GoPro, Inc. 8-K 2015-02-05

Exhibit 99.1 Q4'14 Earnings Release

EXHIBIT 99.1

GOPRO ANNOUNCES FOURTH QUARTER AND FULL YEAR 2014 RESULTS

Fourth Quarter Revenue of $634 Million Up 75% vs Q4 2013; Full Year Revenue of $1.4 Billion Up 41% vs. 2013

5.2 Million Capture Devices Shipped in 2014, Up 35% vs. 2013

SAN MATEO, Calif., February 5, 2015 - GoPro, Inc. (NASDAQ: GPRO), maker of the world’s most versatile camera and enabler of some of today's most immersive and engaging content, today announced financial results for its fourth quarter and full year ended December 31, 2014.

“We're feeling good. GoPro was one of the best-selling products this holiday, selling-in an average of 1,000 units per hour for the entire quarter,” said GoPro Founder and CEO, Nicholas Woodman. “With this many new recruits to the GoPro movement, we’re sure to see some incredible content in 2015.”

Summary of Fourth Quarter 2014 GAAP Results:


•	Revenue of $633.9 million, compared to $361.5 million in the fourth quarter of 2013


•	Gross margin of 47.9%, compared to 41.9% in the fourth quarter of 2013


•	Operating income of $173.7 million, compared to $70.6 million in the fourth quarter of 2013


•	Net income attributable to common stockholders of $122.1 million or $0.83 per diluted share, compared to $33.3 million or $0.33 per diluted share in the fourth quarter of 2013


•	Cash, cash equivalents and marketable securities of $422.3 million, compared to $101.4 million at December 31, 2013

GoPro reports gross profit, operating expenses, operating income, net income and diluted net income per share in accordance with GAAP and additionally on a non-GAAP basis. Non-GAAP net income excludes, where applicable, the effect of stock-based compensation, amortization of acquired intangible assets and the tax impact of these excluded items. Additionally, GoPro reports non-GAAP adjusted EBITDA. A reconciliation of preliminary GAAP financial measures to non-GAAP financial measures, as well as a description of items excluded in the calculation of non-GAAP financial measures including adjusted EBITDA, is presented in the financial statement portion of this release.

Summary of Fourth Quarter Non-GAAP Results:


•	Gross margin of 48.0%, compared to 42.0% in the fourth quarter of 2013


•	Operating income of $193.2 million, compared to $74.4 million in the fourth quarter of 2013


•	Adjusted EBITDA of $202.9, compared to $81.9 million in the fourth quarter of 2013


•	Net income of $144.9 million or $0.99 per diluted share, compared to $46.4 million or $0.33 per diluted share in the fourth quarter of 2013

Fourth Quarter, Full Year 2014 and Recent GoPro Highlights Include:


•	According to NPD data October through December, GoPro capture devices accounted for three of the top five products, including #1, by dollar share in the combined digital camera and camcorder category.

•

Internationally GoPro made significant progress in 2014, including establishing a European Sales and Marketing Headquarters in Munich, Germany, developing in-region product assembly in Brazil, and taking first steps into China by launching with the country’s two largest online retailers, Tmall and JD, as well as other select retailers; in Q4 EMEA and APAC combined revenue grew approximately 70% year-over-year.


•	GoPro shipped 2.4 million capture devices in Q4 and 5.2 million in the full year 2014. GoPro capture devices shipped in Q4 2014 exceeded that of the full year 2012.


•	GoPro App downloads exceeded 2.8 million in Q4 bringing the life to date total to more than 13 million downloads; installs of GoPro Studio exceeded 1.5 million in Q4 with average daily exports of over 30,000.


•	Google reports more than 3.9 years of content was uploaded to YouTube in 2014 with GoPro in the title, 40% above of the 2.8 years posted in 2013.


•	For the full year 2014, videos published on GoPro’s YouTube Channel were up 71%, views were up 84%, and video minutes watched were up more than 140% year-over-year.


•	GoPro released a firmware update enhancing HERO4 cameras with new features including Time Lapse Video, 30/6 Burst Photo and ultra high frame rates for slow-motion playback.


•	Marriott Hotels launched a program at select Caribbean and Latin American resorts offering GoPro HERO4 cameras for guests to use during their stay and to share their experiences.


•	GoPro announced a partnership with Vislink to bring affordable live-broadcast capability to GoPro devices. The new technology was showcased in the NHL All Star Weekend - GoPro’s first agreement with a Big 4 team sports league. Live Broadcast was also featured in ESPN’s coverage of the Winter X Games.


•	GoPro announced an agreement with Roku to bring GoPro content to millions of viewers this spring; GoPro also launched the GoPro Channel App for LG Smart TVs.

