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Share Name | Share Symbol | Market | Type |
---|---|---|---|
GoPro Inc | NASDAQ:GPRO | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.02 | 1.05% | 1.93 | 1.75 | 2.03 | 1.98 | 1.90 | 1.95 | 1,039,760 | 05:00:05 |
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þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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|
|
|
For the quarterly period ended September 30, 2017
|
|
|
|
OR
|
|
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
For the transition period from ________________ to ________________
|
Delaware
|
|
77-0629474
|
(State or other jurisdiction of
|
|
(I.R.S. Employer
|
incorporation or organization)
|
|
Identification No.)
|
|
|
|
3000 Clearview Way
San Mateo, California |
|
94402
|
(Address of principal executive offices)
|
|
(Zip Code)
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|
Page
|
PART I. FINANCIAL INFORMATION
|
||
Item 1.
|
Financial Statements:
|
|
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
PART II. OTHER INFORMATION
|
||
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
||
|
(in thousands, except par values)
|
September 30,
2017 |
|
December 31,
2016 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
164,616
|
|
|
$
|
192,114
|
|
Marketable securities
|
31,946
|
|
|
25,839
|
|
||
Accounts receivable, net
|
100,026
|
|
|
164,553
|
|
||
Inventory
|
177,190
|
|
|
167,192
|
|
||
Prepaid expenses and other current assets
|
36,471
|
|
|
38,115
|
|
||
Total current assets
|
510,249
|
|
|
587,813
|
|
||
Property and equipment, net
|
74,196
|
|
|
76,509
|
|
||
Intangible assets, net
|
26,860
|
|
|
33,530
|
|
||
Goodwill
|
146,459
|
|
|
146,459
|
|
||
Other long-term assets
|
67,665
|
|
|
78,329
|
|
||
Total assets
|
$
|
825,429
|
|
|
$
|
922,640
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
143,054
|
|
|
$
|
205,028
|
|
Accrued liabilities
|
149,395
|
|
|
211,323
|
|
||
Deferred revenue
|
16,301
|
|
|
14,388
|
|
||
Total current liabilities
|
308,750
|
|
|
430,739
|
|
||
Long-term taxes payable
|
21,670
|
|
|
26,386
|
|
||
Long-term debt
|
127,861
|
|
|
—
|
|
||
Other long-term liabilities
|
26,878
|
|
|
18,570
|
|
||
Total liabilities
|
485,159
|
|
|
475,695
|
|
||
|
|
|
|
||||
Commitments, contingencies and guarantees (Note 9)
|
|
|
|
||||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.0001 par value, 5,000 shares authorized; none issued
|
—
|
|
|
—
|
|
||
Common stock and additional paid-in capital, $0.0001 par value, 500,000 Class A shares authorized, 100,079 and 104,647 shares issued and outstanding, respectively; 150,000 Class B shares authorized, 36,673 and 36,712 shares issued and outstanding, respectively
|
840,169
|
|
|
757,226
|
|
||
Treasury stock, at cost, 10,710 and 1,545 shares, respectively
|
(113,613
|
)
|
|
(35,613
|
)
|
||
Accumulated deficit
|
(386,286
|
)
|
|
(274,668
|
)
|
||
Total stockholders’ equity
|
340,270
|
|
|
446,945
|
|
||
Total liabilities and stockholders’ equity
|
$
|
825,429
|
|
|
$
|
922,640
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
(in thousands, except per share data)
|
September 30,
2017 |
|
September 30,
2016 |
|
September 30,
2017 |
|
September 30,
2016 |
||||||||
Revenue
|
$
|
329,805
|
|
|
$
|
240,569
|
|
|
$
|
844,945
|
|
|
$
|
644,860
|
|
Cost of revenue
|
199,259
|
|
|
143,500
|
|
|
540,201
|
|
|
395,075
|
|
||||
Gross profit
|
130,546
|
|
|
97,069
|
|
|
304,744
|
|
|
249,785
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
55,098
|
|
|
96,146
|
|
|
176,761
|
|
|
266,174
|
|
||||
Sales and marketing
|
46,622
|
|
|
91,567
|
|
|
171,156
|
|
|
255,904
|
|
||||
General and administrative
|
20,777
|
|
|
24,945
|
|
|
61,976
|
|
|
74,108
|
|
||||
Total operating expenses
|
122,497
|
|
|
212,658
|
|
|
409,893
|
|
|
596,186
|
|
||||
Operating income (loss)
|
8,049
|
|
|
(115,589
|
)
|
|
(105,149
|
)
|
|
(346,401
|
)
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(4,554
|
)
|
|
(1,156
|
)
|
|
(9,152
|
)
|
|
(1,815
|
)
|
||||
Other income, net
|
322
|
|
|
348
|
|
|
705
|
|
|
1,360
|
|
||||
Total other income (expense), net
|
(4,232
|
)
|
|
(808
|
)
|
|
(8,447
|
)
|
|
(455
|
)
|
||||
Income (loss) before income taxes
|
3,817
|
|
|
(116,397
|
)
|
|
(113,596
|
)
|
|
(346,856
|
)
|
||||
Income tax expense (benefit)
|
(10,844
|
)
|
|
(12,329
|
)
|
|
13,429
|
|
|
(43,562
|
)
|
||||
Net Income (loss)
|
$
|
14,661
|
|
|
$
|
(104,068
|
)
|
|
$
|
(127,025
|
)
|
|
$
|
(303,294
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.11
|
|
|
$
|
(0.74
|
)
|
|
$
|
(0.92
|
)
|
|
$
|
(2.18
|
)
|
Diluted
|
$
|
0.10
|
|
|
$
|
(0.74
|
)
|
|
$
|
(0.92
|
)
|
|
$
|
(2.18
|
)
|
|
|
|
|
|
|
|
|
||||||||
Shares used to compute net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
136,236
|
|
|
140,124
|
|
|
138,450
|
|
|
138,875
|
|
||||
Diluted
|
140,288
|
|
|
140,124
|
|
|
138,450
|
|
|
138,875
|
|
|
Nine months ended
|
||||||
(in thousands)
|
September 30, 2017
|
|
September 30, 2016
|
||||
Operating activities:
|
|
|
|
||||
Net loss
|
$
|
(127,025
|
)
|
|
$
|
(303,294
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
32,260
|
|
|
30,540
|
|
||
Stock-based compensation
|
36,235
|
|
|
51,601
|
|
||
Excess tax benefit from stock-based compensation
(1)
|
—
|
|
|
(2,374
|
)
|
||
Deferred income taxes
|
(1,818
|
)
|
|
(20,956
|
)
|
||
Non-cash restructuring charges
|
3,859
|
|
|
—
|
|
||
Non-cash interest expense
|
3,366
|
|
|
—
|
|
||
Impairment of intangible assets
|
—
|
|
|
6,000
|
|
||
Other
|
3,891
|
|
|
4,754
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
64,874
|
|
|
53,706
|
|
||
Inventory
|
(9,998
|
)
|
|
43,001
|
|
||
Prepaid expenses and other assets
|
4,850
|
|
|
(10,526
|
)
|
||
Accounts payable and other liabilities
|
(106,432
|
)
|
|
28,584
|
|
||
Deferred revenue
|
2,095
|
|
|
(1,485
|
)
|
||
Net cash used in operating activities
|
(93,843
|
)
|
|
(120,449
|
)
|
||
|
|
|
|
||||
Investing activities:
|
|
|
|
||||
Purchases of property and equipment, net
|
(18,313
|
)
|
|
(26,516
|
)
|
||
Purchases of marketable securities
|
(31,918
|
)
|
|
—
|
|
||
Maturities of marketable securities
|
14,160
|
|
|
93,224
|
|
||
Sale of marketable securities
|
11,623
|
|
|
6,791
|
|
||
Acquisitions, net of cash acquired
|
—
|
|
|
(104,353
|
)
|
||
Net cash used in investing activities
|
(24,448
|
)
|
|
(30,854
|
)
|
||
|
|
|
|
||||
Financing activities:
|
|
|
|
||||
Proceeds from issuance of common stock
