Company Update (NASDAQ:GPRO): GoPro Inc Announces Fourth Quarter and Full Year 2015 Results

GoPro Inc (NASDAQ:GPRO), enabler of some of today’s most engaging content, today announced financial results for its fourth quarter and full year ended December 31, 2015.

“In 2015, we recorded 16% year-over-year revenue growth and the fourth quarter represented the second highest revenue quarter in the company’s history,” said GoPro Founder and CEO, Nicholas Woodman. “However, growth slowed in the second half of the year and we recognize the need to develop software solutions that make it easier for our customers to offload, access and edit their GoPro content.”

Fourth quarter revenue includes a $21 million reduction for price protection related charges resulting from the HERO4 Session repricing in December. Full year revenue also reflected charges of approximately $40 million for price protection related charges issued in connection with reductions of the HERO4 Session selling price in September and December.

Fourth quarter and full year non-GAAP gross margin was impacted by a charge of approximately $57 million to cost of revenue for excess purchase order commitments, excess inventory and obsolete tooling resulting from the Company’s decision to discontinue production of the HERO cameras. This charge is greater than the $30 million to $35 million that was previously estimated in our announcement of preliminary fourth quarter results on January 13, 2016 due to our subsequent decision to simplify GoPro’s product offering to consist of HERO4 Black, HERO4 Silver, and HERO4 Session.

GoPro reports gross profit, 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.  Non-GAAP items exclude, where applicable, the effects of stock-based compensation, acquisition-related costs, and the tax impact of these items.  Additionally, GoPro reports non-GAAP adjusted EBITDA.  A reconciliation of preliminary GAAP financial measures to non-GAAP financial measures, as well as a description of items excluded from the calculation of non-GAAP financial measures, is presented in the financial statement portion of this release. GoPro also provides future estimated ranges of gross margin, operating expense and earnings per share on a non-GAAP basis, and provides a description of the non-GAAP adjustments used in these projections.

Stock Repurchase Program and Cash, Cash Equivalents and Marketable Securities

Commencing in the fourth quarter of 2015, GoPro has acquired approximately 1.5 million shares of its Class A capital stock at an average price per share of approximately $23.05, representing a total share repurchase of approximately $35.6 million through December 31, 2015. The Company has a remaining share repurchase authorization of $264.4 million.GoPro ended 2015 with cash, cash equivalents & marketable securities totaling $474 million, an increase of approximately $52 million from year end 2014.

Recent GoPro Highlights Include:

• According to NPD, GoPro’s fourth quarter digital camera/camcorder unit share increased 180 basis points year-over-year to 21.3%.  GoPro accounted for 6 of the top 10 products, including the #1 spot, on a dollar basis in the digital camera/camcorder category. GoPro was also the leader in accessory unit sales with 6 of the top 10 selling accessories, including the #1 spot.
• According to GfK, GoPro’s fourth quarter digital imaging unit share in Europe increased 400 basis points year-over-year to 12%. In the fourth quarter, GoPro accounted for 6 of the top 10 camcorders in Europe, including all of the top five spots in December, on a unit basis.
• International sales totaled more than 50% of full year 2015 revenue; combined Europe and Asia revenue was up over 49% year-over-year.
• In the fourth quarter, China remained a top ten market for GoPro.
• Launched the GoPro Channel on Amazon Fire TV and Fire TV Stick with a custom-designed streaming channel that will be a one-stop destination for delivering on-demandGoPro videos to millions of Amazon customers.
• Launched the GoPro Channel on the PlayStation® Network. The custom designed GoPro Channel app allows PlayStation owners to stream GoPro content on-demand, browse GoPro cameras and accessories, and more. PlayStation joins GoPro’s growing roster of distribution partners including Amazon Fire TV, Roku, Comcast Watchable, Sky, Vessel Entertainment, Xbox, LG and Virgin America.
• The GoPro Channel will launch on SkyQ, the next-generation home entertainment system in early 2016. GoPro videos will be available on two of the largest TV platforms on the globe – Comcast in the U.S. and Sky, with 21 million customers in the UK, Ireland, Germany, Austria and Italy.
• The GoPro Mobile App was downloaded 2.75 million times in the fourth quarter, totaling almost 24 million cumulative downloads; Q4 installs of GoPro Studio totaled nearly 1.7 million, totaling over 15 million cumulative installs, with average daily video exports of over 49,000 in the fourth quarter.
• The GoPro creative community has submitted more than 86,000 content submissions and GoPro has awarded almost $240,000 for video and photo content.  Winning videos and pictures can be viewed at http://gopro.com/awards.
• The PGA Tour, SkratchTV and GoPro announced a partnership that will ‘GoPro’ the game of golf. GoPro will produce episodic videos that bring fans inside-the-ropes at PGA TOUR events, giving them unique access to the events and athletes, including recently signed GoPro athlete and PGA TOUR member, Justin Thomas.
• Periscope users can now broadcast live directly from their GoPro HERO4 Black or Silver camera.  In the five days following the agreement signed in January, 2,700 people used a GoPro to broadcast live on periscope.
• In 2015, GoPro tied with Apple on the Google Brand Leaderboard – a measure of the most popular brands on YouTube.
• According to Google, more than 4.6 years of content was uploaded to YouTube in 2015 with GoPro in the title – up 22 percent from 2014.

Business Outlook:

GoPro is providing guidance for the first quarter and full year of 2016:

⁽¹⁾ Excluding estimated restructuring expenses for Q1 2016 of $5 million to $10 million

GoPro Names Brian McGee Chief Financial Officer – Effective March 11.

Brian McGee, a 30-year finance veteran who has served as CFO of two publicly-traded companies and who joined GoPro in 2015 from Qualcomm will succeed CFO Jack Lazareffective March 11. “The past two years have been incredibly rewarding and I am honored to have worked with Nick and the rest of the GoPro team. I will miss them all and I am excited that Brian is taking over the CFO role,” said Jack Lazar, who is retiring after two years at GoPro.  “Jack has been a great leader who helped GoPro navigate the path to becoming a publicly-traded company. While he will be missed, we are also grateful to have Brian and a strong bench of leaders running Finance at GoPro,” said Nick Woodman. (Original Source)

Shares of GoPro are up 1.31% in after-hours tradin. GPRO has a 1-year high of $65.49 and a 1-year low of $9.90. The stock’s 50-day moving average is $15.01 and its 200-day moving average is $31.19.

On the ratings front, GoPro has been the subject of a number of recent research reports. In a report issued on February 1, Citigroup analyst Jeremy David maintained a Hold rating on GPRO, with a price target of $12, which represents a potential upside of 16.7% from where the stock is currently trading. Separately, on the same day, Piper Jaffray’s Erinn Murphy reiterated a Sell rating on the stock and has a price target of $7.50.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Jeremy David and Erinn Murphy have a total average return of -13.4% and -10.8% respectively. David has a success rate of 29.4% and is ranked #3190 out of 3600 analysts, while Murphy has a success rate of 34.9% and is ranked #3515.

The street is mostly Neutral on GPRO stock. Out of 17 analysts who cover the stock, 8 suggest a Hold rating , 7 suggest a Buy and 2 recommend to Sell the stock. The 12-month average price target assigned to the stock is $18.50, which represents a potential upside of 80.0% from where the stock is currently trading.

GoPro Inc develops hardware and software solutions to alleviate consumer pain points associated with capturing, managing, sharing and enjoying engaging content. It produces mountable and wearable cameras and accessories.