GoPro Announces Second Quarter 2015 Results

Revenue of $420 Million, Up 72% Year-Over-Year

Non-GAAP EPS of $0.35, Up from $0.08 a Year Earlier

GoPro Now Sold in More than 40,000 Stores Worldwide

Jul 21, 2015, 16:05 ET from GoPro, Inc.

SAN MATEO, Calif., July 21, 2015 /PRNewswire/ -- GoPro, Inc. (NASDAQ: GPRO), maker of the world's most versatile camera and enabler of some of today's most immersive and engaging content, today announced financial results for its second quarter ended June 30, 2015.

Second Quarter Results Summary:

Three Months Ended

($ in thousands, except per share amounts)

June 30, 2015

June 30, 2014

% Change

Revenue

$

419,919

$

244,605

71.7

%

Gross margin

GAAP

46.3

%

42.1

%

420 bps

Non-GAAP

46.4

%

42.2

%

420 bps

Operating income (loss)

GAAP

$

46,138

$

(16,666)

376.8

%

Non-GAAP

$

65,845

$

17,803

269.9

%

Net income (loss)

GAAP

$

35,031

$

(19,841)

276.6

%

Non-GAAP

$

50,715

$

11,774

330.7

%

Diluted net income (loss) per share

GAAP

$

0.24

$

(0.24)

200.0

%

Non-GAAP

$

0.35

$

0.08

337.5

%

Adjusted EBITDA

$

75,349

$

25,724

192.9

%

"I couldn't be more proud of our aggressive pace of innovation. With the introduction of HERO4 Session and HERO+ LCD, we've launched five new cameras in the past 10 months, exciting both new and existing customers and contributing to strong second quarter results," said GoPro Founder and CEO, Nicholas Woodman. "Our core business is enjoying terrific momentum as we charge forward into attractive adjacent markets."

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 net income excludes, where applicable, the effects of stock-based compensation, acquisition-related 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.

Second Quarter 2015 and Recent GoPro Highlights Include:

  • Launched HERO4 Session featuring simple one-button control and an exciting new form factor 50% smaller and 40% lighter than other HERO4 cameras. Innovative, water-proof design eliminates the need for a separate housing, reducing complexity and vastly improving audio performance.
  • Introduced HERO+ LCD, adding touch screen convenience, in-camera video trimming and Wi-Fi/Bluetooth integration to the entry-level camera line-up.
  • Released new accessories including the Ball Joint Buckle and Floaty for HERO4 Session and The Strap, The Jam, and Casey to enhance the versatility of GoPro products.
  • GoPro products are now sold in more than 40,000 stores worldwide, reflecting the addition of new retail customers, increased store counts with existing customers, and international expansion.
  • According to NPD, GoPro accounted for 4 of the top 5 products on a unit basis in the combined digital camera and camcorder category, in the US for Q2. In the same category, on a dollar basis, GoPro capture devices accounted for 3 of the top 5 products. GoPro was also the leader in accessory unit sales with 8 of the top 10 selling accessories.
  • Increased shipments of Point-of-Purchase (POP) displays by over 40%; linear feet of new POP displays increased over 75% for the first six months of 2015, year-over-year.
  • International sales totaled more than 50% of Q2 revenue; combined EMEA and APAC revenue was up 126% year-over-year. China is now a top ten revenue-generating country for GoPro.
  • Announced a GoPro-branded quad-copter to debut in the first half of 2016. Also announced a Six-Camera Spherical Array for shooting virtual reality and Odyssey, a 16-Camera Array unveiled in partnership with Google's Jump initiative.
  • GoPro is the official camera of the Tour de France. GoPros are mounted on riders and their bikes, providing never-before-seen perspectives on the world's most prestigious cycling race.
  • GoPro Motorrad Grand Prix of Deutschland viewed live by more than 9 million people across Europe; millions more viewed the broadcast in other countries. Each GoPro Course Preview video generated more than a half million views each.
  • The GoPro Mobile App was downloaded 2.5 million times in Q2, totaling over 18 million cumulative downloads; Q2 installs of GoPro Studio exceeded 1.7 million, up over 100% year-over-year.
  • Unveiled GoPro Licensing, a content licensing portal that professionals can use to search, sort, and request a license to content from GoPro's rapidly growing library.

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) 211-7384 or (913) 312-0418, access code 5992228, approximately 15 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. To access the live webcast, please log in 15 minutes prior to the start of the call to download and install any necessary audio software. 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 six months thereafter.

About GoPro, Inc. (NASDAQ: GPRO):

GoPro, Inc. is transforming the way people capture and share their lives. What began as an idea to help athletes self-document themselves engaged in their sport has become a widely adopted solution for people to 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. And in turn, the world has helped GoPro become one of the most exciting and aspirational companies of our time.

For more information, visit www.gopro.com or connect with GoPro on YouTube, Twitter, Facebook, Pinterest, and LinkedIn.

GOPRO® and HERO® are trademarks or registered trademarks of GoPro, Inc. in the United States and other countries.

