PR Newswire
SAN MATEO, Calif., Nov. 1, 2018
SAN MATEO, Calif., Nov. 1, 2018 /PRNewswire/ -- GoPro, Inc. (NASDAQ: GPRO) announced financial results for its third quarter ended September 30, 2018.
"GoPro completed a successful third quarter highlighted by a very strong reception and global demand for HERO7 Black," said founder and CEO Nicholas Woodman. "We expect to achieve profitability in Q4 and for the second-half of 2018, and exit the year with low channel inventory to be well positioned for Q1 2019."
Recent GoPro Highlights
Results Summary: | |||||||||||
Three months ended September 30, | |||||||||||
($ in thousands, except per share amounts) | 2018 | 2017 | % Change | ||||||||
Revenue | $ | 285,936 | $ | 329,805 | (13.3) | % | |||||
Gross margin | |||||||||||
GAAP | 31.8 | % | 39.6 | % | (780) | bps | |||||
Non-GAAP | 33.2 | % | 40.1 | % | (690) | bps | |||||
Operating income (loss) | |||||||||||
GAAP | $ | (21,354) | $ | 8,049 | (365.3) | % | |||||
Non-GAAP | $ | (3,638) | $ | 24,042 | (115.1) | % | |||||
Net income (loss) | |||||||||||
GAAP | $ | (27,089) | $ | 14,661 | (284.8) | % | |||||
Non-GAAP | $ | (6,058) | $ | 21,149 | (128.6) | % | |||||
Diluted net income (loss) per share | |||||||||||
GAAP | $ | (0.19) | $ | 0.10 | (290.0) | % | |||||
Non-GAAP | $ | (0.04) | $ | 0.15 | (126.7) | % | |||||
Adjusted EBITDA | $ | 6,205 | $ | 35,725 | (82.6) | % |
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) 220-8451 or (323) 794-2588, access code 1753774, 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. A recording of the webcast 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 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 costs, non-cash interest expense and the tax impact of these items. When planning, forecasting and analyzing gross margin, operating expenses, tax expense, net income and earnings 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, expectations regarding our business outlook for 2018 and our ability to address the industry-wide shortage in supply of passive components. 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 growing internationally, and we may not be successful in doing so; any inability to successfully manage frequent product introductions (including roadmap for new hardware and software 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; the effects of the industry-wide shortage of passive components; our dependence on sales of our cameras, mounts and accessories for substantially all of our revenue (and the effects of changes in the sales mix or decrease in demand for these products) and; the effects 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; any changes to trade policies, tariffs, and import/export regulations; 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; expectations regarding the volatility of the Company's tax provision and resulting effective tax rate; risks related to inventory, purchase commitments and long-lived assets; 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, 2017 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, and as updated in future filings with the SEC including the Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, 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 September 30, | Nine months ended September 30, | ||||||||||||||
(in thousands, except per share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Revenue | $ | 285,936 | $ | 329,805 | $ | 770,959 | $ | 844,945 | |||||||
Cost of revenue | 194,904 | 199,259 | 551,642 | 540,201 | |||||||||||
Gross profit | 91,032 | 130,546 | 219,317 | 304,744 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 41,157 | 55,098 | 130,361 | 176,761 | |||||||||||
Sales and marketing | 55,871 | 46,622 | 165,297 | 171,156 | |||||||||||
General and administrative | 15,358 | 20,777 | 50,588 | 61,976 | |||||||||||
Total operating expenses | 112,386 | 122,497 | 346,246 | 409,893 | |||||||||||
Operating income (loss) | (21,354) | 8,049 | (126,929) | (105,149) | |||||||||||
Other income (expense): | |||||||||||||||
Interest expense | (4,616) | (4,554) | (13,804) | (9,152) | |||||||||||
Other income (expense), net | 661 | 322 | (268) | 705 | |||||||||||
Total other expense, net | (3,955) | (4,232) | (14,072) | (8,447) | |||||||||||
Income (loss) before income taxes | (25,309) | 3,817 | (141,001) | (113,596) | |||||||||||
Income tax (benefit) expense | 1,780 | (10,844) | (296) | 13,429 | |||||||||||