|
9,623
|
|
|
6,202
|
|
||
Taxes paid related to net share settlement of equity awards
|
(11,278
|
)
|
|
(860
|
)
|
||
Proceeds from issuance of convertible senior notes
|
175,000
|
|
|
—
|
|
||
Prepayment of forward stock repurchase transaction
|
(78,000
|
)
|
|
—
|
|
||
Excess tax benefit from stock-based compensation
(1)
|
—
|
|
|
2,374
|
|
||
Payment of deferred acquisition-related consideration
|
(76
|
)
|
|
(950
|
)
|
||
Payment of debt issuance costs
|
(5,963
|
)
|
|
(3,287
|
)
|
||
Net cash provided by financing activities
|
89,306
|
|
|
3,479
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
1,487
|
|
|
(271
|
)
|
||
Net decrease in cash and cash equivalents
|
(27,498
|
)
|
|
(148,095
|
)
|
||
Cash and cash equivalents at beginning of period
|
192,114
|
|
|
279,672
|
|
||
Cash and cash equivalents at end of period
|
$
|
164,616
|
|
|
$
|
131,577
|
|
Standard
|
|
Description
|
|
Date of adoption
|
|
Effect on the financial statements or other significant matters
|
Standards that were adopted
|
|
|
|
|
||
Stock Compensation
Accounting Standards Update (ASU) No. 2016-09 (Topic 718) |
|
This standard simplifies certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification on the statement of cash flows. The new guidance also allows an entity to make a policy election to account for forfeitures as they occur.
|
|
January 1, 2017
|
|
Adoption of the standard resulted in the recognition of previously unrecognized excess tax benefits using the modified retrospective method. The Company recorded an increase to U.S. deferred tax assets of $179 million which was recorded directly against accumulated deficit. The increased deferred tax asset allowed for an offset against long-term income tax payable of $16 million. A full valuation allowance was provided on the remaining U.S. deferred tax asset of $163 million, which was also recorded against accumulated deficit. The net impact to equity was a decrease in the accumulated deficit of approximately $16 million. The Company elected to apply the change in presentation to the statements of cash flows prospectively and elected to account for forfeitures as they occur.
|
Standards not yet adopted
|
|
|
|
|
||
Revenue from Contracts with Customers
ASU No. 2014-09, 2016-08, 2016-10 and 2016-12 (Topic 606)
|
|
The updated revenue standard establishes principles for recognizing revenue and develops a common revenue standard for all industries. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard requires that entities disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Early adoption is permitted, but not earlier than the first quarter of 2017. The retrospective or cumulative effect transition method is permitted.
|
|
January 1, 2018
|
|
The Company completed an initial analysis of the impact of the standard on its sales contract portfolio by reviewing its current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to its sales contracts. Although the Company is continuing to review certain aspects of its policies and practices, the Company's analysis of its contracts under the new standard supports the recognition of its product revenue at the time product is shipped, consistent with its current revenue policy. The Company expects that, as a result of the adoption of the new guidance, certain sales incentives will need to be estimated as variable consideration at the time product is shipped and included as a reduction to the transaction price. This will result in a reduction of revenue being recorded earlier than under the existing guidance. The Company recognized approximately $30 and $42 million as a reduction to revenue for such sales incentives for the first nine months of 2017 and for the full year 2016, respectively. The Company does not expect that the adoption of ASU 2014-09 will have a material impact to the quarterly or yearly revenue recognized. The Company expects to utilize the modified retrospective transition method.
|
Leases
ASU No. 2016-02(Topic 842)
|
|
This standard requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. Lessees would recognize a right-to-use asset and lease liability for all leases with terms of more than 12 months. The new standard should be applied on a modified retrospective basis.
|
|
January 1, 2019
|
|
Although the Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures, the Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption.
|
Income Taxes
ASU No. 2016-16 (Topic 740)
|
|
This standard requires entities to recognize the income tax consequences of intra-entity asset transfers when they occur. This removes the exception to postpone recognition until the asset has been sold to an outside party. The updated standard is effective in annual and interim periods in fiscal years beginning after December 15, 2017, with early adoption permitted during the first interim period of a fiscal year.
|
|
January 1, 2018
|
|
The Company completed an initial analysis of the impact of the new standard and intends to apply the modified retrospective approach upon adoption. The Company will continue to evaluate the impact of the new standard but does expect that the adoption of ASU 2016-16 on January 1, 2018 will result in a $10-15 million cumulative-effect increase in accumulated deficit on its consolidated financial statements and related disclosures.
|
Intangible - Goodwill and Other
ASU No. 2017-04 (Topic 350)
|
|
This standard simplifies the accounting for goodwill and removes Step 2 of the annual goodwill impairment test. Upon adoption, goodwill impairment will be determined based on the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017, and requires a prospective transition method.
|
|
January 1, 2020
|
|
The Company does not expect that the adoption of this standard will have a material impact on its consolidated financial statements and related disclosures.
|
Stock Compensation
ASU No. 2017-09 (Topic 718) |
|
This standard clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under this standard, modification is required only if the fair value, the vesting conditions, or the classification of an award as equity or liability changes as a result of the change in terms or conditions. The updated standard is effective in annual and interim periods in fiscal years beginning after December 15, 2017, with early adoption permitted.
|
|
January 1, 2018
|
|
The Company is evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures.
