GPRO
$6.38
Gopro Inc Cl A
($.05)
(.78%)
Earnings Details
4th Quarter December 2018
Wednesday, February 06, 2019 4:05:00 PM
Tweet Share Watch
Summary

Gopro Inc Cl A Beats

Gopro Inc Cl A (GPRO) reported 4th Quarter December 2018 earnings of $0.31 per share on revenue of $377.4 million. The consensus earnings estimate was $0.25 per share on revenue of $375.9 million. The Earnings Whisper number was $0.23 per share. Revenue grew 12.7% on a year-over-year basis.

GoPro Inc develops hardware and software solutions to alleviate consumer pain points associated with capturing, managing, sharing and enjoying engaging content. It produces mountable and wearable cameras and accessories.

Results
Reported Earnings
$0.31
Earnings Whisper
$0.23
Consensus Estimate
$0.25
Reported Revenue
$377.4 Mil
Revenue Estimate
$375.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

GoPro Announces Fourth Quarter and Full Year 2018 Results

SAN MATEO, Calif., Feb. 6, 2019 /PRNewswire/ -- GoPro, Inc. (NASDAQ: GPRO) announced financial results for its fourth quarter and full year ended December 31, 2018.

"Thanks to a strong product line-up and efficient execution, GoPro grew both camera unit sell-through and market share in 2018, resulting in GAAP profitability in the fourth quarter and second half of the year," said founder and CEO Nicholas Woodman. "With this momentum and a continued focus on expense management, we're planning for growth and profitability in 2019."

Recent GoPro Highlights

  • Revenue for Q4 2018 was $377 million, up 13% year-over-year.
  • GAAP gross margin for Q4 2018 was 38%, up from 32% in the prior quarter. Non-GAAP gross margin for Q4 2018 was 38%, up from 33% in the prior quarter.
  • Q4 2018 GAAP net income was $32 million, or $0.22 per share. Non-GAAP net income was $42 million, or $0.30 per share. On a year-over-year basis, GAAP net income increased by $88 million.
  • GoPro reduced Q4 2018 GAAP and non-GAAP operating expenses by $29 million and $22 million, a year-over-year reduction of 21% and 18%, respectively.
  • Cash and investments totaled $198 million at the end of Q4 2018.
  • Revenue for the full year 2018 was approximately $1.15 billion, down 3% year-over-year. Excluding our aerial business, revenue would have increased 3% year-over-year.
  • GoPro.com represented more than 10% of revenue in Q4 2018, growing more than 50% year-over-year.
  • In the US, GoPro captured 97% dollar share and 87% unit share of the action camera category in Q4 2018. The top-five cameras sold by unit volume were GoPro cameras, and GoPro's three HERO7 cameras were the top-three selling action cameras according to the NPD Group.
  • In the US, Fusion captured 38% dollar share of the spherical camera market in Q4 2018 according to the NPD Group.
  • In Europe, in the $199 and above price band, GoPro held 91% unit share and 90% dollar share in Q4 2018, up from 83% and 84%, respectively, year-over-year. Four out of the top-five cameras sold by unit volume were GoPro cameras according to GfK.
  • In Japan, GoPro captured 57% unit share in Q4 2018, up from 50% in Q4 2017, according to GfK.
  • In China, GoPro grew unit sell-through by 2% year-over-year in Q4 2018, according to GfK.
  • In Korea, GoPro market share in Q4 2018 was 36% and 53% by units and dollars, up from 28% and 44% in Q4 2017, respectively, according to GfK.
  • In Thailand, in Q4 2018 GoPro sell-through increased by 169% in units and 154% in dollars, year-over-year, according to GfK. Market share was 88% and 91% by units and dollars, respectively, year-over-year.
  • Social followers increased by over three million in 2018 to approximately 38 million, driven primarily by increases on Instagram and YouTube. GoPro gained one million social followers in Q4 2018.
  • GoPro's Million Dollar Challenge Campaign generated an all-time high of 25,000 customer content submissions, and the resulting highlight reel has been viewed more than 25 million times with more than 3 million engagements across all social platforms.
  • GoPro Plus subscription service reached 199,000 active paying subscribers as of today, up 8% since September 30, 2018 and up more than 50% year-over-year.

Results Summary:


($ in thousands, except per share amounts)


Three months ended December 31,


Year ended December 31,


2018


2017


% Change


2018


2017


% Change

Revenue


$

377,378



$

334,796



12.7%



$

1,148,337



$

1,179,741



(2.7)%


Gross margin













GAAP


37.7%



23.8%



1390 bps



31.5%



32.6%



(110) bps


Non-GAAP


38.4%



24.8%



1360 bps



32.8%



33.3%



(50) bps


Operating income (loss)













GAAP


$

32,967



$

(58,311)



(156.5)%



$

(93,962)



$

(163,460)



(42.5)%


Non-GAAP


$

46,001



$

(37,427)



(222.9)%



$

(18,876)



$

(82,922)



