Sell-Thru Outpaced Sell-in, Channel and GoPro
Inventory Down SequentiallyHERO4 Session Now The #2 Best Selling
Digital Image Device in The U.S. Behind HERO4 SilverReaffirming
Full-Year Revenue Guidance
GoPro, Inc. (NASDAQ:GPRO) announced financial results for its first
quarter ended March 31, 2016.
|
|
Three Months Ended March 31, |
($ in thousands, except
per share amounts) |
|
2016 |
|
2015 |
|
% Change |
|
|
|
|
|
|
|
Revenue |
|
$ |
183,536 |
|
|
$ |
363,109 |
|
|
(49.5 |
)% |
Gross
margin |
|
|
|
|
|
|
GAAP |
|
32.5 |
% |
|
45.1 |
% |
|
(1,260) bps |
Non-GAAP |
|
33.0 |
% |
|
45.2 |
% |
|
(1,220) bps |
Operating
income (loss) |
|
|
|
|
|
|
GAAP |
|
$ |
(121,435 |
) |
|
$ |
22,268 |
|
|
(645.3 |
)% |
Non-GAAP |
|
$ |
(96,798 |
) |
|
$ |
49,111 |
|
|
(297.1 |
)% |
Net income
(loss) |
|
|
|
|
|
|
GAAP |
|
$ |
(107,459 |
) |
|
$ |
16,752 |
|
|
(741.5 |
)% |
Non-GAAP |
|
$ |
(86,740 |
) |
|
$ |
35,619 |
|
|
(343.5 |
)% |
Diluted net
income (loss) per share |
|
|
|
|
|
|
GAAP |
|
$ |
(0.78 |
) |
|
$ |
0.11 |
|
|
(809.1 |
)% |
Non-GAAP |
|
$ |
(0.63 |
) |
|
$ |
0.24 |
|
|
(362.5 |
)% |
Adjusted
EBITDA |
|
$ |
(86,771 |
) |
|
$ |
56,507 |
|
|
(253.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
“Consumer demand for GoPro remains solid,” said
Nicholas Woodman, GoPro Founder and CEO. "Unit sell-thru was close
to first quarter 2015 levels, a quarter which benefited from the
launch of HERO4. Revenue exceeded our guide and, importantly, unit
sell-thru rates were approximately 50% higher than sell-in which
drove global inventory levels down. And while we had to make the
difficult decision to delay our drone, Karma, the upside is that
Karma’s launch should now benefit from the holidays.”
First quarter non-GAAP gross margin was impacted
by charges of approximately $8 million related to legacy products
for excess purchase commitments, inventory write-downs and
marketing development funds. These charges were due to lower sales
estimates for end-of-life HERO products. GoPro has no further
financial exposure remaining from purchase commitments and
inventory related to our end-of-life HERO camera line. Excluding
the charge, our non-GAAP gross margin would have been 36.8%.
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.
Recent GoPro Highlights
Include:
- According to The NPD Group’s Retail Tracking Service, GoPro
accounted for 4 of the top 5 products on a unit basis in the
combined digital camera/camcorder category in the U.S. HERO4 Silver
remains the best-selling digital image camera on a unit and dollar
basis. HERO4 Session moved to the #2 spot from #8 in the fourth
quarter of 2015 on a unit basis in the combined digital
camera/camcorder category in the U.S.
- According to NPD, GoPro’s first quarter combined digital
camera/camcorder unit share in the U.S. increased 150 basis points
year-over-year to 20.9%.
- According to GfK, GoPro’s first quarter digital imaging unit
share in Europe increased 200 basis points year-over-year to 10.5%.
In the first quarter, GoPro accounted for 6 of the top 10
camcorders in Europe on a unit basis.
- International sales totaled more than 50% of total GoPro
revenue in Q1 2016.
- China remained a top ten market for GoPro in the first quarter.
GoPro opened its first retail shop in Tianjin, China. GoPro’s shop
is situated in one of the city’s most popular shopping
streets.
- The GoPro Developer Program is an initiative that provides
GoPro toolkits for developers creating mobile apps that connect
directly to GoPro products. The program launched in April
with 100 partners including BMW, Fisher-Price, Polar, Telefonica,
and Toyota.