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
(in thousands)
|
Level 1
|
|
Level 2
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||||||||
Cash equivalents
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
$
|
45,954
|
|
|
$
|
—
|
|
|
$
|
45,954
|
|
|
$
|
18,024
|
|
|
$
|
—
|
|
|
$
|
18,024
|
|
Commercial paper
|
9,991
|
|
|
—
|
|
|
9,991
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Corporate debt securities
|
—
|
|
|
4,500
|
|
|
4,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total cash equivalents
|
$
|
55,945
|
|
|
$
|
4,500
|
|
|
$
|
60,445
|
|
|
$
|
18,024
|
|
|
$
|
—
|
|
|
$
|
18,024
|
|
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. agency securities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,283
|
|
|
$
|
8,283
|
|
Commercial paper
|
17,428
|
|
|
—
|
|
|
17,428
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Corporate debt securities
|
—
|
|
|
14,518
|
|
|
14,518
|
|
|
—
|
|
|
15,226
|
|
|
15,226
|
|
||||||
Municipal securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,330
|
|
|
2,330
|
|
||||||
Total marketable securities
|
$
|
17,428
|
|
|
$
|
14,518
|
|
|
$
|
31,946
|
|
|
$
|
—
|
|
|
$
|
25,839
|
|
|
$
|
25,839
|
|
(in thousands)
|
September 30,
2017 |
|
December 31, 2016
|
||||
Components
|
$
|
25,997
|
|
|
$
|
25,236
|
|
Finished goods
|
151,193
|
|
|
141,956
|
|
||
Total inventory
|
$
|
177,190
|
|
|
$
|
167,192
|
|
(in thousands)
|
September 30,
2017 |
|
December 31, 2016
|
||||
Leasehold improvements
|
$
|
67,611
|
|
|
$
|
48,103
|
|
Production, engineering and other equipment
|
47,221
|
|
|
46,328
|
|
||
Tooling
|
24,865
|
|
|
23,742
|
|
||
Computers and software
|
20,834
|
|
|
18,750
|
|
||
Furniture and office equipment
|
14,602
|
|
|
12,530
|
|
||
Tradeshow equipment and other
|
7,549
|
|
|
7,578
|
|
||
Construction in progress
|
284
|
|
|
1,870
|
|
||
Gross property and equipment
|
182,966
|
|
|
158,901
|
|
||
Less: Accumulated depreciation and amortization
|
(108,770
|
)
|
|
(82,392
|
)
|
||
Property and equipment, net
|
$
|
74,196
|
|
|
$
|
76,509
|
|
|
September 30, 2017
|
||||||||||
(in thousands)
|
Gross carrying value
|
|
Accumulated
amortization
|
|
Net carrying value
|
||||||
Purchased technology
|
$
|
49,901
|
|
|
$
|
(23,656
|
)
|
|
$
|
26,245
|
|
In-process research and development (IPR&D)
|
615
|
|
|
—
|
|
|
615
|
|
|||
Total intangible assets
|
$
|
50,516
|
|
|
$
|
(23,656
|
)
|
|
$
|
26,860
|
|
|
December 31, 2016
|
||||||||||
(in thousands)
|
Gross carrying value
|
|
Accumulated
amortization |
|
Net carrying value
|
||||||
Purchased technology
|
$
|
47,001
|
|
|
$
|
(17,086
|
)
|
|
$
|
29,915
|
|
IPR&D
|
3,615
|
|
|
—
|
|
|
3,615
|
|
|||
Total intangible assets
|
$
|
50,616
|
|
|
$
|
(17,086
|
)
|
|
$
|
33,530
|
|
(in thousands)
|
Total
|
||
Year ending December 31,
|
|
||
2017 (remaining 3 months)
|
$
|
2,361
|
|
2018
|
9,263
|
|
|
2019
|
8,753
|
|
|
2020
|
4,998
|
|
|
2021
|
870
|
|
|
|
$
|
26,245
|
|
(in thousands)
|
September 30,
2017 |
|
December 31, 2016
|
||||
Accrued payables
|
$
|
38,504
|
|
|
$
|
91,655
|
|
Employee related liabilities
(1)
|
25,503
|
|
|
42,577
|
|
||
Accrued sales incentives
|
23,712
|
|
|
40,070
|
|
||
Warranty liability
|
9,303
|
|
|
11,456
|
|
||
Customer deposits
|
2,735
|
|
|
4,381
|
|
||
Income taxes payable
|
7,477
|
|
|
2,756
|
|
||
Purchase order commitments
|
2,774
|
|
|
4,730
|
|
||
Inventory received
|
25,669
|
|
|
3,950
|
|
||
Other
|
13,718
|
|
|
9,748
|
|
||
Accrued liabilities
|
$
|
149,395
|
|
|
$
|
211,323
|
|
(1)
|
See Note 11 for amounts associated with restructuring liabilities.
|
•
|
during any calendar quarter beginning after the calendar quarter ending on September 30, 2017, if the last reported sale price of Class A common stock for at least 20 trading days (whether or not consecutive) during the last 30 consecutive trading days of the immediately preceding fiscal quarter is greater than or equal to
130%
of the conversion price of the Notes on each applicable trading day;
|
•
|
during the five-business day period following any five consecutive trading day period in which the trading price for the Notes is less than
98%
of the product of the last reported sale price of Class A common stock and the conversion rate for the Notes on each such trading day; or
|
•
|
upon the occurrence of specified corporate events.
