|
þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the fiscal year ended December 31, 2017
|
|
OR
|
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from ________________ to ________________
|
Delaware
|
|
77-0629474
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
3000 Clearview Way
San Mateo, California |
|
94402
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Class A Common Stock, par value $0.0001
(Title of each class)
|
|
The Nasdaq Stock Market LLC
(Name of each exchange on which registered)
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|
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Page
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PART I
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||
Item 1.
|
||
Item 1A.
|
||
Item 1B.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
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PART II
|
||
Item 5.
|
||
Item 6.
|
||
Item 7.
|
||
Item 7A.
|
||
Item 8.
|
||
Item 9.
|
||
Item 9A.
|
||
Item 9B.
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||
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PART III
|
||
Item 10.
|
||
Item 11.
|
||
Item 12.
|
||
Item 13.
|
||
Item 14.
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||
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PART IV
|
||
Item 15.
|
||
Item 16.
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||
|
•
|
HERO5 and HERO6
are our cloud-connected line of cameras launched in Fall 2016 and Fall 2017, respectively, featuring image stabilization, telemetry, cloud connectivity and voice control. Our HERO6 Black camera is powered by GoPro's custom-designed GP1 processor and is the most powerful and performance featured GoPro camera to date. We offer many professional-grade features with our current good-better-best camera offerings, which includes our HERO5 Session, HERO5 Black and HERO6 Black cameras, respectively. These cameras feature automatic uploading capabilities for photos and videos to GoPro Plus, our premium cloud-based storage solution.
|
•
|
Fusion
is our waterproof spherical camera which captures a 360-degree perspective and launched in November 2017. Using our GoPro App on iOS, a mobile user can view live preview shots, stitch, trim and share content directly from their mobile device. Using the mobile OverCapture feature allows the iOS user to re-frame and save traditional fixed-perspective videos “punched out” or extracted from a 360-degree video source file.
|
•
|
GoPro Plus
is a cloud-based storage solution that enables subscribers to easily access, edit and share content. Beginning in 2018, the subscription service also includes camera replacement. Our HERO5 and HERO6 cameras can automatically upload new photos and videos to a subscriber’s GoPro Plus cloud account.
|
•
|
Quik
is our primary mobile editing app
that makes it simple to create stunning edits on a smartphone. Our Quik desktop app provides expanded editing options for power users.
|
•
|
GoPro App
is a mobile app that allows users to preview and play back photos and videos, control their GoPro cameras and share content on the fly using their smartphones. Included in the GoPro App is GoPro
|
•
|
Karma Grip
is a handheld or body-mountable camera stabilizer that makes it easy to capture zero-shake, smooth video.
|
•
|
Karma Drone
is our foldable drone and stabilization solution, which will be discontinued in 2018 after we sell our remaining inventory.
|
•
|
difficulties in staffing and managing foreign operations;
|
•
|
burdens of complying with a wide variety of laws and regulations, including environmental, packaging and labeling, and drone regulations;
|
•
|
adverse tax effects and foreign exchange controls making it difficult to repatriate earnings and cash;
|
•
|
changes to the taxation of undistributed foreign earnings;
|
•
|
the effect of foreign currency exchange rates and interest rates;
|
•
|
political and economic instability;
|
•
|
terrorist activities and natural disasters;
|
•
|
trade restrictions;
|
•
|
differing employment practices and laws and labor disruptions;
|
•
|
the imposition of government controls;
|
•
|
lesser degrees of intellectual property protection;
|
•
|
tariffs and customs duties and the classifications of our goods by applicable governmental bodies;
|
•
|
a legal system subject to undue influence or corruption; and
|
•
|
a business culture in which illegal sales practices may be prevalent.
|
•
|
our board of directors is not currently classified, but at such time as all shares of our Class B common stock have been converted into shares of our Class A common stock, our board of directors will be classified into three classes of directors with staggered three-year terms;
|
•
|
so long as any shares of our Class B common stock are outstanding, special meetings of our stockholders may be called by the holders of 10% of the outstanding voting power of all then outstanding shares of stock, a majority of our board of directors, the chairman of our board of directors, our chief executive officer or our president,
|
•
|
when no shares of our Class B common stock are outstanding, only the chairman of our board of directors, our chief executive officer, our president or a majority of our board of directors will be authorized to call a special meeting of stockholders;
|
•
|
our stockholders may only take action at a meeting of stockholders and not by written consent;
|
•
|
vacancies on our board of directors may be filled only by our board of directors and not by stockholders;
|
•
|
directors may be removed from office with or without cause so long as our board of directors is not classified, and thereafter directors may be removed from office only for cause;
|
•
|
our restated certificate of incorporation provides for a dual class common stock structure in which holders of our Class B common stock have the ability to control the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the outstanding shares of our Class A and Class B common stock, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets;
|
•
|
our restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established, and shares of which may be issued, by our board of directors without stockholder approval and which may contain voting, liquidation, dividend and other rights superior to those of our Class A and Class B common stock; and
|
•
|
advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
|
•
|
heighten our vulnerability to adverse general economic conditions and heightened competitive pressures;
|
•
|
require us to dedicate a larger portion of our cash flow from operations to interest payments, limiting the availability of cash for other purposes;
|
•
|
limit our flexibility in planning for, or reacting to, changes in our business and industry; and
|
•
|
impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes.
|
|
2017
|
|
2016
|
||||||||||||
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
First Quarter
|
|
$10.97
|
|
|
|
$7.24
|
|
|
|
$18.69
|
|
|
|
$9.78
|
|
Second Quarter
|
|
$9.18
|
|
|
|
$7.70
|
|
|
|
$13.98
|
|
|
|
$8.80
|
|
Third Quarter
|
|
$11.69
|
|
|
|
$7.95
|
|
|
|
$17.15
|
|
|
|
$10.59
|
|
Fourth Quarter
|
|
$11.12
|
|
|
|
$7.57
|
|
|
|
$17.13
|
|
|
|
$8.69
|
|
|
Year ended December 31,
|
||||||||||||||||||
(dollars in thousands, except per share amounts)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Consolidated statements of operations data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
1,179,741
|
|
|
$
|
1,185,481
|
|
|
$
|
1,619,971
|
|
|
$
|
1,394,205
|
|
|
$
|
985,737
|
|
Gross profit
|
$
|
384,530
|
|
|
$
|
461,920
|
|
|
$
|
673,214
|
|
|
$
|
627,235
|
|
|
$
|
361,784
|
|
Gross margin
|
32.6
|
%
|
|
39.0
|
%
|
|
41.6
|
%
|
|
45.0
|
%
|
|
36.7
|
%
|
|||||
Operating income (loss)
|
$
|
(163,460
|
)
|
|
$
|
(372,969
|
)
|
|
$
|
54,748
|
|
|
$
|
187,035
|
|
|
$
|
98,703
|
|
Net income (loss)
|
$
|
(182,873
|
)
|
|
$
|
(419,003
|
)
|
|
$
|
36,131
|
|
|
$
|
128,088
|
|
|
$
|
60,578
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(1.32
|
)
|
|
$
|
(3.01
|
)
|
|
$
|
0.27
|
|
|
$
|
1.07
|
|
|
$
|
0.54
|
|
Diluted
|
$
|
(1.32
|
)
|
|
$
|
(3.01
|
)
|
|
$
|
0.25
|
|
|
$
|
0.92
|
|
|
$
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other financial information:
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted EBITDA
(1)
|
$
|
(31,368
|
)
|
|
$
|
(192,807
|
)
|
|
$
|
179,309
|
|
|
$
|
293,380
|
|
|
$
|
133,726
|
|
Non-GAAP net income (loss)
(2)
|
$
|
(95,867
|
)
|
|
$
|
(201,247
|
)
|
|
$
|
111,564
|
|
|
$
|
188,913
|
|
|
$
|
68,826
|
|
Non-GAAP diluted earnings (loss) per share
(2)
|
$
|
(0.69
|
)
|
|
$
|
(1.44
|
)
|
|
$
|
0.76
|
|
|
$
|
1.32
|
|
|
$
|
0.50
|
|
(1)
|
We define adjusted EBITDA as net income (loss) adjusted to exclude the impact of: provision for income taxes, interest income, interest expense, depreciation and amortization, POP display amortization, stock-based compensation, impairment charges and restructuring costs.
|
(2)
|
We define non-GAAP net income as net income (loss) adjusted to exclude stock-based compensation, acquisition-related costs, non-cash interest expense, restructuring costs and taxes related to the tax effect of these adjustments. Acquisition-related costs include the amortization of acquired intangible assets and impairment write-downs (if applicable), as well as third-party transaction costs for legal and other professional services. Non-GAAP earnings per share considers the conversion of the redeemable convertible preferred stock into shares of common stock as though the conversion had occurred at the beginning of the period and the initial public offering shares issued July 2014 as if they had been outstanding since the beginning of the period.
|
|
As of December 31,
|
||||||||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Consolidated balance sheet data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents and marketable securities
|
$
|
247,390
|
|
|
$
|
217,953
|
|
|
$
|
474,058
|
|
|
$
|
422,256
|
|
|
$
|
101,410
|
|
Inventory
|
150,551
|
|
|
167,192
|
|
|
188,232
|
|
|
153,026
|
|
|
111,994
|
|
|||||
Working capital
|
203,156
|
|
|
157,074
|
|
|
538,066
|
|
|
564,274
|
|
|
57,446
|
|
|||||
Total assets
|
850,246
|
|
|
922,640
|
|
|
1,102,976
|
|
|
917,691
|
|
|
439,671
|
|
|||||
Total indebtedness
|
130,048
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
113,612
|
|
|||||
Redeemable convertible preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77,198
|
|
|||||
Total stockholders’ equity (deficit)
|
298,705
|
|
|
446,945
|
|
|
772,033
|
|
|
641,204
|
|
|
(5,366
|
)
|
•
|
Overview.
Discussion of our business and overall analysis of financial and other highlights affecting the Company in order to provide context for the remainder of MD&A.
|
•
|
Components of Our Results of Operations.
Description of the items contained in each operating revenue and expense caption in the consolidated statements of operations.
|
•
|
Results of Operations.
Analysis of our financial results comparing
2017
to
2016
and
2016
to
2015
.
|
•
|
Liquidity and Capital Resources.
Analysis of changes in our balance sheets and cash flows, and discussion of our financial condition and potential sources of liquidity.
|
•
|
Contractual Commitments.
Overview of contractual obligations, including expected payment schedule and indemnifications as of
December 31, 2017
.
|
•
|
Critical Accounting Policies and Estimates.
Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.
|
•
|
Non-GAAP Financial Measures.
