GoPro by Elizabeth Stackpole

GoPro Annual Report 2017

Table of Contents Letter to Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . 2 About Us. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 GoPro By Numbers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Hero 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Why GoPro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 GoPro Model. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Driving Viewership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

GoPro makes the world's most versatile cameras.

A Letter From Our Founder and CEO

Think it. See it. Do it. We dream. We have passionate ideas about what’s possible in this world. Our passions lead us to create experiences and realities that expand our world and inspire those around us. GoPro helps people capture and share their lives’ most meaningful experiences with others—to celebrate them together. Like how a day on the mountain with friends is more meaningful than one spent alone, the sharing of our collective experiences makes our lives more fun. The world’s most versatile cameras are what we make. Enabling you to share your life through incredible photos and videos is what we do. This is your life...GoPro. Nicholas Woodman Founder and CEO

About Us

oPro is transforming the way consumers capture, manage, share and enjoy meaningful life experiences. We do this by enabling people to capture compelling, immersive photo and video content of themselves participating in their favorite activities. Our customers include some of the worldâ&#x20AC;&#x2122;s most active and passionate people. The volume and quality of their shared GoPro content, coupled with their enthusiasm for our brand, are virally driving awareness and demand for our products. To date, we have generated substantially all of our revenue from the sale of our cameras and accessories and we believe that the growing adoption of our capture devices and the engaging content they enable, position GoPro to become an exciting new media company.

“We don’t get too old to play...we get old because we stop playing...” –Robbie Crawford

Shane Dorian having fun on his son's toy surfboard at the playground. –taken with the GoPro Hero 4 Black

GoPro Enables Engaging Content 4

GoPro By Numbers >3.9 >13 >1,394 >25,000 >30,000

years of content uploaded to YouTube in 2014 with GoPro in the title

million capture devices sold million revenue in 2014 from $64 million in 2010

retail outlets in 100+ countries videos exported per day using GoPro Studio

Strong Financial Results • 2014 revenue of $1,394 million, up 41% YOY • 2014 gross margin of 45.1%, up 830 bps YOY • Q1 2015 guidance: revenue up 42% YOY and gross margin up 340 bps YOY

2004 970 GoPro Established

Employees

Million GoPro App Downloads

2014 Initial Public Offering

Introducing

The Most Advanced GoPro. Ever.

$499 4K/30fps 2.7K/50fps 1080/120fps Hilight Tagging Wi-fi/Bluetooth

ntroducing HERO4 Black, the most advanced GoPro ever. Featuring improved image quality and a 2x more powerful processor with 2x faster video frame rates,1 HERO4 Black takes Emmy® Award-winning GoPro performance to a whole new level. Incredible high-resolution 4K30 and 2.7K604 video and high frame rate 1080p120 video enable stunning, immersive footage of you and your world. New Protune™ settings for both photos and video unlock manual control of Color, ISO Limit, Exposure and more. Waterproof to 131’ (40m) with 12MP photos at a blistering 30 frames per second and improved audio,1 HERO4 Black is the ultimate life-capture solution.

2X the performance With a 2x more powerful processor, 2x faster video frame rates and even better image quality than its best-selling predecessor, HERO4 Black delivers footage that’s sharper, richer and more detailed.1 Combined with powerful new features and technologies—and improvements to audio, usability, wireless connectivity and more—HERO4 is the most advanced, highest-performing GoPro ever.

4x the resolution of 1080p. HERO4 is the first camera of its kind to feature ultra highresolution, high frame rate video as powerful as this. Once the exclusive domain of large, costly cameras, HERO4 Black delivers truly professional video quality in a tiny package. Stunning clarity. Liquid-smooth slow-motion playback. Cinema-quality capture. HERO4 brings it all.

