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MarketScreener Homepage  >  Equities  >  Nasdaq  >  GoPro, Inc.    GPRO

GOPRO, INC.

(GPRO)
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GOPRO : Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) (form 10-K)

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02/14/2020 | 04:19pm EST
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements, related notes and other financial information appearing elsewhere in
this Annual Report on Form 10-K. In addition to historical consolidated
financial information, the following discussion contains forward-looking
statements that reflect our plans, estimates and beliefs. Our actual results
could differ materially from those discussed in the forward-looking statements
as a result of a variety of factors, including but not limited to, those
discussed in Risk Factors and elsewhere in this Annual Report on Form 10-K. This
MD&A is organized as follows:
•   Overview. Discussion of our business and overall analysis of financial and

other highlights affecting the Company in order to provide context for the

remainder of MD&A.

• Components of Our Results of Operations. Description of the items contained

in each operating revenue and expense caption in the consolidated statements

of operations.

• Results of Operations. Analysis of our financial results comparing 2019 to

2018 is presented below. An analysis of our financial results comparing 2018

to 2017 can be found under "Management's Discussion and Analysis of Financial

Condition and Results of Operations" in Part II, Item 7 in our Annual Report

on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC

on February 15, 2019, which is available free of charge on the SEC's website

at www.sec.gov and our Investor Relations website at

https://investor.gopro.com.

• Liquidity and Capital Resources. Analysis of changes in our balance sheets

and cash flows, and discussion of our financial condition and potential

sources of liquidity.

• Contractual Commitments. Overview of our contractual obligations, including

expected payment schedule and indemnifications as of December 31, 2019.

• Critical Accounting Policies and Estimates. Accounting estimates that we

believe are important to understanding the assumptions and judgments

incorporated in our reported financial results and forecasts.

• Non-GAAP Financial Measures. A reconciliation and discussion of our GAAP to

non-GAAP financial measures.

Overview

GoPro helps its consumers capture and share their experiences in immersive and
exciting ways. We are committed to developing solutions that create an easy,
seamless experience for consumers to capture, create, and share engaging
personal content. When consumers use our products and services, they often
generate and share content that organically increases awareness for GoPro,
driving a virtuous cycle and a self-reinforcing demand for our products. We
believe revenue growth may be driven by the introduction of new cameras,
accessories, subscription offerings and GoPro app monetization. We believe new
camera features drive a replacement cycle among existing users and attract new
users, expanding our total addressable market. Our investments in image
stabilization, mobile app editing and sharing solutions, modular accessories,
auto-upload capabilities, local language user-interfaces and voice recognition
in more than 12 languages drive the expansion of our global market.
In 2019, we began shipping our HERO8 Black flagship camera which features
enhanced HyperSmooth 2.0 image stabilization, TimeWarp Video 2.0, built-in
mounting, live streaming, cloud connectivity, voice control, improved audio and
a touch display. HyperSmooth 2.0 includes dramatically improved pitch axis
stabilization, a new Boost mode for absolute maximum stabilization, and powerful
in-app horizon leveling that provides gimbal-like stability. TimeWarp Video 2.0
automatically applies a high-speed, 'magic-carpet-ride' effect to videos, while
live streaming enables users to share content in real time on social media
platforms. We also introduced three new accessories for the HERO8 Black camera,
called Mods, which enables users to transform their HERO8 Black camera into a
production powerhouse. The Media Mod delivers shotgun-mic performance with an
integrated directional microphone, the Light Mod illuminates a scene and the
Display Mod allows users to perfectly frame themselves during self-capture. We
also began shipping our newest 360-degree waterproof camera, MAX, in 2019. Our
MAX

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                                  GoPro, Inc.

Management's Discussion and Analysis of Financial Condition and Results of

                                   Operations

camera features MAX HyperSmooth image stabilization, 360-degree MAX TimeWarp
Video, MAX SuperView, PowerPano, built-in mounting, high-quality audio, live
streaming, voice control and a front facing touch display. MAX HyperSmooth
provides the highest performance video stabilization yet, while MAX SuperView
provides the widest view ever from a GoPro camera. PowerPano allows users to
capture a 6.2mp, 270-degree panoramic photo with the push of one button and
creates an artifact-free shot of action or movement. Our MAX camera features six
built-in microphones that allow users to capture immersive 360-degree audio,
directional audio for vlogging and the best stereo sound ever from a GoPro. Our
HERO8 Black, MAX and HERO7 line of cameras are compatible with our ecosystem of
mountable and wearable accessories, and feature automatic uploading capabilities
for photos and videos to GoPro Plus, our subscription service that provides a
camera protection plan, discounts on GoPro accessories and enables subscribers
to easily access, edit, store and share their content.
The following is a summary of measures presented in our consolidated financial
statements and key metrics used to evaluate our business, measure our
performance, develop financial forecasts and make strategic decisions.
(units and dollars
in thousands, except
per share amounts)     Q4 2019        Q4 2018       % Change       FY 2019         FY 2018       % Change
Revenue              $  528,345     $  377,378          40  %   $ 1,194,651     $ 1,148,337           4  %
Camera units shipped
(1)                       1,857          1,413          31  %         4,260           4,337          (2 )%
Gross margin (2)           38.2 %         37.7 %    50 bps             34.6 %          31.5 %   310 bps
Operating expenses   $  105,725     $  109,150          (3 )%   $   415,122     $   455,396          (9 )%
Net income (loss)    $   95,820     $   31,671         203  %   $   (14,642 )   $  (109,034 )       (87 )%
Diluted net income
(loss) per share     $     0.65     $     0.22         195  %   $     (0.10 )   $     (0.78 )       (87 )%
Cash provided by
(used in) operations $   88,251     $   48,413          82  %   $   (24,444 )   $   (42,434 )       (42 )%

Other financial
information:
Adjusted EBITDA (3)  $  112,092     $   58,807          91  %   $    71,958     $    21,778         230  %
Non-GAAP net income
(loss) (4)           $  102,498     $   42,356         142  %   $    35,255     $   (31,909 )      (210 )%
Non-GAAP income
(loss) per share     $     0.70     $     0.30         133  %   $      0.24     $     (0.23 )      (204 )%

(1) Represents the number of camera units that are shipped during a reporting

      period, including camera units that are shipped with drones, net of any
      returns. Camera units shipped does not include drones sold without a
      camera, mounts or accessories.