A presentation of results reconciling GAAP to non-GAAP adjusted measures.
|
(units and dollars in thousands, except per share amounts)
|
Q4 2017
|
|
Q4 2016
|
|
FY 2017
|
|
FY 2016
|
||||||||
Revenue
|
$
|
334,796
|
|
|
$
|
540,621
|
|
|
$
|
1,179,741
|
|
|
$
|
1,185,481
|
|
Camera units shipped
(1)
|
1,361
|
|
|
2,284
|
|
|
4,303
|
|
|
4,762
|
|
||||
Gross margin
(2)
|
23.8
|
%
|
|
39.2
|
%
|
|
32.6
|
%
|
|
39.0
|
%
|
||||
Operating expenses
|
$
|
138,097
|
|
|
$
|
238,703
|
|
|
$
|
547,990
|
|
|
$
|
834,889
|
|
Net loss
|
$
|
(55,848
|
)
|
|
$
|
(115,709
|
)
|
|
$
|
(182,873
|
)
|
|
$
|
(419,003
|
)
|
Diluted net loss per share
|
$
|
(0.41
|
)
|
|
$
|
(0.82
|
)
|
|
$
|
(1.32
|
)
|
|
$
|
(3.01
|
)
|
Cash provided by (used in) operations
|
$
|
56,990
|
|
|
$
|
12,696
|
|
|
$
|
(36,853
|
)
|
|
$
|
(107,753
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other financial information:
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA
(3)
|
$
|
(26,544
|
)
|
|
$
|
44,343
|
|
|
$
|
(31,368
|
)
|
|
$
|
(192,807
|
)
|
Non-GAAP net income (loss)
(4)
|
$
|
(41,319
|
)
|
|
$
|
42,367
|
|
|
$
|
(95,867
|
)
|
|
$
|
(201,247
|
)
|
Non-GAAP income (loss) per share
|
$
|
(0.30
|
)
|
|
$
|
0.29
|
|
|
$
|
(0.69
|
)
|
|
$
|
(1.44
|
)
|
|
Year ended December 31,
|
|||||||||||||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
Revenue
|
$
|
1,179,741
|
|
|
100
|
%
|
|
$
|
1,185,481
|
|
|
100
|
%
|
|
$
|
1,619,971
|
|
|
100
|
%
|
Cost of revenue
|
795,211
|
|
|
67
|
|
|
723,561
|
|
|
61
|
|
|
946,757
|
|
|
58
|
|
|||
Gross profit
|
384,530
|
|
|
33
|
|
|
461,920
|
|
|
39
|
|
|
673,214
|
|
|
42
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
229,265
|
|
|
19
|
|
|
358,902
|
|
|
30
|
|
|
241,694
|
|
|
15
|
|
|||
Sales and marketing
|
236,581
|
|
|
20
|
|
|
368,620
|
|
|
31
|
|
|
268,939
|
|
|
17
|
|
|||
General and administrative
|
82,144
|
|
|
7
|
|
|
107,367
|
|
|
9
|
|
|
107,833
|
|
|
7
|
|
|||
Total operating expenses
|
547,990
|
|
|
46
|
|
|
834,889
|
|
|
70
|
|
|
618,466
|
|
|
38
|
|
|||
Operating income (loss)
|
(163,460
|
)
|
|
(13
|
)
|
|
(372,969
|
)
|
|
(31
|
)
|
|
54,748
|
|
|
3
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest expense
|
(13,660
|
)
|
|
(1
|
)
|
|
(2,992
|
)
|
|
—
|
|
|
(1,575
|
)
|
|
—
|
|
|||
Other income (expense), net
|
733
|
|
|
—
|
|
|
787
|
|
|
—
|
|
|
(588
|
)
|
|
—
|
|
|||
Total other expense, net
|
(12,927
|
)
|
|
(1
|
)
|
|
(2,205
|
)
|
|
—
|
|
|
(2,163
|
)
|
|
—
|
|
|||
Income (loss) before income taxes
|
(176,387
|
)
|
|
(14
|
)
|
|
(375,174
|
)
|
|
(31
|
)
|
|
52,585
|
|
|
3
|
|
|||
Income tax expense
|
6,486
|
|
|
1
|
|
|
43,829
|
|
|
4
|
|
|
16,454
|
|
|
1
|
|
|||
Net income (loss)
|
$
|
(182,873
|
)
|
|
(15
|
)%
|
|
$
|
(419,003
|
)
|
|
(35
|
)%
|
|
$
|
36,131
|
|
|
2
|
%
|
|
Year ended December 31,
|
|
2017 vs 2016
|
|
2016 vs 2015
|
||||||||||||
(camera units and dollars in thousands)
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
Camera units shipped
|
4,303
|
|
|
4,762
|
|
|
6,584
|
|
|
(10
|
)%
|
|
(28
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Direct channel
|
$
|
634,888
|
|
|
$
|
650,111
|
|
|
$
|
841,882
|
|
|
(2
|
)
|
|
(23
|
)
|
Percentage of revenue
|
53.8
|
%
|
|
54.8
|
%
|
|
52.0
|
%
|
|
|
|
|
|||||
Distribution channel
|
$
|
544,853
|
|
|
$
|
535,370
|
|
|
$
|
778,089
|
|
|
2
|
|
|
(31
|
)
|
Percentage of revenue
|
46.2
|
%
|
|
45.2
|
%
|
|
48.0
|
%
|
|
|
|
|
|||||
Total revenue
|
$
|
1,179,741
|
|
|
$
|
1,185,481
|
|
|
$
|
1,619,971
|
|
|
—
|
%
|
|
(27
|
)%
|
|
|
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
591,879
|
|
|
$
|
619,784
|
|
|
$
|
868,772
|
|
|
(5
|
)%
|
|
(29
|
)%
|
Percentage of revenue
|
50.2
|
%
|
|
52.3
|
%
|
|
53.6
|
%
|
|
|
|
|
|||||
Europe, Middle East and Africa (EMEA)
|
$
|
334,872
|
|
|
$
|
366,352
|
|
|
$
|
535,260
|
|
|
(9
|
)
|
|
(32
|
)
|
Percentage of revenue
|
28.4
|
%
|
|
30.9
|
%
|
|
33.0
|
%
|
|
|
|
|
|||||
Asia and Pacific (APAC)
|
$
|
252,990
|
|
|
$
|
199,345
|
|
|
$
|
215,939
|
|
|
27
|
|
|
(8
|
)
|
Percentage of revenue
|
21.4
|
%
|
|
16.8
|
%
|
|
13.4
|
%
|
|
|
|
|
|||||
Total revenue
|
$
|
1,179,741
|
|
|
$
|
1,185,481
|
|
|
$
|
1,619,971
|
|
|
—
|
%
|
|
(27
|
)%
|
|
Year ended December 31,
|
|
2017 vs 2016
|
|
2016 vs 2015
|
||||||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
Cost of revenue
|
$
|
786,657
|
|
|
$
|
719,689
|
|
|
$
|
944,304
|
|
|
9
|
%
|
|
(24
|
)%
|
Stock-based compensation
|
1,935
|
|
|
1,616
|
|
|
1,492
|
|
|
20
|
|
|
8
|
|
|||
Acquisition-related costs
|
5,985
|
|
|
1,759
|
|
|
961
|
|
|
240
|
|
|
83
|
|
|||
Restructuring costs
|
634
|
|
|
497
|
|
|
—
|
|
|
28
|
|
|
N/A
|
|
|||
Total cost of revenue
|
$
|
795,211
|
|
|
$
|
723,561
|
|
|
$
|
946,757
|
|
|
10
|
%
|
|
(24
|
)%
|
Gross margin
|
32.6
|
%
|
|
39.0
|
%
|
|
41.6
|
%
|
|
(640) bps
|
|
|
(260) bps
|
|
|
Year ended December 31,
|
|
2017 vs 2016
|
|
2016 vs 2015
|
||||||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
Research and development
|
$
|
191,182
|
|
|
$
|
295,901
|
|
|
$
|
220,516
|
|
|
(35
|
)%
|
|
34
|
%
|
Stock-based compensation
|
24,963
|
|
|
31,365
|
|
|
18,024
|
|
|
(20
|
)
|
|
74
|
|
|||
Acquisition-related costs
|
3,028
|
|
|
14,439
|
|
|
3,154
|
|
|
(79
|
)
|
|
358
|
|
|||
Restructuring costs
|
10,092
|
|
|
17,197
|
|
|
—
|
|
|
(41
|
)
|
|
N/A
|
|
|||
Total research and development
|
$
|
229,265
|
|
|
$
|
358,902
|
|
|
$
|
241,694
|
|
|
(36
|
)%
|
|
48
|
%
|
Percentage of revenue
|
19.4
|
%
|
|
30.3
|
%
|
|
14.9
|
%
|
|
|
|
|
|
Year ended December 31,
|
|
2017 vs 2016
|
|
2016 vs 2015
|
||||||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
Sales and marketing
|
$
|
219,036
|
|
|
$
|
342,651
|
|
|
$
|
255,045
|
|
|
(36
|
)%
|
|
34
|
%
|
Stock-based compensation
|
10,498
|
|
|
13,883
|
|
|
13,762
|
|
|
(24
|
)
|
|
1
|
|
|||
Acquisition-related costs
|
—
|
|
|
22
|
|
|
132
|
|
|
(100
|
)
|
|
(83
|
)
|
|||
Restructuring costs
|
7,047
|
|
|
12,064
|
|
|
—
|
|
|
(42
|
)
|
|
N/A
|
|
|||
Total sales and marketing
|
$
|
236,581
|
|
|
$
|
368,620
|
|
|
$
|
268,939
|
|
|
(36
|
)%
|
|
37
|
%
|
Percentage of revenue
|
20.1
|
%
|
|
31.1
|
%
|
|
16.6
|
%
|
|
|
|
|
|
Year ended December 31,
|
|
2017 vs 2016
|
|
2016 vs 2015
|
||||||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
General and administrative
|
$
|
65,788
|
|
|
$
|
70,247
|
|
|
$
|
59,308
|
|
|
(6
|
)%
|
|
18
|
%
|
Stock-based compensation
|
13,859
|
|
|
22,663
|
|
|
47,402
|
|
|
(39
|
)
|
|
(52
|
)
|
|||
Acquisition-related costs
|
(22
|
)
|
|
1,126
|
|
|
1,123
|
|
|
(102
|
)
|
|
—
|
|
|||
Restructuring costs
|
2,519
|
|
|
13,331
|
|
|
—
|
|
|
(81
|
)
|
|
N/A
|
|
|||
Total general and administrative expenses
|
$
|
82,144
|
|
|
$
|
107,367
|
|
|
$
|
107,833
|
|
|
(23
|
)%
|
|
—
|
%
|
Percentage of revenue
|
7.0
|
%
|
|
9.1
|
%
|
|
6.7
|
%
|
|
|
|
|
|
Year ended December 31,
|
|
2017 vs 2016
|
|
2016 vs 2015
|
||||||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
Interest expense
|
$
|
(13,660
|
)
|
|
$
|
(2,992
|
)
|
|
$
|
(1,575
|
)
|
|
357
|
%
|
|
90
|
%
|
Other income (expense), net
|
733
|
|
|
787
|
|
|
(588
|
)
|
|
(7
|
)
|
|
(234
|
)
|
|||
Total other expense, net
|
$
|
(12,927
|
)
|
|
$
|
(2,205
|
)
|
|
$
|
(2,163
|
)
|
|
486
|
%
|
|
2
|
%
|
|
Year ended December 31,
|
|
2017 vs 2016
|
|
2016 vs 2015
|
||||||||||||
(dollars in thousands)
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
Income tax expense
|
$
|
6,486
|
|
|
$
|
43,829
|
|
|
$
|
16,454
|
|
|
(85
|
)%
|
|
166
|
%
|
Effective tax rate
|
3.7
|
%
|
|
11.7
|
%
|
|
31.3
|
%
|
|
|
|
|
|
Three months ended
|
||||||||||||||||||||||||||||||
(dollars in thousands, except per share amounts)
|
Dec. 31,
2017
|
|
Sept. 30,
2017 |
|
June 30,
2017
|
|
March 31,
2017 |
|
Dec. 31,
2016
|
|
Sept. 30,
2016 |
|
June 30,
2016
|
|
March 31,
2016 |
||||||||||||||||
Revenue
(1)
|
$
|
334,796
|
|
|
$
|
329,805
|
|
|
$
|
296,526
|
|
|
$
|
218,614
|
|
|
$
|
540,621
|
|
|
$
|
240,569
|
|
|
$
|
220,755
|
|
|
$
|
183,536
|
|
Gross profit
(2)
|
79,786
|
|
|
130,546
|
|
|
105,632
|
|
|
68,566
|
|
|
212,135
|
|
|
97,069
|
|
|
93,002
|
|
|
59,714
|
|
||||||||
Operating expenses
(3)
|
138,097
|
|
|
122,497
|
|
|
130,615
|
|
|
156,781
|
|
|
238,703
|
|
|
212,658
|
|
|
202,379
|
|
|
181,149
|
|
||||||||
Net income (loss)
|
$
|
(55,848
|
)
|
|
$
|
14,661
|
|
|
$
|
(30,536
|
)
|
|
$
|
(111,150
|
)
|
|
$
|
(115,709
|
)
|
|
$
|
(104,068
|
)
|
|
$
|
(91,767
|
)
|
|
$
|
(107,459
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
(0.41
|
)
|
|
$
|
0.11
|
|
|
$
|
(0.22
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(0.82
|
)
|
|
$
|
(0.74
|
)
|
|
$
|
(0.66
|
)
|
|
$
|
(0.78
|
)
|
Diluted
|
$
|
(0.41
|
)
|
|
$
|
0.10
|
|
|
$
|
(0.22
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(0.82
|
)
|
|
$
|
(0.74
|
)
|
|
$
|
(0.66
|
)
|
|
$
|
(0.78
|
)
|
(1)
|
Included in revenue for the quarter ended December 31, 2017 was a reduction of approximately $80 million for price protection and marketing development funds incurred in connection with the reduction of our camera and drone selling price.