|
|
Options outstanding
|
|||||||||
|
Shares (in thousands)
|
|
Weighted- average
exercise price |
|
Aggregate
intrinsic value (in thousands) |
|||||
Outstanding at December 31, 2016:
|
12,379
|
|
|
$
|
12.17
|
|
|
$
|
32,772
|
|
Granted
|
1,773
|
|
|
9.31
|
|
|
|
|||
Exercised
|
(1,296
|
)
|
|
1.64
|
|
|
|
|||
Forfeited/Cancelled
|
(2,910
|
)
|
|
18.19
|
|
|
|
|||
Outstanding at September 30, 2017:
|
9,946
|
|
|
11.28
|
|
|
33,525
|
|
||
|
|
|
|
|
|
|||||
Exercisable at September 30, 2017
|
8,069
|
|
|
$
|
11.01
|
|
|
$
|
31,378
|
|
|
Shares (in thousands)
|
|
Weighted- average grant date fair value
|
|||
Non-vested shares at December 31, 2016:
|
7,970
|
|
|
$
|
18.08
|
|
Granted
|
5,763
|
|
|
9.45
|
|
|
Vested
|
(3,558
|
)
|
|
14.43
|
|
|
Forfeited
|
(3,103
|
)
|
|
16.93
|
|
|
Non-vested shares at September 30, 2017:
|
7,072
|
|
|
$
|
13.38
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
(in thousands)
|
September 30,
2017 |
|
September 30,
2016 |
|
September 30,
2017 |
|
September 30,
2016 |
||||||||
Cost of revenue
|
$
|
445
|
|
|
$
|
426
|
|
|
$
|
1,355
|
|
|
$
|
1,195
|
|
Research and development
|
5,967
|
|
|
8,039
|
|
|
17,039
|
|
|
21,135
|
|
||||
Sales and marketing
|
2,609
|
|
|
3,816
|
|
|
7,295
|
|
|
10,699
|
|
||||
General and administrative
|
2,854
|
|
|
6,185
|
|
|
10,546
|
|
|
18,572
|
|
||||
Total stock-based compensation expense
|
$
|
11,875
|
|
|
$
|
18,466
|
|
|
$
|
36,235
|
|
|
$
|
51,601
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
(in thousands, except per share data)
|
September 30,
2017 |
|
September 30,
2016 |
|
September 30,
2017 |
|
September 30,
2016 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
14,661
|
|
|
$
|
(104,068
|
)
|
|
$
|
(127,025
|
)
|
|
$
|
(303,294
|
)
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares—basic for Class A and Class B common stock
|
136,236
|
|
|
140,124
|
|
|
138,450
|
|
|
138,875
|
|
||||
Effect of dilutive stock-based awards
|
4,052
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted-average common shares—diluted for Class A and Class B common stock
|
140,288
|
|
|
140,124
|
|
|
138,450
|
|
|
138,875
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.11
|
|
|
$
|
(0.74
|
)
|
|
$
|
(0.92
|
)
|
|
$
|
(2.18
|
)
|
Diluted
|
$
|
0.10
|
|
|
$
|
(0.74
|
)
|
|
$
|
(0.92
|
)
|
|
$
|
(2.18
|
)
|
|
Three months ended
|
|
Nine months ended
|
||||||||
(in thousands)
|
September 30,
2017 |
|
September 30,
2016 |
|
September 30,
2017 |
|
September 30,
2016 |
||||
Effect of anti-dilutive stock-based awards
|
10,573
|
|
|
22,693
|
|
|
10,837
|
|
|
20,803
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
(dollars in thousands)
|
September 30,
2017 |
|
September 30,
2016 |
|
September 30,
2017 |
|
September 30,
2016 |
||||||||
Income tax expense (benefit)
|
$
|
(10,844
|
)
|
|
$
|
(12,329
|
)
|
|
$
|
13,429
|
|
|
$
|
(43,562
|
)
|
Effective tax rate
|
(284.1
|
)%
|
|
10.6
|
%
|
|
(11.8
|
)%
|
|
12.6
|
%
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
(in thousands)
|
September 30,
2017 |
|
September 30,
2016 |
|
September 30,
2017 |
|
September 30,
2016 |
||||||||
Beginning balances
|
$
|
9,974
|
|
|
$
|
8,939
|
|
|
$
|
11,944
|
|
|
$
|
10,855
|
|
Charged to cost of revenue
|
5,986
|
|
|
4,485
|
|
|
13,394
|
|
|
13,026
|
|
||||
Settlements of warranty claims
|
(6,273
|
)
|
|
(4,068
|
)
|
|
(15,651
|
)
|
|
(14,525
|
)
|
||||
Ending balances
|
$
|
9,687
|
|
|
$
|
9,356
|
|
|
$
|
9,687
|
|
|
$
|
9,356
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
(in thousands)
|
September 30,
2017 |
|
September 30,
2016 |
|
September 30,
2017 |
|
September 30,
2016 |
||||||||
Accounts receivable sold
|
$
|
51,593
|
|
|
$
|
35,210
|
|
|
$
|
130,555
|
|
|
$
|
99,514
|
|
Factoring fees
|
473
|
|
|
267
|
|
|
1,153
|
|
|
726
|
|
|
Three months ended
|
|
Nine months ended
|
||||
|
September 30,
2017 |
|
September 30,
2016 |
|
September 30,
2017 |
|
September 30,
2016 |
Customer A
|
16%
|
|
21%
|
|
16%
|
|
19%
|
Customer B
|
*
|
|
10%
|
|
*
|
|
12%
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
(in thousands)
|
September 30,
2017 |
|
September 30,
2016 |
|
September 30,
2017 |
|
September 30,
2016 |
||||||||
Americas
|
$
|
163,430
|
|
|
$
|
135,895
|
|
|
$
|
416,164
|
|
|
$
|
345,770
|
|
Europe, Middle East and Africa (EMEA)
|
97,179
|
|
|
77,346
|
|
|
245,256
|
|
|
198,338
|
|
||||
Asia and Pacific (APAC)
|
69,196
|
|
|
27,328
|
|
|
183,525
|
|
|
100,752
|
|
||||
Total revenue
|
$
|
329,805
|
|
|
$
|
240,569
|
|
|
$
|
844,945
|
|
|
$
|
644,860
|
|
|
Nine months ended
|
||||||
(in thousands)
|
September 30,
2017 |
|
September 30,
2016 |
||||
Cost of revenue
|
$
|
458
|
|
|
$
|
364
|
|
Research and development
|
8,406
|
|
|
2,655
|
|
||
Sales and marketing
|
5,960
|
|
|
2,678
|
|
||
General and administrative
|
1,964
|
|
|
811
|
|
||
Total restructuring charges
|
$
|
16,788
|
|
|
$
|
6,508
|
|
(in thousands)
|
Severance
|
|
Other
|
|
Total
|
||||||
Restructuring liability as of December 31, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restructuring charges
|
10,435
|
|
|
3,171
|
|
|
13,606
|
|
|||
Cash paid
|
(9,103
|
)
|
|
(71
|
)
|
|
(9,174
|
)
|
|||
Non-cash reductions
|
(803
|
)
|
|
(2,925
|
)
|
|
(3,728
|
)
|
|||
Restructuring liability as of September 30, 2017
|
$
|
529
|
|
|
$
|
175
|
|
|
$
|
704
|
|
(in thousands)
|
Severance
|
|
Other
|
|
Total
|
||||||
Restructuring liability as of December 31, 2016
|
$
|
9,660
|
|
|
$
|
879
|
|
|
$
|
10,539
|
|
Restructuring charges
|
2,127
|
|
|
1,055
|
|
|
3,182
|
|
|||
Cash paid
|
(11,363
|
)
|
|
(1,884
|
)
|
|
(13,247
|
)
|
|||
Non-cash reductions
|
—
|
|
|
—
|
|
|
—
|
|
|||
Restructuring liability as of September 30, 2017
|
$
|
424
|
|
|
$
|
50
|
|
|
$
|
474
|
|
•
|
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.
