GoPro, Inc. Annual Report 2016

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FY2016 Annual Report · GoPro, Inc.

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GoPro, Inc.
Fiscal Year 2016
Proxy Statement and Annual Report

1616

To Our Shareholders:
2016 marked a year of investment, advancement and action.

INVESTMENT

In 2016, we made significant investments to simultaneously develop and deploy several new products in an

effort to modernize GoPro’s user experience. Specifically, we launched HERO5, a line of cloud-connected

cameras that automatically upload any new footage while the camera is charging. We launched GoPro Plus,

a cloud-based content management service that makes a HERO5 user’s footage accessible via their smartphone.

We launched Quik, our award winning automatic editing app. And we simultaneously launched Karma, our drone

and handheld stabilization system.

ADVANCEMENT

In many ways, 2016 was a revolutionary year in which we deployed these four foundational products as an

integrated end-to-end solution for our customers. This paved the way for 2017 as a lower-cost evolutionary

year where we intend to iterate and improve upon these new experiences.

Our investments in 2016 resulted in the most advanced, yet simplest to use products and services in our 15-year

history. We made significant progress toward our longstanding core vision of making it easy for the world to

capture and share its passion and experiences in the form of engaging content.

ACTION

2016 also included challenges–challenges which led us to action. Initial production issues handicapped the

launch of our HERO5 Black camera and our drone, Karma. While we recovered quickly and these products are

selling well in the first quarter of 2017, the impact of their delay forced us to sharpen our focus on profitability

and managing GoPro as efficiently and effectively as possible. In December 2016 and March 2017, we took

dramatic action to realign our resources on key priorities in order to lower our operating expenses in pursuit

of our goal of returning to full-year profitability in 2017.

Our challenges in 2016 led to a meaningful course correction in our business and the unification of our employees

behind five key priorities.

1. Achieve Profitability Through Efficiency, Lower Cost & Better Execution. Cost management

is central to our goal of returning GoPro to full-year profitability in 2017. We have reduced operating

expenses by 30 percent to a full-year non-GAAP target of $495 million. Headcount has been reduced

by more than 20 percent following a peak in 2016. The result has been a dramatic improvement in

communication and collaboration which we believe is reflected in our early 2017 performance.

2. Make the Smartphone Central to the GoPro Experience. If there are two clear megatrends in

consumer behavior today, they are Mobile and Visual Storytelling. We recognize that for GoPro to serve

as a storytelling solution and grow in relevance with today’s consumers, it must be more mobile-centric.

We believe that our automatic editing app, Quik, serves as a powerful smartphone-centric foundation

to build upon and we plan to debut a significant enhancement that will dramatically simplify the GoPro

experience for our customers.

3. Market Improved GoPro Experience to Existing Community. Since introducing the first HD HERO

camera in 2009, GoPro has sold more than 25 million cameras worldwide. We believe one of the most

powerful growth initiatives we have is to educate and excite our existing users about the simplicity of

our new hardware and software solutions. GoPro is now easy, and we need to let our customers know it.

As a start, we recently announced our new TradeUp initiative, offering discounts to users who trade in

any earlier HERO camera model for the ease of use and performance of our HERO5 line of cameras.

Additionally, we are communicating directly with consumers to clearly demonstrate how upcoming

advancements in our mobile app experience will make using a GoPro feel like a seamless extension

of the smartphone.

4. Grow Our International Business. In 2014, we opened our first international office in Munich, Germany.

By 2016, 53 percent of our annual revenue came from markets outside of the United States. As exciting

as our business is in the United States, there is an even bigger opportunity in global markets like China,

Japan and Europe where positive recognition of the GoPro brand is high.

5. Expand the Experience for Advanced GoPro Users. While we continue to innovate and simplify our

products for mass market consumers, we believe it is also important to develop leading-edge solutions

for our more advanced users, or “prosumers.” In 2016 we introduced Karma–an aerial, handheld and

wearable stabilization system we call “Hollywood Stabilization in a Backpack.” In April of 2017, GoPro

announced the development of Fusion, a 5.2K spherical camera designed to capture professional-quality

content for both virtual reality and non-VR productions. And there’s more to come.

We believe that executing against these five key priorities can help us achieve our goal of profitability in 2017.

2016 was a challenging year, but it was also a rewarding year that has fundamentally improved our approach

to our business. We acknowledge that to fully realize our potential, the strength of our business must match

the strength of our brand.

Since founding GoPro in 2002, I’ve never had the privilege of working with such a strong and capable team.

Our communication, collaboration and culture have never been better and it’s with this in mind that I believe

we are entering an exciting new era for GoPro.

Life is more meaningful when shared, and I thank you for sharing this journey with us.

Nicholas Woodman
Founder, Chairman and Chief Executive Officer

April 26, 2017
Dear Stockholders:

You are cordially invited to attend the 2017 Annual Meeting of Stockholders of GoPro Inc., which will be held
virtually on Tuesday, June 6, 2017 at 10:00 a.m. (Paciﬁc Time). The virtual Annual Meeting can be accessed by
visiting www.virtualshareholdermeeting.com/GPRO2017, where you will be able to listen to the meeting live,
submit questions and vote online. We believe that a virtual stockholder meeting provides greater access to those
who may want to attend and therefore have chosen this over an in-person meeting.

The matters expected to be acted upon at
accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.

the virtual Annual Meeting are described in detail

in the

Your vote is important. Whether or not you plan to attend the meeting, please cast your vote as soon as possible
by Internet or telephone, or by completing and returning the enclosed proxy card in the postage-prepaid
envelope to ensure that your shares will be represented. Your vote by written proxy will ensure your
representation at the Annual Meeting regardless of whether you attend the virtual meeting or not. Returning the
proxy does not deprive you of your right to attend the meeting and to vote your shares at the virtual meeting.

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We look forward to your attendance at our virtual Annual Meeting.

Sincerely,

Nicholas Woodman
Chief Executive Officer

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE STOCKHOLDER MEETING TO BE HELD ON JUNE 6, 2017 AT 10:00 A.M. (PACIFIC TIME):
THIS PROXY STATEMENT AND THE ANNUAL REPORT ARE AVAILABLE AT
www.proxyvote.com

This Page Intentionally Left Blank

GOPRO, INC.

3000 Clearview Way
San Mateo, California 94402

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Our Stockholders:

NOTICE IS HEREBY GIVEN that the 2017 Annual Meeting of Stockholders of GoPro, Inc. will be held virtually
on Tuesday, June 6, 2017, at 10:00 a.m. (Paciﬁc Time). The virtual Annual Meeting can be accessed by visiting
www.virtualshareholdermeeting.com/GPRO2017, where you will be able to listen to the meeting live, submit
questions and vote online.

We are holding the meeting for the following purposes, which are more fully described in the accompanying
proxy statement:

1. To elect seven directors, all of whom are currently serving on our board of directors, each to serve until
the next annual meeting of stockholders and until his or her successor has been elected and qualiﬁed,
or until his or her earlier death, resignation, or removal.

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Nicholas Woodman
Anthony Bates
Kenneth Goldman
Peter Gotcher

Alexander Lurie
Susan Lyne
Lauren Zalaznick

2. To ratify the appointment of PricewaterhouseCoopers LLP as our

independent

registered public

accounting ﬁrm for 2017.

3. To hold an advisory vote on the resolution to approve executive compensation.

In addition, stockholders may be asked to consider and vote upon such other business as may properly come
before the meeting or any adjournment or postponement of the meeting.

Only stockholders of record at the close of business on April 13, 2017 are entitled to notice of, and to vote at, the
the
virtual meeting and any adjournments thereof. For ten days prior to the meeting, a complete list of
stockholders entitled to vote at the virtual meeting will be available for examination by any stockholder for any
purpose germane to the meeting during ordinary business hours at our headquarters.

Your vote as a GoPro, Inc. stockholder is very important. Each share of GoPro Class A common stock that you
own represents one vote and each share of GoPro Class B common stock that you own represents ten votes.
For questions regarding your stock ownership, contact your brokerage ﬁrm or other entity that holds your shares
or, if you are a registered holder, our transfer agent, American Stock Transfer & Trust Company, LLC, by calling
(800) 937-5449, by writing to 6201 15th Avenue, Brooklyn, New York 11219 or by visiting their website at
https://www.astﬁnancial.com.

By Order of the Board of Directors,

Nicholas Woodman
Chief Executive Officer
San Mateo, California
April 26, 2017

This Page Intentionally Left Blank

YOUR VOTE IS IMPORTANT

WHETHER OR NOT YOU PLAN TO ATTEND THE VIRTUAL ANNUAL MEETING, WE ENCOURAGE
YOU TO VOTE AND SUBMIT YOUR PROXY BY INTERNET, TELEPHONE OR BY MAIL. FOR ADDITIONAL
INSTRUCTIONS ON VOTING BY TELEPHONE OR THE INTERNET, PLEASE REFER TO YOUR PROXY
CARD. TO VOTE AND SUBMIT YOUR PROXY BY MAIL, PLEASE COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
IF YOU ATTEND THE
VIRTUAL ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE VIA THE VIRTUAL MEETING
WEBSITE. IF YOU HOLD YOUR SHARES THROUGH AN ACCOUNT WITH A BROKERAGE FIRM, BANK OR
OTHER NOMINEE, PLEASE FOLLOW THE INSTRUCTIONS YOU RECEIVE FROM YOUR ACCOUNT
MANAGER TO VOTE YOUR SHARES.

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GOPRO, INC.

PROXY STATEMENT FOR 2017 ANNUAL MEETING OF STOCKHOLDERS

Table of Contents

INFORMATION ABOUT SOLICITATION AND VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INTERNET AVAILABILITY OF PROXY MATERIALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

GENERAL INFORMATION ABOUT THE ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD; CORPORATE GOVERNANCE

STANDARDS AND DIRECTOR INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

NOMINATIONS PROCESS AND DIRECTOR QUALIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PROPOSAL NO. 1 ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PROPOSAL NO. 3 ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION . . . . . . . . . . . . .

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . .

EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

COMPENSATION DISCUSSION AND ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

REPORT OF THE COMPENSATION AND LEADERSHIP COMMITTEE . . . . . . . . . . . . . . . . . . . . . . .

EQUITY COMPENSATION PLAN INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

REPORT OF THE AUDIT COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

APPENDIX A — RECONCILIATION OF GAAP TO NON-GAAP CORPORATE PERFORMANCE

MEASURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

A-1

GOPRO, INC.
3000 Clearview Way
San Mateo, California 94402

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PROXY STATEMENT FOR THE 2017 ANNUAL MEETING OF STOCKHOLDERS

April 26, 2017

INFORMATION ABOUT SOLICITATION AND VOTING

The accompanying proxy is solicited on behalf of the board of directors of GoPro, Inc. (‘‘GoPro’’) for use at
GoPro’s 2017 Annual Meeting of Stockholders to be held virtually on June 6, 2017, at 10:00 a.m. (Paciﬁc Time)
(‘‘Annual Meeting’’), and any adjournment or postponement of the Annual Meeting. The Annual Meeting can be
accessed by visiting www.virtualshareholdermeeting.com/GPRO2017, where you will be able to listen to the
meeting live, submit questions and vote online. The Notice of Internet Availability of Proxy Materials and this
proxy statement for the Annual Meeting (‘‘Proxy Statement’’) and the accompanying form of proxy were ﬁrst
distributed and made available on the Internet to stockholders on or about April 26, 2017. GoPro’s annual report
on Form 10-K for the year ended December 31, 2016 ﬁled on February 16, 2017 (‘‘Annual Report’’) will be
available with this Proxy Statement by following the instructions in the Notice of Internet Availability of Proxy
Materials.

INTERNET AVAILABILITY OF PROXY MATERIALS

In accordance with U.S. Securities and Exchange Commission (‘‘SEC’’) rules, we are using the Internet as our
primary means of furnishing proxy materials to stockholders. Consequently, most stockholders will not receive
paper copies of our proxy materials. We will instead send these stockholders a Notice of Internet Availability of
Proxy Materials with instructions for accessing the proxy materials, including our Proxy Statement and Annual
Report, and voting via the Internet. The Notice of Internet Availability of Proxy Materials also provides information
on how stockholders may obtain paper copies of our proxy materials if they so choose. We believe this rule
makes the proxy distribution process more efficient and less costly, and helps in conserving natural resources.

GENERAL INFORMATION ABOUT THE ANNUAL MEETING

Purpose of the Annual Meeting

At the Annual Meeting, stockholders will act upon the proposals described in this Proxy Statement.

Record Date; Quorum

Only holders of record of our Class A common stock and Class B common stock at the close of business on
April 13, 2017 (‘‘Record Date’’) will be entitled to vote at the Annual Meeting. At the close of business on the
Record Date, we had 107,093,812 shares of Class A common stock and 36,788,951 shares of Class B common
stock outstanding and entitled to vote.

The holders of a majority of the voting power of the shares of our Class A common stock and Class B common
stock (voting together as a single class) entitled to vote at the Annual Meeting as of the Record Date must be
present at the Annual Meeting in order to hold the Annual Meeting and conduct business. This presence is called
a quorum. Your shares are counted as present at the Annual Meeting if you are present and vote online at the
Annual Meeting or if you have properly submitted a proxy.

Voting Rights; Required Vote

In deciding all matters at the Annual Meeting, each holder of shares of our common stock is entitled to one vote
for each share of Class A common stock held and ten votes for each share of Class B common stock held as of
the close of business on the Record Date. We do not have cumulative voting rights for the election of directors.
You may vote all shares owned by you as of the Record Date, including (i) shares held directly in your name as
the stockholder of record, and (ii) shares held for you as the beneﬁcial owner in street name through a broker,
bank, trustee, or other nominee.

If, on the Record Date, your shares were registered
Stockholder of Record: Shares Registered in Your Name.
directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, then you are
considered the stockholder of record with respect to those shares. As a stockholder of record, you may vote at
the Annual Meeting or vote by telephone, by Internet, or by ﬁlling out and returning the proxy card.

If, on the Record Date, your shares
Beneﬁcial Owner: Shares Registered in the Name of a Broker or Nominee.
were held in an account with a brokerage ﬁrm, bank or other nominee, then you are the beneﬁcial owner of the
shares held in street name. As a beneﬁcial owner, you have the right to direct your nominee on how to vote the
shares held in your account, and your nominee has enclosed or provided voting instructions for you to use in
directing it on how to vote your shares. However, the organization that holds your shares is the stockholder of
record for purposes of voting at the Annual Meeting. Because you are not the stockholder of record, you may not
vote your shares at the Annual Meeting unless you request and obtain a valid proxy from the organization that
holds your shares giving you the right to vote the shares at the Annual Meeting.

•

Proposal No. 1 — Election of Directors. Each director will be elected by a plurality of the votes cast,
which means that the seven individuals nominated for election to the board of directors at the Annual
Meeting receiving the highest number of ‘‘FOR’’ votes will be elected. You may either vote ‘‘FOR’’ one
or any of the nominees or ‘‘WITHHOLD’’ your vote with respect to one or any of the nominees.

Proposal No. 2 — Ratiﬁcation of Appointment of
Independent Registered Accounting
Firm. Ratiﬁcation of PricewaterhouseCoopers LLP as our independent registered public accounting
ﬁrm for 2017 will be obtained if the number of votes cast ‘‘FOR’’ the proposal at the Annual Meeting
exceeds the number of votes ‘‘AGAINST’’ the proposal.

Proposal No. 3 — Advisory Vote to Approve Executive Compensation. Approval, on a
non-binding advisory basis, of the resolution to approve the compensation of our Named Executive
Officers (‘‘NEOs’’), will be obtained if the number of votes cast ‘‘FOR’’ the proposal at the Annual
Meeting exceeds the number of votes ‘‘AGAINST’’ the proposal.

Broker non-votes occur when shares held by a broker for a beneﬁcial owner are not voted either because (i) the
broker did not receive voting instructions from the beneﬁcial owner or (ii) the broker lacked discretionary
authority to vote the shares. Abstentions occur when shares present at
the Annual Meeting are marked
‘‘abstain.’’ A broker is entitled to vote shares held for a beneﬁcial owner on ‘‘routine’’ matters, such as the
ratiﬁcation of PricewaterhouseCoopers LLP as our independent registered public accounting ﬁrm for 2017,
without instructions from the beneﬁcial owner of those shares. On the other hand, absent instructions from the
beneﬁcial owner of such shares, a broker is not entitled to vote shares held for a beneﬁcial owner on
‘‘non-routine’’ matters. All of the other proposals presented at the Annual Meeting are non-routine matters. Broker
non-votes and abstentions are counted for purposes of determining whether a quorum is present, but have no
effect on the outcome of the matters voted upon except where brokers can exercise discretion on ‘‘routine’’
matters. Accordingly, we encourage you to provide voting instructions to your broker, whether or not you plan to
attend the Annual Meeting.

Recommendations of the Board of Directors on Each of the Proposals Scheduled to be
Voted on at the Annual Meeting

The board of directors recommends that you vote ‘‘FOR’’ each of the directors named in this Proxy Statement
(‘‘Proposal 1’’), ‘‘FOR’’ the ratiﬁcation of the appointment of PricewaterhouseCoopers LLP as our independent
registered public accounting ﬁrm for 2017 (‘‘Proposal 2’’) and ‘‘FOR’’ the approval, on a non-binding advisory
basis, of the resolution to approve the compensation of our NEOs (‘‘Proposal 3’’). None of the directors or
executive officers has any substantial interest in any matter to be acted upon, other than elections to office with
respect to the directors so nominated.

Voting Instructions; Voting of Proxies

If you are a stockholder of record, you may:

•

vote via the Annual Meeting website — any stockholder can attend the Annual Meeting by visiting
www.virtualshareholdermeeting.com/GPRO2017, where stockholders may vote and submit questions
during the meeting. The Annual Meeting starts at 10:00 a.m. (Paciﬁc Time) on June 6, 2017. Please
have your 16-Digit Control Number to join the Annual Meeting. Instructions on how to attend and
participate via the Internet, including how to demonstrate proof of stock ownership, are posted at
www.proxyvote.com;

vote via telephone or Internet — in order to do so, please follow the instructions shown on your proxy
card; or

vote by mail — complete, sign and date the proxy card enclosed herewith and return it before the
Annual Meeting in the envelope provided.

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Votes submitted by telephone or Internet must be received by 11:59 p.m. (Eastern Time) on June 5, 2017.
Submitting your proxy, whether via the Internet, by telephone, or by mail, will not affect your right to vote in
person should you decide to attend the Annual Meeting. If you are not the stockholder of record, please refer to
the voting instructions provided by your nominee to direct your nominee on how to vote your shares. You may
either vote ‘‘FOR’’ all of the nominees to the board of directors, or you may withhold your vote from all nominees
or any nominee you specify. For Proposals 2 and 3, you may vote ‘‘FOR’’ or ‘‘AGAINST’’ or ‘‘ABSTAIN’’ from
voting. Your vote is important. Whether or not you plan to attend the Annual Meeting, we urge you to vote by
proxy to ensure that your vote is counted.

All proxies will be voted in accordance with the instructions speciﬁed on the proxy card. If you sign a physical
proxy card and return it without instructions as to how your shares should be voted on a particular proposal at
the Annual Meeting, your shares will be voted in accordance with the recommendations of our board of directors
stated above.

If you do not vote and you hold your shares in street name, and your broker does not have discretionary power
to vote your shares, your shares may constitute ‘‘broker non-votes’’ (as described above) and will not be counted
in determining the number of shares necessary for approval of the proposals. However, shares that constitute
broker non-votes will be counted for the purpose of establishing a quorum for the Annual Meeting.

If you receive more than one proxy card, this is because your shares are registered in more than one name or
are registered in different accounts. To make certain all of your shares are voted, please follow the instructions
included on each proxy card and vote each proxy card by telephone or the Internet. If voting by mail, please
complete, sign and return each proxy card to ensure that all of your shares are voted.

Expenses of Soliciting Proxies

GoPro will pay the expenses of soliciting proxies. Following the original mailing of the soliciting materials, GoPro
and its agents, including directors, officers and other employees, without additional compensation, may solicit
proxies by mail, electronic mail, telephone, facsimile, by other similar means, or in person. Following the original
mailing of the soliciting materials, GoPro will request brokers, custodians, nominees and other record holders to
forward copies of the soliciting materials to persons for whom they hold shares and to request authority for the
exercise of proxies. In such cases, GoPro, upon the request of the record holders, will reimburse such holders
for their reasonable expenses.
If you choose to access the proxy materials through the Internet, you are
responsible for any Internet access charges you may incur.

Revocability of Proxies

A stockholder who has given a proxy may revoke it at any time before it is exercised at the Annual Meeting by:

•

delivering to the Corporate Secretary of GoPro (by any means) a written notice stating that the proxy is
revoked;

signing and delivering a proxy bearing a later date;

•

voting again by telephone or Internet; or

attending and voting at the Annual Meeting (although attendance at the Annual Meeting will not, by
itself, revoke a proxy).

Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to
revoke a proxy, you must contact that ﬁrm to revoke any prior voting instructions.

Voting Results

Voting results will be tabulated and certiﬁed by the inspector of elections appointed for the Annual Meeting. The
preliminary voting results will be announced at the Annual Meeting. The ﬁnal results will be tallied by the
inspector of elections and ﬁled with the SEC in a current report on Form 8-K within four business days of the
Annual Meeting.

BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD;
CORPORATE GOVERNANCE STANDARDS AND DIRECTOR INDEPENDENCE

GoPro is strongly committed to good corporate governance practices. These practices provide an important
framework within which our board of directors and management can pursue our strategic objectives for the
beneﬁt of our stockholders. Our board of directors has adopted Corporate Governance Guidelines that set forth
the role of our board of directors, director independence standards, board structure and functions, director
selection considerations, and other governance policies. In addition, our board of directors has adopted written
charters for its standing committees (audit, compensation and leadership, and nominating and governance), as
well as a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors,
including those officers responsible for ﬁnancial reporting. Our board of directors reviews each of the Corporate
Governance Guidelines, the committee charters, and the Code of Business Conduct and Ethics annually and
implements changes as appropriate. The Corporate Governance Guidelines, the committee charters, and the
Code of Business Conduct and Ethics, and any waivers or amendments to the Code of Business Conduct and
in the ‘‘Corporate
Ethics, are all available on our
Governance’’ section.

Investor Relations website (http://investor.gopro.com)

Board Leadership Structure

it considers to be in the best

Our Corporate Governance Guidelines provide that our board of directors may choose its chairperson in any way
interests of our company. Our nominating and governance committee
that
periodically considers the leadership structure of our board of directors,
the
chairperson and chief executive officer roles and/or appointment of a lead independent director of our board of
directors, and makes such recommendations to our board of directors as our nominating and governance
committee deems appropriate. Our Corporate Governance Guidelines also provide that, when the positions of
chairperson and chief executive officer are held by the same person, the independent directors may designate a
‘‘lead independent director.’’ In cases in which the chairperson and chief executive officer are the same person,
the responsibilities of the lead independent director include: scheduling and preparing agendas for meetings of
the independent directors; serving as a liaison between the chief executive officer and the independent directors;
being available, under appropriate circumstances, for consultation and direct communication with stockholders;
ensuring our board of directors is fulﬁlling its oversight responsibilities in strategy, risk oversight and succession
planning; and performing such other functions and responsibilities as requested by our board of directors from
time to time.

including the separation of

Currently, our board of directors believes that it is in the best interest of our company and our stockholders for
our Chief Executive Officer, Mr. Woodman, to serve as both Chief Executive Officer and Chairman given his
knowledge of our company and industry and strategic vision. Because Mr. Woodman has served and continues
to serve in both these roles, our board of directors appointed Michael Marks in 2014 to serve as our lead
independent director. As lead independent director, Mr. Marks, among other responsibilities, presided over
regularly scheduled meetings at which only our independent directors were present to foster open and honest
communication, and served as a liaison between the Chairman and the President, and the independent
directors, and performed such additional duties as our board of directors may otherwise determine and delegate.
Messrs. Marks’ and Gilhuly’s board service terms will expire at the Annual Meeting and we are deeply grateful
for the signiﬁcant contributions that each of them has made to our board. Accordingly, the Board, including our

independent directors, appointed director Kenneth Goldman to serve as our lead independent director in
April 2017. Our board of directors believes that its independence and oversight of management is maintained
effectively through this leadership structure, the composition of our board of directors and sound corporate
governance policies and practices.

Our Board of Directors’ Role in Risk Oversight

Our board of directors is primarily responsible for overseeing our risk management processes. Our board of
directors, as a whole, determines the appropriate level of risk for GoPro, assesses the speciﬁc risks that we face
and reviews management’s strategies for adequately mitigating and managing the identiﬁed risks. Although our
board of directors administers this risk management oversight function, the committees of our board of directors
support our board of directors in discharging its oversight duties and address risks inherent in their respective
areas. The audit committee reviews our major ﬁnancial risk exposures and the steps management has taken to
to risk
monitor and control such exposures,
assessment and risk management. The compensation and leadership committee reviews risks and exposures
associated with compensation plans and programs, including incentive plans. The nominating and corporate
governance committee assists the board in fulﬁlling its oversight responsibilities with respect to the management
of risks associated with our overall governance practices and the leadership structure of the board of directors
(as described above under ‘‘Board Leadership Structure’’). Our board of directors is kept informed of each
committee’s risk oversights and other activities via regular reports of the committee chairs to the full board of
directors.

including our procedures and related policies with respect

We believe this division of responsibilities is an effective approach for addressing the risks we face and that our
board leadership structure supports this approach.

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Director Independence

Our board of directors determines the independence of our directors by applying the applicable rules, regulations
and listing standards of the NASDAQ Global Select Market (‘‘NASDAQ’’) and applicable rules and regulations
promulgated by the SEC. The applicable rules, regulations and listing standards of NASDAQ provide that a
director is independent only if the board of directors affirmatively determines that the director does not have a
relationship with the company which, in the opinion of the board of directors, would interfere with the exercise of
his or her independent judgment in carrying out the responsibilities of a director. They also specify various
relationships that preclude a determination of director
independence. Such relationships may include
employment, commercial, accounting, family and other business, professional and personal relationships.

Applying these standards, our board of directors annually reviews the independence of our directors, taking into
account all relevant facts and circumstances. In its most recent review, our board of directors considered, among
other things, the relationships that each non-employee director has with our company and all other facts and
circumstances our board of directors deemed relevant in determining their independence, including the beneﬁcial
ownership of our capital stock by each non-employee director.

Our board of directors has determined that Messrs. Goldman, Marks, Gilhuly, and Gotcher, and Mses. Lyne and
Zalaznick, are ‘‘independent directors’’ as deﬁned under the applicable rules, regulations and listing standards of
NASDAQ and applicable rules and regulations promulgated by the SEC. All members of our audit committee,
compensation and leadership committee, and nominating and governance committee must be independent
directors under the applicable rules, regulations and listing standards of NASDAQ. Members of
the audit
committee also must satisfy a separate SEC independence requirement, which provides that (i) they may not
accept directly or indirectly any consulting, advisory or other compensatory fee from GoPro or any of our
subsidiaries other than their directors’ compensation, and (ii) they may not be an affiliated person of GoPro or
any of our subsidiaries. Members of the compensation and leadership committee also must satisfy a separate
SEC independence requirement and a related NASDAQ listing standard with respect to their affiliation with
GoPro and any consulting, advisory or other fees they may have received from us. Our board of directors has
determined that all members of our audit committee, compensation and leadership committee, and nominating
and governance committee are independent and satisfy the relevant SEC and NASDAQ independence
requirements for such committees.

Board and Committee Meetings and Attendance

Our board of directors and its committees meet throughout the year on a set schedule, and also hold special
meetings and act by written consent from time to time. During 2016, our board of directors met twelve times,
including telephonic meetings,
the compensation and leadership
committee held eight meetings, and the nominating and governance committee held four meetings. None of the
directors attended fewer than 75% of the aggregate of the total number of meetings held by our board of
directors and by all committees of our board of directors on which such director served.

the audit committee held ﬁve meetings,

Audit Committee

Our audit committee is comprised of Mr. Goldman, who serves as the chair, and Messrs. Gilhuly and Gotcher.
Our board of directors has determined that each member of the audit committee meets the requirements for
independence under the applicable rules, regulations and listing standards of NASDAQ and applicable rules and
regulations promulgated by the SEC. Each member of our audit committee is ﬁnancially literate. In addition, our
board of directors has determined that Mr. Goldman is an audit committee ﬁnancial expert within the meaning of
Item 407(d) of Regulation S-K of the Securities Act of 1933, as amended (‘‘Securities Act’’).

All audit services to be provided to us and all permissible non-audit services, other than de minimis non-audit
services, to be provided to us by our independent registered public accounting ﬁrm will be approved in advance
by our audit committee. Our audit committee, among other things:

•

reviews the ﬁnancial information which will be provided to stockholders and others;

reviews our system of internal controls with management by consulting with management, our internal
compliance team and the independent auditors;

appoints, retains and oversees the performance of the independent registered public accounting ﬁrm;

oversees our accounting and ﬁnancial reporting processes and the audits of our ﬁnancial statements;

pre-approves audit and permissible non-audit services provided by the independent registered public
accounting ﬁrm; and

reviews related party transactions and proposed waivers of our Code of Business Conduct and Ethics.

Compensation and Leadership Committee

Our compensation and leadership committee (‘‘CLC’’) is comprised of Mr. Gotcher, who serves as the chair,
Mr. Gilhuly, and Mses. Lyne and Zalaznick. In April of 2017, Mr. Marks stepped off the CLC and Ms. Lyne was
appointed to the CLC. Our board of directors has determined that each member of our compensation and
leadership committee meets the requirements for independence under current NASDAQ and SEC rules,
regulations and listing standards. Each member of this committee is also a non-employee director, as deﬁned
pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (‘‘Exchange Act’’),
an outside director, as deﬁned pursuant to Section 162(m) and is ‘‘independent’’ as deﬁned in Section 5605(a)(2)
of the NASDAQ rules and Rule 10C-1 promulgated under the Exchange Act. The purpose of our compensation
and leadership committee is to carry out the responsibilities of our board of directors relating to compensation of
our executive officers. Our compensation and leadership committee, among other things:

•

reviews and determines the compensation of our executive officers and other executives reporting to
the Chief Executive Officer;

administers our equity incentive plans; and

establishes and reviews general policies relating to compensation and beneﬁts of our employees.

The compensation and leadership committee engaged an independent executive compensation consulting ﬁrm,
Compensia, Inc. (‘‘Compensia’’), to evaluate our executive compensation program and practices and to provide
advice and ongoing assistance on executive compensation matters for 2016. Speciﬁcally, Compensia was
engaged to:

•

provide compensation-related data for a peer group of companies to serve as a basis for assessing
competitive compensation practices;

review and assess our current director policies and practices, Chief Executive Officer and other
executive officer compensation policies and practices and equity proﬁle relative to market practices
(with director compensation review done for the beneﬁt of the nominating and governance committee,
which per its charter has responsibility for director compensation review and recommendation);

review and assess our current executive compensation program relative to market
to identify any
potential changes or enhancements to be brought to the attention of the compensation and leadership
committee; and

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review market practices on employee stock purchase plans and other equity programs.

During 2016, Compensia worked directly with the compensation and leadership committee (and not on behalf of
management) to assist the committee in satisfying its responsibilities and undertook no projects for management
without the committee’s prior approval. The compensation and leadership committee has determined that none
of the work performed by Compensia during 2016 raised any conﬂicts of interest.

Nominating and Governance Committee

The nominating and governance committee is comprised of Ms. Zalaznick, who serves as the chair, and
Mr. Gilhuly. In April 2017, Mr. Marks stepped off the nominating and governance committee. Our board of
directors has determined that each member of our nominating and governance committee meets the
requirements for independence under current NASDAQ rules, regulations and listing standards. Our nominating
and governance committee, among other things:

•

identiﬁes, evaluates and recommends nominees,
directors and committees of our board of directors;

conducts searches for appropriate directors;

including stockholder nominees,

to our board of

evaluates the performance of our board of directors and of individual directors;

considers and makes recommendations to our board of directors regarding the composition of our
board of directors and its committees and related compensation (and was assisted in its director
compensation review by Compensia);

reviews developments in corporate governance practices;

evaluates the adequacy of our corporate governance practices and reporting; and

• makes recommendations to our board of directors concerning corporate governance matters.

Compensation and Leadership Committee Interlocks and Insider Participation

None of the members of our compensation and leadership committee has at any time been one of our officers or
employees. None of our executive officers currently serves, or in the past has served, as a member of the board
of directors or compensation and leadership committee (or other board committee performing equivalent
functions) of any entity that has one or more of its executive officers serving on our board of directors or our
compensation and leadership committee.

Board Attendance at Annual Stockholders’ Meeting

Our policy is to invite and encourage each member of our board of directors to be present at our annual meeting
of stockholders. All of our then current directors were present at our 2016 virtual annual meeting of stockholders
held on June 6, 2016.

Communication with Directors

Stockholders and interested parties who wish to communicate with our board of directors, non-management
members of our board of directors as a group, a committee of our board of directors or a speciﬁc member of our
board of directors (including our Chairman or lead independent director) may do so by letters addressed to the
attention of our General Counsel. All communications are reviewed by our General Counsel and provided to the
members of our board of directors consistent with a screening policy providing that unsolicited items, sales
materials, abusive, threatening or otherwise inappropriate materials and other routine items and items unrelated
to the duties and responsibilities of our board of directors shall not be relayed on to directors. Any
communication that is not relayed is recorded in a log and made available to our board of directors.

The address for these communications is:

GoPro, Inc.
c/o General Counsel
3000 Clearview Way
San Mateo, California 94402

NOMINATIONS PROCESS AND DIRECTOR QUALIFICATIONS

Nomination to the Board of Directors

Candidates for nomination to our board of directors are selected by our board of directors based on the
recommendation of the nominating and governance committee in accordance with the committee’s charter, our
certiﬁcate of incorporation and bylaws, our Corporate Governance Guidelines, and the criteria adopted by our
board of directors regarding director candidate qualiﬁcations. In recommending candidates for nomination, the
nominating and governance committee considers candidates recommended by directors, officers, employees,
stockholders and others, using the same criteria to evaluate all candidates. Evaluations of candidates generally
involve a review of background materials,
internal discussions and interviews with selected candidates as
appropriate and, in addition, the committee may engage consultants or third-party search ﬁrms to assist it in
identifying and evaluating potential nominees.

Additional information regarding the process for properly submitting stockholder nominations for candidates for
membership on our board of directors is set forth below under ‘‘Stockholder Proposals to Be Presented at Next
Annual Meeting.’’

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Director Qualiﬁcations

With the goal of developing a diverse, experienced and highly qualiﬁed board of directors, the nominating and
governance committee is responsible for developing and recommending to our board of directors the desired
qualiﬁcations, expertise and characteristics of members of our board of directors, including qualiﬁcations that the
committee believes must be met by a committee-recommended nominee for membership on our board of
directors and speciﬁc qualities or skills that the committee believes are necessary for one or more of the
members of our board of directors to possess.

incorporation, bylaws, Corporate Governance Guidelines, and charters of

Since the identiﬁcation, evaluation and selection of qualiﬁed directors is a complex and subjective process that
requires consideration of many intangible factors, and will be signiﬁcantly inﬂuenced by the particular needs of
our board of directors from time to time, our board of directors has not adopted a speciﬁc set of minimum
qualiﬁcations, qualities or skills that are necessary for a nominee to possess, other than those that are
necessary to meet U.S. legal, regulatory and NASDAQ listing requirements and the provisions of our certiﬁcate
of
the board committees. When
considering nominees, our nominating and governance committee may take into consideration many factors,
including among other things, a candidates’ independence, integrity, diversity (inclusive of age, gender, ethnicity,
sexual orientation and gender identity), skills, knowledge about our business or industry, willingness and ability to
devote adequate time and effort
the existing
composition, knowledge about other areas that are expected to contribute to the board of directors’ overall
effectiveness, and needs of the board of directors and its committees. Our board of directors and nominating
and governance committee believe that a diverse, experienced and highly qualiﬁed board of directors fosters a
robust, comprehensive and balanced decision-making process for the continued effective functioning of our
board of directors and success of the Company. Accordingly, through the nomination process, the nominating
and governance committee seeks to promote board membership that reﬂects a diversity of business experience,
expertise, viewpoints, personal backgrounds and characteristics that are expected to contribute to our board of
directors’ overall effectiveness. The brief biographical description of each director set forth in Proposal 1 below
includes the primary individual experience, qualiﬁcations, attributes and skills of each of our directors that led to
the conclusion that each director should serve as a member of our board of directors at this time.

to the board of directors responsibilities in the context of

PROPOSAL NO. 1

ELECTION OF DIRECTORS

Our board of directors currently consists of nine directors. Seven of our directors will stand for election at the
Annual Meeting to be held on June 6, 2017 and shall serve for a one-year term expiring at the 2018 Annual
Meeting of Stockholders, and until such director’s successor is duly elected and qualiﬁed or until such director’s
earlier death, resignation, or removal.

Shares represented by proxies will be voted ‘‘FOR’’ the election of each of the seven nominees named below,
unless the proxy is marked to withhold authority to so vote. If any nominee for any reason is unable to serve or
for good cause will not serve, the proxies may be voted for such substitute nominee as the proxy holder might
determine. Each nominee has consented to being named in this Proxy Statement and to serve if elected.

Nominees to the Board of Directors

The nominees, their ages, occupations, and length of board service as of April 21, 2017 are provided in the table
below. Additional biographical descriptions of each nominee are set forth in the text below the table.

Name of Director/Nominee

Age

Principal Occupation

Nicholas Woodman . . . . . . .
Anthony Bates . . . . . . . . . . .
Kenneth Goldman(1)† . . . . . .
Peter Gotcher(1)(3)
. . . . . . . .
Alexander Lurie . . . . . . . . . .
Susan Lyne(3)
. . . . . . . . . . .
Lauren Zalaznick(2)(3)
. . . . . .

(1) Member of the audit committee

41
49
67
57
43
65
54

Chief Executive Officer and Chairman, GoPro, Inc.
Former President, GoPro, Inc.
Chief Financial Officer, Yahoo! Inc.
Independent Investor
Chief Executive Officer, SurveyMonkey, Inc.
President and Managing Partner, BBG Ventures LLC
Media Executive

(2) Member of the nominating and governance committee

(3) Member of the compensation and leadership committee

†

Lead Independent Director

Director
Since

2004
2014
2013
2014
2016
2017
2016

Nicholas Woodman founded GoPro and has served as our Chief Executive Officer and a member of the board of
from 2004 until June 2014.
directors since 2004, as Chairman since January 2014 and as President
Mr. Woodman got his start in 1998 by founding an online gaming company, Funbug.com. When that venture
failed in 2001, Mr. Woodman planned an international surﬁng trip to look for inspiration. While preparing for that
trip, Mr. Woodman had the idea for a 35mm ﬁlm-based wrist camera that could be worn during sports like
surﬁng, enabling the user to capture images while engaged in the sport. This idea became GoPro’s ﬁrst product,
the HERO Camera.
family and employees,
innovated on the HERO Camera concept along with a wide array of mounting devices that would make it easy to
mount the camera to everything from helmets to surfboards, vehicles and more. Mr. Woodman holds a B.A. in
Visual Arts from the University of California, San Diego. We believe Mr. Woodman’s experience as the founder of
GoPro and his knowledge of our products and customers give him the experience and leadership capabilities
that qualify him to serve as a member of our board of directors.

followed, Mr. Woodman, along with friends,

In the years that

Anthony Bates served as our President from June 2014 to December 2016, and as a member of our board of
directors since June 2014. From June 2013 until March 2014, Mr. Bates was the Executive Vice President,
Business Development and Evangelism of Microsoft Corporation, a software company. Mr. Bates was the Chief
Executive Officer of Skype Inc., a provider of software applications and related Internet communications
products, from October 2010 until its acquisition by Microsoft in 2011, subsequent to which Mr. Bates served as
the President of Microsoft’s Skype Division until June 2013. From 1996 to October 2010, Mr. Bates served in
various roles at Cisco Systems, Inc., a networking equipment provider, most recently as Senior Vice President
and General Manager of Enterprise, Commercial and Small Business. Mr. Bates currently serves on the board of
leader in cloud infrastructure and
directors of Ebay Inc., a global ecommerce website, and VMware, a global

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business mobility. We believe that Mr. Bates is qualiﬁed to serve on our board of directors due to his extensive
executive leadership experience in the technology industry, including the management of worldwide operations,
sales, service, and support areas.

tax,

treasury, and investor

Kenneth Goldman has served on our board of directors since December 2013 and as lead independent director
of our board since April 2017. Since October 2012, Mr. Goldman has served as the Chief Financial Officer of
Inc., an Internet commerce website, where he is responsible for Yahoo’s global ﬁnance functions
Yahoo!
including ﬁnancial planning and analysis, controllership,
relations. From
September 2007 to October 2012, Mr. Goldman was the Senior Vice President, Finance and Administration and
Chief Financial Officer of Fortinet Inc., a provider of threat management technologies. From November 2006 to
August 2007, Mr. Goldman served as Executive Vice President and Chief Financial Officer of Dexterra, Inc., a
mobile enterprise software company. From August 2000 until March 2006, Mr. Goldman served as Senior Vice
President of Finance and Administration and Chief Financial Officer of Siebel Systems,
Inc., a supplier of
customer software solutions and services. Previously, Mr. Goldman has been the Chief Financial Officer of
Sybase, Inc. (acquired by SAP SE), Excite@Home, Cypress Semiconductor Corporation and VLSI Technology,
Inc.
(acquired by Philips Electronics). Mr. Goldman currently serves on the board of directors of NXP
Semiconductor N.V and TriNet, Inc., as well as the Trustee Emeritus of Cornell University. From December 1999
to December 2003, Mr. Goldman served on the Financial Accounting Standards Board’s (FASB’s) primary
Advisory Council (FASAC). Mr. Goldman was appointed in January 2015 to a three-year term to the Public
Company Accounting Oversight Board’s (PCAOB) Standing Advisory Group (SAG), an organization that provides
advice on the need to formulate new accounting standards or change existing standards. Mr. Goldman holds a
B.S. in Electrical Engineering from Cornell University and an M.B.A. from Harvard Business School. We believe
Mr. Goldman is qualiﬁed to serve as a member of our board of directors based on his experience on the boards
of directors of numerous companies, his extensive executive experience, and his service as a member of
FASAC and SAG. He provides a high level of expertise and signiﬁcant leadership experience in the areas of
ﬁnance, accounting, and audit oversight.

Peter Gotcher has served on our board of directors since June 2014. Mr. Gotcher is an independent private
investor focusing on investments in digital media technology companies. From September 1999 to June 2002,
Mr. Gotcher was a venture partner with Redpoint Ventures, a private investment ﬁrm. Prior to that, Mr. Gotcher
from 1997 to 1999.
was a venture partner with Institutional Venture Partners, a private investment ﬁrm,
Mr. Gotcher founded Digidesign, Inc., a manufacturer of digital audio workstations, and served as its President,
Chief Executive Officer and Chairman from 1984 until
it was acquired by Avid Technology, a media software
company,
in 1995. He served as the Executive Vice President of Avid Technology from 1995 to 1996.
Mr. Gotcher currently serves on the board of directors of Pandora Media, Inc. and is the Chairman of the board
of directors of Dolby Laboratories, Inc. He also serves on the board of trustees of Santa Clara University.
Mr. Gotcher holds a B.A.
in English Literature from the University of California at Berkeley. We believe
Mr. Gotcher is qualiﬁed to serve as a member of our board of directors based on his broad understanding of the
operational, ﬁnancial, and strategic issues facing public companies and his background providing guidance to
companies in the digital media industry.

Alexander Lurie has served on our board of directors since February 2016. Since January 2016, Mr. Lurie has
served as the Chief Executive Officer of SurveyMonkey, Inc., a creator and publisher of online surveys, and he
has served as a member of the board of SurveyMonkey since 2009, including as Chairman of the Board from
July 2015 to January 2016. Mr. Lurie served as GoPro’s Senior Vice President of Media from November 2014
until January 2016. From February 2013 to January 2014, Mr. Lurie served as Executive Vice President for
Guggenheim Digital Media, an internet media company. From April 2010 to August 2012, Mr. Lurie served as
SVP, Strategic Development at CBS Corporation, a mass media corporation. From February 2008 to April 2010,
Mr. Lurie served as Chief Financial Officer and Head of Business Development for CBS Interactive, a division of
CBS Corporation. Mr. Lurie came to CBS Interactive via its acquisition of CNET Networks, a technology
information website, where he served as Chief Financial Officer and head of Corporate Development from
February 2006 to February 2008. Mr. Lurie began his career in the investment banking group at JPMorgan
where he led equity transactions and mergers and acquisitions in the Internet sector. He holds a J.D. and M.B.A.
degree from Emory University, and a B.A. in Political Science from the University of Washington. We believe
Mr. Lurie is qualiﬁed to serve as a member of our board of directors based on his previous experience as an

executive officer of GoPro, his operational and ﬁnancial expertise from his management experience, and his
background in the digital media industry.

Susan Lyne has served on our board of directors since April 2017. Since September 2014, Ms. Lyne has served
as President and Managing Partner of BBG Ventures, an AOL-backed investment fund focused on women-led
tech startups. From February 2013 to September 2014, Ms. Lyne was Chief Executive Officer of the AOL Brand
Group where she oversaw the content brands of AOL, Inc., a global media technology company, including
TechCrunch, Engadget, StyleList, Moviefone and MapQuest. From September 2008 to January 2013, she was
Chief Executive Officer and then Chair of Gilt Groupe, Inc., the innovative ecommerce company that pioneered
ﬂash sales in the United States. From 2004 to 2008, Ms. Lyne served as President and Chief Executive Officer
of Martha Stewart Living Omnimedia, Inc., a diversiﬁed media and merchandising company. From 1996 to 2004,
Ms. Lyne held various positions at The Walt Disney Company, a diversiﬁed worldwide entertainment company,
rising to President of ABC Entertainment where she oversaw the development of shows including Desperate
Housewives, Grey’s Anatomy, and Lost. Ms. Lyne is currently a director of Brit Media, Inc. and has previously
served as a director of Gilt Groupe,
Inc. and Starz
Entertainment Group, LLC. In addition, Ms. Lyne is a trustee of Rockefeller University and a member of the
Council on Foreign Relations. We believe Ms. Lyne is qualiﬁed to serve as a member of our board of directors
based on her experience on the boards of directors of other companies, her extensive executive experience and
her background in the media and consumer products industries.

Inc., Martha Stewart Living Omnimedia,

Inc., AOL,

Lauren Zalaznick has served on our board of directors since July 2016. Since January 2014, Ms. Zalaznick has
been serving as a board member and senior advisor to several companies: she is currently a member of the
boards of directors of The Nielsen Company (since April 2016), Shazam (since April 2014), and Penguin
Random House (since May 2014). In addition, she is currently a senior advisor to various content and tech
start-ups including Reﬁnery29, LifePosts, and Medium.com. From 2004 through December 2013, Ms. Zalaznick
held various roles of increasing responsibility within NBCUniversal, Inc. including Chairman, Entertainment &
Digital Networks and Integrated Media where she had responsibility for the Bravo, Oxygen, Style, Telemundo
and Mun2 networks and ran its digital portfolio. She was Executive Vice President at NBCUniversal, Inc. until
departing the company in December 2013. Since July 2011, Ms. Zalaznick has been a trustee of the Corporation
of Brown University from which she graduated with a Bachelor of Arts magna cum laude and Phi Beta Kappa.
We believe Ms. Zalaznick is qualiﬁed to serve as a member of our board of directors based on her operational
and management expertise and her background in digital media and content strategy.

There are no family relationships among our current directors and officers.

Non-Employee Director Compensation Arrangements

In June 2014, our board of directors adopted a new non-employee director compensation policy, which was
subsequently amended in August 2015, with the equity changes effective after the 2016 annual meeting of
stockholders and the cash retainer changes effective in October 2015.

Pursuant
to our non-employee director compensation policy in effect prior to our 2016 annual meeting of
stockholders, each non-employee director was to receive a stock option having a grant date fair value computed
in accordance with Financial Accounting Standards Board Accounting Standards Codiﬁcation Topic 718 (‘‘FASB
ASC Topic 718’’) equal to $150,000 immediately following each annual meeting of stockholders. Each such
stock option had a ten-year term and vested in full on the earlier of the one-year anniversary of the date of grant
or on the date of the next annual meeting of our stockholders, subject to the director’s continuous service on our
board of directors at such time. In addition, immediately following the annual meeting of our stockholders, each
non-employee director was to receive Restricted Stock Units (‘‘RSUs’’) having a fair market value on the grant
date equal to $30,000. The shares underlying each RSU grant vested as to 25% in each quarter following the
date of grant with the ﬁnal 25% to vest on the earlier of the date of the annual meeting or the one year
anniversary of the date of grant, subject to the director’s continuous service on our board of directors at such
time. The stock options and RSUs described above will accelerate and vest in full in the event of a change in
control. Mr. Lurie who was appointed to our board of directors in February 2016 between the 2015 and 2016
annual meetings of stockholders received pro-rated stock option and RSU grants in accordance with the policy
described in this paragraph.

Pursuant to the current non-employee director compensation policy, immediately following each annual meeting
of our stockholders starting in 2016, we pay each non-employee director a cash retainer of $50,000. We also
grant each non-employee director a stock option having a grant date fair value computed in accordance with
FASB ASC Topic 718 equal to $122,500. Each such stock option will have a ten-year term and will vest in full on
the earlier of the one-year anniversary of the date of grant or on the date of the next annual meeting of our
stockholders, subject to the director’s continuous service on our board of directors at such time. In addition, we
grant each non-employee director RSUs having a fair market value on the grant date equal to $122,500, based
on a three month trailing average of our closing price. The shares underlying each RSU grant will vest as to 25%
in each quarter following the date of grant with the ﬁnal 25% to vest on the earlier of the date of the next annual
meeting of stockholders or the one year anniversary of the date of grant, subject to the director’s continuous
service on our board of directors at such time. The stock options and RSUs described above will accelerate and
vest in full in the event of a change in control. Directors who are appointed to our board of directors between the
annual meetings of our stockholders will receive pro-rated stock option and RSU grants.

In addition to the cash retainers and the annual stock option and RSU grants for service as a member of our board
of directors, our non-employee director compensation policy provides for additional cash retainers to the lead
independent director and the chairs and members of each committee of our board of directors equal to the following:

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•

$20,000 for the lead independent director;

$25,000 for the chair of our audit committee;

$12,500 for audit committee member (other than the chair);

$18,500 for the chair of our compensation and leadership committee;

$10,000 for compensation and leadership committee member (other than the chair);

$10,000 for the chair of our nominating and governance committee; and

$5,000 for nominating and governance committee member (other than the chair).

Non-employee directors receive no other form of remuneration, perquisites or beneﬁts, but are reimbursed for
their reasonable travel expenses incurred in attending board and committee meetings.

As of December 31, 2016, Mr. Bates ceased to be an employee of the Company and remains on the board of
directors. For information on his going-forward compensation as a member of the board of directors, please see
‘‘Arrangements with Mr. Bates’’
the Compensation
Discussion and Analysis portion of this proxy statement below.

in the ‘‘Post Employment Compensation’’ section of

Director Compensation

The following table provides information for 2016 concerning all compensation awarded to, earned by or paid to
each person who served as a non-employee director for some portion of 2016. Nicholas Woodman, our Chief
Executive Officer, and Anthony Bates, our former President, are not included in the table below because they did
not receive additional compensation for their services as directors. Their compensation as employees is shown
below in ‘‘Executive Compensation — Summary Compensation Table.’’

Name

Fees Earned
or Paid in
Cash
($)

Edward Gilhuly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kenneth Goldman. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Peter Gotcher. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michael Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alexander Lurie . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lauren Zalaznick . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

82,500
75,000
72,500
73,500
37,500
32,500

Stock
Awards
($)(1)

114,616(3)
114,616(3)
114,616(3)
114,616(3)
125,212(5)
108,268(7)

Option
Awards
($)(2)

116,064(4)
116,064(4)
116,064(4)
116,064(4)
169,407(6)
107,351(8)

Total
($)

313,180
305,680
303,180
304,180
332,119
248,119

(1)

The amounts reported in this column represent the aggregate grant date value of RSUs made to directors in 2016 computed in
accordance with FASB ASC Topic 718.