|
(2)
|
Included in cost of revenue for the quarter ended March 31, 2016 were charges of $8 million for excess purchase order commitments, excess inventory and obsolete tooling, relating to the end-of-life of our entry-level HERO products.
|
(3)
|
Included in operating expenses for the quarter ended March 31, 2017, December 31, 2016 and March 31, 2016 were restructuring charges of approximately $13.6 million, $36.4 million and $6.2 million, respectively.
|
(dollars in thousands)
|
December 31, 2017
|
|
December 31, 2016
|
||||
Cash and cash equivalents
|
$
|
202,504
|
|
|
$
|
192,114
|
|
Marketable securities
|
44,886
|
|
|
25,839
|
|
||
Total
cash, cash equivalents and marketable securities
|
$
|
247,390
|
|
|
$
|
217,953
|
|
Percentage of total assets
|
29
|
%
|
|
24
|
%
|
•
|
We expect that operating expenses and inventory purchases will constitute a material use of our cash balances. We intend to continue to manage our operating activities in line with our existing cash and available financial resources. We believe the restructuring actions and other cost saving initiatives we have taken will enable us to continue to significantly reduce our operating expenses to below $400 million on a non-GAAP basis for the full year 2018.
|
•
|
We expect to spend significantly less on capital expenditures in 2018 compared to 2017. Our actual future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, the timing of new product introductions, market acceptance of our products and overall economic conditions.
|
•
|
In February 2018, we received an income tax refund of $32.9 million.
|
•
|
In March 2016, we entered into a credit agreement with a syndicate of banks that provided for a secured revolving credit facility under which we could borrow up to an aggregate of
$250.0 million
. Our credit facility terminates in March 2021. (See Note 5 to the Notes to Consolidated Financial Statements for additional information.)
|
•
|
We ended the year with
$247.4 million
in cash, cash equivalents and marketable securities. Additionally, since March 31, 2017, we generated $81.0 million in cash, excluding the net proceeds from our convertible debt offering in April 2017.
|
•
|
We have completed acquisitions in the past and we may evaluate additional possible acquisitions of, or strategic investments in, businesses, products and technologies that are complementary to our business, which may require the use of cash.
|
|
Year ended December 31,
|
|
2017 vs 2016
|
|
2016 vs 2015
|
||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2015
|
|
% Change
|
|
% Change
|
||||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
||||||||
Operating activities
|
$
|
(36,853
|
)
|
|
$
|
(107,753
|
)
|
|
$
|
157,611
|
|
|
(66
|
)%
|
|
(168
|
)%
|
Investing activities
|
$
|
(43,097
|
)
|
|
$
|
19,286
|
|
|
$
|
(211,977
|
)
|
|
(323
|
)%
|
|
(109
|
%)
|
Financing activities
|
$
|
88,594
|
|
|
$
|
1,955
|
|
|
$
|
15,665
|
|
|
4,432
|
%
|
|
(88
|
)%
|
•
|
Persuasive evidence of an arrangement exists
. Contracts or sales orders from our distributors, resellers or online customers are generally used to determine the existence of an arrangement.
|
•
|
Delivery has occurred
. We consider delivery to have occurred once title and risk of loss has been transferred. Shipping documents and customer acceptance, when applicable, are used to verify delivery.
|
•
|
The sales price is fixed or determinable
. We assess whether the sales price is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment.
|
•
|
Collectability is reasonably assured
. We assess collectability based primarily on the creditworthiness of the customer as determined by credit analysis, the customer’s payment history and other relevant factors.
|
•
|
Expected Term.
We do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time stock-based awards have been exercisable since the completion of our IPO in July 2014. As a result, we used the simplified method to calculate the expected term estimate based on the vesting and contractual terms of the option. Under the simplified method, the expected term is equal to the average of the stock-based awards weighted average vesting period and its contractual term.
|
•
|
Volatility.
The expected stock price volatility for our common stock was estimated by taking the average of our historic volatility and the historical volatility of the common stock of a group of comparable publicly traded companies over a period equivalent to the expected term.
|
•
|
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.
|
•
|
adjusted EBITDA does not reflect tax payments that reduce cash available to us;
|
•
|
adjusted EBITDA excludes depreciation and amortization and, although these are non-cash charges, the property and equipment being depreciated and amortized often will have to be replaced in the future, and adjusted EBITDA does not reflect any cash capital expenditure requirements for such replacements;
|
•
|
adjusted EBITDA excludes the amortization of POP display assets because it is a non-cash charge, and is treated similarly to depreciation of property and equipment and amortization of acquired intangible assets;
|
•
|
adjusted EBITDA and non-GAAP net income (loss) exclude the impairment of intangible assets because it is a non-cash charge that is inconsistent in amount and frequency;
|
•
|
adjusted EBITDA and non-GAAP net income (loss) exclude restructuring costs which primarily include severance-related costs, stock-based compensation expenses and facilities consolidation charges recorded in connection with restructuring actions announced in the first and fourth quarters of 2016 and in the first quarter of 2017. These expenses do not reflect expected future operating expenses and do not contribute to a meaningful evaluation of current operating performance or comparisons to the operating performance in other periods;
|
•
|
adjusted EBITDA and non-GAAP net income (loss) exclude stock-based compensation expense related 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 (loss) as we believe their inclusion would hinder our ability to assess core operational performance;
|
•
|
non-GAAP net income (loss) excludes acquisition-related costs including the amortization of acquired intangible assets (primarily consisting of acquired technology), the impairment of acquired intangible assets (if
|
•
|
non-GAAP net income (loss) excludes non-cash interest expense. In connection with issuance of the Convertible Senior Notes in April 2017, we are required to recognize non-cash interest expense in accordance with the authoritative accounting guidance for convertible debt that may be settled in cash;
|
•
|
non-GAAP net income (loss) includes income tax adjustments. Beginning in the first quarter of 2017, we implemented a cash-based non-GAAP tax expense approach (based upon expected annual cash payments for income taxes) for evaluating operating performance as well as for planning and forecasting purposes. This non-GAAP tax approach eliminates the effects of period specific items, which can vary in size and frequency and does not necessarily reflect our long-term operations. Historically, we computed a non-GAAP tax rate based on non-GAAP pre-tax income on a quarterly basis, which considered the income tax effects of the adjustments above; and
|
•
|
other companies may calculate these non-GAAP financial measures differently than we do, limiting their usefulness as comparative measures.
