10-Q 1 gpro-20230930.htm 10-Q gpro-20230930
GPRO000150043512/3110-Q9/30/20232023Q3FALSEClass A common stock, $0.0001 par valueNASDAQ Global Select MarketDelaware77-06294743025 Clearview WaySan 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☑    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
☐        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________

Commission file number: 001-36514
goprologoa23.jpg
GOPRO, INC.
(Exact name of registrant as specified in its charter)
Delaware77-0629474
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
3025 Clearview Way
San Mateo, California94402
(Address of principal executive offices)(Zip Code)
(650)332-7600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.0001 par valueGPRONASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes þ    No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes þ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer        þ                        Smaller reporting company        ☐
Accelerated filer             ☐                        Emerging growth company        ☐
Non-accelerated filer        ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
As of November 6, 2023, 125,781,710 and 26,258,546 shares of Class A and Class B common stock were outstanding, respectively.


1

GoPro, Inc.
Index

Page
PART I. FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
2

Special Note About Forward-Looking Statements

This Quarterly Report on Form 10-Q of GoPro, Inc. (GoPro or we or the Company) includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding guidance, industry prospects, product and marketing plans, or future results of operations or financial position, made in this Quarterly Report on Form 10-Q are forward-looking. To identify forward-looking statements, we use words such as “expect,” “anticipate,” “believe,” “may,” “will,” “estimate,” “intend,” “target,” “goal,” “plan,” “likely,” “potentially,” or variations of such words and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their date. If any of management's assumptions prove incorrect or should unanticipated circumstances arise, the Company's actual results could materially differ from those anticipated by such forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to, those factors identified and detailed in Risk Factors in Part II, Item 1A. of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. Forward-looking statements include, but are not limited to, statements regarding our plans to expand and improve product offerings; projections of results of operations, research and development plans, marketing plans, plans to expand our global retail and distribution footprint, and revenue growth drivers, plans to manage our operating expenses effectively, plans to drive profitability, including our restructuring plans and the improved efficiencies in our operations that such plans may create; the impact of negative macroeconomic factors including rising interest rates and inflation, market volatility, economic recession concerns, and the potential occurrence of a temporary federal government shutdown; the ability for us to grow camera sales to drive meaningful volume and subscription growth; our ability to acquire and retain subscribers; the effects of global conflicts and geopolitical issues such as the conflicts in Israel and Ukraine or China-Taiwan relations on our business; plans to settle the note conversion in cash; expectations regarding the volatility of the Company’s tax provision and resulting effective tax rate and projections of results of operations; the outcome of pending or future litigation and legal proceedings; and any discussion of the trends and other factors that drive our business and future results, as discussed in Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations, and other sections of this Quarterly Report on Form 10-Q, including but not limited to Item 1A. Risk Factors. Readers are strongly encouraged to consider the foregoing including those factors when evaluating any forward-looking statements concerning the Company. The Company does not undertake any obligation to update any forward-looking statements in this Quarterly Report on Form 10-Q to reflect future events or developments.
3

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GoPro, Inc.
Condensed Consolidated Balance Sheets
(unaudited)

(in thousands, except par values)
September 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$220,984 $223,735 
Marketable securities
38,488 143,602 
Accounts receivable, net
107,453 77,008 
Inventory
154,876 127,131 
Prepaid expenses and other current assets
38,030 34,551 
Total current assets
559,831 606,027 
Property and equipment, net
9,314 13,327 
Operating lease right-of-use assets
19,686 21,819 
Goodwill
146,459 146,459 
Other long-term assets
310,347 289,293 
Total assets
$1,045,637 $1,076,925 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$118,713 $91,648 
Accrued expenses and other current liabilities
119,715 118,877 
Short-term operating lease liabilities
9,873 9,553 
Deferred revenue
52,502 55,850 
Total current liabilities
300,803 275,928 
Long-term taxes payable
12,400 9,536 
Long-term debt
141,730 141,017 
Long-term operating lease liabilities
27,825 33,446 
Other long-term liabilities
3,799 5,439 
Total liabilities
486,557 465,366 
Commitments, contingencies and guarantees (Note 9)


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, 125,782 and 128,629 shares issued and outstanding, respectively; 150,000 Class B shares authorized, 26,258 and 26,259 shares issued and outstanding, respectively
989,189 960,903 
Treasury stock, at cost, 23,778 and 16,677 shares, respectively
(183,231)(153,231)
Accumulated deficit
(246,878)(196,113)
Total stockholders’ equity
559,080 611,559 
Total liabilities and stockholders’ equity
$1,045,637 $1,076,925 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4

GoPro, Inc.
Condensed Consolidated Statements of Operations
(unaudited)

Three months ended September 30,Nine months ended September 30,
(in thousands, except per share data)
2023202220232022
Revenue
$294,299 $305,130 $710,039 $772,520 
Cost of revenue
200,095 189,085 487,561 469,995 
Gross profit
94,204 116,045 222,478 302,525 
Operating expenses:
Research and development
41,708 36,043 121,796 103,859 
Sales and marketing
41,254 41,076 119,215 115,888 
General and administrative
15,029 14,495 47,562 45,530 
Total operating expenses
97,991 91,614 288,573 265,277 
Operating income (loss)(3,787)24,431 (66,095)37,248 
Other income (expense):
Interest expense
(1,171)(1,185)(3,463)(4,932)
Other income (expense), net1,963 284 7,231 (523)
Total other income (expense), net792 (901)3,768 (5,455)
Income (loss) before income taxes(2,995)23,530 (62,327)31,793 
Income tax expense (benefit)689 5,960 (11,562)6,019 
Net income (loss)$(3,684)$17,570 $(50,765)$25,774 
Net income (loss) per share:
Basic$(0.02)$0.11 $(0.33)$0.16 
Diluted$(0.02)$0.10 $(0.33)$0.16 
Shares used to compute net income (loss) per share:
Basic152,409 155,819 154,113 156,464 
Diluted152,409 173,184 154,113 180,038 
The accompanying notes are an integral part of these condensed consolidated financial statements.

5

GoPro, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
Nine months ended September 30,
(in thousands)
20232022
Operating activities:
Net income (loss)$(50,765)$25,774 
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization
5,001 6,590 
Non-cash operating lease cost
2,133 4,166 
Stock-based compensation
31,448 29,426 
Deferred income taxes
(17,964)6,147 
Other
(1,968)2,383 
Changes in operating assets and liabilities:
Accounts receivable, net
(30,630)29,792 
Inventory
(27,745)(66,985)
Prepaid expenses and other assets
(6,895)4,602 
Accounts payable and other liabilities
25,712 (67,136)
Deferred revenue
(4,919)5,426 
Net cash used in operating activities(76,592)(19,815)
Investing activities:
Purchases of property and equipment, net
(985)(3,205)
Purchases of marketable securities(25,782)(103,733)
Maturities of marketable securities
134,204 109,649 
Net cash provided by investing activities107,437 2,711 
Financing activities:
Proceeds from issuance of common stock3,876 4,686 
Taxes paid related to net share settlement of equity awards(7,146)(12,327)
Repurchase of outstanding common stock(30,000)(31,618)
Repayment of debt— (125,000)
Net cash used in financing activities(33,270)(164,259)
Effect of exchange rate changes on cash and cash equivalents(326)(2,563)
Net change in cash and cash equivalents(2,751)(183,926)
Cash and cash equivalents at beginning of period223,735 401,087 
Cash and cash equivalents at end of period$220,984 $217,161 
The accompanying notes are an integral part of these condensed consolidated financial statements.
6

GoPro, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(unaudited)

