Q1 2023 Preliminary Earnings Results Summary Confidential information. Copyright © 2023. GoPro, Inc. All rights reserved. May 9, 2023 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 ...

Revenue and Profitability - Revenue for Q1 2023 decreased to $174.72 million, down from $216.705 million in Q1 2022[15] - Net loss for Q1 2023 was $29.869 million, compared to a net income of $5.685 million in Q1 2022[15] - Gross profit declined to $52.502 million, down from $90.476 million in Q1 2022[15] - Net income (loss) per share was $(0.19) for Q1 2023 compared to $0.04 for Q1 2022[56] - Revenue for Q1 2023 was $174.7 million, with Americas contributing $89.5 million, EMEA $46.0 million, and APAC $39.2 million[73] - The company's revenue was negatively impacted by approximately $7.4 million in Q1 2023 due to the strengthening of the U.S. dollar[133] Expenses and Costs - Research and development expenses increased to $38.185 million, up from $31.598 million in Q1 2022[15] - Total operating expenses rose to $92.316 million, compared to $82.314 million in Q1 2022[15] - GoPro recorded a $23.5 million price protection charge in Q1 2023 due to a strategic pricing decision to reduce camera MSRP effective May 2023[25] - Total stock-based compensation expense increased from $9.836 million in Q1 2022 to $10.314 million in Q1 2023[54] - Net lease cost increased from $2.119 million in Q1 2022 to $2.635 million in Q1 2023[63] - Cash paid for operating leases was $3.791 million in Q1 2023 compared to $3.777 million in Q1 2022[64] - Restructuring charges for Q1 2023 totaled $21,000, a significant decrease from $304,000 in Q1 2022[76] - The company recorded restructuring charges of $8.1 million in Q4 2022, primarily for camera production line closure costs[77] Cash and Cash Equivalents - Cash and cash equivalents decreased to $157.826 million from $223.735 million at the end of Q4 2022[11] - The company's cash equivalents decreased to $87.9 million as of March 31, 2023 from $138.4 million as of December 31, 2022[28] - Marketable securities totaled $136.8 million as of March 31, 2023, down from $143.6 million as of December 31, 2022[28] - The company's cash equivalents and marketable securities are primarily composed of money market funds, U.S. treasury securities, and corporate debt securities[133] Inventory - Inventory increased to $154.804 million, up from $127.131 million at the end of Q4 2022[11] - Total inventory increased to $154.8 million as of March 31, 2023 from $127.1 million as of December 31, 2022[31] - Finished goods inventory rose to $125.3 million as of March 31, 2023 compared to $88.7 million as of December 31, 2022[31] Assets and Liabilities - Total assets decreased to $1.022566 billion from $1.076925 billion at the end of Q4 2022[11] - Total liabilities decreased to $437.416 million from $465.366 million at the end of Q4 2022[12] - Stockholders' equity decreased to $585.150 million from $611.559 million at the end of Q4 2022[13] - The fair value of GoPro's 2025 Convertible Senior Notes increased to $137.4 million as of March 31, 2023 from $130.1 million as of December 31, 2022[29] - Property and equipment, net decreased to $12.2 million as of March 31, 2023 from $13.3 million as of December 31, 2022[32] - Long-term deferred tax assets increased to $288,867 thousand as of March 31, 2023, up from $279,045 thousand as of December 31, 2022[33] - Other long-term assets totaled $307,101 thousand as of March 31, 2023, compared to $289,293 thousand as of December 31, 2022[33] - Accrued sales incentives rose to $46,518 thousand as of March 31, 2023, up from $41,662 thousand as of December 31, 2022[35] - Warranty liability decreased to $7,245 thousand as of March 31, 2023, down from $8,012 thousand as of March 31, 2022[36] - Long-lived assets outside the United States were $3.2 million as of March 31, 2023, down from $4.0 million at the end of 2022[73] Deferred Revenue - GoPro's short-term and long-term deferred revenue balances totaled $59.4 million and $60.4 million as of March 31, 2023 and December 31, 2022, respectively[25] - The company recognized $16.5 million and $16.6 million of revenue from deferred revenue balances during the three months ended March 31, 2023 and 2022, respectively[25] Credit and Debt - The company has a $50.0 million revolving credit facility under the 2021 Credit Agreement, with no borrowings made to date[37] - The company issued $143.8 million aggregate principal amount of 1.25% Convertible Senior Notes due 2025[39] - The company recorded interest expense of $0.4 million for contractual coupon interest on the 2025 Notes for the three months ended March 31, 2023[40] - The company repaid $125.0 million of principal and $2.2 million of accrued interest on the 2022 Notes on April 15, 2022[41] Stock Repurchase and Equity - The company's board of directors authorized the repurchase of up to $100 million of its Class A common stock, with $95.4 million remaining as of March 31, 2023[42] - The company repurchased 890 thousand shares at an average price of $5.62 per share during the three months ended March 31, 2023[43] - Outstanding stock options decreased from 3,089 thousand shares at December 31, 2022 to 3,032 thousand shares at March 31, 2023, with a weighted-average exercise price of $9.25[47] - Non-vested RSUs increased from 8,727 thousand shares at December 31, 2022 to 11,972 thousand shares at March 31, 2023, with a weighted-average grant date fair value of $6.72[49] - Non-vested PSUs increased from 686 thousand shares at December 31, 2022 to 1,707 thousand shares at March 31, 2023, with a weighted-average grant date fair value of $6.46[51] Taxes - Income tax benefit was $8.3 million for Q1 2023 compared to $0.1 million for Q1 2022[60] - Gross unrecognized tax benefits increased from $23.4 million at December 31, 2022 to $24.4 million at March 31, 2023[60] Leases - Weighted-average remaining lease term for operating leases decreased from 3.81 years at December 31, 2022 to 3.61 years at March 31, 2023[65] - Total lease payments as of March 31, 2023, amount to $45.4 million, with a present value of lease liabilities at $40.3 million[67] - The company's total undiscounted future expected obligations under multi-year agreements is $222.5 million[67] Accounts Receivable - Customer A represented 26% of the company's net accounts receivable balance as of March 31, 2023, down from 30% at the end of 2022[70] - Accounts receivable sold in Q1 2023 totaled $16.7 million, a decrease from $23.9 million in Q1 2022[71]