|
|
Three months ended
|
||||||
(in thousands)
|
December 31, 2017
|
|
December 31, 2016
|
||||
Net loss
|
$
|
(55,848
|
)
|
|
$
|
(115,709
|
)
|
Income tax expense (benefit)
|
(6,943
|
)
|
|
87,391
|
|
||
Interest income, net
|
4,163
|
|
|
1,022
|
|
||
Depreciation and amortization
|
9,218
|
|
|
11,100
|
|
||
POP display amortization
|
4,342
|
|
|
4,944
|
|
||
Stock-based compensation
|
15,020
|
|
|
17,926
|
|
||
Impairment of intangible assets
|
—
|
|
|
1,088
|
|
||
Restructuring costs
|
3,504
|
|
|
36,581
|
|
||
Adjusted EBITDA
|
$
|
(26,544
|
)
|
|
$
|
44,343
|
|
|
Year ended December 31,
|
||||||||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Net income (loss)
|
$
|
(182,873
|
)
|
|
$
|
(419,003
|
)
|
|
$
|
36,131
|
|
|
$
|
128,088
|
|
|
$
|
60,578
|
|
Income tax expense
|
6,486
|
|
|
43,829
|
|
|
16,454
|
|
|
52,887
|
|
|
30,751
|
|
|||||
Interest expense
|
12,804
|
|
|
1,401
|
|
|
234
|
|
|
5,038
|
|
|
6,018
|
|
|||||
Depreciation and amortization
|
41,478
|
|
|
41,639
|
|
|
28,981
|
|
|
17,945
|
|
|
12,034
|
|
|||||
POP display amortization
|
19,190
|
|
|
19,623
|
|
|
16,829
|
|
|
18,023
|
|
|
13,458
|
|
|||||
Stock-based compensation
|
51,255
|
|
|
69,527
|
|
|
80,680
|
|
|
71,399
|
|
|
10,887
|
|
|||||
Impairment of intangible assets
|
—
|
|
|
7,088
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restructuring costs
|
20,292
|
|
|
43,089
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Adjusted EBITDA
|
$
|
(31,368
|
)
|
|
$
|
(192,807
|
)
|
|
$
|
179,309
|
|
|
$
|
293,380
|
|
|
$
|
133,726
|
|
|
Three months ended
|
||||||
(in thousands)
|
December 31, 2017
|
|
December 31, 2016
|
||||
Net loss
|
$
|
(55,848
|
)
|
|
$
|
(115,709
|
)
|
Stock-based compensation
|
15,020
|
|
|
17,926
|
|
||
Acquisition-related costs
|
2,360
|
|
|
3,700
|
|
||
Restructuring costs
|
3,504
|
|
|
36,581
|
|
||
Non-cash interest expense
|
1,979
|
|
|
—
|
|
||
Income tax adjustments
(1)
|
(8,334
|
)
|
|
99,869
|
|
||
Non-GAAP net income (loss)
|
$
|
(41,319
|
)
|
|
$
|
42,367
|
|
Non-GAAP earnings (loss) per share
|
$
|
(0.30
|
)
|
|
$
|
0.29
|
|
|
|
|
|
||||
GAAP shares for diluted net income (loss) per share
|
136,886
|
|
|
141,063
|
|
||
Add: effect of potentially dilutive shares
|
—
|
|
|
5,198
|
|
||
Non-GAAP shares for diluted net income (loss) per share
|
136,886
|
|
|
146,261
|
|
|
Year ended December 31,
|
||||||||||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Net income (loss)
|
$
|
(182,873
|
)
|
|
$
|
(419,003
|
)
|
|
$
|
36,131
|
|
|
$
|
128,088
|
|
|
$
|
60,578
|
|
Stock-based compensation
|
51,255
|
|
|
69,527
|
|
|
80,680
|
|
|
71,399
|
|
|
10,887
|
|
|||||
Acquisition-related costs
|
8,991
|
|
|
17,346
|
|
|
5,370
|
|
|
1,133
|
|
|
1,106
|
|
|||||
Restructuring costs
|
20,292
|
|
|
43,089
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Non-cash interest expense
|
5,345
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Income tax adjustments
(1)
|
1,123
|
|
|
87,794
|
|
|
(10,617
|
)
|
|
(11,707
|
)
|
|
(3,745
|
)
|
|||||
Non-GAAP net income (loss)
|
$
|
(95,867
|
)
|
|
$
|
(201,247
|
)
|
|
$
|
111,564
|
|
|
$
|
188,913
|
|
|
$
|
68,826
|
|
Non-GAAP diluted earnings (loss) per share
|
$
|
(0.69
|
)
|
|
$
|
(1.44
|
)
|
|
$
|
0.76
|
|
|
$
|
1.32
|
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP shares for diluted net income (loss) per share
|
138,056
|
|
|
139,425
|
|
|
146,486
|
|
|
123,630
|
|
|
98,941
|
|
|||||
Add: preferred shares conversion
|
—
|
|
|
—
|
|
|
—
|
|
|
15,136
|
|
|
30,523
|
|
|||||
Add: initial public offering shares
|
—
|
|
|
—
|
|
|
—
|
|
|
4,414
|
|
|
8,900
|
|
|||||
Non-GAAP shares for diluted net income (loss) per share
|
138,056
|
|
|
139,425
|
|
|
146,486
|
|
|
143,180
|
|
|
138,364
|
|
|
Page
|
(in thousands, except par values)
|
December 31,
2017 |
|
December 31,
2016 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
202,504
|
|
|
$
|
192,114
|
|
Marketable securities
|
44,886
|
|
|
25,839
|
|
||
Accounts receivable, net
|
112,935
|
|
|
164,553
|
|
||
Inventory
|
150,551
|
|
|
167,192
|
|
||
Prepaid expenses and other current assets
|
62,811
|
|
|
38,115
|
|
||
Total current assets
|
573,687
|
|
|
587,813
|
|
||
Property and equipment, net
|
68,587
|
|
|
76,509
|
|
||
Intangible assets, net
|
24,499
|
|
|
33,530
|
|
||
Goodwill
|
146,459
|
|
|
146,459
|
|
||
Other long-term assets
|
37,014
|
|
|
78,329
|
|
||
Total assets
|
$
|
850,246
|
|
|
$
|
922,640
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
138,257
|
|
|
$
|
205,028
|
|
Accrued liabilities
|
213,030
|
|
|
211,323
|
|
||
Deferred revenue
|
19,244
|
|
|
14,388
|
|
||
Total current liabilities
|
370,531
|
|
|
430,739
|
|
||
Long-term taxes payable
|
21,188
|
|
|
26,386
|
|
||
Long-term debt
|
130,048
|
|
|
—
|
|
||
Other long-term liabilities
|
29,774
|
|
|
18,570
|
|
||
Total liabilities
|
551,541
|
|
|
475,695
|
|
||
|
|
|
|
||||
Commitments, contingencies and guarantees (Note 11)
|
|
|
|
|
|||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.0001 par value, 5,000 shares authorized; none issued
|
—
|
|
|
—
|
|
||
Common stock and additional paid-in capital, $0.0001 par value, 500,000 Class A shares authorized, 101,034 and 104,647 shares issued and outstanding, respectively; 150,000 Class B shares authorized, 35,966 and 36,712 shares issued and outstanding, respectively
|
854,452
|
|
|
757,226
|
|
||
Treasury stock, at cost, 10,710 and 1,545 shares, respectively
|
(113,613
|
)
|
|
(35,613
|
)
|
||
Accumulated deficit
|
(442,134
|
)
|
|
(274,668
|
)
|
||
Total stockholders’ equity
|
298,705
|
|
|
446,945
|
|
||
Total liabilities and stockholders’ equity
|
$
|
850,246
|
|
|
$
|
922,640
|
|
|
Year ended December 31,
|
||||||||||
(in thousands, except per share data)
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue
|
$
|
1,179,741
|
|
|
$
|
1,185,481
|
|
|
$
|
1,619,971
|
|
Cost of revenue
|
795,211
|
|
|
723,561
|
|
|
946,757
|
|
|||
Gross profit
|
384,530
|
|
|
461,920
|
|
|
673,214
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
229,265
|
|
|
358,902
|
|
|
241,694
|
|
|||
Sales and marketing
|
236,581
|
|
|
368,620
|
|
|
268,939
|
|
|||
General and administrative
|
82,144
|
|
|
107,367
|
|
|
107,833
|
|
|||
Total operating expenses
|
547,990
|
|
|
834,889
|
|
|
618,466
|
|
|||
Operating income (loss)
|
(163,460
|
)
|
|
(372,969
|
)
|
|
54,748
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense
|
(13,660
|
)
|
|
(2,992
|
)
|
|
(1,575
|
)
|
|||
Other income (expense), net
|
733
|
|
|
787
|
|
|
(588
|
)
|
|||
Total other expense, net
|
(12,927
|
)
|
|
(2,205
|
)
|
|
(2,163
|
)
|
|||
Income (loss) before income taxes
|
(176,387
|
)
|
|
(375,174
|
)
|
|
52,585
|
|
|||
Income tax expense
|
6,486
|
|
|
43,829
|
|
|
16,454
|
|
|||
Net Income (loss)
|
$
|
(182,873
|
)
|
|
$
|
(419,003
|
)
|
|
$
|
36,131
|
|
|
|
|
|
|
|
||||||
Net income (loss) per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
(1.32
|
)
|
|
$
|
(3.01
|
)
|
|
$
|
0.27
|
|
Diluted
|
$
|
(1.32
|
)
|
|
$
|
(3.01
|
)
|
|
$
|
0.25
|
|
|
|
|
|
|
|
||||||
Shares used to compute net income (loss) per share:
|
|
|
|
|
|
|
|||||
Basic
|
138,056
|
|
|
139,425
|
|
|
134,595
|
|
|||
Diluted
|
138,056
|
|
|
139,425
|
|
|
146,486
|
|
|
Common stock and additional paid-in capital
|
|
Treasury stock
|
|
Retained earnings (accumulated
deficit)
|
|
Stockholders’ equity
|
||||||||||
(in thousands)
|
Shares
|
Amount
|
|
Amount
|
|
|
|||||||||||
Balances at December 31, 2014
|
129,115
|
|
$
|
533,000
|
|
|
$
|
—
|
|
|
$
|
108,204
|
|
|
$
|
641,204
|
|
Common stock issued under employee benefit plans, net of shares withheld for tax
|
14,249
|
|
36,413
|
|
|
—
|
|
|
—
|
|
|
36,413
|
|
||||
Taxes paid related to net share settlements
|
—
|
|
(13,943
|
)
|
|
—
|
|
|
—
|
|
|
(13,943
|
)
|
||||
Retirement of common stock
|
(5,218
|
)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Repurchase of outstanding common stock
|
(1,545
|
)
|
—
|
|
|
(35,613
|
)
|
|
—
|
|
|
(35,613
|
)
|
||||
Stock-based compensation expense
|
—
|
|
80,583
|
|
|
—
|
|
|
—
|
|
|
80,583
|
|
||||
Excess tax benefit from stock-based compensation
|
—
|
|
27,258
|
|
|
—
|
|
|
—
|
|
|
27,258
|
|
||||
Net income
|
—
|
|
—
|
|
|
—
|
|
|
36,131
|
|
|
36,131
|
|
||||
Balances at December 31, 2015
|
136,601
|
|
663,311
|
|
|
(35,613
|
)
|
|
144,335
|
|
|
772,033
|
|
||||
Common stock issued under employee benefit plans, net of shares withheld for tax
|
3,936
|
|
10,103
|
|
|
—
|
|
|
—
|
|
|
10,103
|
|
||||
Taxes paid related to net share settlements
|
—
|
|
(6,889
|
)
|
|
—
|
|
|
—
|
|
|
(6,889
|
)
|
||||
Shares issued to third-party vendor for services
|
822
|
|
7,297
|
|
|
—
|
|
|
—
|
|
|
7,297
|
|
||||
Stock-based compensation expense
|
—
|
|
69,499
|
|
|
—
|
|
|
—
|
|
|
69,499
|
|
||||
Stock-based compensation expense related to restructuring
|
—
|
|
15,566
|
|
|
—
|
|
|
—
|
|
|
15,566
|
|
||||
Excess tax benefit from stock-based compensation
|
—
|
|
(1,661
|
)
|
|
—
|
|
|
—
|
|
|
(1,661
|
)
|
||||
Net loss
|
—
|
|
—
|
|
|
—
|
|
|
(419,003
|
)
|
|
(419,003
|
)
|
||||
Balances at December 31, 2016
|
141,359
|
|
757,226
|
|
|
(35,613
|
)
|
|
(274,668
|
)
|
|
446,945
|
|
||||
Common stock issued under employee benefit plans, net of shares withheld for tax
|
4,807
|
|
9,732
|
|
|
—
|
|
|
—
|
|
|
9,732
|
|
||||
Taxes paid related to net share settlements
|
—
|
|
(12,118
|
)
|
|
—
|
|
|
—
|
|
|
(12,118
|
)
|
||||
Stock-based compensation expense (Note 7)
|
—
|
|
54,037
|
|
|
—
|
|
|
—
|
|
|
54,037
|
|
||||
Repurchase of common stock under Prepaid Forward contract (Note 5)
|
(9,166
|
)