Common stock and additional paid-in capitalTreasury stockAccumulated
deficit		Stockholders’ equity
(in thousands)SharesAmountAmount
Balances at December 31, 2021156,474 $1,008,872 $(113,613)$(279,345)$615,914 
Common stock issued under employee benefit plans, net of shares withheld for tax1,891 2,371 — — 2,371 
Taxes paid related to net share settlements— (7,175)— — (7,175)
Stock-based compensation expense— 9,836 — — 9,836 
Repurchase of outstanding common stock(1,120)— (10,000)— (10,000)
Cumulative effect of adoption of new accounting standard — (78,230)— 54,385 (23,845)
Net income— — — 5,685 5,685 
Balances at March 31, 2022157,245 935,674 (123,613)(219,275)592,786 
Common stock issued under employee benefit plans, net of shares withheld for tax421 30 — — 30 
Taxes paid related to net share settlements— (1,313)— — (1,313)
Stock-based compensation expense— 10,251 — — 10,251 
Repurchase of outstanding common stock(1,802)— (11,762)— (11,762)
Net income— — — 2,519 2,519 
Balances at June 30, 2022155,864 944,642 (135,375)(216,756)592,511 
Common stock issued under employee benefit plans, net of shares withheld for tax1,589 2,010 — — 2,010 
Taxes paid related to net share settlements— (3,839)— — (3,839)
Stock-based compensation expense — 9,339 — — 9,339 
Repurchase of outstanding common stock(1,540)— (9,856)— (9,856)
Net income— — — 17,570 17,570 
Balances at September 30, 2022155,913 $952,152 $(145,231)$(199,186)$607,735 
Balances at December 31, 2022154,888 $960,903 $(153,231)$(196,113)$611,559 
Common stock issued under employee benefit plans, net of shares withheld for tax1,960 2,397 — — 2,397 
Taxes paid related to net share settlements— (4,251)— — (4,251)
Stock-based compensation expense— 10,314 — — 10,314 
Repurchase of outstanding common stock(890)— (5,000)— (5,000)
Net loss— — — (29,869)(29,869)
Balances at March 31, 2023155,958 969,363 (158,231)(225,982)585,150 
Common stock issued under employee benefit plans, net of shares withheld for tax375 7 — — 7 
Taxes paid related to net share settlements— (583)— — (583)
Stock-based compensation expense— 11,117 — — 11,117 
Repurchase of outstanding common stock(3,606)— (15,000)— (15,000)
Net loss— — — (17,212)(17,212)
Balances at June 30, 2023152,727 979,904 (173,231)(243,194)563,479 
Common stock issued under employee benefit plans, net of shares withheld for tax1,918 1,580 — — 1,580 
Taxes paid related to net share settlements— (2,312)— — (2,312)
Stock-based compensation expense (Note 6)— 10,017 — — 10,017 
Repurchase of outstanding common stock(2,605)— (10,000)— (10,000)
Net loss— — — (3,684)(3,684)
Balances at September 30, 2023152,040 $989,189 $(183,231)$(246,878)$559,080 
The accompanying notes are an integral part of these condensed consolidated financial statements.
7

GoPro, Inc.
Notes to Condensed Consolidated Financial Statements

1. Summary of business and significant accounting policies
GoPro, Inc. and its subsidiaries (GoPro or the Company) make it easy for the world to capture and share itself in immersive and exciting ways, helping people get the most out of their photos and videos. The Company is committed to developing solutions that create an easy, seamless experience for consumers to capture, create, manage and share engaging personal content. To date, the Company’s cameras, mountable and wearable accessories, subscription and service, and implied post contract support have generated substantially all of its revenue. The Company sells its products globally on its website, and through retailers and wholesale distributors. The Company’s global corporate headquarters are located in San Mateo, California.
Basis of presentation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (GAAP) for financial information set forth in the Accounting Standards Codification (ASC), as published by the Financial Accounting Standards Board (FASB), and with the applicable rules and regulations of the Securities and Exchange Commission (SEC). The Company’s fiscal year ends on December 31, and its fiscal quarters end on March 31, June 30 and September 30.
The condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, that management believes are necessary for the fair statement of the Company's financial statements but are not necessarily indicative of the results expected in future periods. The Condensed Consolidated Balance Sheet as of December 31, 2022, has been derived from the audited financial statements at that date, but does not include all the disclosures required by GAAP. This Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K (Annual Report) for the year ended December 31, 2022. There have been no material changes in the Company’s critical accounting policies and estimates from those disclosed in its Annual Report on Form 10-K.
Principles of consolidation. These condensed consolidated financial statements include all the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of estimates. The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the Company’s condensed consolidated financial statements and accompanying notes. Significant estimates and assumptions made by management include those related to revenue recognition and the allocation of the transaction price (including sales incentives, sales returns and implied post contract support), inventory valuation, product warranty liabilities, the valuation, impairment and useful lives of long-lived assets (property and equipment, operating lease right-of-use assets, intangible assets and goodwill), fair value of convertible senior notes, and income taxes. The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from management’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations could be affected. The Company's actual results for the nine months ended September 30, 2023, as well as its latest projections for the full year 2023 are in-line with expectations reviewed as part of the Company’s fourth quarter 2022 goodwill qualitative assessment. Based on the Company’s interim assessment as of September 30, 2023, and despite the recent reduction in the Company’s market capitalization during the third quarter 2023, the Company determined that it did not incur a “triggering event” requiring a quantitative assessment of goodwill. If the Company's market capitalization continues to decline or future performance varies from current expectations, assumptions, or estimates, including assumptions related to current macroeconomic uncertainties, this may trigger a future impairment charge, which could have a material adverse effect on our business, financial condition, and results of operations in the reporting period in which a charge would be necessary to record. The Company will continue to monitor developments throughout the remainder of 2023, including updates to the Company’s forecasts, discount rates, and the Company’s market capitalization. An update of the Company’s assessment and related estimates may be required in the future.

8

GoPro, Inc.
Notes to Condensed Consolidated Financial Statements
Comprehensive income (loss). For all periods presented, comprehensive income (loss) approximated net income (loss). Therefore, the Condensed Consolidated Statements of Comprehensive Income (Loss) have been omitted.
Revenue recognition. The Company derives substantially all of its revenue from the sale of cameras, mounts, accessories, subscription and service, and implied post contract support to customers. The transaction price recognized as revenue represents the consideration the Company expects to be entitled to and is primarily comprised of product revenue, net of returns and variable consideration, which includes sales incentives provided to customers.
The Company’s camera sales contain multiple performance obligations that can include the following four separate obligations: (i) a camera hardware component (which may be bundled with hardware accessories) and the embedded firmware essential to the functionality of the camera component delivered at the time of sale, (ii) a subscription and service, (iii) the implied right for the customer to receive post contract support after the initial sale (PCS), and (iv) the implicit right to the Company’s downloadable free apps and software solutions. The Company’s PCS includes the right to receive, on a when and if available basis, future unspecified firmware upgrades and features as well as bug fixes, and email, chat and telephone support.
The Company recognizes revenue from its sales arrangements when control of the promised goods or services are transferred to its customers, in an amount that reflects the amount of consideration expected to be received in exchange for the transferred goods or services. For the sale of hardware products, including related firmware and free software solutions, revenue is recognized when transfer of control occurs at a point in time, which generally is at the time the hardware product is shipped and collection is considered probable. For customers who purchase products directly from GoPro.com, the Company retains a portion of the risk of loss on these sales during transit, which are accounted for as fulfillment costs. For PCS, revenue is recognized ratably over 24 months, which represents the estimated period PCS is expected to be provided based on historical experience.
The Company’s subscription and service revenue is recognized primarily from our GoPro subscription and Quik subscription offerings and is recognized ratably over the subscription term, with any payments received in advance of services rendered recorded as deferred revenue. The Company’s GoPro subscription offers a range of services, including unlimited cloud storage of GoPro content supporting source video and photo quality, damaged camera replacement, the delivery of highlight videos automatically via the Company’s mobile app when GoPro camera footage is uploaded to a GoPro cloud account using the Company’s Auto Upload feature, access to a high-quality live streaming service on GoPro.com as well as discounts on GoPro cameras, gear, mounts and accessories. The Company also offers the Quik subscription that provides access to a suite of simple single-clip and multi-clip editing tools.
For the Company’s camera sale arrangements with multiple performance obligations, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which the Company separately sells its products, and subscription and service. If a standalone selling price is not directly observable, then the Company estimates the standalone selling prices considering market conditions and entity-specific factors. For example, the standalone selling price for PCS is determined based on a cost-plus approach, which incorporates the level of support provided to customers, estimated costs to provide such support, and the amount of time and costs that are allocated to efforts to develop the undelivered elements.
The Company’s standard terms and conditions of sale for non-web-based sales do not allow for product returns other than under warranty. However, the Company grants limited rights of return, primarily to certain large retailers. The Company reduces revenue and cost of sales for the estimated returns based on analyses of historical return trends by customer class and other factors. An estimated return liability along with a right to recover assets are recorded for future product returns. Return trends are influenced by product life cycles, new product introductions, market acceptance of products, product sell-through, the type of customer, seasonality, and other factors. Return rates may fluctuate over time but are sufficiently predictable to allow the Company to estimate expected future product returns.
The Company provides sales commissions to internal and external sales representatives which are earned in the period in which revenue is recognized. As a result, the Company expenses sales commissions as incurred.
9

