the $199 and above price band, GoPro held 86% unit and
dollar share in Q1 2019, up slightly from 85% and 84%, respectively,
year-over-year. Three out of the top-five action cameras sold by unit
volume were GoPro cameras according to GfK.
-- Within the APAC region - China, Japan, Korea and Thailand - Q1 2019
sell-through grew in aggregate by 11% on a dollar basis year-over-year,
according to GfK.
-- Organic viewership of GoPro content achieved an all-time quarterly high
in Q1 2019 with 173 million organic, non-paid views.
-- Social followers increased by 1.3 million in Q1 2019 to approximately 40
million, driven primarily by increases on Instagram and YouTube.
-- GoPro won Shorty Awards for "Best Overall Presence on Instagram," and
"Best User-Generated Content" for its Million Dollar Challenge Campaign.
-- GoPro's YouTube channel surpassed 2 billion lifetime views on April 27.
Viewers have now watched nearly eight thousand years of GoPro content.
Results Summary:
Three months ended March 31,
($ in thousands, except per share amounts) 2019 2018 % Change
Revenue $
242,708 $
202,346 19.9
%
Gross margin
GAAP 33.1
% 22.2
% 1,090
bps
Non-GAAP 34.2
% 24.3
% 990
bps
Operating loss
GAAP $
(20,288) $
(74,739) (72.9)
%
Non-GAAP $
(8,118) $
(44,520) (81.8)
%
Net loss
GAAP $
(24,365) $
(76,347) (68.1)
%
Non-GAAP $
(10,171) $
(47,364) (78.5)
%
Diluted net loss per share
GAAP $
(0.17) $
(0.55) (69.1)
%
Non-GAAP $
(0.07) $
(0.34) (79.4)
%
Adjusted EBITDA $
(1,035) $
(34,537) (97.0)
%
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 (800) 263-0877 or (323) 994-2131, access code 5900967, 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 https://investor.gopro.com. A recording of the webcast will be available on GoPro's website, https://investor.gopro.com, approximately two hours after the call and for 90 days thereafter.
About GoPro, Inc. (NASDAQ: GPRO)
GoPro helps the world capture and share itself in immersive and exciting ways.
GoPro, HERO and their respective logos are trademarks or registered trademarks of GoPro, Inc. in the United States and other countries.
For more information, visit www.gopro.com. GoPro users can submit their photos, raw clips and video edits to GoPro Awards for social stoke, GoPro gear and cash prizes. Learn more at www.gopro.com/awards. Connect with GoPro on Facebook, Instagram, LinkedIn, Pinterest, Twitter, YouTube, and GoPro's blog 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 and other related costs, non-cash interest expense, gain on sale and license of intellectual property and the tax impact of these items. When planning, forecasting and analyzing gross margin, operating expenses, other income (expense), tax expense, net income and net income (loss) per share for future periods, GoPro does so primarily on a non-GAAP basis without preparing a GAAP analysis as that would require estimates for reconciling items which are inherently difficult to predict with reasonable accuracy.
Note on Forward-looking Statements
This press release may contain projections or other forward-looking statements within the meaning Section 27A of the Private Securities Litigation Reform Act. Words such as "anticipate," "believe," "estimate," "expect," "intend," "should," "will" and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements in this presentation may include, but are not limited to planned growth and increased profitability in 2019. 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; our ability to continue to focus on expense management; the fact that our future growth depends in part on further penetrating our addressable market and growing internationally, and we may not be successful in doing so; any inability to successfully manage frequent product introductions (including roadmap for new hardware, software and subscription products) 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, and subscription services for substantially all of our revenue (and the effects of changes in the sales mix or decrease in demand for these products); the fact that an economic downturn or economic uncertainty in our key U.S. and international markets may adversely affect consumer discretionary spending; any changes to trade policies, tariffs, and import/export regulations; the effects of transferring most U.S.-bound production out of China; the effects of the highly competitive market in which we operate, including new market entrants; 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, 2018, and as updated in future filings with the SEC including the Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, each of which are 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 March 31,
(in thousands, except per share data) 2019 2018
---
Revenue $
242,708 $
202,346
Cost of revenue 162,361 157,430
Gross profit 80,347 44,916
Operating expenses:
Research and development 37,464 50,979
Sales and marketing 47,290 49,170
General and administrative 15,881 19,506
Total operating expenses 100,635 119,655
Operating loss (20,288) (74,739)
Other income (expense):
Interest expense (4,527) (4,567)
Other income, net 828 177
Total other expense, net (3,699) (4,390)
Loss before income taxes (23,987) (79,129)
Income tax (benefit) expense 378 (2,782)
Net loss $
(24,365) $
(76,347)
Basic and diluted net loss per share $
(0.17) $
(0.55)
Weighted-average number of shares outstanding, basic and diluted 142,601 137,857
GoPro, Inc.