(2)  One basis point (bps) is equal to 1/100th of 1%.


(3)   We define adjusted EBITDA as net income (loss) adjusted to exclude the

impact of: provision for income taxes, interest income, interest expense,

      depreciation and amortization, point of purchase (POP) display
      amortization, stock-based compensation, impairment charges, and
      restructuring and other costs.


(4)  We define non-GAAP net income (loss) as net income (loss) adjusted to

exclude stock-based compensation, acquisition-related costs, restructuring

and other costs, non-cash interest expense, gain on sale and license of

intellectual property and income tax adjustments. Acquisition-related costs

     include the amortization of acquired intangible assets and impairment
     write-downs (if applicable), as well as third-party transaction costs for
     legal and other professional services.

Reconciliations of non-GAAP adjusted measures to the most directly comparable GAAP measures are presented under Non-GAAP Financial Measures.

                                       43
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                                  GoPro, Inc.

Management's Discussion and Analysis of Financial Condition and Results of

                                   Operations

Full year and fourth quarter 2019 financial performance
Revenue for 2019 was up 4% year-over-year at $1.195 billion, compared to $1.148
billion in 2018. Excluding Karma, revenue for 2019 increased 7% year-over-year.
Gross margin for 2019 was 34.6%, up from 31.5% in 2018. The year-over-year
margin improvement was primarily due to a favorable sales mix and lower average
camera costs in 2019, partially offset by United States tariffs and one-time
costs related to the production delay of HERO8 Black. We shipped 4.3 million
camera units in 2019, a 2% decrease from 2018. However, our average selling
price for 2019 increased 6% year-over-year to $280 (defined as total revenue
divided by camera units shipped). Excluding Karma, our 2019 average selling
price increased 8% year-over-year.
Revenue for the fourth quarter of 2019 was $528.3 million, a 40% increase
year-over-year from $377.4 million in the same period of 2018. In addition, the
gross margin percentage for the fourth quarter of 2019 was 38.2%, up from 37.7%
in the same period of 2018. Revenue and gross margin in the fourth quarter of
2019 were positively impacted by the launch of the MAX and HERO8 Black cameras
in the fourth quarter of 2019 compared to the launch of the HERO7 line of
cameras in the third quarter of 2018. Camera units shipped in the fourth quarter
of 2019 was 1.9 million units, compared to 1.4 million units in the same period
of 2018. Our fourth quarter of 2019 average selling price (defined as total
revenue divided by camera units shipped) increased to $285, a 7% increase
year-over-year.
Our full year 2019 and fourth quarter of 2019 operating expenses decreased 9%
and 3%, respectively, primarily attributable to our continued focus on cost
management and the financial benefits recognized from our restructuring actions.
We returned to profitability on a GAAP and non-GAAP basis in the fourth quarter
2019 with net income of $95.8 million and $102.5 million, respectively. In
addition, for 2019, our GAAP net loss improved year-over-year by $94.4 million
to a net loss of $14.6 million and we returned to profitability on a non-GAAP
basis with net income of $35.3 million. 2019 adjusted EBITDA improved to $72.0
million from $21.8 million in 2018.
Factors affecting performance
We believe that our future success will be dependent on many factors, including
those further discussed below. While these areas represent opportunities for us,
they also represent challenges and risks that we must successfully address in
order to operate our business and improve our results of operations.
Driving profitability through improved efficiency, lower costs and better
execution. We incurred operating losses in 2019, 2018 and 2017, however, our
restructuring actions have significantly reduced our operating expenses in 2019
and 2018 resulting in a flatter, more efficient global organization that has
allowed for improved communication and better alignment amongst our functional
teams. If we are unable to generate adequate revenue growth, or continue to
manage our expenses, we may incur significant losses in the future and may not
be able to achieve profitability.
Investing in research and development and enhancing our customer experience. Our
performance is significantly dependent on the investments we make in research
and development, including our ability to attract and retain highly skilled and
experienced research and development personnel. We expect the timing of new
product releases to continue to have a significant impact on our revenue and we
must continually develop and introduce innovative new cameras, mobile
applications and other new offerings. We plan to further build upon our
integrated mobile and cloud-based storytelling solutions, and subscription
offerings. Our investments, including those for marketing and advertising, may
not successfully drive increased revenue and our customers may not accept our
new offerings. If we fail to innovate and enhance our brand, our products, our
integrated storytelling solutions, the value proposition of our subscriptions,
our market position and revenue will be adversely affected. Further, we have
incurred substantial research and development expenses and if our efforts are
not successful, we may not recover the value of these investments.
Growing our total addressable market globally. We continue to believe that
international markets represent a significant growth opportunity for GoPro.
While the total market for digital cameras has continued to decline as
smartphone and tablet camera quality has improved, we continue to believe that
our consumers' differentiated use of GoPro cameras, our integrated storytelling
solutions, our continued innovation of product features desired by our users,
and our brand, all help support our business from many of the negative trends
facing this category.

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                                  GoPro, Inc.

Management's Discussion and Analysis of Financial Condition and Results of

                                   Operations

However, we expect that the markets in which we conduct our business will remain
highly competitive as we face new product introductions from competitors. We
will continue to increase our global presence through the active promotion of
our brand, the creation and cultivation of regional strategic and marketing
partnerships, the expansion of localized products in international markets with
region-specific marketing, and an investment focus on the biggest opportunities.
Our growth also depends on expanding our total addressable market with our
subscription service, GoPro Plus, and capture solutions, including MAX, which
faces intense competition. If we are not successful in penetrating additional
markets, we might not be able to grow revenue and we may not recognize benefits
from our investment in new areas.
Marketing the improved GoPro experience to our extended community. We intend to
continue investing resources in our marketing, advertising and brand management
efforts. Historically, our growth has largely been fueled by the adoption of our
products by people looking to self-capture images of themselves participating in
exciting physical activities. Our future growth depends on continuing to reach,
expand and re-engage with this core user base. We believe that consumers in our
core user base in many markets are not familiar with our brand and products and
believe there is an opportunity for GoPro to expand awareness through a range of
advertising and promotional programs and campaigns, including through social
media. In addition, we may look to expand our user base to include a broader
group of consumers. Sales and marketing investments will often occur in advance
of any sales benefits from these activities, and it may be difficult for us to
determine if we are efficiently allocating our resources in this area.
Seasonality. Historically, we have experienced the highest levels of revenue in
the fourth quarter of the year, coinciding with the holiday shopping season,
particularly in the United States and Europe. While we have implemented
operational changes aimed at reducing the impact of fourth quarter seasonality
on full year performance, timely and effective product introductions and
forecasting, whether just prior to the holiday season or otherwise, are critical
to our operations and financial performance.