GoPro, Inc.
Notes to Condensed Consolidated Financial Statements
Deferred revenue as of September 30, 2023 and December 31, 2022, includes amounts related to the Company’s subscriptions and PCS. The Company’s short-term and long-term deferred revenue balances totaled $55.5 million and $60.4 million as of September 30, 2023 and December 31, 2022, respectively. Of the deferred revenue balance as of December 31, 2022 and 2021, the Company recognized $12.2 million and $9.0 million of revenue during the three months ended September 30, 2023 and 2022, respectively, and $50.6 million and $37.9 million of revenue during the nine months ended September 30, 2023 and 2022, respectively. Of the deferred revenue balance as of June 30, 2023 and 2022, the Company recognized $23.1 million and $18.4 million of revenue during the three months ended September 30, 2023 and 2022, respectively.
Sales incentives. The Company offers sales incentives through various programs, including cooperative advertising, price protection, marketing development funds and other incentives. Sales incentives are considered to be variable consideration, which the Company estimates and records as a reduction to revenue at the date of sale. The Company estimates sales incentives based on historical experience, product sell-through and other factors. In March 2023, the Company made a strategic pricing decision to reduce the manufacturer’s suggested retail price (MSRP) of its cameras, effective May 2023. As a result, the Company recorded a total price protection charge of $26.7 million for this program, based on estimated channel inventory levels as of the price drop date. Actual price protection claims may differ from the Company’s estimates.
Income taxes. The Company utilizes the asset and liability method for computing its income tax provision, under which, deferred tax assets and liabilities are recognized for the expected future consequences of temporary differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates. Management makes estimates, assumptions, and judgments to determine the Company’s provision for income taxes, deferred tax assets and liabilities, and any valuation allowance recorded against deferred tax assets. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income in each tax jurisdiction and, to the extent the Company believes recovery is not likely, establishes a valuation allowance.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. Interest and penalties related to unrecognized tax benefits are recognized within income tax expense.
Segment information. The Company operates as one operating segment as it only reports financial information on an aggregate and consolidated basis to its Chief Executive Officer, who is the Company’s chief operating decision maker.
Recent accounting standards. Although there are several new accounting standards issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its condensed consolidated financial statements.

10

GoPro, Inc.
Notes to Condensed Consolidated Financial Statements
2. Fair value measurements
The Company’s assets that are measured at fair value on a recurring basis within the fair value hierarchy are summarized as follows:
September 30, 2023December 31, 2022
(in thousands)Level 1Level 2TotalLevel 1Level 2Total
Cash equivalents (1):
Money market funds$169,072 $— $169,072 $138,394 $— $138,394 
Total cash equivalents$169,072 $— $169,072 $138,394 $— $138,394 
Marketable securities:
U.S. treasury securities$— $10,846 $10,846 $— $14,716 $14,716 
Commercial paper— 11,819 11,819 — 87,436 87,436 
Corporate debt securities— 3,925 3,925 — 29,637 29,637 
Government securities— 11,898 11,898 — 11,813 11,813 
Total marketable securities$— $38,488 $38,488 $— $143,602 $143,602 
(1)    Included in cash and cash equivalents in the accompanying Condensed Consolidated Balance Sheets. Cash balances were $51.9 million and $85.3 million as of September 30, 2023 and December 31, 2022, respectively.
Cash equivalents are classified as Level 1 because the Company uses quoted market prices to determine their fair value. Marketable securities are classified as Level 2 because the Company uses alternative pricing sources and models utilizing market observable inputs to determine their fair value. The contractual maturities of available-for-sale marketable securities as of September 30, 2023 were all less than one year in duration. At September 30, 2023 and December 31, 2022, the Company had no financial assets or liabilities measured at fair value on a recurring basis that were classified as Level 3, which are valued based on inputs supported by little or no market activity.
At September 30, 2023 and December 31, 2022, the amortized cost of the Company’s cash equivalents and marketable securities approximated their fair value and there were no material realized or unrealized gains or losses, either individually or in the aggregate.
In November 2020, the Company issued $143.8 million principal amount of Convertible Senior Notes due 2025 (2025 Notes) (see Note 4 Financing arrangements). The estimated fair value of the 2025 Notes is based on quoted market prices of the Company’s instruments in markets that are not active and are classified as Level 2 within the fair value hierarchy. The Company estimated the fair value of the 2025 Notes by evaluating quoted market prices and calculating the upfront cash payment a market participant would require to assume these obligations. The calculated fair value of the 2025 Notes was $126.3 million and $130.1 million as of September 30, 2023 and December 31, 2022, respectively. The calculated fair value is highly correlated to the Company’s stock price and as a result, significant changes to the Company’s stock price will have a significant impact on the calculated fair value of the 2025 Notes.
For certain other financial assets and liabilities, including accounts receivable, accounts payable and other current assets and liabilities, the carrying amounts approximate their fair value primarily due to the relatively short maturity of these balances.
The Company also measures certain non-financial assets at fair value on a nonrecurring basis, primarily goodwill, intangible assets, and operating lease right-of-use assets, in connection with periodic evaluations for potential impairment.

11

GoPro, Inc.
Notes to Condensed Consolidated Financial Statements
3. Condensed consolidated financial statement details
The following section provides details of selected balance sheet items.
Inventory
(in thousands)
September 30, 2023December 31, 2022
Components
$17,802 $38,400 
Finished goods
137,074 88,731 
Total inventory
$154,876 $127,131 
Property and equipment, net
(in thousands)
September 30, 2023December 31, 2022
Leasehold improvements$24,084 $32,472 
Production, engineering and other equipment39,941 46,475 
Tooling7,971 9,033 
Computers and software17,717 17,258 
Furniture and office equipment4,645 4,879 
Tradeshow equipment and other1,705 1,664 
Construction in progress158 59 
Gross property and equipment
96,221 111,840 
Less: Accumulated depreciation and amortization(86,907)(98,513)
Property and equipment, net
$9,314 $13,327 
Other long-term assets
(in thousands)
September 30, 2023December 31, 2022
Long-term deferred tax assets
$296,867 $279,045 
Deposits and other
7,893 8,435 
Point of purchase (POP) displays
5,572 1,798 
Intangible assets, net15 15 
Other long-term assets$310,347 $289,293 
Intangible assets are comprised of purchased technology, which have a useful life between 20-72 months, and an indefinite life asset. Amortization expense was zero for the three months ended September 30, 2023 and 2022, and zero and $0.1 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, all of the Company’s purchased technology intangible assets were fully amortized.
12

GoPro, Inc.
Notes to Condensed Consolidated Financial Statements
Accrued expenses and other current liabilities
(in thousands)
September 30, 2023December 31, 2022
Accrued sales incentives$46,341 $41,662 
Accrued liabilities (1)
28,101 35,853 
Employee related liabilities9,828 11,261 
Inventory received
7,859 233 
Warranty liabilities7,653 7,825 
Return liability5,494 6,002 
Customer deposits
3,720 3,428 
Purchase order commitments
1,013 782 
Other
9,706 11,831 
Accrued expenses and other current liabilities$119,715 $118,877 
(1)    See Note 11 Restructuring charges for amounts associated with restructuring liabilities.
Product warranty
Three months ended September 30,Nine months ended September 30,
(in thousands)
2023202220232022
Beginning balance
$7,304 $7,860 $8,319 $8,842 
Charged to cost of revenue
6,284 5,801 14,758 13,049 
Settlement of warranty claims
(5,392)(5,743)(14,881)(13,973)
Warranty liability
$8,196 $7,918 $8,196 $7,918 
At September 30, 2023 and December 31, 2022, $7.7 million and $7.8 million, respectively, of the warranty liability was recorded as a component of accrued expenses and other current liabilities, and $0.5 million and $0.5 million, respectively, was recorded as a component of other long-term liabilities.

