financial statements go pro(1)-3
TRANSCRIPT
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Financial Statements
GOPRO
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Provide an overview of GoPro.
Discuss fi nancial statements and analysis.
TODAY’S OBJECTIVES
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GOPRO PRODUCTS
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GoPro – NHL [for my hockey fans, this one is brand new] https://www.youtube.com/watch?v=F1jpCBPiWS4
GoPro: Red Bull Stratos - Super Bowl Commercial 2014 https://www.youtube.com/watch?v=qEsIMp67pyM
GoPro: HERO3 https://www.youtube.com/watch?v=A3PDXmYoF5U
Red Bull 2013 https://www.youtube.com/watch?v=LZaQqouGMdc
VW http://www.autoblog.com/2014/06/03/2015-vw-gti-makes-movie-
magic-gopro-video/
GOPRO VIDEOS
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COMPANY FINANCIAL ANALYSIS
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Company introduction What does the company do?
Company SWOT analysis What are its strengths, weaknesses, opportunities, threats?
Industry analysis What is the company’s industry? What is the industry’s outlook?
Financial summary What are the company’s assets, liabilities, equity? What are its revenues, expenses, profits?
COMPANY FINANCIAL ANALYSIS
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Financial projections What are the company’s future assets, liabilities, and
equity? What are its future revenues, expenses, profits?
Company outlook What is the company’s “next big thing”? How can it break away from its competitors?
Investment potential Is this company a worthwhile investment? Would you spend $1,000 on this company? Is this a Desert Island Challenge company?
COMPANY FINANCIAL ANALYSIS
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COMPANYOVERVIEW
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Provide financial details about a company 10K: annual report 10Q: quarterly report
Details come from company’s accounting records
Use generally accepted accounting principles (GAAP) American Institute of Certified Public Accountants (AICPA) Financial Accounting Standards Board (FASB) Securities and Exchange Commission (SEC)
FINANCIAL STATEMENTS
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“Transforming the way consumers capture, manage, share, and enjoy meaningful life experiences”
Originally created for athletes playing sports
Has since become more pervasive with mainstream consumer and professional use
COMPANY OVERVIEW
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1. CAPTURE Using mountable, wearable cameras and accessories Sold 8.5 million HD cameras since 2009, 3.8 million in 2013 Product sales in 100 countries, 25,000 retail stores #1 selling camcorder in the U.S., 45% market share
BUSINESS FOCUS
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2. MANAGE “Seek to eliminate the pain point of managing content” GoPro Studio - desktop application, GoPro App Since March 2014, over 4.3 million downloads of GoPro
Studio Average of 20,000 videos per day using desktop application
BUSINESS FOCUS
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3. SHARE Encourage sharing of videos through Facebook, Instagram,
YouTube Users share homemade videos, offi cial GoPro content In 2013, “2.8 years worth of video on YouTube” First three months of 2014, 6,000 videos posted daily
BUSINESS FOCUS
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4. ENJOY Focus on “GoPro programming” - user, GoPro content Use content to interact with current and future customers Facebook 7.2 million likes, Instagram > 2 million followers No revenue generation to-date from social media
BUSINESS FOCUS
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STRATEGIC PLANS
1. Invest in research & development, create and introduce new products
2. Increase sales and marketing activities
3. Promote media content
4. Expand into new markets
5. Combat sales seasonality
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Products used by ESPN, Discovery Channel, other TV producers
Product endorsements with 120 athletes, celebrities, entertainers Shaun White, Kelly Slater,
Foo Fighters, Guy Fieri, Alton Brown
Partnerships with Red Bull, Vail and Whistler resorts
MARKETING FOCUS
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http://www.cbsnews.com/news/gopro-ceo-heads-to-wall-street/
GOPRO ON “SIXTY MINUTES”
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Strengths “Aspirational” company and products Customers make multiple purchases Viral nature of content - free word-of-
mouth advertising and marketing “Virtuous cycle” with “category-
definer”
Weaknesses Dependent on one product line Heavy use of third-party
manufacturers CEO Woodman, driver of business
SWOT ANALYSIS
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Opportunities Continue market growth through
new products, sponsorships Focus on becoming a media brand
through partnerships (e.g., Xbox) Grow in-store brand, international
Threats Highly competitive market with
possibility of copycat, new products
Reliance on third-party suppliers Litigation - patents, user safety Dependent on international sales
(53%), holiday sales (45% in 4Q)
SWOT ANALYSIS
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Sold 17,800,000 shares at $24 per share
Half of these shares belonged to GoPro, other part to original investors
Expected proceeds of $201M to each group
Planned use of proceeds Pay off some existing debt Invest in new businesses
and technologies
INITIAL PUBLIC OFFERING
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STOCK PRICE
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Company outlook What is the company’s “next big thing”? How can it break away from its competitors?
