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GoPro Investor presentation - August 2016

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Gpro aug 2016 investor presentation final

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GoPro Investor presentation - August 2016

  1. 1. Investor Presentation – Aug. 2016
  2. 2. Safe Harbor Statement These slides may contain projections or other forward-looking statements regarding future events, including but not limited to, those regarding our business outlook for the full year of 2016. These statements involve risks and uncertainties, and actual events or results may differ materially. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are our dependence on sales of our capture devices for substantially all of our revenue and the effect of a fall in sales during the holiday season; the fact that we do not expect to continue to grow in the future at the same rate as we have in the past, that we may fail to manage our growth, and profitability in recent periods might not be indicative of future performance; any inability to successfully manage frequent product introductions and transitions or to anticipate consumer preferences and successfully develop desirable products; the risks associated with our expected entrance into the consumer drone market; the effects of the highly competitive market in which we operate; the risks related to inventory, purchase commitments and long-lived assets; difficulty in accurately predicting our future customer demand; the importance of maintaining the value and reputation of our brand; and other factors detailed in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2015, which is on file with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof or as of the date otherwise stated herein. GoPro disclaims any obligation to update these forward-looking statements. We report gross margin, 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 additionally on a non-GAAP basis. Non-GAAP items exclude, where applicable, the effects of stock-based compensation, acquisition-related costs, restructuring costs and the tax impact of these items. Additionally, we report non-GAAP adjusted EBITDA. We believe that non-GAAP information is useful because it can enhance the understanding of our ongoing economic performance. We use non-GAAP reporting internally to evaluate and manage our operations. We have chosen to provide this information to investors to enable them to perform comparisons of operating results in a manner similar to how we analyze our own operating results. A full reconciliation of GAAP to non-GAAP financial data can be found in the appendix to this slide package and in our Q2 2016 earnings press release issued on July 27, 2016, which should be reviewed in conjunction with this presentation. Certain data in this presentation was obtained from various external sources, and neither the Company nor its affiliates, advisers or representatives has verified such data with independent sources. Accordingly, neither the Company nor any of its affiliates, advisers or representatives makes any representations as to the accuracy or completeness of that data or to update such data after the date of this presentation. Such data involves risks and uncertainties and is subject to change based on various factors. The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the products or services of the Company or this proposed offering. 2
  3. 3. GOPRO BY THE NUMBERS • 2Q16 unit sell-thru was up approximately 10% Q/Q and down less than 10% Y/Y • 2Q16 sell-thru exceeded sell-in by over 50%, reducing channel and GoPro inventory sequentially by ~35% and ~36%, respectively • GoPro’s $399 and above cameras accounted for 50%+ of units shipped • ~22 million cumulative cameras shipped thru 2Q16, including 759K cameras shipped in 2Q16 • Quik & Splice mobile editing apps have been downloaded a combined 37 million times. The GoPro App has ~29 million cumulative downloads and installs of GoPro Studio have reached 17.7 million • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • ESTABLISHED IN 2004 HQ IN SAN MATEO 1621 EMPLOYEES IPO IN JUNE 2014 Sources: NPD, GfK, & GoPro as of 6/30/2016 3