|
•
|
Results of Operations.
Analysis of our financial results comparing the
third
quarter and first
nine
months of 2017 to 2016.
|
•
|
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.
Material changes, outside our ordinary course of business, to our contractual obligations, off-balance sheet arrangements and indemnifications from
December 31, 2016
.
|
•
|
Non-GAAP Financial Measures.
A presentation of results reconciling GAAP to non-GAAP adjusted measures.
|
|
|
|
% Change
|
||||||||||||||
(units and dollars in thousands, except per share amounts)
|
Q3 2017
|
|
Q2 2017
|
|
Q3 2016
|
|
Q3 2017 vs. Q2 2017
|
|
Q3 2017 vs. Q3 2016
|
||||||||
Revenue
|
$
|
329,805
|
|
|
$
|
296,526
|
|
|
$
|
240,569
|
|
|
11
|
%
|
|
37
|
%
|
Camera units shipped
(1)
|
1,144
|
|
|
1,061
|
|
|
1,018
|
|
|
8
|
%
|
|
12
|
%
|
|||
Gross margin
(2)
|
39.6
|
%
|
|
35.6
|
%
|
|
40.3
|
%
|
|
400 bps
|
|
|
(70) bps
|
|
|||
Operating expenses
|
$
|
122,497
|
|
|
$
|
130,615
|
|
|
$
|
212,658
|
|
|
(6
|
)%
|
|
(42
|
)%
|
Net income (loss)
|
$
|
14,661
|
|
|
$
|
(30,536
|
)
|
|
$
|
(104,068
|
)
|
|
(148
|
)%
|
|
(114
|
)%
|
Diluted net income (loss) per share
|
$
|
0.10
|
|
|
$
|
(0.22
|
)
|
|
$
|
(0.74
|
)
|
|
(145
|
)%
|
|
(114
|
)%
|
Cash provided by (used in) operations
|
$
|
55,523
|
|
|
$
|
(11,428
|
)
|
|
$
|
(41,724
|
)
|
|
(586
|
)%
|
|
(233
|
)%
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other financial information:
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA
(3)
|
$
|
35,725
|
|
|
$
|
5,120
|
|
|
$
|
(73,622
|
)
|
|
598
|
%
|
|
(149
|
)%
|
Non-GAAP net income (loss)
(4)
|
$
|
21,149
|
|
|
$
|
(12,914
|
)
|
|
$
|
(84,279
|
)
|
|
(264
|
)%
|
|
(125
|
)%
|
Non-GAAP income (loss) per share
|
$
|
0.15
|
|
|
$
|
(0.09
|
)
|
|
$
|
(0.60
|
)
|
|
(267
|
)%
|
|
(125
|
)%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||||||||||
Revenue
|
$
|
329,805
|
|
|
100
|
%
|
|
$
|
240,569
|
|
|
100
|
%
|
|
$
|
844,945
|
|
|
100
|
%
|
|
$
|
644,860
|
|
|
100
|
%
|
Cost of revenue
|
199,259
|
|
|
60
|
|
|
143,500
|
|
|
60
|
|
|
540,201
|
|
|
64
|
|
|
395,075
|
|
|
61
|
|
||||
Gross profit
|
130,546
|
|
|
40
|
|
|
97,069
|
|
|
40
|
|
|
304,744
|
|
|
36
|
|
|
249,785
|
|
|
39
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Research and development
|
55,098
|
|
|
17
|
|
|
96,146
|
|
|
40
|
|
|
176,761
|
|
|
21
|
|
|
266,174
|
|
|
41
|
|
||||
Sales and marketing
|
46,622
|
|
|
14
|
|
|
91,567
|
|
|
38
|
|
|
171,156
|
|
|
20
|
|
|
255,904
|
|
|
40
|
|
||||
General and administrative
|
20,777
|
|
|
6
|
|
|
24,945
|
|
|
10
|
|
|
61,976
|
|
|
7
|
|
|
74,108
|
|
|
11
|
|
||||
Total operating expenses
|
122,497
|
|
|
37
|
|
|
212,658
|
|
|
88
|
|
|
409,893
|
|
|
48
|
|
|
596,186
|
|
|
92
|
|
||||
Operating income (loss)
|
8,049
|
|
|
3
|
|
|
(115,589
|
)
|
|
(48
|
)
|
|
(105,149
|
)
|
|
(12
|
)
|
|
(346,401
|
)
|
|
(54
|
)
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
(4,554
|
)
|
|
(1
|
)
|
|
(1,156
|
)
|
|
—
|
|
|
(9,152
|
)
|
|
(1
|
)
|
|
(1,815
|
)
|
|
—
|
|
||||
Other income, net
|
322
|
|
|
—
|
|
|
348
|
|
|
—
|
|
|
705
|
|
|
—
|
|
|
1,360
|
|
|
—
|
|
||||
Total other income (expense), net
|
(4,232
|
)
|
|
(1
|
)
|
|
(808
|
)
|
|
—
|
|
|
(8,447
|
)
|
|
(1
|
)
|
|
(455
|
)
|
|
—
|
|
||||
Income (loss) before income taxes
|
3,817
|
|
|
2
|
|
|
(116,397
|
)
|
|
(48
|
)
|
|
(113,596
|
)
|
|
(13
|
)
|
|
(346,856
|
)
|
|
(54
|
)
|
||||
Income tax expense (benefit)