Investment potential Is this company a worthwhile investment? Would you spend $1,000 on this company? Why or why not? Is this a Desert Island Challenge company? Why or why not?
WEEK #3WEEKLY RESPONSE QUESTIONS
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Financial Statements
GOPRO
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Provide financial details about a company 10K: annual report 10Q: quarterly report
Details come from company’s accounting records
Use generally accepted accounting principles (GAAP) American Institute of Certified Public Accountants (AICPA) Financial Accounting Standards Board (FASB) Securities and Exchange Commission (SEC)
FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
Income statement Profit or loss earned over a period Periods between “snapshots”
Balance sheet Current financial “snapshot”
Statement of cash flows Changes in cash status over time
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INCOME STATEMENT
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INCOME STATEMENT
Indicates profi t or loss earnedReflects periods between balance sheets
Statement divided into parts Operating revenues, expenses Non-operating revenues, expenses
INCOME = REVENUES - EXPENSES
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GOPRO INCOME STATEMENT
($ millions) 2014 (est) 2013 2012 2011
Revenue 943 986 526 234Cost of Revenue 557 624 299 112Gross Profit 386 362 227 123
ExpensesResearch & Development 115 74 36 9Sales & Marketing 165 158 117 64General & Administrative 40 32 21 11Other Expenses 7 7 0 0Total Operating Expenses 326 270 174 84
Operating Income 60 91 53 39
Taxes 16 31 21 14Net Income 44 61 32 25
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OPERATING REVENUES & EXPENSES
Revenues: exchange of goods, services Money coming into the business Sales of tickets, merchandise; sponsorships GoPro: sales of cameras and accessories
Expenses: costs incurred to earn revenue Money going out of the business Salaries, sales & marketing, R&D Cost of goods sold: production, distribution GoPro: third-party manufacturers, logistics,
warranties
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NET INCOME
Revenues (or Sales)- Cost of Goods Sold= Gross Profit
- Operating Expenses- Other Expenses+ Other Income= Income before Income Taxes
- Income Tax Expense= Net Income
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GOPRO INCOME STATEMENT
($ millions) 2014 (est) 2013 2012 2011
Revenue 943 986 526 234Cost of Revenue 557 624 299 112Gross Profit 386 362 227 123
ExpensesResearch & Development 115 74 36 9Sales & Marketing 165 158 117 64General & Administrative 40 32 21 11Other Expenses 7 7 0 0Total Operating Expenses 326 270 174 84
Operating Income 60 91 53 39
Taxes 16 31 21 14Net Income 44 61 32 25
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BALANCE SHEET
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BALANCE SHEET OVERVIEW
Reflects current financial status
Statement divided in half Left-hand (or top half): Assets Right-hand (or bottom half): Liabilities, Equity
ASSETS = LIABILITIES + EQUITY
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GOPRO BALANCE SHEET
($million)
Assets Liabilities & EquityCash & Short-Term Investments 111 Accounts Payable 56Accounts Receivable, Net 47 Accrued Liabilities 70Inventory 90 Deferred Revenue 9Other Current Assets 25 Income Tax Payable 9Total Current Assets 273 Other Current Liabilities 63
Total Current Liabilities 206Property, Plant, Equipment, Net 34Intangibles and Goodwill 17 Total Long-Term Debt 61Other Long-Term Assets 31Total Long-Term Assets 82 Preferred & Common Stock 77
Paid-In Capital 19Total Assets 355 Accumulated Deficit -9
Total Equity 88
Total Liabilities & Equity 355
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ASSETS
Listed based on time to convert to cash Current assets - can be converted in less than one
year Fixed assets - will take more than one year to
convert Goodwill, intangible assets
Assets reveal several factors Nature of business Nature of industry Financing, operating decisions
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GOPRO ASSETS
($million)
AssetsCash & Short-Term Investments 111Accounts Receivable, Net 47Inventory 90Other Current Assets 25Total Current Assets 273
Property, Plant, Equipment, Net 34Intangibles and Goodwill 17Other Long-Term Assets 31Total Long-Term Assets 82
Total Assets 355
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CURRENT ASSETS
Cash & cash equivalents Bank deposits Investments maturing < 3 months
Accounts (or trades) receivable, net Sales of goods or services Pending customer collection Allowance for doubtful accounts GoPro: sales to independent, big box retailers
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CURRENT ASSETS
Inventories, net Raw and in process, finished goods Reserves for shrinkage, obsolescence GoPro: cameras, accessories from manufacturers
Shrinkage Loss of products due to theft, deterioration
Obsolescence Loss of value as products no longer desirable
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GOPRO ASSETS