Components of our Results of Operations
Revenue. Our revenue is primarily comprised of product revenue, net of returns,
sales incentives (including price protection), and subscription services.
Revenue is derived from the sale of our cameras and accessories directly to
retailers, through our network of domestic and international distributors, and
through gopro.com. See Critical Accounting Policies and Estimates and Note 1
Summary of business and significant accounting policies, to the Notes to
Consolidated Financial Statements of this Annual Report on Form 10-K for
information regarding revenue recognition.
Cost of revenue. Our cost of revenue primarily consists of product costs,
including costs of contract manufacturing for production, third-party logistics
and procurement costs, warranty repair costs, tooling and equipment
depreciation, excess and obsolete inventory write-downs, amortization of
acquired developed technology, license fees, tariffs and certain allocated costs
related to our manufacturing team, facilities and personnel-related expenses.
Operating expenses. We classify our operating expenses into three categories:
research and development, sales and marketing, and general and administrative.
Research and development. Our research and development expense consists
primarily of personnel-related costs, including salaries, stock-based
compensation and employee benefits. Research and development expense also
includes consulting and outside professional services costs, materials, and
allocated facilities, restructuring, depreciation and other supporting overhead
expenses associated with the development of our product and service offerings.
Sales and marketing. Our sales and marketing expense consists primarily of
advertising and marketing promotions of our products and services, and
personnel-related costs, including salaries, stock-based compensation and
employee benefits. Sales and marketing expense also includes point of purchase
(POP) display expenses and related amortization, sales commissions, trade show
and event costs, sponsorship costs,

                                       45
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                                  GoPro, Inc.

Management's Discussion and Analysis of Financial Condition and Results of

                                   Operations

consulting and contractor expenses, and allocated facilities, restructuring,
depreciation and other supporting overhead expenses.
General and administrative. Our general and administrative expense consists
primarily of personnel-related costs, including salaries, stock-based
compensation and employee benefits for our finance, legal, human resources,
information technology and administrative personnel. The expense also includes
professional service costs related to accounting, tax, legal services, and
allocated facilities, restructuring, depreciation and other supporting overhead
expenses.

Results of Operations
The following table sets forth the components of our consolidated statements of
operations for each of the periods presented, and each component as a percentage
of revenue:
                                                 Year ended December 31,
(dollars in
thousands)                    2019                         2018                         2017
Revenue            $ 1,194,651         100  %   $ 1,148,337         100  %   $ 1,179,741         100  %
Cost of revenue        781,862          65          786,903          69          795,211          67
Gross profit           412,789          35          361,434          31          384,530          33
Operating
expenses:
Research and
development            142,894          12          167,296          15          229,265          19
Sales and
marketing              206,431          17          222,096          19          236,581          20
General and
administrative          65,797           6           66,004           6           82,144           7
Total operating
expenses               415,122          35          455,396          40          547,990          46
Operating loss          (2,333 )         -          (93,962 )        (9 )       (163,460 )       (13 )
Other income
(expense):
Interest expense       (19,229 )        (2 )        (18,683 )        (1 )        (13,660 )        (1 )
Other income, net        2,492           -            4,970           -              733           -
Total other
expense, net           (16,737 )        (2 )        (13,713 )        (1 )        (12,927 )        (1 )
Loss before income
taxes                  (19,070 )        (2 )       (107,675 )       (10 )       (176,387 )       (14 )
Income tax
(benefit) expense       (4,428 )        (1 )          1,359           -            6,486           1
Net loss           $   (14,642 )        (1 )%   $  (109,034 )       (10 )%   $  (182,873 )       (15 )%




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                                  GoPro, Inc.
   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations

Revenue

(camera units and dollars in            Year ended December 31,               2019 vs 2018      2018 vs 2017
thousands, except average
selling price)                   2019            2018            2017           % Change          % Change
Camera units shipped               4,260           4,337           4,303           (2 )%              1  %

Average selling price $ 280 $ 265 $ 274

         6                (3 )

Direct channel               $   548,322     $   551,095     $   634,888           (1 )             (13 )
 Percentage of revenue              45.9 %          48.0 %          53.8 %

Distribution channel $ 646,329 $ 597,242 $ 544,853

         8                10
 Percentage of revenue              54.1 %          52.0 %          46.2 %
Total revenue                $ 1,194,651     $ 1,148,337     $ 1,179,741            4  %             (3 )%

Americas                     $   523,975     $   494,797     $   582,917            6  %            (15 )%
 Percentage of revenue              43.9 %          43.1 %          49.4 %
Europe, Middle East and
Africa (EMEA)                $   359,187     $   366,438     $   333,454           (2 )              10
 Percentage of revenue              30.0 %          31.9 %          28.3 %

Asia and Pacific (APAC) $ 311,489 $ 287,102 $ 263,370

         8                 9
 Percentage of revenue              26.1 %          25.0 %          22.3 %
Total revenue                $ 1,194,651     $ 1,148,337     $ 1,179,741            4  %             (3 )%


2019 Compared to 2018. Revenue for 2019 was up 4% year-over-year at $1.195
billion, compared to $1.148 billion in 2018, despite a $28.6 million decrease in
Karma drone and drone accessory revenue, as we exited the drone business in
2018. Excluding Karma, revenue for 2019 increased 7% year-over-year. We shipped
4.3 million camera units in 2019, a 2% decrease from 2018. Our average selling
price for 2019 increased 6% year-over-year to $280, primarily due to a shift of
cameras sold equal to or greater than $300, which represented 90% of our camera
revenue mix. Excluding Karma, our 2019 average selling price increased 8%
year-over-year. Average selling price is defined as total revenue divided by
camera units shipped. Year-over-year, revenue by channel has slightly shifted
from direct to distribution and revenue by geography has slightly shifted from
EMEA to APAC primarily due to increasing our advertising and marketing efforts
in APAC and an increase in demand for our cameras in APAC. Revenue from
gopro.com is included as a component of our direct channel, and represented 10%,
8% and 7% of total revenue for 2019, 2018 and 2017, respectively.
Cost of revenue and gross margin
                                      Year ended December 31,             2019 vs 2018    2018 vs 2017
(dollars in thousands)           2019           2018           2017         % Change        % Change
Cost of revenue              $  772,088     $  772,136     $  786,657              -  %           (2 )%
Stock-based compensation          1,902          1,954          1,935             (3 )             1
Acquisition-related costs         7,818         11,434          5,985            (32 )            91
Restructuring costs                  54          1,379            634            (96 )           118
Total cost of revenue        $  781,862     $  786,903     $  795,211             (1 )%           (1 )%
Gross margin                       34.6 %         31.5 %         32.6 %     