4. Financing arrangements
2021 Credit Facility
In January 2021, the Company entered into a Credit Agreement which provides for a revolving credit facility (2021 Credit Facility) under which the Company may borrow up to an aggregate amount of $50.0 million. In March 2023, the Company amended the 2021 Credit Agreement (collectively, the 2021 Credit Agreement). The 2021 Credit Agreement will terminate and any outstanding borrowings become due and payable on the earlier of (i) January 2027 and (ii) unless the Company has cash in a specified deposit account in an amount equal to or greater than the amount required to repay the Company’s 1.25% convertible senior notes due November 2025, 91 days prior to the maturity date of such convertible notes.
The amount that may be borrowed under the 2021 Credit Agreement may be based on a customary borrowing base calculation if the Company’s Asset Coverage Ratio is at any time less than 1.50. The Asset Coverage Ratio is defined as the ratio of (i) the sum of (a) the Company’s cash and cash equivalents in the United States plus specified percentages of other qualified debt investments (Qualified Cash) plus (b) specified percentages of the net book values of the Company’s accounts receivable and certain inventory to (ii) $50.0 million.
Borrowed funds accrue interest at the greater of (i) a per annum rate equal to the base rate plus a margin of from 0.50% to 1.00% depending on the Company’s Asset Coverage Ratio or (ii) a per annum rate equal to the Secured Overnight Financing Rate plus a 10 basis point premium and a margin of from 1.50% to 2.00% depending on the Company’s Asset Coverage Ratio. The Company is required to pay a commitment fee on the unused portion of the 2021 Credit Facility of 0.25% per annum. Amounts owed under the 2021 Credit Agreement are guaranteed by
13

GoPro, Inc.
Notes to Condensed Consolidated Financial Statements
certain of the Company’s United States subsidiaries and secured by a first priority security interest in substantially all of the assets of the Company and certain of its subsidiaries (other than intellectual property, which is subject to a negative pledge restricting grants of security interests to third parties).
The 2021 Credit Agreement contains customary representations, warranties, and affirmative and negative covenants. The negative covenants include restrictions on the incurrence of liens and indebtedness, certain investments, dividends, stock repurchases and other matters, all subject to certain exceptions. In addition, the Company is required to maintain Liquidity (the sum of unused availability under the credit facility and the Company’s Qualified Cash) of at least $55.0 million (of which at least $40.0 million shall be attributable to Qualified Cash), or, if the borrowing base is then in effect, minimum unused availability under the credit facility of at least $10.0 million. The 2021 Credit Agreement also includes customary events of default that include, among other things, non-payment of principal, interest or fees, inaccuracy of representations and warranties, violation of certain covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments and change of control. Upon an event of default, the lender may, subject to customary cure rights, require the immediate payment of all amounts outstanding.
At September 30, 2023, the Company was in compliance with all financial covenants contained in the 2021 Credit Agreement and has made no borrowings from the 2021 Credit Facility to date. However, there is an outstanding letter of credit under the 2021 Credit Agreement of $5.2 million for certain duty-related requirements. This was not collateralized by any cash on hand.
Convertible Notes
2025 Convertible Notes
In November 2020, the Company issued $125.0 million aggregate principal amount of 1.25% Convertible Senior Notes due 2025 and granted an option to the initial purchasers to purchase up to an additional $18.8 million aggregate principal amount of the 2025 Notes to cover over-allotments, of which $18.8 million was subsequently exercised during November 2020, resulting in a total issuance of $143.8 million aggregate principal amount of the 2025 Notes. The 2025 Notes are senior, unsecured obligations of the Company and mature on November 15, 2025, unless earlier repurchased or converted into shares of Class A common stock under certain circumstances. The 2025 Notes are convertible into cash, shares of the Company’s Class A common stock, or a combination thereof, at the Company’s election, at an initial conversion rate of 107.1984 shares of Class A common stock per $1,000 principal amount of the 2025 Notes, which is equivalent to an initial conversion price of approximately $9.3285 per share of common stock, subject to adjustment. The Company pays interest on the 2025 Notes semi-annually in arrears on May 15 and November 15 of each year.
The Company may redeem all or any portion of the 2025 Notes on or after November 20, 2023 for cash if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides the redemption notice, at a redemption price equal to 100% of the principal amount of the 2025 Notes to be redeemed, plus accrued interest and unpaid interest to, but excluding the redemption date. No sinking fund is provided for the 2025 Notes. The indenture includes customary terms and covenants, including certain events of default after which the 2025 Notes may be due and payable immediately.
Holders have the option to convert the 2025 Notes in multiples of $1,000 principal amount at any time prior to August 15, 2025, but only in the following circumstances:
•during any calendar quarter beginning after the calendar quarter ending on March 31, 2021, 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 2025 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 2025 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 2025 Notes on each such trading day;
•if the Company calls any or all of the 2025 Notes for redemption, at any time prior to the close of business
14

GoPro, Inc.
Notes to Condensed Consolidated Financial Statements
on the scheduled trading day immediately before the redemption date; or
•upon the occurrence of specified corporate events.
At any time on or after August 15, 2025 until the second scheduled trading day immediately preceding the maturity date of the 2025 Notes on November 15, 2025, a holder may convert its 2025 Notes, in multiples of $1,000 principal amount. Holders of the 2025 Notes who convert their 2025 Notes in connection with a make-whole fundamental change (as defined in the indenture) are, under certain circumstances, entitled to an increase in the conversion rate. In addition, in the event of a fundamental change prior to the maturity date, holders will, subject to certain conditions, have the right, at their option, to require the Company to repurchase for cash all or part of the 2025 Notes at a repurchase price equal to 100% of the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest up to, but excluding, the repurchase date. During the three months ended September 30, 2023, the conditions allowing holders of the 2025 Notes to convert were not met.
In connection with the offering of the 2025 Notes, the Company paid $10.2 million to enter into privately negotiated capped call transactions with certain financial institutions (Capped Calls). The Capped Calls have an initial strike price of $9.3285 per share, which corresponds to the initial conversion price of the 2025 Notes. The Capped Calls cover, subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the 2025 Notes, the number of Class A common stock initially underlying the 2025 Notes. The Capped Calls are generally expected to reduce potential dilution to the Company’s Class A common stock upon any conversion of the 2025 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2025 Notes, as the case may be, with such reduction and/or offset subject to a cap, initially equal to $12.0925, and is subject to certain adjustments under the terms of the Capped Call transactions. The Capped Calls will expire in November 2025, if not exercised earlier.
The Capped Calls are subject to adjustment upon the occurrence of specified extraordinary events affecting the Company, including merger events, tender offers and announcement events. In addition, the Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the Capped Calls, including nationalization, insolvency or delisting, changes in law, failures to deliver, insolvency filings and hedging disruptions. For accounting purposes, the Capped Calls are separate transactions, and not part of the terms of the 2025 Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders’ equity as a reduction to additional paid-in capital and will not be remeasured as long as they continue to meet certain accounting criteria.
As of September 30, 2023 and December 31, 2022, the outstanding principal on the 2025 Notes was $143.8 million, the unamortized debt issuance cost was $2.1 million and $2.8 million, respectively, and the net carrying amount of the liability was $141.7 million and $141.0 million, respectively, which was recorded as long-term debt within the Condensed Consolidated Balance Sheets. For the three months ended September 30, 2023 and 2022, the Company recorded interest expense of $0.4 million and $0.4 million, respectively, for contractual coupon interest, and $0.2 million and $0.2 million, respectively, for amortization of debt issuance costs. For the nine months ended September 30, 2023 and 2022 the Company recorded interest expense of $1.3 million and $1.3 million, respectively, for contractual coupon interest, and $0.7 million and $0.7 million, respectively, for amortization of debt issuance costs.
2022 Convertible Notes
In April 2017, the Company issued $175.0 million aggregate principal amount of 3.50% Convertible Senior Notes due 2022 (2022 Notes), which were repaid in full by their April 15, 2022 maturity date. The 2022 Notes were senior, unsecured obligations of the Company that could be converted into cash, shares of the Company’s Class A common stock, or a combination thereof, at the Company’s election, based on conversion rates as defined in the indenture. Concurrently with the November 2020 issuance of the 2025 Notes, the Company used $56.2 million of the net cash proceeds from the 2025 Notes to repurchase $50.0 million principal amount of the 2022 Notes through a single, privately negotiated transaction. On April 15, 2022, the Company repaid the remaining $125.0 million of principal and $2.2 million of accrued interest in cash to the debt holders to fully settle the 2022 Notes on the maturity date. For the three months ended September 30, 2022 the Company recorded interest expense of zero for contractual coupon interest, and zero for amortization of debt issuance costs. For the nine months ended
15

GoPro, Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2022 the Company recorded interest expense of $1.3 million for contractual coupon interest and $0.2 million for amortization of debt issuance costs.

