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GoPro(GPRO) - 2025 Q2 - Quarterly Report
GoProGoPro(US:GPRO)2025-08-11 21:00

PART I. FINANCIAL INFORMATION Financial Statements Presents the unaudited condensed consolidated balance sheets, statements of operations, and cash flows for the period Condensed Consolidated Balance Sheets Details the company's assets, liabilities, and stockholders' equity as of June 30, 2025, compared to the prior year-end Condensed Consolidated Balance Sheet Highlights (as of June 30, 2025 vs. Dec 31, 2024) | Account | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 58,571 | 102,811 | | Inventory | 84,482 | 120,716 | | Goodwill | 133,751 | 152,351 | | Total Assets | 438,990 | 543,678 | | Liabilities & Equity | | | | Total current liabilities | 309,111 | 356,267 | | Short-term debt | 98,518 | 93,208 | | Total Liabilities | 341,075 | 391,989 | | Total Stockholders' Equity | 97,915 | 151,689 | - Total assets decreased to $439.0 million from $543.7 million, primarily due to a reduction in cash, inventory, and a goodwill impairment16 - Total liabilities decreased to $341.1 million from $392.0 million, while total stockholders' equity declined to $97.9 million from $151.7 million, reflecting the net loss for the period16 Condensed Consolidated Statements of Operations Summarizes revenues, expenses, and net loss for the three and six-month periods ended June 30, 2025 Statement of Operations Summary (Three Months Ended June 30) | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 152,643 | 186,224 | -18.0% | | Gross Profit | 54,663 | 56,710 | -3.6% | | Operating Loss | (14,007) | (46,509) | 69.9% improvement | | Net Loss | (16,422) | (47,821) | 65.7% improvement | | Diluted Net Loss Per Share | ($0.10) | ($0.31) | 67.7% improvement | Statement of Operations Summary (Six Months Ended June 30) | Metric | YTD 2025 ($ thousands) | YTD 2024 ($ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 286,951 | 341,693 | -16.0% | | Gross Profit | 97,812 | 109,748 | -10.9% | | Goodwill Impairment | 18,600 | 0 | N/A | | Operating Loss | (59,215) | (87,922) | 32.7% improvement | | Net Loss | (63,131) | (386,909) | 83.7% improvement | | Diluted Net Loss Per Share | ($0.40) | ($2.55) | 84.3% improvement | - The company recorded a goodwill impairment charge of $18.6 million in the first six months of 2025, which was not present in the prior year period19 Condensed Consolidated Statements of Cash Flows Details cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 ($ thousands) | 2024 ($ thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | (48,434) | (97,798) | | Net cash (used in) provided by investing activities | (1,783) | 10,012 | | Net cash provided by (used in) financing activities | 4,750 | (800) | | Net change in cash and cash equivalents | (44,240) | (89,672) | - Net cash used in operating activities improved to $(48.4) million for the first six months of 2025 from $(97.8) million in the same period of 2024, primarily due to a smaller net loss and favorable changes in working capital, including a significant reduction in inventory23 - Financing activities provided $4.8 million in cash, driven by a net $5.0 million in borrowings ($25M proceeds, $20M repayment)23 Notes to Condensed Consolidated Financial Statements Provides supplementary details on accounting policies, goodwill impairment, revenue segmentation, and subsequent financing events - The company's performance in the first six months of 2025 was impacted by macroeconomic issues, a competitive landscape, and a delay in its next-generation 360-camera, leading to a 16.0% revenue decline, a $59.2 million operating loss, and $48.4 million in operating cash outflows33 - Due to a 38% decline in market capitalization in Q1 2025, the company performed a quantitative analysis and recognized an $18.6 million goodwill impairment charge41 - Subscription and service revenue was $53.1 million (18.5% of total revenue) for the six months ended June 30, 2025, compared to $52.2 million (15.3% of total revenue) in the prior year period52 - Subsequent to the quarter end, on August 4, 2025, the company entered into a new $50.0 million second lien credit facility (2025 Credit Agreement) and issued warrants to purchase 11.1 million shares of common stock172180 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Provides management's perspective on financial performance, operational results, liquidity, and capital resources for the reporting period Overview and Financial Performance Reviews key performance metrics, revenue drivers, and subscription trends for the second quarter of 2025 Q2 2025 Key Metrics vs. Prior Periods | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Revenue | $152.6M | $134.3M | $186.2M | | Camera units shipped (thousands) | 408 | 385 | 576 | | Gross margin | 35.8% | 32.1% | 30.5% | | Operating expenses | $68.7M | $88.4M | $103.2M | | Net loss | $(16.4)M | $(46.7)M | $(47.8)M | - Q2 2025 revenue decreased 18.0% YoY to $152.6 million, primarily due to a 29.2% decrease in camera units shipped, which was attributed to macroeconomic issues and increased competition198 - Average selling price (ASP) increased 15.7% YoY to $374 in Q2 2025, partially offsetting the decline in unit volume198 - The subscription attach rate from