310 bps (110) bps



2019 Compared to 2018. Gross margin of 34.6% in 2019 increased from 31.5% in
2018, or 310 bps, reflecting a favorable product sales mix, 271 bps, and lower
average camera costs, 131 bps, partially offset by slightly higher operational
expenses, (71) bps, and higher sales incentives, (70) bps.

                                       47
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                                  GoPro, Inc.
   Management's Discussion and Analysis of Financial Condition and Results of
                                   Operations

Research and development
                                        Year ended December 31,              2019 vs 2018    2018 vs 2017
(dollars in thousands)             2019           2018           2017          % Change        % Change
Research and development       $  125,142     $  134,866     $  191,182           (7 )%           (29 )%
Stock-based compensation           17,167         19,636         24,963          (13 )            (21 )
Acquisition-related costs               -              -          3,028            -             (100 )
Restructuring costs                   585         12,794         10,092          (95 )             27

Total research and development $ 142,894 $ 167,296 $ 229,265

      (15 )%           (27 )%
Percentage of revenue                12.0 %         14.6 %         19.4 %


2019 Compared to 2018. The year-over-year decrease of $24.4 million, or 15%, in
total research and development expense in 2019 compared to 2018 reflected a
$12.2 million decrease in restructuring costs, a $5.6 million decrease in
depreciation and other supporting overhead expenses, a $3.9 million decrease in
cash-based personnel-related costs and a $2.5 million decrease in stock-based
compensation.
Sales and marketing
                                      Year ended December 31,              2019 vs 2018     2018 vs 2017
(dollars in thousands)           2019           2018           2017          % Change         % Change
Sales and marketing          $  198,074     $  207,346     $  219,036           (4 )%            (5 )%
Stock-based compensation          8,043          9,459         10,498          (15 )            (10 )
Restructuring costs                 314          5,291          7,047          (94 )            (25 )
Total sales and marketing    $  206,431     $  222,096     $  236,581           (7 )%            (6 )%
Percentage of revenue              17.3 %         19.3 %         20.1 %


2019 Compared to 2018. The year-over-year decrease of $15.7 million, or 7%, in
total sales and marketing expenses in 2019 compared to 2018 reflected an $8.8
million decrease in overall advertising and marketing expenses, a $5.0 million
decrease in restructuring costs, a $3.9 million decrease in allocated
facilities, depreciation and other supporting overhead expenses, and a $1.4
million decrease in stock-based compensation, partially offset by a $3.0 million
increase in app marketplace and credit card processing fees, and a $0.6 million
increase in travel related expenses.
General and administrative
                                          Year ended December 31,             2019 vs 2018    2018 vs 2017
(dollars in thousands)               2019           2018           2017         % Change        % Change
General and administrative       $   55,220     $   52,865     $   65,788            4  %          (20 )%
Stock-based compensation             10,076          9,838         13,859            2             (29 )
Acquisition-related costs                 -             22            (22 )       (100 )          (200 )
Restructuring costs                     501          3,279          2,519          (85 )            30

Total general and administrative $ 65,797 $ 66,004 $ 82,144

          -  %          (20 )%
Percentage of revenue                   5.5 %          5.7 %          7.0 %


2019 Compared to 2018. Total general and administrative expenses were slightly
down in 2019 compared to 2018 primarily due to a $2.8 million decrease in
restructuring costs partially offset by a $2.7 million increase in allocated
facilities and other supporting overhead expenses.
Restructuring costs
First quarter 2018 restructuring plan. On January 2, 2018, we approved a
restructuring plan to further reduce future operating expenses and better align
resources around our long-term business strategy. The restructuring

                                       48
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                                  GoPro, Inc.

Management's Discussion and Analysis of Financial Condition and Results of

                                   Operations

provided for a reduction of our workforce of approximately 18%, the closure of
our aerial group and the consolidation of certain leased office facilities.
Under the first quarter 2018 restructuring plan, we recorded restructuring
charges of $17.8 million, including $14.1 million related to severance and $3.7
million related to accelerated depreciation and other charges, which primarily
relate to exiting office spaces and the closure of our aerial products business.
First quarter 2017 restructuring plan. On March 15, 2017, we approved a
restructuring plan that provided for a reduction of our workforce by
approximately 17% and the consolidation of certain leased office facilities.
Under the first quarter 2017 restructuring plan, we recorded restructuring
charges of $23.1 million, including $10.3 million related to severance and $12.8
million related to accelerated depreciation and other charges. The actions
associated with the first quarter 2017 restructuring plan were substantially
completed by the fourth quarter of 2017.
Fourth quarter 2016 restructuring plan. On November 29, 2016, we approved a
restructuring plan that provided for a reduction in our workforce of
approximately 15%, the closure of our entertainment group and the consolidation
of certain leased office facilities. Under the fourth quarter 2016 restructuring
plan, we recorded restructuring charges of $40.0 million, including $36.8
million related to severance and $3.2 million related to accelerated
depreciation and other charges, which primarily pertain to exiting office
spaces. The actions associated with the fourth quarter 2016 restructuring plan
were substantially completed by March 31, 2017.
See Note 11 Restructuring charges, to the Notes to Consolidated Financial
Statements.
Other income (expense)
                                      Year ended December 31,              2019 vs 2018    2018 vs 2017
(dollars in thousands)           2019           2018           2017          % Change        % Change
Interest expense             $  (19,229 )   $  (18,683 )   $  (13,660 )          3  %             37 %
Other income, net                 2,492          4,970            733          (50 )             578
Total other expense, net     $  (16,737 )   $  (13,713 )   $  (12,927 )         22  %              6 %