- The GoPro Mobile App was downloaded 2.8 million times in the
first quarter, totaling almost 27 million cumulative downloads; Q1
installs of GoPro Studio totaled almost 1.5 million,
totaling nearly 16.5 million cumulative installs, with average
daily video exports up 33.5% year-over-year to over 52,000 in the
first quarter.
- Launched GoPro Director’s Program which invites external video
directors to help expand the notion of what is possible with GoPro
technology.
- Introduced Custom Solutions that integrate GoPro's camera
technology and HEROCast™, GoPro's wireless HD micro transmitter,
into products and systems used in professional productions,
enabling unique, never- before-seen perspectives. Over the past
year GoPro Custom Solutions have been used in professional
productions including: MotoAmerica, MotoGP™, NHL, PGA TOUR and the
GRAMMY Awards.
- Introduced GoPro VR, a platform to view and share immersive
content. The platform allows users to experience the immersive
world of 360˚ video and transforms users' screens into a virtual
portal, showcasing original content from GoPro and a global
community of artists.
- Omni™, a six-camera spherical array, named Best 360-degree
Video Rig at NAB 2016 by Videomaker. GoPro started taking
pre-orders for Omni™ for August delivery.
- Odyssey™ rigs ship to artists and professional film makers.
Odyssey™ is GoPro’s panoramic stereoscopic 16-camera rig optimized
to work with Google’s Jump.
- GoPro extended an agreement with the world’s premiere cycling
event, Tour de France.
Business Outlook:
We continue to estimate our full year 2016 revenue to be in the
range of $1.35 billion to $1.5 billion, in line with the guidance
we provided on February 3, 2016.
Upcoming Events
Management will participate in upcoming investor
conferences on May 24 and June 14 of 2016. GoPro will furnish a
link to these events on its investor relations website,
http://investor.gopro.com/ for both the live and archived
webcasts.
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) 791-4322 or (913) 312-0652, access code
1741031, approximately 10 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, other GoPro Marks, 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 YouTube, Twitter, Facebook, Pinterest,
Instagram and LinkedIn.
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 investor relations and The Inside Line website, and GoPro’s
pages on YouTube, Twitter, Facebook, Pinterest, Instagram, and
LinkedIn.
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 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
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 recent 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 |
(in thousands,
except per share data) |
March 31, 2016 |
|
March 31, 2015 |
|
|
|
|
Revenue |
$ |
183,536 |
|
|
$ |
363,109 |
|
Cost of revenue |
123,822 |
|
|
199,376 |
|
Gross profit |
59,714 |
|
|
163,733 |
|
|
|
|
|
Operating
expenses: |
|
|
|
Research and development |
76,979 |
|
|
49,437 |
|
Sales and marketing |
79,449 |
|
|
56,369 |
|
General and administrative |
24,721 |
|
|
35,659 |
|
Total operating expenses |
181,149 |
|
|
141,465 |
|
Operating income
(loss) |
(121,435 |
) |
|
22,268 |
|
Other expense, net |
(307 |
) |
|
(2,244 |
) |
Income (loss) before
income taxes |
(121,742 |
) |
|
20,024 |
|
Income tax expense
(benefit) |
(14,283 |
) |
|
3,272 |
|
Net income (loss) |
$ |
(107,459 |
) |
|
$ |
16,752 |
|
|
|
|
|
Net income (loss) per
share: |
|
|
|
Basic |
$ |
(0.78 |
) |
|
$ |
0.13 |
|
Diluted |
$ |
(0.78 |
) |
|
$ |
0.11 |
|
|
|
|
|
Weighted-average shares
used to compute net income (loss) per share: |
|
|
|
Basic |
137,543 |
|
|
132,278 |
|
Diluted |
137,543 |
|
|
148,573 |
|
|
|
|
|
|
|
GoPro, Inc.Preliminary
Condensed Consolidated Balance
Sheets(unaudited)
(in
thousands) |
March 31, 2016 |
|
December 31, 2015 |
|
|
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
248,717 |
|
|
$ |
279,672 |
|
Marketable securities |
139,951 |
|
|
194,386 |
|
Accounts receivable, net |
46,519 |
|
|
145,692 |
|
Inventory |
139,736 |
|
|
188,232 |
|