Summary of 2014 GAAP Results:


•	Revenue of $1,394.2 million, compared to $985.7 million in 2013


•	Gross margin of 45.0%, compared to 36.7% in 2013


•	Operating income of $187.0 million, or 13.4% of revenue, an increase of $88.3 million year-over-year

Summary of 2014 Non-GAAP Results:


•	Gross margin of 45.1%, compared to 36.9% in 2013


•	Operating income of $259.6 million, or 18.6% of revenue, an increase of $148.9 million year-over-year


•	Adjusted EBITDA of $293.4 million, or 21.0% of revenue, up 119.4% year-over-year


•	Earnings per diluted share of $1.32, up 164.0% from 2013

Conference Call

GoPro management will host a conference call and live webcast for analysts and investors today at 2 p.m. Pacific Time (5 p.m. Eastern Time) to discuss the Company's financial results.

To listen to the live conference call, please dial toll free (800) 776-9057 or (913) 312-1393, access code 5030065, approximately 15 minutes prior to the start of the call. A live webcast of the conference call will be accessible on the "Events & Presentations" section of the Company's website at http://investor.gopro.com. To access the live webcast, please log in 15 minutes prior to the start of the call to download and install any necessary audio software. The webcast will be recorded and the recording will be available on GoPro’s website, http://investor.gopro.com, approximately two hours after the call and for six months thereafter.

About GoPro, Inc. (NASDAQ: GPRO):

GoPro, Inc. is transforming the way consumers capture, manage, share and enjoy meaningful life experiences. We do this by enabling people to self-capture engaging, immersive photo and video content of themselves participating in their favorite activities. Our customers include some of the world's most active and passionate people. The quality

and volume of their shared GoPro content, coupled with their enthusiasm for our brand, virally drives awareness and demand for our products.

What began as an idea to help athletes document themselves engaged in their sport has become a widely adopted solution for people to document themselves engaged in their interests, whatever they may be. From extreme to mainstream, professional to consumer, GoPro has enabled the world to capture and share its passions. And in doing so the world, in turn, is helping GoPro become one of the most exciting and aspirational companies of our time.

For more information, visit www.gopro.com or connect with GoPro on YouTube, Twitter, Facebook, Pinterest or LinkedIn.

GOPRO^® and HERO^® are trademarks or registered trademarks of GoPro Inc. in the United States and other countries.

Note on Forward-looking Statements

This press release may contain projections or other forward-looking statements regarding future events. These statements involve risks and uncertainties, and actual events or results may differ materially. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are the effects of the highly competitive market in which we operate; our dependence on sales of our capture devices for substantially all of our revenue; our reliance on third-party suppliers, some of which are sole-source suppliers, to provide components for our products; the fact that we do not expect to continue to grow in the future at the same rate as we have in the past, and profitability in recent periods might not be indicative of future performance; difficulty in accurately predicting our future customer demand; the importance of maintaining the value and reputation of our brand; any inability to successfully manage frequent product introductions and transitions; the effects of international business uncertainties; our reliance on our Chief Executive Officer; and other factors detailed in the Risk Factors section of the final prospectus that we filed with the Securities and Exchange Commission in connection with our public offering. These forward-looking statements speak only as of the date hereof or as of the date otherwise stated herein. GoPro disclaims any obligation to update these forward-looking statements.

# # # # #

Investor Contact:

Peter Salkowski (855) GOPROHD or (855) 467-7643

investor@gopro.com

Media Contact:

Jeff Brown (650) 332-7600 x 9997



GoPro, Inc.
Preliminary Condensed Consolidated Statements of Operations
(in thousands, except per share amounts, unaudited)


	Three months ended
	December 31, 2014			September 30, 2014			December 31, 2013

Revenue	$	633,913		$	279,971		$	361,452
Cost of revenue	330,100			155,932			209,948
Gross profit	303,813			124,039			151,504
Operating expenses:
Research and development	46,074			42,376			25,451
Sales and marketing	61,226			48,109			45,620
General and administrative	22,825			20,097			9,858
Total operating expenses	130,125			110,582			80,929
Operating income	173,688			13,457			70,575
Other expense, net	(1,115		)	(1,784		)	(2,224		)
Income before income taxes	172,573			11,673			68,351
Income tax (benefit) expense	50,313			(2,947		)	24,622
Net income	$	122,260		$	14,620		$	43,729

Less: Net income attributable to participating securities - basic	152			36			12,094
Less: Net income attributable to participating securities - diluted	132			35			10,389

Net income attributable to common stockholders - basic	$	122,108		$	14,584		$	31,635
Net income attributable to common stockholders - diluted	$	122,128		$	14,585		$	33,340

Net income per share attributable to common stockholders:
Basic	$	0.96		$	0.12		$	0.39
Diluted	$	0.83		$	0.10		$	0.33

Shares used in computing net income per share attributable to common stockholders:
Basic	126,849			125,713			81,197
Diluted	146,723			145,186			99,621



GoPro, Inc.
Preliminary Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)



	Year ended
	December 31, 2014			December 31, 2013
	(unaudited)
Revenue	$	1,394,205		$	985,737
Cost of revenue	766,970			623,953
Gross profit	627,235			361,784
Operating expenses:
Research and development	151,852			73,737
Sales and marketing	194,377			157,771
General and administrative	93,971			31,573
Total operating expenses	440,200			263,081
Operating income	187,035			98,703
Other expense, net	(6,060		)	(7,374		)
Income before income taxes	180,975			91,329
Income tax expense	52,887			30,751
Net income	$	128,088		$	60,578