(2)

(3)

(4)

The amounts reported in this column represent the aggregate grant date value of option awards made to directors in 2016 computed in
accordance with FASB ASC Topic 718.

On June 6, 2016, Messrs. Gilhuly, Goldman, Gotcher and Marks received 10,496 RSUs which vest as to 25% of the shares in each
quarter following the date of grant, with the ﬁnal 25% to vest on June 6, 2017, the date of our Annual Meeting, subject to the director’s
continuous service on our board of directors. As of December 31, 2016, 5,248 of the RSUs remained unvested. In the event of a
Change in Control (as deﬁned under the Company’s 2014 Equity Incentive Plan), such RSUs shall accelerate and become immediately
vested.

On June 6, 2016, Messrs. Gilhuly, Goldman, Gotcher and Marks received a stock option to purchase 24,861 shares of common stock
which shall vest in full on June 6, 2017, the date of our Annual Meeting, subject to the director’s continuous service on our board of
directors on such date. In the event of a Change in Control (as deﬁned under the Company’s 2014 Equity Incentive Plan), such options
shall accelerate and become immediately vested.

(5) Mr. Lurie joined GoPro’s board of directors on February 1, 2016. On February 1, 2016, Mr. Lurie received a pro-rated award of
958 RSU’s which vested over an approximately four (4) month period, such that 50% of the shares subject to this stock award vested
on March 8, 2016 and 50% vested June 6, 2016.

On June 6, 2016, Mr. Lurie received 10,496 RSUs which vest as to 25% of the shares in each quarter following the date of grant, with
the ﬁnal 25% to vest on June 6, 2017, the date of our Annual Meeting, subject to the director’s continuous service on our board of
directors. As of December 31, 2016, 5,248 of the RSUs remained unvested. In the event of a Change in Control (as deﬁned under the
Company’s 2014 Equity Incentive Plan), such RSUs shall accelerate and become immediately vested.

(6) Mr. Lurie joined GoPro’s board of directors on February 1, 2016. On February 1, 2016, Mr. Lurie received a pro-rated stock option to

purchase 11,588 shares of common stock which vested in full on June 6, 2016.

On June 6, 2016, Mr. Lurie received a stock option to purchase 24,861 shares of common stock which shall vest in full on June 6,
2017, the date of our Annual Meeting, subject to the director’s continuous service on our board of directors on such date. In the event
of a Change in Control (as deﬁned under the Company’s 2014 Equity Incentive Plan), such options shall accelerate and become
immediately vested.

(7) Ms. Zalaznick joined GoPro’s board of directors July 5, 2016. On July 5, 2016, Ms. Zalaznick received a pro-rated award of 10,166
RSUs which vest as to 25% of the shares in each quarter following the date of grant, with the ﬁnal 25% to vest on June 6, 2017, the
date of our Annual Meeting, subject to the director’s continuous service on our board of directors. As of December 31, 2016, 5,083 of
the RSUs remained unvested. In the event of a Change in Control (as deﬁned under the Company’s 2014 Equity Incentive Plan), such
RSUs shall accelerate and become immediately vested.

(8) Ms. Zalaznick joined GoPro’s board of directors July 5, 2016. On July 5, 2016, Ms. Zalaznick received a pro-rated stock option to
purchase 24,079 shares of common stock which shall vest in full on June 6, 2017, the date of our Annual Meeting, subject to the
director’s continuous service on our board of directors on such date. In the event of a Change in Control (as deﬁned under the
Company’s 2014 Equity Incentive Plan), such options shall accelerate and become immediately vested.

Our non-employee directors held option and RSU awards to acquire the following number of shares as of
December 31, 2016:

Number of Shares
Underlying Outstanding Awards

Name
Edward Gilhuly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kenneth Goldman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Peter Gotcher
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michael Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alexander Lurie . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lauren Zalaznick . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Option Awards
37,374
119,861(1)
48,144(2)
37,374
36,449
24,079

RSU Awards
5,248
5,248
5,248
5,248
5,248
5,083

(1)

(2)

Consists of stock options to purchase 95,000 shares of Class B common stock under an option award granted pursuant to our
2010 Equity Incentive Plan and 24,861 shares of Class A common stock under option awards granted pursuant to our 2014 Equity
Incentive Plan.

Consists of stock options to purchase 17,234 shares of Class B common stock under an option award granted pursuant to our
2010 Equity Incentive Plan and 30,910 shares of Class A common stock under option awards granted pursuant to our 2014 Equity
Incentive Plan.

OUR BOARD OF DIRECTORS RECOMMENDS
A VOTE ‘‘FOR’’ ELECTION OF EACH OF THE NOMINATED DIRECTORS

PROPOSAL NO. 2

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

Our audit committee has re-appointed PricewaterhouseCoopers LLP as GoPro’s independent registered public
accounting ﬁrm to perform the audit of GoPro’s consolidated ﬁnancial statements for 2017 and recommends that
stockholders vote for ratiﬁcation of such selection. Although ratiﬁcation by stockholders is not required by law,
GoPro has determined that it is good practice to request ratiﬁcation of this selection by the stockholders. In the
event that PricewaterhouseCoopers LLP is not ratiﬁed by our stockholders, the audit committee will review its
future selection of PricewaterhouseCoopers LLP as GoPro’s independent registered public accounting ﬁrm.

PricewaterhouseCoopers LLP audited GoPro’s ﬁnancial statements for 2016 and 2015. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting, in which case they will be
given an opportunity to make a statement at the Annual Meeting if they desire to do so, and will be available to
respond to appropriate questions.

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Independent Registered Public Accounting Firm Fees and Services

We regularly review the services and fees from our independent registered public accounting ﬁrm. These
services and fees are also reviewed with our audit committee annually. In accordance with standard policy,
PricewaterhouseCoopers LLP periodically rotates the individuals who are responsible for GoPro’s audit. The
following table shows the fees billed by PricewaterhouseCoopers LLP for the years ended December 31, 2016
and 2015:

Fees Billed to GoPro

2016

2015

Audit fees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax fees(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2,603,700
462,800
$ 3,066,500

2,466,800
462,768
2,929,568

(1)

(2)

‘‘Audit fees’’
ﬁnancial reporting;
documents ﬁled with the SEC; and audit services provided in connection with other statutory and regulatory ﬁlings.

include fees for audit services primarily related to the audit of our annual ﬁnancial statements and internal control over
letters, consents, and assistance with and review of

the review of our quarterly ﬁnancial statements; comfort

‘‘Tax fees’’
include fees for tax compliance, advice and planning. Tax advice fees encompass a variety of permissible tax services,
including technical tax advice related to federal and state and international income tax matters; transfer pricing, international tax structure
planning, assistance with indirect sales tax; and assistance with tax audits.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services
of Independent Registered Public Accounting Firm

Our audit committee’s policy is to preapprove all audit and permissible non-audit services provided by the
independent registered public accounting ﬁrm. These services may include audit services, audit-related services,
tax services and other services. Pre-approval is detailed as to the particular service or category of services and
is generally subject to a speciﬁc budget. The independent registered public accounting ﬁrm and management are
required to report periodically to the audit committee regarding the extent of services provided by the
independent registered public accounting ﬁrm in accordance with this pre-approval, and the fees for the services
performed to date.

All of the services relating to the fees described in the table above were approved by our audit committee.

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE ‘‘FOR’’ APPROVAL OF PROPOSAL NO. 2

PROPOSAL NO. 3

ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

General

In accordance with the requirements of Section 14A of the Exchange Act (which was added by the Dodd-Frank
Wall Street Reform and Consumer Protection Act (the ‘‘Dodd-Frank Act’’) and the related rules of the SEC, we
are providing stockholders an opportunity to approve the compensation of our NEOs as disclosed in this Proxy
Statement in the Compensation Discussion and Analysis section. While the results of the vote are non-binding
and advisory in nature, the board of directors intends to carefully consider the results of this vote.

In considering their vote, stockholders may wish to review with care the information on the company’s
compensation policies and decisions regarding the NEOs presented in the Compensation Discussion and
Analysis section, as well as the discussion regarding the compensation and leadership committee in the
Compensation Discussion and Analysis section entitled ‘‘Further Considerations for Setting Executive
Compensation.’’

The company’s goal for its executive compensation program is to attract, motivate, and retain our executives
who are critical to our success. The company seeks to accomplish this goal in a way that rewards performance
and is aligned with its stockholders’
long-term interests. The company believes its executive compensation
program has been instrumental in helping the company achieve its business objectives.

Frequency of Stockholder Advisory Votes on Executive Compensation

At our 2015 annual meeting of stockholders, we asked our stockholders to express a preference for the
frequency of an advisory vote on the compensation of the NEOs (a ‘‘Say-on-Pay’’ vote). The proposal with
respect to the frequency of our Say-on-Pay votes is commonly known as a ‘‘Say-When-on-Pay’’ vote. At the
2015 annual meeting of stockholders, our stockholders selected, on a non-binding advisory basis, three years as
the frequency at which GoPro will hold a non-binding advisory vote to approve the compensation to be paid by
us to our NEOs. Based on these results, our board of directors has determined that we will conduct future
stockholder advisory votes regarding compensation awarded to our NEOs once every three years. This policy
will remain in effect until the next stockholder vote on the frequency of stockholder advisory votes on the
compensation of NEOs, expected to be held at our 2021 annual meeting of stockholders.

Key Executive Compensation Policies and Practices

In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, we
are asking the stockholders to indicate their support for the compensation of our NEOs as described in this
Proxy Statement. This vote is not intended to address any speciﬁc item of compensation, but rather the overall
compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement.
Accordingly, the board of directors requests the stockholders vote on an advisory basis to approve the following
resolution at the meeting:

RESOLVED, that the compensation paid to the company’s NEOs, as disclosed pursuant to Item 402 of
Regulation S-K including the Compensation Discussion and Analysis, compensation tables, and narrative
discussion set forth in this Proxy Statement, is hereby approved.

While the results of this advisory vote are not binding, the compensation and leadership committee, will consider
the outcome of the vote in deciding whether to take any action as a result of the vote and when making future
compensation decisions regarding NEOs. The compensation and leadership committee and the board of
directors value the opinions of our stockholders. Unless the board of directors modiﬁes its determination on the
frequency of future Say-on-Pay advisory votes, the next Say-on-Pay advisory vote will be held at our 2020
annual meeting.

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE ‘‘FOR’’ APPROVAL, ON A NON-BINDING BASIS, OF
THE RESOLUTION TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS
DISCLOSED IN THIS PROXY STATEMENT.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the beneﬁcial ownership of our common stock
as of March 31, 2017, by:

•

each stockholder known by us to be the beneﬁcial owner of more than 5% of our Class A common
stock or Class B common stock;

each of our directors;

each of our NEOs; and

all of our directors and executive officers as a group.

Percentage ownership of our common stock before this offering is based on 36,749,103 shares of our Class B
common stock and 107,035,182 shares of our Class A common stock outstanding on March 31, 2017. Beneﬁcial
ownership is determined in accordance with the rules of the SEC and thus represents voting or investment
power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and
entities named in the table have sole voting and sole investment power with respect to all shares beneﬁcially
owned, subject to community property laws where applicable. Shares of our Class A common stock and Class B
common stock subject to options that are currently exercisable or exercisable within 60 days of March 31, 2017
or RSUs that may vest and settle within 60 days of March 31, 2017 are deemed to be outstanding and to be
beneﬁcially owned by the person holding the options or RSUs for the purpose of computing the percentage
ownership of that person but are not treated as outstanding for the purpose of computing the percentage
ownership of any other person.

Name of Beneﬁcial Owner
Directors and Executive Officers:
Nicholas Woodman(2)
. . . . . . . . . . . . . . . . . . . .
Michael Marks(3) . . . . . . . . . . . . . . . . . . . . . . . .
Edward Gilhuly(4)
. . . . . . . . . . . . . . . . . . . . . . .
Kenneth Goldman(5)
. . . . . . . . . . . . . . . . . . . . .
Peter Gotcher(6)
. . . . . . . . . . . . . . . . . . . . . . . .
Alexander Lurie(7) . . . . . . . . . . . . . . . . . . . . . . .
Susan Lyne(8) . . . . . . . . . . . . . . . . . . . . . . . . . .
Lauren Zalaznick(9) . . . . . . . . . . . . . . . . . . . . . .
Anthony Bates(10) . . . . . . . . . . . . . . . . . . . . . . .
Brian McGee(11)
. . . . . . . . . . . . . . . . . . . . . . . .
Sharon Zezima(12)
. . . . . . . . . . . . . . . . . . . . . .
Jack Lazar(13) . . . . . . . . . . . . . . . . . . . . . . . . . .
All executive officers and directors as a

group (12 persons)(14) . . . . . . . . . . . . . . . . .

5% Stockholders:
Nicholas Woodman and Jill R. Woodman, as
Co-Trustees of the Woodman Family Trust
under Trust Agreement dated March 11,
2011(15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
. . . . . . .

BlackRock, Inc.(16)
The Vanguard Group − 23-1945930(17)

Shares Beneﬁcially Owned

Class A

Class B

% of Total
Voting
Power(1)

—
100,335
1,025,442
8,961
14,426
30,271
—
7,624
487,596
39,901
28,635
28,238

*
*
*
*
*
*
*
*
*
*
*
*

36,576,628
—
—
80,416
73,212
—
—
—
2,229,666
—
51,531
305,835

99.08%

76.81%

*
*
*
*
*
*
*
5.72%
*
*
*

*
*
*
*
*
*
*
4.58%
*
*
*

1,771,429

1.65% 39,317,288

99.28%

78.43%

—
6,253,462
6,313,910

*
5.84%
5.90%

30,760,716
—
—

83.70%

*
*

64.82%
1.32%
1.33%

Represents beneﬁcial ownership of less than 1% of our outstanding shares of common stock of the designated class of security or less
than 1% of the Total Voting Power, as applicable.

Unless otherwise indicated, the address of each of the individuals and entities named below is c/o GoPro, Inc., 3000 Clearview Way,
San Mateo, California 94402.

(1) Percentage of total voting power represents voting power with respect to all shares of our Class A common stock and Class B common
stock, as a single class. The holders of our Class B common stock are entitled to ten votes per share, and holders of our Class A
common stock are entitled to one vote per share.

(2) Consists of (i) 30,760,716 shares of Class B common stock held by the Woodman Family Trust under Trust Agreement dated March 11,
2011 of which Nicholas Woodman and Jill Woodman are co-trustees, (ii) 1,474,623 shares of Class B common stock held by
Mr. Woodman’s 2016 GRAT, (iii) 1,474,623 shares of Class B common stock held by the 2016 GRAT for Mr. Woodman’s spouse,
(iv) 1,350,000 shares of Class B common stock held by Mr. Woodman’s 2017 GRAT, (v) 1,350,000 shares of Class B common stock
held by the 2017 GRAT for Mr. Woodman’s spouse, and (vi) 166,666 shares of Class B common stock subject to restricted stock units
held by Mr. Woodman that may settle within 60 days of March 31, 2017. As a co-trustee, Mr. Woodman may be deemed to have shared
voting and investment power over the shares owned by the Woodman Family Trust. Mr. Woodman is the sole trustee of all four
(4) GRATs.

(3) Consists of (i) 30,153 shares of Class A common stock held by Mr. Marks, (ii) 8,062 shares of Class A common stock held in the Marks
Family Trust, (iii) 49,607 shares of Class A common stock held by WB Investors, LLC, and (iv) 12,513 shares of Class A common stock
subject to options held by Mr. Marks that are exercisable within 60 days of March 31, 2017. Michael Marks and Carole Jean Marks are
co-trustees and co-beneﬁciaries of the Marks Family Trust. Mr. Marks is Manager of WB Investors, LLC (‘‘WB’’). The members of WB are
Epping Investment Holdings, LLC, which Mr. Marks controls, and certain trusts controlled by Mr. Marks and for the beneﬁt of Mr. Marks
and members of his immediate family. The address for Mr. Marks, Marks Family Trust and WB Investors, LLC is 2494 Sand Hill Road,
Bldg.7, Ste. 100, Menlo Park, CA 94025.

(4) Consists of (i) 9,335 shares of Class A common stock held by Mr. Gilhuly, (ii) 4,177 shares of Class A common stock held by Gilhuly
Investment Partners LLC, (iii) 999,417 shares of Class A common stock held by Sageview Capital Mater, L.P., and (iv) 12,513 shares of
Class A common stock subject to options held by Mr. Gilhuly that are exercisable within 60 days of March 31, 2017. Mr. Gilhuly is the
manager of Gilhuly Investment Partners LLC. Sageview Capital Partners (A), L.P. (‘‘Sageview A’’), Sageview Capital Partners (B), L.P.
(‘‘Sageview B’’) and Sageview Partners (C) (Master), L.P. (‘‘Sageview C’’) are the shareholders of Sageview Capital Master L.P.
(‘‘Sageview Master’’). Sageview Capital GenPar, Ltd. (‘‘Sageview Ltd’’) is the sole general partner of each of Sageview Master, Sageview
A, Sageview B and Sageview C. Sageview Capital GenPar, L.P. (‘‘Sageview GenPar’’) is the sole shareholder of Sageview Ltd.
Sageview Capital MGP, LLC is the sole general partner of Sageview GenPar. Edward Gilhuly is a managing member and controlling
person of Sageview Capital MGP, LLC. The address for Sageview Capital Master, L.P., Mr. Gilhuly and Gilhuly Investment Partners LLC
is c/o Sageview Capital LP, 245 Lytton Avenue, Suite 250, Palo Alto, CA 94301.

(5) Consists of (i) 668 shares of Class A common stock held by Mr. Goldman, (ii) 8,293 shares of Class A common stock held in the
Goldman-Valeriote Family Trust, and (iii) 80,416 shares of Class B common stock subject to options held by Mr. Goldman that are
exercisable within 60 days of March 31, 2017. Kenneth Goldman and Susan Valeriote are co-trustees and have shared voting and
investment power over the shares owned by the Goldman-Valeriote Family Trust.

(6) Consists of (i) 378 shares of Class A common stock held by Mr. Gotcher, (ii) 7,999 shares of Class A common stock held in the Gotcher
Family Trust, (iii) 54,348 shares of Class B common stock held by The Peter and Marie-Helene Gotcher Family Trust, (iv) 1,630 shares
of Class B common stock held by Mr. Gotcher, (v) 17,234 shares of Class B common stock subject to options held by Mr. Gotcher that
are exercisable within 60 days of March 31, 2017, and (vi) 6,049 shares of Class A common stock subject to options held by Mr. Gotcher
that are exercisable within 60 days of March 31, 2017. Mr. Gotcher is the President of The Peter and Marie-Helene Gotcher Family
Trust.

(7) Consists of (i) 18,683 shares of Class A common stock held by the Alexander J Lurie Trust dtd 10/16/2007, and (ii) 11,588 shares of
Class B common stock subject to options held by Mr. Lurie that are exercisable within 60 days of March 31, 2017. Mr. Lurie is the sole
trustee and beneﬁciary of the Alexander J Lurie Trust dtd 10/16/2007.

(8) Ms. Lyne joined our board as of April 21, 2017.

(9) Consists of 7,624 shares of Class A common stock held by Lauren Zalaznick and Phelim Dolan.

(10) Consists of (i) 94,989 shares of Class A common stock held by Mr. Bates, (ii) 367,078 shares of Class A common stock subject to
options held by Mr. Bates that are exercisable within 60 days of March 31, 2017, (iii) 25,529 shares of Class A common stock subject to
restricted stock units held by Mr. Bates the may settle within 60 days of March 31, 2017, and (iv) 2,229,666 shares of Class B common
stock subject to options held by Mr. Bates that are exercisable within 60 days of March 31, 2017.

(11) Consists of (i) 276 shares of Class A common stock held by Mr. McGee’s spouse, and (ii) 39,625 shares of Class A common stock

subject to options held by Mr. McGee that are exercisable within 60 days of March 31, 2017.

(12) Consists of (i) 168 shares of Class A common stock held by Ms. Zezima, (ii) 28,467 shares of Class A common stock subject to options
held by Ms. Zezima that are exercisable within 60 days of March 31, 2017, and (iii) 51,531 shares of Class B common stock subject to
options held by Ms. Zezima that are exericisable within 60 days of March 31, 2017.

(13) Consists of (i) 28,238 shares of Class A common stock, and (ii) 305,835 shares of Class B common stock subject to options held by

Mr. Lazar that are exercisable within 60 days of March 31, 2017.

(14) Consists of (i) 1,268,067 shares of Class A common stock, (ii) 36,465,940 shares of Class B common stock, (iii) 477,833 shares of
Class A common stock subject to options that are exercisable within 60 days of March 31, 2017, (iv) 25,529 shares of Class A common
stock subject to restricted stock units that may settle within 60 days of March 31, 2017, (v) 2,684,682 shares of Class B common stock
subject to options that are exercisable within 60 days of March 31, 2017, and (vi) 166,666 shares of Class B common stock subject to
restricted stock units that may settle within 60 days of March 31, 2017.

(15) Consists of 30,760,716 shares of Class B common stock held by the Woodman Family Trust under Trust Agreement dated March 11,
2011 of which Nicholas Woodman and Jill Woodman are co-trustees. As a co-trustee, Mr. Woodman may be deemed to have shared
voting and investment power over the shares owned by the Woodman Family Trust.

(16) Based on a Schedule 13G ﬁling made on January 30, 2017. Consists of 6,253,462 shares of Class A common stock held by BlackRock,

Inc. The address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055.

(17) Based on a Schedule 13G ﬁling made on February 13, 2017. Consists of 6,313,910 shares of Class A common stock held by The
Vanguard Group — 23-1945930. The address for The Vanguard Group — 23-1945930 is 100 Vanguard Blvd., Malvern, PA 19355.

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The names of our current executive officers, their ages as of March 31, 2017, and their positions are shown
below.

EXECUTIVE OFFICERS

Executive Officers

Age

Position(s)

Nicholas Woodman . . . . . . . . . . . . . . .
Charles ‘‘CJ’’ Prober . . . . . . . . . . . . . . .
Brian McGee . . . . . . . . . . . . . . . . . . . .
Sharon Zezima . . . . . . . . . . . . . . . . . .

41
45
57
52

Chief Executive Officer and Chairman
Chief Operating Officer
Chief Financial Officer
General Counsel

Our board of directors chooses executive officers, who then serve at the board’s discretion. There is no family
relationship among any of our directors or executive officers.

For information regarding Mr. Woodman, please refer to Proposal 1 above titled ‘‘Election of Directors.’’

Charles ‘‘CJ’’ Prober has served as our Chief Operating Officer since January 2017. From June 2014 to
January 2017, he served as our Senior Vice President of Software and Services. From January 2008 until
May 2014, Mr. Prober served in various roles at Electronic Arts, most recently as the Senior Vice President of
Digital Publishing. From January 2007 until January 2008, he was the Vice President of Legal and Business
Affairs at VG Holding Company (BioWare and Pandemic Studios), a gaming company, until
its acquisition by
Electronic Arts. From 2003 until 2006, Mr. Prober was a consultant with McKinsey & Company, a global strategic
management consulting ﬁrm and from 1998 until 2003, he was a corporate attorney at the law ﬁrm Wilson
Sonsini Goodrich & Rosati, P.C. Mr. Prober holds a Bachelor of Commerce from the University of Manitoba and
a Bachelor of Laws from McGill University.

recently as the Vice President, Business Operations. Prior

Brian McGee has served as our Chief Financial Officer since March 2016. Mr. McGee served as our Vice
President of Finance from September 2015 to March 2016, and was responsible for ﬁnancial planning, tax,
treasury and risk management in that role. From May 2011 to September 2015, Mr. McGee served in various
positions at Qualcomm, most
to Qualcomm,
Mr. McGee was at Atheros Communications from December 2009 to May 2011 as the Vice President, General
Manager Global Powerline Business. Prior to Atheros Communications, from January 2007 to December 2009,
Mr. McGee was the Senior Vice President, Chief Financial Officer and Treasurer, at
Intellon, a fabless
semiconductor company that was acquired by Atheros Communications in December 2009. From 2003 to 2006,
Mr. McGee was Vice President Finance and Chief Financial Officer of Lexar, a maker of digital media storage.
Mr. McGee holds a B.S. in Finance from California Polytechnic State University (1983) and a Certiﬁcate in
Management Accounting (1989).

Sharon Zezima has served as our General Counsel since September 2013 and as our Corporate Secretary
since October 2013. From February 2012 to September 2013, Ms. Zezima was the Vice President and General
Counsel at Marketo, Inc., a cloud-based marketing software company. Prior to joining Marketo, Ms. Zezima
served in various positions at Electronic Arts Inc., a developer and distributor of interactive entertainment content
and services, from September 2000 to February 2012, most recently as Vice President and Deputy General
Counsel. Ms. Zezima holds a J.D. from the University of Chicago and an A.B. in American Studies from Smith
College.

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

GoPro’s executive compensation programs, policies and practices (‘‘ECPs’’) are designed to reﬂect the three
major tenets of our executive compensation philosophy, namely to:

•

Align executive compensation with achievement of our business objectives and ﬁnancial performance;

• Motivate executive officers to take actions that enhance long-term stockholder value; and

•

Enable us to attract, retain and reward our executives who contribute to our success.

We manage our ECPs, including compensation-related corporate governance standards, in a manner consistent
with our executive compensation philosophy. These ECPs are intended to both drive performance and either
prohibit or minimize behaviors that we do not believe serve our stockholders’ long-term interests.

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Executive Compensation Best Practices

Compensation and Leadership
Committee Independence

Our board of directors maintains a compensation and leadership committee
comprised solely of independent directors.

Compensation and Leadership
Committee Advisor Independence

Annual Compensation Review

Compensation-Related Risk
Assessment

No Executive Perquisites

‘‘Double-Trigger’’ Change in Control
Arrangements

Reasonable Change in Control
Arrangements

The compensation and leadership committee engages and retains its own
advisors. During 2016, the compensation and leadership committee engaged an
independent national consulting ﬁrm to assist with its responsibilities and such
ﬁrm performs no additional consulting or other services for GoPro.

The compensation and leadership committee annually reviews our executive
compensation philosophy and strategy,
including reviewing our compensation
peer group utilized for appropriate comparative purposes.

We conduct annual evaluations of our compensation programs, policies, and
practices to ensure that they reﬂect an appropriate level of risk-taking but do not
encourage our employees to take excessive or unnecessary risks that could have
a material adverse impact on GoPro.

We do not offer perquisites or other personal beneﬁts to our executive officers,
including our NEOs. Our executive officers, including our NEOs, participate in our
health and welfare beneﬁt programs on the same basis as all of our employees.

The change in control post-employment compensation arrangements for our
executive officers including our NEOs (other
than an arrangement with
Mr. Woodman) are based on a ‘‘double-trigger’’ arrangement that provides for the
receipt of payments and beneﬁts only in the event of (i) a change in control of our
company and (ii) a qualifying termination of employment.

The post-employment compensation arrangements for our management
team,
including our NEOs, provide for amounts and multiples that are within reasonable
market norms.

Prohibition on Hedging and Pledging Our management team, including our NEOs, and the members of our board of
directors, are prohibited from speculating in our equity securities, including the
use of short sales, or any equivalent transaction involving our equity securities
and from engaging in any hedging transactions with respect
to our equity
securities.

Succession Planning

Retirement Programs

Our board of directors reviews the risks associated with our most critical
executive positions on an annual basis so that we have an adequate succession
strategy, and we have plans in place for these critical positions.

Other than our Section 401(k) plan, which is generally available to all employees,
we do not offer deﬁned beneﬁt or contribution retirement plans or arrangements
or nonqualiﬁed deferred compensation plans or arrangements
for our
management team, including our NEOs.

Compensation Recoupment Policy

Stock Ownership Guidelines

In 2016, we adopted a compensation recoupment policy applicable to cash
incentive-based compensation awards paid to our executive officers. In the event
of a substantial restatement of ﬁnancial results ﬁled with the Securities and
Exchange Commission,
the board determines
the policy permits the board,
appropriate under the circumstances, to seek recovery of all or any portion of the
incentive awards paid or awarded to an executive officer in excess of the awards
that would have been paid or awarded based on the restated ﬁnancial results and
the executive officer engaged in fraud or intentional illegal conduct that materially
contributed to the restatement.

In 2016, GoPro adopted a stock ownership policy for our CEO, President, and
non-employee directors to align their interests with those of our stockholders.

This Compensation Discussion and Analysis (‘‘CD&A’’) is intended to assist our stockholders in understanding
GoPro’s ECPs by presenting the following:

1. Elements of Our Executive Compensation Program sets forth GoPro’s executive compensation
philosophy and describes the practices, programs and policies we apply and utilize to support
achievement of our goals and performance objectives.

2. Business Highlights for 2016 summarizes GoPro’s results that

impacted 2016 executive

compensation decisions.

3. Executive Compensation Decisions for 2016 explains compensation decisions that were made last

year based on our results.

4. Severance and Change in Control Arrangements discusses employment agreements and policies

associated with our current and departing executives.

5. Further Considerations for Setting Executive Compensation discusses, among other things, the
role of GoPro’s compensation and leadership committee, consultants, peer group and the impact of tax
and accounting considerations.

This CD&A focuses on the material elements of compensation of our go-forward NEOs as of December 31, 2016:

•

Nicholas Woodman, our Chief Executive Officer and Chairman of our board of directors;

Brian McGee, our Chief Financial Officer; and

Sharon Zezima, our General Counsel.

Certain NEOs departed the Company in 2016 and as such information related to those former NEOs is also
provided:

•

Anthony Bates, our former President terminated employment in December 2016 and remains a member
of our board of directors; and

Jack Lazar, our former Chief Financial Officer terminated employment in March 2016.

In early 2017, GoPro completed a restructuring of its executive team and our board of directors designated the
following additional executive officer:

•

Charles ‘‘CJ’’ Prober, GoPro’s head of Software and Services since 2014, was appointed Chief
Operating Officer in January 2017.

Elements of Our Executive Compensation Program

Compensation Philosophy and Guiding Principles

We have designed our ECPs to reward our executive officers, including our NEOs, at a level consistent with our
overall strategic and ﬁnancial performance and to provide remuneration sufficient to attract, retain, and motivate
them to exert their best efforts in the highly-competitive technology and consumer-oriented environments in
which we operate, and reward them for superior performance. We believe that competitive compensation
packages consisting of a combination of base salaries, annual cash bonus opportunities, and long-term incentive

opportunities in the form of equity awards that are earned over a multi-year period, enable us to attract top
talent, motivate effective short-term and long-term performance, and satisfy our retention objectives. As an
overarching objective, we seek to design each pay element to align the compensation of our management team
with our performance and long-term value creation for our stockholders. That principle has guided the design of
both the annual and long-term incentive compensation opportunities of our executive officers.

The compensation and leadership committee periodically reviews and analyzes market
trends and the
prevalence of various compensation delivery vehicles and adjusts the design and operation of our executive
compensation program from time to time as it deems necessary and appropriate. In designing and implementing
the various elements of our executive compensation program, the compensation and leadership committee
considers market and industry practices. While the compensation and leadership committee considers all of the
factors in its deliberations, and places no formal weighting on any one factor in its overall compensation strategy,
our bonus plan does assign weights to speciﬁc performance metrics.

As we continue to evolve as a publicly-traded company,
the compensation and leadership committee will
evaluate our compensation philosophy and program objectives as circumstances merit. At a minimum, we expect
the compensation and leadership committee to review executive compensation annually.

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Compensation Elements

The three primary elements of our executive compensation program are: (i) base salary, (ii) annual cash bonus
opportunities and (iii) long-term incentives in the form of equity awards subject
to multi-year vesting, as
described below:

Compensation Element

What This Element Rewards

Purpose and Key Features of Element

Base salary

Annual cash bonuses

Individual
experience,
performance and contributions.

performance,
expected

level

of
future

the

competitive level of

Provides
ﬁxed
compensation determined by the market
the
value
and
qualiﬁcations,
performance
each
executive officer and each individual
position.

position,
experience

expectations

and

Achievement
pre-established
corporate and individual performance
focused on our
objectives (for 2016,
revenue growth, proﬁtability and cost
management, as well as individual
contributions
management
and
objectives).

Motivate executive officers to achieve
during the ﬁscal year
(i) short-term
ﬁnancial and operational objectives, and
(ii)
individual performance objectives.
Performance levels are established to
incent our executive officers to achieve
or exceed performance objectives.

Long-term incentives/equity awards

Corporate and individual performance
that enhance long-term stockholder
value. Vesting requirements promote
retention of highly-valued executive
officers.

‘‘at

risk’’ pay

Annual stock options and RSUs that
four years and provide a
vest over
opportunity.
variable
Because the ultimate value of
these
equity awards is directly related to the
market price of our Class A common
stock, and the awards are vesting over
an extended period of time, they serve
to focus management on the creation
and
long-term
stockholder value and help us attract,
retain, motivate, and reward executive
officers.

maintenance

Our executive officers also participate in the standard employee beneﬁt plans available to most of our
employees. In addition, our executive officers are eligible for post-employment (severance and change in control)
payments and beneﬁts under certain circumstances. Each of these compensation elements is discussed in detail

below, including a description of the particular element and how it ﬁts into our overall executive compensation
and a discussion of the amounts of compensation paid to our executive officers, including our NEOs, in 2016
under each of these elements.

Base Salary

We believe that a competitive base salary is a necessary element of our executive compensation program, so
that we can attract and retain a stable management team. Base salaries for our executive officers are intended
to be competitive with those received by other individuals in similar positions at the companies with which we
compete for talent, and also to maintain internal parity across our executive team.

Generally, we establish the initial base salaries of our executive officers through arm’s-length negotiation at the
time we hire the individual executive officer, taking into account his or her position, qualiﬁcations, experience,
prior salary level, and the base salaries of our other executive officers. Thereafter,
the compensation and
leadership committee reviews the base salaries of our executive officers, including our NEOs, at least annually.

Annual Cash Bonuses

We use annual cash bonuses to motivate our executive officers, including our NEOs, to achieve our short-term
ﬁnancial and operational objectives while making progress towards our longer-term growth and other goals.
Consistent with our executive compensation philosophy, these annual bonuses are intended to help us to deliver
a competitive total direct compensation opportunity to our executive officers. Annual cash bonuses are entirely
performance-based, are not guaranteed and may vary materially from year-to-year.

In addition to the corporate performance objectives, the annual cash bonuses for our executive officers, including
our NEOs, are also based on each executive officer’s individual performance. Individual performance goals for
each executive officer are identiﬁed at the beginning of the year in discussions with our Chief Executive Officer.
These goals may be quantitative or qualitative in nature, depending on the organizational priorities for a given
year, and typically focused on key departmental or operational objectives or functions. Most of these goals are
intended to provide a set of common objectives that facilitated collaborative management and engagement,
although our executive officers could also be assigned individual objectives.

Long-Term Incentive Compensation

We use long-term incentive compensation in the form of equity awards to motivate our executive officers,
including our NEOs, by providing them with the opportunity to build an equity interest in GoPro and to share in
the potential appreciation of the value of our common stock.

Generally, in determining the size of the equity awards granted to our executive officers, the compensation and
leadership committee takes into consideration the recommendations of our Chief Executive Officer (except with
respect to his own equity award), as well as the factors described above. The compensation and leadership
committee also considers the dilutive effect of our long-term incentive compensation practices, and the overall
impact that these equity awards, as well as awards to other employees, may have on stockholder value.

Annual equity is awarded to NEOs in the form of stock options (the right to purchase shares of our Class A
common stock at a predetermined price subject to time based vesting), and RSUs which represent the right to
receive shares of our Class A common stock subject to time based vesting. Fifty percent of each NEO’s equity
opportunity is delivered in stock options and 50% of the opportunity is delivered in RSUs. The compensation and
leadership committee evaluates equity vehicles annually to determine which form of equity best aligns executive
incentives with the long-term interest of our stockholders in the current period. The compensation and leadership
committee may choose to utilize other performance-based equity vehicles.

Welfare and Health Beneﬁts

including our executive officers, who satisfy certain eligibility requirements,

We maintain a tax-qualiﬁed retirement plan under Section 401(k) of the Internal Renveue Code (the ‘‘Code’’) for
our US employees,
including
requirements relating to age and length of service that provides them with an opportunity to save for retirement
on a tax-advantaged basis. We intend for this plan to qualify under Sections 401(a) and 501(a) of the Code so
that contributions by employees to the plan, and income earned on plan contributions, are not
taxable to
employees until distributed from the applicable plan.

All participants’ interests in their deferrals are 100% vested when contributed under both plans. In 2016, we
made matching contributions into the Section 401(k) plan for our employees, which are deductible when made
by us. Under the plan, pre-tax contributions are allocated to each participant’s individual account and are then
invested in selected investment alternatives according to the participants’ directions.

In addition, we provide other beneﬁts to our executive officers, including our NEOs, on the same basis as all of
our full-time employees. These beneﬁts include health, dental and vision beneﬁts, health and dependent care
ﬂexible spending accounts, short-term and long-term disability insurance, accidental death and dismemberment
insurance, and basic life insurance coverage. In 2016 we transitioned from providing vacation and other paid
holidays to all employees, including our executive officers, to a discretionary time-off model for all exempt
employees, which resulted in a one-time payout of previously allocated but unused vacation time to all our
NEOs. We do not offer our employees a non-qualiﬁed deferred compensation plan or pension plan.

We design our employee beneﬁts programs to be affordable and competitive in relation to the market, as well as
compliant with applicable laws and practices. We adjust our employee beneﬁts programs as needed based upon
regular monitoring of applicable laws and practices, the competitive market and our employees’ needs.

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Perquisites and Other Personal Beneﬁts

Currently, we do not view perquisites or other personal beneﬁts as a component of our executive compensation
program. Accordingly, we do not provide perquisites to our executive officers, except in situations where we
believe it is appropriate to assist an individual in the performance of his or her duties, to make our executive
officers more efficient and effective, and for recruitment and retention purposes. During 2016, none of the NEOs
received perquisites or other personal beneﬁts that were, in the aggregate, $10,000 or more. In the future, we
may provide perquisites or other personal beneﬁts to our executive officers where we believe it serves a sound
business purpose. We do not expect that any future perquisites or other personal beneﬁts will be a signiﬁcant
aspect of our executive compensation program. All future practices with respect to perquisites or other personal
beneﬁts will be approved and subject to periodic review by the compensation and leadership committee.

Business Highlights for 2016

Our 2016 product achievements were revolutionary for GoPro. In 2016, GoPro unveiled new cloud-connected
HERO5 cameras, a cloud-based subscription service, and video editing applications that when used together,
make capturing, creating and sharing content a seamless experience for our customers. We also introduced
Karma, GoPro’s compact, ﬁts-in-a-small backpack drone and image stabilization grip, and Omni, GoPro’s
six-camera spherical array for capturing VR content. These launches were the result of signiﬁcant investment in
innovative products and services that all work together to provide our users with an end-to-end storytelling
solution. We plan to build upon these integrated solutions to continue to provide an exceptional user experience.
Highlights include the following:

• We released the cloud connected HERO5 Black and HERO5 Session cameras along with a new
ecosystem of mountable, wearable and voice activated accessories. The HERO5 line of cameras are
waterproof (without a housing), shoot in 4K at 30 frames per second and also feature multi-language
voice control, electronic image stabilization, and have built-in Wi-Fi and Bluetooth providing connectivity
with mobile devices to enable remote control, content viewing, editing and sharing functionality;

• We launched GoPro Plus, a cloud-based storage solution that enables subscribers to easily access,

edit and share content;

• We launched the Quik mobile and desktop editing applications — awesome edits made easy — to
enable users to quickly produce high-quality videos that are fun to create and easy to share across
multiple platforms. In 2016, the Quik App was downloaded 12 million times and users shared more than
27 million times; and

• We launched Omni, GoPro’s synchronized six-camera spherical array that produces high-resolution,
360-degree images and works seamlessly with our Kolor stitching software to produce immersive
content for vitual reality.

Other ﬁnancial and operational highlights included the following:

• We shipped 4.8 million cameras, with 2.3 million cameras shipped in the fourth quarter of 2016. Since

2009, we have shipped over 25 million HERO cameras;

•

Sales outside of the United States represented 53% of our revenue in 2016, compared to 52% in 2015
and 43% in 2014;

China with its large consumer market potential remains a top-ten country for GoPro;

Social media views of GoPro content
year-over-year, driven by a 60% year-over-year increase in Facebook views;

in 2016 reached approximately 238 million, up over 40%

According to YouTube, the equivalent of twenty-two years of content with GoPro in the title, description
or keyword was uploaded to YouTube in 2016, a year-over-year increase of 35%; and

The hours of GoPro-related content watched on YouTube in 2016 increased 86% year-over-year to
approximately 78 million hours.

Executive Compensation Decisions for 2016

2016 was a year of revolution with respect to product investment and development. We are proud of the many
product achievements described above which reﬂect our employees’ and executives’ successful
focus on
delivering the products and services that delight our users, and which we believe will drive camera and drone
sales. We strive to bring value to our stockholders through this focus on products as well as operational
excellence.
In this regard, we must also acknowledge that 2016 was a challenging year ﬁnancially given
production issues that delayed unit shipments of our HERO5 Black cameras in the third and fourth quarters of
2016, and also the recall of our Karma drone which returned to shelves in February 2017. The ﬁnancial targets
set by our board of directors were not fully achieved and our stock price did not recover. Decisions related to
base salaries, bonus payouts and equity grants reﬂect our challenges as well as our product achievements.

Base Salary

In 2016, the compensation and leadership committee did not adjust the base salary of Mr. Woodman nor
Mr. Bates as 2015 performance did not warrant a change and their base salaries were deemed market
competitive. In March 2016, Mr. McGee was promoted from Vice President of Finance to Chief Financial Officer
and his base salary was increased to $350,000 to align with the market for his position and the accountability of
his new role. The compensation and leadership committee also reviewed Ms. Zezima’s base salary in
February 2016 and, based on its understanding of the competitive market, as well as her performance as
evaluated by our Chief Executive Officer, approved an increase in her base salary to $340,000. Mr. Lazar’s base
salary was not reviewed as he terminated his employment effective March 11, 2016.

The base salaries of our NEOs during 2016 are set forth in the ‘‘Summary Compensation Table’’ below.

Annual Cash Bonuses

In February 2017, the compensation and leadership committee decided to award cash bonus opportunities to
our executive officers, including our NEOs. The CLC used its authority to select performance measures and
related target levels applicable to the annual cash bonus opportunities for our executive officers and did so for
2016 (the ‘‘2016 Bonus Plan’’). Awards under the 2016 Bonus Plan are subject to the Company’s Executive
Bonus Plan, which was approved by our stockholders in 2015.

Under the 2016 Bonus Plan, the performance measures involving our ﬁnancial results could be determined in
accordance with GAAP, or such ﬁnancial results could consist of non-GAAP ﬁnancial measures, subject to
adjustment by the compensation and leadership committee for one-time items or unbudgeted or unexpected
items when determining whether the target levels for the performance measures had been met. Individual
performance would be based on a review of each executive officer’s actual performance during the year by our
Chief Executive Officer including any factors that he determined to be relevant and provided to the compensation
and leadership committee for its consideration.

Target Bonus Opportunities

For 2016, the target annual cash bonus opportunities for each of our NEOs under the 2016 Bonus Plan,
expressed as a percentage of his or her annual base salary, were as follows:

Named Executive Officer

Nicholas Woodman . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Anthony Bates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jack Lazar(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brian McGee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sharon Zezima . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1) Mr. Lazar terminated employment in March 2016.

(2) Pro-rated based on salary change in February 2016.

Annual Base
Salary
($)

800,000
800,000
400,000
350,000
340,000

Target Bonus
Opportunity
(as a percentage
of base salary)
(%)

150
100
N/A
71.7(2)
59.2(2)

Target Bonus
Opportunity
($)

1,200,000
800,000
N/A
247,917(2)
198,092(2)

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The target annual cash bonus opportunities of our executive officers, including the NEOs, focused on our
short-term ﬁnancial objectives as reﬂected in our annual operating plan while, at the same time, allowed for
recognition of individual contributions toward achievement of those objectives and the successful execution of
each executive’s individual roles and responsibilities. The target bonus opportunities differ among NEOs based
on market data, position and level.

Corporate Performance Objectives

For purposes of
the compensation and leadership committee selected revenue,
non-GAAP gross margin and non-GAAP bonus plan operating expense as the corporate performance measures.
Each of these corporate performance measures was weighted as follows:

the 2016 Bonus Plan,

Corporate Performance Measure

Revenue . . . . . . . . . . . . . . . . . . . . .
Non-GAAP Gross Margin . . . . . . . . .
Non-GAAP Bonus Plan Operating

Expense . . . . . . . . . . . . . . . . . . . .

2016 Target
Level

$1.5 billion
42%

$700 million

For purposes of the 2016 Bonus Plan, the non-GAAP
corporate
be
calculated as follows:

performance measures were

‘‘Non-GAAP gross margin’’ refers to gross margin, as
calculated under GAAP, excluding the impact of
stock-based
the
expense
amortization of acquisition-related costs.

compensation

and

expense

‘‘Non-GAAP bonus plan operating expense’’ refers to
operating
under GAAP,
excluding bonus expense and associated payroll tax,
as well as the impact of stock-based compensation
expense, acquisition-related costs and restructuring
costs.

calculated

The compensation and leadership committee believed these performance measures were appropriate for our
business because they provided a balance between generating revenue, managing our expenses and ensuring
the proﬁtability of our business, all of which the CLC believes most directly inﬂuence long-term stockholder
value. Both revenue and gross margin were performance measures in 2015. However, given the amount of
product investment expected in 2016 the CLC determined that close management of operating expenses was a
priority, and therefore substituted operating expenses for operating proﬁt as the appropriate corporate
performance measure for the 2016 Bonus Plan. At the same time, the compensation and leadership committee
established target performance levels for each of these measures at levels that it believed to be challenging, but
attainable, through the successful execution of our annual operating plan.

The threshold, target, and maximum levels of achievement for each corporate performance measure and their
respective payment amounts, with the actual bonus payment with respect to each measure to be determined
independently, were as follows:

Corporate
Performance
Measure

Revenue . . . . . .
Gross Margin

(Non-GAAP) . .

Bonus

Plan Operating
Expense
(Non-GAAP) . .

Performance
Measure
Weight
(%)

Threshold Performance
Level

Threshold
Payment
Level
(%)

Target
Performance &
Payment Level
(%)

Above 85%

Above 90%

100

Maximum
Performance Level

Above 113%

Maximum
Payment Level
(%)

200

Less than 101%

100

Less than 95%

130

Corporate Performance Measure

Performance
Measure
Weight
(%)

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross Margin (Non-GAAP) . . . . . . . . . . . . . . . .
. .
Bonus Plan Operating Expense (Non-GAAP)

40
40
20

Threshold
Performance
Level

1.3 billion
37%
644 million

Target
Performance
Level

1.5 billion
42%
699 million

Maximum
Performance
Level

1.7 billion
47%
706 million

In the event actual performance results are between the threshold and target, and between target and maximum
performance levels, the payment amount was to be calculated between each performance level on a linear
the compensation and leadership committee retains the discretion to
basis. Notwithstanding the foregoing,
decrease any bonus, or increase any bonus beyond the amount calculated pursuant to this table, up to an
amount not exceeding 130% of actual investment.

Individual Performance

the officer’s individual

After the end of the year, our Chief Executive Officer evaluated each executive officer’s individual performance
based on his assessment of
results and contributions to our executive team,
recommended a total bonus payout based on corporate performance results as calculated under the plan and
individual contribution to such corporate performance results, and then submitted these recommendations to the
compensation and leadership committee for review and approval. In the case of our Chief Executive Officer, his
performance was evaluated and payment was determined by the compensation and leadership committee.
Bonus payments under the 2016 Bonus Plan could not exceed 130% of each executive officer’s target annual
cash bonus opportunity based on performance versus the corporate ﬁnancial performance metrics identiﬁed
above.

2016 Performance Results and Bonus Decisions

In February 2017,
the compensation and leadership committee determined that, based on actual 2016
performance with respect to each corporate performance measure, weighted and combined payout results were
at 45% of target bonus opportunities, reﬂecting achievement of 80% of the revenue target, 95% of the gross
margin target and 98% of the operating expense target. Reconciliations of GAAP to the non-GAAP gross margin
and non-GAAP bonus plan operating expense corporate performance measures are set forth in Appendix A.

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Based on its review of our overall corporate performance, and assessment of our Chief Executive Officer’s individual
performance in relation to our product successes and product challenges for 2016, the CLC approved a bonus
payment of 25% of target for Mr. Woodman, which was below the Company’s combined results of 45% of target.
The CLC also approved our Chief Executive Officer’s recommendations for bonus payments to Mr. McGee and
Ms. Zezima at 58%; the maximum 130% of the Company’s combined results of 45%. Their payments reﬂect their
contributions toward our product and corporate results as members of GoPro’s executive team as well as attainment
of individual objectives related to their respective ﬁnance and legal functions. The payouts were as follows:

Named Executive Officer

Target Annual
Cash Bonus
Opportunity
($)

Actual Annual
Cash Bonus
Payment
($)

Percentage of
Target Annual Cash
Bonus Opportunity

Nicholas Woodman. . . . . . . . . . . . . . . . . . . . . . . . . . .
Anthony Bates(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jack Lazar(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brian McGee(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sharon Zezima(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Mr. Bates terminated employment December 31, 2016.
(2) Mr. Lazar terminated employment March 11, 2016.
(3) Pro-rated based on salary and bonus target changes in February 2016.

1,200,000
800,000
N/A
247,917(3)
198,092(3)

300,000
N/A
N/A
143,291
114,797

25%
N/A
N/A
58%
58%

The annual cash bonuses paid to our NEOs for 2016 are also set forth in the ‘‘Summary Compensation Table’’
below, under the column ‘‘Non-Equity Incentive Plan Compensation.’’

Long-Term Incentive Compensation

Equity Awards for Named Executive Officers

In February 2016, Mr. McGee and Ms. Zezima were awarded options to purchase shares of our Class A
common stock and RSUs that may be settled in shares of our Class A common stock. Mr. McGee and
Ms. Zezima’s awards were based on the competitive market for their respective roles, contributions in 2015 and
expected long-term contributions to GoPro. In May and June, Mr. Bates was awarded options to purchase
shares of our Class A common stock and RSUs that may be settled in shares of our Class A common stock to
ensure his retention in hopes of his expected long-term contributions to the company. The CLC did not grant
Mr. Woodman an equity award in 2016 based on 2015 performance results and the belief that as GoPro’s
founder and majority stockholder Mr. Woodman’s interests continue to be well aligned with those of our
stockholders.

In 2016, the compensation and leadership committee engaged Compensia to review the various long-term
incentive vehicles used by our peers and determined that using a mix of 50% stock options and 50% RSUs
continues to be the best approach for GoPro to attract and retain key talent in our industry and align our
executive officers’ interests with the long-term interests of our stockholders.

The equity awards granted to our NEOs in 2016 are set forth in the ‘‘Summary Compensation Table’’ and the
‘‘2016 Grants of Plan-Based Awards Table’’ below.

Severance and Change in Control Arrangements

Employment Arrangements

including our Chief
We have extended written employment offer letters to each of our executive officers,
Executive Officer and our other NEOs. Each of these arrangements was approved on our behalf by our board of
directors or the compensation and leadership committee, as applicable. We believe that these arrangements
were appropriate to induce these individuals to forego other employment opportunities or leave their current
employer for the uncertainty of a demanding position in a new and unfamiliar organization.

In entering into these arrangements, our board of directors or the compensation and leadership committee, as
applicable, was aware that it would be necessary to recruit candidates with the requisite experience and skills to
manage a growing business in a dynamic and ever-changing environment. Accordingly, it recognized that it
would need to develop competitive compensation packages to attract qualiﬁed candidates in a highly-competitive
labor market. At the same time, our board of directors or the compensation and leadership committee, as
applicable, was sensitive to the need to integrate new executive officers into the executive compensation
structure that it was seeking to develop, balancing both competitive and internal equity considerations.

Each of these employment arrangements provides for ‘‘at will’’ employment and sets forth the initial or ongoing
compensation arrangements for the NEO, including an initial or ongoing base salary, a target annual cash bonus
opportunity, and, in some instances, a recommendation for an equity award in the form of stock options or
RSUs.