Prepaid expenses and other current
assets |
27,452 |
|
|
25,261 |
|
Total current assets |
602,375 |
|
|
833,243 |
|
Property and equipment,
net |
67,725 |
|
|
70,050 |
|
Intangible assets, net
and goodwill |
131,364 |
|
|
88,122 |
|
Other long-term
assets |
127,465 |
|
|
111,561 |
|
Total assets |
$ |
928,929 |
|
|
$ |
1,102,976 |
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
50,989 |
|
|
$ |
89,989 |
|
Accrued liabilities |
148,309 |
|
|
192,446 |
|
Deferred revenue |
13,847 |
|
|
12,742 |
|
Total current liabilities |
213,145 |
|
|
295,177 |
|
Long-term
liabilities |
36,389 |
|
|
35,766 |
|
Total liabilities |
249,534 |
|
|
330,943 |
|
|
|
|
|
Stockholders’
equity: |
|
|
|
Common stock and additional paid-in
capital |
678,132 |
|
|
663,311 |
|
Treasury stock, at cost |
(35,613 |
) |
|
(35,613 |
) |
Retained earnings |
36,876 |
|
|
144,335 |
|
Total stockholders’ equity |
679,395 |
|
|
772,033 |
|
Total liabilities and stockholders’
equity |
$ |
928,929 |
|
|
$ |
1,102,976 |
|
|
|
|
|
|
|
|
|
GoPro, Inc.Preliminary
Condensed Consolidated Statement of Cash
Flows(unaudited)
|
Three Months Ended |
(in
thousands) |
March 31, 2016 |
|
March 31, 2015 |
Operating
activities: |
|
|
|
Net income (loss) |
$ |
(107,459 |
) |
|
$ |
16,752 |
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities: |
|
|
|
Depreciation and amortization |
8,322 |
|
|
5,369 |
|
Stock-based compensation |
15,731 |
|
|
26,501 |
|
Excess tax benefit from stock-based
compensation |
(690 |
) |
|
(6,067 |
) |
Deferred income taxes |
(10,328 |
) |
|
(1,590 |
) |
Other |
765 |
|
|
2,829 |
|
Net changes in
operating assets and liabilities |
60,394 |
|
|
22,473 |
|
Net cash provided by (used in)
operating activities |
(33,265 |
) |
|
66,267 |
|
|
|
|
|
Investing
activities: |
|
|
|
Purchases of property
and equipment, net |
(8,219 |
) |
|
(5,207 |
) |
Purchases of marketable
securities |
— |
|
|
(79,368 |
) |
Maturities and sales of
marketable securities |
54,229 |
|
|
12,503 |
|
Acquisitions, net of
cash acquired |
(45,040 |
) |
|
(5,100 |
) |
Net cash provided by (used) in
investing activities |
970 |
|
|
(77,172 |
) |
|
|
|
|
Financing
activities: |
|
|
|
Proceeds from issuance
of common stock, net |
4,103 |
|
|
11,004 |
|
Excess tax benefit from
stock-based compensation |
690 |
|
|
6,067 |
|
Payment of deferred
acquisition-related consideration |
(356 |
) |
|
— |
|
Payment of credit
facility issuance costs |
(3,085 |
) |
|
— |
|
Payment of deferred
public offering costs |
— |
|
|
(903 |
) |
Net cash provided by (used in)
financing activities |
1,352 |
|
|
16,168 |
|
Effect of exchange rate
changes on cash and cash equivalents |
(12 |
) |
|
(2,027 |
) |
Net increase (decrease) in cash and
cash equivalents |
(30,955 |
) |
|
3,236 |
|
Cash and cash
equivalents at beginning of period |
279,672 |
|
|
319,929 |
|
Cash and cash
equivalents at end of period |
$ |
248,717 |
|
|
$ |
323,165 |
|
|
|
|
|
GoPro,
Inc.Reconciliation of Preliminary GAAP to Non-GAAP
Financial Measures(unaudited)
|
Three months ended |
(in thousands,
except per share data) |
March 31, 2016 |
|
March 31, 2015 |
|
|
|
|
GAAP net income
(loss) |
$ |
(107,459 |
) |
|
$ |
16,752 |
|
Stock-based
compensation: |
|
|
|
Cost of revenue |
357 |
|
|
283 |
|
Research and development |
6,010 |
|
|
3,535 |
|
Sales and marketing |
3,204 |
|
|
3,066 |
|
General and administrative |
6,160 |
|
|
19,617 |
|
Total stock-based compensation |
15,731 |
|
|
26,501 |
|
|
|
|
|
Acquisition-related
costs: |
|
|
|
Cost of revenue |
222 |
|
|
222 |
|
Research and development |
1,285 |
|
|
87 |
|
Sales and marketing |
22 |
|
|
33 |
|
General and administrative |
869 |
|
|
— |
|
Total acquisition-related
costs |
2,398 |
|
|
342 |
|
|
|
|
|
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 |
(3,918 |
) |
|
(7,976 |
) |
Non-GAAP net
income (loss) |
$ |
(86,740 |
) |
|
$ |
35,619 |
|
|
|
|
|
Non-GAAP
diluted net income (loss) per share |
$ |
(0.63 |
) |
|
$ |
0.24 |
|
|
|
|
|
|
|
|
|
GoPro,
Inc.Reconciliation of 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. 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.
