Gadgets

Highlights from GoPro's IPO filing, unearthed

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Image Credit: GoPro

After talking about it for a year or so, the action sports camera company GoPro filed for an initial public offering Monday.

The company has become the de facto supplier of mountable sports cams, and now has plans to make a business of distributing the video shot with them.

Here some of the highlights of GoPro’s IPO plan, pulled directly from the 220-page SEC filing for your reading enjoyment. Except as noted, these are all direct quotes from the filing.

Ticker

We have applied to list our Class A common stock on the NASDAQ Global Select Market under the symbol “GPRO.”

Revenue growth

In 2011, 2012, 2013 and the three months ended March 31, 2014, we generated revenue of $234.2 million, $526.0 million, $985.7 million and $235.7 million and reported net income of $24.6 million, $32.3 million, $60.6 million and $11.0 million, respectively.

Revenue for the three months ended March 31, 2014 decreased 8% to $235.7 million from $255.1 million for the three months ended March 31, 2013. Units shipped in the three months ended March 31, 2014 decreased 11% to 0.9 million from 1.0 million in 2013.

But, gross profit margin grew from 35 percent in Q1 2013 to Q1 2014.

Research and development expense increased $16.7 million, or 139%, for the three months ended March 31, 2014 compared to the three months ended March 31, 2013.

Use of proceeds

We expect to use the net proceeds from this offering for general corporate purposes, including working capital, and to fully repay our term loan under our credit facility, which had an outstanding balance of $111.0 million as of March 31, 2014. We may also use a portion of the net proceeds to acquire or invest in complementary businesses, technologies or assets.

We expect to use at least 5% of the net proceeds from this offering to fully repay our term loan under our credit facility, owed by us to our lenders, including affiliates of J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and Barclays Capital Inc.

We do not currently intend to pay any cash dividends on our Class A common stock or Class B common stock for the foreseeable future.

Balance sheet today

Consolidated balance sheet data (In thousands)    Actual     Pro Forma   
Cash    $ 111,215       $ 111,215      
Working capital      66,999         66,999      
Total assets      355,200         355,200      
Long-term debt, including current portion      110,666         110,666      
Redeemable convertible preferred stock      77,213              
Total stockholders’ equity      10,391         87,604      

 

Size

We increased our total number of full-time employees from 49 as of December 31, 2010 to 718 as of March 31, 2014.

We shipped 3.8 million camera units during 2013, earning the company $133.7 million.

We have a sales network of more than 25,000 stores globally.

Intellectual property

As of the date of this filing, we had 42 issued patents and 68 patent applications pending in the United States, and 15 corresponding issued patents and 12 patent applications pending in foreign countries. Our issued U.S. patents will expire between 2024 and 2032 and our issued foreign patents will expire between 2022 and 2038.

Growth strategy

(paraphrased)

Introduce more and better cameras, develop better video editing and sharing tools, begin selling ads and sponsorships around GoPro video, market mounted cameras to new sports verticals, open more international markets, and enlarge on in-store marketing presence. GamePro also plans to enter more marketing partnerships and increase its advertising spending in the coming year.

Becoming a media company

We plan to pursue new revenue opportunities from the distribution of engaging GoPro content in the near term. For example, in the first quarter of 2014, we entered into an agreement with Microsoft to develop and launch the GoPro Channel on Xbox Live, a leading delivery system for IP video streams on connected televisions, that will provide us with access to advertising revenue, fees from third-party sponsorship of the GoPro Channel and the ability to sell our capture devices directly to consumers as they watch GoPro programming.

Risks

Smartphones and tablets with photo and video functionality have significantly displaced traditional camera sales. It is possible that, in the future, the manufacturers of these devices, such as Apple Inc. and Samsung, may design them for use in a range of conditions, including challenging physical environments, or develop products similar to ours.

We depend on sales of our capture devices [cameras are its only product] for substantially all of our revenue, and any decrease in the sales of these products would harm our business.

All of the components that go into the manufacture of our cameras and accessories are sourced from third-party suppliers, and some of these components are provided by a single supplier or by a supplier that could potentially become a competitor.

We do not expect to continue to grow in the future at the same rate as we have in the past.

Our future success depends in significant part on the continued service of our Chief Executive Officer, Nicholas Woodman. Mr. Woodman is critical to the strategic direction and overall management of our company as well as our research and development process. (Woodman leads the product design team at GoPro)

Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have instituted securities class action litigation following periods of market volatility.

Taxes

Income tax expense for the three months ended March 31, 2014 was $3.9 million compared to $10.0 million for the three months ended March 31, 2013. Our effective tax rate for the three months ended March 31, 2014 was lower than for the three months ended March 31, 2013 and the federal statutory rate of 35%, primarily due to the expansion of our operations into international jurisdictions that have lower overall statutory tax rates.

Executive compensation

GoPro paid CEO Woodman $1.85 million dollars in salary and bonus money in 2013.

COO Nina Richardson received $409,635 in salary and bonuses in 2013. She was also granted 3.2 million shares of stock.

VP of marketing Paul Crandell was paid $384,890 in salary and bonuses, and was granted 928,000 shares of stock.

Underwriters

The main underwriters are J.P. Morgan, Citigroup, and Barclays. Allen & Company, Stifel, Baird, MCS Capital Markets, Piper Jaffray and Raymond James are also listed as minor underwriters.

You can see the whole S-1 here

More information:

GoPro makes the world’s most versatile cameras, enabling people to capture immersive and engaging photo and video content during their favorite activities. GoPro’s HERO lines of wearable and gear mountable cameras are used collecti... read more »

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