For a summary of the material terms and conditions of the employment arrangements with each of our NEOs,
see ‘‘Employment, Severance and Change in Control Agreements’’ below.

Post-Employment Compensation

In January 2014, we adopted a change in control and severance policy, with beneﬁts tied to a qualifying
termination in the event of a change in control applicable to our executive officers and certain other employees
pursuant to which each individual entered into a written agreement governing such situations. We believe that
the severance policy serves several objectives. First, it eliminates the need to negotiate separation payments
and beneﬁts on a case-by-case basis. Second, it also helps assure an executive officer that his or her severance
payments and beneﬁts are comparable to those of other executive officers with similar levels of responsibility
and tenure. Further, it acts as an incentive for our executive officers to remain employed and focused on their

responsibilities during the pendency or negotiation of a change in control transaction, which we believe would
help to preserve our value and the potential beneﬁt to be received by our stockholders in the transaction. Finally,
the severance policy is easier for us to administer than individually negotiated severance agreements, as it
requires less time and expense in negotiation or execution.

The severance policy contemplates that the payments and beneﬁts in the event of a change in control of our
company are payable only upon a ‘‘double trigger’’; that is, only following a change in control and a qualifying
termination of employment, including a termination of employment without cause or a resignation for good
reason, and in each case requires that the NEO execute a release of claims in our favor.

As a result of this policy, we subsequently entered into change in control severance agreements with each of our
executive officers, including each of our NEOs.

The agreements with our executive officers, including each of our NEOs (other than our Chief Executive Officer)
require us to provide certain payments and beneﬁts upon a qualifying termination of employment, which includes
a termination of employment without cause or where the NEO resigns with good reason, within three months
preceding or 12 months following a change in control of our company. The receipt of these payments and
beneﬁts are contingent upon the NEO’s execution, delivery, and non-revocation of a release and waiver of
claims satisfactory to us following the separation from service. In addition, for six months following termination of
employment, and as a condition to the payments and beneﬁts, the NEO must cooperate with any transition
efforts that we request and must not disparage us, or our directors, officers, or employees.

We entered into an employment letter with Mr. Woodman in June 2014, the terms of which supersede in their
entirety the change in control and severance agreement he executed in January 2014. For descriptions of the
change in control severance arrangements with each of our NEOs see ‘‘Estimated Payments and Beneﬁts as of
December 31, 2016’’ below.

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Employment, Severance and Change in Control Agreements

Arrangements with Mr. Woodman

Under his employment letter dated June 2, 2014, Mr. Woodman is eligible to receive severance payments and
beneﬁts upon a qualifying termination of employment, including a termination of employment in connection with a
change in control of our company. In addition, the grant terms of the outstanding RSUs held by our Chief
Executive Officer provide for vesting and acceleration pursuant to a provision that supersedes any acceleration
that would have been provided under his employment letter.

If Mr. Woodman’s employment is terminated by us for any reason other than cause or he resigns for good
reason prior to a change in control of GoPro, he will be eligible to receive:

•

a single lump sum payment equal to the sum of 12 months of his then-current base salary and target
bonus (assuming a 150% achievement threshold);

an additional payment equal to the pro-rata portion of his actual target bonus for the year of his
termination of employment; and

continuation of beneﬁts under COBRA for 12 months following his termination of employment (or if
applicable law requires otherwise, a lump sum payment equal to that amount).

If Mr. Woodman’s employment is terminated by us for any reason other than cause or he resigns for good
reason within 24 months following a change in control of GoPro, he will be eligible to receive:

•

a single lump sum payment equal to the sum of 24 months of his then-current base salary and target
bonus (assuming a 150% achievement threshold);

an additional payment equal to the pro-rata portion of his actual target bonus for the year of his
termination of employment;

•

full accelerated vesting of all of the shares of our common stock subject to his then-outstanding equity
awards (other than his Initial RSU award granted in June 2014), if any; and

continuation of beneﬁts under COBRA for 18 months following his termination of employment (or if
applicable law requires otherwise, a lump sum payment equal to that amount).

These payments and beneﬁts are conditioned on Mr. Woodman’s execution and delivery of an irrevocable
release to us within the 60 days following his termination of employment.

Further, if we undergo a change in control, any payments that would be ‘‘parachute payments’’ within the
meaning of Section 280G of the Code will be reduced so that Mr. Woodman retains, on an after-tax basis, the
greatest amount of these payments.

In June 2014, our board of directors granted Mr. Woodman RSUs that may be settled for up to 4,500,000 shares
of our Class B Common Stock, subject to vesting in tranches of 1,500,000 shares each (the ‘‘Woodman RSU
Award’’), as further described in the footnotes to the ‘‘Outstanding Equity Awards’’ table. The Woodman RSU
Award further provides that, upon a change in control that occurs prior to the termination of his services, a
portion of the second tranche of the Woodman RSU Award will vest (regardless of any service-based vesting
conditions) to the extent that the acquisition price per share of the transaction exceeds the initial public offering
price of our common stock, such that the second tranche will fully vest if the acquisition price exceeds $34.03
per share. Similarly, a portion of the third tranche of this RSU award will vest (regardless of any service-based
vesting conditions) to the extent that the acquisition price per share exceeds $34.03, such that the third tranche
will fully vest if the acquisition price exceeds $44.24 per share.

Arrangements with Mr. Bates

Mr. Bates terminated employment as our President effective December 31, 2016. In connection with Mr. Bates’
departure, he received the severance beneﬁts described below in ‘‘Estimated Payments and Beneﬁts as of
December 31, 2016.’’ Mr. Bates remains a member of GoPro’s board of directors.

Pursuant to his Separation Agreement and Release of Claims dated December 15, 2016, in connection with his
departure Mr. Bates received the following payments and beneﬁts:

•

$800,000, representing 12 months of his then-current base salary;

$800,000, representing an amount equal to his target annual bonus for 2016;

$800,000, representing an amount equal to his target annual bonus for 2017;

If elected, $36,000 representing $3,000 per month for 12 months in lieu of employee beneﬁts;

Vesting accelerated on 25% of the shares initially subject to each of Mr. Bates’ equity grants; and

Additionally, subject to his continuing to serve as a member of GoPro’s board of directors, Mr. Bates will
continue vesting as to 25% of his remaining outstanding and unvested equity awards per the original
vesting schedule of the award, which vesting will accelerate upon a change in control to the extent still
outstanding at that time.

Arrangements with Mr. McGee

In September 2015, we entered into an employment offer letter with Mr. McGee. Among other things, this letter
provided that, subject to the approval of the board of directors, Mr. McGee would be granted an option to
purchase 30,000 shares of our Class A common stock, which would vest as to 25% of the shares subject to the
option on the ﬁrst anniversary of his commencement of employment and thereafter in equal monthly installments
over 36 months thereafter, subject to his continuous employment as of each vesting date. The letter also
provided subject to the approval of the board of directors, a grant of 15,000 RSUs which will vest in four equal
annual installments of 25% each based on continuous service.

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that we
Under his change in control and severance agreement dated September 28, 2015,
terminate his employment for any reason other than cause or he voluntarily resigns his employment for good
reason within the three-month period preceding or the 12-month period following a change in control of GoPro,
Mr. McGee is eligible to receive severance payments and beneﬁts as follows:

in the event

•

12 months of his then-current base salary;

100% of his target annual bonus;

$3,000 per month for 12 months in lieu of employee beneﬁts; and

all of the shares of our common stock subject to each then-outstanding and unvested equity award held
by Mr. McGee will accelerate and become vested and exercisable in full
immediately prior to his
separation from service.

Further, if we undergo a change in control, any payments that would be ‘‘parachute payments’’ within the
meaning of Section 280G of the Code will be reduced so that Mr. McGee retains, on an after-tax basis, the
greatest amount of these payments.

Arrangements with Ms. Zezima

In August 2013, we entered into an employment offer letter with Ms. Zezima. Among other things, this letter
provided that, subject to the approval of the board of directors, Ms. Zezima would be granted an option to
purchase 75,000 shares of our Class B common stock, which would vest as to 25% of the shares subject to the
option on the ﬁrst anniversary of her commencement of employment and thereafter in equal monthly installments
over 36 months thereafter, subject to her continuous employment as of each vesting date.

Under her change in control and severance agreement dated January 13, 2014, in the event that we terminate
her employment for any reason other than cause or she voluntarily resigns her employment for good reason
within the three-month period preceding or the 12-month period following a change in control of GoPro,
Ms. Zezima is eligible to receive severance payments and beneﬁts as follows:

•

12 months of her then-current base salary;

100% of her target annual bonus or, if greater, her most recent actual annual bonus;

$3,000 per month for 12 months in lieu of employee beneﬁts; and

all of the shares of our common stock subject to each then-outstanding and unvested equity award held
immediately prior to her
by Ms. Zezima will accelerate and become vested and exercisable in full
separation from service.

Further, if we undergo a change in control, any payments that would be ‘‘parachute payments’’ within the
meaning of Section 280G of the Code will be reduced so that Ms. Zezima retains, on an after-tax basis, the
greatest amount of these payments.

Severance and change in control arrangements for all NEOs who currently serve as executive officers are set
forth in the ‘‘Estimated Payments and Beneﬁts as of December 31, 2016’’ table below.

Arrangements with Mr. Lazar

Mr. Lazar terminated his employment as our Chief Financial Officer effective March 11, 2016. Pursuant to his
amended change in control severance agreement dated June 8, 2014,
in connection with his departure
Mr. Lazar received the following payments and beneﬁts:

•

$400,000, representing 12 months of his then-current base salary;

$388,336, representing an amount equal to his annual bonus for 2015;

$36,000, representing $3,000 per month for 12 months in lieu of employee beneﬁts; and

continued vesting of his then-outstanding and unvested equity awards subject to his providing services
as a consultant until March 10, 2017.

Further Considerations for Setting Executive Compensation

Compensation-Setting Process

Role of the Compensation and Leadership Committee

The compensation and leadership committee is responsible for establishing our overall compensation philosophy
and reviewing and approving our executive compensation program, including the speciﬁc compensation of our
executive officers, including our NEOs. The compensation and leadership committee has the authority to retain
special counsel and other advisors,
its
responsibilities to determine the compensation of our executive officers and has retained a compensation
consultant, Compensia, as discussed below. The compensation and leadership committee’s authority, duties,
and responsibilities are described in its charter, which is reviewed annually and revised and updated as
warranted. The charter is available on our website at http://investor.gopro.com.

including compensation consultants,

in carrying out

to assist

In determining our overall compensation philosophy and approving the compensation of our executive officers,
the compensation and leadership committee is assisted by its compensation consultant, as well as our Chief
Executive Officer, Senior Vice President, People, and our executive compensation staff
to formulate
recommendations with respect to speciﬁc compensation actions. The compensation and leadership committee
target annual cash bonus
makes all ﬁnal decisions regarding compensation,
opportunities, actual cash bonus payments, and long-term incentives in the form of equity awards that are
earned over a multi-year period. The compensation and leadership committee meets on a regularly-scheduled
basis and at other times as needed and periodically reviews compensation matters with our board of directors.

including base salary levels,

At the beginning of each year, the compensation and leadership committee reviews our executive compensation
program, including any incentive compensation plans and arrangements, to assess whether our compensation
elements, actions and decisions are (i) properly coordinated, (ii) aligned with our vision, mission, values and
corporate goals,
(iii) provide appropriate short-term and long-term incentives for our executive officers,
(iv) achieve their intended purposes and (v) are competitive with the compensation of executives in comparable
positions at
the
compensation and leadership committee may make any necessary or appropriate modiﬁcations to our existing
plans and arrangements or adopt new plans or arrangements.

the companies with which we compete for executive talent. Following this assessment,

The compensation and leadership committee also conducts an annual review of our executive compensation
strategy to ensure that it is appropriately aligned with our business strategy and achieving our desired objectives.
Further,
trends and changes in competitive
compensation practices, as further described below.

the compensation and leadership committee reviews market

The factors to be considered by the compensation and leadership committee in determining the compensation of
our executive officers, including our NEOs, include:

•

the recommendations of our Chief Executive Officer, and Senior Vice President, People (except with
respect to their own compensation) as described below;

our corporate growth and other elements of ﬁnancial performance;

our corporate and individual achievements against one or more short-term and long-term performance
objectives;

the individual performance of each executive officer against his or her business objectives;

a review of
described below);

the relevant competitive market analysis prepared by its compensation consultant (as

the expected future contribution of the individual executive officer;

historical compensation decisions we have made regarding our executive officers; and

internal pay equity based on the impact on our business and performance.

The compensation and leadership committee does not weigh these factors in any predetermined manner, nor
does it apply any formulas in making its decisions. The members of the compensation and leadership committee

consider this information in light of
executive officer, knowledge of
regarding executive compensation and our executive compensation program.

their individual experience, knowledge of GoPro, knowledge of each
in making their decisions

the competitive market and business judgment

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As part of this process, the compensation and leadership committee evaluates the performance of our Chief
Executive Officer each year and makes all decisions regarding his base salary adjustments, target annual cash
bonus opportunities, actual cash bonus payments and long-term incentives in the form of equity awards that are
earned over a multi-year period. Our Chief Executive Officer is not present during any of the deliberations
regarding his compensation.

Role of our Chief Executive Officer

Our Chief Executive Officer works closely with the compensation and leadership committee in determining the
compensation of our other executive officers, including the other NEOs. Our Chief Executive Officer works with
the compensation and leadership committee to recommend the structure of the annual bonus plan, and to
identify and develop corporate and individual performance objectives for such plan, and to evaluate actual
performance against the selected measures. Our Chief Executive Officer also makes recommendations to the
compensation and leadership committee as described in the following paragraph and is involved in the
determination of compensation for the executive officers who report to him.

At the beginning of each year, our Chief Executive Officer reviews the performance of our other executive
officers, including the other NEOs, for the previous year, and then shares these evaluations with, and makes
recommendations to, the compensation and leadership committee for each element of compensation. Using his
evaluation of each executive officer’s performance and taking into consideration historical compensation awards
to our executive officers and our corporate performance during the preceding year, our Chief Executive Officer
makes recommendations regarding base salary adjustments, target annual cash bonus opportunities, actual
bonus payments, and long-term incentives in the form of equity awards subject to multi-year vesting for each of
our executive officers (other than himself) based on our ﬁnancial and operating results, the individual executive
officer’s contribution to these results, and his or her performance toward achieving his or her individual
performance goals. The compensation and leadership committee then reviews these recommendations and
considers the other factors described above and makes decisions as to the target compensation of each
executive officer (other than our Chief Executive Officer), as well as each individual compensation element.

While the compensation and leadership committee will consider our Chief Executive Officer’s recommendations,
as well as the competitive market analysis prepared by its compensation consultant, Compensia,
these
recommendations and market data serve as only two of several factors that the compensation and leadership
committee considers in making its decisions with respect to the compensation of our executive officers. No
executive officer participates in the determination of the amounts or elements of his or her own compensation.

Role of Compensation Consultant

Pursuant to its charter, the compensation and leadership committee has the authority to engage its own legal
counsel and other advisors, including compensation consultants, as determined in its sole discretion, to assist in
carrying out its responsibilities. The compensation and leadership committee has the authority to make all
determinations regarding the engagement, fees, and services of these advisors, and any such advisor reports
directly to the compensation and leadership committee.

In 2016, pursuant to this authority, the compensation and leadership committee engaged Compensia, a national
compensation consulting ﬁrm, to provide information, analysis, and other assistance relating to our executive
compensation program on an ongoing basis. The nature and scope of the services provided to the compensation
and leadership committee by Compensia in 2016 were as follows:

•

developed our compensation peer group;

provided advice with respect to compensation best practices, regulatory developments and market
trends for executive officers and members of our board of directors;

conducted an analysis of long-term incentive equity practices for our peers and advised on design of
our long-term incentive plans;

•

conducted an analysis of the levels of overall compensation and each element of compensation for our
executive officers;

conducted an analysis of the levels of overall compensation and each element of compensation for the
members of our board of directors;

provided design advice on our short-term annual incentive bonus plan; and

provided ad hoc advice and support throughout the year.

Representatives of Compensia attend meetings of the compensation and leadership committee as requested
and also communicate with the compensation and leadership committee outside of meetings. Compensia reports
to the compensation and leadership committee rather than to management, although Compensia may meet with
including our Chief Executive Officer, our Senior Vice President, People, and
members of management,
members of our executive compensation staff,
for purposes of gathering information on proposals that
management may make to the compensation and leadership committee.

things,

The compensation and leadership committee has assessed the independence of Compensia taking into account,
among other
forth in Exchange Act Rule 10C-1 and the enhanced
independence standards and factors set forth in the applicable listing standards of the NASDAQ Stock Market,
and has concluded that its relationship with Compensia and their respective work on behalf of the compensation
and leadership committee has not raised any conﬂict of interest.

the various factors as set

Competitive Positioning

location, the compensation and
Given our unique history and business, market competitors and geographical
leadership committee believes that
includes publicly traded
technology companies, including Internet-based product and services companies. Accordingly, it develops a
compensation peer group to contain a carefully-selected cross-section of public companies using factors
described below, with revenues and market capitalizations that are similar to ours and that may also compete in
a similar market for executive talent.

the competitive market

for executive talent

Compensation Peer Group

In November 2015, the compensation and leadership committee directed Compensia to formulate a group of
peer companies to be used as a reference for market positioning and for assessing competitive market practices
in connection with making 2016 executive compensation decisions. Compensia undertook a detailed review of
the pool of U.S.-based publicly-traded companies, taking into consideration our industry sector, the size of such
companies (based on revenues and market capitalization) relative to our size and growth rate, and the following
additional factors:

•

the comparability of the company’s business model;

the comparability of the company’s revenue and market capitalization;

the comparability of the company’s primary sales channels, including via the Internet;

the company’s consumer products and/or business services focus;

the comparability of the company’s operating history;

the comparability of the company’s organizational complexities and growth attributes;

the stage of the company’s maturity curve (which increases its likelihood of attracting the type of
executive talent for whom we compete); and

the comparability of the company’s operational performance (for consistency with our strategy and
future performance expectations).

Following this review, Compensia recommended to the compensation and leadership committee a peer group of
18 information technology and consumer-oriented companies, which the compensation and leadership
committee subsequently approved. The selected companies had revenues ranging from $845 million to
$4.2 billion and market capitalizations ranging from $1.3 billion to $20.3 billion, which were comparable peers at
the time of selection. The compensation and leadership committee reviewed the compensation data drawn from

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the compensation peer group to develop a representation of the ‘‘competitive market’’ speciﬁcally tailored to
GoPro with respect
to current executive compensation levels and related policies and practices. The
compensation and leadership committee then evaluated how its contemplated compensation actions and
decisions compared to the competitive market.

The companies comprising the compensation peer group were as follows:

Akamai Technologies
Dealertrack Technologies
F5 Networks
Fitbit
Fortinet
Garmin
IPG Photonics

Lending Club
Logitech
Palo Alto Networks
Pandora Media
Rackspace Hosting
Red Hat
ServiceNow

Skyworks Solutions
Solera Holdings
Trip Advisor
Twitter
Workday
Zebra Technologies

This peer group was referenced and informed executive compensation decisions including setting of base salary,
annual bonus targets and equity grants made in February 2016. Due to the decrease in GoPro’s market
capitalization, Compensia was engaged to complete a new study of peers in March 2016. A revised group of
16 peers was approved by the compensation and leadership committee in May which informed compensation
decisions through the remainder of 2016 and into 2017, including evaluation of vehicles for long term incentives.
The revised selection of companies had revenues ranging from $810 million to $4.0 billion and market
capitalizations ranging from $400 million to $6.5 billion.

The companies comprising the revised compensation peer group were as follows:

Cirrus Logic
Fitbit
Garmin
IPG Photonics
LendingClub
Logitech

Pandora Media
Plantronics
Polycom
Rackspace Hosting
Shutterﬂy
Square

Stratasys
Super Micro Computer
Synaptics
Zebra Technologies

The compensation and leadership committee does not believe that it is appropriate to make compensation
decisions, whether regarding base salaries or short-term or long-term incentive compensation, using solely
benchmarking as guidance. The committee, however, does believe that information regarding the compensation
practices at our compensation peer group is useful
in two respects. First, the compensation and leadership
committee recognizes that our compensation policies and practices must be competitive in the marketplace.
Second, this information is useful in assessing the reasonableness and appropriateness of individual executive
compensation elements and of our overall executive compensation packages.

Other Compensation Policies

Compensation Recoupment Policy

In 2016, we adopted a compensation recoupment policy applicable to cash incentive-based compensation
awards paid to our executive officers. In the event of a substantial restatement of ﬁnancial results ﬁled with the
Securities and Exchange Commission, the policy permits the board, if the board determines appropriate under
the circumstances, to seek recovery of all or any portion of the incentive awards paid or awarded to an executive
officer in excess of the awards that would have been paid or awarded based on the restated ﬁnancial results and
the executive officer engaged in fraud or intentional illegal conduct that materially contributed to the restatement.

In addition, pursuant to Section 304 of the Sarbanes-Oxley Act of 2002, as applicable to all public companies,
we may be legally required to seek reimbursement from our Chief Executive Officer and Chief Financial Officer
if, as a result of their misconduct, we restate our ﬁnancial results due to our material noncompliance with any
ﬁnancial reporting requirements under the federal securities laws.

Equity Incentive Award Grant Policy

It
is our policy to avoid the granting of equity awards close in time to the release of material non-public
information, and we have adopted a written equity incentive award grant policy to specify the timing of the

effectiveness of our equity awards to avoid such timing. This policy provides the following guidelines to be
observed by the compensation and leadership committee and our board of directors in administering the grant of
equity awards under our equity compensation plans:

•

our board of directors has delegated to the compensation and leadership committee the express
authority to administer our 2014 Equity Incentive Plan (the ‘‘2014 Plan’’), including the authority to grant
awards under the 2014 Plan;

our board of directors has delegated to the equity management committee (a committee consisting
solely of our Chief Executive Officer) the non-exclusive authority to grant equity awards to employees
below the level of executive staff vice president where the awards fall within standard guidelines
approved by the compensation and leadership committee and subject to a limitation on the number of
shares of our common stock that may be granted in any year;

if the equity management committee approves equity awards on or before the 15th day of the month,
the awards will be granted effective as of the 15th day of that month, and if it approves such equity
awards after the 15th of the month, the grant date for these awards will be the approval date;

all equity awards granted outside the equity management committee guidelines or to our employees at
or above the level of vice president who serve on the Company’s executive staff must be approved by
the compensation and leadership committee; and

all equity awards to the non-employee members of our board of directors, other than newly appointed
directors, will be granted automatically in accordance with the terms of our Director Compensation
Policy. Grants to newly appointed directors follow the terms of the Director Compensation Policy.

Under our 2014 Plan, the exercise price of any option to purchase shares of our Class A common stock may not
be less than the fair market value (based on the market closing price) of our Class A common stock on the date
of grant.

Stock Ownership Guidelines

In 2016, our board of directors adopted a stock ownership policy to better align the interests of our CEO,
President, and our non-employee directors with the interests of our stockholders. Pursuant to our policy, our
CEO and President are each required to achieve ownership of GoPro common stock valued at ﬁve times and
three times their annual base salary, respectively. Our non-employee directors are required to achieve ownership
of GoPro common stock valued at ﬁve times the amount of the annual retainer payable to directors within
ﬁve years of joining the Board. The ownership levels of our 2016 NEOs as of March 31, 2016 are set forth in the
beneﬁcial ownership table section.

Derivatives Trading and Hedging and Pledging Policies

We have adopted a policy prohibiting our employees, including our executive officers, and members of our board
of directors from speculating in our equity securities,
including the use of short sales or any equivalent
transaction involving our equity securities. In addition, they may not engage in any other hedging or monetization
transactions or trading on margin and other similar or related arrangements, with respect to the securities that
they hold. Finally, no employee, including an executive officer, or member of our board of directors may acquire,
sell, or trade in any interest or position relating to the future price of our equity securities.

Rule 10b5-1 Sales Plans

Certain of our directors and executive officers have adopted written plans, known as Rule 10b5-1 plans, in which
they have contracted with a broker to buy or sell shares of our common stock on a periodic basis. Under a
Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director or officer when
entering into the plan, without further direction from the director or officer. The director or officer may amend or
terminate the plan in some circumstances. The adoption, amendment, termination and certain other actions with
respect to Rule 10b5-1 plans must comply with the terms of our Policy on Securities Trades by GoPro, Inc.
Personnel and the GoPro, Inc. Requirements for Trading Plans.

Frequency of Say-on-Pay Advisory Vote

As previously reported, at our 2015 annual meeting of stockholders, our stockholders selected, on a non-binding
advisory basis, three years as the frequency at which GoPro will hold a non-binding advisory vote to approve the
compensation to be paid by us to our NEOs. Based on these results, our board of directors has determined that
we will conduct future stockholder advisory votes regarding compensation awarded to our NEOs once every
three years. This policy will remain in effect until the next stockholder vote on the frequency of stockholder
advisory votes on the compensation of NEOs, expected to be held at our 2021 annual meeting of stockholders.

Tax and Accounting Considerations

Deductibility of Executive Compensation

federal

Section 162(m) generally disallows a deduction for
income tax purposes to any publicly-traded
corporation for any remuneration in excess of $1 million paid in any taxable year to its chief executive officer and
the three other most highly-compensated executive officers (other than its chief ﬁnancial officer).
each of
Generally, remuneration in excess of $1 million may be deducted if, among other things,
it qualiﬁes as
‘‘performance-based’’ compensation within the meaning of the Code or qualiﬁes for a different exemption. In this
regard, the compensation income realized upon the exercise of options to purchase shares of the granting
company’s securities granted under a stockholder-approved stock option plan generally will be deductible.
Conversely, the compensation income realized upon the vesting of RSUs that are subject to time-based vesting
requirements generally will not be deductible since such awards do not qualify as ‘‘performance-based’’
compensation. Certain of the cash bonus awards under the 2016 Bonus Plan may not be entitiled to a deduction
for payments made in 2017.

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The compensation and leadership committee seeks to qualify the incentive compensation paid to the covered
executive officers for
the ‘‘performance-based’’ compensation exemption from the deduction limit under
Section 162(m) when it believes such action is in our best interests. In approving the amount and form of
compensation for our executive officers, the compensation and leadership committee believes that the potential
deductibility of the compensation payable under those plans and arrangements should be only one of a number
of relevant factors taken into consideration, and not the sole governing factor. Accordingly, the compensation and
leadership committee considers all elements of the cost to us of providing such compensation, including the
the compensation and leadership
potential
committee may deem it appropriate to provide one or more executive officers with the opportunity to earn
incentive compensation, whether through cash incentive awards tied to our ﬁnancial performance or equity
incentive awards tied to the executive officer’s continued service, which may be in excess of
the amount
deductible by reason of Section 162(m) or other provisions of the Code. While we obtained approval of our
Executive Bonus Plan for purposes of Section 162(m) at the 2015 Annual Meeting, we reserve the right to
structure awards (including the interplay of awards and employment agreements) in a manner that
is not
deductible in order to achieve our recruiting and retention objectives.

the Section 162(m) deduction limit. For that reason,

impact of

Taxation of Nonqualiﬁed Deferred Compensation

Section 409A of the Code requires that amounts that qualify as ‘‘nonqualiﬁed deferred compensation’’ satisfy
requirements with respect to the timing of deferral elections, timing of payments, and certain other matters.
the compensation and leadership committee intends to administer our executive compensation
Generally,
program and design individual compensation components, as well as the compensation plans and arrangements
for our employees generally, so that they are either exempt from, or satisfy the requirements of, Section 409A.
From time to time, we may be required to amend some of our compensation plans and arrangements to ensure
that they are either exempt from, or compliant with, Section 409A.

Taxation of ‘‘Parachute’’ Payments

Sections 280G and 4999 of the Code provide that executive officers and directors who hold signiﬁcant equity
interests and certain other service providers may be subject to additional taxes if they receive payments or
beneﬁts in connection with a change in control of our company that exceeds certain prescribed limits, and that
we (or a successor) may forfeit a deduction on the amounts subject to this additional tax. We did not provide any
executive officer, including any NEO, with a ‘‘gross-up’’ or other reimbursement payment for any tax liability that

he or she might owe as a result of the application of Sections 280G or 4999 during 2016 and going forward we
have not agreed and are not otherwise obligated to provide any executive officers, including any NEO, with such
a ‘‘gross-up’’ or other reimbursement payment.

Accounting for Stock-Based Compensation

The compensation and leadership committee takes accounting considerations into account
in designing
compensation plans and arrangements for our executive officers and other employees. Chief among these is
FASB ASC Topic 718,
the standard which governs the accounting treatment of stock-based compensation
awards.

FASB ASC Topic 718 requires us to recognize in our ﬁnancial statements all share-based payment awards to
employees, including grants of options to purchase shares of our common stock and restricted stock units that
may be settled for shares of our common stock to our executive officers, based on their fair values.

FASB ASC Topic 718 also requires us to recognize the compensation cost of our share-based payment awards
in our income statement over the period that an employee, including our executive officers, is required to render
service in exchange for the award (which, generally, will correspond to the award’s vesting schedule).

Compensation-Related Risks

Our board of directors is responsible for the oversight of our risk proﬁle, including compensation-related risks.
The compensation and leadership committee monitors our compensation policies and practices as applied to our
employees to ensure that these policies and practices do not encourage excessive and unnecessary risk-taking.
In 2016, our compensation and leadership committee conducted a review of our compensation programs,
including our executive compensation program, and, based on this review, determined that the level of risk
associated with these programs is not reasonably likely to have a material adverse effect on us.

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Summary Compensation Table

The following table provides information concerning compensation awarded to, earned by or paid to each of our
NEOs for 2016, 2015 and 2014.

Name and Principal Position

Year

Nicholas Woodman,

Chief Executive Officer

Anthony Bates,(7)

former President

Brian McGee,(13)

Chief Financial Officer

Sharon Zezima,(15)
General Counsel

Jack Lazar,(19)

former Chief Financial
Officer

Stock
Awards
($)(1)

—
—
74,686,050

Salary
($)

800,000
805,128
800,000

800,000
805,128
462,222

2016
2015
2014

Option
Awards
($)(2)

Non-Equity
Incentive Plan
Compensation
($)(3)

All Other
Compensation
($)

Total
($)

—
—
—

300,000
—
1,893,600

—
—
715,520

113,255(4)
89(5)
47,525(6)

1,213,255
805,217
77,427,175

2,663,159(10) 12,750,120
10,689(11)
2,524,987
10,400(12) 27,586,968

4,966,912(8)
795,302
4,576,982

4,320,049(9)
913,868
21,821,844

2016

345,769

428,400

417,352

143,291

3,508(14)

1,338,320

2016
2015
2014

334,616
290,494
275,000

76,923
398,013
328,125

309,829
298,238
—

—
795,302
1,622,000

301,872
296,662
—

—
913,868
7,989,124

114,797
43,000
166,980

—
—
388,336

45,205(16)
11,189(17)
10,400(18)

1,106,319
939,583
452,380

872,152(20)
949,075
11,189(21)
2,118,372
10,400(22) 10,337,985

(1) The amounts reported in this column represent the aggregate grant date value of RSUs made to the NEO in 2016, 2015 and 2014
computed in accordance with the FASB ASC Topic 718 and excluding the effect of estimated forfeitures. The grant date fair value for
RSUs is measured based on the closing fair market value of GoPro’s common stock on the date of grant. Note that the amounts
reported in this column reﬂect the accounting cost for these RSUs and do not correspond to the actual economic value that may be
received by the NEO.

(2) The amounts reported in this column represent the aggregate grant date value of option awards made to the NEO in 2016, 2015 and
2014 computed in accordance with FASB ASC Topic 718 and excluding the effect of estimated forfeitures. The assumptions used in
calculating the grant date fair value of the stock options reported in the Option Awards column are set forth in Note 7 to the audited
ﬁnancial statements included in our Annual Report. Note that the amounts reported in this column reﬂect the accounting cost for these
options and do not correspond to the actual economic value that may be received by the NEO.

(3) The amounts reported in this column represent the NEO’s annual cash bonus awards, which for 2016, 2015 and 2014, we awarded
under the 2016 Executive Bonus Plan, the 2015 Executive Bonus Plan, and the 2014 Executive Bonus Plan, respectively, based on the
compensation and leadership committee’s determination of individual and overall company performance.

(4) The amount reported represents $138 as the value of corporate merchandise and a $113,117 one-time payout of vacation time due to

adoption of all employee discretionary time off program.

(5) The amount reported represents $89 as the value of corporate merchandise.

(6) The amount reported includes reimbursement of Mr. Woodman’s legal fees incurred in connection with entering into his June 2014

employment agreement and the value of corporate merchandise.

(7) Mr. Bates began employment with us as our President in June 2014 and terminated employment in December 2016.

(8)

(9)

In addition to the grant date fair value of $3,841,806 for the stock award granted in 2016, the reported amount includes the incremental
fair value of $1,125,106 for stock awards associated with the modiﬁcation of Mr. Bates’ outstanding stock awards on December 31,
2016, in connection with the termination of Mr. Bates’ employment. Mr. Bates’ outstanding stock awards were modiﬁed to allow him to
continue to vest in an additional 25% of the shares initially subject to each previously granted stock award after such termination, if and
so long as Mr. Bates continues to serve on our board of directors.

In addition to the grant date fair value of $3,267,510 for the option award granted in 2016, the reported amount includes the incremental
fair value of $1,052,539 for option awards associated with the modiﬁcation of Mr. Bates’ outstanding option awards on December 31,
2016, in connection with the termination of Mr. Bates’ employment. Mr. Bates’ outstanding option awards were modiﬁed to allow him to
continue to vest in an additional 25% of the shares initially subject to each previously granted option award after such termination, if and
so long as Mr. Bates continues to serve on our board of directors.

(10) The amount reported represents $109 as the value of corporate merchandise, a $92,309 one-time payout of vacation time due to
adoption of all employee discretionary time off program, $10,600 matching 401(k) account contributions, $131,150 paid compensation in
lieu of notice and $2,428,991 in accrued severance and COBRA payments per Mr. Bates’ separation agreement reported on
December 14, 2016.

(11) The amount reported represents $10,600 matching 401(k) account contributions and $89 as the value of corporate merchandise.

(12) The amount reported represents matching 401(k) account contributions.

(13) Mr. McGee was appointed Chief Financial Officer in March 2016.

(14) The amount reported represents $138 as the value of corporate merchandise and a $3,370 one-time payout of vacation time due to

adoption of all employee discretionary time off program.

(15) Ms. Zezima began employment with us as General Counsel in September 2013.

(16) The amount reported represents $138 as the value of corporate merchandise, a $33,967 one-time payout of vacation time due to

adoption of all employee discretionary time off program, $10,600 matching 401(k) and $500 in charitable contribution matching.

(17) The amount reported includes $10,600 in matching 401(k) account contributions, $89 as the value of corporate merchandise and $500 in

charitable contribution matching.

(18) The amount reported represents matching 401(k) account contributions.

(19) Mr. Lazar began employment with us as our Chief Financial Officer in January 2014 and terminated employment in March 2016.

(20) The amount reported represents a $43,012 one-time payout of vacation time due to adoption of all employee discretionary time off
program, $4,804 matching 401(k) account contributions and $824,336 in severance and COBRA payments per Mr. Lazar’s separation
agreement reported on February 3, 2016.

(21) The amount includes $10,600 in matching 401(k) contributions, $89 as the value of corporate merchandise and $500 in charitable

contribution matching.

(22) The amount reported represents matching 401(k) account contributions.

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Grants of Plan-Based Awards

The following table provides information concerning each grant of an award made in 2016 for each of our NEOs
under any plan. This information supplements the information about these awards set forth in the Summary
Compensation Table. All options and stock awards represented in the table below were granted pursuant to our
2014 Plan, unless otherwise noted.

Name

Nicholas Woodman

Anthony Bates

Brian McGee

Sharon Zezima

Jack Lazar

Estimated Future Payouts Under
Non-Equity Incentive Plan Awards

Award
Type

Approval
Date

Grant Date

Threshold
($)(1)

Target
($)

Maximum
($)(2)

Cash

RSU

Option

Cash

RSU

Option

Cash

RSU

Option

Cash

RSU

Option

—

5/4/2016

—

5/4/2016

—

5/4/2016

6/3/2014

2/9/2015

6/6/2016

6/3/2014

2/9/2015

240,000

1,200,000

2,232,000

—

60,000

300,000

558,000

2/3/2016

—

45,000

225,000

418,500

2/11/2016

—

All Other
Stock
Awards:
Number of
Shares or
Stock or
Units

All Other
Option
Awards:
Number of
Securities
Underlying
Options

Exercise
Base Price
of Option
Awards
($/Sh)

Grant Date
Fair Value
of Stock
and Option
Awards
($)(3)

—

374,446(4)
93,611

31,094

4,470

—

—
40,000(12)
—

—
30,465(14)
—

—

715,649(8)
178,912

284,638

9,252

—

—
86,800(13)

—

—
66,116(15)

—

10.92

18.40

44.48

—

10.71

—

10.17

—

3,841,806

815,352(5)
270,820(6)
38,934(7)

3,267,510

541,276(9)
506,790(10)
4,473(11)

—

428,400

417,352

—

309,829

301,872

—

(1) As set forth under our 2016 Bonus Plan, the threshold amount represents corporate ﬁnancial performance (i) 85% achievement of the
revenue target, (ii) 90% achievement of the gross margin (non-GAAP) target, and (iii) 101% achievement of operating expense target
equaling a payment of 20% of target bonus opportunity.

(2) As set forth under our 2016 Bonus Plan, the maximum amount represents corporate ﬁnancial performance (i) above 113% achievement
of the revenue target, (ii) above 113% achievement of the gross margin (non-GAAP) target, and (iii) below 95% achievement of
operating expense target equaling a maximum payment of 186% of target bonus opportunity.

(3) The amounts reported in this column represent

the aggregate grant date value of each award computed in accordance with
FASB ASC Topic 718. The assumptions used in calculating the grant date fair value of the stock reported in the Option Awards column
are set forth in Note 7 to the audited ﬁnancial statements included in our Annual Report. Note that the amounts reported in this column
reﬂect the accounting cost for these awards and do not correspond to the actual economic value that may be received by the NEO.

(4) The RSUs shall vest over a forty-four (44) month period, such that 4.55% of the shares subject to this Award shall vest on August 15,
2016, and 6.82% of the shares subject to this Award shall vest on each three-month anniversary thereafter, subject to Mr. Bates’
continuous status as an employee or service provider through each such date. Mr. Bates terminated employment on December 31, 2016
and remains a member of GoPro’s board of directors. Pursuant to Mr. Bates’ Separation Agreement vesting on 25% of the RSU’s subject
to the award (93,611 shares) was accelerated to December 31, 2016. 25% of the RSUs subject to the award (93,611 shares) shall
continue to vest per the original vesting schedule of the award, serving as Mr. Bates’ board compensation while his service continues,
subject to acceleration upon a change in control as described in the section above ‘‘Arrangements with Mr. Bates.’’ The remaining
144,660 unvested RSUs were cancelled upon Mr. Bates’ employment termination.

(5) The amount reported represents the incremental fair value of $815,352 associated with the modiﬁcation of the RSU on December 31,
2016 in connection with the termination of Mr. Bates’ employment. Mr. Bates’ stock award was modiﬁed to allow him to continue to vest
in an additional 25% of the shares initially subject to this equity award after such termination, if and so long as Mr. Bates continues to
serve on our board of directors, subject to acceleration upon a change in control as described in the section above ‘‘Arrangements with
Mr. Bates.’’

(6) The amount reported represents the incremental fair value of $270,820 associated with the modiﬁcation of the RSU on December 31,
2016 in connection with the termination of Mr. Bates’ employment. Mr. Bates’ stock award was modiﬁed to allow him to continue to vest
in an additional 25% of the shares initially subject to this stock award after such termination, if and so long as Mr. Bates continues to
serve on our board of directors, subject to acceleration upon a change in control as described in the section above ‘‘Arrangements with
Mr. Bates.’’ This stock award was granted pursuant to our 2010 Equity Incentive Plan.

(7) The amount reported represents the incremental fair value of $38,934 associated with the modiﬁcation of the RSU on December 31,
2016 in connection with the termination of Mr. Bates’ employment. Mr. Bates’ stock award was modiﬁed to allow him to continue to vest
in an additional 25% of the shares initially subject to this stock award after such termination, if and so long as Mr. Bates continues to
serve on our board of directors, subject to acceleration upon a change in control as described in the section above ‘‘Arrangements with
Mr. Bates.’’

(8) The options shall vest over a forty-four (44) month period, such that 1/44th of the shares subject to this stock option shall vest on July 06,
2016, and 1/44th of the shares subject to this stock option shall vest on each monthly anniversary thereafter, subject to Mr. Bates’
continuous status as an employee or service provider through each such date. Mr. Bates terminated employment on December 31, 2016
and remains a member of GoPro’s board of directors. Pursuant to Mr. Bates’ Separation Agreement vesting on 25% of the options
subject to the award (178,912 options) was accelerated to December 31, 2016. 25% of the options subject to the award (178,912
options) shall continue to vest per the original vesting schedule of the award, serving as Mr. Bates’ board compensation while his service
continues, subject to acceleration upon a change in control as described in the section above ‘‘Arrangements with Mr. Bates.’’ The
remaining 260,236 unvested options were cancelled upon Mr. Bates employment termination.

(9) The amount reported represents the incremental fair value of $541,276 associated with the modiﬁcation of the option on December 31,
2016 in connection with the termination of Mr. Bates’ employment. Mr. Bates’ option award was modiﬁed to allow him to continue to vest
in an additional 25% of the shares initially subject to this option award after such termination, if and so long as Mr. Bates continues to
serve on our board of directors, subject to acceleration upon a change in control as described in the section above ‘‘Arrangements with
Mr. Bates.’’

(10) The amount reported represents the incremental fair value of $506,790 associated with the modiﬁcation of the option on December 31,
2016 in connection with the termination of Mr. Bates’ employment. Mr. Bates’ option award was modiﬁed to allow him to continue to vest
in an additional 25% of the shares initially subject to this option award after such termination, if and so long as Mr. Bates continues to
serve on our board of directors, subject to acceleration upon a change in control as described in the section above ‘‘Arrangements with
Mr. Bates.’’ This option award was granted pursuant to our 2010 Equity Incentive Plan.

(11) The amount reported represents the incremental fair value of $4,473 associated with the modiﬁcation of the option on December 31,
2016 in connection with the termination of Mr. Bates’ employment. Mr. Bates’ option award was modiﬁed to allow him to continue to vest
in an additional 25% of the shares initially subject to this option award after such termination, if and so long as Mr. Bates continues to
serve on our board of directors, subject to acceleration upon a change in control as described in the section above ‘‘Arrangements with
Mr. Bates.’’

(12) The RSUs shall vest over a four (4) year period, such that 25% of the RSUs shall vest in four equal annual installments commencing on
the one-year anniversary of the Vesting Commencement Date of February 15, 2016, subject to Mr. McGee’s continuous status as an
employee or service provider through each such date. Such RSUs shall accelerate and become vested subject to the terms of the
Change in Control Severance Agreement entered into between Mr. McGee and GoPro.

(13) The options shall vest over a four (4) year period, such that 25% of

to this stock option shall vest exactly
twelve months after the Vesting Commencement Date of February 03, 2016, and that 1/48th of the shares subject to this Option shall
vest each month thereafter on the same day of the month as the Vesting Commencement Date, subject to Mr. McGee’s continuous
status as an employee or service provider through each such date. Such Options shall accelerate and become vested and exercisable
subject to the terms of the Change in Control Severance Agreement entered into between Mr. McGee and GoPro.

the shares subject

(14) The RSUs shall vest over a four (4) year period, such that 25% of the RSUs shall vest in four equal annual installments commencing on
the one-year anniversary of the Vesting Commencement Date of February 15, 2016, subject to Ms. Zezima’s continuous status as an
employee or service provider through each such date. Such RSUs shall accelerate and become vested subject to the terms of the
Change in Control Severance Agreement entered into between Ms. Zezima and GoPro.

(15) The options shall vest over a four (4) year period, such that 25% of

to this stock option shall vest exactly
twelve months after the Vesting Commencement Date of February 11, 2016, and that 1/48th of the shares subject to this Option shall
vest each month thereafter on the same day of the month as the Vesting Commencement Date, subject to Ms. Zezima’s continuous
status as an employee or service provider through each such date. Such Options shall accelerate and become vested and exercisable
subject to the terms of the Change in Control Severance Agreement entered into between Ms. Zezima and GoPro.

the shares subject

Outstanding Equity Awards at December 31, 2016

The following table provides information concerning unexercised options, stock that has not vested and equity
incentive plan awards for each NEO as of December 31, 2016.

Option Awards

Stock Awards

Name
Nicholas Woodman . . . .

Anthony Bates . . . . . . .

Brian McGee . . . . . . . .

Sharon Zezima . . . . . . .

Number of
Securities
Underlying
Unexercised
Options
Exercisable
—

Number of
Securities
Underlying
Options
Unexercisable

—

1,992,468(3)
9,253(5)
276,501(7)

284,638(3)
9,252(5)
178,912(7)

9,375(9)
—

43,718(13)
6,360(15)
—

20,625(9)
86,800(11)

10,938(13)
7,519(15)
66,116(17)

375,000(18)
37,011(20)

Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested
500,000(2)

Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested
($)
4,355,000

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31,094(4)
4,470(6)
93,611(8)

11,250(10)
40,000(12)

5,029(14)
30,465(16)
—

50,000(19)
17,880(21)

270,829
38,934
815,352

97,988
348,400

43,803
265,350
—

435,500
155,735

Option
Exercise
Price
($)(1)
—

18.40
44.48
10.92

28.54
10.71

15.59
44.48
10.17

16.22
44.48

Option
Expiration Date
—

6/2/2024
2/8/2025
6/5/2026

10/14/2025
2/2/2026

9/15/2023
2/8/2025
2/10/2026

1/28/2024
2/8/2025

Jack Lazar . . . . . . . . . .

275,835(18)

—

(1) Represents the fair market value of a share of our common stock. For options granted pre-IPO, market value was determined by our
board of directors on the grant date. For options granted after our IPO, market value is the closing price of our stock on date of grant.

(2) The RSUs shall vest in three portions: (i) 1,500,000 (the ‘‘First Tranche’’), (ii) 1,500,000 (the ‘‘Second Tranche’’), and (iii) 1,500,000 (the

‘‘Third Tranche’’), each as may be adjusted pursuant to Sections 2.2 and 11 of the 2014 Plan, as follows:

The First Tranche vested at grant; as the First Milestone Price and Second Milestone Price were satisﬁed on January 21, 2015 while
Mr. Woodman was in Continuous Service, the Second Tranche vests in equal monthly installments over three years from the Grant Date
as follows: (A) on the First Milestone Price Date, as to 1/36th of the Second Tranche for each full month of Mr. Woodman’s Continuous
Service from the Date of Grant through this First Milestone Price Date, and (B) any portion of the Second Tranche not vested on the
First Milestone Price Date will vest after the First Milestone Price Date such that 1/36th of the Second Tranche will be vested at the end
of each monthly anniversary of the Date of Grant following the First Milestone Price Date, and only for so long as Mr. Woodman remains
in Continuous Service; the Third Tranche will vest in equal monthly installments over three years from the Date of Grant as follows: (A)
on the Second Milestone Price Date, as to 1/36th of the Third Tranche for each full month of Mr. Woodman’s Continuous Service from
the Date of Grant through this Second Milestone Price Date, and (B) any portion of the Third Tranche not vested on the Second
Milestone Price Date will vest after the Second Milestone Price Date such that 1/36th of the Third Tranche will be vested at the end of
each monthly anniversary of the Date of Grant following the Second Milestone Price Date, and only for so long as Mr. Woodman
remains in Continuous Service.

(3) The options shall vest over a four (4) year period, such that 1/48th of the shares subject to this stock option shall vest on each monthly
anniversary of the Vesting Commencement Date of June 2, 2014, subject to Mr. Bates’ continuous status as an employee or service
provider through each such date. Pursuant to Mr. Bates’ Separation Agreement, vesting of 25% of the shares initially subject to this
option award was accelerated on December 31, 2016. If and so long as Mr. Bates continues to serve on our board of directors, an
additional 25% of the shares initially subject to this option award will continue to vest, with the number of shares vesting on each vesting
date pursuant to the original vesting schedule.

(4) The RSUs shall vest as follows: 6.25% of the total number of RSUs will vest on the 3-month anniversary of the Vesting Commencement
Date of June 02, 2014, and 6.25% of the total number of RSUs will vest on each three-month anniversary thereafter, subject to
Mr. Bates’ continuous status as an employee or service provider through each such date. Pursuant to Mr. Bates’ Separation Agreement,
vesting of 25% of the shares initially subject to this RSU award was accelerated on December 31, 2016. If and so long as Mr. Bates
continues to serve on our board of directors, an additional 25% of the shares initially subject to this RSU award will continue to vest, with
the number of shares vesting on each vesting date pursuant to the original vesting schedule.

(5) The options shall vest over a two (2) year period as follows: 1/24th of the shares shall vest on March 9, 2018, and 1/24th of the shares
shall vest monthly thereafter, subject to Mr. Bates’ continuous status as an employee or service provider through each such date.
Mr. Bates terminated employment on December 31, 2016 and remains a member of GoPro’s board of directors. Pursuant to Mr. Bates’
Separation Agreement, vesting of 25% of the shares initially subject to this option award was accelerated on December 31, 2016. If and
so long as Mr. Bates continues to serve on our board of directors, an additional 25% of the shares initially subject to this option award
will continue to vest, with the number of shares vesting on each vesting date pursuant to the original vesting schedule. The remaining
unvested shares were cancelled upon the termination of Mr. Bates employment.

(6) The RSUs shall vest over a two (2) year period as follows: 1/24th shall vest on March 15, 2018, and 1/24th shall vest monthly thereafter,
subject to Mr. Bates’ continuous status as an employee or service provider through each such date. Pursuant to Mr. Bates’ Separation
Agreement, vesting of 25% of the shares initially subject to this RSU award was accelerated on December 31, 2016. If and so long as
Mr. Bates continues to serve on our board of directors, an additional 25% of the shares initially subject to this RSU award will continue to
vest, with the number of shares vesting on each vesting date pursuant to the original vesting schedule. The remaining unvested shares
were cancelled upon the termination of Mr. Bates employment.

(7) The options shall vest over a forty-four (44) month period, such that 1/44th of the shares subject to this stock option shall vest on July 06,
2016, and 1/44th of the shares subject to this stock option shall vest on each monthly anniversary thereafter, subject to Mr. Bates’
continuous status as an employee or service provider through each such date. Pursuant to Mr. Bates’ Separation Agreement, vesting of
25% of the shares initially subject to this option award was accelerated on December 31, 2016. If and so long as Mr. Bates continues to
serve on our board of directors, an additional 25% of the shares initially subject to this option award will continue to vest, with the
number of shares vesting on each vesting date pursuant to the original vesting schedule. The remaining unvested shares were cancelled
upon the termination of Mr. Bates employment.

(8) The RSUs shall vest over a forty-four (44) month period, such that 4.55% of the shares subject to this Award shall vest on August 15,
2016, and 6.82% of the shares subject to this Award shall vest on each three-month anniversary thereafter, subject to Mr. Bates’
continuous status as an employee or service provider through each such date. Pursuant to Mr. Bates’ Separation Agreement, vesting of
25% of the shares initially subject to this RSU award was accelerated on December 31, 2016. If and so long as Mr. Bates continues to
serve on our board of directors, an additional 25% of the shares initially subject to this RSU award will continue to vest, with the number
of shares vesting on each vesting date pursuant to the original vesting schedule. The remaining unvested shares were cancelled upon
the termination of Mr. Bates employment.

(9) The options shall vest over a four (4) year period, such that 25% of

to this stock option shall vest exactly
twelve months after the Vesting Commencement Date of September 28, 2015, and that 1/48th of the shares subject to this Option shall
vest each month thereafter on the same day of the month as the Vesting Commencement Date, subject to Mr. McGee’s continuous
status as an employee or service provider through each such date. The Options shall accelerate and become vested and exercisable
subject to the terms of the Change in Control Severance Agreement entered into between Mr. McGee and GoPro.

the shares subject

(10) The RSUs shall vest over a four (4) year period, in four equal annual

installments commencing on the one-year anniversary of the
Vesting Commencement Date of October 15, 2015, subject to Mr. McGee’s continuous status as an employee or service provider
through each such date. The RSUs shall accelerate and become vested subject to the terms of the Change in Control Severance
Agreement entered into between Mr. McGee and GoPro.