  4. 4. MARKET SHARE • Market Share • GoPro accounted for 6 of the top 10 products on a unit basis, including the top 3 spots, for 2Q16 in the combined digital camera/camcorder category in the U.S.* • HERO4 Silver remains the best-selling digital image camera on a unit and dollar basis for the seventh consecutive quarter.* • By our estimate, HERO Session was the #2 best-selling camera on a unit basis for the second consecutive quarter in the U.S. • 2Q16 digital camera/camcorder leading unit share in the U.S. increased 110 basis points YoY to 21.3%.* • 2Q16 digital imaging unit share in Europe increased 110 basis points YoY to 9.4%.** • GoPro accounted for 4 of the top 5 camcorders in Europe on a unit basis.** 4Sources: *NPD, **GfK, GoPro as of 6/30/2016
  5. 5. RECENT ANNOUNCEMENTS • Recent Announcements • Announced an exclusive partnership with Reliance Digital, India's largest Consumer Electronics retailer, that will put GoPro's cameras, mounts and accessories, on the shelves of up to 1,800 Reliance Digital across India. • Lauren Zalaznick was appointed to GoPro's Board of Directors. A 12-year executive at NBCUniversal, Ms. Zalaznick has devoted her career to transforming the cultural landscape in media, and has been named one of Time's 100 Most Influential People and Fortune's 50 Most Powerful Women. • Signed content partnerships to create episodic content with some of the world's most recognized brands including Ford, Wimbledon, and Real Madrid. The first series, produced with Ford Motor Company titled "Unstoppable Life," profiles GoPro athletes who demonstrate the perseverance and determination on their respective life journeys. • Launched GoPro Care to U.S. consumers, a fee-based service offering a range of support options, including extended warranty and accidental damage coverage. • Entered into a multi-year, global agreement with Red Bull that included content production, distribution, and cross-promotion through which GoPro will become Red Bull's exclusive provider of point-of-view imaging technology. Content to be distributed across both Red Bull and GoPro's digital distribution networks, including The GoPro Channel, Red Bull TV, RedBull.com and in the Red Bull Content Pool, Red Bull's media service platform. 5
  6. 6. ABOUT US what we make World’s Most Versatile Capture Devices what we do Enable Engaging Content 6
  7. 7. Why GoPro Matters 7 People are spending more time online sharing personal experiences through photos and video GoPro enables the world to capture and share its passion in the form of immersive and engaging content
  8. 8. 8 GOPRO MODEL: A VIRTUOUS CYCLE CAPTURE, ACCESS, & SHARE ENGAGING CONTENT VIRALLY SCALES AWARENESS + ENTHUSIASM
  9. 9. 9 MARKET LEADING PRODUCT LINE & FEATURES $499.99$399.99$199.99 MSRP’s Hilight Tagging Trim n Share GoPro App for the Apple Watch Periscope – Live Streaming from a GoPro HERO4 Black or Silver Software features
  10. 10. 10 ATTRACTIVE MARKET OPPORTUNITY MATURE CE PRODUCTS 30mm+ DIGITAL CAMERAS & CAMCORDERS 50mm+ NEW MEDIA CAPTURE OPPORTUNITIES 5.1mm units (TTM) Note: Portable navigation device market representative of mature CE products. Source: IDC 2014, Technavio. CONTENT DRIVEN MODEL CREATES ORGANIC MEDIA OPPORTUNITIES  Software  Services  Licensing  Advertising  Linear programming  OTT ANNUAL UNIT MARKET OPPORTUNITY Virtual Reality Drone User-Generated- Content Social
  11. 11. OUR MISSION: ELIMINATE THE PAIN POINTS OF CAPTURING, ACCESSING AND SHARING ENGAGING CONTENT PHASE I CAPTURE ACCESS MAXIMIZE SHARING & ENJOYMENT LEADING CAPTURE BRAND GoPro Desktop App w/ GoPro Studio, Quik & Splice + PHASE II Cross Platform Content Management & Editing Solutions 11 LEADING ACCESSORY BRAND
  12. 12. GOPRO PLATFORM – INCREASINGLY MOBILE 12 37 million cumulative downloads GoPro Studio 29 million cumulative downloads 43,500 average exports per day during 2Q16, up 15% Y/Y