all sales channels was 56% in Q2 2025, up from 45% in Q2 2024, while the aggregate retention rate for annual subscribers remained stable at 68%198 Results of Operations Analyzes year-over-year changes in gross margin and operating expenses, detailing drivers for cost reductions - Gross margin for Q2 2025 increased to 35.8% from 30.5% in Q2 2024, a 530 bps improvement, mainly due to less promotional activity and a higher mix of subscription revenue215 - Total operating expenses for Q2 2025 decreased by 33% YoY to $68.7 million, driven by significant reductions in R&D (down 35%) and Sales & Marketing (down 39%)197217220 - The decrease in R&D expense was primarily due to lower consulting costs for the next-generation system-on-chip and reduced personnel-related costs217 - The decrease in Sales & Marketing expense was driven by lower spending on advertising, online campaigns, and events220 Liquidity and Capital Resources Discusses the company's cash position, debt obligations, recent financing activities, and its ability to continue as a going concern - As of June 30, 2025, the company had $58.6 million in cash and cash equivalents, down from $102.8 million at year-end 2024237 - The company's 2025 Convertible Notes, with an outstanding principal of $93.8 million, mature on November 15, 2025260 - Management has assessed its ability to continue as a going concern, citing restructuring actions, the new $50.0 million 2025 Credit Agreement, and plans to manage working capital as sufficient to maintain liquidity for at least 12 months261262 - In February 2025, the company drew $25.0 million from its 2021 Credit Facility and repaid $20.0 million in June 2025, leaving $39.8 million available to draw as of June 30, 2025246 Quantitative and Qualitative Disclosures About Market Risk Outlines the company's exposure to market risks, primarily from foreign currency fluctuations and interest rate changes - The strength of the U.S. dollar negatively impacted revenue, gross margin, and net income per share by approximately $43.7 million in the 12 months ending June 30, 2025, relative to 2021 foreign currency rates282 - The company's primary foreign currency exposures are to the Euro, British pound, Australian dollar, Japanese yen, Romanian leu, and Canadian dollar282 - Interest rate risk is primarily related to cash and cash equivalents, but management does not believe a 10% shift in rates would have a material effect on the portfolio's fair value284 Controls and Procedures Confirms the effectiveness of the company's disclosure controls and procedures as of the end of the reporting period - The principal executive officer and principal financial officer concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective286 - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls287 PART II. OTHER INFORMATION Legal Proceedings Details significant ongoing legal matters, including patent infringement litigation with Contour IP Holdings and Insta360 - In the long-running patent case with Contour IP Holdings (CIPH), a district court ruling in GoPro's favor was reversed on appeal, and a new trial is scheduled for September 29, 2025151 - GoPro filed a complaint against Insta360 for patent infringement; an Administrative Law Judge issued an Initial Determination finding Insta360 violated federal law regarding GoPro's HERO camera design, and a final ITC determination is expected by November 10, 2025152 - Insta360 has filed three patent infringement actions against GoPro in China, which the company believes lack merit152 Risk Factors Outlines significant risks to the business, including operating losses, competition, and subscriber retention challenges - The company has incurred substantial operating losses, including $135.0 million in 2024, and may not achieve or sustain profitability due to factors like delayed product launches, competition, and macroeconomic conditions292294 - Competition has intensified from established camera makers, large electronics companies, and smartphones with advanced photo/video capabilities, which could lead to a loss of market share292312313 - The subscriber base declined 3% year-over-year in Q2 2025 to 2.45 million, and future growth is not guaranteed, which could impact the company's highest-margin revenue stream303 - The company's stock price has been highly volatile, ranging from a high of $6.46 in Q1 2023 to a low of $0.48 in Q2 2025, and a sustained decline could lead to further impairment charges301372374 Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities Reports on the company's stock repurchase program status, noting no repurchases were made during the quarter - As of June 30, 2025, the company had a remaining share repurchase authorization of $60.4 million405 - No shares of Class A or Class B common stock were repurchased during the three months ended June 30, 2025405 Other Information Discloses the adoption of Rule 10b5-1 trading plans by two company executives during the second quarter Executive 10b5-1 Trading Plan Adoptions (Q2 2025) | Name | Title | Date Adopted | Expiration Date | Total Shares to be Sold | | :--- | :--- | :--- | :--- | :--- | | Brian T. McGee | EVP, CFO & COO | 5/19/2025 | 5/19/2027 | 1,195,412 | | Dean Jahnke | SVP, Global Sales | 5/20/2025 | 5/20/2026 | 429,615 |