(77.2)%


Net income (loss)













GAAP


$

31,671



$

(55,848)



(156.7)%



$

(109,034)



$

(182,873)



(40.4)%


Non-GAAP


$

42,356



$

(41,319)



(202.5)%



$

(31,909)



$

(95,867)



(66.7)%


Diluted net income (loss) per share













GAAP


$

0.22



$

(0.41)



(153.7)%



$

(0.78)



$

(1.32)



(40.9)%


Non-GAAP


$

0.30



$

(0.30)



(200.0)%



$

(0.23)



$

(0.69)



(66.7)%


Adjusted EBITDA


$

58,807



$

(26,544)



(321.5)%



$

21,778



$

(31,368)



(169.4)%


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) 458-4148 or (323) 794-2597, access code 2816808, 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, 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, our momentum heading into 2019, including 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 for substantially all of our revenue (and the effects of changes in the sales mix or decrease in demand for these products) and; 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 US-bound production out of China; 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, 2017 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, and as updated in future filings with the SEC including the Annual Report on Form 10-K for the year ended December 31, 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 December 31,


Twelve months ended December 31,

(in thousands, except per share data)

2018


2017


2018


2017

Revenue

$

377,378



$

334,796



$

1,148,337



$

1,179,741


Cost of revenue

235,261



255,010



786,903



795,211


Gross profit

142,117



79,786



361,434



384,530










Operating expenses:








Research and development

36,935



52,504



167,296



229,265


Sales and marketing

56,799



65,425



222,096



236,581


General and administrative

15,416



20,168



66,004



82,144


  Total operating expenses

109,150



138,097



455,396



547,990


Operating income (loss)

32,967



(58,311)



(93,962)



(163,460)


Other income (expense):








Interest expense

(4,879)



(4,508)



(18,683)



(13,660)


Other income, net

5,238



28



4,970



733


  Total other income (expense), net

359



(4,480)



(13,713)



(12,927)


Income (loss) before income taxes

33,326



(62,791)



(107,675)



(176,387)


Income tax (benefit) expense

1,655



(6,943)



1,359



6,486


Net income (loss)

$

31,671



$

(55,848)



$

(109,034)



$

(182,873)










Net income (loss) per share:








Basic

$

0.22



$

(0.41)



$

(0.78)



$

(1.32)


Diluted

$

0.22



$

(0.41)



$

(0.78)



$

(1.32)










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








Basic

140,882



136,886



139,425



138,056


Diluted

143,241



136,886



139,425



138,056


 

GoPro, Inc.

Preliminary Condensed Consolidated Balance Sheets

(unaudited)


(in thousands)

December 31,
 2018


December 31,
 2017

Assets




Current assets:




Cash and cash equivalents

$

152,095



$

202,504


Marketable securities

45,417



44,886


Accounts receivable, net

129,216



112,935


Inventory

116,458



150,551


Prepaid expenses and other current assets

30,887



62,811


Total current assets

474,073



573,687


Property and equipment, net

46,567



68,587


Intangible assets, net and goodwill

159,524



170,958


Other long-term assets

18,195



37,014


Total assets

$

698,359



$

850,246






Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable

$

148,478



$

138,257


Accrued liabilities

135,892



213,030


Deferred revenue

15,129



19,244


Total current liabilities

299,499



370,531


Long-term debt

138,992



130,048


Other long-term liabilities

47,756



50,962


Total liabilities

486,247



551,541






Stockholders' equity:




Common stock and additional paid-in capital

894,755



854,452


Treasury stock, at cost

(113,613)



(113,613)


Accumulated deficit

(569,030)



(442,134)


Total stockholders' equity

212,112



298,705


Total liabilities and stockholders' equity

$

698,359



$

850,246


 

GoPro, Inc.

Preliminary Condensed Consolidated Statement of Cash Flows

(unaudited)



Three months ended December 31,


Twelve months ended December 31,

(in thousands)

2018


2017


2018


2017

Operating activities:








Net income (loss)

$

31,671



$

(55,848)



$

(109,034)



$

(182,873)


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








Depreciation and amortization

7,290



9,218



35,063



41,478


Stock-based compensation

9,716



15,020



40,887



51,255


Deferred income taxes

598



(709)



(389)



(2,527)


Non-cash restructuring charges

494



3,456



6,282



7,315


Non-cash interest expense

2,124



1,979



8,112



5,345


Sale and license of intellectual property

(5,000)





(5,000)




Other

1,997



203



1,696



4,094


Net changes in operating assets and liabilities

(476)



83,671



(17,600)



39,060


Net cash provided by (used in) operating activities

48,414



56,990



(39,983)



(36,853)










Investing activities:








Purchases of property and equipment, net

(2,800)



(5,748)



(11,004)



(24,061)


Purchases of marketable securities

(42,835)



(20,400)



(57,731)



(52,318)


Maturities of marketable securities

2,500



7,499



57,500



21,659


Sale of marketable securities







11,623


Proceeds from the sale and license of intellectual property

5,000





5,000




Net cash used in investing activities

(38,135)