Reconciliations of non-GAAP financial measures are set forth
below:
|
Three months ended |
(dollars in
thousands) |
March 31, 2016 |
|
March 31, 2015 |
GAAP gross
profit |
$ |
59,714 |
|
|
$ |
163,733 |
|
Stock-based
compensation |
357 |
|
|
283 |
|
Acquisition-related
costs |
222 |
|
|
222 |
|
Restructuring
costs |
364 |
|
|
— |
|
Non-GAAP gross
profit |
$ |
60,657 |
|
|
$ |
164,238 |
|
|
|
|
|
GAAP gross
profit as a % of revenue |
32.5 |
% |
|
45.1 |
% |
Stock-based
compensation |
0.2 |
|
|
0.1 |
|
Acquisition-related
costs |
0.1 |
|
|
— |
|
Restructuring
costs |
0.2 |
|
|
— |
|
Non-GAAP gross
profit as a % of revenue |
33.0 |
% |
|
45.2 |
% |
|
|
|
|
GAAP operating
expenses |
$ |
181,149 |
|
|
$ |
141,465 |
|
Stock-based
compensation |
(15,374 |
) |
|
(26,218 |
) |
Acquisition-related
costs |
(2,176 |
) |
|
(120 |
) |
Restructuring
costs |
(6,144 |
) |
|
— |
|
Non-GAAP
operating expenses |
$ |
157,455 |
|
|
$ |
115,127 |
|
|
|
|
|
GAAP operating
income (loss) |
$ |
(121,435 |
) |
|
$ |
22,268 |
|
Stock-based
compensation |
15,731 |
|
|
26,501 |
|
Acquisition-related
costs |
2,398 |
|
|
342 |
|
Restructuring
costs |
6,508 |
|
|
— |
|
Non-GAAP
operating income (loss) |
$ |
(96,798 |
) |
|
$ |
49,111 |
|
|
|
|
|
GAAP operating
income (loss) as a % of revenue |
(66.2 |
)% |
|
6.1 |
% |
Stock-based
compensation |
8.6 |
|
|
7.3 |
|
Acquisition-related
costs |
1.3 |
|
|
0.1 |
|
Restructuring
costs |
3.5 |
|
|
— |
|
Non-GAAP
operating income (loss) as a % of revenue |
(52.8 |
)% |
|
13.5 |
% |
|
|
|
|
|
Three months ended |
(in
thousands) |
March 31, 2016 |
|
March 31, 2015 |
GAAP net income
(loss) |
$ |
(107,459 |
) |
|
$ |
16,752 |
|
Income tax expense
(benefit) |
(14,283 |
) |
|
3,272 |
|
Interest (income)
expense, net |
(334 |
) |
|
65 |
|
Depreciation and
amortization |
8,323 |
|
|
5,369 |
|
POP display
amortization |
4,743 |
|
|
4,548 |
|
Stock-based
compensation |
15,731 |
|
|
26,501 |
|
Restructuring
costs |
6,508 |
|
|
— |
|
Adjusted
EBITDA |
$ |
(86,771 |
) |
|
$ |
56,507 |
|
|
|
|
|
|
|
|
|
Investor Contact:
Peter Salkowski (855) GOPROHD or (855) 467-7643
investor@gopro.com
Media Contact:
Jeff Brown (650) 332-7600 x 9997
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