Net income (loss) | $ | (27,089) | $ | 14,661 | $ | (140,705) | $ | (127,025) | |||||||
Net income (loss) per share: | |||||||||||||||
Basic | $ | (0.19) | $ | 0.11 | $ | (1.01) | $ | (0.92) | |||||||
Diluted | $ | (0.19) | $ | 0.10 | $ | (1.01) | $ | (0.92) | |||||||
Weighted-average shares used to compute net income (loss) per share: | |||||||||||||||
Basic | 140,072 | 136,236 | 139,028 | 138,450 | |||||||||||
Diluted | 140,072 | 140,288 | 139,028 | 138,450 |
GoPro, Inc. Preliminary Condensed Consolidated Balance Sheets (unaudited) | |||||||
(in thousands) | September 30, | December 31, | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 143,246 | $ | 202,504 | |||
Marketable securities | 4,996 | 44,886 | |||||
Accounts receivable, net | 149,449 | 112,935 | |||||
Inventory | 123,249 | 150,551 | |||||
Prepaid expenses and other current assets | 31,958 | 62,811 | |||||
Total current assets | 452,898 | 573,687 | |||||
Property and equipment, net | 53,043 | 68,587 | |||||
Intangible assets, net and goodwill | 161,606 | 170,958 | |||||
Other long-term assets | 21,026 | 37,014 | |||||
Total assets | $ | 688,573 | $ | 850,246 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 123,357 | $ | 138,257 | |||
Accrued liabilities | 193,913 | 213,030 | |||||
Deferred revenue | 14,418 | 19,244 | |||||
Total current liabilities | 331,688 | 370,531 | |||||
Long-term debt | 136,659 | 130,048 | |||||
Other long-term liabilities | 48,180 | 50,962 | |||||
Total liabilities | 516,527 | 551,541 | |||||
Stockholders' equity: | |||||||
Common stock and additional paid-in capital | 886,360 | 854,452 | |||||
Treasury stock, at cost | (113,613) | (113,613) | |||||
Accumulated deficit | (600,701) | (442,134) | |||||
Total stockholders' equity | 172,046 | 298,705 | |||||
Total liabilities and stockholders' equity | $ | 688,573 | $ | 850,246 |
GoPro, Inc. Preliminary Condensed Consolidated Statement of Cash Flows (unaudited) | |||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Operating activities: | |||||||||||||||
Net income (loss) | $ | (27,089) | $ | 14,661 | $ | (140,705) | $ | (127,025) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||
Depreciation and amortization | 9,693 | 9,100 | 27,773 | 32,260 | |||||||||||
Stock-based compensation | 10,337 | 11,875 | 31,171 | 36,235 | |||||||||||
Deferred income taxes | (362) | 76 | (987) | (1,818) | |||||||||||
Non-cash restructuring charges | 2,532 | 1,059 | 5,788 | 3,859 | |||||||||||
Non-cash interest expense | 2,036 | 1,836 | 5,988 | 3,366 | |||||||||||
Other | 266 | 128 | (301) | 3,891 | |||||||||||
Net changes in operating assets and liabilities | 12,350 | 16,788 | (17,124) | (44,611) | |||||||||||
Net cash provided by (used in) operating activities | 9,763 | 55,523 | (88,397) | (93,843) | |||||||||||
Investing activities: | |||||||||||||||
Purchases of property and equipment, net | (1,326) | (8,201) | (8,204) | (18,313) | |||||||||||
Purchases of marketable securities | — | (31,918) | (14,896) | (31,918) | |||||||||||
Maturities of marketable securities | 20,000 | — | 55,000 | 14,160 | |||||||||||
Sale of marketable securities | — | — | — | 11,623 | |||||||||||
Net cash provided by (used in) investing activities | 18,674 | (40,119) | 31,900 | (24,448) | |||||||||||
Financing activities: | |||||||||||||||
Proceeds from issuance of common stock | 1,706 | 2,994 | 5,131 | 9,623 | |||||||||||
Taxes paid related to net share settlement of equity awards | (1,636) | (3,068) | (5,388) | (11,278) | |||||||||||
Proceeds from issuance of convertible senior notes | — | — | — | 175,000 | |||||||||||
Prepayment of forward stock repurchase transaction | — | — | — | (78,000) | |||||||||||
Payment of deferred acquisition-related consideration | — | (1) | (2,450) | (76) | |||||||||||
Payment of credit facility issuance costs | — | (713) | — | (5,963) | |||||||||||
Net cash provided by (used in) financing activities | 70 | (788) | (2,707) | 89,306 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | (104) | 245 | (54) | 1,487 | |||||||||||
Net change in cash and cash equivalents | 28,403 | 14,861 | (59,258) | (27,498) | |||||||||||
Cash and cash equivalents at beginning of period | 114,843 | 149,755 | 202,504 | 192,114 | |||||||||||
Cash and cash equivalents at end of period | $ | 143,246 | $ | 164,616 | $ | 143,246 | $ | 164,616 |
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 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:
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:
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 September 30, | Nine months ended September 30, | ||||||||||||||
(in thousands, except per share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||
GAAP net income (loss) | $ | (27,089) | $ | 14,661 | $ | (140,705) | $ | (127,025) | |||||||
Stock-based compensation: | |||||||||||||||
Cost of revenue | 534 | 445 | 1,406 | 1,355 | |||||||||||
Research and development | 4,977 | 5,967 | 14,942 | 17,039 | |||||||||||
Sales and marketing | 2,429 | 2,609 | 7,489 | 7,295 | |||||||||||
General and administrative | 2,397 | 2,854 | 7,334 | 10,546 | |||||||||||
Total stock-based compensation | 10,337 | 11,875 | 31,171 | 36,235 | |||||||||||
Acquisition-related costs: | |||||||||||||||
Cost of revenue | 3,363 | 1,195 | 9,352 | 3,625 | |||||||||||
Research and development | — | 946 | — | 3,028 | |||||||||||
General and administrative | — | — | 3 | (22) | |||||||||||
Total acquisition-related costs | 3,363 | 2,141 | 9,355 | 6,631 | |||||||||||
Restructuring costs: | |||||||||||||||
Cost of revenue | 115 | 40 | 1,357 | 458 | |||||||||||
Research and development | 2,288 | 1,025 | 12,032 | 8,406 | |||||||||||
Sales and marketing | 1,195 | 357 | 5,042 | 5,960 | |||||||||||
General and administrative | 418 | 555 | 3,095 | 1,964 | |||||||||||
Total restructuring costs | 4,016 | 1,977 | 21,526 | 16,788 | |||||||||||
Non-cash interest expense | 2,036 | 1,836 | 5,988 | 3,366 | |||||||||||
Income tax adjustments | 1,279 | (11,341) | (1,600) | 9,457 | |||||||||||
Non-GAAP net income (loss) | $ | (6,058) | $ | 21,149 | $ | (74,265) | $ | (54,548) | |||||||
GAAP shares for diluted net income (loss) per share | 140,072 | 136,236 | 139,028 | 138,450 | |||||||||||
Add: dilutive shares | — | 4,052 | — | — | |||||||||||
Non-GAAP shares for diluted net income (loss) per share | 140,072 | 140,288 | 139,028 | 138,450 | |||||||||||
Non-GAAP diluted net income (loss) per share | $ | (0.04) | $ | 0.15 | $ | (0.53) | $ | (0.39) |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(dollars in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
GAAP gross profit | $ | 91,032 | $ | 130,546 | $ | 219,317 | $ | 304,744 | |||||||
Stock-based compensation | 534 | 445 | 1,406 | 1,355 | |||||||||||
Acquisition-related costs | 3,363 | 1,195 | 9,352 | 3,625 | |||||||||||
Restructuring costs | 115 | 40 | 1,357 | 458 | |||||||||||
Non-GAAP gross profit | $ | 95,044 | $ | 132,226 | $ | 231,432 | $ | 310,182 | |||||||
GAAP gross profit as a % of revenue | 31.8 | % | 39.6 | % | 28.4 | % | 36.1 | % | |||||||
Stock-based compensation | 0.2 | 0.1 | 0.2 | 0.2 | |||||||||||
Acquisition-related costs | 1.2 | 0.4 | 1.2 | 0.4 | |||||||||||
Restructuring costs | — | — | 0.2 | — | |||||||||||
Non-GAAP gross profit as a % of revenue | 33.2 | % | 40.1 | % | 30.0 | % | 36.7 | % | |||||||
GAAP operating expenses | $ | 112,386 | $ | 122,497 | $ | 346,246 | $ | 409,893 | |||||||
Stock-based compensation | (9,803) | (11,430) | (29,765) | (34,880) | |||||||||||
Acquisition-related costs | — | (946) | (3) | (3,006) | |||||||||||
Restructuring costs | (3,901) | (1,937) | (20,169) | (16,330) | |||||||||||
Non-GAAP operating expenses | $ | 98,682 | $ | 108,184 | $ | 296,309 | $ | 355,677 | |||||||
GAAP operating income (loss) | $ | (21,354) | $ | 8,049 | $ | (126,929) | $ | (105,149) | |||||||
Stock-based compensation | 10,337 | 11,875 | 31,171 | 36,235 | |||||||||||
Acquisition-related costs | 3,363 | 2,141 | 9,355 | 6,631 | |||||||||||
Restructuring costs | 4,016 | 1,977 | 21,526 | 16,788 | |||||||||||
Non-GAAP operating income (loss) | $ | (3,638) | $ | 24,042 | $ | (64,877) | $ | (45,495) | |||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
GAAP net income (loss) | $ | (27,089) | $ | 14,661 | $ | (140,705) | $ | (127,025) | |||||||
Income tax (benefit) expense | 1,780 | (10,844) | (296) | 13,429 | |||||||||||
Interest expense, net | 4,297 | 4,228 | 12,808 | 8,641 | |||||||||||
Depreciation and amortization | 9,693 | 9,100 | 27,773 | 32,260 | |||||||||||
POP display amortization | 3,171 | 4,728 | 10,694 | 14,848 | |||||||||||
Stock-based compensation | 10,337 | 11,875 | 31,171 | 36,235 | |||||||||||
Restructuring costs | 4,016 | 1,977 | 21,526 | 16,788 | |||||||||||
Adjusted EBITDA | $ | 6,205 | $ | 35,725 | $ | (37,029) | $ | (4,824) |
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SOURCE GoPro, Inc.
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