GOPRO, INC. 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
on
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
• 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 theimpact 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 toexclude 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.
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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,
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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
6 (3 ) Direct channel$ 548,322 $ 551,095 $ 634,888 (1 ) (13 ) Percentage of revenue 45.9 % 48.0 % 53.8 %
Distribution channel
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 %
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.
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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
(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
- % (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. OnJanuary 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 -------------------------------------------------------------------------------- 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)
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
for the quarter ended
Liquidity and Capital Resources The following table presents selected financial information as ofDecember 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 ofDecember 31, 2019 , our cash, cash equivalents and marketable securities of$165.1 million reflected a decrease of$32.4 million , or 16.4%, compared toDecember 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 ofDecember 31, 2019 ,$23.9 million of cash was held by our foreign subsidiaries. Convertible Notes InApril 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 onApril 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 onApril 15 andOctober 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 --------------------------------------------------------------------------------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
that provided for a secured revolving credit facility under which we could
borrow up to an aggregate of
in
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.
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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
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GoPro, Inc. Management's Discussion and Analysis of Financial Condition and Results of
OperationsWarranty
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 inthe United States and multiple foreign jurisdictions. Our effective tax rates differ fromthe 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 ofDecember 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-
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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
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
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GoPro, Inc. Management's Discussion and Analysis of Financial Condition and Results of
OperationsThe 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 )
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.
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GoPro, Inc. Management's Discussion and Analysis of Financial Condition and Results of
Operations© Edgar Online, source