Revenue and Sales Performance - Annual revenue increased from $891.9 million in 2020 to $1.16 billion in 2021, showing significant growth[43] - Fourth quarter revenue comprised 29%, 34%, and 40% of total revenue for 2022, 2021, and 2020, respectively, indicating strong seasonal sales patterns[44] - First half revenue accounted for 43%, 39%, and 28% of annual revenue for 2022, 2021, and 2020, respectively, showing lower sales in the first half of the year[44] - Revenue for Q4 2022 was $321,021, a decrease of 18% compared to Q4 2021's $391,149, and FY 2022 revenue was $1,093,541, down 6% from FY 2021's $1,161,084[95] - Full year 2022 revenue was $1.09 billion, a 5.8% decrease from 2021, impacted by foreign exchange fluctuations and macroeconomic factors[97] - GoPro shipped 2.8 million camera units in 2022, a 10.6% decrease compared to 2021, with a 52.1% year-over-year increase in subscription and service revenue to $82.4 million[97] - The Americas region accounted for 47.7% of total revenue, down from 52.3% in 2021, reflecting a 14% decline in revenue from this region[108] Profitability and Income - Operating income for 2022 was $39.0 million, compared to $113.2 million in 2021, and an operating loss of $36.8 million in 2020[43] - Net income for Q4 2022 was $3,073, a 94% drop from $52,626 in Q4 2021, and FY 2022 net income was $28,847, down 92% from $371,171 in FY 2021[95] - Adjusted EBITDA for full year 2022 was $95 million, or 8.7% of revenue, down from $167.8 million or 14.5% of revenue in 2021[98] - GoPro's net income (loss) for the year ended December 31, 2022, was $28.847 million, a significant decrease from $371.171 million in 2021[154] - The company reported an income tax expense of $5.6 million for 2022 on pre-tax net income of $34.5 million[120] Costs and Expenses - Research and development expenses were $139.9 million in 2022, $141.5 million in 2021, and $131.6 million in 2020, with expectations for substantial expenses continuing in 2023[47] - Sales and marketing expenses increased by 7% year-over-year to $167 million, driven by higher advertising and personnel-related costs[112] - General and administrative expenses decreased by 7% to $61 million, mainly due to a reduction in legal-related expenses[113] - The company incurred restructuring and other costs of $7.554 million in 2022, compared to $2.649 million in 2021, indicating an increase of approximately 185.5%[154] Market and Economic Conditions - The strengthening of the U.S. dollar against foreign currencies negatively impacted sales in 2022, particularly in the Euro, Japanese yen, and British pound markets[43] - Macroeconomic conditions, including inflation and consumer confidence, could adversely affect consumer spending and demand for products[43] - Inflationary pressures may impact consumer spending and the company's ability to raise prices, affecting overall revenue[48] - The company is monitoring macroeconomic factors, including inflation and currency strength, which may impact product pricing and overall financial performance[91] Supply Chain and Operational Risks - The company relies on third-party suppliers for components, with some being sole-source suppliers, which poses risks of supply shortages and increased costs[45] - The company faces risks from supply chain disruptions, which could lead to increased inventory costs and decreased profit margins[46] - The company has experienced disruptions in its supply chain due to the pandemic, which may affect its ability to meet customer demand[57] - The company relies on contract manufacturers located in China and Thailand, exposing it to risks related to tariffs and trade restrictions[54] Product Development and Innovation - Future growth is dependent on expanding the total addressable market, particularly through new product offerings like the HERO11 Black and HERO11 Black Creator Edition[46] - The HERO11 Black flagship camera was launched in 2022, featuring a GP2 processor, larger sensor, and HyperSmooth 5.0 image stabilization[90] - The company expanded its software solutions with the GoPro Player + ReelSteady desktop app, enhancing video stabilization