(11) The options shall vest over a four (4) year period, such that 25% of

to this stock option shall vest exactly
twelve months after the Vesting Commencement Date of February 03, 2016, and that 1/48th of the shares subject to this Option shall
vest each month thereafter on the same day of the month as the Vesting Commencement Date, subject to Mr. McGee’s continuous
status as an employee or service provider through each such date. The Options shall accelerate and become vested and exercisable
subject to the terms of the Change in Control Severance Agreement entered into between Mr. McGee and GoPro.

the shares subject

(12) The RSUs shall vest over a four (4) year period, in four equal annual

installments commencing on the one-year anniversary of the
Vesting Commencement Date of February 15, 2016, subject to Mr.McGee’s continuous status as an employee or service provider
through each such date. The RSUs shall accelerate and become vested subject to the terms of the Change in Control Severance
Agreement entered into between Mr. McGee and GoPro.

(13) The options shall vest over a four (4) year period, such that 25% of the shares subject to the option shall vest exactly twelve months
after July 29, 2013, the vesting commencement date, and that 1/48th of the shares subject to the option shall vest each month thereafter
on the same day of the month as the Vesting Commencement Date, subject to Ms. Zezima’s continuous status as an employee or
service provider through each such date. The option shall accelerate and become vested and exercisable subject to the terms of the
Change in Control Severance Agreement entered into between Ms. Zezima and GoPro.

(14) The RSUs shall vest over a four (4) year period, in four equal annual

installments commencing on the one year anniversary of
February 15, 2015, the vesting commencement date, subject to Ms. Zezima’s continuous status as an employee or service provider
through each such date. The RSUs shall accelerate and become vested subject to the terms of the Change in Control Severance
Agreement entered into between Ms. Zezima and GoPro.

(15) The options shall vest over a four (4) year period, such that 25% of the shares subject to the option shall vest exactly twelve months
after February 9, 2015, the vesting commencement date, and that 1/48th of the shares subject to the option shall vest each month
thereafter on the same day of the month as the Vesting Commencement Date, subject to Ms. Zezima’s continuous status as an
employee or service provider through each such date. The option shall accelerate and become vested and exercisable subject to the
terms of the Change in Control Severance Agreement entered into between Ms. Zezima and GoPro.

(16) The RSUs shall vest over a four (4) year period, in four equal annual

installments commencing on the one-year anniversary of the
Vesting Commencement Date of February 15, 2016, subject to Ms. Zezima’s continuous status as an employee or service provider
through each such date. The RSUs shall accelerate and become vested subject to the terms of the Change in Control Severance
Agreement entered into between Ms. Zezima and GoPro.

(17) The options shall vest over a four (4) year period, such that 25% of

to this stock option shall vest exactly
twelve months after the Vesting Commencement Date of February 11, 2016, and that 1/48th of the shares subject to the Option shall vest
each month thereafter on the same day of the month as the Vesting Commencement Date, subject to Ms. Zezima’s continuous status as
an employee or service provider through each such date. The Options shall accelerate and become vested and exercisable subject to
the terms of the Change in Control Severance Agreement entered into between Ms. Zezima and GoPro.

the shares subject

(18) The options shall vest over a ﬁve (5) year period, such that 20% of the shares subject to the option shall vest exactly twelve months
after January 24, 2014, the Vesting Commencement Date, and that 1/60th of the shares subject to the vested each month thereafter on
the same day of the month as the vesting commencement date, subject to Mr. Lazar’s continuous status as an employee or service
provider through each such date. In November 2014 we accelerated 180,000 of the shares underlying the option in connection with
Mr. Lazar’s participation in our follow-on offering. Effective March 11, 2016, Mr. Lazar terminated his employment and ceased to serve as
our Chief Financial Officer. Pursuant to his Change in Control and Other Severance Agreement, Mr. Lazar continued to vest in his option
awards until March 10, 2017, pursuant to his continued service as a consultant.

(19) The RSUs shall vest over a four (4) year period, in four equal annual

installments commencing on the one year anniversary of
January 24, 2014, the Vesting Commencement Date, subject to Mr. Lazar’s continuous status as an employee or service provider
through each such date. Effective March 11, 2016, Mr. Lazar terminated his employment and ceased to serve as our Chief Financial
Officer. Pursuant to his Change in Control and Other Severance Agreement, Mr. Lazar continued to vest in his stock awards until
March 10, 2017, pursuant to his continued service as a consultant.

(20) The options shall vest over a two (2) year period as follows: 1/24th of the shares shall vest on March 9, 2018, and 1/24th of the shares
shall vest monthly thereafter, subject to Mr. Lazar’s continuous status as an employee or service provider through each such date.
Effective March 11, 2016, Mr. Lazar terminated his employment and ceased to serve as our Chief Financial Officer. Pursuant to his
Change in Control and Other Severance Agreement, Mr. Lazar continued to vest in his option awards until March 10, 2017, pursuant to
his continued service as a consultant.

(21) The RSUs shall vest over a two (2) year period as follows: 1/24th shall vest on March 15, 2018, and 1/24th shall vest monthly thereafter,
subject to Mr. Lazar’s continuous status as an employee or service provider through each such date. Effective March 11, 2016, Mr. Lazar
terminated his employment and ceased to serve as our Chief Financial Officer. Pursuant to his Change in Control and Other Severance
Agreement, Mr. Lazar continued to vest in his stock awards until March 10, 2017, pursuant to his continued service as a consultant.

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Option Exercises and Stock Vested

The following table provides information concerning each exercise of options and each vesting of RSUs in 2016
for each NEO as of December 31, 2016. Value realized on option exercise is calculated by subtracting the
aggregate exercise price of the options exercised from the aggregate market value of the shares of common
stock acquired on the date of exercise. Value realized on vesting of RSUs is based on the fair market value of
our common stock on the vesting date multiplied by the number of shares vested and does not necessarily
reﬂect proceeds received by the NEO.

Name
Nicholas Woodman . . . . . . . . . . . . . . . . . . . . . . . .
Anthony Bates . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brian McGee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sharon Zezima . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jack Lazar

Option Awards

Stock Awards

Number of
Shares
Acquired on
Exercise
—
—
—
—
50,000

Value
Realized on
Exercise
($)

—
—
—
—
64,000

Number of
Shares
Acquired on
Vesting
1,000,000
265,020
3,750
1,676
25,000

Value Realized
on Vesting
($)
12,853,320
2,669,907(1)
52,763
19,425
264,750

(1) The amount reﬂects the acceleration of unvested RSUs on December 31, 2016 pursuant to Mr. Bates’ Separation Agreement, which

were settled to Mr. Bates on January 3, 2017.

Estimated Payments and Beneﬁts as of December 31, 2016

The following table sets forth the estimated payments and beneﬁts that would be received by each of the NEOs
(other than Mr. Lazar) upon a change in control of GoPro, upon a termination of employment without cause or
following a resignation for good reason, or in the event of a termination of employment without cause or
in GoPro. This table reﬂects
following a resignation for good reason in connection with a change in control
amounts payable to each NEO assuming that his or her employment was terminated on December 31, 2016,
and the change in control of GoPro also occurred on that date. The closing market price per share of our
common stock on December 30, 2016, was $8.71.

Change In Control

Termination of Employment
No Change of Control

Termination of Employment
Change of Control

Named Executive
Officer
Nicholas Woodman
Anthony Bates
Brian McGee
Sharon Zezima

Accelerated
Vesting of
Equity
Awards
($)(1)

Total
($)
4,355,000(2) 4,355,000(2) 3,200,000

Severance
Payment
($)

—
—
—

— 2,531,150(3)
—
—

—
—

Medical
Beneﬁts
Continuation
($)
36,000
28,991(4)
—
—

Accelerated
Vesting of
Equity
Awards
($)(1)

Total
($)

— 3,236,000
1,405,550(5) 3,965,691
—
—

—
—

Severance
Payment
($)
5,200,000
—
612,500
544,000

Medical
Beneﬁts
Continuation
($)
54,000
—
36,000
36,000

Accelerated
Vesting of
Equity
Awards
($)(1)

Total
($)

4,355,000(2) 12,791,000
—
1,094,888
889,153

—
446,388
309,153

(1) The value of the accelerated vesting of outstanding and unvested equity awards has been calculated based on the closing market price
of our common stock on the NASDAQ Stock Market on December 30, 2016, which was $8.71 per share, less, if applicable, the exercise
price of each outstanding and unvested stock option.

(2) This amount assumes the achievement of certain performance requirements upon the change in control of GoPro.

(3) Mr. Bates terminated employment on December 31, 2016, ending his prior employment agreement and entering into his separation
agreement. The amounts represents $131,150 payment in lieu of notice under California’s WARN act and $2,400,000 in accrued
severance.

(4) The amount reported represents cost for COBRA should Mr. Bates elect to receive the termination beneﬁt.

(5) The amount reported represents RSUs accelerated to vest on December 31, 2016, which were settled in Class A Common Stock on

January 3, 2017.

REPORT OF THE COMPENSATION AND LEADERSHIP COMMITTEE

This report of the compensation and leadership committee is required by the SEC and, in accordance with the
SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any ﬁling under the Securities Act or under the Exchange
Act, except to the extent that we speciﬁcally incorporate this information by reference, and will not otherwise be
deemed ‘‘soliciting material’’ or ‘‘ﬁled’’ under either the Securities Act or the Exchange Act.

Our compensation and leadership committee has reviewed and discussed the ‘‘Compensation Discussion and
Analysis’’ required by Item 402(b) of Regulation S-K with management and based on such review and
discussions,
the
‘‘Compensation Discussion and Analysis’’ be included in this Proxy Statement and incorporated by reference into
our Annual Report on Form 10-K for the year ended December 31, 2016.

the compensation and leadership committee recommended to our board of directors that

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Submitted by the Compensation and Leadership Committee

Peter Gotcher, Chair
Edward Gilhuly
Lauren Zalaznick

EQUITY COMPENSATION PLAN INFORMATION

The following table presents information as of December 31, 2016, with respect to compensation plans under
which shares of our Class A common stock or Class B common stock may be issued.

Plan category

Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total

Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants and
rights(1)

Weighted-average
exercise price
of outstanding
options,
warrants
and rights
($)(2)

(a)
19,392,931(3)
—(5)

19,392,931

(b)
12.173479
—
12.173479

Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities)
reﬂected in
column (a))

—
15,293,211

(1)

Includes our 2010 Equity Incentive Plan (‘‘2010 Plan’’), grants acquired under the Sparrow Acquisition Plan (‘‘SAP Plan’’), and our 2014
Plan. Excludes purchase rights accruing under our 2014 Employee Stock Purchase Plan.

(2) The weighted-average exercise price does not reﬂect the shares that will be issued in connection with the settlement of RSUs, since

RSUs have no exercise price.

(3) Excludes 160,268 RSUs accelerated to vest on 12/31/2016. The RSUs were released on 1/3/2017.

(4) There are no shares of common stock available for issuance under our 2010 Plan or under the SAP Plan, but those plans will continue
to govern the terms of options granted thereunder. Any shares of Class B common stock that are subject to outstanding awards under
the 2010 Plan that are issuable upon the exercise of stock options that expire or become unexercisable for any reason without having
been exercised in full will generally be available for future grant and issuance as shares of Class A common stock under our 2014 Plan.
In addition, the number of shares reserved for issuance under our 2014 Plan increased automatically by 4,851,264 on January 1, 2017
and will increase automatically on the ﬁrst day of January of each of 2018 through 2024 by the number of shares equal to 3% of the total
outstanding shares of our common stock (which includes outstanding shares of our Class A common stock, outstanding shares of our
Class B common stock, outstanding stock options and outstanding RSUs) as of the immediately preceding December 31 or a lower
number approved by our board of directors. There are 5,391,470 shares of Class A common stock available for issuance under the 2014
Employee Stock Purchase Plan. The number of shares reserved for issuance under our 2014 Employee Stock Purchase Plan increased
automatically by 1,617,088 on January 1, 2017 and will increase automatically on the ﬁrst day of January of each year during the term of
the 2014 Employee Stock Purchase Plan by the number of shares equal to 1% of the total outstanding shares of our common stock
(which includes outstanding shares of our Class A common stock, outstanding shares of our Class B common stock, outstanding stock
options and outstanding RSUs) as of the immediately preceding December 31 or a lower number approved by our board of directors.

(5) Excludes outstanding RSUs to acquire 796,367 shares that were assumed as part of an acquisition. In connection with the acquisition,
GoPro has only assumed the outstanding RSUs, but not the plan itself, and therefore, no further awards may be granted under the
acquired-company plan.

RELATED PARTY TRANSACTIONS

In addition to the executive officer and director compensation arrangements discussed above under ‘‘Executive
Compensation’’ and ‘‘Proposal No. 1 — Election of Directors — Director Compensation,’’ respectively, since
January 1, 2016, we were a party to the following transactions in which:

•

we have been or are to be a participant;

the amount involved exceeds $120,000; and

any of our directors, executive officers or holders of more than 5% of our capital stock, or any
immediate family member of or person sharing the household with any of these individuals, had or will
have a direct or indirect material interest.

Offer Letters and Change In Control Agreements

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We have entered into offer letters and change in control severance agreements with our executive officers that,
‘‘Executive
among
control
and
compensation — Employment, Severance and Change in Control Agreements’’
these
agreements.

beneﬁts. See
for information about

severance

change

provide

things,

other

for

Indemniﬁcation of Directors

We have entered into indemniﬁcation agreements with each of our directors and executive officers. These
indemniﬁcation agreements and our restated certiﬁcate of
incorporation and amended and restated bylaws
provide for indemniﬁcation of each of our directors and executive officers to the fullest extent permitted by
Delaware law.

Other Transactions

The Company incurs costs for Company-related chartered aircraft fees for the use of Mr. Woodman’s private
plane. The Company recorded expense of $0.5 million, $0.7 million and $0.6 million in 2016, 2015 and 2014,
respectively. As of December 31, 2016 and 2015, the Company had accounts payable associated with these
aircraft fees of zero and $0.1 million, respectively.

In 2013, the Company entered into a three-year Naming Rights Agreement, which was amended in July 2016 to
continue through the end of 2016, with Mooresville Motorplex, LLC, which Agreement was previously assigned to
Mooresville’s parent The Drylake Group in 2015. The principal of each of Mooresville Motorplex LLC and The
Drylake Group is Justin Marks, son of our board member Michael Marks. As consideration for the naming rights,
the Company paid $0.5 million over the three year period. As of December 31, 2016, the Company has recorded
cumulative expense of $0.1 million, and has also provided 100 GoPro cameras at no cost each year. As of
December 31, 2016 and 2015, the Company had no accounts payable associated with this Agreement.

In 2016, the Company obtained services from SurveyMonkey, Inc. whose CEO, Alexander Lurie, is a member of
the Company’s board of directors. The Company recorded expense of $0.4 million in 2016. As of December 31,
2016, the Company had accounts payable associated with SurveyMonkey, Inc. of $0.0 million.

Adam Dornbusch, who was employed by the Company from June 17, 2013 to December 2, 2016, married the
daughter of our board member Michael Marks in July 2015. In 2016, Mr. Dornbusch received total compensation
of $549,311, including base salary, bonus, and other compensation, and severance payments related to his
separation from the Company. Mr. Marks did not have any ﬁnancial
in the compensation of
Mr. Dornbusch as a GoPro employee.

interest

Review, Approval or Ratiﬁcation of Transactions with Related Parties

Our Corporate Governance Guidelines and our Related Party Transactions policy requires that any transaction
with a related party that must be reported under applicable rules of the SEC (other than compensation-related
matters), must be reviewed and approved or ratiﬁed by our audit committee (other than transactions that are
subject to review by our board of directors as a whole or any other committee of our board of directors). In
approving or rejecting any such proposal, our audit committee will consider the relevant and available facts and
circumstances, including, but not limited to, the extent of the related person’s interest in the transactions, the
material facts of the proposed transaction, including the proposed aggregate value of such transaction and
whether the proposed transaction is on terms no less favorable than terms generally available to an unaffiliated
third-party under the same or similar circumstances.

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REPORT OF THE AUDIT COMMITTEE

The information contained in the following report of our audit committee is not considered to be ‘‘soliciting
material,’’ ‘‘ﬁled’’ or incorporated by reference in any past or future ﬁling by us under the Securities Exchange Act
of 1934 or the Securities Act of 1933 unless and only to the extent that we speciﬁcally incorporate it by
reference.

The audit committee of our board of directors is composed of three independent outside directors. The audit
committee has reviewed and discussed with our management and PricewaterhouseCoopers LLP our audited
ﬁnancial statements for the year ended December 31, 2016. The audit committee has also discussed with
PricewaterhouseCoopers LLP the matters required to be discussed pursuant to AS No. 1301 ‘‘Communications
with Audit Committees’’ as adopted by the Public Company Accounting Oversight Board.

committee has

The audit
from
PricewaterhouseCoopers LLP required by applicable requirements of the Public Company Accounting Oversight
Board regarding the independent accountant’s communications with the audit committee concerning
independence, and has discussed with PricewaterhouseCoopers LLP its independence from GoPro.

received and reviewed the written disclosures and the letter

Based on the review and discussions referred to above, the audit committee recommended to the board of
directors that the audited ﬁnancial statements be included in our Annual Report on Form 10-K for the year ended
December 31, 2016, for ﬁling with the Securities and Exchange Commission.

Submitted by the Audit Committee

Kenneth Goldman, Chair
Edward Gilhuly
Peter Gotcher

ADDITIONAL INFORMATION

Stockholder Proposals to be Presented at Next Annual Meeting

Our bylaws provide that, for stockholder nominations to the board or other proposals to be considered at
an annual meeting, the stockholder must give timely notice thereof in writing to the Secretary at GoPro, Inc.,
3000 Clearview Way, San Mateo, California 94402, Attn: Secretary.

To be timely for the 2018 Annual Stockholder’s Meeting, a stockholder’s notice must be delivered to or mailed
and received by our Secretary at our principal executive offices not earlier than 5:00 p.m. (Paciﬁc Time) on
February 21, 2018 and not later than 5:00 p.m. (Paciﬁc Time) on March 23, 2018. A stockholder’s notice to the
Secretary must set forth each matter the stockholder proposes to bring before the annual meeting and the
information required by our bylaws.

Stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act and intended to be presented
at our 2018 Annual Meeting must be received by the Secretary no later than December 27, 2017 in order to be
considered for inclusion in our proxy materials for that annual meeting.

Section 16(a) Beneﬁcial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, executive officers and any persons who own more than
10% of our common stock, to ﬁle initial reports of ownership and reports of changes in ownership with the SEC.
Such persons are required by SEC regulation to furnish us with copies of all Section 16(a) forms that they ﬁle.
Based solely on its review of the copies of such forms furnished to us and written representations from the
directors and executive officers, we believe that all Section 16(a) ﬁling requirements were timely met in 2016.

Available Information

GoPro will mail without charge, upon written request, a copy of GoPro’s Annual Report, including the ﬁnancial
statements and list of exhibits, and any exhibit speciﬁcally requested. Requests should be sent to:

GoPro, Inc.
3000 Clearview Way
San Mateo, California 94402
Attn: Investor Relations

‘‘Householding’’ — Stockholders Sharing the Same Last Name and Address

The SEC has adopted rules that permit companies and intermediaries (such as brokers) to implement a delivery
procedure called ‘‘householding.’’ Under this procedure, multiple stockholders who reside at the same address
may receive a single copy of our Annual Report and proxy materials, including the Notice of Internet Availability,
unless the affected stockholder has provided contrary instructions. This procedure reduces printing costs and
postage fees, and helps protect the environment as well.

including the Notice of

This year, a number of brokers with account holders who are GoPro stockholders will be ‘‘householding’’ our
Annual Report and proxy materials,
Internet
Availability and, if applicable, a single set of Annual Report and other proxy materials will be delivered to multiple
stockholders sharing an address unless contrary instructions have been received from the affected stockholders.
Once you have received notice from your broker that it will be ‘‘householding’’ communications to your address,
‘‘householding’’ will continue until you are notiﬁed otherwise or until you revoke your consent. Stockholders may
revoke their consent at any time by contacting American Stock Transfer & Trust Company, LLC by calling
(800) 937-5449 or writing to 6201 15th Avenue, Brooklyn, New York 11219.

Internet Availability. A single Notice of

Upon written or oral request, GoPro will promptly deliver a separate copy of the Notice of Internet Availability
and, if applicable, Annual Report and other proxy materials to any stockholder at a shared address to which a
single copy of any of those documents was delivered. To receive a separate copy of the Notice of Internet
Availability and, if applicable, Annual Report and other proxy materials, you may write GoPro’s Investor Relations
department at 3000 Clearview Way, San Mateo, California 94402, Attn:
Investor Relations or
call (855) GOPROHD or (855) 467-7643.

Any stockholders who share the same address and currently receive multiple copies of GoPro’s Notice of
Internet Availability or Annual Report and other proxy materials who wish to receive only one copy in the future
can contact their bank, broker or other holder of record to request information about householding or GoPro’s
Investor Relations department at the address or telephone number listed above.

OTHER MATTERS

The board of directors does not presently intend to bring any other business before the Annual Meeting and, so
far as is known to the board of directors, no matters are to be brought before the Annual Meeting except as
speciﬁed in the Notice of Annual Meeting of Stockholders. As to any business that may arise and properly come
before the Annual Meeting, however, it is intended that proxies, in the form enclosed, will be voted in respect
thereof in accordance with the judgment of the persons voting such proxies.

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APPENDIX A

Reconciliation of GAAP to Non-GAAP Corporate Performance Measures

(dollars in thousands)

GAAP gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition-related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-GAAP gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(dollars in thousands)

GAAP operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition-related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonus expenses and related taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-GAAP bonus plan operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

P
r
o
x
y

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t
a
t
e
m
e
n
t

2016

39.0%
0.1
0.2
—
39.3%

2016

$ 834,889
(67,911)
(15,587)
(20,756)
(42,592)
$ 688,043

A-1

This Page Intentionally Left Blank

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K

(cid:2)

□

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the ﬁscal year ended December 31, 2016

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

GOPRO, INC.
(Exact name of registrant as speciﬁed in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

77-0629474
(I.R.S. Employer Identiﬁcation No.)

3000 Clearview Way
San Mateo, California
(Address of principal executive offices)

94402
(Zip Code)

(650) 332-7600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Class A Common Stock, par value $0.0001
(Title of each class)

The NASDAQ Stock Market LLC

(Name of each exchange on which registered)

Securities registered pursuant to section 12(g) of the Act: None

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Indicate by check mark if the Registrant is a well-known seasoned issuer, as deﬁned in Rule 405 of the Securities Act. Yes (cid:2) No □

Indicate by check mark if the Registrant is not required to ﬁle reports pursuant to Section 13 or Section 15(d) of Act. Yes □ No (cid:2)

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 (cid:2) No □

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such
shorter period that the Registrant was required to submit and post such ﬁles). Yes (cid:2) No □

Indicate by check mark if disclosure of delinquent ﬁlers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
in deﬁnitive proxy or information statements
to the best of Registrant’s knowledge,
contained herein, and will not be contained,
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (cid:2)

Indicate by check mark whether the registrant is a large accelerated ﬁler, an accelerated ﬁler, a non-accelerated ﬁler, or a smaller
reporting company. See the deﬁnitions of ‘‘large accelerated ﬁler,’’ ‘‘accelerated ﬁler’’ and ‘‘smaller reporting company’’ in Rule 12b-2 of
the Exchange Act.

Large accelerated ﬁler (cid:2)

Accelerated ﬁler □

Non accelerated ﬁler □
(Do not check if a smaller reporting company)

Smaller reporting company □

Indicate by check mark whether the registrant is a shell company (as deﬁned in Rule 12b-2 of the Exchange Act). Yes □ No (cid:2)
The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2016, the last business day of the
registrant’s most recently completed second ﬁscal quarter, was approximately $1,097,400,000 based upon the closing price reported for
such date on the NASDAQ Global Select Market.

As of January 31, 2017, 105,351,578 and 36,760,415 shares of Class A and Class B common stock were outstanding, respectively.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s deﬁnitive proxy statement for its 2017 Annual Meeting of Stockholders (the ‘‘Proxy Statement’’), to be ﬁled
within 120 days of the registrant’s ﬁscal year ended December 31, 2016, are incorporated by reference in Part II and Part III of this
to information speciﬁcally incorporated by reference in this Annual Report on
Annual Report on Form 10-K. Except with respect
Form 10-K, the Proxy Statement is not deemed to be ﬁled as part of this Annual Report on Form 10-K.

GoPro, Inc.

Index

PART I

Item 1.

Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2.

Properties

Item 3.

Legal Proceedings

Item 4.

Mine Safety Disclosures

PART II

Item 5.

Market for the Company’s Common Shares, Related Shareholders Matters and Issuer
Purchases of Equity Securities

Item 6.

Selected Consolidated Financial Data

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8.

Financial Statements and Supplementary Data

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 10. Directors, Executive Officers and Corporate Governance

Item 11.

Executive Compensation

PART III

Item 12. Security Ownership of Certain Beneﬁcial Owners and Management and Related

Stockholder Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accounting Fees and Services

Item 15. Exhibits, Financial Statement Schedules

Signatures

PART IV

Page

PART I.
Special note regarding forward-looking statements

their date.

This Annual Report on Form 10-K 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 Annual Report on Form 10-K are
forward-looking. To identify forward-looking statements, we use such words as ‘‘expect,’’ ‘‘anticipate,’’ ‘‘believe,’’
‘‘may,’’ ‘‘will,’’ ‘‘estimate,’’ ‘‘continue,’’ ‘‘intend,’’ ‘‘target,’’ ‘‘goal,’’ ‘‘plan,’’ or variations of such words and similar
expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which
If any of management’s assumptions prove incorrect or should unanticipated
speak only as of
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 under Item 1A. Risk Factors. Forward-looking statements
include plans to include new product offerings in ‘‘Item 1. Business’’ and other sections of this Annual Report on
Form 10-K, projections of results of operations, and any discussion of the trends and other factors that drive our
business and future results in ‘‘Item 7. Management’s Discussion and Analysis of Financial Condition and
including the discussion appearing there under ‘‘Looking Ahead to 2017,’’ and other
Results of Operations,’’
sections of this Annual Report on Form 10-K 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 Annual Report on Form 10-K to reﬂect future events or developments.

Item 1. Business

Overview

GoPro is enabling the way people capture and share their lives from a perspective only achieved with a GoPro.
What began as an idea to help athletes document themselves engaged in sport, GoPro has become a mobile
storytelling solution that helps the world share itself through immersive content. To date, our cameras and
mountable and wearable accessories have generated substantially all of our revenue. We sell our products
globally through retailers, wholesale distributors, and on our website.

Our product offerings include the following:

•

HERO5 is our all-new line of cloud-connected cameras launched in Fall 2016 featuring image
stabilization, telemetry, cloud connectivity and voice control.

GoPro Plus is a new cloud-based storage solution that enables subscribers to easily access, edit and
share content. HERO5 cameras can automatically upload new photos and videos to a subscriber’s
GoPro cloud account.

Quik is our primary mobile editing app that makes it simple to create stunning edits on a smartphone.
Our Quik desktop app provides expanded editing options for power users.

Capture is a mobile app that allows users to preview and play back shots, control their GoPro cameras
and share content on the ﬂy using their smartphones.

Karma is our compact and foldable drone and versatile stabilization solution that includes the Karma
controller, and camera stabilizer, and it all ﬁts in a custom backpack.

Karma Grip is a handheld, body-mountable camera stabilizer that makes it easy to capture zero-shake,
smooth video.

• We also offer a full ecosystem of mountable, wearable and voice activated accessories. See ‘‘Products’’

below for additional information.

We believe our investments in hardware, cloud and mobile have yielded a solid foundational experience for
consumers that we will continue to build upon in 2017.

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Our strategy

Helping our consumers capture and share experiences is at the core of our business. We are committed to
developing solutions that create an easy, seamless experience for consumers to capture, create and enjoy
engaging personal content. When consumers use our products and services,
those products and services
enable compelling, authentic 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, drones, accessories and software applications. We believe new camera features drive a
replacement cycle and attract new users, and mobile editing solutions, auto-upload capabilities, local language
user-interfaces and voice recognition in multiple languages drive the expansion of our total addressable market.
Key components of our growth strategy for 2017 and beyond include the following:

Drive proﬁtability through improved efficiency, lower costs and better execution. We incurred material
operating losses in 2016 and our future success will depend in part upon our ability to manage our operating
expenses effectively.
In the fourth quarter of 2016, we implemented a company-wide restructuring of our
business resulting in a global reduction-in-force, the elimination of several high-cost initiatives, including the
closure of our entertainment group in order to focus our resources on our hardware and software integrated
storytelling solution, and the consolidation of certain leased office facilities. (See ‘‘Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations’’ below for information regarding
restructuring charges in 2016 and future periods.) We believe the actions we have taken will reduce our
operating expenses by more than $100 million in 2017 compared to 2016, while providing a ﬂatter more efficient
global organization that will allow for improved communication and alignment among our functional teams. For
2017 and beyond, we plan to operate efficiently while continuing to invest in those areas that we believe will
grow revenue.

Make the smartphone central to the GoPro experience. We seek to eliminate the pain point of managing
content and making it a seamless and near automatic process for our users to stay engaged in an activity or
moment without having to pause to document their experience. Our new cloud-connected HERO5 cameras,
GoPro Plus service and Quik editing applications all work together enabling an experience that allows users to
capture, auto-upload and edit content on a mobile device without ever touching an SD card or computer. We
believe HERO5’s auto-upload and voice control features provide game-changing experiences for consumers that
we will continue to build upon in the future with our next-generation cameras. Our Quik editing applications
enable users to quickly produce high-quality videos that are fun to create and easy to share across multiple
platforms. We expect
including solutions that
to continue to enhance our software and services offerings,
automate editing on-the-go and enable content transfer from GoPro cameras to mobile devices, with a focus on
making the smartphone a key component in the GoPro user experience.

immersive photo and video content of

Market the improved GoPro experience to our extended community. We believe the global market for
their everyday life and
enabling people to self-capture compelling,
activities is large. To date, our business strategies have enabled us to be a leader in outdoor recreational
markets such as skiing, snowboarding, surﬁng, motorsports, kayaking, hunting and ﬁshing, and we continue to
target other categories, such as music, families, travel and ﬁtness. We believe many consumers in these other
markets may not be as familiar with our brand and products, and while other consumers may know of our brand,
have not recognized GoPro as the go-to product and service for capturing and sharing meaningful moments in
their lives. We believe there is a signiﬁcant opportunity for GoPro to expand awareness through the greater
GoPro community of users, followers and fans and through more targeted media campaigns. Although we
ceased our pursuit of monetizing GoPro content with the recent closure of our entertainment group, we will
continue to develop content that builds awareness for our brand, products and partner platforms.

Grow our business internationally. We believe that
international markets represent a signiﬁcant growth
opportunity for GoPro. Revenue from outside the United States comprised 53%, 52% and 43% of our revenue in
2016, 2015 and 2014, respectively. We believe our continued investments in innovative and easy-to-use
cameras and drones, as well as intuitive and simple software tools and services, will enable us to expand our
user base to a broader group of international consumers. We plan to increase our presence globally through the
active promotion of our brand, the creation and cultivation of regional strategic and marketing partnerships, the

introduction of localized products in international markets with region speciﬁc marketing, and an investment
focus on the biggest opportunities in Europe and the Asia-Paciﬁc region.

Expand the GoPro experience for advanced users. We will continue to pursue our goal of developing the
world’s most versatile cameras, drones and stabilization products for enabling self-capture during any activity or
moment. We will seek to leverage our brand strength and product expertise to drive a hardware upgrade cycle
for our users and opportunistically enter complementary new device categories, including our recent re-entry into
the consumer drone market with our ﬁrst aerial drone, Karma, as well as virtual reality products beyond 2017.
With our drone and our robust ecosystem of mounts and accessories, including a voice-control remote, GoPro
products allow our users to live the moment they wish to capture without having to step outside of that moment
to capture it.

Products

Cameras. We offer the cloud connected HERO5 Black and HERO5 Session cameras as well as the HERO
Session. The HERO5 line of cameras are waterproof
(without a housing), come with select mounting
accessories, and have built-in Wi-Fi and Bluetooth providing connectivity with a mobile device to enable remote
control, content viewing, editing and sharing functionality. Our HERO5 cameras shoot in 4K at 30 frames per
second and also feature multi-language voice control, electronic image stabilization, simpliﬁed controls, and the
ability to auto-upload photos and videos to the cloud via Wi-Fi for easy access and editing with our Quik
application. HERO5 Black features GPS and additional sensors that capture location, elevation, speed and
G-force loads.

Drone and image stabilization. The Karma drone features a compact design that ﬁts in a small backpack,
and the drone is ﬂown using a game-style controller with an integrated touch display. Karma also includes a
3-axis camera stabilizer that can be removed from the drone and attached to the Karma Grip. Karma Grip, which
we also offer as a standalone accessory, is a handheld, body-mountable camera stabilizer product that makes it
easy to capture zero-shake, smooth video.

Virtual reality. Omni is a professional spherical camera rig plus related stitching software. It’s an end-to-end
solution that connects and synchronizes six HERO4 Black cameras for capturing, stitching and publishing
high-resolution virtual reality (360˚) and immersive content.

Mounts and accessories. We offer a wide range of mounts and accessories, either bundled with a camera or
sold separately,
that enhance the functionality and versatility of our cameras and drone, and enable our
consumers to self-capture their experiences during a variety of activities or moments, and from different
viewpoints. These include equipment-based mounts, such as the helmet, handlebar, roll bar, as well as tripod
mounts, such as the 3-way, a 3-in-1 mount that can be used as a camera grip, extension arm or tripod. We also
enable consumers to wear mounts on their bodies, such as our wrist housing, chest harness and head strap.
Our accessories include the Remo voice-activated waterproof remote, a micro-USB card reader, Quik Key, that
plugs into a smartphone for quick transfer of content from the camera, Karma Grip, Smart Remote, Floaty
Backdoor and Battery BacPac, all of which expand the features, versatility and convenience of our cameras.
Additionally, we offer spare batteries, charging accessories and cables to connect our GoPro cameras to
television monitors, ﬂotation devices, dive ﬁlters and anti-fogging solutions.

Applications. We offer mobile and desktop applications to all consumers at no charge that help our users
manage, edit, view and share their content. The Quik mobile app is a fast, easy way to automatically create
awesome videos from users’ smartphone content or
from their GoPro Plus account. Quik for desktop
automatically imports content from a GoPro camera and makes it simple for users to create awe-inspiring videos
synced to music with just a few clicks of the mouse. Our Capture app allows users to preview and play back
shots, control their GoPro and share content on the ﬂy using their smartphones. The GoPro VR app allows users
to explore exciting virtual reality experiences on their smartphone. Our GoPro Passenger app for Karma allows
one person to view the ﬂight and control the GoPro mounted camera while another person ﬂies the drone using
the Karma controller.

Services. GoPro Plus is a cloud-based subscription service that offers a range of premium beneﬁts to our
consumers, including easy auto-upload from a GoPro camera to the cloud for on-the-go access, editing and
sharing using a smartphone and the Quik app, an expanded library of soundtracks, premium support, and

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exclusive discounts on mounts and accessories. GoPro Care is a fee-based service that offers a range of
support options to our consumers, including extended warranty and accidental damage coverage. Revenue
earned to date from GoPro Plus and GoPro Care was not material to our results in 2016.

Seasonality

Our sales are subject to seasonal ﬂuctuation. Historically, we have experienced the highest levels of revenue in
the fourth quarter of
the year, coinciding with the holiday shopping season. Our fourth quarter revenue
comprised 46%, 27% and 45% of our 2016, 2015 and 2014 revenue, respectively. Sales of consumer products
are also heavily inﬂuenced by the timing of the release of new products. Fourth quarter 2016 revenue beneﬁted
from the launch of our HERO5 cameras just prior to the holiday season. In 2015, we launched our products
earlier in the year. Neither historical seasonal patterns nor historical patterns of product introductions should be
considered reliable indicators of our
future revenue or ﬁnancial
performance.

future pattern of product

introductions,

Segment information and geographic data

We operate as one reportable segment. Financial information about geographic areas is presented in Note 12 to
the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.

Backlog

We do not believe that backlog information is material or meaningful as of any particular date or indicative of
future sales, as our customers can change or cancel orders with limited or no penalty and limited advance notice
prior to shipment.

Research and development

We are passionate about developing new and innovative products that inspire our consumers and enhance our
brand. We are constantly innovating to deliver better performance, expanded functionality and increased
convenience to enhance the appeal of our products. In particular, we have increased our investment in software
application development to facilitate convenient and seamless content management, editing and sharing. We
strive to remain a market leader by consistently introducing innovative products that offer optimal performance at
affordable price points and better software functionality.

We have a user experience-driven approach to product development and our CEO leads product design. By
engaging with customers, consumers and opinion leaders in our core markets around the world, our
development team strives to introduce meaningful and empowering new features that expand the versatility and
performance of our products. We also beneﬁt from input received from our in-house production team, our
sponsored athletes and our brand advocates that regularly travel the world capturing content using our products.
We believe leveraging this input will help reﬁne our existing products and inﬂuence future products that give us a
competitive advantage.

The engineering team supports the development of cameras, drones, related mounts and accessories, ﬁrmware
and software. The hardware engineering team is responsible for developing technologies to support
the
concepts developed by our product team. These core technologies include new image silicon processors, image
sensors and lenses, as well as the core algorithms that enable the systems to operate and provide optimal
performance and features. The hardware engineering team also integrates these innovations and ﬁrmware into
our product designs and develops our cameras, drones, mounts and accessories.

The software engineering team develops applications that enhance the functionality of our products and facilitate
the management, editing, sharing and viewing of content. These applications are being developed for mobile,
desktop and web-based platforms and powered by server-side services. The core technologies include rendering
engines to enable video editing, video encoding and decoding for smooth playback and algorithms for moment
identiﬁcation.

Our research and development expense was $358.9 million, $241.7 million and $151.9 million for 2016, 2015
and 2014, respectively.

Manufacturing, logistics and fulﬁllment

Our products are designed and developed in California, Switzerland, France and China, and a signiﬁcant
majority of our manufacturing is outsourced to contract manufacturers located in China. We believe that using
outsourced manufacturing enables greater scale and ﬂexibility than establishing our own manufacturing facilities.
Our strategic commodity team manages the pricing and supply of the key components of our cameras and
drones,
lenses and motors. Several key strategic parts are
purchased from suppliers by us and then consigned to our manufacturers, while the vast majority of parts are
procured directly by our contract manufacturers. We seek to use our commodity team to achieve competitive
pricing on the largest value-add components, and leverage our contract manufacturers’ volume purchases for
best pricing on common parts.

including digital signal processors, sensors,

We have third-party fulﬁllment centers in California, China, Hong Kong, Singapore, Brazil and the Netherlands
that deliver our products from multiple locations worldwide. These facilities are either warehouse/fulﬁllment
centers or full service postponement centers (that perform light assembly in addition to warehouse/fulﬁllment). In
addition, we have third-party centers in California, Czech Republic and China that perform in-region ﬁnal
packaging services. Cameras are typically air freighted while accessories and packaging are generally regionally
procured or shipped via ocean freighter from our manufacturers in China to these fulﬁllment centers, where the
products are packaged for retail sale. Our fulﬁllment strategy allows us to reduce shipping costs, reduce custom
levies, customize products for local languages and improve inventory ﬂexibility.

Sales channels and customers

We offer our products in over 45,000 retail outlets and in over 100 countries through our direct sales channel
and indirectly through our distribution channel. In 2016 and 2015, our direct sales accounted for 55% and 52%
of our revenue, respectively, and our distributors accounted for 45% and 48% of our revenue, respectively.

Direct sales

We sell directly to most of our retailers in the United States, some of our retailers in Europe and directly to
consumers around the world through our e-commerce channels, as described below. We believe that our diverse
direct sales channels are a key differentiator for GoPro.

Independent specialty retailers. We use a network of location-based independent manufacturer representatives
to sell our products to independent specialty retailers in the United States focused on sports and consumer
activity capture markets. Our representatives provide highly personalized service to these retailers, including
taking orders and providing clinics to educate retail sales personnel about GoPro
in-store merchandising,
products and services. We also have an internal, regionally focused sales team that provides a secondary level
of service to both the independent specialty retailers and manufacturer representatives. Independent specialty
retailers generally carry our higher end products, targeting their core customers who we believe tend to be early
adopters of new technologies. Independent specialty retailers outside of the United States represent a similarly
important sales channel for us, and we reach these customers indirectly through our network of international
distributors.

Big box retailers. We sell to large retailers with a national presence, including Amazon.com, Inc., Best Buy,
Inc., Target Corporation and Wal-Mart, Inc. We support these retailers with a dedicated and experienced sales
management team that we believe enables us to reduce channel conﬂict. Best Buy, Inc. accounted for 17%,
14% and 20%, of our total revenue in 2016, 2015 and 2014, respectively, and Amazon.com, Inc. accounted for
11% and 12% of our total revenue in 2016 and 2015, respectively.

Mid-market retailers. We also sell to retailers with a large regional or national presence, often focused on
speciﬁc verticals such as consumer electronics, sporting goods, military, hunting and ﬁshing and motor sports. In
the U.S., we sell directly to these mid-market retailers through our experienced sales teams assigned to
particular accounts and regions.

E-commerce channel. We sell our full
line of products directly to consumers around the world through our
online store at gopro.com, which we market through online and offline advertising. Sales through gopro.com
were less than 10% of our total revenue for 2016, 2015 and 2014.

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Distribution

We sell to over 50 distributors who resell our products to retailers in international markets and to certain speciﬁc
verticals in the United States. We have dedicated sales personnel focused on providing a high level of service to
these distributors, including assisting with product mix planning, channel marketing and in-store merchandising,
development of marketing materials, order assistance and educating the distributors’ sales personnel about
GoPro products.

In-store merchandising

Our in-store merchandising strategy focuses on our iconic GoPro-branded, video-enabled point of purchase
(‘‘POP’’) merchandising displays that are located in nearly all retail outlets where our products are sold. These
displays showcase GoPro videos and attractively present our product ecosystem in a customer-friendly manner.
Our larger retailers help us represent a broader range of products due to their deployment in their stores of our
larger and custom POP displays. Having recognized our success in these stores, coupled with our expanding
product portfolio, we have been successful working with our retailers to further expand the footprint of our POP
displays within existing stores. As of December 31, 2016, we had approximately 29,000 POP displays in retail
outlets worldwide, up year-over-year from approximately 25,000 at December 31, 2015.

Marketing and advertising

Our marketing and advertising programs are focused on engaging consumers by exposing them to compelling
GoPro content and educating them about the new hardware features as well as the power of our solutions for
software editing (Quik mobile and desktop) and content management (GoPro Plus). We believe this approach
enhances our brand while demonstrating the performance, durability and versatility of our products. Our
marketing and advertising efforts span a wide range of consumer interests and leverage both traditional
consumer marketing and lifestyle marketing strategies.

role in our consumer marketing strategy. Our
Consumer marketing. Social media plays an important
consumers capture and share personal GoPro content on social media and content sharing platforms like
Facebook, Instagram, Pinterest, Twitter, Vimeo and YouTube. We estimate social media views of GoPro content
reached approximately 238 million, up over 40% year-over-year, driven by an estimated 160% year-over-year
increase in views on Facebook. In 2016, we gained almost 6 million new followers to our social accounts, which
represented an estimated 30% increase over 2015 to a total of approximately 25.5 million followers. We also
integrate user-generated content and GoPro originally produced content
into advertising campaigns across
various platforms including television, print, online, billboards and other out of home advertising, and at
consumer and trade facing events. This content also supports our in-store channel marketing efforts, appearing
on our POP displays and other in-store marketing materials. Although we ceased our pursuit of monetizing
GoPro content with the recent closure of our entertainment group, we continue to believe GoPro content remains
a signiﬁcant asset that builds awareness for our brand and products.

Lifestyle marketing. Our lifestyle marketing programs focus on expanding GoPro brand awareness by
engaging consumers through relationships with key inﬂuencers, event promotions and other outreach efforts. We
cultivate strong relationships with inﬂuential athletes, celebrities, entertainers and brands, all of whom use our
products to create and share engaging content with their own fans and consumers. We also work directly with
these partners to create compelling content that we leverage to our mutual beneﬁt across the GoPro Network, a
collection of GoPro Channels hosted on a variety of online destinations and partner platforms.

Competition

The market for cameras is highly competitive and characterized by frequent product introductions and rapid
technological advances. We believe the principal competitive factors impacting the market for our products
include quality, reliability and user experience, price and performance, design innovation, brand recognition,
marketing and distribution capability, service and support, and brand reputation.

and versatile product design facilitates increased functionality and wearability and we offer a variety of mounts
and other accessories that enable a wide range of consumer use cases that are difficult for other competing
products to address. Further, we offer many professional-grade features within our good, better, best product
offering at attractive consumer price points, including our superview mode, which allows a user to capture an
immersive wide-angle perspective, super high resolution video capability, voice control features, and image
stabilization. We also provide users with a suite of free mobile and desktop applications that enhance the overall
GoPro experience. Moreover, we believe we have achieved signiﬁcant brand recognition in our target vertical
markets. We believe our years of experience working with active and inﬂuential consumers contributes to our
ability to develop attractive products and establishes the authenticity of our brand, thereby differentiating us from
current and potential competitors.

Smartphones and tablets with photo and video functionality have signiﬁcantly displaced the market for traditional
camera sales, and the makers of those devices also have mobile and other content editing applications and
storage for content captured with those devices. Our Quik mobile and desktop editing applications, our Capture
application and our GoPro Plus service may not be as compelling a solution as those offered by other
companies, such as Apple, Inc. and Google, although the Quik mobile application supports content from other
platforms including content from Apple. Also, it is possible that, in the future, the manufacturers of such devices,
such as Apple, Google and Samsung, may design them for use in a range of conditions, including challenging
In addition, new companies may
physical environments, or develop products with features similar to ours.
emerge and offer competitive products directly in our category.

We recently entered the consumer drone market and face signiﬁcant competition from other companies
promoting their own drone and related products. These include established and start up drone manufacturers,
such as DJI Technology Co., Parrot SA and Yuneec International Co., who currently have or are attempting to
gain a substantial share of the emerging international drone market. We believe we compete favorably with
these companies’ products because our Karma system delivers strong versatility to consumers. The combination
of a GoPro camera, removable camera stabilizer, portable drone and backpack allows consumers to create high
quality, stabilized content, in the air, on the ground and mounted to their gear. We believe that our focus on
versatility, GoPro compatibility, ease of use and portability contributes to the attractiveness of our aerial and
stabilization products and differentiates us from current and potential competitors.

Intellectual property

Intellectual property is an important aspect of our business, and our practice is to seek protection for our
intellectual property as appropriate. Our trademarks, including ‘‘GOPRO,’’ ‘‘HERO,’’ ‘‘SESSION,’’ and ‘‘KARMA,’’
and the GoPro logos, among others, are a critical component of the value of our business. In addition, we hold
many issued and pending utility and design patents for innovations that help our consumers capture, create, and
share their content using our cameras, drones, mounts, accessories, and software. Our patents cover areas that
include physical structures, image processing, operational ﬁrmware and software, post-processing software,
distribution software, mount and accessory structures, as well as the ornamental aspects of our hardware and
software products. As of December 31, 2016, we had 208 issued patents and 497 patent applications pending in
the United States, and 112 corresponding issued patents and 165 patent applications pending in foreign
countries. Our issued U.S. patents will expire between 2022 and 2036 and our issued foreign patents will expire
between 2022 and 2041. We cannot be certain that our patent applications will be issued or that any issued
patents will provide us with any competitive advantage or will not be challenged by third parties. We continually
review our development efforts to assess our innovations, including their patentability. We take active measures
to protect our intellectual property against unauthorized third party use,
including misuse of our patents,
copyrights, and trademarks, and other proprietary rights.

In addition to the foregoing protections, we generally control access to and use of our proprietary and other
conﬁdential
information through the use of internal and external controls, including contractual protections in
agreements with employees, contract manufacturers, distributors and others. Despite these protections, we may
be unable to prevent third parties from using our intellectual property without our authorization, breaching any
nondisclosure agreements with us, or independently developing products that are similar to ours, particularly in
those countries where the laws do not protect our proprietary and intellectual property rights as fully as in the
United States.

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Employees

As of December 31, 2016 we had 1,552 employees. None of our employees are currently covered by a
collective bargaining agreement, and we have experienced no work stoppages. We consider our relationship
with our employees to be good.

Corporate and available information

We were incorporated as Woodman Labs,
in California and began doing business as GoPro in
February 2004. We reincorporated in Delaware in December 2011 and in February 2014 we changed our
name to GoPro,
Inc. Our principal executive offices are located at 3000 Clearview Way, San Mateo,
California 94402, and our telephone number is (855) 636-3578. We completed our initial public offering in
July 2014 and our Class A common stock is listed on the NASDAQ Global Select Market under the symbol
‘‘GPRO’’. Our Class B common stock is not listed nor traded on any stock exchange.

Inc.

We have registered and applied to register a number of trademarks with the U.S. Patent and Trademark Office
and the trademark offices of other countries including ‘‘GOPRO,’’
‘‘SESSION’’ and the
GoPro logos. This Annual Report on Form 10-K also includes references to trademarks and service marks of
other entities, and those trademarks and service marks are the property of their respective owners.

‘‘KARMA,’’

‘‘HERO,’’

Our website address is www.gopro.com. Through a link on the Investor Relations section of our website, we
make available the following ﬁlings as soon as reasonably practicable after they are electronically ﬁled with or
furnished to the Securities and Exchange Commission (SEC): our Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports ﬁled or
furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. All such ﬁlings are available free of charge.
The information posted on our website is not incorporated into this report. Further, a copy of this Annual Report
on Form 10-K is located at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.
Information on the operation of
calling the
SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and information statements
and other information regarding our ﬁlings at www.sec.gov.

the Public Reference Room can be obtained by

Item 1A. Risk Factors

You should carefully consider the risks described below and all other information contained in this Annual Report
on Form 10-K before making an investment decision. Our business, ﬁnancial condition, cash ﬂows and operating
results could be materially and adversely affected if any of the following risks, or other risks and uncertainties
that are not yet identiﬁed or that we currently think are immaterial, actually occur. In that event, the trading price
of our shares may decline, and you may lose part or all of your investment.

Risks related to our business and industry

Our future growth depends in part on further penetrating our total addressable market, and we may not
be successful in doing so.

Our growth historically has largely been fueled by the adoption of our products by people looking to self-capture
images of themselves participating in exciting physical activities. We believe that our future growth depends on
continuing to reach and expand our core community of users,
followers and fans and then utilizing that
energized community as brand ambassadors to an extended community. We believe that in order to expand our
market, we must provide both innovative and easy-to-use products as well as intuitive and simple software tools
that enable effortless sharing of content, with the smartphone as central to the GoPro experience. We may not
be able to expand our market through this strategy on a timely basis, or at all, and we may not be successful in
providing tools that our users adopt or believe are easy to use.

In Fall 2016, we launched our integrated storytelling solution comprising our new cloud-connected HERO5
cameras, a new ecosystem of mounts and accessories, our new GoPro Plus cloud-based storage service, our
updated Capture application and updated versions of our Quik mobile and desktop editing applications. We plan
to further build upon our integrated storytelling solution in future periods, and our investments in this solution,
including marketing and advertising expenses, may not successfully drive increased sales of our products and
our users may not adopt our new offerings. If we are not successful
in broadening our user base with our
integrated solution, our future revenue growth will be negatively impacted and we may not recognize beneﬁts
from our investments in the various components of our storytelling solution and the marketing, sales and
advertising costs to promote our solution.

Our growth also depends on expanding our market with new capture perspectives, including spherical and
aerial, which are resource-intensive initiatives in highly competitive markets. While we are investing resources,
including in sales and marketing, to reach these expanded and new consumer markets, we cannot be assured
that we will be successful in doing so. If we are not successful in penetrating additional markets, we might not be
able to grow our revenue and we may not recognize beneﬁts from our investment in new areas.