Less: Net income attributable to participating securities - basic	16,512			16,727
Less: Net income attributable to participating securities - diluted	14,235			14,418

Net income attributable to common stockholders - basic	$	111,576		$	43,851
Net income attributable to common stockholders - diluted	$	113,853		$	46,160

Net income per share attributable to common stockholders:
Basic	$	1.07		$	0.54
Diluted	$	0.92		$	0.47

Shares used in computing net income per share attributable to common stockholders:
Basic	104,453			81,018
Diluted	123,630			98,941



GoPro, Inc.
Preliminary Condensed Consolidated Balance Sheets
(in thousands)


	December 31,		December 31,
	2014		2013
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	319,929	$	101,410
Marketable securities	102,327		—
Accounts receivable, net	183,992		122,669
Inventory, net	153,026		111,994
Prepaid expenses and other current assets	63,769		21,967
Total current assets	823,043		358,040
Property and equipment, net	41,556		32,111
Intangible assets and goodwill	17,032		17,365
Other long-term assets	36,060		32,155
Total assets	$	917,691	$	439,671

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	126,240	$	126,423
Accrued liabilities	115,775		86,391
Other current liabilities	16,754		27,483
Current portion of long-term debt	—		60,297
Total current liabilities	258,769		300,594
Long-term debt, less current portion	—		53,315
Other long-term liabilities	17,718		13,930
Total liabilities	276,487		367,839

Redeemable convertible preferred stock	—		77,198
Total stockholders’ equity (deficit)	641,204		(5,366		)
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)	$	917,691	$	439,671



GoPro, Inc.
Preliminary Condensed Consolidated Statement of Cash Flows
(in thousands, unaudited)

	Three Months						Year Ended
	December 31, 2014			December 31, 2013			December 31, 2014			December 31, 2013

Operating activities:
Net income	$	122,260		$	43,729		$	128,088		$	60,578
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	5,176			3,526			17,945			12,034
Deferred taxes	(13,112		)	(7,055		)	(16,920		)	(8,129		)
Excess tax benefit from stock-based compensation	(53,542		)	578			(77,134		)	(323		)
Stock-based compensation	19,256			3,540			71,399			10,887
Provision for doubtful accounts and inventory obsolescence	1,786			332			5,046			4,745
Other adjustments	257			230			1,865			1,224
Changes in assets and liabilities:
Accounts receivable	(89,989		)	(66,579		)	(62,294		)	(43,117		)
Inventories	(37,239		)	(7,950		)	(45,108		)	(55,664		)
Prepaid expenses and other assets	(4,475		)	(270		)	(30,317		)	(15,355		)
Accounts payable and accrued liabilities	87,029			110,003			98,354			135,197
Deferred revenue	5,783			2,246			5,998			400
Net cash provided by operating activities	$	43,190		$	82,330		$	96,922		$	102,477
Investing activities:
Purchases of property and equipment	(4,644		)	(3,747		)	(27,498		)	(18,325		)
Purchases of marketable securities, net of maturities	(102,744		)	—			(102,744		)	—
Proceeds from sale of property and equipment	—			—			288			—
Net cash used in acquisitions	(750		)	(2,912		)	(3,950		)	(2,912		)
Net cash used in investing activities	$	(108,138	)	$	(6,659	)	$	(133,904	)	$	(21,237	)
Financing activities:
Net proceeds from issuance of common stock	97,429			327			301,577			527
Payment of debt issuance costs and deferred public offering costs	(1,283		)	(139		)	(5,730		)	(1,165		)
Repayments of debt, net of issuances	—			(21,500		)	(114,000		)	(16,000		)
Excess tax benefit from stock-based compensation	53,542			(578		)	77,134			323
Other financing activities	(2,560		)	—			(3,480		)	—
Net cash provided by (used in) financing activities	$	147,128		$	(21,890	)	$	255,501		$	(16,315	)
Net increase in cash and cash equivalents	$	82,180		$	53,781		$	218,519		$	64,925
Cash and cash equivalents:
Beginning of period	$	237,749		$	47,629		$	101,410		$	36,485
End of period	$	319,929		$	101,410		$	319,929		$	101,410



GoPro, Inc.
Reconciliation of Preliminary GAAP to Non-GAAP Financial Measures
(in thousands, except per share data, unaudited)


	Three months ended
	December 31, 2014		September 30, 2014		December 31, 2013

GAAP NET INCOME	$	122,260	$	14,620	$	43,729
Stock-based compensation
Cost of revenue	280		233		160
Research and development	6,154		2,428		1,266
Sales and marketing	4,135		3,225		1,593
General and administrative	8,687		8,027		521
Total stock-based compensation	19,256		13,913		3,540

Amortization of acquisition-related intangible assets
Cost of revenue	221		223		222
Research and development	43		20		16
Sales and marketing	33		33		48
Total amortization of acquisition-related intangible assets	297		276		286
Income tax adjustments	3,085

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