Q1 2020 Preliminary Earnings Results Summary May 7, 2020
SAFE HARBOR STATEMENT This presentation may contain projections or other forward-looking statements within the meaning Section 27A of the Private Securities Litigation Reform Act. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “should,” “will” and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements in this presentation may include, but are not limited to planned growth and profitability in 2020. 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 our ability to effectively manage late stage production delays; the risk that our reduction in operating expenses may impact our ability to meet our business objectives and achieve our revenue targets, and may not result in the expected improvement in our profitability; our ability to continue to focus on expense management; the fact that our future growth depends in part on further penetrating our addressable market and growing internationally, and we may not be successful in doing so; the risk that growing our direct-to-consumer business while reducing our reliance on our other sales channels could impact profitability; the impact of the COVID-19 pandemic and its effect on the United States and global economies and our business in particular; any inability to successfully manage frequent product introductions (including roadmap for new hardware, software and subscription products) and transitions, including managing our sales channel and inventory, and accurately forecasting future sales; the fact that a small number of retailers and distributors account for a substantial portion of our revenue and our level of business with them could be significantly reduced due to retail closures related to COVID-19; our reliance on third party suppliers, some of which are sole source suppliers, to provide components for our products and our reliance on third party logistics partners to deliver without interruption; our dependence on sales of our cameras, mounts and accessories, and subscription services for substantially all of our revenue (and the effects of changes in the sales mix or decrease in demand for these products); the fact that an economic downturn or economic uncertainty in our key U.S. and international markets, as well as fluctuations in currency exchange rates, may adversely affect consumer discretionary spending; any changes to trade agreements, trade policies, tariffs, and import/export regulations; the effects of manufacturing U.S.-bound production in Mexico; the effects of the highly competitive market in which we operate, including new market entrants; the fact that we may not be able to achieve revenue growth or profitability in the future; risks related to inventory, purchase commitments and long-lived assets; difficulty in accurately predicting our future customer demand; the importance of maintaining the value and reputation of our brand; the risk that the e-commerce technology systems that give consumers the ability to shop online do not function effectively; the risk that we will encounter problems with our distribution system; the threat of a security breach or other disruption including cyberattacks; the concern that our intellectual property and proprietary rights may not adequately protect our products and services; and other factors detailed in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2019, and as updated in future filings with the Securities and Exchange Commission including the Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, each of which is on file with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof or as of the date otherwise stated herein. GoPro disclaims any obligation to update these forward-looking statements. 2
USE OF NON-GAAP METRICS We report gross margin, operating expenses, operating income (loss), net income (loss) and diluted net income (loss) per share in accordance with U.S. generally accepted accounting principles (GAAP) and on a non-GAAP basis. Additionally, we report non-GAAP adjusted EBITDA. We believe that non-GAAP information is useful because it can enhance the understanding of our ongoing economic performance. We use non-GAAP reporting internally to evaluate and manage our operations. We have chosen to provide this information to investors to enable them to perform comparisons of operating results in a manner similar to how we analyze our own operating results. A full reconciliation of GAAP to non-GAAP financial data can be found in the appendix to this slide package and in our Q1 2020 earnings press release issued on May 7, 2020, which should be reviewed in conjunction with this presentation. 3
QUARTERLY NON-GAAP INCOME STATEMENT SUMMARY ($ in millions, except per Q1 2020 Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 share data) Revenue $ 119.4 $ 528.3 $ 131.2 $ 292.4 $ 242.7 $ 377.4 $ 285.9 $ 282.7 $ 202.3 Camera units shipped 341 1,857 479 1,082 842 1,413 1,095 1,071 758 (in thousands) Gross margin* 34.2% 38.6% 23.4% 35.8% 34.2% 38.4% 33.2% 30.8% 24.3% Operating expenses* $ 87.5 $ 99.1 $ 90.3 $ 97.3 $ 91.1 $ 98.8 $ 98.7 $ 103.9 $ 93.7 Operating income (loss)* $ (46.7) $ 105.0 $ (59.6) $ 7.5 $ (8.1) $ 46.0 $ (3.6) $ (16.7) $ (44.5) Net income (loss)* $ (49.6) $ 102.5 $ (61.3) $ 4.2 $ (10.2) $ 42.4 $ (6.1) $ (20.8) $ (47.4) Diluted net income (loss) per share* $ (0.34) $ 0.70 $ (0.42) $ 0.03 $ (0.07) $ 0.30 $ (0.04) $ (0.15) $ (0.34) Adjusted EBITDA* $ (41.4) $ 112.1 $ (52.7) $ 13.6 $ (1.0) $ 58.8 $ 6.2 $ (8.7) $ (34.5) Headcount 923 926 912 900 903 891 927 948 1,020 * Non-GAAP metric. See reconciliations in Appendix. 4
QUARTERLY REVENUE METRICS ($ in millions) Q1 2020 Q4 2019 Q3 2019 Q2 2019 Q1 2019 Revenue by Channel: $ % of Rev $ % of Rev $ % of Rev $ % of Rev $ % of Rev Direct * $ 64.9 54.3% $ 230.3 43.6% $ 71.7 54.7% $ 135.3 46.3% $ 110.9 45.7% Distribution 54.5 45.7 298.0 56.4 59.5 45.3 157.1 53.7 131.8 54.3 Total Revenue $ 119.4 100.0% $ 528.3 100.0% $ 131.2 100.0% $ 292.4 100.0% $ 242.7 100.0% Revenue by Geography: $ % of Rev $ % of Rev $ % of Rev $ % of Rev $ % of Rev Americas $ 57.3 47.9% $ 212.2 40.2% $ 60.4 46.0% $ 142.3 48.7% $ 109.1 45.0% Europe, Middle East and Africa 29.7 24.9 156.0 29.5 49.4 37.7 82.9 28.3 70.9 29.2 Asia and Pacific 32.4 27.2 160.1 30.3 21.4 16.3 67.2 23.0 62.7 25.8 Total Revenue $ 119.4 100.0% $ 528.3 100.0% $ 131.2 100.0% $ 292.4 100.0% $ 242.7 100.0% * Revenue from gopro.com is included as a component of our Direct channel and represents $20.2 million, $56.4 million, $19.0 million, $22.8 million and $26.7 million for the quarters ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively. 5
SELECT BALANCE SHEET METRICS ($ in millions) Q1 2020 Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 Cash, cash equivalents and marketable securities $ 124.9 $ 165.1 $ 79.0 $ 130.1 $ 133.3 $ 197.5 $ 148.2 $ 139.8 $ 144.8 Days sales outstanding 38 34 49 45 44 31 47 37 36 Inventory $ 172.0 $ 144.2 $ 250.0 $ 129.2 $ 119.0 $ 116.5 $ 123.2 $ 86.1 $ 132.6 Annualized inventory turns 2.0x 6.6x 2.1x 6.0x 5.4x 7.8x 7.3x 7.2x 4.3x Inventory days 197 40 224 62 67 45 58 40 78 6
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