To remain competitive and stimulate consumer demand, we must effectively manage product
introductions, product transitions and marketing.

We believe that we must continually develop and introduce new products, enhance our existing products and
effectively stimulate customer demand for new and upgraded products to maintain or increase our revenue.

The success of new product introductions depends on a number of factors including, but not limited to, timely
and successful research and development, pricing, market and consumer acceptance, the effective forecasting
and management of product demand, purchase commitments and inventory levels, the availability of products in
appropriate quantities to meet anticipated demand, the management of manufacturing and supply costs, the
management of risks associated with new product production ramp-up issues, and the risk that new products
may have quality issues or other defects or bugs in the early stages of introduction. In addition, the introduction
or announcement of new products or product enhancements may shorten the life cycle of our existing products
or reduce demand for our current products, thereby offsetting any beneﬁts of successful product introductions
and potentially lead to challenges in managing inventory of existing products. Failure to complete product
transitions effectively or in a timely manner could harm our brand and lead to, among other things, lower
revenue, excess prior generation product inventory, or a deﬁcit of new product inventory and reduced proﬁtability.

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For example, in Fall 2016, we experienced production issues that resulted in delayed unit shipments of our new
HERO5 Black cameras in the third and fourth quarters of 2016. In addition, in November 2016, we announced
the withdrawal of all Karma drones after we discovered that some Karma units lost power during operation. As a
result of these issues, our revenues and operating results for the second half of 2016 were negatively impacted.
In addition, in January 2016, we announced the end-of-life for our entry-level HERO line of cameras in order to
simplify our product offering. As a result, we recorded product charges of approximately $57 million and
$8 million to cost of revenue in the fourth quarter of 2015 and ﬁrst quarter of 2016, respectively.

Additionally, our brand and product marketing efforts are critical to stimulating consumer demand. We market our
products globally through a range of advertising and promotional programs and campaigns, including social
media. If we do not successfully market our products, the lack of success or increased costs of promotional
programs could have an adverse effect on our business, ﬁnancial condition and results of operations.

We depend on sales of our cameras, mounts and accessories for substantially all of our revenue, and
any decrease in the sales or change in sales mix of these products would harm our business.

We expect to derive the substantial majority of our revenue from sales of cameras, mounts and accessories for
the foreseeable future. A decline in the price or unit demand for these products, whether due to macroeconomic
these products, would harm our
conditions, competition or otherwise, or our inability to increase sales of
business and operating results more seriously than it would if we derived signiﬁcant revenue from a variety of
product lines and services.

While we have developed and released products and services to add to our offerings, we may not be successful
in achieving future revenue growth driven by newly released products and services. For example, concurrently
with our HERO5 camera launch we announced our integrated storytelling solution to make editing and sharing
content from a GoPro easier for our users. If all the components of the storytelling solution do not work together
seamlessly or our users do not adopt them, they may not drive camera sales and our operating results could be
adversely affected. In addition, although we re-launched Karma in the ﬁrst quarter of 2017, drone sales may not
result in long term success or signiﬁcant revenue for us. We cannot be assured that our investments in the
development of software-related products and services, or drones, will result in either increased revenue or
proﬁt. Changes in product mix may harm our ﬁnancial results. If there is a shift in consumer demand from our
higher-priced to lower-priced cameras without a corresponding increase in units sold, our revenues and gross
proﬁt could decrease.

As a result, our future growth and ﬁnancial performance may continue to depend heavily on our ability to
develop and sell enhanced versions of our cameras, mounts and accessories. If we fail to deliver product
enhancements, new releases or new products and services that appeal to consumers, our future ﬁnancial
condition, operating results and cash ﬂows will be materially affected. Further, our products are discretionary
items for consumers subject to changing preferences. The overall market for consumer electronics is highly
competitive and consumers may choose to spend their dollars on products or devices offered by our competitors
or other consumer electronics companies instead of on GoPro products, which may adversely affect our sales.

An economic downturn or economic uncertainty in our key U.S. and international markets, as well as
ﬂuctuations in currency exchange rates, may adversely affect consumer discretionary spending and
demand for our products.

Factors affecting the level of consumer spending include general market conditions, macroeconomic conditions,
ﬂuctuations in foreign exchange rates and interest rates, and other factors such as consumer conﬁdence, the
availability and cost of consumer credit, levels of unemployment and tax rates. The substantial majority of our
sales occur in U.S. dollars and an increase in the value of the dollar against the Euro and other currencies could
increase the real cost to consumers of our products in those markets outside the United States. If global
economic conditions are volatile or
reduce
purchases of our products resulting in consumer demand for our products that may not reach our sales targets.
For example, the recent referendum vote in the U.K. to exit the European Union, commonly known as ‘‘Brexit’’,
caused signiﬁcant short term volatility in global stock markets as well as currency exchange rate ﬂuctuations,
resulting in further strengthening of the U.S. dollar. Further, as a result of the increase in the value of the U.S.
dollar against the Euro and British Pound in recent periods, we have increased the prices of certain products to

if economic conditions deteriorate, consumers may delay or

customers in euro zone countries to maintain our proﬁt margins in these markets. These changes have
increased the real cost to customers and consumers of our products in these markets, which may reduce
purchases of our products and have a negative impact on our future international revenue. Further strengthening
of the U.S. dollar and/or weakness in the economies of euro zone countries could adversely impact sales of our
products in the European region, which would have a material negative impact on our future operating results.
Our sensitivity to economic cycles and any related ﬂuctuation in consumer demand could adversely affect our
business, ﬁnancial condition and operating results.

If we are unable to anticipate consumer preferences and successfully develop desirable products and
solutions, we might not be able to maintain or increase our revenue and proﬁtability.

Our success depends on our ability to identify and originate product trends as well as to anticipate, gauge and
react to changing consumer demands in a timely manner. All of our products are subject to changing consumer
preferences that cannot be predicted with certainty and lead times for our products may make it more difficult for
us to respond rapidly to new or changing product or consumer preferences. If we are unable to introduce
appealing new products or novel technologies in a timely manner, or our new products or technologies are not
accepted or adopted by consumers, our competitors may increase their market share, which could hurt our
competitive position.

Our research and development efforts are complex and require us to incur substantial expenses to support the
development of our next generation cameras, drones, mobile and desktop editing applications, and other new
products and services. Our
research and development expense was $358.9 million, $241.7 million and
$151.9 million for 2016, 2015 and 2014, respectively. We expect that our research and development expenses
will continue to be substantial in 2017 but less than expense levels incurred in 2016. Our more limited research
and development investment in 2017 may require us to forego investment in certain products or features which
might have been successful and we may not choose the right features, products, or services to update or
enhance. Unanticipated problems in developing products could also divert substantial resources, which may
impair our ability to develop new products and enhancements of existing products, and could further increase
our costs. For example, in the fourth quarter of 2016, we diverted resources to investigate and resolve an issue
related to our Karma drone after discovering that some Karma units lost power during operation.

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We may not be able to achieve an acceptable return, if any, on our research and development efforts, and our
business may be adversely effected. As we continually seek to enhance our products, we will incur additional
costs to incorporate new or revised features. We might not be able to, or determine that it is not in our interests
to, raise prices to compensate for any additional costs.

Our entrance into the consumer drone market is subject to numerous risks and uncertainties.

We began resuming shipments of Karma in the United States in the ﬁrst quarter of 2017 and expect to begin
shipping internationally in Spring 2017. We have no prior experience in the consumer drone market and expect
to face signiﬁcant competition from incumbent companies promoting their own drone and related products.
These include established and start up drone manufacturers, such as DJI Technology Co., Parrot SA and
Yuneec International Co., who currently have or are attempting to gain a substantial share of the emerging
global drone market. A nascent industry of software developers developing for the drone market is growing and if
we do not support this third party developer movement, we may forego the beneﬁts of this developer ecosystem.
Failure to effectively compete in this new market could damage our reputation, limit our growth and negatively
affect our operating results. Furthermore, we are committed long-term to the drone market and we expect to
continue to invest signiﬁcant resources for the foreseeable future.

Regulations and legislation relating to the distribution, sale and use of consumer drones in the United States and
other countries where we plan to sell our drones are evolving and may be subject to future changes that could
negatively impact our sales of such products. It is possible that further U.S. federal or state regulations or
regulations in other countries could restrict the use of recreational drones and/or require speciﬁc registration,
certiﬁcation, qualiﬁcations or design modiﬁcations, which could have an unfavorable impact on our future
business, ﬁnancial position and operating results.

In addition, our drones and related product offerings present new and difficult technical challenges, and we may
be subject to claims if users experience failures or other quality issues. For example, in November 2016, we

withdrew Karma drones from the market after we discovered that some Karma units lost power during operation.
No related injuries or property damage have been reported and we have offered a full refund to Karma
purchasers. If our drones malfunction or contain errors or defects in the future, collisions or crashes could occur
resulting in property damage, personal
injury or death. If any of these events occurs, we could be subject to
signiﬁcant liability for personal injury and property damage.

We operate in a highly competitive market and the size and resources of some of our competitors may
allow them to compete more effectively than we can, which could result in a loss of our market share
and a decrease in our revenue and proﬁtability.

The market for cameras is highly competitive. Further, competition has intensiﬁed as existing competitors have
introduced new and more competitive offerings alongside their existing products, and as market entrants have
introduced new products into our markets. Increased competition and changing consumer preferences may
result in pricing pressures, reduced proﬁt margins and may impede our ability to continue to increase the sales
of our products or cause us to lose market share, any of which could substantially harm our business and results
of operations.

We compete against established, well-known camera manufacturers such as Canon Inc., Fujiﬁlm Corporation,
Nikon Corporation, Olympus Corporation and Vivitar Corporation, as well as large, diversiﬁed electronics
companies such as, Panasonic Corporation, Samsung Electronics Co. and Sony Corporation and specialty
companies such as Garmin Ltd. Many of our current competitors have substantial market share, diversiﬁed
product lines, well-established supply and distribution systems, strong worldwide brand recognition and greater
ﬁnancial, marketing, research and development and other resources than we do. Many of our existing and
potential competitors enjoy substantial competitive advantages, such as longer operating histories; the capacity
to leverage their sales efforts and marketing expenditures across a broader portfolio of products; broader
distribution and established relationships with channel partners; access to larger established customer bases;
greater
intellectual property portfolios; and the ability to bundle
competitive offerings with other products and services. Further, new companies may emerge and offer
competitive products. We are aware that certain companies have developed cameras designed and packaged to
appear similar to our products, which may confuse consumers or distract consumers from purchasing GoPro
products.

resources to make acquisitions;

larger

Moreover, smartphones and tablets with photo and video functionality have signiﬁcantly displaced the market for
traditional cameras, and the makers of those devices also have mobile and other content editing applications
and storage for content captured with those devices. Our Quik mobile and desktop editing applications, Capture
application and our GoPro Plus service may not be as compelling a solution as those offered by other
companies, such as Apple, Inc. and Google, although the Quik mobile application supports content from other
platforms including content from Apple and Google. Also, it is possible that, in the future, the manufacturers of
smartphones and tablets, such as Apple, Google, and Samsung, may design them for use in a range of
conditions, including challenging physical environments, or develop products with features similar to ours.

We may not be able to achieve revenue growth or proﬁtability in the future.

We have historically experienced signiﬁcant revenue growth. As our revenue has increased, our annual growth
rate has slowed or declined, and our historical results should not be considered as indicative of our future
performance. For example, our annual revenue grew rapidly from $986 million in 2013 to $1.62 billion in 2015
and then declined to $1.19 billion in 2016. In future periods, we could again experience a decline in revenue, or
revenue could grow more slowly than we expect, which could have a material negative effect on our future
operating results.

In addition, we incurred a substantial operating loss of $373 million in 2016 as compared to operating income of
$54.7 million in 2015. Lower levels of revenue or higher levels of operating expense investment in future periods

losses or limited proﬁtability. Although we have implemented restructuring actions to
may result in additional
reduce our future operating expenses, we may not realize the cost savings expected from these actions. We
may continue to incur signiﬁcant losses in the future for a number of reasons, including other risks described in
this Annual Report on Form 10-K, and we may encounter unforeseen expenses, difficulties, complications,
delays and other unknown factors.

If our sales fall below our forecasts, especially during the holiday season, our overall ﬁnancial condition
and results of operations could be adversely affected.

Seasonal consumer shopping patterns signiﬁcantly affect our business. We have traditionally experienced
greater revenues in the fourth quarter of each year due to demand related to the holiday season, and in
some years, including 2016, the launch of new products heading into the holiday season. Fourth quarter revenue
comprised 46%, 27% and 45% of our 2016, 2015 and 2014 revenue, respectively. Given the strong seasonal
nature of our sales, appropriate forecasting is critical to our operations. We anticipate that this seasonal impact
is likely to continue and any shortfalls in expected fourth quarter revenue, due to macroeconomic conditions,
product release patterns, a decline in the effectiveness of our promotional activities, supply chain disruptions, or
for any other reason, could cause our annual results of operations to suffer signiﬁcantly. For example, as a result
of production issues impacting launch volumes of our HERO5 Black cameras and the recall of our Karma
drones, we were limited in our ability to meet initial estimated customer demand for the 2016 holiday season. In
addition, we typically experience lower revenue in the ﬁrst quarter. First quarter revenue comprised 15%, 22%
and 17% of our 2016, 2015 and 2014 revenue, respectively.

In contrast, a substantial portion of our expenses are personnel related and include salaries, stock-based
compensation, beneﬁts and incentive-based compensation plan expenses, which are not seasonal
in nature.
Accordingly,
in the event of revenue shortfalls, we are generally unable to mitigate a negative impact on
operating margins in the short term. For example, we recorded a substantial net loss for 2016 due to lower
levels of revenue and higher levels of operating expense investment. To the extent such revenue shortfalls recur
in future periods, our operating results would be harmed.

We face substantial risks related to inventory, purchase commitments and long-lived assets, and we
could incur material charges related to these items that adversely affect our operating results.

To ensure adequate inventory supply and meet the demands of our retailers and distributors, we must forecast
inventory needs and place orders with our contract manufacturers and component suppliers based on our
estimates of future demand for particular products as well as accurately track the level of product inventory in
the channel to ensure we are not in an over or under supply situation. To the extent we discontinue the
manufacturing and sales of any products or services, we must manage the inventory liquidation, supplier
commitments and customer expectations. For example, in the fourth quarter of 2015 and ﬁrst quarter of 2016,
we recorded product charges of $57 million and $8 million,
for excess purchase order
commitments, excess inventory, and obsolete tooling, relating to the end-of-life of our entry-level HERO products
and slower than anticipated overall demand.

respectively,

No assurance can be given that we will not incur additional charges in future periods related to our inventory
management or that we will not underestimate or overestimate forecast sales in a future period. Our ability to
accurately forecast demand for our products is affected by many factors, including product introductions by us
inventory levels, unanticipated changes in general market demand,
and our competitors, channel
macroeconomic conditions or consumer conﬁdence. If we do not accurately forecast customer demand for our
products, we may in future periods be unable to meet customer, retailer or distributor demand for our products,
or may be required to incur higher costs to secure the necessary production capacity and components, and our
business and operating results could be adversely affected.

If we fail to manage our operating expenses effectively, our ﬁnancial performance may continue to
suffer.

Our success will depend in part upon our ability to manage our operating expenses effectively. We incurred
signiﬁcant operating losses in 2016 and, as of December 31, 2016, we had an accumulated deﬁcit of
$275 million. In the ﬁrst and fourth quarters of 2016, we implemented global reductions-in-force and other
restructuring actions to reduce our future operating expenses. Although we plan to seek to operate efficiently and

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to manage our costs effectively, we may not realize the cost savings expected from these actions. We will need
to continue to improve our operational, ﬁnancial and management controls, reporting processes and procedures
and ﬁnancial and business information systems. We are also investing in areas we believe will grow revenue
and our operating expenses might increase as a result of these investments. If we are unable to operate
efficiently and manage our costs, we may continue to incur signiﬁcant losses in the future and may not be able
to achieve or maintain proﬁtability.

In the future,
in response to unfavorable market conditions or consumer demand, we may again need to
strategically realign our resources, adjust our product line and/or enact price reductions in order to stimulate
demand, and implement additional restructurings and workforce reductions. Any such actions may result in the
recording of special charges including inventory-related write-offs, workforce reductions, or other restructuring
costs. Additionally, our estimates with respect to the useful life or ultimate recoverability of our assets, including
purchased intangible assets and tooling, could also change and result in impairment charges.

Our international business operations account for a signiﬁcant portion of our revenue and operating
expenses and are subject to challenges and risks.

Revenue from outside the United States comprised 53%, 52% and 43% of our revenue in 2016, 2015 and 2014,
respectively, and we expect this portion to continue to be signiﬁcant in the future. Further, our supply chain
partners have operations in countries including China, Brazil, Hong Kong, Singapore, Czech Republic, Japan
and the Netherlands. We intend to expand our relationships in these countries and may establish additional
relationships in other countries as we continue to expand our international operations. Operating in foreign
countries requires signiﬁcant resources and considerable management attention, and we may enter new
geographic markets where we have limited or no experience in marketing, selling, and deploying our products.
International expansion has required and will continue to require us to invest signiﬁcant
funds and other
resources and we cannot be assured our efforts will be successful. International sales and operations may be
subject to risks such as:

•

difficulties in staffing and managing foreign operations;

burdens of complying with a wide variety of laws and regulations, including environmental, packaging and
labeling, and drone regulations;

adverse tax effects and foreign exchange controls making it difficult to repatriate earnings and cash;

the impact of foreign currency exchange rates and interest rates;

political and economic instability;

terrorist activities and natural disasters;

trade restrictions;

differing employment practices and laws and labor disruptions;

the imposition of government controls;

lesser degrees of intellectual property protection;

tariffs and customs duties and the classiﬁcations of our goods by applicable governmental bodies;

a legal system subject to undue inﬂuence or corruption; and

a business culture in which illegal sales practices may be prevalent.

The occurrence of any of these risks could negatively affect our international business and consequently our
business, operating results and ﬁnancial condition.

We depend on key personnel to operate and grow our business. If we are unable to retain, attract and
integrate qualiﬁed personnel, our ability to develop and successfully grow our business could be
harmed.

We believe that our future success is highly dependent on the contributions of our CEO and our executive
officers, as well as our ability to attract and retain highly skilled and experienced research and development,
sales and marketing and other personnel in the United States and abroad. All of our employees, including our
executive officers, are free to terminate their employment relationship with us at any time, and their knowledge of
our business and industry may be difficult to replace.

In the fourth quarter of 2016, we began implementing a restructuring of our business and announced the
resignation of our President, and in January 2017, we appointed our Senior Vice President of Software and
Services to be our Chief Operating Officer. These changes, and any future changes, in our operations and
management team could be disruptive to our operations. Our restructuring actions and any future restructuring
actions could have an adverse impact on our business as a result of decreases in employee morale and the
failure to meet operational targets due to the loss of employees. If more of our key employees leave, we may not
be able to fully integrate new personnel or replicate the prior working relationships, and our operations could
suffer. Furthermore, if our founder and CEO, Nick Woodman, left the Company, his departure could affect our
ability to continue to attract other top executives and potentially negatively impact the view of our brand.

Qualiﬁed individuals are in high demand, and we may incur signiﬁcant costs to attract and retain them. While we
utilize competitive salary, bonus and long-term incentive packages to recruit new employees, many of
the
companies with which we compete for experienced personnel also have greater resources than we do.
Competition for qualiﬁed personnel
is particularly intense in the San Francisco Bay Area, where our
headquarters are located. We have, from time to time, experienced, and we expect to continue to experience,
difficulty in hiring and retaining highly skilled employees with appropriate qualiﬁcations.
job
candidates and existing employees often consider the value of the equity awards they receive in connection with
their employment. Fluctuations in the price of our Class A common stock may make it more difficult or costly to
use equity compensation to motivate, incentivize and retain our employees. For example, during 2016, our stock
price ranged from a high of $18.69 in the ﬁrst quarter to a low of $8.69 in the fourth quarter. If we are unable to
attract and retain highly skilled personnel, we may not be able to achieve our strategic objectives, and our
business, ﬁnancial condition and operating results could be adversely affected.

In addition,

We may acquire other businesses, which could require signiﬁcant management attention, disrupt our
business, dilute stockholder value and adversely affect our operating results.

We have completed several acquisitions and expect
to evaluate additional acquisitions of, or strategic
investments in, other companies, products or technologies that we believe are complementary to our business.
For example, in the ﬁrst half of 2016, we acquired two mobile editing application companies for aggregate cash
consideration of approximately $104 million.

We may not be able to ﬁnd suitable acquisition candidates and we may not be able to complete acquisitions on
favorable terms, if at all. If we do complete acquisitions, we may not ultimately strengthen our competitive
position or achieve our goals, and any acquisitions we complete could be viewed negatively by users or
investors. In addition, if we fail to successfully integrate such acquisitions, or the technologies associated with
such acquisitions, the revenue and operating results of the combined company could be adversely affected.
Acquisitions may disrupt our ongoing operations, divert management from their primary responsibilities, subject
us to additional
increase our expenses and adversely impact our business, ﬁnancial condition,
operating results and cash ﬂows. We may not successfully evaluate or utilize the acquired technology and
accurately forecast the ﬁnancial
impact of an acquisition transaction, including accounting charges. We have
recorded signiﬁcant goodwill and intangible assets in connection with our acquisitions, and in the future, if our
acquisitions do not yield expected revenue, we may be required to take material impairment charges that could
adversely affect our results of operations.

liabilities,

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We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which
could affect our ﬁnancial condition or the value of our capital stock. The sale of equity to ﬁnance any such
in increased ﬁxed
acquisitions could result

in dilution to our stockholders.

If we incur debt

it would result

obligations and could also subject us to covenants or other restrictions that would impede our ability to manage
our operations. In addition, our future operating results may be impacted by performance earnouts or contingent
payments. For example, for our 2016 acquisitions, aggregate deferred cash and stock compensation of up to
to meeting speciﬁed future
approximately $35 million is payable to certain continuing employees subject
in
employment conditions. Furthermore, acquisitions may require large one-time charges and can result
increased debt or contingent
liabilities, adverse tax consequences, additional stock-based compensation
expense and the recording and subsequent amortization or impairments of amounts related to certain purchased
intangible assets, any of which could negatively impact our future results of operations.

We may not be able to secure additional ﬁnancing on favorable terms, or at all, to meet our future capital
needs.

In the future, we may require additional capital to respond to business opportunities, challenges, acquisitions or
unforeseen circumstances and may determine to engage in equity or debt ﬁnancings or enter into credit facilities
for other reasons. We may not be able to timely secure additional ﬁnancing on favorable terms, or at all. For
example, our current credit facility contains restrictive covenants relating to our capital raising activities and other
ﬁnancial and operational matters, and any debt ﬁnancing obtained by us in the future could involve further
restrictive covenants, which may make it more difficult for us to obtain additional capital and to pursue business
opportunities, including potential acquisitions. If we raise additional funds through the issuance of equity or
convertible debt or other equity-linked securities, our existing stockholders could suffer signiﬁcant dilution. If we
are unable to obtain adequate ﬁnancing under our credit facility, or alternative sources, when we require it, our
ability to grow or support our business and to respond to business challenges could be signiﬁcantly limited. In
the event additional ﬁnancing is required from outside sources, we may not be able to raise it on terms
acceptable to us or at all.

Our success depends on our ability to maintain the value and reputation of our brand.

‘‘KARMA,’’

Our success depends on the value and reputation of our brand, including our primary trademarks ‘‘GOPRO,’’
‘‘HERO,’’
to the growth of our
‘‘SESSION’’ and the GoPro logos. The GoPro brand is integral
business and expansion into new markets. Maintaining, promoting and positioning our brand will largely depend
on the success of our marketing and merchandising efforts, our ability to provide consistent, high quality
products, and our consumers’ satisfaction with the technical support and software updates we provide. Failure to
grow and maintain our brand or negative publicity related to our products, our consumers’ user-generated
content, the athletes we sponsor, the celebrities we are associated with, or the labor policies of any of our
suppliers or manufacturers could adversely impact our brand, business and operating results. Maintaining and
enhancing our brand also requires substantial ﬁnancial investments, although there is no guarantee that these
investments will increase sales of our products or positively impact our operating results.

We rely on third-party suppliers, some of which are sole-source suppliers, to provide components for
our products.

Our ability to meet customer demand depends, in part, on our ability to obtain timely and adequate delivery of
components for our products. All of
the components that go into the manufacturing of our cameras and
accessories are sourced from third-party suppliers, and some of these components are provided by a single
supplier or by a supplier that could potentially become a competitor.

If we lose access to components from a particular supplier, or experience a signiﬁcant disruption in the supply of
products and components from a current supplier, we may be unable to locate alternative suppliers of
comparable quality at an acceptable price, or at all, and our business could be materially and adversely affected.
In addition, if we experience a signiﬁcant increase in demand for our products, our suppliers might not have the
capacity or elect not to meet our needs as they allocate components to other customers. Identifying a suitable
supplier is an involved process that requires us to become satisﬁed with the supplier’s quality control,
responsiveness and service, ﬁnancial stability and labor and other ethical practices, and if we seek to source
materials from new suppliers there can be no assurance that we could do so in a manner that does not disrupt
the manufacture and sale of our products. Our reliance on single source, or a small number of, suppliers
involves a number of additional risks, including risks related to: supplier capacity constraints; price increases;
to market
timely delivery; component quality;

failure of a key supplier to remain in business and adjust

conditions; delays in, or the inability to execute on, a supplier roadmap for components and technologies; and
natural disasters, ﬁre, acts of terrorism or other catastrophic events.

In particular, for our camera designs we incorporate image processors, sensors and lens solutions that critically
impact the performance of our products. These components have unique performance proﬁles, and, as a result,
it is not commercially practical to support multiple sources for these components for our camera and drone
products. As an example, we incorporate video compression and image processing semiconductors from
Ambarella, Inc. and we do not currently have alternative suppliers for these key components. In the event that
Ambarella and other suppliers are unable to supply the components that we need to produce our products to
meet anticipated customer demand, our business would be materially and adversely affected.

Any signiﬁcant cybersecurity incidents or disruption of our information systems, and our reliance on
Software-as-a-Service (SaaS)
technologies from third parties, could adversely affect our business
operations and ﬁnancial results.

We are increasingly dependent on information systems to process transactions, manage our supply chain and
inventory, ship goods on a timely basis, maintain cost-efficient operations, complete timely and accurate ﬁnancial
reporting, operate our e-commerce website and respond to customer inquiries.

Our information systems and those of third parties we use in our operations are vulnerable to cybersecurity risk,
including cyber-attacks such as distributed denial of service (DDoS) attacks, computer viruses, physical or
electronic break-ins that damage operating systems, and similar disruptions. These systems periodically
experience directed attacks intended to lead to interruptions and delays in our operations as well as loss, misuse
or theft of data. We have implemented physical, technical, and administrative safeguards to protect our systems.
To date, unauthorized users have not had a material
there can be no
assurance that attacks will not be successful
In addition, our information systems must be
in the future.
constantly updated, patched, and upgraded to protect against known vulnerabilities and optimize performance.
Material disruptions or slowdown of our systems, including a disruption or slowdown could occur if we are unable
to successfully update, patch and upgrade our systems.

impact on our systems; however,

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System disruptions, failures and slowdowns, whether caused by cyber-attacks, update failures, or other causes,
could affect our ﬁnancial systems and operations. This could cause delays in our supply chain or cause
information, including data related to customer orders, to be lost or delayed which could result in delays in the
delivery of merchandise to our stores and customers or lost sales, especially if the disruption or slowdown
occurred during our seasonally strong fourth quarter. Any of these events could reduce demand for our products,
impair our ability to complete sales through our e-commerce channels and cause our revenue to decline. If
changes in technology cause our information systems to become obsolete, or if our information systems are
inadequate to handle our growth, we could lose customers or our business and operating results could be
adversely affected.

The information systems used by our third-party service providers are vulnerable to these risks as well. In
particular, we are heavily reliant on SaaS enterprise resource planning systems to conduct our order and
inventory management, e-commerce and ﬁnancial transactions and reporting. In addition, we utilize third-party
cloud computing services in connection with our business operations. Problems faced by us or our third-party
including technological or
hosting/cloud computing providers, or content delivery network providers,
business-related disruptions, as well as cybersecurity threats, could adversely impact our business and operating
results, our ability to accurately report our ﬁnancial results, as well as the experience of our consumers, which in
turn could adversely affect our business and operating results.

As we expand our operations, we expect to utilize additional systems and service providers that may also be
essential to managing our business. Our ability to manage our business would suffer if one or more of our
providers suffer an interruption in their business, or experience delays, disruptions or quality control problems in
their operations, or we have to change or add systems and services. While we conduct reasonable diligence on
our service providers, we may not always be able to control the quality of the systems and services we receive
from these providers, which could impair our ability to maintain appropriate internal controls over ﬁnancial
reporting and complete timely and accurate ﬁnancial reporting, and may impact our business, operating results
and ﬁnancial condition.

Security breaches and other disruptions including cyber-attacks, and our actual or perceived failure to
adequately protect business and consumer data and content could harm our brand and our reputation in
the marketplace.

In the ordinary course of our business, we electronically maintain sensitive data, including intellectual property,
our proprietary business information and that of our customers and suppliers, and some personally identiﬁable
information of our customers and employees, in our facilities and on our networks. Through GoPro Plus, users
may store video and image ﬁles, including any telemetry or metadata that the user has chosen to associate with
those ﬁles in the cloud. In our e-commerce services, we process, store and transmit consumer data. We also
collect user data through certain marketing activities. For all of the foregoing internal and customer or consumer
facing data and content collection, we collect and store that information in our or our third-party providers’
electronic systems. These systems may be targets of attacks, such as viruses, malware or phishing attempts by
cyber criminals or other wrongdoers seeking to steal our users’ content or data, or our customer’s information for
ﬁnancial gain or to harm our business operations or reputation. The loss, misuse or compromise of such
information or content may result in costly investigations, remediation efforts and costly notiﬁcation to affected
consumers. If such content were accessed by unauthorized third parties or deleted inadvertently by us or third
parties, our brand and reputation could be adversely affected. Cyber-attacks could also adversely affect our
operating results, consume internal resources, and result in litigation or potential liability for us and otherwise
harm our business. Further, we are subject to general consumer regulations and laws, as well as regulations and
laws speciﬁcally related to security and privacy of consumer data or content. In the event of an incident affecting
the security of consumer data or content, regulators may open an investigation or pursue ﬁnes or penalties for
non-compliance with these laws, or private plaintiffs may sue us, resulting in additional costs and reputational
harm to our business.

Changing laws governing e-commerce and data collection could impede growth and increase the cost of
doing business.

Changing regulations and laws governing the Internet, data privacy, data protection and e-commerce
transactions (including taxation, pricing and electronic communications) could impede the growth of our
e-commerce business, increase our cost of doing business and limit our ability to collect and use information
collected from our users. Further, new regulations limiting our ability to collect, use and disclose consumer data,
or imposing additional requirements with respect to the retention and security of consumer data, could limit our
marketing activities and could adversely affect our business and ﬁnancial condition.

If we do not effectively maintain and further develop our sales channels, including developing and
supporting our retail sales channel and distributors, our business could be harmed.

We depend upon effective sales channels to reach the consumers who are the ultimate purchasers of our
products. In the United States, we primarily sell our products directly through a mix of retail channels, including
big box, mid-market and specialty retailers, and we reach certain U.S. markets through distributors.
In
international markets, we primarily sell through distributors who in turn sell to local retailers; however, we also
have direct sales relationships with certain customers.

We depend on retailers to provide adequate and attractive space for our products and POP displays in their
stores. We further depend on our retailers to employ, educate and motivate their sales personnel to effectively
sell our products. If our retailers do not adequately display our products, choose to reduce the space for our
products and POP displays in their stores or locate them in less than premium positioning, or choose not to carry
some or all of our products or promote competitors’ products over ours or do not effectively explain to customers
the advantages of our products, our sales could decrease and our business could be harmed. Similarly, our
business could be adversely affected if any of our large retail customers were to experience ﬁnancial difficulties,
or change the focus of their businesses in a way that deemphasized the sale of our products. We also continue
to invest in providing new retailers with POP displays and expanding the footprint of our POP displays in existing
stores, and there can be no assurance that this investment will lead to increased revenue.

Our distributors generally offer products from several different manufacturers. Accordingly, we are at risk that
these distributors may give higher priority to selling other companies’ products. We have consolidated our
distributor channels in certain regions, and if we were to lose the services of a distributor, we might need to ﬁnd

another distributor in that area and there can be no assurance of our ability to do so in a timely manner or on
favorable terms. Further, our distributors build inventory in anticipation of future sales, and if such sales do not
occur as rapidly as they anticipate, our distributors will decrease the size of their future product orders. We are
also subject
to the risks of our distributors encountering ﬁnancial difficulties, which could impede their
effectiveness and also expose us to ﬁnancial risk if they are unable to pay for the products they purchase from
us. Additionally, our international distributors buy from us in U.S. dollars and generally sell to retailers in local
currency so signiﬁcant currency ﬂuctuations could impact their proﬁtability, and in turn, affect their ability to buy
future products from us. For example, the Brexit referendum vote in the U.K., caused signiﬁcant short term
volatility in global stock markets as well as currency exchange rate ﬂuctuations, resulting in further strengthening
of the U.S. dollar.

We have converted portions of our distributors’ business into direct sales, and if we were to do this on a larger
scale, it could create signiﬁcant disruptions to our distribution channel and the associated revenue. Any reduction
in sales by our current distributors, loss of key distributors or decrease in revenue from our distributors could
adversely affect our revenue, operating results and ﬁnancial condition.

A small number of retailers and distributors account for a substantial portion of our revenue, and if our
relationships with any of these retailers or distributors were to be terminated or the level of business
with them signiﬁcantly reduced, our business could be harmed.

Our ten largest customers, measured by the revenue we derive from them, accounted for 50%, 52% and 50% of
our revenue for 2016, 2015 and 2014, respectively. One retailer accounted for 17%, 14% and 20% of our
revenue for 2016, 2015 and 2014, respectively. A second retailer accounted for 11% and 12% of our revenue in
2016 and 2015, respectively. The loss of a small number of our large customers, or the reduction in business
with one or more of these customers, could have a signiﬁcant adverse impact on our operating results. In
addition, we may choose to temporarily or permanently stop shipping product to customers who do not follow the
policies and guidelines in our sales agreements, which could have a material negative impact on our revenues
and operating results. Our sales agreements with these large customers do not require them to purchase any
meaningful amount of our products annually and we grant limited rights to return product to some of these large
customers.

If we encounter problems with our distribution system, our ability to deliver our products to the market
and to meet customer expectations could be harmed.

We rely on third-party distribution facilities for substantially all of our product distribution to distributors and
directly to retailers. Our distribution facilities include computer controlled and automated equipment, which
means their operations may be vulnerable to computer viruses or other security risks, the proper operation of
software and hardware, electronic or power interruptions or other system failures. Further, because substantially
all of our products are distributed from only a few locations and by a small number of companies, our operations
could be interrupted by labor difficulties, extreme or severe weather conditions, or ﬂoods, ﬁres or other natural
disasters near our distribution centers, or port shutdowns or other transportation-related interruptions along our
distribution routes. Additionally, we use one primary supplier for the third party distribution and if this supplier
were to incur ﬁnancial difficulties, it could adversely affect our business.

We may be subject to warranty claims that could result in signiﬁcant direct or indirect costs, or we could
experience greater returns from retailers than expected, which could harm our business and operating
results.

We generally provide a 12-month warranty on all of our products, except in the European Union, or EU, where
we provide a two-year warranty on all of our products. Additionally, we plan to resume shipments of our Karma
drone by the end of the ﬁrst quarter of 2017 and we have no historical experience related to warranty claims for
this product. The occurrence of any material defects in our products could make us liable for damages and
warranty claims in excess of our current reserves. In addition, we could incur signiﬁcant costs to correct any
defects, warranty claims or other problems, including costs related to product recalls. Any negative publicity
related to the perceived quality and safety of our products could affect our brand image, decrease retailer,
distributor and consumer conﬁdence and demand, and adversely affect our operating results and ﬁnancial

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condition. Also, while our warranty is limited to repairs and returns, warranty claims may result in litigation, the
occurrence of which could adversely affect our business and operating results.

In 2016, we launched GoPro Care, a fee-based service that offers a range of support options to our consumers,
including extended warranty and accidental damage coverage in the United States, and we plan to expand
GoPro Care internationally. Accidental damage coverage and extended warranties are regulated in the
United States on a state level and are treated differently within each state. Additionally, outside the
United States, regulations for extended warranties and accidental damage vary from country to country.
Changes in interpretation of
the insurance regulations or other laws and regulations concerning extended
warranties and accidental damage coverage on a federal, state, local or international level may cause us to incur
costs or have additional regulatory requirements to meet in the future in order to continue to offer GoPro Care in
compliance with any similar laws adopted in other jurisdictions. Our failure to comply with past, present and
future similar laws could result in reduced sales of our products, reputational damage, penalties and other
sanctions, which could harm our business and ﬁnancial condition.

Consumers may be injured while engaging in activities with our products, and we may be exposed to
claims, or regulations could be imposed, which could adversely affect our brand, operating results and
ﬁnancial condition.

Consumers use our cameras, drones and their associated mounts and accessories to self-capture their
participation in a wide variety of physical activities, including extreme sports, which in many cases carry the risk
of signiﬁcant injury or death. Consumers may also use our drones for a wide range of ﬂight activity, including
aerial data collection, videography and photography. We may be subject to claims that users have been injured
or harmed by or while using our products, including false claims or erroneous reports relating to safety, security
or privacy issues, or that personal property has been damaged as a result of use of our drone. Although we
maintain insurance to help protect us from the risk of such claims, such insurance may not be sufficient or may
not apply to all situations. Similarly, proprietors of establishments at which consumers engage in challenging
physical activities could seek to ban the use of our products in their facilities to limit their own liability. In addition,
if lawmakers or governmental agencies were to determine that the use of our products increased the risk of
injury or harm to all or a subset of our users or should otherwise be restricted to protect consumers, they may
pass laws or adopt regulations that limit the use of our products or increase our liability associated with the use
of our products. Any of these events could adversely affect our brand, operating results and ﬁnancial condition.

Our intellectual property and proprietary rights may not adequately protect our products, and our
business may suffer if it is alleged or determined that our technology, products, or another aspect of our
business infringes third party intellectual property or if third parties infringe our rights.

We own patents, trademarks, copyrights, trade secrets, and other intellectual property (collectively ‘‘intellectual
property’’) related to aspects of our products, software, services and designs. Our commercial success may
depend in part on our ability to obtain, maintain and protect these rights in the United States and abroad.

We regularly ﬁle patent applications to protect innovations arising from our research, development and design as
we deem appropriate. We may fail to apply for patents on important products, services, technologies or designs
in a timely fashion, or at all. We may not have sufficient intellectual property rights in all countries where
unauthorized third party copying or use of our proprietary technology occurs and the scope of our intellectual
property might be more limited in certain countries. Our existing and future patents may not be sufficient to
protect our products, services,
technologies or designs and/or may not prevent others from developing
competing products, services, technologies or designs. We cannot predict the validity and enforceability of our
patents and other intellectual property with certainty.

We have registered, and applied to register, certain of our trademarks in several jurisdictions worldwide. In some
of those jurisdictions, third party ﬁlings exist for the same, similar or otherwise related products or services,
which could block the registration of our marks. Even if we are able to register our marks, competitors may adopt
or ﬁle similar marks to ours, register domain names that mimic or incorporate our marks, or otherwise infringe
upon our trademark rights. Although we police our trademark rights carefully, there can be no assurance that we
are aware of all third party uses or that we will prevail in enforcing our rights in all such instances. Any of these
negative outcomes could impact the strength, value and effectiveness of our brand, as well as our ability to

that we use in our
market our products. We have also registered domain names for websites, or URLs,
business, such as gopro.com. If we are unable to protect our domain names, our brand, business, and operating
results could be adversely affected. Domain names similar to ours have already been registered in the United
States and elsewhere, and we may be unable to prevent third parties from acquiring and using domain names
that infringe, are similar to, or otherwise decrease the value of, our brand or our trademarks. In addition,
although we own gopro.com and various other global top level domains, we might not be able to, or may choose
not to, acquire or maintain other country-speciﬁc versions of the domain name or other potentially similar URLs
in all countries in which we currently conduct or intend to conduct business.

Litigation may be necessary to enforce our intellectual property rights. Initiating infringement proceedings against
third parties can be expensive, take signiﬁcant time, and divert management’s attention from other business
concerns. We may not prevail in litigation to enforce our intellectual property against unauthorized use.

Third parties, including competitors and non-practicing entities, have brought intellectual property infringement
claims against us. We expect to continue to receive such intellectual property claims in the future. While we will
defend the Company vigorously against any such existing and future legal proceedings, we may not prevail
against all such allegations. For example, patent holding companies and practicing entities,
including our
competitors, have alleged infringement of patent or other intellectual property infringement. We may not prevail
against such allegations. We may seek licenses from third parties where appropriate, but they could refuse to
grant us a license or demand commercially unreasonable terms. The occurrence of any of these events may
adversely affect our business, ﬁnancial condition and operating results. Among other things, an adverse ruling in
an intellectual property infringement proceeding could force us to suspend or permanently cease the production
or sale of products/services, face a temporary or permanent injunction, redesign our products/services, rebrand
our products/services, pay signiﬁcant settlement costs, pay third party license fees or damage awards or give up
some of our intellectual property.

If we are unable to maintain or acquire rights to include intellectual property owned by others in the
content distributed by us, our marketing, sales or future business strategy could be affected or we could
be subject to lawsuits relating to our use of this content.

The distribution of GoPro content helps to market our brand and our products. If we cannot continue to acquire
rights to distribute user-generated content or acquire rights to use and distribute music, athlete and celebrity
names and likenesses or other content for our original productions or third party entertainment distribution
channels or for our software products, our marketing efforts could be diminished, our sales could be harmed and
our future content strategy could be adversely affected. In addition, third-party content providers may allege that
we have violated their intellectual property rights. If we are unable to obtain sufficient rights, successfully defend
our use of or otherwise alter our business practices on a timely basis in response to claims of infringement,
third-party intellectual property rights, our business may be
misappropriation, misuse or other violation of
adversely affected. As a user and distributor of content, we face potential
liability for rights of publicity and
privacy, as well as copyright, or trademark infringement or other claims based on the nature and content of
materials that we distribute. If we are found to violate such third party rights, then our business may suffer.

If we encounter issues with our manufacturers or suppliers, our business, brand, and results of
operations could be harmed and we could lose sales.

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insufficient quality control,

We do not have internal manufacturing capabilities and rely on several contract manufacturers, located primarily
in China, to manufacture our products. We cannot be certain that we will not experience operational difficulties
with our manufacturers, including reductions in the availability of production capacity, errors in complying with
increases in
product speciﬁcations,
manufacturing costs and increased lead times. Additionally, our manufacturers may experience disruptions in
their manufacturing operations due to equipment breakdowns, labor strikes or shortages, natural disasters,
component or material shortages, cost increases or other similar problems. Further, in order to minimize their
inventory risk, our manufacturers might not order components from third-party suppliers with adequate lead time,
thereby impacting our ability to meet our demand forecast. Therefore, if we fail to manage our relationship with
our manufacturers effectively, or if they experience operational difficulties, our ability to ship products to our
retailers and distributors could be impaired and our competitive position and reputation could be harmed.

failures to meet production deadlines,

In the event that we receive shipments of products that fail to comply with our technical speciﬁcations or that fail
to conform to our quality control standards, and we are not able to obtain replacement products in a timely
manner, we risk revenue losses from the inability to sell those products, increased administrative and shipping
costs, and lower proﬁtability. Additionally,
if defects are not discovered until after consumers purchase our
products, they could lose conﬁdence in the technical attributes of our products and our business could be
harmed.

We do not control our contract manufacturers or suppliers, including their labor, environmental or other practices.
Environmental regulations or changes in the supply, demand or available sources of natural resources may
affect the availability and cost of goods and services necessary to run our business. We require our contract
manufacturers and suppliers to comply with our formal supplier code of conduct and relevant standards and
have ongoing audit programs in place to assess our suppliers’ compliance with our
requirements. We
periodically conduct audits of our contract manufacturers’ and suppliers’ compliance with our code of conduct,
applicable laws and good industry practices. However, these audits may not be frequent or thorough enough to
detect non-compliance. Deliberate violations of labor, environmental or other laws by our contract manufacturers
or suppliers, or a failure of these parties to follow ethical business practices, could lead to negative publicity and
harm our reputation or brand.

Failure to obtain new, and maintain existing, high-quality event, venue, athlete and celebrity sponsorships
could harm our business.

Establishing relationships with high proﬁle sporting and entertainment events, venues, sports leagues and sports
associations, athletes and celebrity personalities to evaluate, promote and establish product credibility with
consumers, including entering into sponsorship and licensing agreements, has and will continue to be a key
element of our marketing strategy. However, as competition in our markets has increased, the costs of obtaining
and retaining event, venue, athlete and celebrity sponsorships and licensing agreements have increased.
Additionally, we may be forced to sign longer term sponsorships in order to retain relationships. If we are unable
to maintain our current associations with our event, venue, athlete and celebrity partners, or to do so at a
reasonable cost, we could lose the beneﬁts of these relationships, and we may be required to modify and
substantially increase our marketing investments. In addition, actions taken by endorsers of our products that
harm their reputations could also harm our brand image with consumers. The failure to correctly identify high
impact events and venues or build partnerships with those who develop and promote those events and venues,
promising athletes or other appealing personalities to use and endorse our products, or poor performance by our
endorsers, could adversely affect our brand and result in decreased sales of our products.

We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery
Act or similar anti-bribery laws in other jurisdictions in which we operate.

The global nature of our business and the signiﬁcance of our international revenue create various domestic and
local regulatory challenges and subject us to risks associated with our international operations. The U.S. Foreign
Corrupt Practices Act (‘‘FCPA’’), the U.K. Bribery Act 2010, or the U.K. Bribery Act, and similar anti-bribery and
anti-corruption laws in other jurisdictions generally prohibit U.S.-based companies and their intermediaries from
making improper payments to non-U.S. officials for the purpose of obtaining or retaining business, directing
business to another, or securing an advantage. In addition, U.S. public companies are required to maintain
records that accurately and fairly represent
internal
accounting controls. Under the FCPA, U.S. companies may be held liable for the corrupt actions taken by
directors, officers, employees, agents, or other strategic or local partners or representatives. As such, if we or
the FCPA or similar legislation, governmental
our intermediaries fail
authorities in the United States and elsewhere could seek to impose substantial civil and/or criminal ﬁnes and
penalties which could have a material adverse effect on our business, reputation, operating results and ﬁnancial
condition.

their transactions and have an adequate system of

to comply with the requirements of

We operate in areas of the world that experience corruption by government officials to some degree and, in
certain circumstances, compliance with anti-bribery and anti-corruption laws may conﬂict with local customs and
practices. Our global operations require us to import and export
to and from several countries, which
geographically expands our compliance obligations. In addition, changes in such laws could result in increased
regulatory requirements and compliance costs which could adversely affect our business, ﬁnancial condition and
results of operations. We cannot be assured that our employees or other agents will not engage in prohibited
conduct and render us responsible under the FCPA or the U.K. Bribery Act. While we have compliance
programs,
they may not be effective to prevent violations from occurring and employees may engage in
prohibited conduct nonetheless. If we are found to be in violation of the FCPA, the U.K. Bribery Act or other
anti-bribery or anti-corruption laws (either due to acts or inadvertence of our employees, or due to the acts or
inadvertence of others), we could suffer criminal or civil penalties or other sanctions, which could have a material
adverse effect on our business.

We are subject to governmental export and import controls and economic sanctions laws that could
subject us to liability and impair our ability to compete in international markets.

The U.S. and various foreign governments have imposed controls, export license requirements and restrictions
on the import or export of some technologies. Our products are subject to U.S. export controls, and exports of
our products must be made in compliance with various economic and trade sanctions laws. Furthermore,
U.S. export control
laws and economic sanctions prohibit the provision of products and services to countries,
governments, and persons targeted by U.S. sanctions. Even though we take precautions to prevent our products
from being provided to targets of U.S. sanctions, our products, including our ﬁrmware updates, could be provided
to those targets or provided by our customers despite such precautions. Any such provision could have negative
investigations, penalties and reputational harm. Our failure to obtain
consequences,
required import or export approval
for our products could harm our international and domestic sales and
adversely affect our revenue.

including government

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We could be subject to future enforcement action with respect to compliance with governmental export and
import controls and economic sanctions laws that result in penalties, costs, and restrictions on export privileges
that could have a material effect on our business and operating results.

Our effective tax rate and the intended tax beneﬁts of our corporate structure and intercompany
arrangements depend on the application of the tax laws of various jurisdictions and on how we operate
our business.

We are subject to income taxes in the United States and various jurisdictions outside the United States. Our
effective tax rate could ﬂuctuate due to changes in the mix of earnings and losses in countries with differing
statutory tax rates. For example, our effective tax rates could be adversely affected by earnings being lower than
anticipated in countries where we have lower statutory rates and higher than anticipated in countries where we
have higher statutory rates. Our tax expense could also be impacted by changes in non-deductible expenses,
changes in excess tax beneﬁts related to exercises and vesting of stock-based expense, and the applicability of
withholding taxes.

Our future effective tax rates could be unfavorably affected by changes in the tax rates in jurisdictions where our
income is earned, by changes in, or our interpretation, of tax rules and regulations in the jurisdictions in which
we do business, by unanticipated decreases in the amount of earnings in countries with low statutory tax rates,
or by changes in the valuation of our deferred tax assets and liabilities. The United States, the European
Commission, countries in the European Union and other countries where we do business have been considering
changes in relevant tax, accounting and other laws, regulations and interpretations, including changes to tax
laws applicable to corporate multinationals. These potential changes could adversely affect our effective tax
rates or result in other costs to us.

In addition, we are subject to the examination of our income tax returns by the U.S. Internal Revenue Service
(‘‘IRS’’) and other domestic and foreign tax authorities. These tax examinations are expected to focus on our
intercompany transfer pricing practices as well as other matters. We regularly assess the likelihood of outcomes
resulting from these examinations to determine the adequacy of our provision for income taxes and have

reserved for adjustments that may result from the current examinations. We cannot provide assurance that the
ﬁnal determination of any of these examinations will not have an adverse effect on our operating results and
ﬁnancial position.

If we are unable to maintain effective internal controls in the future, we may not be able to produce
timely and accurate ﬁnancial statements, which could adversely impact our investors’ conﬁdence and
our stock price.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we are required to evaluate and determine the
effectiveness of our internal controls over ﬁnancial reporting, and to include a management report assessing the
effectiveness of our internal control over ﬁnancial reporting. We expect that the requirements of these rules and
regulations will continue to increase our legal, accounting and ﬁnancial compliance costs, making some activities
more time consuming and costly, placing signiﬁcant demands on our ﬁnancial and operational resources, as well
as our IT systems.

While we have determined that our internal control over ﬁnancial reporting was effective as of December 31,
2016, we must continue to monitor and assess our internal control over ﬁnancial reporting. Our control
environment may not be sufficient to remediate or prevent future material weaknesses or signiﬁcant deﬁciencies
from occurring. A control system, no matter how well designed and operated, can provide only reasonable
assurance that the control system’s objectives will be met. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will
not occur or that all control issues and all instances of fraud will be detected.

If we are unable to assert that our internal control over ﬁnancial reporting are effective, or if our independent
registered public accounting ﬁrm is unable to express an opinion as to the effectiveness of our internal control
over ﬁnancial reporting, investors may lose conﬁdence in the accuracy and completeness of our ﬁnancial reports
and the market price of our Class A common stock could be negatively affected, and we could become subject
the SEC or other regulatory
to investigations by the stock exchange on which our securities are listed,
authorities.

We use open source software in our platform that may subject our technology to general release or
require us to re-engineer our solutions, which may cause harm to our business.