|
(1
|
)
|
|
(78,000
|
)
|
|
—
|
|
|
(78,001
|
)
|
||||
Issuance of Convertible Note (Note 5)
|
—
|
|
45,211
|
|
|
—
|
|
|
—
|
|
|
45,211
|
|
||||
Cumulative effect of adoption of new ASU
|
—
|
|
365
|
|
|
—
|
|
|
15,407
|
|
|
15,772
|
|
||||
Net loss
|
—
|
|
—
|
|
|
—
|
|
|
(182,873
|
)
|
|
(182,873
|
)
|
||||
Balances at December 31, 2017
|
137,000
|
|
$
|
854,452
|
|
|
$
|
(113,613
|
)
|
|
$
|
(442,134
|
)
|
|
$
|
298,705
|
|
|
Year ended December 31,
|
||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(182,873
|
)
|
|
$
|
(419,003
|
)
|
|
$
|
36,131
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
41,478
|
|
|
41,640
|
|
|
28,981
|
|
|||
Stock-based compensation
|
51,255
|
|
|
69,527
|
|
|
80,680
|
|
|||
Excess tax benefit from stock-based compensation
(1)
|
—
|
|
|
(3,463
|
)
|
|
(29,348
|
)
|
|||
Deferred income taxes
|
(2,527
|
)
|
|
38,568
|
|
|
(11,468
|
)
|
|||
Non-cash restructuring charges
|
7,315
|
|
|
17,601
|
|
|
—
|
|
|||
Non-cash interest expense
|
5,345
|
|
|
—
|
|
|
—
|
|
|||
Impairment of intangible assets
|
—
|
|
|
7,088
|
|
|
—
|
|
|||
Other
|
4,094
|
|
|
7,574
|
|
|
5,427
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
52,278
|
|
|
(18,816
|
)
|
|
38,313
|
|
|||
Inventory
|
16,641
|
|
|
21,040
|
|
|
(35,005
|
)
|
|||
Prepaid expenses and other assets
|
9,303
|
|
|
(14,618
|
)
|
|
(23,281
|
)
|
|||
Accounts payable and other liabilities
|
(44,411
|
)
|
|
142,941
|
|
|
68,461
|
|
|||
Deferred revenue
|
5,249
|
|
|
2,168
|
|
|
(1,280
|
)
|
|||
Net cash provided by (used in) operating activities
|
(36,853
|
)
|
|
(107,753
|
)
|
|
157,611
|
|
|||
|
|
|
|
|
|
||||||
Investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment, net
|
(24,061
|
)
|
|
(43,627
|
)
|
|
(51,245
|
)
|
|||
Purchases of marketable securities
|
(52,318
|
)
|
|
—
|
|
|
(220,055
|
)
|
|||
Maturities of marketable securities
|
21,659
|
|
|
119,918
|
|
|
94,680
|
|
|||
Sale of marketable securities
|
11,623
|
|
|
47,348
|
|
|
30,048
|
|
|||
Acquisitions, net of cash acquired
|
—
|
|
|
(104,353
|
)
|
|
(65,405
|
)
|
|||
Net cash provided by (used in) investing activities
|
(43,097
|
)
|
|
19,286
|
|
|
(211,977
|
)
|
|||
|
|
|
|
|
|
||||||
Financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of common stock
|
9,751
|
|
|
9,664
|
|
|
36,775
|
|
|||
Taxes paid related to net share settlement of equity awards
|
(12,118
|
)
|
|
(6,889
|
)
|
|
(13,942
|
)
|
|||
Proceeds from issuance of convertible senior notes
|
175,000
|
|
|
—
|
|
|
—
|
|
|||
Prepayment of forward stock repurchase transaction
|
(78,000
|
)
|
|
—
|
|
|
—
|
|
|||
Excess tax benefit from stock-based compensation
(1)
|
—
|
|
|
3,463
|
|
|
29,348
|
|
|||
Payment of deferred acquisition-related consideration
|
(75
|
)
|
|
(950
|
)
|
|
—
|
|
|||
Payment of debt issuance costs
|
(5,964
|
)
|
|
(3,333
|
)
|
|
—
|
|
|||
Payment of deferred public offering costs
|
—
|
|
|
—
|
|
|
(903
|
)
|
|||
Repurchases of outstanding common stock
|
—
|
|
|
—
|
|
|
(35,613
|
)
|
|||
Net cash provided by financing activities
|
88,594
|
|
|
1,955
|
|
|
15,665
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
1,746
|
|
|
(1,046
|
)
|
|
(1,556
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
10,390
|
|
|
(87,558
|
)
|
|
(40,257
|
)
|
|||
Cash and cash equivalents at beginning of period
|
192,114
|
|
|
279,672
|
|
|
319,929
|
|
|||
Cash and cash equivalents at end of period
|
$
|
202,504
|
|
|
$
|
192,114
|
|
|
$
|
279,672
|
|
|
|
|
|
|
|
Level 1
|
Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to directly access.
|
Level 2
|
Valuations based on quoted prices for similar assets or liabilities; valuations for interest-bearing securities based on non-daily quoted prices in active markets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
|
Level 3
|
Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
Standard
|
|
Description
|
|
Date of adoption
|
|
Effect on the financial statements or other significant matters
|
Standards that were adopted
|
|
|
|
|
||
Stock Compensation
Accounting Standards Update (ASU) No. 2016-09 (Topic 718) |
|
This standard simplifies certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification on the statement of cash flows. The new guidance also allows an entity to make a policy election to account for forfeitures as they occur.
|
|
January 1, 2017
|
|
Adoption of the standard resulted in the recognition of previously unrecognized excess tax benefits using the modified retrospective method. The Company recorded an increase to U.S. deferred tax assets of $179 million which was recorded directly against the accumulated deficit. The increased deferred tax asset allowed for an offset against long-term income tax payable of $16 million. A full valuation allowance was provided on the remaining U.S. deferred tax asset of $163 million, which was also recorded against the accumulated deficit. The net impact to equity was a decrease in the accumulated deficit of approximately $16 million. The Company elected to apply the change in presentation to the statements of cash flows prospectively and elected to account for forfeitures as they occur.
|
Standards not yet adopted
|
|
|
|
|
||
Revenue from Contracts with Customers
ASU No. 2014-09, 2015-14, 2016-08, 2016-10 and 2016-12 (Topic 606)
|
|
The updated revenue standard establishes principles for recognizing revenue and develops a common revenue standard for all industries. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard requires that entities disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Early adoption is permitted, but not earlier than the first quarter of 2017. The retrospective or cumulative effect transition method is permitted.
|
|
January 1, 2018
|
|
The Company completed an analysis of the impact of the standard on its sales contract portfolio by reviewing its current accounting policies and practices to identify differences that would result from applying the requirements of the new standard to its sales contracts. The Company’s analysis of its contracts under the new standard supports the recognition of its product revenue at the time product is shipped, consistent with its current revenue policy.
As a result of the adoption of the new guidance, certain sales incentives will need to be estimated as variable consideration at the time product is shipped and included as a reduction to the transaction price. This will result in a reduction of revenue being recorded earlier than under the existing guidance. Additionally, for customers who purchase products directly from the Company's website, the new standard provides for a policy election whereby the Company will record revenue when the related product is shipped. This will result in recognition of revenue earlier than under existing guidance, under which the Company recognizes revenue upon delivery to the customer.
The Company expects the net impact of ASU 2014-09 to be less than $5 million as a reduction to retained earnings. The Company will adopt the standard on a modified retrospective basis.
|
Leases
ASU No. 2016-02(Topic 842)
|
|
This standard requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. Lessees would recognize a right-to-use asset and lease liability for all leases with terms of more than 12 months. The new standard should be applied on a modified retrospective basis.
|
|
January 1, 2019
|
|
Although the Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures, the Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption.
|
Income Taxes
ASU No. 2016-16 (Topic 740)
|
|
This standard requires entities to recognize the income tax consequences of intra-entity asset transfers when they occur. This removes the exception to postpone recognition until the asset has been sold to an outside party. The updated standard is effective in annual and interim periods in fiscal years beginning after December 15, 2017, with early adoption permitted during the first interim period of a fiscal year.
|
|
January 1, 2018
|
|
The Company intends to apply the modified retrospective approach upon adoption. The Company expects that the adoption of ASU 2016-16 on January 1, 2018 will result in a $15 million cumulative-effect increase in accumulated deficit on its consolidated financial statements and related disclosures.
|
Intangible - Goodwill and Other
ASU No. 2017-04 (Topic 350)
|
|
This standard simplifies the accounting for goodwill and removes Step 2 of the annual goodwill impairment test. Upon adoption, goodwill impairment will be determined based on the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017, and requires a prospective transition method.
|
|
January 1, 2020
|
|
The Company does not expect that the adoption of this standard will have a material impact on its consolidated financial statements and related disclosures.
|
Stock Compensation
ASU No. 2017-09 (Topic 718) |
|
This standard clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under this standard, modification is required only if the fair value, the vesting conditions, or the classification of an award as equity or liability changes as a result of the change in terms or conditions. The updated standard is effective in annual and interim periods in fiscal years beginning after December 15, 2017, with early adoption permitted.
|
|
January 1, 2018
|
|
The Company does not expect that the adoption of ASU 2017-09 will have a material impact to its consolidated financial statements and related disclosures. The Company will adopt the amendment on a prospective basis.