Why GoPro People are spending more time online sharing personal experiences through photos and video

GoPro enables people to self-capture and share experiences in the most engaging and immersive way

Matters

Mission: Make Capturing, Managing and Sharing Engaging Content Easier

Phase 1: Capture

Phase 2: Manage

Phase 3: Share and Enjoy

GoPro Studio • Cross Platform Content Management & Editing Solution • 30,000+ average exports per day. GoPro App

•

13+ million downloads

“Sunset over the Wadi Rum Desert. #GoPro #JordanRules” –Kiersten Rich

Capture, Manage, Share Engaging Content

Our Model: A Virtuous Cycle

Virtually Scales Awareness and Enthusiasm

“Gliding above the beautiful Winnipeg, Manitoba landscape. #GoPro #QuikPod #aerialextreme” –Patrick Pelletier

Engaging Content Drives Viewership

•

3.9 Years of video uploaded to YouTube with “GoPro” in the title in 2014.

•

Top Ten Brand Channel on Instagram

•

8.3 Million Likes on GoPro’s Facebook page through Q4 2014

•

695 Million Views of videos on GoPro’s YouTube Channel through Q4 2014

•

> 40 Million Views of GoPro’s Adventures of Life in 4k

Recently Professionally Produced

NHL

GoPros used on players and referees during live broadcast of NHL all-star game

Winter X Games GoPros used on athletes and by camera men during live broadcast of ESPNâ&#x20AC;&#x2122;s X-Games

The Adventure of Life in 4K GoPro-produced short form videos documenting life in 4k

Financial Highlights

Annual Revenue Growth $1,394

$ in Millions

$986

$526

$234 $64

2010

2011

2012

2013

Annual Capture Device Units Shipped

2014

5 .2

Units in Millions

3 .8

2 .3

1 .1 0 .4

2010

2011

2012

2013

2014

Quarterly Revenue

$634

$ in Millions

GoProâ&#x20AC;&#x2122;s shares began trading publicly on June 26, 2014. The initial offering price was $24 per share.

$361 $255

$236 $177

$244

$280

$192

2013

2014

Quarterly Non-GAAP Income Statement Summary Q4 2014 vs. Q4 2013 ($ in millions, except EPS)

Q4 2013

Revenue

Q4 2014

$361.5 $280.0 $633.9

Chg 272.4

Chg

Q4 2014 vs. Q3 2014 Chg

75.4% $353.9

Chg 126.4%

Gross Margin*

42.0% 44.5% 48%

Operating Expenses*

77.5 96.8 111.1 33.6 43.3% 14.3 14.7%

Operating Income*

74.4 27.6 193.2 118.8 159.7% 165.6 599.0%

% of revenue Net Income* Diluted EPS* *Non-GAAP Metrics

Q3 2014

20.6%

9.9%

30.5%

- 600bps

- 350bps

46.4 18.0 144.9 98.5 212.5% 126.9 706.8% 0.33

0.12

0.99

0.66

200.0%

0.87

725.0%

Quarterly Revenue Metrics ($ in millions)

Q4 2013

Revenue by Channel: Direct

Total Revenue

Q4 2014

% of Rev

58.5% $187.2

% of Rev

66.9% $391.6

61.8%

150.2 41.5% 92.8 33.1% 242.3 38.2% $361.5

Revenue by Geography: Americas

% of Rev

$211.3

Distribution

Q3 2014

100.0% $280.0

% of Rev

$229.3

100.0% $633.9

% of Rev

100.0% % of Rev

63.4% $204.9

73.2% $407.6

64.3%

Europe, Middle East & Africa

95.2

26.3%

56.1

20.0%

163.9

25.9%

Asia & Pacific Area

37.0

10.2%

19.0

6.8%

62.4

9.8%

Total Revenue

$361.5

100.0% $280.0

100.0% $633.9

100.0%

Full Year Non-GAAP Income Statement Summary ($ in millions, except EPS) Revenue Gross margin*

2013

2014

2014 vs. 2013

Chg

$985.7 $1,394.2 $408.5 36.9% 45.1%

Chg

41.4%

- 820bps

Operating Expenses*

252.7 369.4 116.7 46.2%

Operating Income*

110.7 259.6 148.9 134.5%

% of revenue

11.2% 18.6%

Net Income*

68.8 188.9 120.1 174.5%

Diluted EPS*

0.50

1.32

- 0.82

165.2%

*Non-GAAP Metrics

Other Quarterly Metrics

($ in millions, units in thousands)

Q4 2013

Q3 2014

Q4 2014 vs. Q4 2013

Q4 2014

Chg

Q4 2014 vs. Q3 2014

Chg

Units shipped (1)

1,420 1,089 2,385 965 68.0% 1,296 119.0%

Adjusted EBITDA(2)

$81.9

Headcount

$36.2 $202.9 $121.0

147.8% $166.7 460.8%

646 869 970 324 50.2% 101 11.6%

(1) Units shipped represents the number of individual packaged camera units, which include selected accessories, that are shipped during a reporting period, net of any returns. (2) Non-GAAP Metrics