We use open source software in connection with our services. From time to time, companies that incorporate
open source software into their products have faced claims challenging the ownership of open source software
and/or compliance with open source license terms. Therefore, we could be subject to suits by parties claiming
ownership of what we believe to be open source software or noncompliance with open source licensing terms.
Some open source software licenses require users who distribute or make available open source software as
part of their software to publicly disclose all or part of the source code to such software and/or make available
any derivative works of the open source code on unfavorable terms or at no cost. While we monitor our use of
open source software and try to ensure that none is used in a manner that would require us to disclose the
source code or that would otherwise breach the terms of an open source agreement, such use could
nevertheless occur and we may be required to release our proprietary source code, pay damages for breach of
contract, re-engineer our applications, discontinue sales in the event re-engineering cannot be accomplished on
a timely basis or take other remedial action that may divert resources away from our development efforts, any of
which could adversely affect our business, ﬁnancial condition or operating results.

Any signiﬁcant disruption to our e-commerce business could result in lost sales.

Online sales through gopro.com represent less than 10% of our total revenue. Nonetheless, system interruptions
or delays could cause potential consumers to fail to purchase our products and could harm our reputation and
brand. The operation of our direct to consumer e-commerce business through gopro.com depends on the ability
to maintain the efficient and uninterrupted operation of online order-taking and fulﬁllment operations. Our
e-commerce operations subject us to certain risks that could have an adverse effect on our operating results,
including risks related to the computer systems that operate our website and related support systems, such as
system failures, viruses, cyberattacks, computer hackers and similar disruptions. If we or our designated third
party contractors are unable to maintain and upgrade our e-commerce website or if we encounter system
interruptions or delays, our operating results could be adversely impacted.

If our estimates or judgments relating to our critical accounting policies and estimates prove to be
incorrect, our operating results could be adversely affected.

The preparation of ﬁnancial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the amounts reported in the consolidated ﬁnancial statements and accompanying notes.
We base our estimates on historical experience and on various other assumptions that we believe to be
reasonable under the circumstances, as provided in this Annual Report on Form 10-K in the section titled
‘‘Management’s discussion and analysis of ﬁnancial condition and results of operations.’’ The results of these
estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the
amount of revenue and expenses that are not readily apparent from other sources. Our operating results may be
adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions,
which could cause our operating results to fall below the expectations of securities analysts and investors,
resulting in a decline in our stock price. Signiﬁcant assumptions and estimates used in preparing our
consolidated ﬁnancial statements include those related to revenue recognition, inventory valuation, stock-based
compensation expense, warranty reserves, goodwill and acquired intangible assets, and accounting for income
taxes including deferred tax assets and liabilities.

If we fail to comply with environmental regulations and conﬂict minerals disclosures, our business,
ﬁnancial condition, operating results and reputation could be adversely affected.

We are subject to various federal, state, local and international environmental
laws and regulations including
laws regulating the manufacture, import, use, discharge and disposal of hazardous materials, labeling and notice
requirements relating to potential consumer exposure to certain chemicals, and laws relating to the collection of
and recycling of electrical and electronic equipment and their packaging.

We are also subject to the SEC’s conﬂict minerals rule which requires disclosure by public companies of the
origin, source and chain of custody of speciﬁed minerals, known as conﬂict minerals, that are necessary to the
functionality or production of products manufactured or contracted to be manufactured. The rule requires
companies to obtain sourcing data from suppliers, engage in supply chain due diligence, and ﬁle annually with
the SEC a specialized disclosure report on Form SD covering the prior calendar year. The rule could limit our
ability to source at competitive prices and to secure sufficient quantities of certain minerals (or derivatives
thereof) used in the manufacture of our products, speciﬁcally tantalum, tin, gold and tungsten, as the number of
suppliers that provide conﬂict-free minerals may be limited. We have and will continue to incur costs associated
with complying with the rule, such as costs related to the determination of the origin, source and chain of
custody of the minerals used in our products, the adoption of conﬂict minerals-related governance policies,
processes and controls, and possible changes to products or sources of supply as a result of such activities.
Within our supply chain, we may not be able to sufficiently verify the origins of the relevant minerals used in our
products through the data collection and due diligence procedures that we implement, which may harm our
reputation. We continue to investigate the presence of conﬂict materials within our supply chain.

Although we have policies and procedures in place requiring our contract manufacturers and major component
suppliers to comply with applicable federal, state, local and international requirements, we cannot conﬁrm that
our manufacturers and suppliers consistently comply with these requirements. In addition, if there are changes to
these or other laws (or their interpretation) or if new similar laws are passed in other jurisdictions, we may be
required to re-engineer our products to use components compatible with these regulations. This re-engineering
and component substitution could result in additional costs to us or disrupt our operations or logistics.

Changes in interpretation of any federal, state, local or international regulation may cause us to incur costs or
have additional regulatory requirements to meet in the future in order to comply, or with any similar laws adopted
in other jurisdictions. Our failure to comply with past, present and future similar laws could result in reduced
sales of our products, substantial product
reputational damage, penalties and other
inventory write-offs,
sanctions, which could harm our business and ﬁnancial condition. We also expect that our products will be
laws and regulations on an ongoing basis. To date, our expenditures for
affected by new environmental
impact on our results of operations or cash ﬂows and,
environmental compliance have not had a material
although we cannot predict the future impact of such laws or regulations, they will likely result in additional costs
and may increase penalties associated with violations or require us to change the content of our products or how
they are manufactured, which could have a material adverse effect on our business and ﬁnancial condition.

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Catastrophic events or political instability could disrupt and cause harm to our business.

Our headquarters is located in the San Francisco Bay Area of California, an area susceptible to earthquakes. A
major earthquake or other natural disaster, ﬁre, act of terrorism or other catastrophic event in California or
elsewhere that results in the destruction or disruption of any of our critical business operations or information
technology systems could severely affect our ability to conduct normal business operations and, as a result, our
future operating results could be harmed. Our key manufacturing, supply and distribution partners have global
operations including in China, Hong Kong, Japan, Netherlands, Singapore and Taiwan as well as the
United States. Political
instability or catastrophic events in any of those countries could adversely affect our
business in the future, our ﬁnancial condition and operating results.

Risks related to Ownership of our Class A Common Stock

Our stock price has been and will likely continue to be volatile.

Since shares of our Class A common stock were sold in our IPO in July 2014 at a price of $24.00 per share, our
stock price has ranged from $8.69 to $98.47 through December 31, 2016. Our stock price may ﬂuctuate in
response to a number of events and factors, such as quarterly operating results; changes in our ﬁnancial
projections provided to the public or our failure to meet those projections; the public’s reaction to our press
releases, other public announcements and ﬁlings with the SEC; signiﬁcant
transactions, or new features,
products or services by us or our competitors; changes in ﬁnancial estimates and recommendations by securities
analysts; media coverage of our business and ﬁnancial performance; the operating and stock price performance
of, or other developments involving, other companies that investors may deem comparable to us; trends in our
industry; any signiﬁcant change in our management; and general economic conditions.

In addition, the stock market in general, and the market prices for companies in our industry, have experienced
volatility that often has been unrelated to operating performance. These broad market and industry ﬂuctuations
may adversely affect the price of our stock, regardless of our operating performance. Price volatility over a given
period may cause the average price at which we repurchase our own stock to exceed the stock’s price at a
given point in time. Volatility in our stock price also impacts the value of our equity compensation, which affects
our ability to recruit and retain employees. In addition, some companies that have experienced volatility in the
market price of their stock have been subject to securities class action litigation. We have been the target of this
type of litigation and may continue to be a target in the future. Securities litigation against us could result in
substantial costs and divert our management’s attention from other business concerns, which could harm our
business.

If we fail to meet expectations related to future growth, proﬁtability, or other market expectations, our stock price
may decline signiﬁcantly, which could have a material adverse impact on investor conﬁdence and employee
retention. A sustained decline in our stock price and market capitalization could lead to impairment charges.

The dual class structure of our common stock has the effect of concentrating voting control with our
CEO.

Our Class B common stock has 10 votes per share, and our Class A common stock has one vote per share.
Stockholders who hold shares of Class B common stock hold approximately 78% of the voting power of our
outstanding capital stock as of December 31, 2016 with Mr. Woodman, our Chairman and CEO, holding
approximately 77% of the outstanding voting power. Mr. Woodman is able to control all matters submitted to our
stockholders, including the election of directors, amendments of our organizational documents and any merger,
consolidation, sale of all or substantially all of our assets or other major corporate transaction. This concentrated
control could delay, defer, or prevent a change of control, merger, consolidation, or sale of all or substantially all
of our assets that our other stockholders support, or conversely this concentrated control could result in the
consummation of such a transaction that our other stockholders do not support. This concentrated control could
also discourage a potential investor from acquiring our Class A common stock due to the limited voting power of
such stock relative to the Class B common stock and might harm the trading price of our Class A common stock.

If securities analysts do not publish research or publish inaccurate or unfavorable research about our
business, our stock price and trading volume could decline.

The trading market for our Class A common stock depends in part on the research and reports that securities or
industry analysts publish about us or our business. If one or more of the analysts who cover us downgrade our
stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If
one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand
for our stock could decrease, which might cause our stock price and trading volume to decline.

Delaware law and provisions in our restated certiﬁcate of incorporation and amended and restated
bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price
of our Class A common stock.

Our status as a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law
may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination
with an interested stockholder for a period of three years after the person becomes an interested stockholder,
even if a change in control would be beneﬁcial to our existing stockholders. In addition, our restated certiﬁcate of
incorporation and amended and restated bylaws contain provisions that may make the acquisition of our
company more difficult without the approval of our board of directors, or otherwise adversely affect the rights of
the holders of our Class A and Class B common stock, including the following:

•

our board of directors is not currently classiﬁed, but at such time as all shares of our Class B common stock
have been converted into shares of our Class A common stock, our board of directors will be classiﬁed into
three classes of directors with staggered three-year terms;

so long as any shares of our Class B common stock are outstanding, special meetings of our stockholders
may be called by the holders of 10% of the outstanding voting power of all then outstanding shares of stock,
a majority of our board of directors, the chairman of our board of directors, our chief executive officer or our
president,

when no shares of our Class B common stock are outstanding, only the chairman of our board of directors,
our chief executive officer, our president or a majority of our board of directors will be authorized to call a
special meeting of stockholders;

our stockholders may only take action at a meeting of stockholders and not by written consent;

vacancies on our board of directors may be ﬁlled only by our board of directors and not by stockholders;

directors may be removed from office with or without cause so long as our board of directors is not
classiﬁed, and thereafter directors may be removed from office only for cause;

our restated certiﬁcate of incorporation provides for a dual class common stock structure in which holders of
our Class B common stock have the ability to control the outcome of matters requiring stockholder approval,
even if they own signiﬁcantly less than a majority of the outstanding shares of our Class A and Class B
common stock, including the election of directors and signiﬁcant corporate transactions, such as a merger or
other sale of our company or its assets;

our restated certiﬁcate of incorporation authorizes undesignated preferred stock, the terms of which may be
established, and shares of which may be issued, by our board of directors without stockholder approval and
which may contain voting, liquidation, dividend and other rights superior to those of our Class A and Class B
common stock; and

advance notice procedures apply for stockholders to nominate candidates for election as directors or to
bring matters before an annual meeting of stockholders.

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Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

As of December 31, 2016, we leased office facilities around the world totaling approximately 602,000 square
feet, including approximately 311,000 square feet for our corporate headquarters in San Mateo, California. All of
our properties are currently leased. We believe our existing facilities are adequate to meet our current
requirements. If we were to require additional space, we believe we will be able to obtain such space on
acceptable, commercially reasonable terms. See Note 11 to the Notes to Consolidated Financial Statements of
this Annual Report on Form 10-K for more information about our lease commitments.

Item 3. Legal Proceedings

Shareholder class action lawsuits

Beginning on January 13, 2016, the ﬁrst of four purported shareholder class action lawsuits was ﬁled in the U.S
District Court for the Northern District of California against the Company and certain of its officers (the ‘‘GoPro
Defendants’’). Similar complaints were ﬁled on January 21, 2016, February 4, 2016, and February 19, 2016.
Each of the complaints purports to bring suit on behalf of shareholders who purchased the Company’s publicly
traded securities between July 21, 2015 and January 13, 2016 for the ﬁrst three complaints and between
November 26, 2014 and January 13, 2016 for the last ﬁled complaint. Each complaint purports to allege that
defendants made false and misleading statements about the Company’s business, operations and prospects in
violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and each seeks unspeciﬁed
compensatory damages, fees and costs. On April 21, 2016, the court consolidated the complaints and appointed
lead plaintiff and lead counsel for the ﬁrst three actions (the ‘‘Camia Investments Class Action’’); the court
allowed the fourth action to proceed separately as to the period November 26, 2014 through July 20, 2015 (the
‘‘Majesty Palms Class Action’’) and appointed lead plaintiff and lead counsel for that action. The lead plaintiff in
the Majesty Palms Class Action did not ﬁle an amended complaint and voluntarily dismissed the Majesty Palms
Class Action on July 28, 2016. On September 26, 2016, the GoPro Defendants ﬁled a motion to dismiss the
Camia Investment Class Action. That motion was heard on January 19, 2017 and is pending decision by the
court.

On January 25, 2016, a purported shareholder class action lawsuit was ﬁled in the Superior Court of the State of
California, County of San Mateo, against the Company, certain of its current and former directors and executive
officers and underwriters of the Company’s IPO (‘‘Defendants’’). The complaint purports to bring suit on behalf of
shareholders who purchased the Company’s stock pursuant or traceable to the Registration Statement and
Prospectus issued in connection with the Company’s IPO and alleges claims under Sections 11, 12(a)(2) and 15
of the Securities Act of 1933. The suit seeks unspeciﬁed damages and other relief. A similar complaint was ﬁled
on May 13, 2016, and consolidated on June 7, 2016. Defendants ﬁled a demurrer (motion to dismiss) to the
consolidated action. On July 13, 2016, the court sustained the demurrer dismissing the complaint with leave to
amend the complaint. The plaintiff ﬁled an amended complaint on October 7, 2016. Defendants ﬁled a demurrer
to the amended complaint on October 28, 2016. On December 16, 2016, the court overruled the demurrer with
respect to the Section 11 and 15 claims and sustained the demurrer in part and overruled the demurrer in part
with respect to the Section 12(a)(2) claim.

On November 16, 2016, a purported shareholder class action lawsuit was ﬁled in the U.S. District Court for the
Northern District of California against the Company and Mr. Woodman (‘‘Defendants’’). The complaint purports to
bring suit on behalf of shareholders who purchased the Company’s publicly traded securities between
September 19, 2016 and November 4, 2016. The complaint purports to allege that Defendants made false and
misleading statements about the Company’s business, operations and prospects in violation of Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and seeks unspeciﬁed compensatory damages, fees and
costs. On February 6, 2017, the court appointed lead plaintiff and lead counsel.

We are currently and in the future may continue to be subject to litigation, claims and assertions incidental to our
business, including patent infringement litigation and product liability claims, as well as other litigation of a
non-material nature in the ordinary course of business. Due to inherent uncertainties of litigation, we cannot
accurately predict the ultimate outcome of these matters. We are unable at this time to determine whether the
outcome of the litigation would have a material impact on our business, ﬁnancial condition, results of operations
or cash ﬂows.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II
Item 5. Market for the Company’s Common Shares, Related Shareholder Matters and Issuer Purchases of
Equity Securities

The following table sets forth the high and low closing sale price per share of our Class A common stock, as
reported on the NASDAQ for the periods indicated:

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

2016

2015

High
$ 18.69
$ 13.98
$ 17.15
$ 17.13

Low
$ 9.78
$ 8.80
$ 10.59
$ 8.69

High
$ 66.87
$ 59.41
$ 64.74
$ 30.65

Low
$ 37.95
$ 40.89
$ 29.67
$ 16.89

Holders. As of January 31, 2017,
51 holders of record of our Class B common stock.

there were 97 holders of record of our Class A common stock and

Dividends. We have not declared or paid any cash dividends on our capital stock and do not currently intend
to pay any cash dividends on our Class A or Class B common stock in the foreseeable future.

Securities authorized for issuance under equity compensation plans. The information required by this
item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from our
Proxy Statement to be ﬁled with the SEC for our 2017 Annual Meeting of Stockholders within 120 days after the
end of our ﬁscal year ended December 31, 2016.

Performance graph. The graph below compares the cumulative total return on our Class A common stock with
that of the S&P 500 Index and the S&P 500 Consumer Durables Index. The graph assumes $100 was invested
(with reinvestment of all dividends, as applicable) at the close of market on June 26, 2014 in the Class A
common stock of GoPro, Inc., the S&P 500 Index and the S&P 500 Consumer Durables Index, and its relative
performance is tracked through December 31, 2016. Note that historic stock price performance is not intended to
be indicative of future stock price performance.

Sales of unregistered securities. Not applicable.

registration statement on Form S-1
Use of proceeds. On June 25, 2014,
(File No. 333-196083) effective for our IPO. On November 19, 2014, the SEC declared our registration statement
on Form S-1 (File No. 333-200038) effective for our follow-on offering. There has been no material change in the
planned use of proceeds from our initial public offering or our follow-on offering as described in our ﬁnal
prospectus ﬁled with the SEC on June 26, 2014 and November 17, 2014, respectively.

the SEC declared our

Issuer purchases of equity securities. No shares of our Class A or Class B common stock were purchased
during 2016. Our share repurchase program expired on September 30, 2016.

Item 6. Selected Consolidated Financial Data

The information set forth below for the ﬁve years ended December 31, 2016 is not necessarily indicative of
results of future operations, and should be read in conjunction with ‘‘Management’s Discussion and Analysis of
Financial Condition and Results of Operations’’ and the consolidated ﬁnancial statements, related notes and
other ﬁnancial information included elsewhere in this Annual Report on Form 10-K.

(in thousands, except per share
amounts)
Consolidated statements of
operations data:
Revenue
Gross proﬁt
Gross margin
Operating income (loss)
Net income (loss)

Net income (loss) per share:

Basic
Diluted

Other ﬁnancial information:
Adjusted EBITDA(1)
Non-GAAP net income (loss)(2)
Non-GAAP diluted earnings (loss)

per share(2)

Year ended December 31,

2016
$ 1,185,481
461,920
$

2015
$ 1,619,971
673,214
$

2014
$ 1,394,205
627,235
$

2013
$ 985,737
$ 361,784

2012
$ 526,016
$ 227,486

39.0%

$ (372,969)
$ (419,003)

$
$

(3.01)
(3.01)

$ (192,807)
$ (201,247)

(1.44)

$
$

41.6%

54,748
36,131

0.27
0.25

179,309
111,564

0.76

$
$

45.0%

36.7%

43.2%

187,035
128,088

$ 98,703
$ 60,578

$ 53,617
$ 32,262

1.07
0.92

$
$

0.54
0.47

$
$

0.07
0.07

293,380
188,913

$ 133,726
$ 68,826

$ 75,288
—

1.32

0.50

—

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(1) We deﬁne adjusted EBITDA as net income (loss) adjusted to exclude the impact of: provision for income taxes, interest income, interest

expense, depreciation and amortization, POP display amortization, stock-based compensation, impairment charges and restructuring costs.

(2) We deﬁne non-GAAP net

income as net

income (loss) adjusted to exclude stock-based compensation, acquisition-related costs,
restructuring costs and taxes related to the tax effect of these adjustments. Acquisition-related costs include the amortization of acquired
intangible assets and impairment write-downs (if applicable), as well as third-party transaction costs for legal and other professional
services. Non-GAAP earnings per share considers the conversion of the redeemable convertible preferred stock into shares of common
stock as though the conversion had occurred at the beginning of the period and the initial public offering shares issued July 2014 as if
they had been outstanding since the beginning of the period.

See ‘‘Non-GAAP Financial Measures’’ in Item 7. MD&A below for additional information and a reconciliation of
net income (loss) to Adjusted EBITDA and net income (loss) to non-GAAP net income (loss), and a reconciliation
of the shares used in the calculation of non-GAAP diluted earnings per share.

(in thousands)
Consolidated balance sheet data:
Cash, cash equivalents and
marketable securities

Inventory
Working capital
Total assets
Total indebtedness
Redeemable convertible preferred

stock

Total stockholders’ equity (deﬁcit)

2016

2015

As of December 31,
2014

2013

2012

$ 217,953
167,192
157,074
922,640
—

$ 474,058
188,232
538,066
1,102,976
—

$ 422,256
153,026
564,274
917,691
—

$ 101,410
111,994
57,446
439,671
113,612

$ 36,485
60,412
69,618
246,665
129,395

—
446,945

—
772,033

—
641,204

77,198
(5,366)

77,138
(79,741)

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7. 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 consolidated ﬁnancial statements, related notes and other ﬁnancial information appearing
elsewhere in this Annual Report on Form 10-K. In addition to historical consolidated ﬁnancial information, the
following discussion contains forward-looking statements that reﬂect our plans, estimates and beliefs. Our actual
results could differ materially from those discussed in the forward-looking statements as a result of a variety of
factors, including but not limited to, those discussed in ‘‘Risk Factors’’ and elsewhere in this Annual Report on
Form 10-K. Our MD&A is organized as follows:

•

Overview. Discussion of our business and overall analysis of ﬁnancial and other highlights affecting the
Company in order to provide context for the remainder of MD&A.

Components of Our Results of Operations. Description of the items contained in each operating revenue
and expense caption in the consolidated statements of operations.

Results of Operations. Analysis of our ﬁnancial results comparing 2016 to 2015 and 2015 to 2014.

Liquidity and Capital Resources. Analysis of changes in our balance sheets and cash ﬂows, and
discussion of our ﬁnancial condition and potential sources of liquidity.

Contractual Commitments. Overview of contractual obligations,
off-balance sheet arrangements and indemniﬁcations as of December 31, 2016.

including expected payment schedule,

Critical Accounting Policies and Estimates. Accounting estimates that we believe are most important to
understanding the assumptions and judgments incorporated in our reported ﬁnancial results and forecasts.

Non-GAAP Financial Measures. A presentation of
measures.

results reconciling GAAP to non-GAAP adjusted

Overview

GoPro, Inc. is enabling the way people capture and share their lives from a perspective only achieved with a
GoPro. We are committed to developing solutions that create an easy, seamless experience for consumers to
capture, create and enjoy engaging personal content. To date, our cameras and mountable and wearable
accessories have generated substantially all of our revenue. We sell our products globally through retailers,
wholesale distributors, and on our website.

In Fall 2016, we launched our all-new cloud connected HERO5 cameras, which began shipping in September
2016, and a new ecosystem of mountable, wearable and voice activated accessories. We offer many
professional-grade features within our good-better-best product camera offering of HERO Session, HERO5
Session and HERO5 Black. Our HERO5 cameras feature voice control and can automatically upload photos and
videos to GoPro Plus, a new cloud-based storage solution that enables subscribers to easily access, edit and
share content. Complementing our new HERO5 cameras and GoPro Plus, we also released updated versions of
our Quik mobile and desktop applications and rebranded the GoPro mobile app as Capture. We re-launched our
ﬁrst drone, Karma, in the ﬁrst quarter of 2017. See ‘‘Item 1. Business’’ above for additional information regarding
our products.

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a summary of measures presented in our consolidated ﬁnancial statements and key metrics
used to evaluate our business, measure our performance, develop ﬁnancial
forecasts and make strategic
decisions.

(units and dollars in thousands, except per share amounts)

Q4 2016

Q4 2015

FY 2016

FY 2015

Revenue
Units shipped(1)
Gross margin(2)
Operating expenses
Operating income (loss)
Net income (loss)
Diluted net income (loss) per share
Cash provided by (used in) operations

Other ﬁnancial information:

Adjusted EBITDA(3)
Non-GAAP net income (loss)(4)
Non-GAAP earnings (loss) per share

$ 540,621
2,284

$ 436,603
2,002

$ 1,185,481
4,762

$ 1,619,971
6,584

39.2%

29.4%

39.0%

41.6%

$ 238,703
$ (26,568)
$ (115,709)
$
(0.82)
$ 12,696

$ 169,805
$ (41,294)
$ (34,451)
$
(0.25)
$ 20,848

$
$
834,889
$ (372,969) $
$ (419,003) $
$
(3.01) $
$ (107,753) $

618,466
54,748
36,131
0.25
157,611

$ 44,343
$ 42,367
0.29
$

$
(9,268)
$ (11,396)
(0.08)
$

$ (192,807) $
$ (201,247) $
(1.44) $
$

179,309
111,564
0.76

(1) Represents the number of individually packaged camera units that are shipped during a reporting period, net of any returns. Units

shipped does not include sales of mounts or accessories.

(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, POP display amortization, stock-based compensation, impairment charges and restructuring
costs.

(4) We deﬁne non-GAAP net income (loss) as net income (loss) adjusted to exclude stock-based compensation, acquisition-related costs,
restructuring costs and taxes related to the income tax effect of these adjustments. Acquisition-related costs include amortization and
impairment write-downs (if applicable) of acquired intangible assets, as well as third-party transaction costs for legal and other
professional services.

Reconciliations of non-GAAP adjusted measures to the most directly comparable measures are presented under
‘‘Non-GAAP Financial Measures’’ below.

Full year and fourth quarter 2016 highlights

For the fourth quarter of 2016, we achieved revenue of $540.6 million, up 24% year-over-year, the second
highest revenue quarter in our history. Year-over-year growth was attributable to a 14% increase in units shipped
to 2.3 million, driven by the launch of our new HERO5 cameras prior to the 2016 holiday shopping season, and
a 9% increase in average selling price (deﬁned as total revenue divided by units shipped). We estimate that
overall global channel unit sell-in exceeded sell-through for the fourth quarter. Units shipped included 0.2 million
of previously discontinued cameras, which mostly sold through during the fourth quarter. Excluding the impact of
these discontinued cameras, average selling price would have been up about 17% year-over-year. Comparing
launch periods, units shipped of HERO5 cameras in the fourth quarter of 2016 were approximately 10% higher
than units shipped of HERO4 cameras in the fourth quarter of 2014. However, total revenue for the fourth
quarter of 2016 was lower than we expected due to the unexpected withdrawal of our Karma drone in November
2016 as well as early production issues related to our HERO5 Black cameras that compromised initial launch
volumes. Based on retail price points, our $399 and above cameras accounted for more than 50% of the units
shipped and revenue in the fourth quarter with consumers having a strong preference for our ﬂagship HERO5
Black camera.

Full year 2016 revenue of $1.19 billion was down 27% year-over-year, reﬂecting estimated global channel unit
sell-through that exceeded sell-in for each of the ﬁrst three quarters of 2016 as we worked to reduce channel
inventory before the launch of HERO5. We estimate that global channel unit sell-through exceeded sell-in by
over 10% in 2016. At December 31, 2016, we believe the vast majority of channel inventory consisted of new
products and estimated weeks of inventory were down year-over-year. The average selling price for full year

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GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

2016 was approximately ﬂat as compared to the prior year. We have not experienced any notable pricing
pressures in the average selling price of individual camera models shipped during 2016. See ‘‘Revenue’’ below.

to a
Gross margin of approximately 39% for both the fourth quarter and full year 2016 reﬂected a shift
good-better-best offering of HERO Session, HERO5 Session and HERO5 Black cameras. Gross margin in 2016
was lower than historical levels due primarily to an increase in our average cost per unit shipped, reﬂecting the
enhanced functionality and better capability of our new HERO5 cameras when compared with prior generation
offerings. Gross margin in 2015 was negatively impacted by product alignment charges of $57 million related to
our decision to discontinue the production of entry-level HERO cameras. See ‘‘Gross Margin’’ below.

The year-over-year growth in operating expenses of $68.9 million and $216.4 million in the fourth quarter and full
year 2016,
respectively, compared to the corresponding periods in 2015 was primarily attributable to:
(1) restructuring charges of $36.4 million and $42.6 million, respectively, (2) higher cash-based personnel-related
expenses of approximately $13.2 million and $63.0 million, respectively, driven by a 25% growth in average
global headcount during 2016, and (3) higher advertising and promotional activity costs of $16.9 million and
$58.5 million, respectively. In the ﬁrst and fourth quarters of 2016, we implemented global reductions-in-force
and other restructuring actions to reduce our future operating expenses. See ‘‘Operating Expenses’’ and
‘‘Restructuring Costs’’ below.

GAAP net loss of $115.7 million, or $0.82 loss per share, and $419.0 million, or $3.01 loss per share, for the
fourth quarter and full year 2016, respectively, included charges of approximately $102 million for an income tax
related valuation allowance on U.S. deferred tax assets. For the fourth quarter of 2016, we achieved non-GAAP
net income of $42.4 million, or $0.29 per share, and adjusted EBITDA of $44.3 million, our ﬁrst proﬁtable quarter
on a non-GAAP basis since the third quarter of 2015.

We generated cash ﬂows from operations of $12.7 million in the fourth quarter of 2016 due to increased
revenues associated with the 2016 holiday season that were mostly offset by increased operating expenses. We
ended the year with total cash and investments of $218.0 million, down 54.0% from a year ago. For full year
2016, we used cash ﬂows in operations of $107.8 million, purchased $43.6 million of property and equipment
and completed acquisitions of two mobile editing application companies in the ﬁrst half of 2016 for total purchase
consideration of $104.4 million. In March 2016, we entered into a credit agreement with a syndicate of banks
that provides for a secured revolving credit facility under which we may borrow up to approximately $150 million
as of December 31, 2016. No borrowings have been made from the credit facility to date.

See ‘‘Results of Operations’’ and ‘‘Liquidity and Financial Resources’’ below for additional information.

Looking ahead to 2017

We expect our revenue in the ﬁrst quarter of 2017 to be approximately $190 million to $210 million, a
year-over-year increase compared to the ﬁrst quarter of 2016. Average selling price in 2017 is expected to
increase slightly as compared to 2016. Gross margin will ﬂuctuate in future periods based on product, distributor
and geographical mix and volume. We have adjusted our long-term gross margin model from a range of 42% to
44% to a range of 39% to 41%. As a result of our restructuring and other cost saving initiatives, we expect total
operating expenses for the ﬁrst quarter of 2017 will be signiﬁcantly lower than the ﬁrst quarter of 2016 and we
expect total operating expenses for full year 2017 to be reduced by more than $100 million compared to full year
2016, on both a GAAP and non-GAAP basis. As we work toward achieving non-GAAP proﬁtability in 2017, we
expect to implement further cost saving initiatives, including additional restructuring actions, as part of our
continued efforts to streamline our operations and focus our resources. We may incur material charges as a
result of these initiatives.

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 continue the growth of our business and improve our results of operations.

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Driving proﬁtability through improved efficiency,
lower costs and better execution. We incurred material
operating losses in 2016 and our future success will depend in part upon our ability to manage our operating
In the fourth quarter of 2016, we implemented a company-wide restructuring of our
expenses effectively.
business resulting in a global reduction-in-force, the elimination of several high-cost initiatives, including the
closure of our entertainment group in order to focus our resources on our hardware and software integrated
storytelling solution, and the consolidation of certain leased office facilities (see ‘‘Restructuring Costs’’ below). As
noted above in ‘‘Looking ahead to 2017,’’ we believe the actions we have taken will signiﬁcantly reduce our
operating expenses in 2017, while also providing a ﬂatter, more efficient global organization that will allow for
improved communication and alignment among our functional teams. For 2017 and beyond, we plan to operate
efficiently and manage our costs effectively, which we expect will
include implementing additional cost saving
initiatives and restructuring actions, while continuing to invest in those areas that we believe will grow revenue. If
we are unable to generate adequate revenue growth and to manage our expenses, we may continue to incur
signiﬁcant losses in the future and may not be able to achieve or maintain proﬁtability.

Investing in research and development and making the smartphone central to the GoPro 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 must continually
develop and introduce innovative new cameras, mobile and desktop applications, and other new products and
services. We plan to build upon our integrated storytelling solution in future periods, with the smartphone playing
an even more central role in the GoPro experience. Our investments in this solution, including marketing and
advertising expenses, may not successfully drive increased sales of our products and our users may not adopt
our new offerings. If we fail to innovate and enhance our product offerings, our brand, market position and
revenue will be adversely affected. Further, we have incurred substantial research and development expenses
and if our efforts are not successful, we will not recover the value of these investments.

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Marketing the improved GoPro experience to our extended community. We intend to continue investing
resources in our marketing, advertising and brand management efforts. 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 future growth depends on continuing to reach, expand and re-engage with this
core demographic as well as grow it, and also to continue expanding our user base to include a broader group
of consumers. We still believe that consumers in many markets are not familiar with our brand and products and
believe there is a signiﬁcant opportunity for GoPro to expand awareness through a range of advertising and
promotional programs and campaigns, including social media. 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.

total addressable international market. We believe that

international markets represent a
Growing our
signiﬁcant growth opportunity for GoPro. Revenue from outside the United States comprised 53%, 52% and 43%
of our revenue in 2016, 2015 and 2014, respectively. While the total market for digital cameras has declined in
recent periods as smartphone and tablet camera quality has increased, we continue to believe our consumers’
differentiated use of GoPro cameras, our hardware and software ecosystem and our powerful brand helps
insulate our business from many of the negative trends facing this category. However, we expect the markets in
which we conduct our business will remain highly competitive. We plan to increase our presence globally
through the active promotion of our brand, the creation and cultivation of regional strategic and marketing
partnerships, the introduction of localized products in international markets with region speciﬁc marketing, and an
investment focus on the biggest opportunities in Europe and the Asia-Paciﬁc region.

Expanding the GoPro experience to advanced users. Our growth also depends on expanding our total
addressable market with new capture perspectives, including aerial and spherical, which are resource-intensive
initiatives in highly competitive markets. We have no prior experience in the consumer drone market and expect
to face signiﬁcant competition from incumbent companies promoting their own drone and related products. If we
are not successful in penetrating additional markets, we might not be able to grow our revenue and we may not
recognize beneﬁts from our investment in new areas.

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Seasonality. Historically, we have experienced the highest levels of revenue in the fourth quarter of the year,
coinciding with the holiday shopping season, particularly in the United States and Europe. Timely and effective
product introductions and forecasting, whether just prior to the holiday season or otherwise, are critical to our
operations and ﬁnancial performance.

Refer to ‘‘Item 1. Business’’ above for additional information regarding our business strategy.

Components of our Results of Operations

Revenue. Our revenue is primarily comprised of product revenue, net of returns and sales incentives. Revenue
is derived from the sale of our cameras and accessories directly to retailers, as well as through our network of
domestic and international distributors, and through gopro.com. See ‘‘Critical Accounting Policies and Estimates’’
below and Note 1 to the consolidated ﬁnancial statements for information regarding revenue recognition.

including costs of contract
Cost of revenue. Our cost of
tooling
manufacturing for production,
equipment depreciation, excess and obsolete inventory write-downs, amortization of acquired developed
technology, and certain allocated costs related to manufacturing management, facilities, and personnel-related
expenses.

third-party logistics and procurement costs, warranty repair costs,

revenue primarily consists of product costs,

Operating expenses. We classify our operating expenses into three categories: research and development,
sales and marketing, and general and administrative.

Research and development. Our research and development expense consists primarily of personnel-related
including salaries, stock-based compensation and employee beneﬁts. Research and development
costs,
expense also includes consulting and outside professional services costs, materials, depreciation and other
supporting overhead expenses associated with the development of our product and service offerings, as well as
the amortization of certain acquired intangible assets. All research and development costs are expensed as
incurred.

Sales and marketing. Our sales and marketing expense consists primarily of advertising and marketing
promotions of our products and services and personnel-related costs,
including salaries, stock-based
compensation and employee beneﬁts. Sales and marketing expense also includes POP display expenses and
trade show and event costs, sponsorship costs, consulting and
related amortization, sales commissions,
contractor expenses, and allocated overhead costs.

including salaries, stock-based compensation and employee beneﬁts for our ﬁnance,

General and administrative. Our general and administrative expense consists primarily of personnel-related
legal, human
costs,
resources, information technology, and administrative personnel. The expense also includes professional service
costs related to accounting,
legal services, and allocated facilities, depreciation, and other supporting
overhead expenses.

tax,

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 consolidated statements of operations for each of the
periods presented and each of the periods presented as a percentage of revenue:

2016

Year ended December 31,
2015

2014

$ 1,185,481
723,561
461,920

100%
61
39

$ 1,619,971
946,757
673,214

100%
58
42

$ 1,394,205
766,970
627,235

100%
55
45

358,902
368,620

107,367

834,889
(372,969)
(2,205)

30
31

70
(31)
—

241,694
268,939

107,833

618,466
54,748
(2,163)

15
17

38
3
—

151,852
194,377

93,971

440,200
187,035
(6,060)

(375,174)
43,829
$ (419,003)

(31)
4
(35)%

52,585
16,454
36,131

3
1
2%

180,975
52,887
$ 128,088

11
14

32
13
—

13
4
9%

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(dollars in thousands)
Revenue
Cost of revenue
Gross proﬁt

Operating expenses:

Research and
development

Sales and marketing
General and

administrative
Total operating
expenses
Operating income (loss)
Other expense, net
Income (loss) before

income taxes

Income tax expense
Net income (loss)

Revenue

(in thousands)
Units shipped

Direct channel

Percentage of revenue

Distribution channel

Percentage of revenue

Year ended December 31,
2015

2016

4,762

650,111

54.8%

535,370

45.2%

6,584

841,882

52.0%

778,089

48.0%

2014

5,180

2016 vs 2015
% Change
(28)%

2015 vs 2014
% Change
27%

818,381

(23)%

58.7%

575,824

(31)%

41.3%

(27)%

(29)%

Total revenue

$ 1,185,481

$ 1,619,971

$ 1,394,205

Americas

Percentage of revenue

Europe, Middle East and Africa

(‘‘EMEA’’)
Percentage of revenue
Asia and Paciﬁc (‘‘APAC’’)
Percentage of revenue

619,784

868,772

890,352

52.3%

53.6%

63.9%

366,352

30.9%

199,345

16.8%

535,260

33.0%

215,939

13.4%

371,197

(32)%

26.6%

132,656

9.5%

(8)%

Total revenue

$ 1,185,481

$ 1,619,971

$ 1,394,205

(27)%

2016 Compared to 2015. The year-over-year decline in total revenues during 2016 compared to 2015 was due
to a 28% decrease in units shipped, reﬂecting global channel unit sell-through that exceeded sell-in for the ﬁrst
inventory in preparation for the launch of HERO5 in
three quarters of 2016 as we worked to reduce channel
September 2016. In addition, our revenue in the ﬁrst half of 2015 beneﬁted from the launch of our HERO4
cameras preceding the 2014 holiday season, whereas there was no major product introduction near the end of
2015. Revenue increased sequentially each quarter of 2016, with the fourth quarter comprising 46% of total

35%

16%

(2)%

44%

63%

16%

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

2016 revenue, reﬂecting the launch of HERO5 cameras and new mounts and accessories preceding the holiday
shopping season. The average selling price of units shipped, deﬁned as total revenue divided by unit shipments,
increased 1% year-over-year. We recognized no revenue in 2016 for our Karma drone.

2015 Compared to 2014. The year-over-year growth in revenues and units shipped during 2015 compared to
2014 was primarily driven by the transition from our prior generation products to the HERO4 line of cameras,
including HERO4 Session, and the entry-level HERO cameras. The year-over-year increase in the EMEA and
APAC regions resulted from the continued expansion of our business and distribution networks in international
markets. The year-over-year decrease in the Americas region resulted primarily from the launch of new products
in 2014 just prior to the holiday shopping season, which were initially shipped to this region. The average selling
price of units shipped, deﬁned as total revenue divided by unit shipments, decreased approximately 9% in 2015
due primarily to a slight change in product mix toward the entry-level HERO cameras, as well as increased
charges of approximately $73 million for price protection and marketing development
funds, of which
approximately $40 million related to reductions of the HERO4 Session selling price.

Gross margin

(dollars in thousands)
Cost of revenue
Stock-based compensation
Acquisition-related costs
Restructuring costs
Total cost of revenue
Gross margin

Year ended December 31,

2016
$ 719,689
1,616
1,759
497
$ 723,561

2015
$ 944,304
1,492
961
—
$ 946,757

2014
$ 765,247
835
888
—
$ 766,970

39.0%

41.6%

45.0%

2016 vs 2015
% Change
(24)%
8 %
83 %
N/A
(24)%
(260) bps

2015 vs 2014
% Change
23%
79%
8%
N/A
23%
(340) bps

2016 Compared to 2015. Gross margin of 39.0% in 2016 decreased from 41.6% in 2015, or 260 bps. Gross
margin in 2016 reﬂected an increase in our average cost per unit shipped, which was primarily attributable to the
enhanced functionality and improved capability of our new HERO5 cameras (including image stabilization,
telemetry, cloud connectivity and voice control) when compared with prior generation offerings, as well as the
allocation of ﬁxed overhead costs across signiﬁcantly fewer units shipped in 2016. This resulted in a 610 bps
decrease in gross margin when compared to 2015.

In addition, gross margin for 2015 and 2016 was negatively impacted by product charges of approximately
$57 million and $8 million, respectively, for excess purchase order commitments, excess inventory and other
charges related to end-of-life HERO legacy products. Partially offsetting these charges, gross margin for 2016
beneﬁted from sales of approximately $18 million associated with previously written off legacy camera inventory.
The net year-over-year effect of these legacy items was a beneﬁt to gross margin of approximately 350 bps. The
year-over-year effect of stock-based compensation, acquisition-related costs and restructuring costs on gross
margin was not material.

As noted above in ‘‘Looking Ahead’’, we have adjusted our long-term gross margin model from a range of 42%
to 44% to a range of 39% to 41%.

2015 Compared to 2014. Gross margin decreased by 340 bps compared with 2014. The year-over-year
decrease in gross margin was primarily attributable to a 350 bps charge for product realignment costs of
approximately $57 million in the fourth quarter of 2015 for excess purchase commitments,
inventory and
obsolete tooling assets. In addition, gross margin decreased due to a shift in product mix toward lower margin
entry-level HERO capture devices partially offset by continued improvements in production and supply chain
costs. The year-over-year effect of stock-based compensation and acquisition-related costs on gross margin was
insigniﬁcant.

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Operating expenses

Research and development

Year ended December 31,

(dollars in thousands)
Research and development
Stock-based compensation
Acquisition-related costs
Restructuring costs
Total research and development expenses

2016
$ 295,901
31,365
14,439
17,197
$ 358,902

2015
$ 220,516
18,024
3,154
—
$ 241,694

2014
$ 140,109
11,640
103
—
$ 151,852

Percentage of revenue

30.3%

14.9%

10.9%

2016 vs 2015
% Change
34%
74%
358%
N/A

48%

2015 vs 2014
% Change
57%
55%
2,962%
N/A

59%

2016 Compared to 2015. The year-over-year growth of $117.2 million, or 48%,
research and
development expenses in 2016 compared to 2015 was primarily attributable to increases in cash-based
personnel-related costs of $45.8 million (excluding restructuring charges) driven by 35% growth in average
increases in allocated facilities, depreciation and other supporting overhead
global headcount during 2016,
expenses of $19.3 million and increases in material and equipment costs of $11.5 million.
In addition,
stock-based compensation increased $13.3 million in 2016 due to higher employee headcount.
Acquisition-related costs increased $11.3 million in 2016 due to intangible asset
impairment charges of
approximately $7 million related to projects that were discontinued in the second half of 2016, as well as
increased amortization associated with two acquisitions completed during the ﬁrst half of 2016. See
‘‘Restructuring Costs’’ below for information regarding restructuring charges of $17.2 million recorded in 2016.

in total

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The growth in research and development expense in absolute dollars, and as a percentage of revenue, was
primarily driven by investments (including increased headcount) to support the development of our recently
launched cameras, drone, related mounts and accessories and software offerings.

2015 Compared to 2014. The year-over-year growth of $89.8 million in research and development expense in
2015 compared to 2014 was primarily attributable to increases in cash-based personnel-related costs of
$35.8 million, resulting from a 63% growth in global headcount from December 31, 2014 to December 31, 2015,
as well as increases in consulting and outside professional service costs of $27.1 million and increases in
materials, depreciation, and other supporting overhead expenses of $16.4 million. Stock-based compensation
increased $6.4 million in 2015 due to higher employee headcount. Acquisition-related costs increased
$3.1 million from intangible asset amortization associated with acquisitions completed during 2015. The growth
in research and development expense in absolute terms, and as a percentage of revenue, was primarily driven
by investments to support the development of our next generation capture devices, drone-related products,
content-management software solutions, and entertainment related initiatives.

Sales and marketing

(dollars in thousands)
Sales and marketing
Stock-based compensation
Acquisition-related costs
Restructuring costs
Total sales and marketing expenses

Year ended December 31,

2016
$ 342,651
13,883
22
12,064
$ 368,620

2015
$ 255,045
13,762
132
—
$ 268,939

2014
$ 183,807
10,428
142
—
$ 194,377

2016 vs 2015
% Change
34 %
1 %
(83)%
N/A

37 %

2015 vs 2014
% Change
39 %
32 %
(7)%

N/A

38 %

Percentage of revenue

31.1%

16.6%

13.9%

2016 Compared to 2015. The year-over-year growth of $99.7 million, or 37%, in total sales and marketing
expenses in 2016 compared to 2015 was primarily attributable to increases in advertising and promotional
activity costs of $58.5 million associated with expanded corporate branding campaigns to improve worldwide

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

brand awareness and to support
the launch of our HERO5 cameras, Karma drone and related products.
Additionally, the year-over-year growth in 2016 was attributable to increases in allocated facilities, depreciation
and other supporting overhead expenses of $10.2 million and increases in cash-based personnel-related costs
(excluding restructuring costs) of $11.4 million, driven by 16% growth in average global headcount during 2016.
See ‘‘Restructuring Costs’’ below for information regarding restructuring charges of $12.1 million recorded in
2016.

2015 Compared to 2014. The year-over-year growth of $74.6 million in sales and marketing expense in 2015
compared to 2014 was primarily attributable to increases in advertising and promotional activity costs of
$30.8 million associated with expanded corporate branding campaigns initiated in the second half of 2015, as
well as increases in cash-based personnel-related costs of $24.4 million, resulting from a 67% growth in global
headcount from December 31, 2014 to December 31, 2015, increases in allocated facilities, depreciation and
other supporting overhead expenses of $7.5 million and increases in consulting and outside professional service
costs of $6.2 million. Stock-based compensation increased $3.3 million in 2015 due to higher employee
headcount.

General and administrative

Year ended December 31,

(dollars in thousands)
General and administrative
Stock-based compensation
Acquisition-related costs
Restructuring costs
Total general and administrative expenses

2016
$ 70,247
22,663
1,126
13,331
$ 107,367

2015
$ 59,308
47,402
1,123
—
$ 107,833

2014
$ 45,475
48,496
—
—
$ 93,971

Percentage of revenue

9.1%

6.7%

2016 vs 2015
% Change
18 %
(52)%
— %

N/A

— %

2015 vs 2014
% Change
30 %
(2)%

N/A
N/A

15 %

2016 Compared to 2015. General and administrative expenses were approximately ﬂat year-over-year.
Stock-based compensation decreased $17.3 million in 2016 compared to 2015 due to the timing of expense
recognition attributable to the CEO RSUs (see Note 7 to the Notes to Consolidated Financial Statements of this
Annual Report on Form 10-K), which was partially offset by restructuring charges in 2016 of $13.3 million, as
well as increases in consulting and outside professional service costs of $3.7 million, and increases in allocated
facilities, depreciation and other supporting overhead expenses of $3.2 million. Cash-based personnel-related
costs, excluding restructuring costs, were approximately ﬂat year-over-year. See ‘‘Restructuring Costs’’ below for
information regarding restructuring charges recorded in 2016.

2015 Compared to 2014. The year-over-year growth of $13.9 million in general and administrative expense in
2015 compared to 2014 was primarily attributable to increases in consulting and outside professional service
costs of $5.9 million, as well as an increase in cash-based personnel-related costs of $5.5 million resulting from
a 41% growth in global headcount from December 31, 2014 to December 31, 2015 and increases in allocated
facilities, depreciation and other supporting overhead expenses of $2.3 million. Stock-based compensation
expenses decreased $1.1 million in 2015 due to a decrease in expense attributable to CEO RSUs of $9.0
million, partially offset by increases of $7.9 million for long-term incentive awards. (See Note 7 to the Notes to
Consolidated Financial Statements of this Annual Report on Form 10-K.) Acquisition-related costs increased $1.1
million due to increased acquisition activity in 2015.

Restructuring costs

First quarter 2016 restructuring. On January 12, 2016, we approved a restructuring that provided for a
reduction in our global workforce of approximately 7%. We incurred aggregate restructuring expenses of
$6.5 million in the ﬁrst quarter of 2016, which primarily included cash-based severance costs. We substantially
completed this plan at the end of the ﬁrst quarter of 2016 and all costs have been paid.

Fourth quarter 2016 restructuring. On November 29, 2016, we announced a restructuring of our business to
reduce operating expenses and work toward achieving our goal of returning to non-GAAP proﬁtability for 2017.

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

The restructuring included a reduction in our global workforce of approximately 15%,
the closure of our
entertainment group and the consolidation of certain leased office facilities. In the fourth quarter of 2016, we
incurred total restructuring charges of $36.6 million, which consisted of $18.9 million for severance and related
costs, $15.6 million for stock-based compensation and $2.1 million for facilities consolidation and other costs. At
December 31, 2016, accrued severance costs on our consolidated balance sheet was approximately
$10.5 million, a substantial majority of which is expected to be paid in the ﬁrst quarter of 2017. We estimate
additional restructuring charges of approximately $4 million will be recognized in the ﬁrst quarter of 2017,
primarily cash-based severance costs. We anticipate the restructuring actions and other cost saving initiatives
we have taken will enable us to reduce our operating expenses by more than $100 million in 2017 compared to
2016, primarily reﬂecting lower cash-based personnel-related costs. (See Note 13 to the Notes to Consolidated
Financial Statements of this Annual Report on Form 10-K.)

During 2017, we expect to implement further cost saving initiatives, including additional restructuring actions, as
part of our continued efforts to streamline our operations and focus our resources, and we may incur material
charges as a result of these initiatives.

Other expense, net

There were no material changes to other expense, net in 2016 as compared to 2015. Other expense, net for
2015 of $2.2 million decreased $3.9 million from 2014, primarily due to lower interest expense and debt related
costs of $4.5 million as a result of our repayment of outstanding debt in 2014, coupled with a $1.3 million
increase in interest income associated with higher cash equivalents and marketable securities throughout 2015,
partially offset by losses of $1.9 million associated with foreign exchange rate movements and other expenses.

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Income taxes

(dollars in thousands)
Income tax expense
Effective tax rate

Year ended December 31,

2016
$ 43,829
11.7%

2015
$ 16,454

2014
$ 52,887

31.3%

29.2%

2016 vs 2015
% Change
166%

2015 vs 2014
% Change
(69)%

2016 compared to 2015. The lower effective tax rate in 2016 compared to 2015 resulted from a federal
statutory tax beneﬁt of $131.3 million on pre-tax book losses of $375.2 million, offset by the establishment of a
valuation allowance of $101.9 million on all U.S. federal and state net deferred tax assets, as well as income
taxes paid at lower rates in proﬁtable foreign jurisdictions (primarily related to our wholly owned subsidiaries in
Europe). We recorded a full valuation allowance on our U.S. deferred tax assets because, based upon the
weight of available evidence, we believe that it is not more likely than not that our U.S. deferred tax assets will
be realized in the foreseeable future.

Our provision for income taxes in each period has differed from the tax computed at U.S. federal statutory tax
the effect of non-U.S. operations, deductible and
rates due to changes in our valuation allowance,
non-deductible stock-based compensation expense, state taxes, federal research and development tax credits
and other adjustments. See Note 9 to the Notes to Consolidated Financial Statements of this Annual Report on
Form 10-K for a reconciliation between the U.S. statutory tax rate and our effective tax rates.

2015 compared to 2014.
Income tax expense for 2015 of $16.5 million decreased $36.4 million from 2014,
primarily due to lower pre-tax income. Our higher effective tax rate for 2015 compared to 2014 was due to higher
U.S. taxable income and lower international taxable income, which resulted from incurring a higher proportion of
our 2015 operating expenses in foreign jurisdictions. Additionally, our effective tax rate for 2015 was lower than
the federal statutory rate of 35% primarily due to beneﬁts from research and development tax credits.