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
(in thousands)
|
Level 1
|
|
Level 2
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||||||||
Cash equivalents
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
$
|
25,251
|
|
|
$
|
—
|
|
|
$
|
25,251
|
|
|
$
|
18,024
|
|
|
$
|
—
|
|
|
$
|
18,024
|
|
Commercial paper
|
14,981
|
|
|
—
|
|
|
14,981
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Corporate debt securities
|
—
|
|
|
2,500
|
|
|
2,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Agency securities
|
|
|
4,999
|
|
|
4,999
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total cash equivalents
|
$
|
40,232
|
|
|
$
|
7,499
|
|
|
$
|
47,731
|
|
|
$
|
18,024
|
|
|
$
|
—
|
|
|
$
|
18,024
|
|
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. treasury securities
|
$
|
—
|
|
|
$
|
4,995
|
|
|
$
|
4,995
|
|
|
$
|
—
|
|
|
$
|
8,283
|
|
|
$
|
8,283
|
|
Commercial paper
|
19,888
|
|
|
—
|
|
|
19,888
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Corporate debt securities
|
—
|
|
|
20,003
|
|
|
20,003
|
|
|
—
|
|
|
15,226
|
|
|
15,226
|
|
||||||
Municipal securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,330
|
|
|
2,330
|
|
||||||
Total marketable securities
|
$
|
19,888
|
|
|
$
|
24,998
|
|
|
$
|
44,886
|
|
|
$
|
—
|
|
|
$
|
25,839
|
|
|
$
|
25,839
|
|
(in thousands)
|
December 31, 2017
|
|
December 31, 2016
|
||||
Components
|
$
|
18,995
|
|
|
$
|
25,236
|
|
Finished goods
|
131,556
|
|
|
141,956
|
|
||
Total inventory
|
$
|
150,551
|
|
|
$
|
167,192
|
|
(in thousands)
|
Useful life
(in years)
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Leasehold improvements
|
1–11
|
|
$
|
67,713
|
|
|
$
|
48,103
|
|
Production, engineering and other equipment
|
4
|
|
47,502
|
|
|
46,328
|
|
||
Tooling
|
1–2
|
|
24,871
|
|
|
23,742
|
|
||
Computers and software
|
2
|
|
20,636
|
|
|
18,750
|
|
||
Furniture and office equipment
|
3
|
|
14,895
|
|
|
12,530
|
|
||
Tradeshow equipment and other
|
2–5
|
|
7,237
|
|
|
7,578
|
|
||
Construction in progress
|
|
|
347
|
|
|
1,870
|
|
||
Gross property and equipment
|
|
|
183,201
|
|
|
158,901
|
|
||
Less: Accumulated depreciation and amortization
|
|
|
(114,614
|
)
|
|
(82,392
|
)
|
||
Property and equipment, net
|
|
|
$
|
68,587
|
|
|
$
|
76,509
|
|
|
Useful life
(in months)
|
|
December 31, 2017
|
||||||||||
(in thousands)
|
|
|
Gross carrying value
|
|
Accumulated
amortization
|
|
Net carrying value
|
||||||
Purchased technology
|
24–72
|
|
$
|
49,901
|
|
|
$
|
(26,017
|
)
|
|
$
|
23,884
|
|
In-process research and development (IPR&D)
|
|
|
615
|
|
|
—
|
|
|
615
|
|
|||
Total intangible assets
|
|
|
$
|
50,516
|
|
|
$
|
(26,017
|
)
|
|
$
|
24,499
|
|
|
Useful life
(in months)
|
|
December 31, 2016
|
||||||||||
(in thousands)
|
|
|
Gross carrying value
|
|
Accumulated
amortization |
|
Net carrying value
|
||||||
Purchased technology
|
24–72
|
|
$
|
47,001
|
|
|
$
|
(17,086
|
)
|
|
$
|
29,915
|
|
IPR&D
|
|
|
3,615
|
|
|
—
|
|
|
3,615
|
|
|||
Total intangible assets
|
|
|
$
|
50,616
|
|
|
$
|
(17,086
|
)
|
|
$
|
33,530
|
|
(in thousands)
|
Total
|
||
Year ending December 31,
|
|
||
2018
|
$
|
9,263
|
|
2019
|
8,753
|
|
|
2020
|
4,998
|
|
|
2021
|
870
|
|
|
2022
|
—
|
|
|
|
$
|
23,884
|
|
(in thousands)
|
December 31, 2017
|
|
December 31, 2016
|
||||
POP displays
|
$
|
16,451
|
|
|
$
|
27,592
|
|
Long-term deferred tax assets
|
825
|
|
|
106
|
|
||
Income tax receivable
|
—
|
|
|
33,425
|
|
||
Deposits and other
|
19,738
|
|
|
17,206
|
|
||
Other long-term assets
|
$
|
37,014
|
|
|
$
|
78,329
|
|
(in thousands)
|
December 31, 2017
|
|
December 31, 2016
|
||||
Accrued payables
(1)
|
$
|
44,582
|
|
|
$
|
91,655
|
|
Employee related liabilities
(1)
|
24,945
|
|
|
42,577
|
|
||
Accrued sales incentives
|
89,549
|
|
|
40,070
|
|
||
Warranty liability
|
9,934
|
|
|
11,456
|
|
||
Customer deposits
|
8,700
|
|
|
4,381
|
|
||
Income taxes payable
|
1,247
|
|
|
2,756
|
|
||
Purchase order commitments
|
6,162
|
|
|
4,730
|
|
||
Inventory received
|
14,470
|
|
|
3,950
|
|
||
Other
|
13,441
|
|
|
9,748
|
|
||
Accrued liabilities
|
$
|
213,030
|
|
|
$
|
211,323
|
|
(1)
|
See Note 13 for amounts associated with restructuring liabilities.
|
|
Year ended December 31,
|
||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Beginning balances
|
$
|
11,945
|
|
|
$
|
10,856
|
|
|
$
|
6,405
|
|
Charged to cost of revenue
|
20,139
|
|
|
19,272
|
|
|
25,377
|
|
|||
Settlements of warranty claims
|
(21,711
|
)
|
|
(18,183
|
)
|
|
(20,926
|
)
|
|||
Ending balances
|
$
|
10,373
|
|
|
$
|
11,945
|
|
|
$
|
10,856
|
|
•
|
during any calendar quarter beginning after the calendar quarter ending on September 30, 2017, if the last reported sale price of Class A common stock for at least 20 trading days (whether or not consecutive) during the last 30 consecutive trading days of the immediately preceding fiscal quarter is greater than or equal to
130%
of the conversion price of the Notes on each applicable trading day;
|
•
|
during the five-business day period following any five consecutive trading day period in which the trading price for the Notes is less than
98%
of the product of the last reported sale price of Class A common stock and the conversion rate for the Notes on each such trading day; or
|
•
|
upon the occurrence of specified corporate events.
|
(in thousands)
|
December 31, 2017
|
|
Stock options outstanding
|
9,809
|
|
Restricted stock units outstanding
|
9,483
|
|
Common stock available for future grants
|
23,071
|
|
Total common stock shares reserved for issuance
|
42,363
|
|
|
Options outstanding
|
|||||||||||
|
Shares
(in thousands)
|
|
Weighted- average
exercise price |
|
Weighted-average remaining contractual term (in years)
|
|
Aggregate intrinsic value
(in thousands) |
|||||
Outstanding at December 31, 2016
|
12,379
|
|
|
$
|
12.17
|
|
|
5.97
|
|
$
|
32,772
|
|
Granted
|
1,848
|
|
|
9.28
|
|
|
|
|
|
|||
Exercised
|
(1,329
|
)
|
|
1.70
|
|
|
|
|
|
|||
Forfeited/Cancelled
|
(3,089
|
)
|
|
18.15
|
|
|
|
|
|
|||
Outstanding at December 31, 2017
|
9,809
|
|
|
$
|
11.16
|
|
|
6.00
|
|
$
|
19,971
|
|
|
|
|
|
|
|
|
|
|||||
Vested and expected to vest at December 31, 2017
|
9,786
|
|
|
$
|
11.15
|
|
|
6.00
|
|
$
|
19,971
|
|
Exercisable at December 31, 2017
|
8,154
|
|
|
$
|
10.99
|
|
|
5.45
|
|
$
|
19,971
|
|
|
Shares
(in thousands)
|
|
Weighted- average grant date fair value
|
|||
Non-vested shares at December 31, 2016
|
7,970
|
|
|
$
|
18.08
|
|
Granted
|
8,740
|
|
|
9.40
|
|
|
Vested
|
(3,862
|
)
|
|
14.95
|
|
|
Forfeited
|
(3,365
|
)
|
|
16.62
|
|
|
Non-vested shares at December 31, 2017
|
9,483
|
|
|
$
|
11.87
|
|
|
Year ended December 31,
|
||||
|
2017
|
|
2016
|
|
2015
|
Volatility
|
33%–36%
|
|
43%–54%
|
|
39%–45%
|
Expected term (years)
|
0.5
|
|
0.5
|
|
0.5
|
Risk-free interest rate
|
0.7%–1.2%
|
|
0.4%–0.5%
|
|
0.1%–0.2%
|
Dividend yield
|
—%
|
|
—%
|
|
—%
|
|
Year ended December 31,
|
||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Cost of revenue
|
$
|
1,935
|
|
|
$
|
1,616
|
|
|
$
|
1,492
|
|
Research and development
|
24,963
|
|
|
31,365
|
|
|
18,024
|
|
|||
Sales and marketing
|
10,498
|
|
|
13,883
|
|
|
13,762
|
|
|||
General and administrative
|
13,859
|
|
|
22,663
|
|
|
47,402
|
|
|||
Total stock-based compensation expense
|
$
|
51,255
|
|
|
$
|
69,527
|
|
|
$
|
80,680
|
|
|
Year ended December 31,
|
||||||||||
(in thousands, except per share data)
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(182,873
|
)
|
|
$
|
(419,003
|
)
|
|
$
|
36,131
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Weighted-average common shares—basic for Class A and Class B common stock
|
138,056
|
|
|
139,425
|
|
|
134,595
|
|
|||
Effect of dilutive stock-based awards
|
—
|
|
|
—
|
|
|
11,891
|
|
|||
Weighted-average common shares—diluted for Class A and Class B common stock
|
138,056
|
|
|
139,425
|
|
|
146,486
|
|
|||
|
|
|
|
|
|
||||||
Net income (loss) per share
|
|
|
|
|
|
||||||
Basic
|
$
|
(1.32
|
)
|
|
$
|
(3.01
|
)
|
|
$
|
0.27
|
|
Diluted
|
$
|
(1.32
|
)
|
|
$
|
(3.01
|
)
|
|
$
|
0.25
|
|
|
Year ended December 31,
|
|||||||
(in thousands)
|
2017
|
|
2016
|
|
2015
|
|||
Effect of anti-dilutive stock-based awards
|
18,994
|
|
|
21,000
|
|
|
2,681
|
|
|
Year ended December 31,
|
||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Current
|
|
|
|
|
|
||||||
Federal
|
$
|
(1,857
|
)
|
|
$
|
(2,925
|
)
|
|
$
|
18,548
|
|
State
|
240
|
|
|
(356
|
)
|
|
3,007
|
|
|||
Foreign
|
10,631
|
|
|
8,542
|
|
|
6,539
|
|
|||
Total current
|
9,014
|
|
|
5,261
|
|
|
28,094
|
|
|||
Deferred
|
|
|
|
|
|
||||||
Federal
|
(248
|
)
|
|
37,573
|
|
|
(11,211
|
)
|
|||
State
|
—
|
|
|