($million)
AssetsCash & Short-Term Investments 111Accounts Receivable, Net 47Inventory 90Other Current Assets 25Total Current Assets 273
Property, Plant, Equipment, Net 34Intangibles and Goodwill 17Other Long-Term Assets 31Total Long-Term Assets 82
Total Assets 355
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FIXED ASSETS
Property, plant, & equipment, net Buildings, stadiums, warehouses Net of depreciation
Depreciation Decline in value of fixed assets over time
Equity or real estate investments Land parcels for future use
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INTANGIBLE ASSETS
Intangible assets, net Software, trademarks, licensing agreements Net of amortization
Amortization Decline in value of intangible assets over time E.g., Microsoft Offi ce 2010 versus 2003
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GOODWILL
Goodwill “Excess of business acquisition costs over fair
value of net assets acquired” “Cost in excess of fair value of assets”
E.g., Disney versus Kings Island E.g., Coca-Cola versus Sam’s Cola
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GOPRO ASSETS
($million)
AssetsCash & Short-Term Investments 111Accounts Receivable, Net 47Inventory 90Other Current Assets 25Total Current Assets 273
Property, Plant, Equipment, Net 34Intangibles and Goodwill 17Other Long-Term Assets 31Total Long-Term Assets 82
Total Assets 355
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GOPRO LIABILITIES & EQUITY
($million)
Liabilities & EquityAccounts Payable 56Accrued Liabilities 70Deferred Revenue 9Income Tax Payable 9Other Current Liabilities 63Total Current Liabilities 206
Total Long-Term Debt 61
Preferred & Common Stock 77Paid-In Capital 19Accumulated Deficit -9Total Equity 88
Total Liabilities & Equity 355
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LIABILITIES & EQUITY
Listed based on when payment due Current liabilities - must pay in less than one year Long-term liabilities - have more than one year to pay Stockholders’ equity
Liabilities and equity reveal several factors Nature of business Nature of industry Financing, operating decisions
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GOPRO LIABILITIES & EQUITY
($million)
Liabilities & EquityAccounts Payable 56Accrued Liabilities 70Deferred Revenue 9Income Tax Payable 9Other Current Liabilities 63Total Current Liabilities 206
Total Long-Term Debt 61
Preferred & Common Stock 77Paid-In Capital 19Accumulated Deficit -9Total Equity 88
Total Liabilities & Equity 355
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CURRENT LIABILITIES
Accounts (or trades) payable Payment owed to vendors Salary contracts: current period
Accrued liabilities Wages payable Rent payable Property taxes
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GOPRO LIABILITIES & EQUITY
($million)
Liabilities & EquityAccounts Payable 56Accrued Liabilities 70Deferred Revenue 9Income Tax Payable 9Other Current Liabilities 63Total Current Liabilities 206
Total Long-Term Debt 61
Preferred & Common Stock 77Paid-In Capital 19Accumulated Deficit -9Total Equity 88
Total Liabilities & Equity 355
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LONG-TERM DEBT
Letters of credit Like a credit card--with a much larger balance Single bank or syndicate financial backing
Subordinated notes Funding for capital projects Lower repayment priority
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GOPRO LIABILITIES & EQUITY
($million)
Liabilities & EquityAccounts Payable 56Accrued Liabilities 70Deferred Revenue 9Income Tax Payable 9Other Current Liabilities 63Total Current Liabilities 206
Total Long-Term Debt 61
Preferred & Common Stock 77Paid-In Capital 19Accumulated Deficit -9Total Equity 88
Total Liabilities & Equity 355
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EQUITY
Stock Common stock: voting shares Preferred stock: dividend priority
Paid-in capital Initial investment in company
Retained earnings Net income not distributed
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GOPRO BALANCE SHEET
($million)
Assets Liabilities & EquityCash & Short-Term Investments 111 Accounts Payable 56Accounts Receivable, Net 47 Accrued Liabilities 70Inventory 90 Deferred Revenue 9Other Current Assets 25 Income Tax Payable 9Total Current Assets 273 Other Current Liabilities 63
Total Current Liabilities 206Property, Plant, Equipment, Net 34Intangibles and Goodwill 17 Total Long-Term Debt 61Other Long-Term Assets 31Total Long-Term Assets 82 Preferred & Common Stock 77
Paid-In Capital 19Total Assets 355 Accumulated Deficit -9
Total Equity 88
Total Liabilities & Equity 355
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Financial summary What are the company’s assets, liabilities, equity? What are its revenues, expenses, profits? What is your assessment of the company based on these
numbers?
Investment potential What is the current stock price? Beta? 52-week high and
low? How would you evaluate these numbers? Based on what you now know, is this company a worthwhile
investment? Why or why not?
WEEK #4WEEKLY RESPONSE QUESTIONS