GoPro(GPRO) - 2019 Q2 - Quarterly Report

Financial Performance - Revenue for Q2 2019 was $292.4 million, a 3.4% increase year-over-year from $282.7 million in Q2 2018[89] - Net loss for Q2 2019 was $11.3 million, or $0.08 per share, an improvement of $26.0 million compared to Q2 2018[89] - Adjusted EBITDA for Q2 2019 was $13.6 million, an improvement of $22.3 million from negative $8.7 million in Q2 2018[89] - Operating loss for Q2 2019 was $(6,947) thousand, compared to $(30,836) thousand in Q2 2018[93] - Net loss for Q2 2019 was $(11,287) thousand, or (4)% of revenue, compared to $(37,269) thousand, or (13)% in Q2 2018[93] - The company reported a net loss of $11.3 million for the three months ended June 30, 2019, compared to a net loss of $24.4 million for the previous quarter[121] - Adjusted EBITDA for the three months ended June 30, 2019, was $13.6 million, compared to an adjusted EBITDA of $(1.0) million for the previous quarter[120] - Non-GAAP net income for the three months ended June 30, 2019, was $4.2 million, with a non-GAAP income per share of $0.03[121] Revenue and Sales - Total revenue for Q2 2019 was $292,429 thousand, a 3% increase from $282,677 thousand in Q2 2018[94] - The HERO7 Black camera accounted for over 85% of camera revenue in Q2 2019[89] - Average selling price in Q2 2019 increased to $270, a 2% increase year-over-year[89] - Direct channel revenue decreased by 7% to $135,351 thousand in Q2 2019, while distribution channel revenue increased by 14% to $157,078 thousand[94] - Average selling price of cameras increased by 7% to $270 in Q2 2019 compared to the same period in 2018[94] Cost and Expenses - Gross margin in Q2 2019 was 34.9%, up from 29.5% in Q2 2018, representing a 540 bps improvement[89] - Total cost of revenue for Q2 2019 was $190,244 thousand, a 5% decrease from $199,308 thousand in Q2 2018[95] - Operating expenses in Q2 2019 were $109.1 million, a decrease of $5.1 million year-over-year[89] - Total operating expenses for Q2 2019 were $109,132 thousand, a decrease from $114,205 thousand in Q2 2018[93] - Total sales and marketing expenses decreased by $8.1 million, or 13%, in Q2 2019 compared to Q2 2018, primarily due to a $7.6 million decrease in advertising expenses[98] - General and administrative expenses increased by $2.5 million, or 16%, in Q2 2019 compared to Q2 2018, driven by a $1.1 million increase in allocated facilities and other overhead expenses[100] Research and Development - Research and development expenses for Q2 2019 were $38,811 thousand, representing 13.3% of revenue, a slight increase from 13.5% in Q2 2018[97] - The company plans to continue investing in research and development to enhance customer experience and product offerings[90] Market and Growth Opportunities - International markets are viewed as a significant growth opportunity despite the overall decline in the digital camera market[90] Cash and Liquidity - Total cash, cash equivalents, and marketable securities decreased by $67.4 million, or 34.1%, from $197.5 million as of December 31, 2018, to $130.1 million as of June 30, 2019[107] - The percentage of total assets represented by cash, cash equivalents, and marketable securities decreased from 28% as of December 31, 2018, to 19% as of June 30, 2019[105] - The company expects its cash, cash equivalents, and marketable securities, along with amounts available under its credit facility, to be sufficient for at least the next 12 months[109] - Operating activities resulted in a cash outflow of $66.0 million for the six months ended June 30, 2019, primarily due to an adjusted net loss of $7.8 million and a net cash outflow of $73.9 million from changes in operating assets and liabilities[112] - Cash provided by investing activities was $5.0 million in the first half of 2019, resulting from maturities of marketable securities of $37.2 million, partially offset by purchases of marketable securities of $30.2 million[113] - Cash used in financing activities was $0.1 million in the first half of 2019, primarily due to $4.0 million in tax payments for net RSU settlements[114] Debt and Financing - The company issued $175.0 million in Convertible Senior Notes with a 3.50% interest rate, maturing on April 15, 2022[108] - The company has a secured revolving credit facility of up to $250.0 million, which terminates in March 2021, with no borrowings made to date[109] Other Financial Information - The company recorded an income tax benefit of $0.6 million for Q2 2019 on a pre-tax net loss of $11.9 million, resulting in an effective tax rate of 5.1%[104] - Total other expense, net, decreased by $0.8 million in Q2 2019 compared to Q2 2018, attributed to a decrease in unrealized losses from foreign exchange rates[103] - The company incurred restructuring costs of $563,000 in Q2 2019, a 43% increase compared to Q2 2018[100] - Total general and administrative expenses for the first half of 2019 decreased by $1.2 million, or 3%, compared to the first half of 2018[100] - There have been no material changes to the company's market risk during the six months ended June 30, 2019[123]