GoPro, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. The filing also reports fourth-quarter results; amounts below are in U.S. dollars unless noted. GoPro sells cameras, mounts and accessories, software, and subscriptions through retail and direct channels. It operates as one reportable segment.
Financial performance and liquidity
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | $1,161.1 million | $891.9 million | +30% |
| Gross margin | 41.1% | 35.3% | +580 bps |
| Operating income (loss) | $113.2 million | ($36.8 million) | Improved |
| Net income (loss) | $371.2 million | ($66.8 million) | Improved |
| Diluted EPS | $2.27 | ($0.45) | Improved |
| Cash from operations | $229.2 million | $93.8 million | +144% |
| Adjusted EBITDA | $167.8 million | $43.2 million | +288% |
FY2021 net income included a $284.6 million non-cash benefit from releasing U.S. federal and state deferred-tax valuation allowances. Non-GAAP net income was $146.1 million; adjusted EBITDA and non-GAAP measures are not substitutes for GAAP results.
Fourth quarter: Revenue was $391.1 million, up 9% year over year; gross margin was 41.2%, versus 38.0%; operating expenses were $102.4 million, up 27%; net income was $52.6 million, versus $44.4 million; and operating cash flow was $163.8 million, versus $106.3 million. Camera units shipped fell 7% to 1.033 million, while average selling price rose 17% to $379.
Revenue mix and operating indicators: FY2021 retail revenue was $769.0 million (66.2% of revenue), and GoPro.com revenue was $392.1 million (33.8%). Camera shipments rose 12% to 3.145 million; average selling price increased 17% to $369. Subscription revenue grew 131% to $52.9 million, and GoPro subscribers reached approximately 1.6 million, up 107%.
Cash, debt and liquidity: Cash, cash equivalents and marketable securities totaled $538.9 million at year-end, versus $325.7 million a year earlier. Current assets were $781.9 million and current liabilities $474.8 million. Convertible-note principal outstanding was $125.0 million due April 2022 and $143.8 million due November 2025; the company said it intended to deliver cash up to the principal amount of the 2022 Notes. It reported no borrowings under its $50 million revolving credit facility and believed available liquidity would cover needs for at least one year from issuance of the financial statements. Cash, net of note principal, was reported as $270.1 million.
Investing cash outflow was $143.7 million, primarily reflecting $146.5 million of marketable-security purchases. Financing cash outflow was $9.9 million. Capital expenditures were $5.5 million; the filing does not state a free-cash-flow measure.
Material changes versus comparable periods
- Revenue rebounded 30% from pandemic-affected 2020, but remained below FY2019 revenue of $1,194.7 million.
- Higher camera price points, including a $50 increase in flagship-camera MSRP, higher direct-to-consumer sales, and subscription growth supported revenue and gross-margin gains. GoPro.com revenue grew 39%; retail revenue grew 26%.
- Operating expenses rose 4% for the year, to $363.9 million, principally due to personnel costs and support for the direct-to-consumer business. Fourth-quarter expenses rose 27% year over year.
- Operating results turned positive, while reported GAAP net income was substantially amplified by the non-cash tax-allowance release.
- FY2021 revenue rose in all reported regions: Americas 26%, EMEA 40%, and APAC 31%.
Outlook, commentary and risks
Management’s strategy is to expand GoPro.com sales and subscriptions, develop cameras and accessories, and improve integrated mobile, software and cloud services. It said these efforts are intended to support more consistent profitability, but gave no specific FY2022 revenue or earnings guidance in the supplied filing text. The company expected continued investment in product development and customer experience and noted that product launch timing affects revenue.
Key risks include pandemic-related demand and supply-chain uncertainty; component shortages, sole-source suppliers and outsourced manufacturing; shipping and input-cost inflation; holiday-season concentration; intense competition, including smartphones; dependence on camera sales; customer and retailer concentration; and execution risk in growing direct sales and subscriptions. Fourth-quarter revenue represented 34% of FY2021 revenue. The ten largest third-party customers represented 46% of revenue, and one retailer represented 11%.
GoPro disclosed a patent-infringement case brought by Contour IP Holdings LLC, with trial scheduled for May 4, 2022 and a decision pending on the company’s summary-judgment motion. GoPro said it believed the claims lacked merit; it could not estimate a loss or range of loss and did not expect a material adverse effect. In January 2022, the board authorized up to $100 million of Class A share repurchases, with no time limit. The company reported effective disclosure controls and internal control over financial reporting; its auditor issued unqualified opinions.
Important facts for investors to verify
- How much of FY2021 GAAP earnings reflects sustainable operations versus the $284.6 million non-cash tax benefit; assess the deferred-tax assets’ future realizability.
- Whether the $125 million 2022 Notes were repaid, converted or refinanced at maturity, and the resulting liquidity and share-count effects.
- Whether higher average selling prices, margins, direct-to-consumer mix and subscription growth can continue despite lower Q4 unit shipments.
- Whether supply constraints, freight costs, inflation and holiday-season demand affect product availability, margins and cash conversion.
- Developments in the Contour litigation and the timing and actual scale of share repurchases under the $100 million authorization.