2019 Compared to 2018. Total other expense, net, increased $3.0 million in 2019
compared to 2018, primarily due to a $5.0 million gain on the sale and license
of intellectual property recognized in 2018, which did not recur in 2019,
partially offset by a $2.4 million increase in net foreign exchange rate-based
transaction gains.
Income taxes
                                       Year ended December 31,              2019 vs 2018     2018 vs 2017
(dollars in thousands)           2019           2018            2017          % Change         % Change
Income tax (benefit) expense $   (4,428 )   $    1,359      $    6,486          (426 )%          (79 )%
Effective tax rate                 23.2 %         (1.3 )%         (3.7 )%


2019 Compared to 2018. We recorded an income tax benefit of $4.4 million in 2019
on a pre-tax net loss of $19.1 million, which resulted in an effective tax rate
of 23.2%. Our income tax benefit was primarily related to an overall decrease in
losses before income taxes, a benefit from the reversal of previously accrued
tax provision on uncertain tax positions that were no longer necessary due to
the expiration of the statute of limitations and settlements with certain taxing
jurisdictions, partially offset by the valuation allowance on United States
federal and state net deferred tax assets and a shortfall tax impact from
stock-based compensation. Our 2018 negative effective tax rate of 1.3% resulted
primarily from a benefit related to the conclusion of an IRS audit and a benefit
related to the set up and current year activity of disregarded entities (foreign
branches) for United States tax purposes, partially offset by the valuation
allowance on United States federal and state net deferred tax assets and a
shortfall tax impact from stock-based compensation.
See Note 8 Income taxes, to the Notes to Consolidated Financial Statements for
additional information.

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                                  GoPro, Inc.

Management's Discussion and Analysis of Financial Condition and Results of

                                   Operations

Quarterly results of operations
The following table sets forth our unaudited quarterly consolidated results of
operations for each of the eight quarterly periods ended December 31, 2019.
                                                                Three months ended
(dollars in
thousands, except   Dec. 31,      Sept. 30,     June 30,      March 31,     Dec. 31,      Sept. 30,     June 30,      March 31,
per share amounts)    2019          2019          2019          2019          2018          2018          2018          2018
Revenue            $ 528,345     $ 131,169     $ 292,429     $ 242,708     $ 377,378     $ 285,936     $ 282,677     $ 202,346
Gross profit         201,825        28,432       102,185        80,347     

142,117 91,032 83,369 44,916 Operating expenses (1)

                  105,725        99,630       109,132       100,635      

109,150 112,386 114,205 119,655 Net income (loss) $ 95,820 $ (74,810 ) $ (11,287 ) $ (24,365 ) $ 31,671 $ (27,089 ) $ (37,269 ) $ (76,347 )


Net income (loss)
per share:
Basic              $    0.65     $   (0.51 )   $   (0.08 )   $   (0.17 )   $    0.22     $   (0.19 )   $   (0.27 )   $   (0.55 )
Diluted            $    0.65     $   (0.51 )   $   (0.08 )   $   (0.17 )   $    0.22     $   (0.19 )   $   (0.27 )   $   (0.55 )

(1) Included in operating expenses were restructuring charges of $1.7 million

for the quarter ended June 30, 2019, $4.0 million for the quarter ended

September 30, 2018, and $16.7 million for the quarter ended March 31, 2018.




Liquidity and Capital Resources
The following table presents selected financial information as of December 31,
2019 and 2018:
(dollars in thousands)                            December 31, 2019     December 31, 2018
Cash and cash equivalents                        $         150,301     $         152,095
Marketable securities                                       14,847                45,417
Total cash, cash equivalents and marketable
securities                                       $         165,148     $    

197,512

Percentage of total assets                                      21 %        

28 %



Our primary source of cash is receipts from sales of our products and services.
Other sources of cash are from proceeds from employee participation in the
employee stock purchase plan, the exercise of employee stock options, tax
refunds and facility subleases. The primary uses of cash are for inventory
procurement, payroll-related expenses, general operating expenses, including
advertising, marketing and office rent, purchases of property and equipment and
other costs of revenue.
As of December 31, 2019, our cash, cash equivalents and marketable securities of
$165.1 million reflected a decrease of $32.4 million, or 16.4%, compared to
December 31, 2018. The change was primarily due to an increase in accounts
receivable driven by the timing of sales in the fourth quarter and an increase
in inventory due to our production delay, partially offset by positive operating
cash (net loss of $14.6 million, offset by non-cash expenses of $78.0 million).
As of December 31, 2019, $23.9 million of cash was held by our foreign
subsidiaries.
Convertible Notes
In April 2017, we issued $175.0 million aggregate principal amount of 3.50%
Convertible Senior Notes in a private placement to purchasers for resale to
qualified institutional buyers. The Notes mature on April 15, 2022, unless
earlier repurchased or converted into shares of Class A common stock subject to
certain conditions. The Notes are convertible into cash, shares of the Class A
common stock, or a combination thereof, at our election, at an initial
conversion rate of 94.0071 shares of common stock per $1,000 principal amount of
the Notes, which is equivalent to an initial conversion price of approximately
$10.64 per share of common stock, subject to adjustment. We pay interest on the
Notes semi-annually in arrears on April 15 and October 15 of each year. Proceeds
received from the issuance of the Notes were allocated between a liability
component (long-term debt) and an equity component (additional paid-in capital).
The fair value of the liability component was measured using rates determined
for similar debt instruments without a conversion feature.

                                       50
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                                  GoPro, Inc.

Management's Discussion and Analysis of Financial Condition and Results of

                                   Operations

In connection with the Notes offering, we entered into a prepaid forward stock
repurchase transaction agreement (Prepaid Forward) with a financial institution.
Pursuant to the Prepaid Forward, we used approximately $78.0 million of the
proceeds from the offering of the Notes to pay the prepayment amount. The
aggregate number of shares of our Class A common stock underlying the Prepaid
Forward is approximately 9.2 million shares. The expiration date for the Prepaid
Forward is April 15, 2022, although it may be settled earlier in whole or in
part. Upon settlement of the Prepaid Forward, at expiration or upon any early
settlement, the forward counterparty will deliver to us the number of shares of
Class A common stock underlying the Prepaid Forward or the portion thereof being
settled early. The shares purchased under the Prepaid Forward were treated as
treasury stock on the consolidated balance sheet (and not outstanding for
purposes of the calculation of basic and diluted income (loss) per share), but
remain outstanding for corporate law purposes, including for purposes of any
future stockholders' votes, until the forward counterparty delivers the shares
underlying the Prepaid Forward to us. The net proceeds from the Convertible
Senior Notes offering of approximately $91 million were used for general
corporate purposes.
Liquidity
We believe, based on our most current projections, that our cash, cash
equivalents and marketable securities, and amounts available under our credit
facility, will be sufficient to address our working capital needs, capital
expenditures, outstanding commitments and other liquidity requirements for 12
months from the issuance of these financial statements.
•   We expect that operating expenses and inventory purchases will constitute a

material use of our cash balances. We intend to continue to manage our

operating activities in line with our existing cash and available financial

resources.