|
(10,844
|
)
|
|
(3
|
)
|
|
(12,329
|
)
|
|
(5
|
)
|
|
13,429
|
|
|
2
|
|
|
(43,562
|
)
|
|
(7
|
)
|
||||
Net income (loss)
|
$
|
14,661
|
|
|
5
|
%
|
|
$
|
(104,068
|
)
|
|
(43
|
)%
|
|
$
|
(127,025
|
)
|
|
(15
|
)%
|
|
$
|
(303,294
|
)
|
|
(47
|
)%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
% Change
|
|
2017
|
|
2016
|
|
% Change
|
||||||||||
Camera units shipped
|
1,144
|
|
|
1,018
|
|
|
12
|
%
|
|
2,942
|
|
|
2,478
|
|
|
19
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct channel
|
$
|
171,018
|
|
|
$
|
147,979
|
|
|
16
|
%
|
|
$
|
455,455
|
|
|
$
|
359,810
|
|
|
27
|
%
|
Percentage of revenue
|
52
|
%
|
|
62
|
%
|
|
|
|
54
|
%
|
|
56
|
%
|
|
|
||||||
Distribution channel
|
$
|
158,787
|
|
|
$
|
92,590
|
|
|
71
|
%
|
|
$
|
389,490
|
|
|
$
|
285,050
|
|
|
37
|
%
|
Percentage of revenue
|
48
|
%
|
|
38
|
%
|
|
|
|
46
|
%
|
|
44
|
%
|
|
|
||||||
Total revenue
|
$
|
329,805
|
|
|
$
|
240,569
|
|
|
37
|
%
|
|
$
|
844,945
|
|
|
$
|
644,860
|
|
|
31
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Americas
|
$
|
163,430
|
|
|
$
|
135,895
|
|
|
20
|
%
|
|
$
|
416,164
|
|
|
$
|
345,770
|
|
|
20
|
%
|
Percentage of revenue
|
50
|
%
|
|
56
|
%
|
|
|
|
49
|
%
|
|
54
|
%
|
|
|
||||||
EMEA
|
$
|
97,179
|
|
|
$
|
77,346
|
|
|
26
|
%
|
|
$
|
245,256
|
|
|
$
|
198,338
|
|
|
24
|
%
|
Percentage of revenue
|
29
|
%
|
|
32
|
%
|
|
|
|
29
|
%
|
|
31
|
%
|
|
|
||||||
APAC
|
$
|
69,196
|
|
|
$
|
27,328
|
|
|
153
|
%
|
|
$
|
183,525
|
|
|
$
|
100,752
|
|
|
82
|
%
|
Percentage of revenue
|
21
|
%
|
|
12
|
%
|
|
|
|
22
|
%
|
|
15
|
%
|
|
|
||||||
Total revenue
|
$
|
329,805
|
|
|
$
|
240,569
|
|
|
37
|
%
|
|
$
|
844,945
|
|
|
$
|
644,860
|
|
|
31
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
% Change
|
|
2017
|
|
2016
|
|
% Change
|
||||||||||
Cost of revenue
|
$
|
197,579
|
|
|
$
|
142,852
|
|
|
38
|
%
|
|
$
|
534,763
|
|
|
$
|
392,850
|
|
|
36
|
%
|
Stock-based compensation
|
445
|
|
|
426
|
|
|
4
|
%
|
|
1,355
|
|
|
1,195
|
|
|
13
|
%
|
||||
Acquisition-related costs
|
1,195
|
|
|
222
|
|
|
438
|
%
|
|
3,625
|
|
|
666
|
|
|
444
|
%
|
||||
Restructuring costs
|
40
|
|
|
—
|
|
|
100
|
%
|
|
458
|
|
|
364
|
|
|
26
|
%
|
||||
Total cost of revenue
|
$
|
199,259
|
|
|
$
|
143,500
|
|
|
39
|
%
|
|
$
|
540,201
|
|
|
$
|
395,075
|
|
|
37
|
%
|
Gross margin
|
39.6
|
%
|
|
40.3
|
%
|
|
|
|
36.1
|
%
|
|
38.7
|
%
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
% Change
|
|
2017
|
|
2016
|
|
% Change
|
||||||||||
Research and development
|
$
|
47,160
|
|
|
$
|
79,752
|
|
|
(41
|
)%
|
|
$
|
148,288
|
|
|
$
|
230,526
|
|
|
(36
|
)%
|
Stock-based compensation
|
5,967
|
|
|
8,039
|
|
|
(26
|
)%
|
|
17,039
|
|
|
21,135
|
|
|
(19
|
)%
|
||||
Acquisition-related costs
|
946
|
|
|
8,355
|
|
|
(89
|
)%
|
|
3,028
|
|
|
11,858
|
|
|
(74
|
)%
|
||||
Restructuring costs
|
1,025
|
|
|
—
|
|
|
100
|
%
|
|
8,406
|
|
|
2,655
|
|
|
217
|
%
|
||||
Total research and development
|
$
|
55,098
|
|
|
$
|
96,146
|
|
|
(43
|
)%
|
|
$
|
176,761
|
|
|
$
|
266,174
|
|
|
(34
|
)%
|
Percentage of revenue
|
16.7
|
%
|
|
40.0
|
%
|
|
|
|
20.9
|
%
|
|
41.3
|
%
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
% Change
|
|
2017
|
|
2016
|
|
% Change
|
||||||||||
Sales and marketing
|
$
|
43,656
|
|
|
$
|
87,751
|
|
|
(50
|
)%
|
|
$
|
157,901
|
|
|
$
|
242,505
|
|
|
(35
|
)%
|
Stock-based compensation
|
2,609
|
|
|
3,816
|
|
|
(32
|
)%
|
|
7,295
|
|
|
10,699
|
|
|
(32
|
)%
|