5. Stockholders’ equity
Stock Repurchase Program. On January 27, 2022, the Company’s board of directors authorized the repurchase of up to $100 million of its Class A common stock, and on February 9, 2023, the Company’s board of directors authorized the repurchase of an additional $40 million of its Class A common stock. Stock repurchases under the program may be made periodically using a variety of methods, including without limitation, open market purchases, block trades or otherwise in compliance with all federal and state securities laws and state corporate law and in accordance with the single broker, timing, price, and volume guidelines set forth in Rule 10b-18 and Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, as such guidelines may be modified by the SEC from time to time. This stock repurchase program has no time limit and may be modified, suspended, or discontinued at any time. The Company currently intends to hold its repurchased shares as treasury stock.
As of September 30, 2023, the remaining amount of share repurchases under the program was $70.4 million. The following table summarizes share repurchases during the three and nine months ended September 30, 2023 and 2022.

Three months ended September 30,Nine months ended September 30,
(in thousands, except per share data)2023202220232022
Shares repurchased2,605 1,540 7,101 4,462 
Average price per share$3.84 $6.40 $4.22 $7.09 
Value of shares repurchased$10,000 $9,856 $30,000 $31,618 

6. Employee benefit plans
Equity incentive plans. The Company has outstanding equity grants from its three stock-based employee compensation plans: the 2014 Equity Incentive Plan (2014 Plan), the 2010 Equity Incentive Plan (2010 Plan) and the 2014 Employee Stock Purchase Plan (2014 ESPP). No new options or awards have been granted under the 2010 Plan since June 2014. Outstanding options and awards under the 2010 Plan continue to be subject to the terms and conditions of the 2010 Plan. Options granted under the 2014 Plan generally expire within ten years from the date of grant and generally vest over one to four years. Restricted stock units (RSUs) granted under the 2014 Plan generally vest over two to four years based upon continued service and are settled at vesting in shares of the Company’s Class A common stock. Performance stock units (PSUs) granted under the 2014 Plan generally vest over three years based upon continued service and the Company achieving certain financial and operating targets and are settled at vesting in shares of the Company’s Class A common stock. The Company accounts for forfeitures of stock-based payment awards in the period they occur. The 2014 ESPP allows eligible employees to purchase shares of the Company’s Class A common stock through payroll deductions at a price equal to 85% of the lesser of the fair market value of the stock as of the first date or the ending date of each six-month offering period. For additional information regarding the Company’s equity incentive plans, refer to the 2022 Annual Report.
In June 2023, the Company’s stockholders approved the 2024 Equity Incentive Plan (2024 Plan) and the 2024 Employee Stock Purchase Plan (2024 ESPP) which will be the successors to the Company’s 2014 Plan and 2014 ESPP, respectively. The effective date of both the 2024 Plan and the 2024 ESPP is February 15, 2024. The 2014 Plan and the 2014 ESPP will each expire on February 15, 2024. Awards granted under the 2014 Plan will continue to be subject to the terms and provisions of the 2014 Plan.
16

GoPro, Inc.
Notes to Condensed Consolidated Financial Statements
Stock options
A summary of the Company’s stock option activity for the nine months ended September 30, 2023 is as follows:
Shares
(in thousands)
Weighted-average exercise price
Weighted-average remaining contractual term (in years)
Aggregate intrinsic value (in thousands)
Outstanding at December 31, 20223,089 $9.37 5.30$467 
Granted— — 
Exercised— — 
Forfeited/Cancelled(481)10.49 
Outstanding at September 30, 20232,608 $9.16 4.73$— 
Vested and expected to vest at September 30, 20232,608 $9.16 4.73$— 
Exercisable at September 30, 20232,307 $9.38 4.34$— 
The aggregate intrinsic value of the stock options outstanding as of September 30, 2023 represents the value of the Company’s closing stock price on September 30, 2023 in excess of the exercise price multiplied by the number of options outstanding.
Restricted stock units
A summary of the Company’s RSU activity for the nine months ended September 30, 2023 is as follows:
Shares
(in thousands)
Weighted-average grant date fair value
Non-vested shares at December 31, 20228,727 $7.19 
Granted7,358 5.40 
Vested(4,380)6.70 
Forfeited(520)6.78 
Non-vested shares at September 30, 202311,185 $6.22 
Performance stock units
A summary of the Company’s PSU activity for the nine months ended September 30, 2023 is as follows:
Shares
(in thousands)
Weighted-average grant date fair value
Non-vested shares at December 31, 2022686 

$7.93 
Granted1,254 5.79 
Vested(402)7.62 
Forfeited(18)8.40 
Non-vested shares at September 30, 20231,520 $6.24 
Employee stock purchase plan. For the nine months ended September 30, 2023 and 2022, the Company issued 0.9 million and 0.7 million shares under its ESPP, respectively, at weighted-average prices of $4.10 and $6.72 per share, respectively.
Stock-based compensation expense. The Company measures compensation expense for all stock-based payment awards based on the estimated fair values on the date of the grant. The fair value of stock options
17

GoPro, Inc.
Notes to Condensed Consolidated Financial Statements
granted and ESPP issuances is estimated using the Black-Scholes option pricing model. The fair value of RSUs and PSUs are determined using the Company’s closing stock price on the date of grant. There have been no significant changes in the Company’s valuation assumptions from those disclosed in its 2022 Annual Report.
The following table summarizes stock-based compensation expense included in the Condensed Consolidated Statements of Operations:
Three months ended September 30,Nine months ended September 30,
(in thousands)
2023202220232022
Cost of revenue
$500 $441 $1,496 $1,371 
Research and development
4,713 4,395 14,381 12,958 
Sales and marketing
2,125 1,819 6,662 6,171 
General and administrative
2,679 2,684 8,909 8,926 
Total stock-based compensation expense$10,017 $9,339 $31,448 $29,426 
The income tax benefit related to stock-based compensation expense was $2.3 million and $7.1 million for the three and nine months ended September 30, 2023, respectively. The income tax benefit related to stock-based compensation expense was $2.1 million and $6.5 million for the three and nine months ended September 30, 2022, respectively. See Note 8, Income taxes, for additional details.
As of September 30, 2023, total unearned stock-based compensation of $62.6 million related to stock options, RSUs, PSUs and ESPP shares is expected to be recognized over a weighted-average period of 2.26 years.

7. Net income (loss) per share
The following table presents the calculations of basic and diluted net income (loss) per share:
Three months ended September 30,Nine months ended September 30,
(in thousands, except per share data)2023202220232022
Numerator:
Net income (loss) - Basic$(3,684)$17,570 $(50,765)$25,774 
Interest on convertible notes, income tax effected— 485 — 2,721 
Net income (loss) - Diluted$(3,684)$18,055 $(50,765)$28,495 
Denominator:
Weighted-average common shares - basic for Class A and Class B common stock152,409 155,819 154,113 156,464 
Effect of dilutive securities— 17,365 — 23,574 
Weighted-average common shares - diluted for Class A and Class B common stock152,409 173,184 154,113 180,038 
Net income (loss) per share
Basic$(0.02)$0.11 $(0.33)$0.16 
Diluted$(0.02)$0.10 $(0.33)$0.16 
18

GoPro, Inc.
Notes to Condensed Consolidated Financial Statements

The following potentially dilutive shares were not included in the calculation of diluted shares outstanding as the effect would have been anti-dilutive:
Three months ended September 30,Nine months ended September 30,
(in thousands)
2023202220232022
Stock-based awards15,535 10,328 15,410 7,007 
Shares related to convertible senior notes15,410 — 15,410 — 
Total anti-dilutive securities30,945 10,328 30,820 7,007 
Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding. Diluted net income (loss) per share adjusts the basic net income (loss) per share and the weighted-average number of shares of common stock outstanding for the potentially dilutive impact of the Company’s ESPP and stock awards, using the treasury stock method.
The Company calculated the potential dilutive effect of its 2022 Notes and 2025 Notes under the if-converted method. Under the if-converted method, diluted net income per share was determined by assuming all of the 2022 Notes and the 2025 Notes were converted into shares of the Company’s Class A common stock at the beginning of the reporting period. In addition, in periods of net income, interest charges on the 2022 Notes and 2025 Notes, which includes both coupon interest and amortization of debt issuance costs, were added back to net income on an after-tax effected basis.
The Company’s 2022 Notes matured on April 15, 2022 and the Company’s 2025 Notes will mature on November 15, 2025, unless earlier repurchased or converted into shares of Class A common stock under certain circumstances as described further in Note 4 Financing arrangements. The 2025 Notes are convertible into cash, shares of the Company’s Class A common stock, or a combination thereof, at the Company’s election.
The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share. Each share of Class B common stock is convertible at any time at the option of the stockholder into one share of Class A common stock and has no expiration date. Each share of Class B common stock will convert automatically into one share of Class A common stock upon the date when the outstanding shares of Class B common stock represent less than 10% of the aggregate number of shares of common stock then outstanding. Class A common stock is not convertible into Class B common stock. The computation of the diluted net income (loss) per share of Class A common stock assumes the conversion of Class B common stock.
8. Income taxes
The following table provides the income tax expense (benefit) amount:
Three months ended September 30,Nine months ended September 30,
(dollars in thousands)2023202220232022
Income tax expense (benefit)$689 $5,960 $(11,562)$6,019 
The Company recorded an income tax expense of $0.7 million for the three months ended September 30, 2023 on pre-tax net loss of $3.0 million. The Company’s income tax expense for the three months ended September 30, 2023 was composed of $1.0 million of tax benefit incurred on pre-tax loss, and discrete items that primarily included $1.7 million of nondeductible equity tax expense for employee stock-based compensation, $0.1 million of tax expense related to the restructuring charges, and $0.1 million of tax benefit related to the foreign provision to income tax return adjustments. The Company recorded an income tax benefit of $11.6 million for the nine months ended September 30, 2023 on pre-tax net loss of $62.3 million. The Company’s income tax benefit for the nine months ended September 30, 2023 was composed of $14.4 million of tax benefit incurred on pre-tax loss, and discrete items that primarily included $2.4 million of net nondeductible equity tax expense for employee
19