and editing capabilities[91] - GoPro subscription services were introduced, offering unlimited cloud storage, camera replacement, and editing tools through the Quik mobile app[91] Customer and Market Dependency - The company expects to derive the majority of its revenue from camera sales, mounts, and accessories, with increasing revenue from software and services[47] - The ten largest third-party customers accounted for 41%, 46%, and 44% of total revenue in 2022, 2021, and 2020, respectively, highlighting dependency on a few key clients[54] - One retailer represented 8%, 11%, and 10% of total revenue for the years 2022, 2021, and 2020, indicating a significant reliance on specific retail partnerships[54] - International revenue accounted for 59%, 55%, and 52% of total revenue in 2022, 2021, and 2020, respectively, indicating a strong reliance on foreign markets[50] Regulatory and Compliance Issues - The company is subject to environmental regulations that may affect the availability and cost of necessary goods and services[46] - The regulatory framework for privacy and data protection is rapidly evolving, with significant implications for compliance costs and operational risks[63] - The California Privacy Rights Act (CPRA) will be effective on July 1, 2023, potentially leading to civil penalties for noncompliance[63] - Compliance with environmental regulations and conflict minerals disclosures may incur additional costs and affect product sales[65] Financial Position and Capital Structure - The company maintains significant deferred tax assets related to net operating losses, which are dependent on future taxable income and could be adjusted based on changes in tax law[79] - The company’s credit facility imposes restrictions that may adversely affect its ability to operate and pursue business opportunities, including potential acquisitions[75] - The company has authorized a stock repurchase program of up to $100 million, with $60.4 million remaining as of December 31, 2022[225] - The company completed an offering of $175.0 million aggregate principal amount of 3.50% convertible senior notes due 2022, repurchasing $50.0 million in November 2020 and repaying the remaining $125.0 million at maturity in April 2022[74] Employee and Workforce Management - The company faces challenges in attracting and retaining qualified personnel, which could impact its ability to achieve strategic objectives[52] - The company has implemented global reductions-in-force and restructuring actions to manage operating expenses, which may affect employee morale and operational targets[52] - The company has implemented a 20% reduction in its global workforce as part of the 2020 Restructuring Plan to align with growth areas and reduce operating expenses[57] Stock and Shareholder Matters - The company’s Class B common stock holds approximately 67.1% of the voting power, with the CEO controlling about 64.1% of the outstanding voting power, potentially affecting corporate governance and stockholder decisions[71] - The company’s dual class structure may lead to exclusion from certain stock indexes, potentially affecting the attractiveness of its Class A common stock to investors[71] - The potential dilutive effect of the 2022 and 2025 Notes was calculated under the if-converted method, impacting the diluted net income (loss) per share[240]

Q4 2022 Preliminary Earnings Results Summary February 2, 2023 Confidential information. Copyright © 2023. GoPro, Inc. All rights reserved. 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 iden ...

GoPro, Inc. (NASDAQ:GPRO) Q4 2022 Earnings Conference Call February 2, 2023 5:00 PM ET Company Participants Christopher Clark - Vice President of Corporate Communications Nicholas Woodman - Chief Executive Officer Brian McGee - Chief Financial Officer & Chief Operating Officer Conference Call Participants Anna Glaessgen - Jefferies Jim Suva - Citi Martin Yang - Oppenheimer Operator Good afternoon. Thank you for attending the GoPro Q4 2022 Earnings Call. My name is Matt, and I'll be your moderator for today' ...

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