||||
Acquisition-related costs
|
—
|
|
|
—
|
|
|
N/A
|
|
|
—
|
|
|
22
|
|
|
(100
|
)%
|
||||
Restructuring costs
|
357
|
|
|
—
|
|
|
N/A
|
|
|
5,960
|
|
|
2,678
|
|
|
123
|
%
|
||||
Total sales and marketing
|
$
|
46,622
|
|
|
$
|
91,567
|
|
|
(49
|
)%
|
|
$
|
171,156
|
|
|
$
|
255,904
|
|
|
(33
|
)%
|
Percentage of revenue
|
14.1
|
%
|
|
38.1
|
%
|
|
|
|
20.3
|
%
|
|
39.7
|
%
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
% Change
|
|
2017
|
|
2016
|
|
% Change
|
||||||||||
General and administrative
|
$
|
17,368
|
|
|
$
|
18,764
|
|
|
(7
|
)%
|
|
$
|
49,488
|
|
|
$
|
53,625
|
|
|
(8
|
)%
|
Stock-based compensation
|
2,854
|
|
|
6,185
|
|
|
(54
|
)%
|
|
10,546
|
|
|
18,572
|
|
|
(43
|
)%
|
||||
Acquisition-related costs
|
—
|
|
|
(4
|
)
|
|
(100
|
)%
|
|
(22
|
)
|
|
1,100
|
|
|
(102
|
)%
|
||||
Restructuring costs
|
555
|
|
|
—
|
|
|
N/A
|
|
|
1,964
|
|
|
811
|
|
|
142
|
%
|
||||
Total general and administrative expenses
|
$
|
20,777
|
|
|
$
|
24,945
|
|
|
(17
|
)%
|
|
$
|
61,976
|
|
|
$
|
74,108
|
|
|
(16
|
)%
|
Percentage of revenue
|
6.3
|
%
|
|
10.4
|
%
|
|
|
|
7.3
|
%
|
|
11.5
|
%
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
% Change
|
|
2017
|
|
2016
|
|
% Change
|
||||||||||
Interest expense
|
$
|
(4,554
|
)
|
|
$
|
(1,156
|
)
|
|
294
|
%
|
|
$
|
(9,152
|
)
|
|
$
|
(1,815
|
)
|
|
404
|
%
|
Other income, net
|
322
|
|
|
348
|
|
|
(7
|
)%
|
|
705
|
|
|
1,360
|
|
|
(48
|
)%
|
||||
Total other income (expense), net
|
$
|
(4,232
|
)
|
|
$
|
(808
|
)
|
|
424
|
%
|
|
$
|
(8,447
|
)
|
|
$
|
(455
|
)
|
|
1,756
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
% Change
|
|
2017
|
|
2016
|
|
% Change
|
||||||||||
Income tax expense (benefit)
|
$
|
(10,844
|
)
|
|
$
|
(12,329
|
)
|
|
(12
|
)%
|
|
$
|
13,429
|
|
|
$
|
(43,562
|
)
|
|
(131
|
)%
|
Effective tax rate
|
(284.1
|
)%
|
|
10.6
|
%
|
|
|
|
(11.8
|
)%
|
|
12.6
|
%
|
|
|
(dollars in thousands)
|
September 30,
2017 |
|
December 31,
2016 |
||||
Cash and cash equivalents
|
$
|
164,616
|
|
|
$
|
192,114
|
|
Marketable securities
|
31,946
|
|
|
25,839
|
|
||
Total
cash, cash equivalents and marketable securities
|
$
|
196,562
|
|
|
$
|
217,953
|
|
Percentage of total assets
|
24
|
%
|
|
24
|
%
|
•
|
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. We believe the restructuring actions and other cost saving initiatives we have taken will enable us to significantly reduce our operating expenses in 2017 compared to 2016.
|
•
|
We expect to spend significantly less on capital expenditures in 2017 than in 2016. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, the timing of new product introductions, market acceptance of our products and overall economic conditions.
|
•
|
In March 2016, we entered into a credit agreement with a syndicate of banks that provides for a secured revolving credit facility under which we could borrow up to an aggregate of
$250 million
. As of
September 30, 2017
, we could borrow up to approximately
$110 million
under the credit facility, based upon a borrowing base formula with respect to our inventory and accounts receivable balances. Our credit facility terminates in March 2021. (See Note 3 to the Notes to Condensed 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.
|
•
|
We used a portion of the net proceeds from the Notes offering to pay for the Prepaid Forward and intend to use the remaining proceeds from the offering for general corporate purposes.