GoPro, Inc.
Notes to Condensed Consolidated Financial Statements
stock-based compensation, $0.1 million of tax expense related to the foreign provision to income tax return adjustments, and $0.3 million of tax expense related to the restructuring charges.
The Company recorded an income tax expense of $6.0 million for the three months ended September 30, 2022 on pre-tax net income of $23.5 million. The Company’s income tax expense for the three months ended September 30, 2022 was composed of $5.8 million of tax expense incurred on pre-tax income, and discrete items that primarily included $0.1 million of net excess tax benefit for employee stock-based compensation, $0.1 million of tax expense related to the foreign provision to income tax return adjustments, and $0.1 million of tax expense relating to restructuring charges. The Company recorded an income tax expense of $6.0 million for the nine months ended September 30, 2022 on pre-tax net income of $31.8 million. The Company’s income tax expense for the nine months ended September 30, 2022 was composed of $7.7 million of tax expense incurred on pre-tax income, and discrete items that primarily included $1.7 million of net excess tax benefit for employee stock-based compensation, $0.2 million of tax benefit related to the foreign provision to income tax return adjustments, and $0.1 million of tax expense relating to restructuring charges.
At September 30, 2023 and December 31, 2022, the Company’s gross unrecognized tax benefits were $26.1 million and $23.4 million, respectively. If recognized, $12.6 million of these unrecognized tax benefits (net of United States federal benefit) at September 30, 2023 would reduce income tax expense. A material portion of the Company’s gross unrecognized tax benefits, if recognized, would increase the Company’s net operating loss carryforward. The Company conducts business globally and as a result, files income tax returns in the United States and foreign jurisdictions. The Company’s unrecognized tax benefits relate primarily to unresolved matters with taxing authorities. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, the Company believes that its reserves reflect the more likely outcome. The Company believes, due to statute of limitations expiration, that within the next 12 months, it is possible that up to $2.4 million of uncertain tax position could be released. It is also reasonably possible that additional uncertain tax positions will be added. It is not reasonably possible at this time to quantify the net effect.
9. Commitments, contingencies and guarantees
Facility leases. The Company leases its facilities under long-term operating leases, which expire at various dates through 2029.
The components of net lease cost, which were primarily recorded in operating expenses, were as follows:
Three months ended September 30,Nine months ended September 30,
(in thousands)2023202220232022
Operating lease cost (1)
$2,363 $2,871 $8,557 $8,198 
Sublease income(277)(723)(1,723)(2,184)
Net lease cost$2,086 $2,148 $6,834 $6,014 
(1)    Operating lease cost includes variable lease costs, which are immaterial.

Supplemental cash flow information related to leases was as follows:
Nine months ended September 30,
(in thousands)20232022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$9,526 $11,083 
Right-of-use assets obtained in exchange for operating lease liabilities3,047 873 
Operating lease modification to decrease right-of-use assets— (232)

20

GoPro, Inc.
Notes to Condensed Consolidated Financial Statements
Supplemental balance sheet information related to leases was as follows:
September 30, 2023December 31, 2022
Weighted-average remaining lease term (in years) - operating leases3.313.81
Weighted-average discount rate - operating leases6.2%6.1%

As of September 30, 2023, maturities of operating lease liabilities were as follows:
(in thousands)
September 30, 2023
2023 (remaining 3 months)$1,986 
202413,126 
202512,693 
202612,361 
20271,359 
Thereafter504 
Total lease payments42,029 
Less: Imputed interest(4,331)
Present value of lease liabilities$37,698 
Other commitments. In the ordinary course of business, the Company enters into multi-year agreements to purchase sponsorships with event organizers, resorts, and athletes as part of its marketing efforts; software licenses related to its financial and IT systems; debt agreements; and various other contractual commitments. As of September 30, 2023, the Company’s total undiscounted future expected obligations under multi-year agreements described above with terms longer than one year was $209.6 million.
Legal proceedings and investigations. Since 2015, Contour IP Holdings LLC (CIPH) and related entities have filed lawsuits in various federal district courts alleging, among other things, patent infringement in relation to certain GoPro products. Following litigation in federal courts and the United States Patent and Trademark Office, CIPH’s patents were ruled invalid in March 2022. Judgment was then entered in favor of the Company and against CIPH. CIPH later appealed, and the appeal is pending at the Federal Circuit. The Company believes that the appeal lacks merit and intends to vigorously defend against CIPH's appeal.
The Company regularly evaluates the associated developments of the legal proceeding described above, as well as other legal proceedings that arise in the ordinary course of business. While litigation is inherently uncertain, based on the currently available information, the Company is unable to determine a loss or a range of loss, and does not believe the ultimate cost to resolve these matters will have a material adverse effect on its business, financial condition, cash flows or results of operations.
Indemnifications. The Company has entered into indemnification agreements with its directors and executive officers which requires the Company to indemnify its directors and executive officers against liabilities that may arise by reason of their status or service. In addition, in the normal course of business, the Company enters into agreements that contain a variety of representations and warranties, and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future but have not yet been made. It is not possible to determine the maximum potential amount under these indemnification agreements due to the Company’s limited history with indemnification claims and the unique facts and circumstances involved in each particular agreement. As of September 30, 2023, the Company has not paid any claims, nor has it been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations.
21

GoPro, Inc.
Notes to Condensed Consolidated Financial Statements
10. Concentrations of risk and geographic information
Concentration of risk. Financial instruments which potentially subject the Company to concentration of credit risk includes cash and cash equivalents, marketable securities, accounts receivable, and derivative instruments, including the Capped Calls associated with the 2025 Notes. The Company places cash and cash equivalents with high-credit-quality financial institutions; however, the Company maintains cash balances in excess of the FDIC insurance limits. The Company believes that credit risk for accounts receivable is mitigated by the Company’s credit evaluation process, relatively short collection terms and dispersion of its customer base. The Company generally does not require collateral and losses on trade receivables have historically been within the Company’s expectations. The Company believes its counterparty credit risk related to its derivative instruments is mitigated by transacting with major financial institutions with high credit ratings.
Customers who represented 10% or more of the Company’s net accounts receivable balance were as follows:
September 30, 2023December 31, 2022
Customer A34%30%
Customer B18%11%
The following table summarizes the Company’s accounts receivables sold, without recourse, and factoring fees paid:
Three months ended September 30,Nine months ended September 30,
(in thousands)
2023202220232022
Accounts receivable sold$32,011 $35,755 $73,050 $86,577 
Factoring fees434 363 1,101 629 
Third-party customers who represented 10% or more of the Company's total revenue were as follows:
Three months ended September 30,Nine months ended September 30,
2023202220232022
Customer A12%*10%*
Customer B**10%*
* Less than 10% of total revenue for the periods indicated.
Supplier concentration. The Company relies on third parties for the supply and manufacture of its products, some of which are sole-source suppliers. The Company believes that outsourcing manufacturing enables greater scale and flexibility. As demand and product lines change, the Company periodically evaluates the need and advisability of adding manufacturers to support its operations. In instances where a supply and manufacture agreement does not exist or suppliers fail to perform their obligations, the Company may be unable to find alternative suppliers or satisfactorily deliver its products to its customers on time, if at all. The Company also relies on third parties with whom it outsources supply chain activities related to inventory warehousing, order fulfillment, distribution and other direct sales logistics. In instances where an outsourcing agreement does not exist or these third parties fail to perform their obligations, the Company may be unable to find alternative partners or satisfactorily deliver its products to its customers on time.
22