Pro Forma Long-Term Model

Quarterly Gross Margin*

48 .0% 44 .5%

42 .0%

FY 2014

Long-Term Target

Gross Margin %

45.1%

42–44%

Operating Expenses %

26.5%

18–20%

Operating Margin %

18.6%

18–20%

Adjusted EBITDA %

21.0%

21–23%

35 .2% 32 .3%

*Non-GAAP metrics

42 .2% 41 .1%

33 .5%

Q3 2013

Q3 2014

Full Year Revenue Metrics ($ in millions)

2013

Revenue by Channel:

2014

% of Rev

Direct

509.5 51.7 818.4 58.7

Distribution

476.2 48.3 575.8 41.3

Total Revenue

985.7 100 1394.2 100

Revenue by Geography:

% of Rev

Americas

557.3 56.5 890.3 63.9

Europe, Middle East & Africa

322.2

32.7

371.2

26.6

Asia and Pacific area

106.2

10.8

132.7

9.5

Total Revenue

985.7 100.0 1,394.2 100.0

Other Full Year Metrics $ in millions, units in thousands) Units shipped (1) Adjusted EBITDA (2) Headcount

2013

2014

2014 vs. 2013 Chg Chg

3,849 5,180 1,331 34.6% $133.7 $293.4 $159.7 119.4% 646 970 324 50.2%

(1) Units shipped represents the number of individual packaged camera units, which include selected accessories, that are shipped during a reporting period, net of any returns. (2) Non-GAAP Metrics

Selected Balance Sheet Metrics

($ in millions) Cash, cash equivalents and

Q4 2013

Q3 2014

Q4 2014

$101.4

$237.7

$422.3

Q4 2014 vs. Q4 2013

Chg

$320.9

Chg

316.4%

Q4 2014 vs. Q3 2014

Chg

$184.6

Chg

77.7%

marketable securities Cash flow from operations

82.3

47.0

43.2

(39.1)

(47.5%)

(3.8)

(8.1%)

Days sales outstanding

30.5

30.4

26.5

(4.4)

(14.5%)

(4.3)

(14.1%)

Inventory Annualized Inventory Returns Inventory Days

112.0 117.0 153.0 41.0 36.6% 36.0 30.8% 7.8 48.1

6.3 67.7

9.8 41.8

2.0

26.5%

3.5

55.6%

(6.3) (13.1%) (25.9) (38.3%)

Appendix: GAAP to Non-GAAP Reconciliation

Reconciliations of non-GAAP financial measures are set forth below (in thousands, except per share data): December 31, 2013

GAAP Net Income

September 30, 2014

December 31, 2014

$43,729 $14,620 $122,260

Stock based compensation Cost of revenue

160

233

290

Research and development

1,266

2,428

6,154

Sales and marketing

1,593

3,225

4,135

521

8,027

8,687

3,540

13,913

19,256

222

223

221

Research and development

Sales and marketing

286

276

297

(1,194)

(10,850)

3,085

General and administrative Total stock-based compensation Amortization of acquisition-related intangible assets Cost of revenue

Total amortization of acquisition-related intangible assets Income tax adjustments Non-GAAP net income GAAP shares for diluted net income per share Add: preferred shares conversion Add: initial public offering shares Non-GAAP shares for diluted net income per share Non-GAAP diluted net income per share

$46,361 $17,959 $144,898 99,621 145,186 146,723 30,523

8,900

139,044

145,186

146,723

$0.33

$0.12

$0.99

Appendix: GAAP to Non-GAAP Reconciliation

Reconciliations of non-GAAP financial measures are set forth below (in thousands, except per share data): Dec. 31, 2013

GAAP net income

Dec. 31, 2014

$60,578 $128,086

Stock-based compensation Cost of revenue

690

835

Research and development

3,003

11,640

Sales and marketing

5,670

10,426

General and administrative

1,524

48,496

10,887

71,399

Total stock-based compensation

Amortization of acquisition-related intangible assets Cost of revenue Research and development Sales and marketing

888

103

189

142

Total amortization of aquisition-related intangible assets

1,106

1,133

Income tax adjustments

(3,745)

(11,707)