|
|
Nine months ended
|
|||||||||
(in thousands)
|
September 30,
2017 |
|
September 30,
2016 |
|
% Change
|
|||||
Net cash provided by (used in):
|
|
|
|
|
|
|||||
Operating activities
|
$
|
(93,843
|
)
|
|
$
|
(120,449
|
)
|
|
(22
|
)%
|
Investing activities
|
$
|
(24,448
|
)
|
|
$
|
(30,854
|
)
|
|
(21
|
)%
|
Financing activities
|
$
|
89,306
|
|
|
$
|
3,479
|
|
|
2,467
|
%
|
|
Three months ended
|
||||||||||
(in thousands)
|
September 30, 2017
|
|
June 30, 2017
|
|
September 30, 2016
|
||||||
Net income (loss)
|
$
|
14,661
|
|
|
$
|
(30,536
|
)
|
|
$
|
(104,068
|
)
|
Income tax expense (benefit)
|
(10,844
|
)
|
|
1,991
|
|
|
(12,329
|
)
|
|||
Interest income (expense), net
|
4,228
|
|
|
3,652
|
|
|
596
|
|
|||
Depreciation and amortization
|
9,100
|
|
|
11,467
|
|
|
12,734
|
|
|||
POP display amortization
|
4,728
|
|
|
4,955
|
|
|
4,979
|
|
|||
Stock-based compensation
|
11,875
|
|
|
11,235
|
|
|
18,466
|
|
|||
Impairment of intangible assets
|
—
|
|
|
—
|
|
|
6,000
|
|
|||
Restructuring costs
|
1,977
|
|
|
2,356
|
|
|
—
|
|
|||
Adjusted EBITDA
|
$
|
35,725
|
|
|
$
|
5,120
|
|
|
$
|
(73,622
|
)
|
|
Three months ended
|
||||||||||
(in thousands)
|
September 30, 2017
|
|
June 30, 2017
|
|
September 30, 2016
|
||||||
Net income (loss)
|
$
|
14,661
|
|
|
$
|
(30,536
|
)
|
|
$
|
(104,068
|
)
|
Stock-based compensation
|
11,875
|
|
|
11,235
|
|
|
18,466
|
|
|||
Acquisition-related costs
|
2,141
|
|
|
2,142
|
|
|
8,573
|
|
|||
Restructuring costs
|
1,977
|
|
|
2,356
|
|
|
—
|
|
|||
Non-cash interest expense
|
1,836
|
|
|
1,530
|
|
|
—
|
|
|||
Income tax adjustments
(1)
|
(11,341
|
)
|
|
359
|
|
|
(7,250
|
)
|
|||
Non-GAAP net income (loss)
|
$
|
21,149
|
|
|
$
|
(12,914
|
)
|
|
$
|
(84,279
|
)
|
Non-GAAP earnings (loss) per share
|
$
|
0.15
|
|
|
$
|
(0.09
|
)
|
|
$
|
(0.60
|
)
|
•
|
these non-GAAP financial measures may exclude certain recurring, non-cash charges such as stock-based compensation, non-cash interest expense and amortization of acquired intangible assets;
|
•
|
adjusted EBITDA does not reflect tax payments that reduce cash available to us
;
|
•
|
adjusted EBITDA excludes depreciation and amortization and, although these are non-cash charges, the property and equipment being depreciated and amortized often will have to be replaced in the future, and adjusted EBITDA does not reflect any cash capital expenditure requirements for such replacements;
|
•
|
adjusted EBITDA excludes the amortization of POP display assets because it is a non-cash charge, and is treated similarly to depreciation of property and equipment and amortization of acquired intangible assets;
|
•
|
adjusted EBITDA and non-GAAP net income (loss) exclude the impairment of intangible assets because it is a non-cash charge that is inconsistent in amount and frequency;
|
•
|
adjusted EBITDA and non-GAAP net income (loss) exclude restructuring costs because 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;
|
•
|
non-GAAP net income (loss) also excludes non-cash interest expense because it is a non-cash charge, provides greater visibility to the underlying performance of the business operations, facilitates comparison of our results with other periods and may also facilitate comparison with the results of other companies in our industry; and
|
•
|
other companies may calculate these non-GAAP financial measures differently than we do, limiting their usefulness as comparative measures.
|
•
|
difficulties in staffing and managing foreign operations;
|
•
|
burdens of complying with a wide variety of laws and regulations, including environmental, packaging and labeling, and drone regulations;
|
•
|
adverse tax effects and foreign exchange controls making it difficult to repatriate earnings and cash;
|
•
|
the impact of foreign currency exchange rates and interest rates;
|
•
|
political and economic instability;
|
•
|
terrorist activities and natural disasters;
|
•
|
trade restrictions;
|
•
|
differing employment practices and laws and labor disruptions;
|
•
|
the imposition of government controls;
|
•
|
lesser degrees of intellectual property protection;
|
•
|
tariffs and customs duties and the classifications of our goods by applicable governmental bodies;
|
•
|
a legal system subject to undue influence or corruption; and
|
•
|
a business culture in which illegal sales practices may be prevalent.
|
•
|
our board of directors is not currently classified, but at such time as all shares of our Class B common stock have been converted into shares of our Class A common stock, our board of directors will be classified into three classes of directors with staggered three-year terms;
|
•
|
so long as any shares of our Class B common stock are outstanding, special meetings of our stockholders may be called by the holders of 10% of the outstanding voting power of all then outstanding shares of stock, a majority of our board of directors, the chairman of our board of directors, our chief executive officer or our president,
|
•
|
when no shares of our Class B common stock are outstanding, only the chairman of our board of directors, our chief executive officer, our president or a majority of our board of directors will be authorized to call a special meeting of stockholders;
|
•
|
our stockholders may only take action at a meeting of stockholders and not by written consent;
|
•
|
vacancies on our board of directors may be filled only by our board of directors and not by stockholders;
|
•
|
directors may be removed from office with or without cause so long as our board of directors is not classified, and thereafter directors may be removed from office only for cause;
|
•
|
our restated certificate of incorporation provides for a dual class common stock structure in which holders of our Class B common stock have the ability to control the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the outstanding shares of our Class A and Class B common stock, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets;
|
•
|
our restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established, and shares of which may be issued, by our board of directors without stockholder approval and which may contain voting, liquidation, dividend and other rights superior to those of our Class A and Class B common stock; and
|
•
|
advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
|
•
|
heighten our vulnerability to adverse general economic conditions and heightened competitive pressures;
|
•
|
require us to dedicate a larger portion of our cash flow from operations to interest payments, limiting the availability of cash for other purposes;
|
•
|
limit our flexibility in planning for, or reacting to, changes in our business and industry; and
|
•
|
impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes.
|
|
|
GoPro, Inc.
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated:
|
November 2, 2017
|
By: /s/ Nicholas Woodman
|
|
|
Nicholas Woodman
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated:
|
November 2, 2017
|
By: /s/ Brian McGee
|
|
|
Brian McGee
Chief Financial Officer (Principal Financial Officer) |
Exhibit
|
|
|
Incorporated by Reference
|
Filed
|
|||
Number
|
|
Exhibit Title
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Herewith
|
|
Certification of Principal Executive Officer Required Under Rule 13(a)-14(a) and 15(d)-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
X
|
|
|
Certification of Principal Financial Officer Required Under Rule 13(a)-14(a) and 15(d)-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
X
|
|
32.01
‡
|
|
Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
|
|
|
|
|
X
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
|
1 Year GoPro Chart |
1 Month GoPro Chart |
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