GoPro, Inc.
Notes to Condensed Consolidated Financial Statements
Geographic information
Revenue by geographic region was as follows:
Three months ended September 30,Nine months ended September 30,
(in thousands)
2023202220232022
Americas
$131,612 $139,419 $342,775 $368,379 
Europe, Middle East and Africa (EMEA)83,490 84,994 196,006 218,216 
Asia and Pacific (APAC)
79,197 80,717 171,258 185,925 
Total revenue
$294,299 $305,130 $710,039 $772,520 
Revenue from the United States, which is included in the Americas geographic region, was $100.9 million and $119.1 million, for the three months ended September 30, 2023 and 2022, respectively, and $283.0 million and $312.3 million for the nine months ended September 30, 2023 and 2022, respectively. No other individual country exceeded 10% of total revenue for any period presented. The Company does not disclose revenue by product category as it does not track sales incentives and other revenue adjustments by product category to report such data.
As of September 30, 2023 and December 31, 2022, long-lived assets, which represent net property and equipment, located outside the United States, primarily in Hong Kong and mainland China, were $1.9 million and $4.0 million, respectively.
11. Restructuring charges
Restructuring charges for each period were as follows:
Three months ended September 30,Nine months ended September 30,
(in thousands)
2023202220232022
Cost of revenue
$— $— $(183)$28 
Research and development
— (4)10 235 
Sales and marketing
— (2)6 132 
General and administrative
— (1)3 75 
Total restructuring charges
$— $(7)$(164)$470 
Fourth quarter 2022 restructuring
In December 2022, the Company approved a restructuring plan to reduce camera production-related costs by globally realigning its manufacturing footprint to concentrate production activities in two primary locations: China and Thailand. Under the fourth quarter 2022 restructuring, the Company recorded restructuring charges of $8.1 million including $7.0 million for camera production line closure costs and $1.1 million for related transitional costs to migrate production to the Company’s remaining manufacturing locations.
The following table provides a summary of the Company’s restructuring activities and the movement in the related liabilities recorded in accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets under the fourth quarter 2022 restructuring.
(in thousands)
Contract and Other Costs
Total
Restructuring liability as of December 31, 2022$7,833 $7,833 
Restructuring charges (releases)(184)(184)
Cash paid
(7,649)(7,649)
Restructuring liability as of September 30, 2023$— $— 
23

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2022 included in our Annual Report on Form 10-K filed with the SEC. This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading Special Note About Forward-Looking Statements in this Quarterly Report on Form 10-Q. Disclosures under the heading Risk Factors in this Quarterly Report on Form 10-Q include a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements. Our MD&A is provided in addition to the accompanying condensed consolidated financial statements and accompanying notes to assist readers in understanding our results of operations, financial condition, and cash flows.
This MD&A is organized as follows:
•Overview. Discussion of our business, overall analysis of our financial performance and other highlights affecting the business in order to provide context for the remainder of the MD&A.
•Results of Operations. Analysis of our financial results comparing the third quarter and first nine months of 2023 to 2022.
•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.
•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 reconciliation and discussion of our GAAP to non-GAAP financial measures.
Overview
GoPro helps the world capture and share itself in immersive and exciting ways. We are committed to developing solutions that create an easy, seamless experience for consumers to capture, create and share engaging personal content. When consumers use our products and services, they often generate and share content that organically increases awareness for GoPro, driving a virtuous cycle and a self-reinforcing demand for our products. We believe revenue growth may be driven by the introduction of new cameras, accessories, lifestyle gear, and software and subscription offerings. We believe new camera features drive a replacement cycle among existing users and attract new users, expanding our total addressable market. Our investments in image stabilization, mobile app editing and sharing solutions, modular accessories, auto-upload capabilities, local language user-interfaces and voice recognition in more than 12 languages drive the expansion of our global market.
In September 2023, we began shipping our HERO12 Black flagship camera that includes our GP2 processor, HyperSmooth 6.0 image stabilization, high dynamic range (HDR) photos and videos in 5.3K at 60 frames per second (FPS) and 4K at 60 FPS, and wireless audio support for Apple AirPods and other Bluetooth devices. HyperSmooth 6.0 image stabilization features improved AutoBoost, which analyzes up to 4x more data compared to HyperSmooth 5.0 while supporting 360-degree Horizon Lock. The HERO12 Black also includes 10-bit color video at up to 5.3K video at 60 FPS, 27 megapixel photo resolution, 8:7 aspect ratio video for a larger vertical field of view, and HyperView, which allows for a 16:9 field of view. The HERO12 Black also includes the Enduro Battery, which improves the camera performance in both cold and moderate temperatures, a front-facing and rear touch display, TimeWarp 3.0, a Timecode Sync feature, and a Night Effects Time Lapse feature. We also began shipping our Max Lens Mod 2.0 for HERO12 Black, which features an ultra wide-angle digital lens for 4K video at 60 FPS, Max HyperSmooth in all video modes, and Horizon Lock for all digital lenses. Additionally, we began
24

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
shipping our HERO12 Black Creator Edition, which combines the HERO12 Black, Volta, Enduro Battery, Media Mod, and Light Mod to create professional-quality videos.
Our HERO12 Black, HERO12 Black Creator Edition, HERO11 Black, HERO11 Black Mini, HERO11 Black Creator Edition, HERO10 Black, HERO10 Black Creator Edition, HERO9 Black and MAX cameras are compatible with our ecosystem of mountable and wearable accessories. We also offer our GoPro Player + ReelSteady desktop app, which provides industry-leading video stabilization and 360-reframing tools in a single post-production app.
We offer our GoPro subscription, which includes unlimited cloud storage of GoPro content supporting source video and photo quality, damaged camera replacement, the delivery of highlight videos automatically via our mobile app when GoPro camera footage is uploaded to the user’s GoPro cloud account using our Auto Upload feature, access to a high-quality live streaming service on GoPro.com, as well as discounts on GoPro cameras, gear, mounts and accessories.
In addition to the GoPro subscription, we offer the Quik subscription which makes it easy for users to get the most out of their favorite photos and videos, captured on any phone or camera, through the use of our mobile app’s editing tools. These editing tools include features such as trim, color, crop, filtering, auto-sync of edits to music, and the ability to change video speed. We believe the Quik subscription is an important offering in expanding our total addressable market to those who may not own a GoPro camera.
We continue to monitor the current evolving macroeconomic landscape. Inflation, rising interest rates, and recession concerns places increasing pressure on many areas of our business, including product pricing, operating expenses, component pricing and consumer spending. In fiscal year 2022, the strength of the U.S. dollar relative to other foreign currencies largely impacted our revenue and gross margin. If the U.S. dollar strengthens relative to other foreign currencies in the future, our financial results will be negatively impacted. See Item 1A. Risk Factors for further discussion of the possible impact of inflation and the strong U.S. dollar on our business.
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GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is a summary of measures presented in our condensed consolidated financial statements and key metrics used to evaluate our business, measure our performance, develop financial forecasts and make strategic decisions.