Preliminary Condensed Consolidated Balance Sheets
(unaudited)
(in thousands) March 31, December 31,
2019 2018
---
Assets
Current assets:
Cash and cash
equivalents $
86,941 $
152,095
Marketable securities 46,319 45,417
Accounts receivable,
net 117,822 129,216
Inventory 118,970 116,458
Prepaid expenses and
other current assets 26,402 30,887
Total current assets 396,454 474,073
Property and equipment,
net 42,680 46,567
Operating lease right-
of-use assets 57,469
Intangible assets, net
and goodwill 157,442 159,524
Other long-term assets 16,793 18,195
Total assets $
670,838 $
698,359
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $
91,757 $
148,478
Accrued expenses and
other current
liabilities 117,290 135,892
Short-term operating
lease liabilities 10,862
Deferred revenue 14,065 15,129
Total current
liabilities 233,974 299,499
Long-term debt 141,342 138,992
Long-term operating
lease liabilities 73,887
Other long-term
liabilities 23,079 47,756
Total liabilities 472,282 486,247
Stockholders' equity:
Common stock and
additional paid-in
capital 905,625 894,755
Treasury stock, at cost (113,613) (113,613)
Accumulated deficit (593,456) (569,030)
Total stockholders'
equity 198,556 212,112
Total liabilities and
stockholders' equity $
670,838 $
698,359
GoPro, Inc.
Preliminary Condensed Consolidated Statement of Cash Flows
(unaudited)
Three months ended March 31,
(in thousands) 2019 2018
---
Operating activities:
Net loss $
(24,365) $
(76,347)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and
amortization 6,850 8,907
Amortization of leased
assets 2,626
Stock-based
compensation 9,785 10,823
Deferred income taxes (38) (593)
Non-cash restructuring
charges (201) 2,933
Non-cash interest
expense 2,142 1,934
Other (329) 272
Net changes in
operating assets and
liabilities (61,454) (45,041)
Net cash used in
operating activities (64,984) (97,112)
Investing activities:
Purchases of property
and equipment, net (724) (6,782)
Purchases of marketable
securities (6,948) (14,896)
Maturities of
marketable securities 4,400 20,000
Sale of marketable
securities 1,889
Net cash used in
investing activities (1,383) (1,678)
Financing activities:
Proceeds from issuance
of common stock 3,812 3,210
Taxes paid related to
net share settlement
of equity awards (2,673) (2,402)
Net cash provided by
financing activities 1,139 808
Effect of exchange rate
changes on cash and
cash equivalents 74 465
Net change in cash and
cash equivalents (65,154) (97,517)
Cash and cash
equivalents at
beginning of period 152,095 202,504
Cash and cash
equivalents at end of
period $
86,941 $
104,987
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), diluted net income (loss) per share and adjusted EBITDA. We also provide forecasts of non-GAAP gross margin, non-GAAP operating expenses, non-GAAP other income (expense), non-GAAP tax expense, non-GAAP net income (loss) and non-GAAP diluted net income (loss) per share. We use these non-GAAP financial measures to help us understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short-term and long-term operational plans. Our management uses, and believes that investors benefit from referring to these non-GAAP financial measures in assessing our operating results. These non-GAAP financial measures should not be considered in isolation from, or as an alternative to, the measures prepared in accordance with GAAP, and are not based on any comprehensive set of accounting rules or principles. 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.