4,436
|
|
|
(204
|
)
|
|||
Foreign
|
(2,280
|
)
|
|
(3,441
|
)
|
|
(225
|
)
|
|||
Total deferred
|
(2,528
|
)
|
|
38,568
|
|
|
(11,640
|
)
|
|||
Income tax expense
|
$
|
6,486
|
|
|
$
|
43,829
|
|
|
$
|
16,454
|
|
|
Year ended December 31,
|
|||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
(dollars in thousands)
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||
Reconciliation to statutory rate
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Tax at federal statutory rate
|
$
|
(61,735
|
)
|
|
(35.0
|
)%
|
|
$
|
(131,311
|
)
|
|
(35.0
|
)%
|
|
$
|
18,405
|
|
|
35.0
|
%
|
Change in valuation allowance
|
(38,016
|
)
|
|
(21.6
|
)
|
|
101,878
|
|
|
27.2
|
|
|
8,555
|
|
|
16.3
|
|
|||
DTA rate change impact due to TCJA
|
74,943
|
|
|
42.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Impact of foreign operations
|
34,039
|
|
|
19.3
|
|
|
84,491
|
|
|
22.5
|
|
|
6,434
|
|
|
12.2
|
|
|||
Stock-based compensation
|
12,001
|
|
|
6.8
|
|
|
15,718
|
|
|
4.2
|
|
|
2,390
|
|
|
4.5
|
|
|||
State taxes, net of federal benefit
|
(6,469
|
)
|
|
(3.7
|
)
|
|
(14,195
|
)
|
|
(3.8
|
)
|
|
1,454
|
|
|
2.8
|
|
|||
Tax credits
|
(9,957
|
)
|
|
(5.6
|
)
|
|
(12,992
|
)
|
|
(3.5
|
)
|
|
(21,891
|
)
|
|
(41.6
|
)
|
|||
Other
|
1,680
|
|
|
1.0
|
|
|
240
|
|
|
0.1
|
|
|
1,107
|
|
|
2.1
|
|
|||
Income tax provision at effective tax rate
|
$
|
6,486
|
|
|
3.7
|
%
|
|
$
|
43,829
|
|
|
11.7
|
%
|
|
$
|
16,454
|
|
|
31.3
|
%
|
|
Year ended December 31,
|
||||||
(in thousands)
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
113,378
|
|
|
$
|
30,193
|
|
Tax credit carryforwards
|
66,983
|
|
|
22,341
|
|
||
Stock-based compensation
|
13,055
|
|
|
26,656
|
|
||
Allowance for returns
|
5,452
|
|
|
6,336
|
|
||
Intangible assets
|
770
|
|
|
—
|
|
||
Accruals and reserves
|
18,981
|
|
|
26,587
|
|
||
Total deferred tax assets
|
218,619
|
|
|
112,113
|
|
||
Valuation allowance
|
(217,884
|
)
|
|
(110,433
|
)
|
||
Total deferred tax assets, net of valuation allowance
|
735
|
|
|
1,680
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation and amortization
|
(292
|
)
|
|
(1,714
|
)
|
||
Intangible assets
|
—
|
|
|
(2,540
|
)
|
||
Total deferred tax liabilities
|
(292
|
)
|
|
(4,254
|
)
|
||
Net deferred tax assets (liabilities)
|
$
|
443
|
|
|
$
|
(2,574
|
)
|
|
Year ended December 31,
|
||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Gross balance at January 1
|
$
|
56,909
|
|
|
$
|
36,273
|
|
|
$
|
16,558
|
|
Gross increase related to current year tax positions
|
20,002
|
|
|
20,594
|
|
|
19,948
|
|
|||
Gross decrease related to tax rate change for current year tax positions
|
(2,299
|
)
|
|
—
|
|
|
—
|
|
|||
Gross increase related to prior year tax positions
|
—
|
|
|
130
|
|
|
108
|
|
|||
Gross decrease related to prior year tax positions
|
(3,927
|
)
|
|
(88
|
)
|
|
(341
|
)
|
|||
Gross decrease related to tax rate change for prior year tax positions
|
(12,101
|
)
|
|
—
|
|
|
—
|
|
|||
|
$
|
58,584
|
|
|
$
|
56,909
|
|
|
$
|
36,273
|
|
(in thousands)
|
Total
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
||||||||||||||
Operating leases
(1)
|
$
|
128,228
|
|
|
$
|
22,177
|
|
|
$
|
15,056
|
|
|
$
|
18,244
|
|
|
$
|
17,817
|
|
|
$
|
16,693
|
|
|
$
|
38,241
|
|
Sponsorship commitments
(2)
|
7,256
|
|
|
4,487
|
|
|
2,769
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other contractual commitments
(3)
|
2,766
|
|
|
2,044
|
|
|
722
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Long-term debt
(4)
|
175,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
175,000
|
|
|
—
|
|
|||||||
Total contractual cash obligations
|
$
|
313,250
|
|
|
$
|
28,708
|
|
|
$
|
18,547
|
|
|
$
|
18,244
|
|
|
$
|
17,817
|
|
|
$
|
191,693
|
|
|
$
|
38,241
|
|
|
December 31, 2017
|
|
December 31, 2016
|
Customer A
|
16%
|
|
15%
|
Customer B
|
32%
|
|
27%
|
Customer C
|
12%
|
|
*
|
Customer D
|
11%
|
|
*
|
|
Year ended December 31,
|
||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Accounts receivable sold
|
$
|
178,300
|
|
|
$
|
167,769
|
|
|
$
|
194,223
|
|
Factoring fees
|
1,630
|
|
|
1,266
|
|
|
1,566
|
|
|
Year ended December 31,
|
||||||||||
(in thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Americas
|
$
|
591,879
|
|
|
$
|
619,784
|
|
|
$
|
868,772
|
|
Europe, Middle East and Africa (EMEA)
|
334,872
|
|
|
366,352
|
|
|
535,260
|
|
|||
Asia and Pacific (APAC)
|
252,990
|
|
|
199,345
|
|
|
215,939
|
|
|||
Total revenue
|
$
|
1,179,741
|
|
|
$
|
1,185,481
|
|
|
$
|
1,619,971
|
|
|
Twelve months ended
|
||||||
(in thousands)
|
December 31, 2017
|
|
December 31, 2016
|
||||
Cost of revenue
|
$
|
634
|
|
|
$
|
497
|
|
Research and development
|
10,092
|
|
|
17,197
|
|
||
Sales and marketing
|
7,047
|
|
|
12,064
|
|
||
General and administrative
|
2,519
|
|
|
13,331
|
|
||
Total restructuring charges
|
$
|
20,292
|
|
|
$
|
43,089
|
|
(in thousands)
|
Severance
|
|
Other
|
|
Total
|
||||||
Restructuring liability as of December 31, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restructuring charges
|
10,312
|
|
|
6,654
|
|
|
16,966
|
|
|||
Cash paid
|
(9,509
|
)
|
|
(151
|
)
|
|
(9,660
|
)
|
|||
Non-cash reductions
|
(803
|
)
|
|
(2,953
|
)
|
|
(3,756
|
)
|
|||
Restructuring liability as of December 31, 2017
|
$
|
—
|
|
|
$
|
3,550
|
|
|
$
|
3,550
|
|
(in thousands)
|
Severance
|
|
Other
|
|
Total
|
||||||
Restructuring liability as of December 31, 2016
|
$
|
9,660
|
|
|
$
|
879
|
|
|
$
|
10,539
|
|
Restructuring charges
|
2,134
|
|
|
1,055
|
|
|
3,189
|
|
|||
Cash paid
|
(11,411
|
)
|
|
(1,884
|
)
|
|
(13,295
|
)
|
|||
Non-cash reductions
|
17
|
|
|
—
|
|
|
17
|
|
|||
Restructuring liability as of December 31, 2017
|
$
|
400
|
|
|
$
|
50
|
|
|
$
|
450
|
|
(in thousands)
|
Balance at Beginning of Year
|
|
Charges to Revenue
|
|
Charges to Expense
|
|
Charges to Other Accounts - Equity
|
|
Deductions/Write-offs
|
|
Balance at End of Year
|
||||||||||||
Allowance for doubtful accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Year ended December 31, 2017
|
$
|
1,281
|
|
|
$
|
—
|
|
|
$
|
(263
|
)
|
|
$
|
—
|
|
|
$
|
(268
|
)
|
|
$
|
750
|
|
Year ended December 31, 2016
|
1,400
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|
(159
|
)
|
|
1,281
|
|
||||||
Year ended December 31, 2015
|
1,250
|
|
|
—
|
|
|
682
|
|
|
—
|
|
|
(532
|
)
|
|
1,400
|
|
||||||
Allowance for sales returns:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Year ended December 31, 2017
|
$
|
20,038
|
|
|
$
|
55,274
|
|
|
$
|
(48,554
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26,758
|
|
Year ended December 31, 2016
|
26,280
|
|
|
35,136
|
|
|
(41,378
|
)
|
|
—
|
|
|
—
|
|
|
20,038
|
|
||||||
Year ended December 31, 2015
|
25,747
|
|
|
48,182
|
|
|
(47,649
|
)
|
|
—
|
|
|
—
|
|
|
26,280
|
|
||||||
Valuation allowance for deferred tax assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Year ended December 31, 2017
|
$
|
110,433
|
|
|
$
|
—
|
|
|
$
|
(38,016
|
)
|
|
$
|
145,467
|
|
|
$
|
—
|
|
|
$
|
217,884
|
|
Year ended December 31, 2016
|
8,555
|
|
|
—
|
|
|
101,878
|
|
|
—
|
|
|
—
|
|
|
110,433
|
|
||||||
Year ended December 31, 2015
|
—
|
|
|
—
|
|
|
8,555
|
|
|
—
|
|
|
—
|
|
|
8,555
|
|
1.
|
Financial Statements
|
2.
|
Financial Statement Schedules
|
3.
|
Exhibit Listing
|
Exhibit
|
|
|
Incorporated by Reference
|
Filed
|
|||
Number
|
|
Exhibit Title
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
Herewith
|
|
Restated Certificate of Incorporation of the Registrant.
|
S-1
|
333-200038
|
3.01
|
November 10, 2014
|
|
|
|
Amended and Restated Bylaws of the Registrant.
|
S-1
|
333-200038
|
3.02
|
November 10, 2014
|
|
|
|
Form of Registrant’s Class A common stock certificate.
|
S-1
|
333-196083
|
4.01
|
May 19, 2014
|
|
|
Indenture, dated as of April 12, 2017, between the Company and Wells Fargo Bank, National Association (including the form of 3.50% Convertible Senior Notes due 2022)
|
8-K
|
001-36514
|
4.1
|
April 12, 2017
|
|
|
|
Form of Indemnity Agreement by and between the Registrant and each of its directors and executive officers.
|
S-1
|
333-196083
|
10.01
|
May 19, 2014
|
|
|
|
Form of Change in Control Severance Agreement.
|
S-1
|
333-196083
|
10.09
|
May 19, 2014
|
|
|
|
2010 Equity Incentive Plan, as amended, and form of stock option agreement and restricted stock unit agreement.
|
S-1
|
333-196083
|
10.02
|
May 19, 2014
|
|
|
|
2014 Equity Incentive Plan, as amended, and forms thereunder.
|
10-Q
|
001-36514
|
10.03
|
July 29, 2016
|
|
|
|
2014 Employee Stock Purchase Plan and forms thereunder.
|
S-1/A
|
333-196083
|
10.04
|
June 11, 2014
|
|
|
|
Employment Letter to Nicholas Woodman from the Registrant, dated June 2, 2014.