Note on Forward-looking Statements

This press release may contain projections or other forward-looking statements regarding future events. 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 effects of the highly competitive market in which we operate; our dependence on sales of our capture devices for substantially all of our revenue; our reliance on third-party suppliers, some of which are sole-source suppliers, to provide components for our products; the fact that we do not expect to continue to grow in the future at the same rate as we have in the past, and profitability in recent periods might not be indicative of future performance; difficulty in accurately predicting our future customer demand; the importance of maintaining the value and reputation of our brand; any inability to successfully manage frequent product introductions and transitions; the effects of international business uncertainties; our reliance on our Chief Executive Officer; and other factors detailed in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2014, 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.

Investor Contact:
Peter Salkowski (855) GOPROHD or (855) 467-7643
investor@gopro.com

Media Contact:
Jeff Brown (650) 332-7600 x 9997

 

 GoPro, Inc.

 Preliminary Condensed Consolidated Statement of Operations

 (unaudited)



Three months ended


Six months ended

(in thousands, except per share data)

June 30,
 2015


June 30,
 2014


June 30,
 2015


June 30,
 2014









Revenue

$

419,919



$

244,605



$

783,028



$

480,321


Cost of revenue

225,579



141,736



424,955



280,938


Gross profit

194,340



102,869



358,073



199,383










Operating expenses:








Research and development

58,453



34,663



107,890



63,402


Sales and marketing

63,494



43,701



119,863



85,042


General and administrative

26,255



41,171



61,914



51,049


   Total operating expenses

148,202



119,535



289,667



199,493


Operating income (loss)

46,138



(16,666)



68,406



(110)


Other income (expense), net

122



(1,536)



(2,122)



(3,161)


Income (loss) before income taxes

46,260



(18,202)



66,284



(3,271)


Income tax expense

11,229



1,639



14,501



5,521


Net income (loss)

$

35,031



$

(19,841)



$

51,783



$

(8,792)










Net income (loss) per share attributable to common stockholders:








Basic

$

0.26



$

(0.24)



$

0.39



$

(0.11)


Diluted

$

0.24



$

(0.24)



$

0.35



$

(0.11)










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








Basic

133,150



82,936



132,716



82,263


Diluted

146,781



82,936



147,720



82,263


 


 GoPro, Inc.

 Preliminary Condensed Consolidated Balance Sheets

 (unaudited)


(in thousands)

June 30,
 2015


December 31,
 2014





Assets




Current assets:




Cash and cash equivalents

$

338,031



$

319,929


Marketable securities

178,953



102,327


Accounts receivable, net

118,551



183,992


Inventory

219,272



153,026


Prepaid expenses and other current assets

80,636



63,769


   Total current assets

935,443



823,043


Property and equipment, net

52,252



41,556


Intangible assets and goodwill

78,524



17,032


Other long-term assets

45,313



36,060


   Total assets

$

1,111,532



$

917,691






Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable

$

156,450



$

126,240


Accrued liabilities

133,442



115,775


Deferred revenue

13,298



14,022


Income taxes payable

4,691



2,732


   Total current liabilities

307,881



258,769


Other long-term liabilities

20,678



17,718


   Total liabilities

328,559



276,487






Stockholders' equity:




Common stock and additional paid-in capital

622,986



533,000


Retained earnings

159,987



108,204


   Total stockholders' equity

782,973



641,204


   Total liabilities and stockholders' equity

$

1,111,532



$

917,691






 


 GoPro, Inc.

 Preliminary Condensed Consolidated Statement of Cash Flows

 (unaudited)



Three months ended


Six months ended

(in thousands)

June 30,
 2015


June 30,
 2014


June 30,
 2015


June 30,
 2014









Operating activities:








Net income (loss)

$

35,031



$

(19,841)



$

51,783



$

(8,792)


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








Depreciation and amortization

6,422



4,177



11,791



7,988


Stock-based compensation

18,189



34,193



44,690



38,230


Foreign currency remeasurement and transaction losses

(604)





1,586




Deferred taxes

(5,066)



(469)



(6,656)



(799)


Other

731



51



1,370



298


Changes in operating assets and liabilities:








Accounts receivable, net

(12,122)



(1,920)



65,562



73,439


Inventory

(55,028)



9,810



(66,045)



31,617


Prepaids and other assets

(23,049)



(40,572)



(21,598)



(39,504)


Accounts payable and other liabilities

100,399



936



50,382



(96,106)


Deferred revenue

971



(530)



(724)



378


Net cash provided by (used in) operating activities

65,874



(14,165)



132,141



6,749










Investing activities:








Purchases of property and equipment

(16,062)



(7,668)



(21,269)



(12,369)


Purchases of marketable securities

(32,958)





(112,326)




Sales and maturities of marketable securities

21,943





34,446




Acquisitions, net of cash acquired

(52,606)





(57,706)



(3,200)


Net cash used in investing activities

(79,683)



(7,668)



(156,855)



(15,569)










Financing activities:








Proceeds from issuance of common stock, net of repurchases

9,176



(13)



21,501



509


Taxes paid related to net share settlement of equity awards

(3,041)





(4,362)




Excess tax benefit from stock-based compensation

22,072



20,767



28,139



20,836


Payment of deferred public offering and debt issuance costs



(2,257)



(903)



(3,056)


Repayment of debt



(3,000)





(6,000)


Net cash provided by financing activities

28,207



15,497



44,375



12,289


Effect of exchange rate changes on cash and cash equivalents

468





(1,559)




    Net increase (decrease) in cash and cash equivalents

14,866



(6,336)



18,102



3,469


Cash and cash equivalents at beginning of period

323,165



111,215



319,929



101,410


Cash and cash equivalents at end of period

$

338,031



$

104,879



$

338,031



$

104,879










 


 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,
 2015


June 30,
 2014


June 30,
 2015


June 30,
 2014









GAAP net income (loss)

$

35,031



$

(19,841)



$

51,783



$

(8,792)


Stock-based compensation:








Cost of revenue

350



154



633



322


Research and development

3,710



1,657



7,245



3,058


Sales and marketing

2,932



1,654



5,998



3,068


General and administrative

11,197



30,728



30,814



31,782


   Total stock-based compensation

18,189



34,193



44,690



38,230










Acquisition-related costs:








Cost of revenue

295



222



517



444


Research and development

612



20



699



40


Sales and marketing

33



34



66



76


General and administrative

578





578




   Total acquisition-related costs

1,518



276



1,860



560










Income tax adjustments

(4,023)



(2,854)



(11,999)



(3,942)


Non-GAAP net income

$

50,715



$

11,774



$

86,334



$

26,056










GAAP shares for diluted net income per share

146,781



82,936



147,720



82,263


    Add: dilutive shares



17,345





18,273


    Add: preferred shares conversion



30,523





30,523


    Add: initial public offering shares



8,900





8,900


Non-GAAP shares for diluted net income per share

146,781



139,704



147,720



139,959










Non-GAAP diluted net income per share

$

0.35



$

0.08



$

0.58



$

0.19


 

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, operating expenses, operating income, net income, earnings per share and adjusted EBITDA.  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 developed technology, and 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.
  • Adjustment for taxes relates 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. We believe that these adjustments provide us with the ability to more clearly view trends in our core operating performance.
  • Adjustment to shares includes the conversion of the redeemable convertible preferred stock into shares of common stock as though the conversion had occurred at the beginning of the period and the initial public offering shares issued July 2014, as if they had been outstanding since the beginning of the period.

Reconciliations of non-GAAP financial measures are set forth below ($ in thousands):

 


Three months ended


Six months ended

(dollars in thousands)

June 30,
 2015


June 30,
 2014


June 30,
 2015


June 30,
 2014

GAAP gross profit

$

194,340



$

102,869



$

358,073



$

199,383


Stock-based compensation

350



154



633



322


Acquisition-related costs

295



222



517



444


Non-GAAP gross profit

$

194,985



$

103,245



$

359,223



$

200,149










GAAP gross profit as a % of revenue

46.3

%


42.1

%


45.7

%


41.5

%

Stock-based compensation

0.1





0.1



0.1


Acquisition-related costs



0.1



0.1



0.1


Non-GAAP gross profit as a % of revenue

46.4

%


42.2

%


45.9

%


41.7

%









GAAP operating expenses

$

148,202



$

119,535



$

289,667



$

199,493


Stock-based compensation

(17,839)



(34,039)



(44,057)



(37,908)


Acquisition-related costs

(1,223)



(54)



(1,343)



(116)


Non-GAAP operating expenses

$

129,140



$

85,442



$

244,267



$

161,469










GAAP operating income (loss)

$

46,138



$

(16,666)



$

68,406



$

(110)


Stock-based compensation

18,189



34,193



44,690



38,230


Acquisition-related costs

1,518



276



1,860



560


Non-GAAP operating income

$

65,845



$

17,803



$

114,956



$

38,680










GAAP operating income (loss) as a % of revenue

11.0

%


(6.8)

%


8.7

%


%

Stock-based compensation

4.3



14.0



5.7



8.0


Acquisition-related costs

0.4



0.1



0.3



0.1


Non-GAAP operating income as a % of revenue

15.7

%


7.3

%


14.7

%


8.1

%









 



Three months ended


Six months ended

(in thousands)

June 30,
 2015


June 30,
 2014


June 30,
 2015


June 30,
 2014

GAAP net income (loss)

$

35,031



$

(19,841)



$

51,783



$

(8,792)


Income tax expense

11,229



1,639



14,501



5,521


Interest income and expense

155



1,390



220



2,725


Depreciation and amortization

6,422



4,177



11,791



7,988


POP display amortization

4,323



4,166



8,871



8,679


Stock-based compensation

18,189



34,193



44,690



38,230


Adjusted EBITDA

$

75,349



$

25,724



$

131,856



$

54,351










 

SOURCE GoPro, Inc.



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