% Change
(units and dollars in thousands, except per share amounts)
Q3 2023Q2 2023Q3 2022Q3 2023 vs. Q2 2023Q3 2023 vs. Q3 2022
Revenue$294,299$241,020$305,13022 %(4)%
Camera units shipped (1)
923 704 797 31 %16 %
Gross margin (2)
32.0 %31.4 %38.0 %60  bps(600) bps
Operating expenses$97,991 $98,266 $91,614 — %7 %
Net income (loss)$(3,684)$(17,212)$17,570 (79)%(121)%
Diluted net income (loss) per share$(0.02)$(0.11)$0.10 (82)%(120)%
Cash provided by (used in) operations$(1,638)$(7,852)$40,736 (79)%(104)%
Other financial information:
Adjusted EBITDA (3)
$7,232 $(10,290)$35,200 (170)%(79)%
Non-GAAP net income (loss) (4)
$6,309 $(11,291)$31,847 (156)%(80)%
Non-GAAP diluted net income (loss) per share$0.04 $(0.07)$0.19 (157)%(79)%
(1)     Represents the number of camera units that are shipped during a reporting period, net of any returns.
(2)    One basis point (bps) is equal to 1/100th of 1%.
(3)     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, point of purchase (POP) display amortization, stock-based compensation, and restructuring and other costs, including right-of-use asset impairment charges.
(4)    We define non-GAAP net income (loss) as net income (loss) adjusted to exclude stock-based compensation, acquisition-related costs, restructuring and other costs, including right-of-use asset impairment charges (if applicable), and income tax adjustments. Acquisition-related costs include the amortization of acquired intangible assets and impairment charges (if applicable), as well as third-party transaction costs for legal and other professional services.
Reconciliations of non-GAAP adjusted measures to the most directly comparable GAAP measures are presented under Non-GAAP Financial Measures.
Third quarter 2023 financial performance
Revenue for the third quarter of 2023 was $294.3 million, which represented a 3.5% decrease from the same period in 2022. The decrease was primarily driven by the impact of our decision to reduce the manufacturer’s suggested retail price (MSRP) across our camera lineup in May 2023. In addition, we expected a lift in camera revenue for entry-level cameras at a sub-$300 price point. The current entry-level cameras are also our lowest margin products and are expected to return low margins until we are able to replace them with a more cost-effective solution planned for the second quarter of 2024. As a result, our third quarter 2023 average selling price decreased 16.7% year-over-year to $319, and our third quarter 2023 camera revenue mix from cameras with an MSRP equal to or greater than $400 was 75% compared to 87% for the same period in 2022. These factors were partially offset by a 15.8% year-over-year increase in units shipped in the third quarter to 923 thousand as we experienced an increase in demand for our flagship HERO12 Black camera as well as our lower price point cameras. Retail revenue was $231.0 million in the third quarter of 2023 and represented 78.5% and 67.7% of total revenue for the third quarter of 2023 and 2022, respectively. The shift towards our retail channel reflects results of our refreshed go-to-market strategy to rebuild our retail presence and to drive retail consumers to our GoPro subscription offering via our mobile app or GoPro.com. GoPro.com revenue was $63.3 million in the third quarter of 2023 and represented 21.5% of total revenue, compared to 32.3% of total revenue for the same period in 2022. Subscription and service revenue, which is included in the GoPro.com channel, was $24.8 million in the third quarter of 2023, or a 16.2% increase year-over-year. We had 2.50 million GoPro subscribers as of September 30,
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GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
2023, a 20% increase year-over-year. Our GoPro subscriber attach rate from both sales on GoPro.com and from post-camera purchases at retail was 40% in the third quarter of 2023. Our annual subscriber retention rate for the first-year renewal was in a range of 60% to 65%. In addition, our annual subscriber retention rate for the second-year renewal was in a range of 70% to 75%. Our gross margin percentage for the third quarter of 2023 was 32.0%, down from 38.0% in the third quarter of 2022. Net loss for the third quarter of 2023 was $3.7 million compared to net income of $17.6 million in the same period in 2022. Adjusted EBITDA for the third quarter of 2023 was $7.2 million, compared to $35.2 million for the same period in 2022.
Our GoPro subscriber attach rate from purchases through both GoPro.com and at retail represents the number of new GoPro subscribers in the period over the corresponding number of estimated camera units sold through both GoPro.com and retail channels. Our annual GoPro subscriber retention rate represents the number of annual subscribers that renewed their subscription in the period over the number of annual GoPro subscribers with renewal dates in the same period.
Factors affecting performance
We believe that our future success will be dependent on many factors, including those further discussed below. While these areas represent opportunities for us, they also represent challenges and risks that we must successfully address in order to operate our business and improve our results of operations.
Driving profitability through improved efficiency, lower costs and better execution. We incurred an operating loss in the first nine months of 2023, although we have previously generated positive operating income for the full years of 2022 and 2021, and continue to make strategic decisions to drive volume, growth and profitability in our business. Despite the operating loss in the first nine months of 2023, our 2022 and prior years restructuring actions, along with continued effective cost management, have enabled us to scale our on-going operating expenses based on our growth strategies, resulting in a more efficient global organization that has allowed for improved communication and better alignment among our functional teams. We remain focused on increasing unit sales volume and subscribers, which was the catalyst for our strategic price move in May 2023. We will continue to cultivate the partnerships with our distributors and retailers in order to rebuild our retail channel. Our expectation is sales from our retail channel will continue to increase relative to sales on GoPro.com. We have grown our subscribers and subscription revenue over the past several years and continue to make strategic decisions to enhance our subscription offerings, grow subscribers, and increase subscription revenue.
If we are unable to generate adequate unit sales and revenue growth as a result of the strategic price move, successfully increase retail sales, grow subscribers and subscription revenue, continue to effectively manage our expenses, and navigate the volatile macroeconomic environment (including interest rates, currency exchange rates, and recession fears), we may incur significant losses in the future and may not be able to return to profitability.
Investing in research and development and enhancing our customer experience. Our performance is significantly dependent on the investments we make in research and development, including our ability to attract and retain highly skilled and experienced research and development personnel. We expect the timing of new product releases to continue to have a significant impact on our revenue and we must continually develop and introduce innovative new cameras, mobile and desktop applications, and other new offerings. We plan to further build upon our integrated mobile, desktop and cloud-based storytelling solutions, and subscription offerings. Our investments, including those for marketing and advertising, may not successfully drive increased revenue and our customers may not accept our new offerings. If we fail to innovate and enhance our brand, our products, our mobile and desktop app experience, or the value proposition of our subscription, our market position and revenue will be adversely affected. Further, we have and will continue to incur substantial research and development expenses and if our efforts are not successful, we may not recover the value of these investments.
Improving profitability. We believe that our continued focus on growing our total addressable market from our retail and GoPro.com channels, including subscription and service revenue, will support our ability to return to profitability on an annual basis due to expected increases in unit volume, subscribers and related revenue, and continued operating expense control. We continue to believe that international markets represent a significant opportunity to achieve profitability. While the total market for digital cameras has continued to decline as smartphone and tablet camera quality has improved, we continue to believe that our consumers’ differentiated use
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GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
of GoPro cameras, our mobile and desktop app and cloud solutions, our continued innovation of product features desired by our users, and our brand, all help support our business from many of the negative trends facing the digital camera market. However, we expect that the markets in which we conduct our business will remain highly competitive as we face new product introductions from competitors. Sales in international locations subject us to foreign currency exchange rate fluctuations and regional macroeconomic conditions that may cause us to adjust pricing which may make our products more or less attractive to the consumer. Continued fluctuations in foreign currency exchange rates and regional macroeconomic conditions could have a continued impact on our future operating results.
Our profitability also depends on the continued success of our subscription and service offerings. If we are not successful in maintaining our product sales, and subscription and service offerings, increasing our paid subscriber base through both GoPro.com and retail mobile app attach, and improving subscriber retention, we may not be able to return to profitably and we may not recognize benefits from our investment in new areas.
Marketing the improved GoPro experience. We intend to focus our marketing resources to highlight our camera features, subscription and service benefits, and further improve brand recognition. Historically, our growth has largely been fueled by the adoption of our products by people looking to self-capture images of themselves participating in exciting physical activities. Our goal of profitability depends on continuing to reach, expand and re-engage with this core user base in alignment with our strategic priorities. Sales and marketing investments will often occur in advance of any sales benefits from these activities, and it may be difficult for us to determine if we are efficiently allocating our resources in this area.
Seasonality. Historically, we have experienced the highest levels of total revenue in the fourth quarter of the year, coinciding with the holiday shopping season, particularly in the United States and Europe. While we have implemented operational changes aimed at reducing the impact of fourth quarter seasonality on full year performance, timely and effective product introductions, whether just prior to the holiday season or otherwise, and forecasting, are critical to our operations and financial performance.
Macroeconomic risks. Macroeconomic conditions affecting the level of consumer spending include fluctuations in foreign exchange rates and interest rates, market volatility, inflation, and volatility in the global banking system. Some product costs have become subject to inflationary pressure, and we may not be able to fully offset such higher costs through price increases. Our inability or failure to adjust pricing could harm our business, financial condition, and operating results.

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GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
The following table sets forth the components of our Condensed Consolidated Statements of Operations for each of the periods presented, and each component as a percentage of revenue:
Three months ended September 30,Nine months ended September 30,
(dollars in thousands)
2023202220232022
Revenue
$294,299 100 %$305,130 100 %$710,039 100 %$772,520 100 %
Cost of revenue
200,095 68 189,085 62 487,561 69 469,995 61 
Gross profit
94,204 32