• In March 2016, we entered into a credit agreement with a syndicate of banks

that provided for a secured revolving credit facility under which we could

borrow up to an aggregate of $250.0 million. Our credit facility terminates

in March 2021. (See Note 4 Financing Arrangements, in the Notes to

Consolidated Financial Statements for additional information.)

• We have completed acquisitions in the past and we may evaluate additional

possible acquisitions of, or strategic investments in, businesses, products

and technologies that are complementary to our business, which may require

the use of cash.



In the future, we may require additional funding to respond to business
opportunities, challenges or unforeseen circumstances. If we are unable to
obtain adequate financing under our credit facility, or other sources, when we
require it, our ability to grow or support our business and to respond to
business challenges could be significantly limited. In the event additional
financing is required from outside sources, we may not be able to raise it on
terms acceptable to us or at all.
Summary of Cash Flow
The following table summarizes our cash flows for the periods indicated:
                                         Year ended December 31,             2019 vs 2018    2018 vs 2017
(in thousands)                      2019           2018           2017         % Change        % Change
Net cash provided by (used in):
Operating activities            $  (24,444 )   $  (42,434 )   $  (36,853 )        (42 )%           15  %
Investing activities            $   22,771     $   (6,235 )   $  (43,097 )       (465 )%          (86 )%
Financing activities            $   (1,044 )   $   (1,481 )   $   88,594          (30 )%         (102 )%


Cash flows from operating activities
Cash used in operating activities of $24.4 million was primarily attributable to
a net cash outflow of $87.8 million from changes in operating assets and
liabilities and a net loss of $14.6 million, offset by non-cash expenses of
$78.0 million. Cash outflows related to operating assets and liabilities
consisted primarily of a $71.3 million increase in accounts receivable and a
$27.8 million increase in inventory, partially offset by a $7.5 million

                                       51
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                                  GoPro, Inc.

Management's Discussion and Analysis of Financial Condition and Results of

                                   Operations

decrease in prepaid expenses and other assets, and a $3.2 million increase in
accounts payable and other liabilities.
Cash flows from investing activities
Our primary investing activities consisted of purchases, maturities and sales of
marketable securities, and purchases of property and equipment. Cash provided by
investing activities was $22.8 million resulting from maturities and sales of
marketable securities of $74.8 million, partially offset by purchases of
marketable securities of $43.6 million and net purchases of property and
equipment of $8.3 million.
Cash flows from financing activities
Our primary financing activities consisted of the issuance of equity securities
under our common stock plans. Cash used in financing activities was $1.0 million
resulting from $6.6 million in tax payments for net RSU settlements, partially
offset by $5.6 million received from stock purchases made through our employee
stock purchase plan and employee stock option exercises.
Off-balance sheet arrangements
During the periods presented, we did not have any relationships with
unconsolidated organizations or financial partnerships, such as structured
finance or special purpose entities, which would have been established for the
purpose of facilitating off-balance sheet arrangements or other contractually
narrow or limited purposes.
Contractual Obligations
As of December 31, 2019, our total undiscounted future expected payment
obligations under our agreements with terms longer than one year were
approximately $303.6 million, including $175.0 million for our Convertible
Senior Notes, $88.8 million for operating leases, $3.2 million for sponsorship
agreements and $36.6 million for other multi-year agreements. See Note 4
Financing Arrangements, for a discussion regarding our Convertible Senior Notes
and Note 9 Commitments, contingencies and guarantees, for a discussion regarding
facility leases and other contractual commitments in the Notes to Consolidated
Financial Statements.
Indemnifications
We have entered into indemnification agreements with our directors and executive
officers which require us to indemnify our directors and executive officers
against liabilities that may arise by reason of their status or service. In
addition, in the normal course of business, we enter into agreements that
contain a variety of representations and warranties and provide for general
indemnification. It is not possible to determine the maximum potential amount
under these indemnification agreements due to our limited history with prior
indemnification claims and the unique facts and circumstances involved in each
particular agreement. To date, the payments we have made under these agreements
have not had a material effect on our operating results, financial position or
cash flows. However, we may record charges in the future as a result of these
indemnification agreements.
Critical Accounting Policies and Estimates
We prepare our consolidated financial statements in accordance with GAAP. The
preparation of these consolidated financial statements requires us to make
estimates, assumptions and judgments that can significantly impact the amounts
we report as assets, liabilities, revenue, costs and expenses and the related
disclosures. Note 1 Summary of business and significant accounting policies, to
the Notes to Consolidated Financial Statements of this Annual Report on Form
10-K describes the significant accounting policies and methods used in the
preparation of the consolidated financial statements. We base our estimates on
historical experience and other assumptions that we believe are reasonable under
the circumstances. Our actual results could differ significantly from these
estimates. We believe that the accounting policies discussed below are critical
to understanding our historical and future performance as these policies involve
a greater degree of judgment and complexity. Our senior management has reviewed
these critical accounting policies and related disclosures with the audit
committee of our board of directors.

                                       52
--------------------------------------------------------------------------------

                                  GoPro, Inc.