  13. 13. PARTICIPATING IN TODAY’S MEGA-TRENDS 13 • Drones • Karma, GoPro’s drone, to be released in the second half of 2016 • User Generated Content • Consumers watch more UGC today than ever before • Social Media • Global audience for shared GoPro content • Stokes the virtuous cycle • Virtual Reality – Omni & Odyssey • GoPro broadly used for VR capture today • Partnerships with Google, Facebook and others • GoPro VR mobile app for 360-degree & VR reality content Odyssey Omni GoPro VR App
  14. 14. 14 MARKETING CONSUMER MARKETING LIFESTYLE MARKETING CHANNEL MARKETING TV TOP TIER EVENTS RESORTS / CAMPS GLOBAL TRADESHOWS SOCIAL 160+ GOPRO ATHLETES Kelly Slater Shaun White Missy Franklin STRATEGIC MARKETING AND BRANDING OUT-OF-HOME ADVERTISING PRINT ADS
  15. 15. 15 DISTRIBUTION – POINT OF PURCHASE Custom video-enabled point-of-purchase displays distributed in over 45,000 retail locations, globally Available in 2ft, 3ft and 4ft and 12ft footprints 12 ft POP display 4 ft POP display2 ft POP display
  16. 16. STRONG NETWORK OF DIRECT AND DISTRIBUTOR SALES STRONG NETWORK OF INTERNATIONAL DISTRIBUTORS - China increased 1H16 sell-thru by ~140% Y/Y, while maintaining price discipline - Korea retail locations reached ~680 stores in 2Q16, a Q/Q increase of ~65% - Japan 2Q16 store count increased 25% Y/Y helping to drive a 91% Y/Y increase in sell-thru. - GoPro’s market share in Japan increased 15 percentage points Y/Y to 42% - Signed an exclusive partnership in 2Q16 with Reliance Digital, India’s largest consumer electronics retailer 16 BIG BOX RETAIL MID MARKET RETAIL SPECIALTY RETAIL GLOBAL FOOTPRINT 45,000+ Retail Locations, 100+ countries DIRECT -> 58% OF 2Q16 REVENUE DISTRIBUTION -> 42% OF 2Q16 REVENUE
  17. 17. 17 Extensive multi- faceted marketing efforts Sophisticated and efficient global supply chain Meaningful investment in product development – over 650* R & D employees Aspirational brand with #1 market position Unparalleled social engagement – compelling and engaging content drives viewership and adoption Mission to eliminate pain points of capturing, managing and sharing engaging content Global distribution footprint – 40,000+ retail outlets in 100+ countriesPOP displays as unique marketing tool SIGNIFICANT BARRIERS TO ENTRY * As of 12/31/2015
  18. 18. FINANCIAL OVERVIEW
  19. 19. 19 $986 $1,394 $1,620 $1,350 $420 $221 2013 2014 2015 2016E 2Q15 2Q16 REVENUE • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • $ in millions 3.8 5.2 6.6 1.6 0.8 2013 2014 2015 2Q15 2Q16 CAPTURE DEVICE UNITS SHIPPED • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • Units in millions $1,500* ~22 million cumulative units * 2016 revenue guidance of between $1.35 billion and $1.5 billion, as of 7/27/2016 REVENUE & UNITS SHIPPED
  20. 20. 20 QUARTERLY TRENDS 35.2% 32.3% 33.5% 42.0% 41.1% 42.2% 44.5% 48.0% 45.2% 46.4% 46.8% 29.6% 33.0% 42.4% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 QUARTERLY REVENUE QUARTERLY GROSS MARGIN* • • • • • • • • • • •• • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • •• • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • $255 $177 $192 $361 $236 $245 $280 $634 $363 $420 $400 $437 $184 $221 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 $ in millions * Non-GAAP metric. See reconciliation in Appendix.
  21. 21. 21 SELECTED METRICS 2014 2015 2Q15 2Q16 ADJUSTED EBITDA* $293 $178 $75.3 $(76.8) DAYS SALES OUTSTANDING 26 30 25 27 ANNUALIZED INVENTORY TURNS 9.8x 4.6x 4.7x 4.4x CASH, CASH EQUIVALENTS & MARKETABLE SECURITIES $422 $474 $517 $279 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • $ in millions * Non-GAAP metric. See reconciliation in Appendix.
  22. 22. 22 PRO FORMA LONG-TERM MODEL 2013 2014 2015 2Q16 Long-Term Annual Target GROSS MARGIN %* 36.9% 45.1% 41.7% 42.4% 42-44% OPERATING EXPENSES %* 25.6% 26.5% 33.0% 82.8% 24-26% OPERATING MARGIN %* 11.2% 18.6% 8.7% (40.4)% 18-20% ADJUSTED EBITDA %* 13.6% 21.0% 11.0% (34.8)% 21-23% • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • * Non-GAAP metric. See reconciliation in Appendix.