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Quarterly results of operations

The following table sets forth our unaudited quarterly consolidated results of operations for each of the eight
quarterly periods ended December 31, 2016.

(in thousands, except per
share amounts)
Revenue(1)
Gross proﬁt(2)
Operating expenses(3)
Net income (loss)

Dec. 31,
2016
$ 540,621
212,135
238,703
$ (115,709)

Sept. 30,
2016
$ 240,569
97,069
212,658
$ (104,068)

June 30,
2016
$ 220,755
93,002
202,379
$ (91,767)

March 31,
2016
$ 183,536
59,714
181,149
$ (107,459)

Dec. 31,
2015
$ 436,603
128,511
169,805
$ (34,451)

Sept. 30,
2015
$ 400,340
186,630
158,994
$ 18,799

June 30,
2015
$ 419,919
194,340
148,202
$ 35,031

March 31,
2015
$ 363,109
163,733
141,465
$ 16,752

Three months ended

Net income (loss) per

share:
Basic
Diluted

$
$

(0.82)
(0.82)

$
$

(0.74)
(0.74)

$
$

(0.66)
(0.66)

$
$

(0.78)
(0.78)

$
$

(0.25)
(0.25)

$
$

0.14
0.13

$
$

0.26
0.24

$
$

0.13
0.11

(1) Included in revenue for the quarters ended September 30, 2015 and December 31, 2015 was a reduction of approximately $19 million
and $21 million, respectively, for price protection and marketing development funds incurred in connection with the reduction of the
HERO4 Session selling price.

(2) Included in cost of revenue for the quarters ended December 31, 2015 and March 31, 2016 were charges of $57 million and $8 million,
respectively, for excess purchase order commitments, excess inventory and obsolete tooling, relating to the end-of-life of our entry-level
HERO products.

(3) Included in operating expenses for the quarter ended March 31, 2016 and December 31, 2016 were restructuring charges of

approximately $6.2 million and $36.4 million, respectively.

Liquidity and Capital Resources

The following table presents selected ﬁnancial information as of December 31, 2016 and 2015:

(dollars in thousands)

Cash and cash equivalents
Marketable securities
Total cash and investments
Percentage of total assets

December 31,
2016

December 31,
2015

$ 192,114
25,839
$ 217,953

$ 279,672
194,386
$ 474,058

24%

43%

Our primary source of cash is receipts from revenue. The primary uses of cash are payroll-related expenses,
general operating expenses, including marketing and office rent, and cost of revenue. Other sources of cash are
proceeds from participation in the employee stock purchase plan and the exercise of employee options. Other
uses of cash include purchases of property and equipment and business acquisitions.

As of December 31, 2016, our cash and investments of $218.0 million was down $256.1 million, or 54%,
compared to $474.1 million at December 31, 2015. The decrease was primarily driven by lower revenue in the
ﬁrst three quarters of 2016, lower margins and higher operating expenses, resulting in net cash ﬂows used in
operations of $107.8 million. In addition, we used $43.6 million for purchases of property and equipment and
acquired two mobile editing application companies in the ﬁrst half of 2016 for $104.4 million. As of December 31,
2016, $71.9 million of cash was held by our foreign subsidiaries.

We believe, based on our most current projections, that our cash and investments balance, along with the
anticipated savings from our recent restructuring actions, any future actions and available borrowings under our
credit facility will be sufficient to meet our working capital needs, capital expenditures, outstanding commitments
and other liquidity requirements for at least the next 12 months:

• We forecast

that revenue will

increase in 2017 as compared to 2016, which we anticipate will have

favorable impacts on our cash receipts and working capital.

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

• We believe the restructuring actions and other cost saving initiatives we have taken will enable us to reduce
our operating expenses by more than $100 million in 2017 compared to 2016, on both a GAAP and
non-GAAP basis, primarily reﬂecting lower cash-based personnel-related expenses.

• We expect to spend signiﬁcantly less on capital expenditures in 2017 than in 2016 and prior years. Our
future capital requirements may vary materially from those currently planned and will depend on many
the timing and extent of spending on research and
factors,
rate of
introductions, market
development efforts and other business initiatives,
acceptance of our products, and overall economic conditions.

the timing of new product

revenue growth,

including our

•

In March 2016, we entered into a credit agreement with a syndicate of banks that provides for a secured
revolving credit facility under which we may borrow up to an aggregate of $250 million. As of December 31,
2016, we may borrow up to approximately $150 million under the credit facility, based upon a borrowing
base formula with respect to our inventory and accounts receivable balances. (See Note 5 to the Notes to
Consolidated Financial Statements of this Annual Report on Form 10-K for additional information.)

• We have completed acquisitions in the past and we expect to evaluate additional possible acquisitions of, or
strategic investments in, businesses, products and technologies that are complementary to our business,
which may require the use of cash.

Over the long-term, we forecast to generate positive cash ﬂow from operations as we did during 2015 and 2014.
In the future, we may require additional funding to respond to business opportunities, challenges, acquisitions or
unforeseen circumstances. If we are unable to obtain adequate ﬁnancing under our credit facility, or other
sources, when we require it, our ability to grow or support our business and to respond to business challenges
could be signiﬁcantly limited. In the event additional ﬁnancing is required from outside sources, we may not be
able to raise it on terms acceptable to us or at all.

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Summary of Cash Flows

The following table summarizes our cash ﬂows for the periods indicated:

(in thousands)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities

Cash ﬂows from operating activities

Year ended December 31,

2016

2015

2014

2016 vs 2015
% Change

2015 vs 2014
% Change

$ (107,753)
19,286
$
1,955
$

$ 157,611
$ (211,977)
15,665
$

96,922
$
$ (133,904)
$ 255,501

(168)%
(109)%
(88)%

63 %
58 %
(94)%

Cash used by operating activities of $107.8 million in 2016 was attributable to an adjusted net
loss of
$240.5 million (net loss adjusted for non-cash expenses of $178.5 million) partially offset by net cash inﬂow of
$132.7 million from changes in operating assets and liabilities. Cash inﬂow related to changes in operating
assets and liabilities consisted of increased accounts payable and accrued liabilities of $142.9 million, primarily
associated with inventory procurement in the fourth quarter of 2016 to support customer demand during the
holiday season, partially offset by other changes in assets and liabilities. The decrease in operating cash ﬂows of
$265.4 million in 2016 compared to 2015 was primarily due to a year-over-year decline in total cash inﬂows
associated with lower revenues coupled with a year-over-year increase in cash outﬂows associated with growth
in total operating expenses.

Cash provided by operating activities of $157.6 million in 2015 was comprised of $36.1 million of net income,
non-cash adjustments to net
income of $74.3 million (including stock-based compensation expense of
$80.7 million), and net cash inﬂow of $47.2 million from operating assets and liabilities. Cash inﬂow related to
operating assets and liabilities consisted of an increase in accounts payable and other liabilities of $68.5 million,
primarily related to excess purchase commitments, and a decrease of $38.3 million in accounts receivable due
to lower fourth quarter 2015 revenue. These increases were partially offset by $35.0 million of higher inventory

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

and an increase in prepaid expenses and other assets of $23.3 million due to higher income tax receivables.
The increase in cash provided by operating activities of $60.7 million from 2014 to 2015 was primarily due to
favorable changes in working capital accounts.

Cash ﬂows from investing activities

Cash provided by investing activities was $19.3 million in 2016 resulting from net maturities and sales of
marketable securities of $167.3 million to be used in operations, offset by $104.4 million in net cash used for
acquisitions and $43.6 million for purchases of property and equipment, net. We had no purchases of
marketable securities during 2016.

Cash used in investing activities was $212.0 million in 2015 resulting from $220.1 million for purchases of
marketable securities, $65.4 million for business acquisitions, and $51.2 million for purchases of property and
equipment, partially offset by $124.7 million for net sales and maturities of marketable securities. The increase in
cash outﬂow from 2014 to 2015 was mostly attributable to increased business acquisition activity in 2015.

Cash ﬂows from ﬁnancing activities

Cash provided by ﬁnancing activities was $2.0 million in 2016 resulting from $2.8 million in net proceeds
received from stock purchases made through our ESPP and employee stock option exercises, as well as
$3.5 million of excess tax beneﬁt
related to stock-based compensation, partially offset by payments of
$3.3 million for costs incurred in the ﬁrst quarter to secure our credit facility and payments of $1.0 million for
deferred acquisition-related consideration.

Cash provided by ﬁnancing activities was $15.7 million in 2015 resulting from $22.8 million in net proceeds
received from stock purchases made through our ESPP and employee stock option exercises, as well as
$29.3 million of excess tax beneﬁt related to stock-based compensation, partially offset by payments of
$35.6 million from the repurchase of our Class A common stock. Cash provided by ﬁnancing activities of $255.5
million in 2014 included $294 million of proceeds received from our public offerings of common stock, as well as
$77.1 million of excess tax beneﬁt related to stock-based compensation, partially offset by $114 million for
repayments of our debt.

Contractual Commitments

Contractual obligations. As of December 31, 2016, our
total undiscounted future expected payment
obligations under our agreements with terms longer than one year were approximately $193 million, including
$140 million for operating leases, $15 million for sponsorship agreements and $39 million for other multi-year
agreements. See Note 11 to the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K
for a table of contractual obligations, including payments due by period.

We also issue inventory purchase orders in the normal course of business, which represent authorizations to
purchase that are cancelable by their terms. We do not consider purchase orders to be ﬁrm inventory
commitments; therefore, they are excluded from our payment obligations above. If we choose to cancel a
purchase order, we may be obligated to reimburse the vendor for unrecoverable outlays incurred prior to
cancellation.

Off-balance sheet arrangements. During the periods presented, we did not have any relationships with
unconsolidated organizations or ﬁnancial partnerships, such as structured ﬁnance or special purpose entities,
which would have been established for the purpose of facilitating off-balance sheet arrangements or other
contractually narrow or limited purposes.

Indemniﬁcations. We have entered into indemniﬁcation agreements with our directors and executive officers
which require us to indemnify our directors and executive officers against liabilities that may arise by reason of
their status or service. In addition, in the normal course of business, we enter into agreements that contain a
variety of representations and warranties and provide for general indemniﬁcation. It is not possible to determine
the maximum potential amount under these indemniﬁcation agreements due to our limited history with prior
indemniﬁcation claims and the unique facts and circumstances involved in each particular agreement. To date,

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

the payments we have made under these agreements have not had a material effect on our operating results,
ﬁnancial position or cash ﬂows. However, we may record charges in the future as a result of
these
indemniﬁcation agreements.

Critical Accounting Policies and Estimates

We prepare our consolidated ﬁnancial statements in accordance with GAAP. The preparation of
these
consolidated ﬁnancial statements requires us to make estimates, assumptions and judgments that can
signiﬁcantly impact the amounts we report as assets, liabilities, revenue, costs and expenses and the related
disclosures. Note 1 to the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K
describes the signiﬁcant accounting policies and methods used in the preparation of the consolidated ﬁnancial
statements. We base our estimates on historical experience and other assumptions that we believe are
reasonable under the circumstances. Our actual results could differ signiﬁcantly from these estimates under
different assumptions and conditions. We believe that the accounting policies discussed below are critical to
understanding our historical and future performance as these policies involve a greater degree of judgment and
complexity. Our senior management has reviewed these critical accounting policies and related disclosures with
the Audit Committee of our board of directors.

Revenue recognition

Revenue is primarily derived from the sale of our cameras, mounts and accessories and the related implied post
contract support, or PCS. We recognize revenue when all of the following criteria have been met:

•

Persuasive evidence of an arrangement exists. Contracts or sales orders from our distributors, resellers or
online customers are generally used to determine the existence of an arrangement.

Delivery has occurred. We consider delivery to have occurred once title and risk of
transferred. Shipping documents and customer acceptance, when applicable, are used to verify delivery.

loss has been

The sales price is ﬁxed or determinable. We assess whether the sales price is ﬁxed or determinable based
on the payment terms associated with the transaction and whether the sales price is subject to refund or
adjustment.

Collectability is reasonably assured. We assess collectability based primarily on the creditworthiness of the
customer as determined by credit analysis, the customer’s payment history, and other relevant factors.

For most of our revenue, these criteria are met at the time the product is shipped. Our standard terms and
conditions of sale for non-web based sales do not allow for product returns other than under warranty. However,
we grant limited rights to return product for certain large retailers and distributors. Estimates of expected future
product returns are recognized at the time of sale based on analyses of historical return trends by customer
class. Upon recognition, we reduce revenue and cost of sales for the estimated 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 can ﬂuctuate over time, but are sufficiently
predictable to allow us to estimate expected future product returns. Actual returns in any future period could
differ from our estimates, which could impact the revenue that we report.

Our products include multiple element arrangements that generally include the following two separate units of
accounting: 1) the hardware component (camera and accessories) and the embedded ﬁrmware essential to the
functionality of the camera delivered at the time of sale, and 2) the implied right for the customer to receive PCS.
Judgment is required to properly identify the accounting units of multiple element arrangements and to determine
the manner in which revenue should be allocated among the units. We believe that our best estimate of the
selling price, or BESP, is the most appropriate methodology to determine the allocation of revenue. BESP
reﬂects our best estimates of what the selling prices of elements would be if they were sold regularly on a
stand-alone basis. Our process for determining BESP considers multiple factors that may vary over time
depending upon the unique facts and circumstances related to each deliverable, including: the level of support
provided to customers, estimated costs to provide our support, the amount of time and cost that is allocated to
our efforts to develop the undelivered elements, and market trends in the pricing for similar offerings. While

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GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

changes in the allocation of the estimated sales price between the units of accounting will not affect the amount
of total revenue recognized for a particular sales arrangement, any material changes in these allocations could
impact the timing of revenue recognition, which could have a material effect on our ﬁnancial condition and
results of operations.

In addition, we provide our customers with sales incentives including cooperative advertising, marketing
development
funds and other incentives. Additionally, we have historically provided certain distributors and
retailers price protection beneﬁts for inventory on hand when we have reduced the recommended retail price of
our products to the end customer. We record reductions to revenue for estimated commitments related to sales
incentives when the related revenue is recognized or when a relevant event subsequently occurs. See Note 1 to
the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.

Inventory valuation and liability for purchase commitments

Inventory consists of ﬁnished goods and component parts and is stated at the lower of cost or market on a
ﬁrst-in, ﬁrst-out basis. Our inventory balances were $167.2 million and $188.2 million as of December 31, 2016
and 2015, respectively. Our assessment of market value requires the use of estimates regarding the net
realizable value of our inventory balances,
including an assessment of excess or obsolete inventory. We
determine excess and obsolete inventory based on multiple factors, including an estimate of the future demand
for our products within a speciﬁed time horizon, generally 12 months, product
life cycle status, product
development plans and current sales levels. We also record a liability for noncancelable purchase commitments
with contract manufacturers for quantities in excess of our future demand forecasts consistent with the valuation
of our excess and obsolete inventory. The estimates used for future demand are also used for near-term
capacity planning and inventory purchases and are consistent with our revenue forecast assumptions. If our
demand forecast is greater than the actual demand, the amount of our loss will be impacted by our contractual
ability to reduce inventory purchases from our contract manufacturers. Our assumptions of future demand for our
products are inherently uncertain, and if there were to be an abrupt and substantial decline in demand for one or
more of our products or a change in our product development plans, we may be required to increase our
inventory write-downs and our liability for purchase commitments that would adversely affect our results of
operations in the period when such write-downs and/or excess commitments are recorded.

Warranty

We generally provide 12-month warranty coverage on all of our products except in the EU where we provide a
the associated products during the
two-year warranty. Our warranty provides for repair or replacement of
warranty period. We establish a liability for estimated product warranty costs at the time product revenue is
recognized. The warranty obligation is affected by product failure rates and the related use of materials, labor
costs and freight incurred in correcting any product failure. Should actual product failure rates, use of materials
or other costs differ from our estimates, additional warranty liabilities could be required, which could materially
affect our results of operations.

Income taxes

We are subject to income taxes in the United States and multiple foreign jurisdictions. Our effective tax rates
differ from the U.S. federal statutory rate, primarily due to changes in our valuation allowance, the effect of
non-U.S. operations, deductible and non-deductible stock-based compensation expense, state taxes, federal
research and development tax credits and other adjustments. Our effective tax rate was 11.7%, 31.3% and
29.2% in 2016, 2015 and 2014, respectively. The calculation of our provision for income taxes involves the use
of estimates, assumptions and judgments while taking into account current tax laws, our interpretation of current
tax laws and possible outcomes of future tax audits. We review our tax positions quarterly and adjust the
balances as new information becomes available. Our income tax rate is materially affected by the tax rates that
apply to our foreign earnings. As of December 31, 2016, $3.3 million of earnings had been indeﬁnitely reinvested
outside the U.S., primarily in active non-U.S. business operations. We do not intend to repatriate these earnings
to fund U.S. operations and, accordingly, we do not provide for U.S. federal income and foreign withholding tax
on these earnings.

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Deferred tax assets. Deferred tax assets arise because of
temporary differences between the ﬁnancial
reporting and tax bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards.
We evaluate the recoverability of these future tax deductions and credits by assessing the adequacy of future
expected taxable income from all sources, including reversal of taxable temporary differences, forecast operating
earnings and available tax planning strategies. As of December 31, 2016, we had a full valuation allowance on
all of U.S. net deferred tax assets based on our assessment that it is not more likely than not that the deferred
tax asset will be realized.

Uncertain tax positions. We recognize tax beneﬁts from uncertain tax positions only if it is more likely than not
that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of
the position. We ﬁle annual income tax returns in multiple taxing jurisdictions around the world and a number of
years may elapse before an uncertain tax position is audited by the relevant tax authorities and ﬁnally resolved.
We have established reserves to address potential exposures related to tax positions that could be challenged
by tax authorities. While it is often difficult to predict the ﬁnal outcome or the timing of resolution of any particular
uncertain tax position, we believe that our reserves reﬂect the most likely outcome.

Our future effective tax rates could be adversely affected by earnings being lower than anticipated in countries
where we have lower statutory rates and higher than anticipated in countries where we have higher statutory
rates, by changes in the valuation of our deferred tax assets or liabilities, outcomes resulting from income tax
examinations, or by changes or interpretations in tax laws, regulations or accounting principles.

Goodwill and acquired intangible assets

When we acquire a business, we allocate the purchase price to the net tangible and identiﬁable intangible
assets, with the residual of the purchase price recorded as goodwill. The determination of the fair value of the
intangible assets acquired involves signiﬁcant judgments and estimates. These judgments can include, but are
not limited to, the cash ﬂows that an asset is expected to generate in the future, technology obsolescence, and
the appropriate weighted average cost of capital. Our estimate of the fair value of certain assets may differ
materially from that determined by others who use different assumptions or utilize different business models.

We perform an annual assessment of our goodwill during the fourth quarter to determine if any events or
circumstances exist, such as an adverse change in business climate or a decline in the overall industry demand,
that would indicate that it is more likely than not that the fair value of our single reporting unit would be reduced
below its carrying amount. If further testing is deemed necessary, we perform a two-step process. The ﬁrst step
involves comparing the fair value of our reporting unit to its carrying value. The second step, if necessary,
measures the amount of impairment, if any, by comparing the carrying value of the goodwill to its implied fair
value. As of December 31, 2016, we determined that no impairment of the carrying value of goodwill was
required.

Stock-based compensation

We measure and recognize stock-based compensation based on the fair value measurement for all stock-based
awards granted to employees and directors over the service period for awards expected to vest. See Note 7 to
the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K. We use the Black-Scholes
option-pricing model to determine the fair value of stock options and employee stock purchase plan options. The
determination of the grant date fair value of options using an option-pricing model is affected by our common
stock fair value as well as assumptions regarding a number of variables, of which the most subjective were
estimated as follows:

•

Expected Term. We do not have sufficient historical exercise data to provide a reasonable basis upon
which to estimate expected term due to the limited period of
time stock-based awards have been
exercisable since the completion of our IPO in July 2014. As a result, we used the simpliﬁed method to
calculate the expected term estimate based on the vesting and contractual terms of the option. Under the
simpliﬁed method, the expected term is equal to the average of the stock-based award’s weighted average
vesting period and its contractual term.

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GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

•

Volatility. As we do not have a signiﬁcant trading history for our common stock, the expected stock price
volatility for our common stock was estimated by taking the average historic volatility of the common stock
of a group of comparable publicly traded companies over a period equivalent to the expected term.

The estimation of awards that will ultimately vest requires judgment, and to the extent actual results or updated
estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the
period estimates are revised. These adjustments have not been material to date.

Recent accounting pronouncements

Refer to ‘‘Recent Accounting Pronouncements’’ in Note 1 to Consolidated Financial Statements included in Part
II, Item 8 of this Annual Report on Form 10-K.

Non-GAAP Financial Measures

In addition to the measures presented in our consolidated ﬁnancial statements, we use the non-GAAP ﬁnancial
measures of adjusted EBITDA, non-GAAP net
income (loss) and non-GAAP earnings (loss) per share to
evaluate our business, measure our performance, develop ﬁnancial forecasts and make strategic decisions.

The following tables present a reconciliation of net income (loss) to adjusted EBITDA:

(in thousands)
Net loss
Income tax expense (beneﬁt)
Interest (income) expense, net
Depreciation and amortization
POP display amortization
Stock-based compensation
Impairment of intangible assets
Restructuring costs
Adjusted EBITDA

(in thousands)
Net income (loss)
Income tax expense
Interest expense
Depreciation and amortization
POP display amortization
Stock-based compensation
Impairment of intangible assets
Restructuring costs
Adjusted EBITDA

Three months ended

December 31,
2016
$ (115,709)
87,391
1,022
11,100
4,944
17,926
1,088
36,581
44,343

December 31,
2015
$ (34,451)
(6,521)
(126)
9,596
4,114
18,120
—
—
$ (9,268)

Year ended December 31,

2016

2015

$ (419,003) $ 36,131
16,454
234
28,981
16,829
80,680
—
—
$ (192,807) $ 179,309

43,829
1,401
41,639
19,623
69,527
7,088
43,089

2014
$ 128,088
52,887
5,038
17,945
18,023
71,399
—
—
$ 293,380

2013
$ 60,578
30,751
6,018
12,034
13,458
10,887
—
—
$ 133,726

2012
$ 32,262
20,948
346
3,975
8,601
9,156
—
—
$ 75,288

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following tables present a reconciliation of net income (loss) to non-GAAP net income (loss):

(in thousands)
Net loss
Stock-based compensation
Acquisition-related costs
Restructuring costs
Income tax adjustments
Non-GAAP net income (loss)

Non-GAAP diluted earnings (loss) per share

GAAP shares for diluted net income (loss) per share

Add: effect of potentially dilutive shares

Non-GAAP shares for diluted net income per share

Three months ended

December 31,
2016
$ (115,709)
17,926
3,700
36,581
99,869
42,367

December 31,
2015
$ (34,451)
18,120
1,545
—
3,390
$ (11,396)

0.29

(0.08)

141,063
5,198
146,261

137,086
—
137,086

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(in thousands)
Net income (loss)
Stock-based compensation
Acquisition-related costs
Restructuring costs
Income tax adjustments
Non-GAAP net income (loss)
Non-GAAP diluted earnings (loss) per share
GAAP shares for diluted net income (loss) per

share
Add: preferred shares conversion
Add: initial public offering shares

Non-GAAP shares for diluted net income

(loss) per share

Year ended December 31,

2016
$ (419,003)
69,527
17,346
43,089
87,794
$ (201,247)
(1.44)
$

139,425
—
—

2015
$ 36,131
80,680
5,370
—
(10,617)
$ 111,564
0.76
$

146,486
—
—

2014
$ 128,088
71,399
1,133
—
(11,707)
$ 188,913
1.32
$

123,630
15,136
4,414

2013
$ 60,578
10,887
1,106
—
(3,745)
$ 68,826
0.50
$

98,941
30,523
8,900

139,425

146,486

143,180

138,364

We use these non-GAAP ﬁnancial measures of adjusted EBITDA, non-GAAP net income (loss), and non-GAAP
earnings (loss) per share to help us understand and evaluate our core operating performance and trends, to
prepare and approve our annual budget, and to develop short-term and long-term operational plans. We believe
that these measures provide useful
information to investors and others in understanding and evaluating our
operating results in the same manner as our management and board of directors. These non-GAAP ﬁnancial
measures should not be considered in isolation from, or as an alternative to, measures prepared in accordance
with GAAP, and are not based on any comprehensive set of accounting rules or principles. These non-GAAP
ﬁnancial measures have limitations in that they do not reﬂect all of the amounts associated with our results of
operations as determined in accordance with GAAP. Some of these limitations are:

•

These non-GAAP ﬁnancial measures may exclude certain recurring, non-cash charges such as stock-based
compensation and amortization of acquired intangible assets;

adjusted EBITDA does not reﬂect tax payments that reduce cash available to us;

adjusted EBITDA excludes depreciation and amortization and, although these are non-cash charges, the
property and equipment being depreciated and amortized often will have to be replaced in the future, and
adjusted EBITDA does not reﬂect any cash capital expenditure requirements for such replacements;

GoPro, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

•

adjusted EBITDA excludes the amortization of POP display assets because it is a non-cash charge, and
similar to depreciation of property and equipment and amortization of acquired intangible assets;

adjusted EBITDA and non-GAAP net income (loss) excludes the impairment of intangible assets because it
is a non-cash charge that is inconsistent in amount and frequency, and similar to amortization of acquired
intangible assets;

income (loss) also excludes restructuring costs because these
adjusted EBITDA and non-GAAP net
expenses do not reﬂect expected future operating expenses and do not contribute to a meaningful
evaluation of current operating performance or comparisons to the operating performance in other periods;
and

other companies may calculate these non-GAAP ﬁnancial measures differently than we do, limiting their
usefulness as comparative measures.

these limitations, you should consider adjusted EBITDA, non-GAAP net

Because of
income (loss) and
non-GAAP diluted earnings (loss) per share alongside other ﬁnancial performance measures, including our
ﬁnancial results presented in accordance with GAAP.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks in the ordinary course of our business. These risks primarily include foreign
currency and interest rate risks as follows:

to ﬂuctuations due to changes in foreign currency exchange rates. However, we believe that

the majority of our product sales and inventory purchases have been
Foreign currency risk. To date,
denominated in U.S. dollars. We therefore have had insigniﬁcant foreign currency risk associated with these two
activities. The functional currency of all of our entities is the U.S. dollar. Our operations outside of the United
States hold foreign denominated cash balances and incur a majority of their operating expenses in foreign
currencies, principally the Euro and the British Pound. Our results of operations and cash ﬂows are, therefore,
subject
the
exposure to foreign currency ﬂuctuation from operating expenses is immaterial at this time as the related costs
do not constitute a signiﬁcant portion of our total expenses. As we grow our operations, or if foreign currency
held in our U.S. dollar functional currency entities increases, our exposure to foreign currency risk could become
more signiﬁcant. To date, we have not entered into any material foreign currency exchange contracts. For assets
and liabilities denominated in other currencies, we do not believe that the effects of a 10% shift in exchange
rates between those currencies and the U.S. dollar would have a material effect on our results of operations
from such a shift.

Interest rate risk. Our exposure to market risk for changes in interest rates primarily relates to our cash and
cash equivalents and marketable securities. Our cash equivalents and marketable securities are comprised
primarily of money market
treasury securities, U.S. agency securities, commercial paper
and corporate debt securities. The primary objectives of our investment activities are to preserve principal and
provide liquidity without signiﬁcantly increasing risk. Our cash and cash equivalents are held for working capital
purposes. We do not enter into investments for trading or speculative purposes. Due to the relatively short-term
nature of our investment portfolio, we do not believe that an immediate 10% increase in interest rates would
have a material effect on the fair value of our investment portfolio.

funds, U.S.

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Item 8. Financial Statements and Supplementary Data

GoPro, Inc.
Index to consolidated ﬁnancial statements

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity

(Deﬁcit)

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Page(s)

The supplementary ﬁnancial information required by this Item 8, is included in Part II, Item 7 under the caption
‘‘Quarterly Results of Operations,’’ which is incorporated herein by reference.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of GoPro, Inc.

the accompanying consolidated balance sheets and the related consolidated statements of
In our opinion,
operations, of redeemable convertible preferred stock and stockholders’ equity (deﬁcit) and of cash ﬂows present
fairly, in all material respects, the ﬁnancial position of GoPro, Inc. and its subsidiaries at December 31, 2016 and
December 31, 2015, and the results of their operations and their cash ﬂows for each of the three years in the
period ended December 31, 2016 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control
over ﬁnancial reporting as of December 31, 2016, based on criteria established in Internal Control — Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The Company’s management is responsible for these ﬁnancial statements, for maintaining effective internal
control over ﬁnancial reporting and for its assessment of the effectiveness of internal control over ﬁnancial
reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing
under Item 9A. Our responsibility is to express opinions on these ﬁnancial statements and on the Company’s
internal control over ﬁnancial reporting based on our audits (which were integrated audits in 2016 and 2015). We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the ﬁnancial statements are free of material misstatement and whether effective internal control
over ﬁnancial reporting was maintained in all material respects. Our audits of the ﬁnancial statements included
examining, on a test basis, evidence supporting the amounts and disclosures in the ﬁnancial statements,
assessing the accounting principles used and signiﬁcant estimates made by management, and evaluating the
overall ﬁnancial statement presentation. Our audit of internal control over ﬁnancial reporting included obtaining
an understanding of internal control over ﬁnancial reporting, assessing the risk that a material weakness exists,
and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
Our audits also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audits provide a reasonable basis for our opinions.

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A company’s internal control over ﬁnancial reporting is a process designed to provide reasonable assurance
regarding the reliability of ﬁnancial reporting and the preparation of ﬁnancial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over ﬁnancial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reﬂect
the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of ﬁnancial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the ﬁnancial statements.

the transactions and dispositions of

the assets of

its inherent

Because of
reporting may not prevent or detect
internal control over ﬁnancial
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

limitations,

/s/ PricewaterhouseCoopers LLP

San Jose, California
February 16, 2017

GoPro, Inc.
Consolidated Balance Sheets

(in thousands, except par values)

Assets
Current assets:

Cash and cash equivalents
Marketable securities
Accounts receivable, net
Inventory
Prepaid expenses and other current assets

Total current assets
Property and equipment, net
Intangible assets, net
Goodwill
Other long-term assets
Total assets

Liabilities and Stockholders’ Equity
Current liabilities:

Accounts payable
Accrued liabilities
Deferred revenue

Total current liabilities

Long-term taxes payable
Other long-term liabilities
Total liabilities

December 31,
2016

December 31,
2015

$ 192,114
25,839
164,553
167,192
38,115
587,813
76,509
33,530
146,459
78,329
$ 922,640

$ 205,028
211,323
14,388
430,739
26,386
18,570
475,695

279,672
194,386
145,692
188,232
25,261
833,243
70,050
31,027
57,095
111,561
$ 1,102,976

89,989
192,446
12,742
295,177
21,770
13,996
330,943

Commitments, contingencies and guarantees (Note 11)

Stockholders’ equity:

Preferred stock, $0.0001 par value, 5,000 shares authorized; none issued
Common stock and additional paid-in capital, $0.0001 par value, 500,000 Class A

shares authorized, 104,647 and 100,596 shares issued and outstanding,
respectively; 150,000 Class B shares authorized, 36,712 and 36,005 shares issued
and outstanding, respectively

Treasury stock, at cost, 1,545 and 1,545 shares, respectively
Retained earnings (accumulated deﬁcit)

Total stockholders’ equity
Total liabilities and stockholders’ equity

—

757,226
(35,613)
(274,668)
446,945
$ 922,640

663,311
(35,613)
144,335
772,033
$ 1,102,976

The accompanying notes are an integral part of these consolidated ﬁnancial statements.

GoPro, Inc.
Consolidated Statements of Operations

Year ended December 31,

(in thousands, except per share data)
Revenue
Cost of revenue
Gross proﬁt

Operating expenses:

Research and development
Sales and marketing
General and administrative
Total operating expenses

Operating income (loss)
Other expense, net
Income (loss) before income taxes
Income tax expense
Net income (loss)

Less: net income allocable to participating securities
Net income (loss) attributable to common stockholders — basic

Add: net income allocable to dilutive participating securities

2016
$ 1,185,481
723,561
461,920

358,902
368,620
107,367
834,889
(372,969)
(2,205)
(375,174)
43,829
$ (419,003)

—
$ (419,003)

—

Net income (loss) attributable to common stockholders — diluted

$ (419,003)

2015
$ 1,619,971
946,757
673,214

2014
$ 1,394,205
766,970
627,235

241,694
268,939
107,833
618,466
54,748
(2,163)
52,585
16,454
36,131

—
36,131

—

36,131

0.27

0.25

151,852
194,377
93,971
440,200
187,035
(6,060)
180,975
52,887
128,088

(16,512)
111,576

2,277

113,853

1.07

0.92

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Net income (loss) per share:
Basic

Diluted

Shares used to compute net income (loss) per share:

Basic
Diluted

(3.01)

139,425
139,425

134,595
146,486

104,453
123,630

The accompanying notes are an integral part of these consolidated ﬁnancial statements.

GoPro, Inc.
Consolidated Statements of Redeemable Convertible Preferred Stock and
Stockholders’ Equity (Deﬁcit)

(in thousands)

Balances at December 31, 2013

Issuance of common stock upon public

offerings, net of offering costs

Conversion of preferred stock to common
stock upon initial public offering, net of
issuance cost accretion

Common stock issued under employee

beneﬁt plans, net of shares withheld for
tax

Retirement of common stock

Stock-based compensation expense

Excess tax beneﬁt from stock-based

compensation

Net income

Balances at December 31, 2014

Common stock issued under employee

beneﬁt plans, net of shares withheld for
tax

Taxes paid related to net share settlements

Retirement of common stock

Repurchase of outstanding common stock

Stock-based compensation expense

Excess tax beneﬁt from stock-based

compensation

Net income

Balances at December 31, 2015

Common stock issued under employee

beneﬁt plans, net of shares withheld for
tax

Taxes paid related to net share settlements

Shares issued to third-party vendor for

services (Note 11)

Stock-based compensation expense (Note

Stock-based compensation expense related

to restructuring (Note 13)

Excess tax beneﬁt from stock-based

compensation

Net loss

Balances at December 31, 2016

Redeemable
convertible
preferred stock

Common stock
and additional
paid-in capital

Treasury
stock

30,523

Amount

$ 77,198

Amount

81,420

$ 14,518

—

10,188

286,247

(30,523)

(77,198)

30,523

77,198

—

(35,613)

—

8,414

(1,430)

—

7,681

(1,177)

71,399

77,134

—

129,115

533,000

14,249

—

(5,218)

(1,545)

—

36,413

(13,943)

—

80,583

27,258

—

136,601

663,311

(35,613)

3,936

—

10,103

(6,889)

822

7,297

—

69,499

15,566

(1,661)

—

Retained
earnings
(accumulated
deﬁcit)

Stockholders’
equity
(deﬁcit)

$ (19,884)

(5,366)

—

128,088

108,204

—

36,131

144,335

—

(419,003)

286,247

77,198

7,681

(1,177)

71,399

77,134

128,088

641,204

36,413

(13,943)

—

(35,613)

80,583

27,258

36,131

772,033

10,103

(6,889)

7,297

69,499

15,566

(1,661)

(419,003)

141,359

$ 757,226

$ (35,613)

$ (274,668)

$ 446,945

—

The accompanying notes are an integral part of these consolidated ﬁnancial statements.

GoPro, Inc.
Consolidated Statements of Cash Flows

(in thousands)
Operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating

Year ended December 31,

2016

2015

2014

$ (419,003)

$ 36,131

$ 128,088

activities:
Depreciation and amortization
Stock-based compensation
Excess tax beneﬁt from stock-based compensation
Deferred income taxes
Non-cash restructuring charges
Impairment of intangible assets
Other

Changes in operating assets and liabilities:

Accounts receivable, net
Inventory
Prepaid expenses and other assets
Accounts payable and other liabilities
Deferred revenue

Net cash provided by (used in) operating activities

Investing activities:
Purchases of property and equipment, net
Purchases of marketable securities
Maturities of marketable securities
Sale of marketable securities
Acquisitions, net of cash acquired

Net cash provided by (used in) investing activities

Financing activities:
Proceeds from issuance of common stock, net
Excess tax beneﬁt from stock-based compensation
Payment of deferred acquisition-related consideration
Payment of credit facility issuance costs
Payment of deferred public offering costs
Repurchases of outstanding common stock
Repayment of debt

Net cash provided by ﬁnancing activities

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Supplementary cash ﬂow disclosure:

Cash paid for interest
Cash paid (refunded) for income taxes, net
Non-cash investing and ﬁnancing activities:

Conversion of preferred stock to common stock, net
Purchases of property and equipment included in accounts payable and accrued

liabilities

Reclass of deferred public offering costs to additional paid-in capital

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41,640
69,527
(3,463)
38,568
17,601
7,088
7,574

(18,816)
21,040
(14,618)
142,941
2,168
(107,753)

(43,627)
—
119,918
47,348
(104,353)
19,286

2,775
3,463
(950)
(3,333)
—
—
—
1,955
(1,046)
(87,558)
279,672
$ 192,114

$
$

—
9,690

—

2,258
—

28,981
80,680
(29,348)
(11,468)
—
—
5,427

38,313
(35,005)
(23,281)
68,461
(1,280)
157,611

(51,245)
(220,055)
94,680
30,048
(65,405)
(211,977)

22,833
29,348
—
—
(903)
(35,613)
—
15,665
(1,556)
(40,257)
319,929
$ 279,672

17,945
71,399
(77,134)
(16,920)
—
—
1,865

(61,323)
(41,033)
(30,317)
98,354
5,998
96,922

(27,210)
(103,827)
1,083
—
(3,950)
(133,904)

300,097
77,134
(2,000)
—
(5,730)
—
(114,000)
255,501
—
218,519
101,410
$ 319,929

$
$

—
(1,093)

$
1,853
$ 37,283

—

$ 77,198

5,153
—

$
$

2,474
7,722

The accompanying notes are an integral part of these consolidated ﬁnancial statements.

GoPro, Inc.
Notes to Consolidated Financial Statements

1. Summary of business and signiﬁcant accounting policies

GoPro, Inc. (GoPro or the Company) makes mountable and wearable cameras, drones and accessories. The
Company’s products are sold globally through retailers, wholesale distributors and on the Company’s website.
The Company’s global corporate headquarters are located in San Mateo, California.

Basis of presentation. The accompanying consolidated ﬁnancial statements have been prepared in
accordance with U.S. generally accepted accounting principles (GAAP). The Company’s ﬁscal year ends on
December 31, and its ﬁscal quarters end on March 31, June 30, and September 30.

Principles of consolidation. These consolidated ﬁnancial statements include all the accounts of the Company
intercompany balances and transactions have been eliminated in
and its wholly-owned subsidiaries. All
consolidation.

Use of estimates. The preparation of ﬁnancial statements in accordance with GAAP requires management to
make estimates and assumptions that affect the amounts reported and disclosed in the Company’s consolidated
ﬁnancial statements and accompanying notes. 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.

Comprehensive income (loss). For all periods presented, comprehensive income (loss) approximated net
income (loss). Therefore, the consolidated statements of comprehensive income (loss) have been omitted.

Prior period reclassiﬁcations. Reclassiﬁcations of certain prior period amounts in the consolidated ﬁnancial
statements have been made to conform to the current period presentation.

Cash equivalents and marketable securities. Cash equivalents primarily consist of investments in money
market funds with maturities of three months or less from the date of purchase. Marketable securities consist of
commercial paper, U.S. agency securities, and corporate debt securities, and are classiﬁed as available-for-sale
securities. The Company views these securities as available to support current operations and it has classiﬁed
all available-for-sale securities as current assets. Available-for-sale securities are carried at
fair value with
unrealized gains and losses, if any, included in stockholders’ equity. Unrealized losses are charged against other
income (expense), net, for declines in fair value below the cost of an individual investment that is deemed to be
other than temporary. The Company has not
identiﬁed any marketable securities as other-than-temporarily
impaired for the periods presented. The cost of securities sold is based upon a speciﬁc identiﬁcation method.

Accounts receivable and allowance for doubtful accounts. Accounts receivable are stated at invoice value
less estimated allowances for returns and doubtful accounts. Allowances are recorded based on the Company’s
assessment of various factors, such as: historical experience, credit quality of its customers, age of the accounts
receivable balances, geographic related risks, economic conditions and other
factors that may affect a
customer’s ability to pay. The allowance for doubtful accounts as of December 31, 2016 and 2015 was
$1.3 million and $1.4 million, respectively.

Inventory.
Inventory consists of ﬁnished goods and component parts, which are purchased directly or from
contract manufacturers. Inventory is stated at the lower of cost or market on a ﬁrst-in, ﬁrst-out basis. The
Company writes down its inventory for estimated obsolescence or excess inventory equal to the difference
between the cost of inventory and estimated market value. The Company’s assessment of market value is based
upon assumptions around market conditions and estimated future demand for its products within a speciﬁed time
horizon, generally 12 months. Adjustments to reduce inventory to net realizable value are recognized in cost of
revenue.

Point of purchase (POP) displays. The Company provides retailers with POP displays, generally free of
charge, in order to facilitate the marketing of the Company’s products within retail stores. The POP displays

GoPro, Inc.
Notes to Consolidated Financial Statements

contain a display that broadcasts video images taken by GoPro cameras with product placement available for
cameras and accessories. POP display costs, less any fees charged, are capitalized as long-term assets and
charged to sales and marketing expense over the expected period of beneﬁt, which generally ranges from 24 to
36 months. Cash outﬂows and amortization related to POP displays are classiﬁed as operating activities in the
consolidated statement of cash ﬂows. Amortization was $19.6 million, $16.8 million and $18.0 million in 2016,
2015 and 2014, respectively.

Property and equipment, net. Property and equipment are stated at cost and are depreciated using the
life of the assets, ranging from one to ten years. Leasehold
straight-line method over the estimated useful
improvements are amortized over the shorter of the lease term or their expected useful
life. Property and
equipment pending installation, conﬁguration or qualiﬁcation are classiﬁed as construction in progress. Costs of
maintenance and repairs that do not improve or extend the lives of the respective assets are expensed as
incurred.

Fair value measurements. Fair value is deﬁned as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the reporting date. The Company
estimates and categorizes the fair value of its ﬁnancial assets by applying the following hierarchy:

Level 1

Level 2

Level 3

Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the
ability to directly access.
Valuations based on quoted prices for similar assets or liabilities; valuations for interest-bearing securities based
on non-daily quoted prices in active markets; quoted prices in markets that are not active; or other inputs that are
observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
Valuations based on inputs that are supported by little or no market activity and that are signiﬁcant to the fair
value of the assets or liabilities.

instrument’s level within the fair value hierarchy is based on the lowest level of any input that is
A ﬁnancial
signiﬁcant to the fair value measurement. The fair value of Level 2 ﬁnancial
instruments is obtained from an
independent pricing service, which may use quoted market prices for identical or comparable instruments or
model driven valuations using observable market data or inputs corroborated by observable market data.

Leases. The Company leases its office space and facilities under cancelable and non-cancelable operating
leases. For leases that contain rent escalation or rent concession provisions, the Company recognizes rent
expense on a straight-line basis over the term of the lease. The Company does not assume renewals in its
determination of the lease term unless the renewals are deemed to be reasonably assured at lease inception.

Goodwill and other intangible assets. Goodwill represents the excess of the purchase price over the fair
value of the net assets acquired in a business combination. Acquired intangible assets other than goodwill are
amortized over their useful lives unless the lives are determined to be indeﬁnite. For intangible assets acquired
in a business combination, the estimated fair values of the assets received are used to establish their recorded
values. Valuation techniques consistent with the market approach, income approach and/or cost approach are
used to measure fair value.

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Impairment of goodwill and long-lived assets. The Company performs an annual assessment of its goodwill
during the fourth quarter of each calendar year or more frequently if indicators of potential impairment exist, such
as an adverse change in business climate or a decline in the overall industry demand, that would indicate it is
more likely than not that the fair value of its single reporting unit is less than its carrying value. There was no
impairment of goodwill for any periods presented. For the annual
impairment testing in 2016, the Company
performed a quantitative analysis and determined the fair value of its single reporting unit exceeded the carrying
value. Other indeﬁnite-lived intangible assets are assessed for impairment at
their value
carrying value exceeds the estimated fair value, the difference is recorded as an impairment. See Note 4 for
information regarding impairment charges recorded for indeﬁnite-lived intangible assets.

least annually.

Long-lived assets, such as property and equipment and intangible assets subject to amortization, are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or

GoPro, Inc.
Notes to Consolidated Financial Statements

asset group may not be recoverable. Recoverability of assets to be held and used is measured by comparing
the carrying amount to the estimated future undiscounted cash ﬂows expected to be generated by the asset
group. If it is determined that an asset group is not recoverable, an impairment charge is recognized for the
amount by which the carrying amount of
the asset group exceeds its fair value. There was no material
impairment of long-lived assets for any periods presented.

Warranty. The Company records a liability for estimated product warranty costs at the time product revenue is
recognized. The Company’s standard warranty obligation to its end-users generally provides a 12-month
warranty coverage on all of its products except in the European Union where the Company provides a two-year
warranty. The Company’s estimate of costs to service its warranty obligations is based on its historical
experience of repair and replacement of the associated products and expectations of future conditions. The
warranty obligation is affected by product failure rates and the related use of materials, labor costs and freight
incurred in correcting any product failure.

Revenue recognition. Revenue is primarily comprised of product revenue, net of returns and sales incentives.
The Company derives substantially all of its revenue from the sale of cameras, mounts and accessories and the
related implied post contract support (PCS). The Company recognizes revenue when persuasive evidence of an
arrangement exists, delivery has occurred,
the sales price is ﬁxed or determinable, and collectability is
reasonably assured. For most of the Company’s revenue, these criteria are met at the time the product is
shipped. For customers who purchase products directly from the Company’s website, revenue is deferred until
delivery to the customer’s address because the Company retains a portion of the risk of loss on these sales
during transit.

The Company grants limited rights to return product for certain large retailers and distributors. The Company
records reductions to revenue and cost of sales for expected future product returns at the time of sale based on
analyses of historical return trends by customer class. 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’s camera sales are multiple element arrangements that generally include the following two units of
accounting: a) the hardware component (camera and/or accessories) and the embedded ﬁrmware essential to
the functionality of the camera delivered at the time of sale, and b) the implied right for the customer to receive
PCS. PCS includes the right to receive, on a when and if available basis, future unspeciﬁed ﬁrmware upgrades
and features as well as bug ﬁxes, email and telephone support. The Company accounts for each element
separately and allocates revenue based on its best estimate of the selling price (BESP). The Company’s process
for determining BESP considers multiple factors that may vary over time depending upon the unique facts and
circumstances related to each deliverable, including: the level of support provided to customers, estimated costs
to provide the Company’s support, the amount of time and cost that is allocated to the Company’s efforts to
develop the undelivered elements, and market trends in the pricing for similar offerings. The Company also
offers several mobile and desktop applications at no charge to help users manage, edit, view and share their
content. These applications are not essential to the functionality of the camera, therefore, are not accounted as a
separate element of the arrangement.

Revenue allocated to the delivered hardware and the related essential software is recognized at the time of sale
provided the conditions for recognition of revenue have been met. Revenue allocated to PCS is deferred and
recognized on a straight-line basis over the estimated term of the support period, which is estimated to be
15 months based on historical experience. Deferred revenue also includes amounts related to the Company’s
GoPro Care and GoPro Plus fee-based service offerings.

Sales incentives. The Company offers sales incentives through various programs, consisting primarily of
cooperative advertising and marketing development fund programs. Sales incentives are recorded as a reduction
to revenue in the period the incentives are offered to the Company’s customers or the related revenue is
recognized, whichever is later. In addition, the Company offers price protection discounts to certain customers

GoPro, Inc.
Notes to Consolidated Financial Statements

when camera device models are released or repriced and the customer has remaining inventory on hand. The
Company calculates price protection discounts in the period that the price reduction goes into effect, and they
are recorded as a reduction of revenue, based on the evaluation of inventory currently held by the customer
subject to price protection.

Shipping costs. Amounts billed to customers for shipping and handling are classiﬁed as revenue and the
Company’s related shipping and handling costs incurred are classiﬁed as cost of revenue.

Sales taxes. Sales taxes collected from customers and remitted to respective governmental authorities are
recorded as liabilities and not included in revenue.

Advertising costs. Advertising costs consist of costs associated with print, television and ecommerce media
advertisements and are expensed as incurred. The Company incurs promotional expenses resulting from
payments under event,
resort and athlete sponsorship contracts. These sponsorship arrangements are
considered to be executory contracts and, as such, the costs are expensed as performance under the contract is
including the supply of GoPro
received. The costs associated with preparation of sponsorship activities,
products, media team support, and activation fees are expensed as incurred. Prepayments made under
sponsorship agreements are included in prepaid expenses or other long-term assets depending on the period to
which the prepayment applies. Advertising costs were $106.0 million, $64.7 million and $47.2 million in 2016,
2015 and 2014, respectively.

Stock-based compensation. The Company accounts for stock-based compensation in accordance with
accounting guidance that requires all stock-based awards granted to employees and directors to be measured
at
fair value and recognized as an expense. The Company primarily issues restricted stock units. For
service-based awards, stock-based compensation is recognized on a straight-line basis over the requisite
service period, net of estimated forfeitures. For performance and market-based awards which also require a
service period, the Company uses graded vesting over the longer of the derived service period or when the
performance or market condition is satisﬁed.

The Company recognizes a beneﬁt from stock-based compensation as additional paid-in capital if an excess tax
beneﬁt is realized by following the with-and-without approach. The indirect effects of stock-based compensation
deductions are reﬂected in the income tax provision for purposes of measuring the excess tax beneﬁt at
settlement of awards.

Foreign currency. The U.S. dollar is the functional currency of
the Company’s foreign subsidiaries. The
Company remeasures monetary assets or liabilities denominated in currencies other than the U.S. dollar using
exchange rates prevailing on the balance sheet date, and non-monetary assets and liabilities at historical rates.
Foreign currency remeasurement and transaction gains and losses are included in other expense, net and have
not been material for any periods presented.

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 losses recorded against deferred tax assets.
The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income
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.

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GoPro, Inc.
Notes to Consolidated Financial Statements

Segment
information. The Company operates as one operating segment as it only reports ﬁnancial
information on an aggregate and consolidated basis to its CEO, who is the Company’s chief operating decision
maker.

Expected
date of
adoption

January 1,
2018

January 1,
2019

Effect on the ﬁnancial statements or other
signiﬁcant matters

its

and

impact

policies

practices

The Company completed an initial analysis
of the impact of the standard on its sales
contract portfolio by reviewing its current
accounting
to
identify potential differences that would
result
from applying the requirements of
the new standard to its sales contracts.
The Company does not anticipate a
material
consolidated
on
ﬁnancial statements because the analysis
its contracts under the new standard
of
its
supports the recognition of most of
revenue at
is shipped,
the time product
consistent with its current revenue policy.
Although the Company is continuing to
review certain aspects of its policies and
practices, it expects that, as a result of the
adoption of the new guidance, the timing of
recognizing certain sales incentives as a
reduction of
revenue will generally be
earlier than under the existing guidance.
The Company expects
to utilize the
modiﬁed retrospective transition method.

statements

the Company

Although
currently
evaluating the impact that the adoption of
this standard will have on its consolidated
related
ﬁnancial
disclosures,
currently
its operating lease
expects that most of
commitments will be subject
to the new
standard and recognized as operating
lease liabilities and right-of-use assets
upon adoption.

and
Company

the

Recent accounting pronouncements

Standard

Description

Standards that are not yet adopted

Revenue from
Contracts with
Customers
Accounting
Standards Update
(ASU) No. 2014-09,
2016-08,
2016-10 and
2016-12
(Topic 606)

Leases
ASU No. 2016-02
(Topic 842)

and

revenue
for

standard
The
updated
recognizing
establishes principles
revenue
common
develops
revenue standard for all industries. Under
the new model, recognition of revenue
occurs when a customer obtains control
of promised goods or services in an
amount that reﬂects the consideration to
which the entity expects to be entitled in
exchange for those goods or services.
The new standard requires that entities
disclose the nature, amount, timing, and
uncertainty of revenue and cash ﬂows
arising from contracts with customers.
Early adoption is permitted, but not
earlier than the ﬁrst quarter of 2017. The
retrospective
effect
transition method is permitted.

cumulative

the

Lessees

practice.

expenses

This standard requires lessees to put
most leases on their balance sheets but
recognize
their
income statements in a manner similar to
current
would
recognize a right-to-use asset and lease
leases with terms of more
liability for all
Recognition,
than
measurement
of
expenses will depend on classiﬁcation as
a ﬁnance or operating lease. The new
standard should be applied on a modiﬁed
retrospective basis.

months.
and

presentation

GoPro, Inc.
Notes to Consolidated Financial Statements

Expected
date of
adoption

January 1,
2017

Effect on the ﬁnancial statements or other
signiﬁcant matters

adjustment

cumulative-effect

The adoption of the standard resulted in a
net
of
$16.2 million to decrease accumulated
deﬁcit as of January 1, 2017, mostly
related to the recognition of previously
unrecognized excess tax beneﬁts using
the modiﬁed
retrospective method.
The previously unrecognized excess tax
effects were recorded as a reduction to tax
liabilities or an increase to deferred
tax assets, which was fully offset by a
valuation allowance. Without the valuation
allowance,
deferred
tax assets would have increased by
$162.8 million. The Company elected to
apply the change in presentation to the
statements of cash ﬂows prospectively and
elected to account for forfeitures as they
occur.