(18,649)



(6,235)



(43,097)










Financing activities:








Proceeds from issuance of common stock

38



128



5,169



9,751


Taxes paid related to net share settlement of equity awards

(1,262)



(840)



(6,650)



(12,118)


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)



(75)


Payment of credit facility issuance costs



(1)





(5,964)


Net cash provided by (used in) financing activities

(1,224)



(712)



(3,931)



88,594


Effect of exchange rate changes on cash and cash equivalents

(206)



259



(260)



1,746


Net change in cash and cash equivalents

8,849



37,888



(50,409)



10,390


Cash and cash equivalents at beginning of period

143,246



164,616



202,504



192,114


Cash and cash equivalents at end of period

$

152,095



$

202,504



$

152,095



$

202,504



 

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:

  • 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 costs which 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, first quarter of 2017 and first quarter of 2018. 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 December 31,


Twelve months ended December 31,

(in thousands, except per share data)

2018


2017


2018


2017

GAAP net income (loss)

$

31,671



$

(55,848)



$

(109,034)



$

(182,873)


Stock-based compensation:








Cost of revenue

548



580



1,954



1,935


Research and development

4,694



7,924



19,636



24,963


Sales and marketing

1,970



3,203



9,459



10,498


General and administrative

2,504



3,313



9,838



13,859


Total stock-based compensation

9,716



15,020



40,887



51,255










Acquisition-related costs:








Cost of revenue

2,082



2,360



11,434



5,985


Research and development







3,028


General and administrative

19





22



(22)


Total acquisition-related costs

2,101



2,360



11,456



8,991










Restructuring costs:








Cost of revenue

22



176



1,379



634


Research and development

762



1,686



12,794



10,092


Sales and marketing

249



1,087



5,291



7,047


General and administrative

184



555



3,279



2,519


Total restructuring costs

1,217



3,504



22,743



20,292










Non-cash interest expense

2,124



1,979



8,112



5,345


Gain on sale and license of intellectual property

(5,000)





(5,000)




Income tax adjustments

527



(8,334)



(1,073)



1,123


Non-GAAP net income (loss)

$

42,356



$

(41,319)



$

(31,909)



$

(95,867)










GAAP shares for diluted net income (loss) per share

140,882



136,886



139,425



138,056


    Add: dilutive shares

2,359








Non-GAAP shares for diluted net income (loss) per share

143,241



136,886



139,425



138,056










Non-GAAP diluted net income (loss) per share

$

0.30



$

(0.30)



$

(0.23)



$

(0.69)


 


Three months ended December 31,


Twelve months ended December 31,

(dollars in thousands)

2018


2017


2018


2017

GAAP gross profit

$

142,117



$

79,786



$

361,434



$

384,530


Stock-based compensation

548



580



1,954



1,935


Acquisition-related costs

2,082



2,360



11,434



5,985


Restructuring costs

22



176



1,379



634


Non-GAAP gross profit

$

144,769



$

82,902



$

376,201



$

393,084










GAAP gross profit as a % of revenue

37.7

%


23.8

%


31.5

%


32.6

%

Stock-based compensation

0.1



0.2



0.2



0.2


Acquisition-related costs

0.6



0.7



1.0



0.5


Restructuring costs



0.1



0.1




Non-GAAP gross profit as a % of revenue

38.4

%


24.8

%


32.8

%


33.3

%









GAAP operating expenses

$

109,150



$

138,097



$

455,396



$

547,990


Stock-based compensation

(9,168)



(14,440)



(38,933)



(49,320)


Acquisition-related costs

(19)





(22)



(3,006)


Restructuring costs

(1,195)



(3,328)



(21,364)



(19,658)


Non-GAAP operating expenses

$

98,768



$

120,329



$

395,077



$

476,006










GAAP operating income (loss)

$

32,967



$

(58,311)



$

(93,962)



$

(163,460)


Stock-based compensation

9,716



15,020



40,887



51,255


Acquisition-related costs

2,101



2,360



11,456



8,991


Restructuring costs

1,217



3,504



22,743



20,292


Non-GAAP operating income (loss)

$

46,001



$

(37,427)



$

(18,876)



$

(82,922)


 


Three months ended December 31,


Twelve months ended December 31,

(in thousands)

2018


2017


2018


2017

GAAP net income (loss)

$

31,671



$

(55,848)



$

(109,034)



$

(182,873)


Income tax (benefit) expense

1,655



(6,943)



1,359



6,486


Interest expense, net

4,470



4,163



17,278



12,804


Depreciation and amortization

7,290



9,218



35,063



41,478


POP display amortization

2,788



4,342



13,482



19,190


Stock-based compensation

9,716



15,020



40,887



51,255


Restructuring costs

1,217



3,504



22,743



20,292


Adjusted EBITDA

$

58,807



$

(26,544)



$

21,778



$

(31,368)


 

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SOURCE GoPro, Inc.