  23. 23. SUMMARY • Aspirational brand focused on enabling the world to capture and share its passion in the form of immersive and engaging content • Participating in today’s mega-trends in social, OTT, virtual reality, drones and entertainment • Developing an ecosystem of partners, content distributors and products • Investing in hardware & software that make is easier for GoPro users to offload, access and edit their content • HERO5 and Karma to be released in the second half of 2016 23
  24. 24. 24 APPENDIX
  25. 25. Appendix: GAAP to Non-GAAP Reconciliation 25 To supplement our unaudited selected financial data presented on a basis consistent with GAAP, we disclose certain non-GAAP financial measures, including non-GAAP gross profit, gross margin, operating expenses, operating income (loss), net income (loss), earnings (loss) per share and adjusted EBITDA. These non-GAAP measures are not in accordance with, nor serve as an alternative for GAAP. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our GAAP results of operations. These non-GAAP measures should only be viewed in conjunction with corresponding GAAP measures. In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of our core operating performance on a period-to-period basis. The excluded items represent stock-based compensation and charges that are primarily driven by discrete events that we do not consider to be directly related to core operating performance. We use non-GAAP measures to evaluate the core operating performance of our business, for comparison with forecasts and strategic plans and for calculating return on investment. In addition, management’s incentive compensation is determined using non-GAAP measures. Since we find these measures to be useful, we believe that investors benefit from seeing results reviewed by management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with our GAAP financials, provide useful information to investors by facilitating: • the comparability of our on-going operating results over the periods presented; • the ability to identify trends in our underlying business; and • the comparison of our operating results against analyst financial models and operating results of other public companies that supplement their GAAP results with non-GAAP financial measures.
  26. 26. Appendix: GAAP to Non-GAAP Reconciliation 26 The following are explanations of each type of adjustment that we incorporate into non-GAAP financial measures: • Stock-based compensation expense relates to equity awards granted primarily to our workforce. We exclude stock-based compensation expense because we believe that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In particular, we note that companies calculate stock-based compensation expense for the variety of award types that they employ using different valuation methodologies and subjective assumptions. These non-cash charges are not factored into our internal evaluation of net income as we believe their inclusion would hinder our ability to assess core operational performance. We believe that excluding this expense provides greater visibility to the underlying performance of our business operations, facilitates comparison of our results with other periods, and may also facilitate comparison with the results of other companies in our industry. • Acquisition-related costs include the amortization of acquired intangible assets (primarily consisting of acquired technology), and third party transaction costs incurred for legal and other professional services. These costs are not factored into our evaluation of potential acquisitions, or of our performance after completion of the acquisitions, because they are not related to our core operating performance, and the frequency and amount of such costs vary significantly based on the timing and magnitude of our acquisition transactions and the maturities of the businesses being acquired. • Restructuring costs primarily include severance-related costs recorded in connection with our global workforce reduction in January 2016. We believe that excluding this expense provides greater visibility to the underlying performance of our business operations, facilitates comparison of our results with other periods, and may also facilitate comparison with the results of other companies in our industry. • Adjustment for taxes relates to the tax effect of the adjustments that we incorporate into non-GAAP measures in order to provide a more meaningful measure of non-GAAP net income. We believe that these adjustments provide us with the ability to more clearly view trends in our core operating performance. • Additionally, adjusted EBITDA excludes the amortization of point-of-purchase (POP) display assets because it is a non-cash charge, and similar to depreciation of property and equipment and amortization of acquired intangible assets.
  27. 27. Appendix: GAAP to Non-GAAP Reconciliation 27
  28. 28. Appendix: GAAP to Non-GAAP Reconciliation 28
  29. 29. 29 Appendix: Adjusted EBITDA Reconciliation

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