These non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. Some of these limitations are:
-- adjusted EBITDA does not reflect tax payments that reduce cash available
to us;
-- adjusted EBITDA excludes depreciation and amortization and, although
these are non-cash charges, the property and equipment being depreciated
and amortized often will have to be replaced in the future, and adjusted
EBITDA does not reflect any cash capital expenditure requirements for
such replacements;
-- adjusted EBITDA excludes the amortization of POP display assets because
it is a non-cash charge, and is treated similarly to depreciation of
property and equipment and amortization of acquired intangible assets;
-- adjusted EBITDA and non-GAAP net income (loss) exclude the impairment of
intangible assets because it is a non-cash charge that is inconsistent
in amount and frequency;
-- adjusted EBITDA and non-GAAP net income (loss) exclude restructuring and
other related costs which primarily include severance-related costs,
stock-based compensation expenses, facilities consolidation charges
recorded in connection with restructuring actions announced in the
fourth quarter of 2016, first quarter of 2017 and first quarter of 2018,
and the related ongoing operating lease cost of those facilities
recorded under Accounting Standards Codification 842, Leases. These
expenses do not reflect expected future operating expenses and do not
contribute to a meaningful evaluation of current operating performance
or comparisons to the operating performance in other periods;
-- adjusted EBITDA and non-GAAP net income (loss) exclude stock-based
compensation expense related 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;
-- non-GAAP net income (loss) excludes acquisition-related costs including
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;
-- non-GAAP net income (loss) excludes non-cash interest expense. In
connection with the 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;
-- non-GAAP net income (loss) excludes a gain on the sale and license of
intellectual property. This gain is not related to our core operating
performance or reflective of ongoing operating results in the period,
and the frequency and amount of such gains are inconsistent;
-- non-GAAP net income (loss) includes income tax adjustments. Beginning in
the first quarter of 2017, we 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; and
-- other companies may calculate these non-GAAP financial measures
differently than we do, limiting their usefulness as comparative
measures.
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 March 31,
(in thousands, except per share data) 2019 2018
---
GAAP net loss $
(24,365) $
(76,347)
Stock-based compensation:
Cost of revenue 513 382
Research and development 4,677 5,005
Sales and marketing 2,213 2,747
General and administrative 2,382 2,689
Total stock-based compensation 9,785 10,823
Acquisition-related costs:
Cost of revenue 2,082 2,655
General and administrative - 3
Total acquisition-related costs 2,082 2,658
Restructuring and other costs:
Cost of revenue 16 1,239
Research and development 97 9,599
Sales and marketing 103 3,618
General and administrative 87 2,282
Total restructuring and other costs 303 16,738
Non-cash interest expense 2,142 1,934
Income tax adjustments (118) (3,170)
Non-GAAP net loss $
(10,171) $
(47,364)
GAAP and non-GAAP shares for diluted net loss per share 142,601 137,857
Non-GAAP diluted net loss per share $
(0.07) $
(0.34)
Three months ended March 31,
(dollars in thousands) 2019 2018
---
GAAP gross profit $
80,347 $
44,916
Stock-based compensation 513 382
Acquisition-related costs 2,082 2,655
Restructuring and other costs 16 1,239
Non-GAAP gross profit $
82,958 $
49,192
GAAP gross profit as a % of revenue 33.1
% 22.2
%
Stock-based compensation 0.2 0.2
Acquisition-related costs 0.9 1.3
Restructuring and other costs - 0.6
Non-GAAP gross profit as a % of revenue 34.2
% 24.3
%
===
GAAP operating expenses $
100,635 $
119,655
Stock-based compensation (9,272) (10,441)
Acquisition-related costs - (3)
Restructuring and other costs (287) (15,499)
Non-GAAP operating expenses $
91,076 $
93,712
GAAP operating loss $
(20,288) $
(74,739)
Stock-based compensation 9,785 10,823
Acquisition-related costs 2,082 2,658
Restructuring and other costs 303 16,738
Non-GAAP operating loss $
(8,118) $
(44,520)
Three months ended March 31,
(in thousands) 2019 2018
---
GAAP net loss $
(24,365) $
(76,347)
Income tax (benefit) expense 378 (2,782)
Interest expense, net 4,083 4,212
Depreciation and amortization 6,850 8,907
POP display amortization 1,931 3,912
Stock-based compensation 9,785 10,823
Restructuring and other costs 303 16,738
Adjusted EBITDA $
(1,035) $
(34,537)
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SOURCE GoPro, Inc.