Company’s

the

January 1,
2018

The Company is evaluating the impact that
the adoption of this standard will have on
its consolidated ﬁnancial statements and
related disclosures.

January 1,
2020

The Company is evaluating the impact that
the adoption of this standard will have on
its consolidated ﬁnancial statements and
related disclosures.

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Standard

Description

Stock
Compensation
ASU No. 2016-09
(Topic 718)

Income Taxes
ASU No. 2016-16
(Topic 740)

Intangible −
Goodwill and
Other
ASU No. 2017-04
(Topic 350)

classiﬁcation

accounting
transactions,

This standard simpliﬁes certain aspects
for
of
share-based
the
including income
payment
and
of
taxes,
classiﬁcation on the statement of cash
ﬂows. The new guidance also allows an
entity to make a policy election to
account
forfeitures as they occur.
Early adoption is permitted for an entity in
any interim or annual period.

awards

for

entities

requires

standard

transfers.

to
This
recognize at
the transaction date the
income tax consequences of intra-entity
asset
guidance
requires the tax effects from intra-entity
asset transfers to be deferred until that
asset is sold to a third party or recovered
through use. The updated standard is
effective in annual and interim periods in
ﬁscal
after
December 15, 2017, with early adoption
permitted during the ﬁrst interim period of
a ﬁscal year, and requires a modiﬁed
retrospective transition method.

beginning

years

impairment

This standard simpliﬁes the accounting
for goodwill and removes Step 2 of the
test. Upon
annual goodwill
adoption, goodwill
impairment will be
determined based on the amount by
which a reporting unit’s carrying value
exceeds its fair value, not to exceed the
goodwill. Early
of
carrying
adoption permitted for interim or annual
goodwill
tests performed on
testing dates after January 1, 2017, and
requires a prospective transition method.

impairment

amount

2. Business Acquisitions

In 2016, the Company completed acquisitions of two privately-held mobile editing application companies for total
cash consideration of approximately $104 million. The aggregate allocation of the purchase prices primarily
included $17.4 million of
identiﬁable intangible assets, $3.4 million of net deferred tax liabilities and
approximately $89 million of residual goodwill. Net tangible assets acquired were not material. In addition to the
amounts above, aggregate deferred cash and stock compensation of up to approximately $35 million is payable
to certain continuing employees subject to meeting speciﬁed future employment conditions. This amount is being
recognized as compensation expense over the requisite service periods of up to four years from the respective
acquisition dates, including approximately $22 million recognized in 2016.

GoPro, Inc.
Notes to Consolidated Financial Statements

the Company completed several acquisitions qualifying as business combinations for aggregate
In 2015,
consideration of $70.2 million,
the substantial majority of which was cash consideration. The aggregated
allocation of the purchased prices primarily included $32.3 million of identiﬁable intangible assets, $4.7 million of
net deferred tax liabilities and approximately $43.0 million of residual goodwill. Net liabilities assumed were not
material.

is primarily attributable to expected synergies in the technologies that can be leveraged by the
Goodwill
Company in future product offerings related to device and software related offerings. Goodwill is not expected to
be deductible for U.S.
the acquired companies have been
included in the Company’s consolidated ﬁnancial statements for 2016 and 2015 from the date of acquisition.

income tax purposes. The operating results of

Actual and pro forma results of operations for these acquisitions have not been presented because they do not
have a material impact to the Company’s consolidated results of operations, either individually or in aggregate.

3. 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:

(in thousands)
Cash equivalents(1):

Money market funds
Total cash equivalents

Marketable securities:

U.S. agency securities
Commercial paper
Corporate debt securities
Municipal securities

Total marketable securities

December 31, 2016

December 31, 2015

Level 1

Level 2

Total

Level 1

Level 2

Total

$ 18,024
$ 18,024

$
$

— $ 18,024
— $ 18,024

$ 51,059
$ 51,059

$
$

— $ 51,059
— $ 51,059

— $ 8,283
—
—
15,226
—
—
2,330
— $ 25,839

$ 8,283
—
15,226
2,330
$ 25,839

— $ 14,451
2,197
—
165,825
—
—
11,913
— $ 194,386

$ 14,451
2,197
165,825
11,913
$ 194,386

(1)

Included in ‘‘cash and cash equivalents’’ in the accompanying consolidated balance sheets. Cash balances were $174.1 million and
$228.6 million as of December 31, 2016 and December 31, 2015, respectively.

There were no transfers of ﬁnancial assets between levels for the periods presented.

The remaining contractual maturities of available-for-sale marketable securities are as follows:

(in thousands)
Less than one year
Greater than one year but less than two years

Total

December 31,

2016
$ 25,839
—
$ 25,839

2015
$ 122,199
72,187
$ 194,386

the Company’s cash equivalents and marketable
At December 31, 2016 and 2015,
securities approximated their fair value and there were no material unrealized gains or losses, either individually
or in the aggregate.

the amortized cost of

For certain other ﬁnancial assets and liabilities, including accounts receivable, accounts payable and other
current liabilities, the carrying amounts approximate their fair value due to the relatively short maturity of these
balances.

GoPro, Inc.
Notes to Consolidated Financial Statements

4. Consolidated ﬁnancial statement details

The following sections and tables provide details of selected balance sheet items.

Inventory

(in thousands)
Components
Finished goods

Total inventory

Property and equipment, net

(in thousands)
Leasehold improvements
Production, engineering and other equipment
Tooling
Computers and software
Furniture and office equipment
Tradeshow equipment and other
Construction in progress

Gross property and equipment

Less: Accumulated depreciation and amortization

Property and equipment, net

December 31,

2016
$ 25,236
141,956
$ 167,192

2015

9,476
178,756
$ 188,232

Useful life
(in years)
3-12
4
1-2
2
3
2-5

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December 31,

2016
$ 48,103
46,328
23,742
18,750
12,530
7,578
1,870
158,901
(82,392)
$ 76,509

2015
$ 40,841
25,174
19,537
14,581
11,389
4,136
4,632
120,290
(50,240)
$ 70,050

Depreciation expense was $32.4 million, $24.8 million and $16.8 million in 2016, 2015 and 2014, respectively.
The Company recorded accelerated depreciation charges in connection with plans to vacate certain leased office
facilities as disclosed in Note 13.

Intangible assets and goodwill

(in thousands)
Purchased technology
In-process research and development (IPR&D)
Total intangible assets

(in thousands)
Purchased technology
IPR&D
Total intangible assets

December 31, 2016

Gross carrying
value
$ 47,001
3,615
$ 50,616

Accumulated
amortization
$ (17,086)
—
$ (17,086)

December 31, 2015

Gross carrying
value
$ 32,952
6,615
$ 39,567

Accumulated
amortization
$ (8,540)
—
$ (8,540)

Net carrying
value
$ 29,915
3,615
$ 33,530

Net carrying
value
$ 24,412
6,615
$ 31,027

GoPro, Inc.
Notes to Consolidated Financial Statements

A summary of the Company’s IPR&D activity during 2016 is as follows:

(in thousands)
Balance at December 31, 2015
IPR&D assets acquired
Technological feasibility achieved
Asset impairment
Balance at December 31, 2016

Total
$ 6,615
4,460
(1,150)
(6,310)
$ 3,615

life of four years. The Company recorded
Purchased technology acquired in 2016 had an estimated useful
impairment charges of $6.3 million to research and development expense for IPR&D assets abandoned in the
third and fourth quarters of 2016. As of December 31, 2016, technological feasibility has not been established for
the remaining IPR&D assets, which have no alternative future use and, as such, continue to be accounted for as
indeﬁnite-lived intangible assets.

Amortization expense was $9.1 million, $4.2 million and $1.1 million in 2016, 2015 and 2014, respectively. At
December 31, 2016, the expected amortization expense of intangible assets for future periods is as follows:

(in thousands)
Year ending December 31,
2017
2018
2019
2020
2021

Total

$ 8,689
8,297
7,786
4,273
870
$ 29,915

The carrying amount of goodwill was $146.5 million and $57.1 million as of December 31, 2016 and 2015,
respectively. The increase in 2016 was entirely attributable to the acquisitions described above in Note 2. There
was no impairment of goodwill for any periods presented.

Other long-term assets

(in thousands)
POP displays
Long-term deferred tax assets
Income tax receivable
Deposits and other

Other long-term assets

December 31,

2016
$ 27,592
106
33,425
17,206
$ 78,329

2015
$ 27,989
41,936
33,206
8,430
$ 111,561

GoPro, Inc.
Notes to Consolidated Financial Statements

Accrued liabilities

(in thousands)
Accrued payables
Employee related liabilities(1)
Accrued sales incentives
Warranty liability
Customer deposits
Income taxes payable
Purchase order commitments
Other

Accrued liabilities

December 31,

2016
$ 91,655
42,577
40,070
11,456
4,381
2,756
4,730
13,698
$ 211,323

2015
$ 60,738
27,535
29,298
10,400
8,877
7,536
38,477
9,585
$ 192,446

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(1) See Note 13 for amounts associated with restructuring liabilities.

5. Financing Arrangements

In March 2016, the Company entered into a Credit Agreement (‘‘Credit Agreement’’) with JPMorgan Chase Bank,
N.A., as administrative agent, Wells Fargo Bank, National Association, as co-agent, and the lender parties
thereto. The Credit Agreement provides for a secured revolving credit facility (‘‘Credit Facility’’) under which the
Company may borrow up to an aggregate of $250 million and the Company and lenders may increase the total
commitments under the Credit Facility to up to $300 million, subject to certain conditions. The Credit Facility will
terminate, and all outstanding borrowings become due and payable, in March 2021.

The amount that may be borrowed under the Credit Facility is based upon a borrowing base formula with
respect to the Company’s inventory and accounts receivable balances. Borrowed funds accrue interest, at the
Company’s election, based on an annual rate of (a) London Interbank Offered Rate (‘‘LIBOR’’) or (b) the
administrative agent’s base rate, plus an applicable margin of between 1.50% and 2.00% for LIBOR rate loans,
and between 0.50% and 1.00% for base rate loans, depending on the level of utilization of the Credit Facility.
The Company is required to pay a commitment fee on the unused portion of the Credit Facility of 0.25% or
0.375% per annum, based on the level of utilization of the Credit Facility. Amounts owing under the Credit
Agreement and related credit documents are guaranteed by the Company and its material subsidiaries. The
Company and its Cayman and Netherlands subsidiaries have also granted security interests in substantially all
of their assets to collateralize these obligations.

The Credit Agreement contains customary affirmative covenants, such as ﬁnancial statement
reporting
requirements and delivery of borrowing base certiﬁcates, as well as customary covenants that limit the ability of
the Company and its subsidiaries to, among other
incur debt, create liens and
encumbrances, make investments and redeem or repurchase stock. The Company is required to maintain a
minimum ﬁxed charge coverage ratio if and when the unborrowed availability under the Credit Facility is less
than the greater of $25.0 million or 10.0% of the borrowing base at such time. The Credit Agreement contains
customary events of default, such as the failure to pay obligations when due,
initiation of bankruptcy or
insolvency proceedings, defaults on certain other indebtedness, change of control or breach of representations
and warranties or covenants. Upon an event of default, the lenders may, subject to customary cure rights,
require the immediate payment of all amounts outstanding and foreclose on collateral.

things, pay dividends,

As of December 31, 2016, the Company may borrow up to approximately $150 million under the Credit Facility
and was in compliance with all ﬁnancial covenants contained in the Credit Agreement. No borrowings have been
made from the Credit Facility to date.

GoPro, Inc.
Notes to Consolidated Financial Statements

6. Stockholders’ equity

In July 2014, the Company completed its IPO in which the Company issued and sold
Initial public offering.
8.9 million shares of Class A common stock at a public offering price of $24.00 per share and the selling
stockholders sold 11.6 million shares of Class A common stock,
including 2.7 million shares upon the
underwriters’ option to purchase additional shares. The Company did not receive any proceeds from the sale of
shares by the selling stockholders. The total net proceeds received by the Company from the IPO were
$200.8 million after deducting underwriting discounts and commissions.

Follow-on offering.
In November 2014, the Company completed a follow-on offering in which the Company
issued and sold 1.3 million shares of Class A common stock at a public offering price of $75.00 per share and
the selling stockholders sold 10.6 million shares of Class A common stock, including 1.6 million shares upon the
underwriters’ option to purchase additional shares. The Company did not receive any proceeds from the sale of
shares by the selling stockholders. The total net proceeds received by the Company from the follow-on offering
were $93.2 million after deducting underwriting discounts and commissions.

Redeemable convertible preferred stock. Prior to the Company’s IPO, the Company had 30.5 million of
Series A redeemable convertible preferred stock outstanding, which were convertible into shares of Class B
common stock at a rate of 1-for-1. Concurrent with the close of
those outstanding shares were
converted into Class B common stock.

the IPO,

Common stock. Following the Company’s IPO, the Company had two classes of authorized common stock:
Class A common stock with 500 million shares authorized and Class B common stock with 150 million shares
authorized. As of December 31, 2016, 104.6 million shares of Class A stock were issued and outstanding and
36.7 million shares of Class B stock were issued and outstanding. The rights of the holders of Class A and
Class B common stock are identical, except with respect to voting power and conversion rights. 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. The Class B common stock is
also convertible into Class A common stock on the same basis upon any transfer, whether or not for value,
except for ‘‘permitted transfers’’ as deﬁned in the Company’s restated certiﬁcate of incorporation. 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. As of December 31, 2016, the Class B stock continued to represent greater
than 10% of the overall outstanding shares.

The Company had the following shares of common stock reserved for issuance upon the exercise of equity
instruments as of December 31, 2016:

(in thousands)
Stock options outstanding
Restricted stock units outstanding
Common stock available for future grants

Total common stock shares reserved for issuance

December 31, 2016
12,379
7,970
20,685
41,034

Stock repurchase program. The stock repurchase program authorized by the Company’s board of directors in
September 2015 to repurchase up to $300 million of
the Company’s Class A common stock expired on
September 30, 2016 and has not been renewed. The repurchase program did not obligate the Company to
acquire any speciﬁc number of shares. Under the program, the Company repurchased approximately 1.5 million
shares of its common stock at an average price of $23.05 per share, for an aggregate purchase price of
approximately $35.6 million. The Company holds the repurchased shares as treasury stock.

GoPro, Inc.
Notes to Consolidated Financial Statements

CEO stock contributions.
In the ﬁrst half of 2015, the CEO contributed an aggregate 5.2 million common
stock to the Company without consideration per the terms of a Contribution Agreement dated December 28,
2011, and amended on May 11, 2015. Under the original Contribution Agreement, the CEO agreed to contribute
back to the Company from time-to-time the same number of shares of common stock as are issued to a certain
Company employee upon the exercise of certain stock options held by such employee. Pursuant
to this
agreement, the CEO contributed back to the Company 0.5 million shares of Class B common stock from
January 2015 through April 2015. In May 2015, the CEO contributed back to the Company 4.7 million shares of
Class B common stock pursuant to the amended agreement, representing all of the then remaining shares
subject to the contribution obligations. All of the shares contributed by the CEO were retired during the year.

7. 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 (ESPP). In 2014, the Company terminated the authority to grant new
awards under the 2010 Plan and 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.

The 2014 Plan serves as the successor to the 2010 Plan and provides for the granting of
incentive and
nonqualiﬁed stock options, restricted stock awards (RSAs), restricted stock units (RSUs), stock appreciation
rights, stock bonus awards and performance awards to qualiﬁed employees, non-employee directors and
consultants. Options granted under the 2014 Plan generally expire within 10 years from the date of grant and
generally vest over four years and are exercisable for shares of the Company’s Class A stock. Options with
performance or market-based conditions are generally subject
to a required service period along with the
performance or market condition. RSUs granted under the 2014 Plan generally vest annually over a four year
period based upon continued service and are settled at vesting in shares of the Company’s Class A common
stock.

The 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 values of the stock as of the ﬁrst date
or the ending date of each six-month offering period. The 2014 Plan and the ESPP also provides for automatic
annual increases in the number of shares reserved for future issuance.

Employee retirement plan. The Company has a deﬁned contribution retirement plan covering U.S. and other
international full-time employees that provides for voluntary employee contributions from 1% to 86% of annual
to a maximum limit allowed by Internal Revenue Service guidelines. The Company
compensation, subject
matches 100% of each employee’s contributions up to a maximum of 4% of
the employee’s eligible
compensation. The Company’s matching contributions to the plan were $7.2 million, $5.5 million and $2.7 million
in 2016, 2015 and 2014, respectively.

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GoPro, Inc.
Notes to Consolidated Financial Statements

Stock options

A summary of the Company’s stock option activity in 2016 is as follows:

Outstanding at December 31, 2015:
Granted
Exercised
Forfeited/Cancelled
Outstanding at December 31, 2016:

Vested and expected to vest at December 31, 2016
Exercisable at December 31, 2016

Options outstanding

Shares
(in
thousands)
13,081
2,573
(1,733)
(1,542)
12,379

12,245
8,952

Weighted-
average
exercise
price
$ 11.82
11.27
2.05
19.07
$ 12.17

$ 12.12
$ 10.37

Weighted-
average
remaining
contractual
term
(in years)
6.70

Aggregate
intrinsic
value
(in
thousands)
$ 108,846

5.97

5.95
5.36

$ 32,772

$ 32,772
$ 32,771

The weighted average grant date fair value of all options granted and assumed were $4.84, $18.40 and $11.51
per share in 2016, 2015 and 2014, respectively. The total fair value of all options vested was $27.2 million,
$26.9 million and $16.0 million in 2016, 2015 and 2014, respectively. The aggregate intrinsic value of the stock
options outstanding as of December 31, 2016 represented the value of the Company’s closing stock price on the
last trading day of the year in excess of the exercise price multiplied by the number of options outstanding.

Restricted stock units

A summary of the Company’s RSU activity in 2016 and 2015 is as follows:

Non-vested shares at December 31, 2014
Granted
Vested
Forfeited
Non-vested shares at December 31, 2015
Granted
Vested
Forfeited
Non-vested shares at December 31, 2016

Shares
(in thousands)

4,307
2,170
(1,735)
(104)
4,638
7,354
(2,075)
(1,947)
7,970

Weighted-
average
grant date
fair value

$ 21.98
44.00
19.84
63.47
32.15
12.10
23.87
22.85
$ 18.08

In June 2014, the Company granted an award of 4.5 million RSUs covering shares of the Company’s Class B
common stock to the Company’s CEO (CEO RSUs), which included 1.5 million RSUs that vested immediately
upon grant and 3.0 million RSUs that were subject to both a market-based vesting condition and a three-year
service-based vesting condition. The market-based condition was achieved in January 2015. Stock-based
compensation expense related to the CEO RSUs was $6.4 million, $29.4 million and $38.3 million for 2016,
2015 and 2014, respectively.

Employee stock purchase plan In 2016 and 2015, the Company issued 668,107 and 436,924 shares under
its ESPP at weighted average prices of $9.15 and $26.88, respectively. The weighted-average fair value of each

GoPro, Inc.
Notes to Consolidated Financial Statements

right to purchase shares of the Company’s Class A common stock granted under the ESPP was $3.99, $15.76
and $7.16 in 2016, 2015 and 2014, respectively.

Fair value disclosures The fair value of stock options granted and purchases under the Company’s ESPP is
estimated using the Black-Scholes option pricing model. Expected term of stock options granted was estimated
based on the simpliﬁed method. Expected stock price volatility was estimated by taking the average historic price
volatility for industry peers based on daily price observations over a period equivalent to the expected term.
Risk-free interest rate was based on the yields of U.S. Treasury securities with maturities similar to the expected
term. Dividend yield was zero as the Company does not have any history of, nor plans to make, dividend
payments.

The fair value of stock options granted was estimated as of the grant date using the following assumptions:

Volatility
Expected term (years)
Risk-free interest rate
Dividend yield

Year ended December 31,

2016
44% − 45%
5.2 − 6.1

2015
43% − 54%
5.5 − 7.0

1.2% − 2.0% 1.6% − 2.0%

—%

2014
54% − 56%
5.3 − 6.3
1.7% − 2.0%
—%

The fair value of stock purchase rights granted under the ESPP was estimated using the following assumptions:

Volatility
Expected term (years)
Risk-free interest rate
Dividend yield

Year ended December 31,

2016
43% − 54%
0.5

2015
39% − 45%
0.5

0.4% − 0.5% 0.1% − 0.2%

—%

2014
45.5%
0.6
0.1%
—%

During 2014, the Company used a Monte Carlo valuation model to calculate the fair value of the CEO RSUs
subject to a market condition based on the following assumptions: expected term of 10 years, expected volatility
of 50.9%, risk-free interest rate of 2.69%, and a grant date fair value of $18.40 for the underlying shares.

Stock-based compensation expense. The following table summarizes stock-based compensation included in
the consolidated statements of operations:

(in thousands)

Cost of revenue
Research and development
Sales and marketing
General and administrative

Total stock-based compensation expense

Year ended December 31,

2016
$ 1,616
31,365
13,883
22,663
$ 69,527

2015
$ 1,492
18,024
13,762
47,402
$ 80,680

2014

835
11,640
10,428
48,496
$ 71,399

The income tax beneﬁt related to stock-based compensation expense was zero, $28.0 million and $19.5 million
for 2016, 2015 and 2014, respectively. There is no current year tax beneﬁt due to a full valuation allowance on
U.S. net deferred tax assets (see Note 9 below).

At December 31, 2016, total unearned stock-based compensation of $116.3 million related to stock options,
RSUs and ESPP shares is expected to be recognized over a weighted average period of 2.6 years.

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GoPro, Inc.
Notes to Consolidated Financial Statements

8. Net income (loss) per share

income per share attributable to common stockholders is computed by dividing the net

income
Basic net
attributable to common stockholders by the weighted-average number of common shares outstanding during the
period. All participating securities are excluded from basic weighted average common shares outstanding. The
Company considers shares issued upon the early exercise of options subject to repurchase and non-vested
restricted shares to be participating securities, because holders of such shares have a non-forfeitable right to
dividends. Additionally, prior
the Company considered its
to the Company’s IPO and their conversion,
redeemable convertible preferred stock to be participating securities due to their non-cumulative dividend rights.

Diluted net income per share attributable to common stockholders is computed by dividing the net income
attributable to common stockholders by the weighted-average number of common shares outstanding, including
all potentially dilutive common shares.

Undistributed earnings are allocated based on the contractual participation rights of Class A and Class B as if
the
the earnings for the year have been distributed. As the liquidation and dividend rights are identical,
undistributed earnings are allocated on a proportionate basis. The computation of the diluted net income per
share of Class A common stock assumes the conversion of Class B common stock.

The following table presents the calculations of basic and diluted net income (loss) per share:

(in thousands, except per share data)

2016

2015

2014

Year ended December 31,

Numerator:
Allocation of net income (loss)
Less: net income allocable to participating securities
Net income (loss) attributable to common stockholders −

basic

Add: net income allocable to dilutive participating securities
Net income (loss) attributable to common

stockholders − diluted

Denominator:
Weighted-average common shares − basic for Class A and

Class B common stock

Stock options, RSU’s and ESPP shares
Weighted-average common shares − diluted for Class A and

Class B common stock

Net income (loss) per share attributable to common

stockholders:
Basic

Diluted

$ (419,003)
—

$ 36,131
—

$ 128,088
16,512

(419,003)
—

36,131
—

111,576
2,277

$ (419,003)

$ 36,131

$ 113,853

139,425
—

134,595
11,891

104,453
19,177

139,425

146,486

123,630

(3.01)

0.27

0.25

1.07

0.92

GoPro, Inc.
Notes to 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:

(in thousands)
Stock options, RSUs and ESPP shares

9. Income taxes

Income before income taxes consisted of the following:

(in thousands)
Domestic
Foreign

Income tax expense consisted of the following:

(in thousands)
Current:
Federal
State
Foreign

Total current

Deferred:
Federal
State
Foreign

Total deferred
Income tax expense

Year ended December 31,

2016
21,000

2015
2,681

2014
15,921

Year ended December 31,

2016
$ (200,595)
(174,579)
$ (375,174)

2015
$ 13,562
39,023
$ 52,585

2014
$ 114,937
66,038
$ 180,975

Year ended December 31,

2016

2015

2014

$ (2,925)
(356)
8,542
5,261

37,573
4,436
(3,441)
38,568
$ 43,829

$ 18,548
3,007
6,539
28,094

(11,211)
(204)
(225)
(11,640)
$ 16,454

$ 55,846
6,075
8,219
70,140

(13,551)
(3,369)
(333)
(17,253)
$ 52,887

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As of December 31, 2016, $3.3 million of earnings had been indeﬁnitely reinvested outside the U.S., primarily in
active non-U.S. business operations. We do not intend to repatriate these earnings to fund U.S. operations and,
accordingly, we do not provide for U.S. federal income and foreign withholding tax on these earnings.

(in thousands, except percentage)
Reconciliation to statutory rate:
Tax at federal statutory rate
Change in valuation allowance
Impact of foreign operations
Stock-based compensation
State taxes, net of federal beneﬁt
Tax credits
Other

Income tax provision at effective tax rate

Year ended December 31,

2016

2015

2014

$ (131,311)
101,878
84,491
15,718
(14,195)
(12,992)
240
43,829

(35.0)% $ 18,405
8,555
27.2
6,434
22.5
2,390
4.2
1,454
(3.8)
(21,891)
(3.5)
1,107
0.1
$ 16,454
11.7%

35.0% $ 63,341
—
16.3
(13,305)
12.2
8,050
4.5
4,911
2.8
(10,616)
(41.6)
506
2.1
31.3% $ 52,887

35.0%
—
(7.4)
4.4
2.7
(5.9)
0.4
29.2%

GoPro, Inc.
Notes to Consolidated Financial Statements

The lower effective tax rates of 2016 compared to 2015 resulted from a signiﬁcant beneﬁt on pre-tax book
losses, offset by the establishment of a valuation allowance on all U.S. federal and state net deferred tax assets
and by income taxes paid at lower rates in proﬁtable foreign jurisdictions (primarily wholly owned subsidiaries in
Europe). The provision for income taxes in each period has differed from the tax computed at U.S. federal
statutory tax rates due to change in valuation allowance, the effect of non-U.S. operations, deductible and
non-deductible stock-based compensation expense, states taxes, federal research and development tax credits,
and other adjustments.

The higher effective tax rate for 2015 compared to 2014 was due to higher U.S. taxable income and lower
international taxable income, which resulted from incurring a higher proportion of our 2015 operating expenses in
foreign jurisdictions. Additionally, the effective tax rate for 2015 was lower than the federal statutory rate of 35%
primarily due to beneﬁts from research and development tax credits.

Deferred income taxes reﬂect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for ﬁnancial reporting purposes and the amounts used for income tax purposes. Signiﬁcant
components of the Company’s deferred tax assets and liabilities were as follows:

(in thousands)
Deferred tax assets:

Net operating loss carryforwards
Tax credit carryforwards
Stock-based compensation
Allowance for returns
Accruals and reserves

Total deferred tax assets

Valuation allowance

Total deferred tax assets, net of valuation allowance

Deferred tax liabilities:

Depreciation and amortization
Intangible assets

Total deferred tax liabilities
Net deferred tax assets (liabilities)

December 31,

2016

2015

30,193
22,341
26,656
6,336
26,587
112,113
(110,433)
1,680

(1,714)
(2,540)
(4,254)
(2,574)

339
9,372
19,096
8,812
20,398
58,017
(8,555)
49,462

(6,937)
(2,904)
(9,841)
$ 39,621

Recognition of deferred tax assets is appropriate when realization of such assets is more likely than not. Based
upon the weight of available evidence, the Company believes it is not more likely that not that the U.S. deferred
tax assets will be realized. Accordingly, a full valuation allowance is established against U.S. deferred tax assets.
The foreign deferred tax assets in each jurisdiction are minimal and are supported by taxable income or in the
case of acquired companies, by the future reversal of deferred tax liabilities. It is more likely than not that the
Company’s foreign deferred tax assets will be realized and thus, no valuation allowance is required on foreign
deferred tax assets. The Company will continue to assess the realizability of the deferred tax assets in each of
the applicable jurisdictions going forward. The Company’s valuation allowance increased by $101.9 million to
$110.4 million as of December 31, 2016, primarily due to the establishment of a full valuation allowance on all
U.S. federal and state deferred tax assets. As of December 31, 2015, the Company had established a valuation
allowance of $8.6 million for state research tax credits.

GoPro, Inc.
Notes to Consolidated Financial Statements

As of December 31, 2016, the Company’s federal, California and other state net operating loss carryforwards for
income tax purposes were $467.2 million, $201.5 million and $207.3 million, respectively and federal and
California state tax credit carryforwards were $32.5 million and $27.9 million, respectively. If not utilized, federal
loss, federal credit and California loss carryforwards will begin to expire from 2030 to 2036, while other state loss
carryforwards will begin to expire from 2019 to 2036. California tax credits may be carried forward indeﬁnitely.

Under the provisions of §382 of the Internal Revenue Code, a change of control may impose an annual limitation
on the amount of the Company’s net operating loss and tax credit carryforwards that can be used to reduce
future tax liabilities. Of the Company’s total $467.2 million federal and state net operating loss carryforwards,
approximately $8 million was from one of our 2016 acquisitions. These acquired tax attributes are subject to an
annual limitation of $1.7 million per year for federal purposes and will begin to expire in the year 2034, if not
utilized.

Uncertain income tax positions. The Company had gross unrecognized tax beneﬁts of $56.9 million,
$36.3 million and $16.6 million, as of December 31, 2016, 2015 and 2014, respectively. For ﬁscal 2016, 2015
and 2014, total unrecognized income tax beneﬁts in an amount of $24.1 million, $31.0 million and $16.6 million,
respectively, if recognized, would reduce income tax expense after considering the impact of the change in
valuation allowance in the U.S. A material portion of our gross unrecognized tax beneﬁts, if recognized, would
increase the Company’s net operating loss carryforward, which would be offset by a full valuation allowance
based on present circumstances.

These unrecognized tax beneﬁts relate primarily to unresolved matters with taxing authorities regarding the
Company’s transfer pricing positions and tax positions based on the Company’s interpretation of certain U.S. trial
and appellate court decisions, which remain subject to appeal and therefore could be overturned in future
periods. The Company’s existing tax positions will continue to generate an increase in unrecognized tax beneﬁts
in subsequent periods. Management believes events that could occur in the next 12 months and cause a
material change in unrecognized tax beneﬁts include, but are not limited to, the completion of examinations by
the U.S. or foreign taxing authorities and the expiration of statute of limitations on the Company’s tax returns.
Although the completion, settlement and closure of any audits is uncertain, it is reasonably possible that the total
amount of unrecognized tax beneﬁts will materially increase within the next 12 months. However, given the
number of years remaining that are subject to examination, the range of the reasonably possible change cannot
be estimated reliably.

A reconciliation of the beginning and ending amount of the unrecognized income tax beneﬁts are as follows:

(in thousands)
Gross balance at January 1
Gross increase related to current year tax positions
Gross increase related to prior year tax positions
Gross decrease related to prior year tax positions

2016
$ 36,273
20,594
130
(88)
$ 56,909

December 31,

2015
$ 16,558
19,948
108
(341)
$ 36,273

2014
$ 9,898
6,401
259
—
$ 16,558

The Company’s policy is to account for interest and penalties related to income tax liabilities within the provision
for income taxes. The balances of accrued interest and penalties recorded in the balance sheets and provision
for income taxes were not material for any period presented.

The Company ﬁles income tax returns in the U.S. and non-U.S. jurisdictions. The Company is subject to federal,
state and foreign income tax examinations for calendar tax years ending 2012 through 2015. The tax authorities
could choose to audit the tax years beyond the statute of limitation period due to tax attribute carryforwards from
prior years, making adjustments only to carryforward attributes. The Company is currently under examination by
the Internal Revenue Service for the 2012 through 2015 tax years. At this time, the Company is not able to

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GoPro, Inc.
Notes to Consolidated Financial Statements

estimate the potential
impact that the examination may have on income tax expense. If the examination is
resolved unfavorably, there is a possibility it may have a material negative impact on the Company’s results of
operations.

10. Related party transactions

The Company incurs costs for Company-related chartered aircraft fees for the use of the CEO’s private plane.
The Company recorded expense of $0.5 million, $0.7 million and $0.6 million in 2016, 2015 and 2014,
respectively. As of December 31, 2016 and 2015, the Company had accounts payable associated with these
aircraft fees of zero and $0.1 million, respectively.

In 2013, the Company entered into a three-year agreement, which was amended in July 2016 to continue
through the end of 2016, with a company affiliated with the son of one of the members of the Company’s board
of directors to acquire certain naming rights to a kart racing facility. As consideration for these naming rights, the
Company paid $0.6 million over the three year period. As of December 31, 2016, the Company has recorded
cumulative expense of $0.6 million, and has also provided 100 GoPro cameras at no cost each year. As of
December 31, 2016 and 2015, the Company had no accounts payable associated with this agreement.

the Company obtained services from a vendor whose CEO is also one of

In 2016,
the
Company’s board of directors. The Company recorded expense of $0.4 million in 2016. As of December 31,
2016, the Company had accounts payable associated with this vendor of $0.3 million.

the members of

The Company has agreements for certain contract manufacturing and engineering services with a vendor
the Company’s investors. The Company made payments of zero, $0.2 million and
affiliated with one of
$12.2 million to this vendor in 2016, 2015 and 2014, respectively. As of December 31, 2016 and 2015, the
Company had no accounts payable associated with this vendor.

In June 2014,
the CEO purchased seven automobiles from the Company for a total purchase price of
$0.3 million, which was equal to the deemed fair value of the automobiles purchased. There have been no
additional purchases in 2016 and 2015.

In the second quarter of 2013, the Company loaned one of its executive officers $0.2 million pursuant to a
demand payment loan that did not bear interest, which was fully repaid in March, 2014.

See Notes 6 and 7 above for information regarding CEO RSUs and Class B common stock contributed by the
CEO back to the Company.

11. Commitments, contingencies and guarantees

The Company enters into multi-year agreements to lease facilities, purchase sponsorships with event organizers,
resorts and athletes as part of its marketing efforts; software licenses related to its ﬁnancial and IT systems; and
various other contractual commitments.

In May 2016, the Company entered into a 3.5 year agreement with Red Bull GmbH (Red Bull) that includes
content production, distribution and cross-promotion. As part of
the Company issued
unregistered restricted shares of its Class A common stock to Red Bull with a fair value of approximately
$7 million, which is being expensed ratably over one-year as a component of sales and marketing expense.
Over the term of the agreement, Red Bull will also receive cash consideration, which is included in the other
contractual commitments section of the table below.

the agreement,

GoPro, Inc.
Notes to Consolidated Financial Statements

The following table summarizes the Company’s total undiscounted future expected obligations under multi-year
agreements with terms longer than one year:

(in thousands)

Total

2017

2018

2019

2020

2021

Thereafter

Operating leases(1)
Sponsorship commitments(2)
Other contractual commitments(3)
Total contractual cash obligations

$ 139,511
14,500
39,189
$ 193,200

$ 16,972
7,449
11,744
$ 36,165

$ 20,345
4,134
14,723
$ 39,202

$ 13,896
2,917
12,722
$ 29,535

$ 17,157
—
—
$ 17,157

$ 16,770
—
—
$ 16,770

$ 54,371
—
—
$ 54,371

(1) The Company leases its facilities under long-term operating leases, which expire at various dates through 2027.

(2) The Company enters into multi-year sponsorship agreements with event organizers, resorts and athletes as part of its marketing efforts.

(3) The Company enters into other contractual commitments, including the multi-year agreement with Red Bull, as well as software licenses

related to the Company’s ﬁnancial and IT systems which require payments over several years.

In 2016, the Company entered into sub-lease agreements for its office facilities that decreased the Company’s
total future minimum lease payments by sub-lease rentals of approximately $6 million, which approximates the
corresponding remaining lease rentals.

Rent expense was $19.8 million, $12.2 million and $7.3 million for 2016, 2015 and 2014, respectively.

Product warranty

The following table summarizes the warranty liability activity:

(in thousands)
Beginning balances
Charged to cost of revenue
Settlements of warranty claims
Ending balances

Year ended December 31,

2016
$ 10,856
19,272
(18,183)
$ 11,945

2015

6,405
25,377
(20,926)
$ 10,856

2014
$ 3,870
10,268
(7,733)
$ 6,405

At December 31, 2016, $11.5 million of the warranty liability was recorded as an element of accrued liabilities
and $0.5 million was recorded as an element of other long-term liabilities.

Legal proceedings. From time to time, the Company is involved in legal proceedings in the ordinary course of
business. Due to inherent uncertainties of litigation, the Company cannot accurately predict the ultimate outcome
of these matters. The Company is unable at this time to determine whether the outcome of the litigation would
have a material impact on the results of operations, ﬁnancial condition or cash ﬂows of the Company.

In the normal course of business, the Company enters into agreements that contain a
Indemniﬁcations.
indemniﬁcation. The Company’s exposure
variety of representations and warranties and provide for general
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 December 31, 2016, 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.

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GoPro, Inc.
Notes to Consolidated Financial Statements

12. Concentrations of risk and geographic information

Customer concentration. Financial instruments, which potentially subject the Company to concentrations of
credit risk, consist principally of trade receivables. The Company’s management 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 management’s expectations.

Customers who represented 10% or more of the Company’s net accounts receivable balance were as follows:

Customer A
Customer B
Customer C

December 31,

2016
15%
27%
*

2015
*
40%
18%

*Less than 10% of total accounts receivable for the period indicated

The following table summarizes the Company’s accounts receivables sold, without recourse, and factoring fees
paid:

(in thousands)
Accounts receivable sold
Factoring fees

Year ended December 31,

2016
$ 167,769
1,266

2015
$ 194,223
1,566

2014
$ 250,437
2,148

Customers who represented 10% or more of the Company’s total revenue were as follows:

Customer A
Customer B

*Less than 10% of total revenue for the period indicated

Year ended December 31,

2016
17%
11%

2015
14%
12%

2014
20%
*

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’s management 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.

Geographic information

Revenue by geographic region, based on ship-to destinations, was as follows:

(in thousands)
Americas
EMEA
APAC
Total revenue

Year ended December 31,

2016
619,784
366,352
199,345
$ 1,185,481

2015
868,772
535,260
215,939
$ 1,619,971

2014
890,352
371,197
132,656
$ 1,394,205

GoPro, Inc.
Notes to Consolidated Financial Statements

Revenue in the United States, which is included in the Americas geographic region, was $554.9 million,
$769.2 million and $796.0 million for 2016, 2015 and 2014, 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 December 31, 2016 and 2015 long-lived assets, which represent gross property and equipment, located
outside the United States, primarily in Hong Kong and China, were $76.6 million and $47.6 million, respectively.

13. Restructuring charges and other exit costs

First quarter 2016 restructuring. On January 12, 2016, the Company approved a restructuring that provided
for a reduction in the Company’s global workforce of approximately 7%. The Company incurred aggregate
restructuring expenses of $6.5 million in the ﬁrst quarter of 2016, which primarily included cash-based severance
costs. The plan was substantially completed as of March 31, 2016 and all costs have been paid.

Fourth quarter 2016 restructuring. On November 29, 2016, the Company approved a restructuring to reduce
future operating expenses and achieve its goal of returning to proﬁtability. The restructuring provided for a
reduction of the Company’s global workforce of approximately 15%, the closure of the Company’s entertainment
group to concentrate on its core business, and the consolidation of certain leased office facilities. The Company
incur total aggregate charges of approximately $40 million for the restructuring. The
estimates that
Company expects actions associated with the restructuring will be substantially completed in the ﬁrst half of
2017.

it will

Restructuring charges of approximately $36.6 million were recorded in the fourth quarter of 2016, which was
comprised of the following:

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(in thousands)

Employee severance pay and related costs(1)
Non-cash acceleration of stock-based compensation expense(1)
Non-cancelable leases, accelerated depreciation and other charges

Total restructuring charges

Amount

$ 18,893
15,566
2,122
$ 36,581

(1)

Includes total charges of $11.4 million (including $8.8 million for accelerated equity awards) associated with the departure of the
Company’s former President.

The following table provides a summary of the Company’s restructuring activities in the fourth quarter of 2016
and the related liabilities recorded in accrued liabilities on the consolidated balance sheet. The Company expects
to pay out its restructuring liability for severance in the ﬁrst half of 2017.

(in thousands)

Restructuring liability as of October 1, 2016
Restructuring charges
Cash paid
Non-cash settlements
Restructuring liability as of December 31, 2016

Severance

—
18,893
(8,440)
(793)
$ 9,660

Other

$ —
879
—
—
$ 879

Total

—
19,772
(8,440)
(793)
$ 10,539

GoPro, Inc.
Notes to Consolidated Financial Statements

Restructuring charges

The following table summarizes total 2016 restructuring charges in the consolidated statements of operations:

(in thousands)

Cost of revenue
Research and development
Sales and marketing
General and administrative

Total restructuring charges

Amount

497
17,197
12,064
13,331
$ 43,089

Other exit costs.
In addition to the restructuring actions above, in the second and third quarters of 2016, the
Company committed to plans to vacate and sublet certain leased office facilities. Changes in estimated useful
life of associated leasehold improvements and office equipment are expected to result
in accelerated
depreciation expense of approximately $10 million, including $6.0 million recorded in 2016 and $4.0 million
ratably over an estimated remaining period of 8 months.

Schedule II
GoPro, Inc.

VALUATION AND QUALIFYING ACCOUNTS

For the years ended December 31, 2016, 2015 and 2014

(in thousands)

Allowance for doubtful accounts

receivable:

Year ended December 31, 2016
Year ended December 31, 2015
Year ended December 31, 2014

Allowance for sales returns:
Year ended December 31, 2016
Year ended December 31, 2015
Year ended December 31, 2014

Valuation allowance for deferred

tax assets:

Year ended December 31, 2016
Year ended December 31, 2015

Balance at
Beginning of
Year

$ 1,400
1,250
520

$ 26,280
25,747
14,352

Charges to
Revenue

Charges to
Expense

Deductions/
Write-offs

Balance at
End of Year

—
—
—

$ 35,136
48,182
39,011

40
682
970

$ (41,378)
(47,649)
(27,616)

$ (159)
(532)
(240)

$ —
—
—

1,281
1,400
1,250

$ 20,038
26,280
25,747

$ 8,555
—

—
—

$ 101,878
8,555

$ —
—

$ 110,433
8,555

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain ‘‘disclosure controls and procedures,’’ as deﬁned in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act, that are designed to ensure that information required to be disclosed by a company in the reports
that it ﬁles or submits under the Exchange Act is recorded, processed, summarized and reported, within the time
periods speciﬁed in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be disclosed by a company in the
reports that it ﬁles or submits under the Exchange Act is accumulated and communicated to the company’s
management, including its principal executive and principal ﬁnancial officers, as appropriate to allow timely
decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated
the effectiveness of our disclosure controls and procedures as of December 31, 2016. Based on the evaluation
of our disclosure controls and procedures as of December 31, 2016, our Chief Executive Officer and Chief
Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the
reasonable assurance level.

Management’s Report on Internal Control Over Financial Reporting

Our management
is responsible for establishing and maintaining adequate internal control over ﬁnancial
reporting (as deﬁned in Rule 13a-15(f) under the Exchange Act). Our management conducted an assessment of
the effectiveness of our internal control over ﬁnancial reporting based on the criteria established in ‘‘Internal
Control − Integrated Framework’’ (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on that assessment, our management has concluded that our internal control over
ﬁnancial reporting was effective as of December 31, 2016. The effectiveness of the Company’s internal control

over ﬁnancial reporting as of December 31, 2016 has been audited by PricewaterhouseCoopers LLP, an
independent registered public accounting ﬁrm, as stated in their report which appears herein.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over ﬁnancial reporting identiﬁed in connection with the evaluation
required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended
December 31, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control
over ﬁnancial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including the CEO and CFO, recognizes that our disclosure controls and procedures or our
internal control over ﬁnancial reporting cannot prevent or detect all possible instances of errors and all fraud. A
control system, no matter how well designed and operated, can provide only reasonable, not absolute,
assurance that the control system’s objectives will be met. The design of a control system must reﬂect the fact
that there are resource constraints, and the beneﬁts of controls must be considered relative to their costs.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required for this Item is incorporated by reference from our Proxy Statement to be ﬁled for our
2017 Annual Meeting of Stockholders within 120 days after the end of the ﬁscal year ended December 31, 2016.

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneﬁcial Owners and Management and Related Stockholder
Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accounting Fees and Services

PART IV

Item 15. Exhibits, Financial Statement Schedules

1. Financial Statements

The ﬁnancial statements ﬁled as part of this report are listed in the ‘‘Index to Financial Statements’’ under
Part II, Item 8 of this report.

2. Financial Statement Schedules

All schedules are omitted as the required information is inapplicable or the information is presented in the
Consolidated Financial Statements or Notes to Consolidated Financial Statements under Item 8.

3. Exhibits

The information required by this item is set forth on the exhibit index which follows the signature page of this
report.

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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this

Report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

Dated: February 16, 2017

GoPro, Inc.
(Registrant)
By: /s/ Nicholas Woodman
Nicholas Woodman
Chief Executive Officer
(Principal Executive Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby
constitutes and appoints Nicholas Woodman and Brian McGee, and each of them, as his true and lawful
attorneys-in-fact, proxies and agents, each with full power of substitution, for him in any and all capacities, to
sign any and all amendments to this Annual Report on Form 10-K, and to ﬁle the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact, proxies and agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he might or
could do in person, hereby ratifying and conﬁrming all that said attorneys-in-fact, proxies and agents, or their or
his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by

the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:

Name

Title

/s/ Nicholas Woodman
Nicholas Woodman

Chief Executive Officer and Chairman
(Principal Executive Officer)

/s/ Brian McGee
Brian McGee

/s/ Anthony Bates
Anthony Bates

/s/ Michael Marks
Michael Marks

/s/ Peter Gotcher
Peter Gotcher

/s/ Edward Gilhuly
Edward Gilhuly

/s/ Kenneth Goldman
Kenneth Goldman

/s/ Alexander Lurie
Alexander Lurie

/s/ Lauren Zalaznick
Lauren Zalaznick

Chief Financial Officer
(Principal Financial and Accounting Officer)

Director

Date

February 16, 2017

Exhibit
Number
3.01

3.02

4.01

4.02

10.01*

10.02*

10.03*

10.04*

10.05*

10.06*

10.07*

10.08*

10.09*

10.10*

10.11*

10.12*

10.13*

10.14

10.15

10.16

10.17

21.01
23.01

Exhibit Title
Restated Certiﬁcate of Incorporation of the
Registrant.
Amended and Restated Bylaws of the
Registrant.
Form of Registrant’s Class A common
stock certiﬁcate.
Investors’ Rights Agreement, dated as of
February 26, 2011, by and among the
Registrant and certain investors, as
amended.
Form of Indemnity Agreement by and
between the Registrant and each of its
directors and executive officers.
Form of Change in Control Severance
Agreement.
2010 Equity Incentive Plan, as amended,
and form of stock option agreement and
restricted stock unit agreement.
2014 Equity Incentive Plan, as amended,
and forms thereunder.
2014 Employee Stock Purchase Plan and
forms thereunder.
Employment Letter to Nicholas Woodman
from the Registrant, dated June 2, 2014.
Offer Letter to Jack Lazar from the
Registrant, dated January 17, 2014.
Amended and Restated Change in Control
Severance Agreement dated June 8, 2014,
by and between Jack Lazar and the
Registrant.
Offer Letter to Sharon Zezima from the
Registrant, dated August 23, 2013.
Amended and Restated Offer Letter to
Anthony Bates from the Registrant,
effective as of October 23, 2014.
Separation Agreement and Release of
Claims dated December 15, 2016 by and
between Anthony Bates and the
Registrant.
Offer Letter to Brian McGee from the
Registrant, dated September 3, 2015.
Offer Letter to Charles Prober from
Registrant, dated May 28, 2014.
Office Lease Agreement, dated as of
November 1, 2011, by and between Locon
San Mateo, LLC and the Registrant, as
amended, and other leases for the
Registrant’s headquarters.
Eighth amendment to Office Lease
Agreement, by and between RAR2 −
Clearview Business Park Owner QRS, LLC
and the Registrant, dated February 24,
2016.
Ninth amendment to Office Lease
Agreement, by and between
RAR2 − Clearview Business Park Owner
QRS, LLC and the Registrant, dated
August 3, 2016.
Credit Agreement by and among
Registrant, the Lenders party thereto and
JPMorgan Chase Bank, N.A. dated
March 25, 2016.
List of Subsidiaries.
Consent of Independent Registered Public
Accounting Firm.

EXHIBIT INDEX

Incorporated by Reference

Form
S-1

File No.
333-200038

Exhibit
3.01

Filing Date
November 10, 2014

Filed
Herewith

S-1

333-200038

333-196083

3.02

4.01

4.02

November 10, 2014

May 19, 2014

S-1

333-196083

10.01

May 19, 2014

S-1

333-196083

10.09

May 19, 2014

333-196083

10.02

May 19, 2014

10-Q

001-36514

10.03

July 29, 2016

S-1/A

333-196083

10.04

June 11, 2014

S-1/A

333-196083

10.16

June 11, 2014

S-1

333-196083

10.07

May 19, 2014

S-1/A

333-196083

10.01

June 11, 2014

S-1

333-196083

10.08

May 19, 2014

333-200038

10.16

November 10, 2014

8-K

001-36514

10.01

December 20, 2016

S-1

333-196083

10.12

May 19, 2014

10-Q

001-36514

10.17

May 6, 2016

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X
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24.01

31.01

31.02

32.01‡

101.INS
101.SCH
101.CAL

101.LAB
101.PRE

101.DEF

Power of Attorney (included on the
signature page to this Annual Report on
Form 10-K).
Certiﬁcation of Principal Executive Officer
Required Under Rule 13(a)-14(a) and
15(d)-14(a) of the Securities Exchange Act
of 1934, as amended.
Certiﬁcation of Principal Financial Officer
Required Under Rule 13(a)-14(a) and
15(d)-14(a) of the Securities Exchange Act
of 1934, as amended.
Certiﬁcation of the Chief Executive Officer
and Chief Financial Officer Pursuant
to 18 U.S.C. Section 1350.
XBRL Instance Document
XBRL Taxonomy Extension Schema
XBRL Taxonomy Extension Calculation
Linkbase
XBRL Taxonomy Extension Label Linkbase
XBRL Taxonomy Extension Presentation
Linkbase
XBRL Taxonomy Extension Deﬁnition
Linkbase

‡

Indicates a management contract or compensatory plan.

As contemplated by SEC Release No. 33-8212, these exhibits are furnished with this Annual Report on Form 10-K and are not deemed
ﬁled with the SEC and are not incorporated by reference in any ﬁling of GoPro, Inc. under the Securities Act of 1933 or the Exchange
Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in such ﬁlings.

GoPro, Inc.
3000 Clearview Way
San Mateo, CA 94402
(650) 332-7600
gopro.com

Investor Relations
investor.gopro.com