Non-GAAP net income

$68,826

$188,913

GAAP shares for diluted earnings per share

98,941 143,180

Add: preferred shares conversion

30,523

Add: initial public offering shares

8,900

138,374

143,180

$0.50

$1.32

Non-GAAP shares for diluted earnings per share Non-GAAP diluted net income per share

888

Appendix: GAAP to Non-GAAP Reconciliation

Reconciliations of non-GAAP financial measures are set forth below ($ in thousands): December 31, 2013

GAAP gross profit

September 30, 2014

$151,504

December 31, 2014

$124,039 $303,813

Stock-based compensation

160

233

280

Amortization of acquisition-related intangible assets

222

223

221

$151,886

$124,495

$304,314

Non-GAAP gross profit GAAP gross profit as a % of revenue

41.9%

44.3% 47.9%

Stock-based compensation

0.0%

0.1%

Amortization of acquisition-related intangible assets

0.1%

0.0%

42.0%

44.5%

48.0%

Non-GAAP gross profit as a % of revenue GAAP operating expenses Stock-based compensation Amortization of acquisition-related intangible assets

$80,929

$110,582 $130,125

(3,380)

(13,680)

(18,976)

(64)

(53)

(76)

Non-GAAP operating expenses

$77,485

$96,849

$111,073

GAAP operating income

$70,575

$13,457 $173,668

Stock-based compensation Amortization of acquisition-related intangible asset Non-GAAP operating income GAAP operating income as a % of revenue Stock-based compensation Amortization of acquisition-related intangible assets Non-GAAP operating income as a % of revenue

3,540

13,913

19,256

286

276

297

$74,401

$27,646

$193,241

19.5% 1.0%

4.8% 27.4% 6.0%

3.1%

0.1%

0.0%

20.6%

9.9%

30.5%

Appendix: GAAP to Non-GAAP Reconciliation

Reconciliations of non-GAAP financial measures are set forth below ($ in thousands): Dec. 31, 2013 GAAP gross profit

$361,784 $627,235

Stock-based compensation

690

835

Amortization of acquisition-related intangible assets

888

$363,362

$628,958

Non-GAAP gross profit GAAP gross profit as a % of revenue

36.7% 45.0%

Stock-based compensation

0.1%

0.0%

Amortization of acquisition-related intangible assets

0.1%

36.9%

45.1%

Non-GAAP gross profit as a % of revenue GAAP operating expenses Stock-based compensation Amortization of acquisition-related intangible assets Non-GAAP operating income GAAP operating income Stock-based compensation Amortization of acquisition-related intangible assets Non-GAAP operating income GAAP operating income as a % of revenue Stock-based compensation Amortization of acquisition-related intangible assets Non-GAAP operating income as a % of revenue

Dec. 31, 2014

$263,081 $440,200 (10,197)

(70,564)

(218)

(245)

$252,666

$369,391

$98,703 $187,035 10,887

71,399

1,106

1,133

$110,696

$259,567

10.0% 13.4% 1.1%

5.1%

0.1%

11.2%

18.6%

Appendix: Adjusted EBITDA Reconciliation Reconciliations of non-GAAP financial measures are set forth below ($ in thousands): December 31, 2013

September 30, 2014

December 31, 2014

$43,729

$14,620

$122,260

Income tax (benefit) expenses

24,622

(2,947)

50,313

Interest income and expenses

1,889

1,284

1,029

Depreciation and emortization

3,526

4,781

5,176

POP display amortization

4,550

4,524

4,820

GAAP net income

Stock-based compensation Adjusted EBITDA

3,540

13,913

19,256

$81,856

$36,175

$202,854

Appendix: Adjusted EBITDA Reconciliation Reconciliations of non-GAAP financial measures are set forth below ($ in thousands): Dec. 31, 2013 GAAP net income

Dec. 31, 2014

$60,578

$128,088

30,751

52,887

6,018

5,036

Depreciation and amortization

12,034

17,945

POP display amortization

13,458

18,023

Stock-based compensation

10,887

71,399

$133,726

$293,380

Income tax expense Interest income and expense

Adjusted EBITDA

Thank You

Show us what you’ve got. If you’ve got epic GoPro photos and videos, we want to see them. Submit them to GoPro.com and we’ll pick our favorites and share them with the world. You might even win Video of the Day, Photo of the Day or the Creator’s Challenge.

Be a HERO

GoPro.com 3000 Clearview Way, San Mateo, CA 94402