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S-1/A
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333-196083
|
10.16
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June 11, 2014
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Offer Letter to Sharon Zezima from the Registrant, dated August 23, 2013.
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S-1
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333-196083
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10.08
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May 19, 2014
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Separation Agreement and Release of Claims dated December 15, 2016 by and between Anthony Bates and the Registrant.
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8-K
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001-36514
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10.01
|
December 20, 2016
|
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Offer Letter to Brian McGee from the Registrant, dated September 3, 2015.
|
10-K
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001-36514
|
10.12
|
February 16, 2017
|
|
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Offer Letter to Charles Prober from Registrant, dated May 28, 2014.
|
10-K
|
001-36514
|
10.13
|
February 16, 2017
|
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Office Lease Agreement, dated as of November 1, 2011, by and between Locon San Mateo, LLC and the Registrant, as amended, and other leases for the Registrant’s headquarters.
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S-1
|
333-196083
|
10.12
|
May 19, 2014
|
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Eighth amendment to Office Lease Agreement, by and between RAR2 - Clearview Business Park Owner QRS, LLC and the Registrant, dated February 24, 2016.
|
10-K
|
001-36514
|
10.15
|
February 16, 2017
|
|
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|
Ninth amendment to Office Lease Agreement, by and between RAR2 - Clearview Business Park Owner QRS, LLC and the Registrant, dated August 3, 2016.
|
10-K
|
001-36514
|
10.16
|
February 16, 2017
|
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Credit Agreement by and among Registrant, the Lenders party thereto and JPMorgan Chase Bank, N.A. dated March 25, 2016.
|
10-Q
|
001-36514
|
10.17
|
May 6, 2016
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|
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Forward Stock Purchase Transaction, dated April 6, 2017, between the Company and JPMorgan Chase Bank, National Association
|
8-K
|
001-36514
|
10.1
|
April 7, 2017
|
|
|
|
First Amendment, dated August 12, 2016, to Office Lease Agreement dated November 1, 2011, between the Company and RAR2-Clearview Business Park Owner, LLC
|
10-Q
|
001-36514
|
10.02
|
August 4, 2017
|
|
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Waiver Agreement dated January 1, 2018 by and between Nicholas Woodman and the Registrant.
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|
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X
|
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Terms of Separation Agreement dated January 4, 2018 by and between Charles Prober and the Registrant.
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X
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Transition Incentive Agreement dated January 4, 2018 by and between Sharon Zezima and the Registrant.
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X
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List of Subsidiaries.
|
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X
|
|
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Consent of Independent Registered Public Accounting Firm.
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|
|
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X
|
|
|
Power of Attorney (included on the signature page to this Annual Report on Form 10-K).
|
|
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X
|
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Certification of Principal Executive Officer Required Under Rule 13(a)-14(a) and 15(d)-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
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X
|
|
Certification of Principal Financial Officer Required Under Rule 13(a)-14(a) and 15(d)-14(a) of the Securities Exchange Act of 1934, as amended.
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X
|
|
32.01
‡
|
|
Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
|
|
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X
|
101.INS
|
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema
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101.CAL
|
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XBRL Taxonomy Extension Calculation Linkbase
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101.LAB
|
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XBRL Taxonomy Extension Label Linkbase
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101.PRE
|
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XBRL Taxonomy Extension Presentation Linkbase
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101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
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GoPro, Inc.
|
|
|
(Registrant)
|
|
|
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|
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|
Dated:
|
February 16, 2018
|
By: /s/ Nicholas Woodman
|
|
|
Nicholas Woodman
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
|
|
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|
|
Dated:
|
February 16, 2018
|
By: /s/ Brian McGee
|
|
|
Brian McGee
Chief Financial Officer (Principal Financial Officer) |
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Name
|
|
Title
|
|
Date
|
|
|
|
|
|
|
By:
|
/s/ Nicholas Woodman
|
|
Chief Executive Officer and Chairman
|
|
February 16, 2018
|
|
Nicholas Woodman
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
By:
|
/s/ Brian McGee
|
|
Chief Financial Officer
|
|
February 16, 2018
|
|
Brian McGee
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
|
By:
|
/s/ Anthony Bates
|
|
Director
|
|
February 16, 2018
|
|
Anthony Bates
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Kenneth Goldman
|
|
Director
|
|
February 16, 2018
|
|
Kenneth Goldman
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Peter Gotcher
|
|
Director
|
|
February 16, 2018
|
|
Peter Gotcher
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Alexander Lurie
|
|
Director
|
|
February 16, 2018
|
|
Alexander Lurie
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Susan Lyne
|
|
Director
|
|
February 16, 2018
|
|
Susan Lyne
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Frederic Welts
|
|
Director
|
|
February 16, 2018
|
|
Frederic Welts
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Lauren Zalaznick
|
|
Director
|
|
February 16, 2018
|
|
Lauren Zalaznick
|
|
|
|
|
1.
|
There are no circumstances that presently give rise to Good Reason or CIC Good Reason.
|
2.
|
For purposes of your Agreement, and for all other purposes (including as to any of your equity awards), the Salary Reduction and the Bonus Reduction (and each of them) shall not constitute Good Reason or CIC Good Reason, and any application of Good Reason or CIC Good Reason shall not consider the decrease to each of your Base Salary (or the associated consequences, including changes in your participation in benefit plans) and your Target Bonus contemplated by this Waiver for one year, beginning on the Effective Date.
|
3.
|
You agree and acknowledge that the Salary Reduction is expected to have adverse effects on your participation in certain benefit plans. You agree and acknowledge that these changes will not constitute Good Reason or CIC Good Reason for one year, beginning on the Effective Date.
|
4.
|
Neither your Base Salary nor your Target Bonus shall be increased, except with the prior written consent of the Company.
|
5.
|
You have no entitlement or expectation (x) that the Salary Reduction and/or the Bonus Reduction will be reversed, (y) that your Base Salary and/or your Target Bonus will increased, or (z) that you will receive any true-up, gross-up, or other similar payment to compensate you, wholly or partially, or directly or indirectly, for the Salary Reduction, the Bonus Reduction and/or the waivers contemplated hereby.
|
6.
|
As of immediately following the effectiveness of this Waiver and at all times thereafter, any application of Good Reason or CIC Good Reason shall only be in reference to your Base Salary and Target Bonus as then in effect, notwithstanding anything to the contrary in the Agreement or otherwise in this Waiver.
|
7.
|
You have been given the opportunity to consult with a tax and financial advisor with respect to this Waiver and confirm that you accept this Waiver voluntarily and without conditions.
|
8.
|
This Waiver shall be subject to California law, without reference to conflict of laws provisions. If one or more provisions of this Waiver are unenforceable, you agree that the other provisions shall be enforced to the maximum extent of applicable law, and the offending provisions shall be renegotiated in good faith by you.
|
GoPro, Inc.,
|
|
a Delaware corporation
|
|
|
|
By:
|
/s/ Laura Robblee
|
Name:
|
Laura Robblee
|
Title:
|
VP, People & Places
|
|
|
AGREED AND ACCEPTED:
|
|
/s/ Nicholas Woodman
|
|
Nicholas Woodman
|
|
Date:
|
1/4/2018
|
January 4, 2018
|
|
To: Charles “CJ” Prober
|
|
Re: Terms of Separation
|
|
Dear CJ:
|
/s/ Laura Robblee
|
Laura Robblee
|
VP, People, GoPro Inc.
|
/s/ Charles "CJ" Prober
|
January 4, 2018
|
Charles "CJ" Prober
|
Date
|
/s/ Charles "CJ" Prober
|
January 4, 2018
|
Charles "CJ" Prober
|
Date
|
EMPLOYEE INVENTION ASSIGNMENT AND
|
CONFIDENTIALITY AGREEMENT
|
Company:
|
|
Employee:
|
|
|
|
|
|
By:
|
/s/ Allison Banks
|
|
/s/ Charles J. Prober
|
|
|
|
Signature
|
Name:
|
Allison Banks
|
|
Charles J. Prober
|
|
|
|
Name (Please Print)
|
Title:
|
Senior Director of Human Resources
|
|
|
|
|
|
|
Identifying Number
|
Title
|
|
Date
|
|
or Brief Description
|
|
|
Charles "CJ" Prober
|
Date
|
|
|
GOPRO, INC.
|
|
/s/ Sharon Zezima
|
|
/s/ Laura Robblee
|
|
Sharon Zezima
|
|
By:
|
Laura Robblee
|
|
|
Title:
|
Vice President, People and Places
|
|
|
Exhibit 21.01
|
|
|
|
|
|
|
List of Subsidiaries
|
||
|
|
|
|
|
|
Name
|
|
Jurisdiction of Incorporation
|
GoPro Australia Pty Ltd
|
|
Australia
|
GoPro do Brasil Participações Ltda.
|
|
Brazil
|
GoPro Philippines Ltd.
|
|
Cayman Islands
|
Woodman Labs Cayman, Inc.
|
|
Cayman Islands
|
GoPro Technology (Shenzhen) Limited
|
|
China
|
GoPro Trading (Shanghai) Limited
|
|
China
|
GoPro Technology France SAS
|
|
France
|
Kolor SAS
|
|
France
|
GoPro GmbH
|
|
Germany
|
GoPro Hong Kong Limited
|
|
Hong Kong
|
GoPro GK
|
|
Japan
|
GoPro Coöperatief U.A.
|
|
The Netherlands
|
GoPro Holding B.V.
|
|
The Netherlands
|
GoPro International B.V.
|
|
The Netherlands
|
GoPro Bucharest S.R.L.
|
|
Romania
|
GoPro Switzerland AG
|
|
Switzerland
|
GoPro Media (UK) Ltd.
|
|
United Kingdom
|
GoPro Care, Inc.
|
|
United States
|
GoPro Care Services, Inc.
|
|
United States
|
GoPro Mobility (U.S.), LLC
|
|
United States
|
|
|
|
|
|
|
|
|
|
Date:
|
February 16, 2018
|
/s/ Nicholas Woodman
|
|
|
Nicholas Woodman
Chief Executive Officer
(Principal Executive Officer)
|
Date:
|
February 16, 2018
|
/s/ Brian McGee
|
|
|
Brian McGee
Chief Financial Officer
(Principal Financial Officer)
|
By: /s/ Nicholas Woodman
|
Nicholas Woodman
Chief Executive Officer
(Principal Executive Officer)
|
February 16, 2018
|
By: /s/ Brian McGee
|
Brian McGee
Chief Financial Officer
(Principal Financial Officer)
|
February 16, 2018
|