GoPro(US:GPRO)2023-02-09 16:00Revenue 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]