Management's Discussion and Analysis of Financial Condition and Results of

                                   Operations

Revenue recognition
We derive substantially all of our revenue from the sale of cameras, mounts and
accessories, and subscription services. We recognize revenue when control of the
promised goods or services is transferred to customers, in an amount that
reflects the consideration we expect to be entitled to in exchange for those
goods or services. The transaction price we expect to be entitled to is
primarily comprised of product revenue, net of returns and variable
consideration, including sales incentives provided to customers.
For most of our revenue, revenue is recognized at the time the product is
delivered and when collection is deemed probable. For the Company's subscription
services, revenue is recognized on a ratable basis over the subscription term,
with payments received in advanced of services being rendered recorded in
deferred revenue. For customers who purchase products directly from gopro.com,
we retain a portion of the risk of loss on these sales during transit, which are
accounted for as fulfillment costs.
Our standard terms and conditions for non-web based sales do not allow for
product returns other than under warranty. However, we grant limited rights to
return product for certain large retailers and distributors. Estimates of
expected future product returns are recognized at the time of sale based on
analyses of historical return trends by customer class and other factors. An
estimated return liability along with a right to recover assets are recorded for
future product returns. Return trends are influenced by product life cycles, new
product introductions, market acceptance of products, product sell-through, the
type of customer, seasonality and other factors. Return rates may fluctuate over
time, but are sufficiently predictable to allow us to estimate expected future
product returns. Actual returns in any future period could differ from our
estimates, which could impact the revenue that we report.
Our camera sales contain multiple performance obligations that generally include
the following three separate obligations: a) a hardware component (camera and/or
accessories) and the embedded firmware essential to the functionality of the
hardware delivered at the time of sale, b) the implicit right to our
downloadable free apps and software solutions, and c) the implied right for the
customer to receive post contract support after the initial sale (PCS). PCS
includes the right to receive, on a when and if available basis, future
unspecified firmware upgrades and features as well as bug fixes, and email and
telephone support. Judgment is required to properly identify the accounting
units of multiple performance obligations and to determine the manner in which
revenue should be allocated among the obligations. We allocate the transaction
price to PCS based on a cost-plus method. The transaction price is allocated to
the remaining performance obligations on a residual value method. Our process to
allocate the transaction price considers multiple factors that may vary over
time depending upon the unique facts and circumstances related to each
deliverable, including: the level of support provided to customers, estimated
costs to provide our support, the amount of time and cost that is allocated to
our efforts to develop the undelivered elements, and market trends in the
pricing for similar offerings. While changes in the allocation of the
transaction price among the performance obligations will not affect the amount
of total revenue ultimately recognized for a particular sales arrangement, any
material changes in these allocations could impact the timing of revenue
recognition, which could have a material effect on our financial condition and
results of operations.
We provide our customers with sales incentives through various programs,
including cooperative advertising, price protection, marketing development funds
and other incentives. Sales incentives are considered to be variable
consideration, which we estimate and record as a reduction to revenue at the
date of sale. Sales incentives are influenced by historical experience, product
sell-through and other factors. Actual sales incentives and their impact on
reported revenue could differ from our estimates.
Inventory valuation
Inventory consists of finished goods and component parts, and is stated at the
lower of cost or net realizable value on a first-in, first-out basis. Our
inventory balances were $144.2 million and $116.5 million as of December 31,
2019 and 2018, respectively. Our assessment of market value requires the use of
estimates regarding the net realizable value of our inventory balances,
including an assessment of excess or obsolete inventory. We determine excess or
obsolete inventory based on multiple factors, including an estimate of the
future demand for our products within a specified time horizon, generally 12
months, product life cycle status, product development plans and current sales
levels.

                                       53
--------------------------------------------------------------------------------

                                  GoPro, Inc.

Management's Discussion and Analysis of Financial Condition and Results of

                                   Operations

Warranty

We generally provide a 12-month warranty coverage on all of our products except
in the EU where we provide a 24-month warranty. The Company also offers extended
warranty programs for a fee. Our standard warranty provides for repair or
replacement of the associated products during the warranty period. We establish
a liability for estimated product warranty costs at the time product revenue is
recognized. The warranty obligation is affected by product failure rates and the
related use of materials, labor costs and freight incurred in correcting any
product failure. Should actual product failure rates, use of materials or other
costs differ from our estimates, additional warranty liabilities could be
required, which could materially affect our results of operations.
Income taxes
We are subject to income taxes in the United States and multiple foreign
jurisdictions. Our effective tax rates differ from the United States federal
statutory rate, primarily due to changes in our valuation allowance, the effect
of non-United States operations, deductible and non-deductible stock-based
compensation expense, state taxes, federal research and development tax credits
and other adjustments. Our effective tax rate was 23.2%, a negative 1.3% and a
negative 3.7% in 2019, 2018 and 2017, respectively. The calculation of our
provision for income taxes involves the use of estimates, assumptions and
judgments while taking into account current tax laws, our interpretation of
current tax laws and possible outcomes of future tax audits. We review our tax
positions quarterly and adjust the balances as new information becomes
available. Our income tax rate is materially affected by the tax rates that
apply to our foreign earnings.
Uncertain tax positions. We recognize tax benefits from uncertain tax positions
only if it is more likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical merits of the
position. We file annual income tax returns in multiple taxing jurisdictions
around the world and a number of years may elapse before an uncertain tax
position is audited by the relevant tax authorities and finally resolved. We
have established reserves to address potential exposures related to tax
positions that could be challenged by tax authorities. While it is often
difficult to predict the final outcome or the timing of resolution of any
particular uncertain tax position, we believe that our reserves reflect the more
likely outcome.
Our future effective tax rates could be adversely affected if actual earnings
are different than our estimates, by changes in the valuation of our deferred
tax assets or liabilities, outcomes resulting from income tax examinations, or
by changes or interpretations in tax laws, regulations or accounting principles.
Goodwill and acquired intangible assets
When we acquire a business, we allocate the purchase price to the net tangible
and identifiable intangible assets, with the residual of the purchase price
recorded as goodwill. The determination of the fair value of the intangible
assets acquired involves significant judgments and estimates. These judgments
can include, but are not limited to, the cash flows that an asset is expected to
generate in the future, technology obsolescence, and the appropriate
weighted-average cost of capital. Our estimate of the fair value of certain
assets may differ materially from that determined by others who use different
assumptions or utilize different business models.
We perform an annual assessment of our goodwill during the fourth quarter to
determine if any events or circumstances exist, such as an adverse change in
business climate or a decline in the overall industry demand, that would
indicate that it is more likely than not that the fair value of our single
reporting unit would be reduced below its carrying amount. If further testing is
deemed necessary, we perform a two-step process. The first step involves
comparing the fair value of our reporting unit to its carrying value. The second
step, if necessary, measures the amount of impairment, if any, by comparing the
carrying value of the goodwill to its implied fair value. As of December 31,
2019, we determined that no impairment of the carrying value of goodwill was
required.

Recent Accounting Pronouncements
Refer to Recent Accounting Pronouncements in Note 1 Summary of business and
significant accounting policies, to Consolidated Financial Statements included
in Part II, Item 8 of this Annual Report on Form 10-K.


                                       54
--------------------------------------------------------------------------------

                                  GoPro, Inc.

Management's Discussion and Analysis of Financial Condition and Results of

                                   Operations

Non-GAAP Financial Measures
We report net income (loss) and diluted net income (loss) per share in
accordance with United States generally accepted accounting principles (GAAP)
and on a non-GAAP basis. Additionally, we report non-GAAP adjusted EBITDA. We
use 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 ASC 842.

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. Although we exclude the
    amortization of acquired intangible assets from our non-



                                       55
--------------------------------------------------------------------------------

                                  GoPro, Inc.

Management's Discussion and Analysis of Financial Condition and Results of

                                   Operations

GAAP net income (loss), management believes that it is important for investors
to understand that such intangible assets were recorded as part of purchase
accounting and contribute to revenue generation;
•   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. We utilize 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.



The following tables present a reconciliation of net income (loss) to adjusted
EBITDA:
                                 Three months ended December 31,
(in thousands)                       2019                 2018
Net income                    $         95,820       $       31,671
Income tax (benefit) expense            (3,928 )              1,655
Interest expense, net                    5,032                4,470
Depreciation and amortization            6,445                7,290
POP display amortization                 1,666                2,788
Stock-based compensation                 7,028                9,716
Restructuring and other costs               29                1,217
Adjusted EBITDA               $        112,092       $       58,807



                                                        Year ended December 31,
(in thousands)                      2019           2018           2017           2016           2015
Net income (loss)               $  (14,642 )   $ (109,034 )   $ (182,873 )   $ (419,003 )   $   36,131
Income tax (benefit) expense        (4,428 )        1,359          6,486         43,829         16,454
Interest expense                    17,872         17,278         12,804          1,401            234

Depreciation and amortization 26,268 35,063 41,478

     41,639         28,981
POP display amortization             7,504         13,482         19,190         19,623         16,829
Stock-based compensation            37,188         40,887         51,255         69,527         80,680
Impairment of intangible assets          -              -              -          7,088              -
Restructuring costs                  2,196         22,743         20,292         43,089              -
Adjusted EBITDA                 $   71,958     $   21,778     $  (31,368 )   $ (192,807 )   $  179,309




                                       56
--------------------------------------------------------------------------------

                                  GoPro, Inc.

Management's Discussion and Analysis of Financial Condition and Results of

                                   Operations

The following tables present a reconciliation of net income (loss) to non-GAAP net income (loss):

                                                            Three months ended December 31,
(in thousands, except per share data)                          2019                  2018
Net income                                              $         95,820       $       31,671
Stock-based compensation                                           7,028                9,716
Acquisition-related costs                                          1,864                2,101
Restructuring and other costs                                         29                1,217
Non-cash interest expense                                          2,354                2,124
Gain on sale and license of intellectual property                      -               (5,000 )
Income tax adjustments                                            (4,597 )                527
Non-GAAP net income                                     $        102,498       $       42,356

GAAP diluted net income per share                       $           0.65       $         0.22
Non-GAAP diluted net income per share                   $           0.70    

$ 0.30


Shares for diluted net income per share                          147,052              143,401



                                                    Year ended December 31,
(in thousands)                  2019           2018           2017           2016           2015
Net income (loss)           $  (14,642 )   $ (109,034 )   $ (182,873 )   $ (419,003 )   $   36,131
Stock-based compensation        37,188         40,887         51,255         69,527         80,680
Acquisition-related costs        7,818         11,456          8,991         17,346          5,370
Restructuring costs              2,196         22,743         20,292         43,089              -
Non-cash interest expense        8,987          8,112          5,345              -              -
Gain on sale and license of
intellectual property                -         (5,000 )            -              -              -

Income tax adjustments (1) (6,292 ) (1,073 ) 1,123

  87,794        (10,617 )
Non-GAAP net income (loss)  $   35,255     $  (31,909 )   $  (95,867 )   $ (201,247 )   $  111,564

GAAP diluted net income
(loss) per share            $    (0.10 )   $    (0.78 )   $    (1.32 )   $    (3.01 )   $     0.25
Non-GAAP diluted net income
(loss) per share            $     0.24     $    (0.23 )   $    (0.69 )   $  

(1.44 ) $ 0.76


GAAP shares for diluted net
income (loss) per share        144,891        139,495        138,056        139,425        146,486
Add: effect of dilutive
shares                           1,580              -              -              -              -

Non-GAAP shares for diluted net income (loss) per share 146,471 139,495 138,056 139,425 146,486

(1) Beginning in the first quarter of 2017, we implemented a cash-based non-GAAP

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 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.



                                       57
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                                  GoPro, Inc.

Management's Discussion and Analysis of Financial Condition and Results of

                                   Operations

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01/06GOPRO : Lights Up CES With Cameras and Accessories That Shine Brighter Than the ..
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2019GOPRO : Move Over, Rudolph. GoPro "Sleighs" the Holidays with New Light Mod*
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Financials (USD)
Sales 2020 1 171 M
EBIT 2020 76,4 M
Net income 2020 3,68 M
Finance 2020 86,7 M
Yield 2020 -
P/E ratio 2020 179x
P/E ratio 2021 30,3x
EV / Sales2020 0,44x
EV / Sales2021 0,38x
Capitalization 599 M
Chart GOPRO, INC.
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GoPro, Inc. Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends GOPRO, INC.
Short TermMid-TermLong Term
TrendsNeutralNeutralBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 7
Average target price 4,71  $
Last Close Price 4,08  $
Spread / Highest target 71,6%
Spread / Average Target 15,4%
Spread / Lowest Target -14,2%
EPS Revisions
Managers
NameTitle
Nicholas Woodman Chairman & Chief Executive Officer
Kevin Hinge Senior Vice President-Operations
Brian McGee CFO, Principal Accounting Officer & Executive VP
Kenneth A. Goldman Lead Independent Director
Peter C. Gotcher Independent Director
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1st jan.Capitalization (M$)
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