GoPro Inc

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2023 included in our 2023 Annual Report. This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading Special Note About Forward-Looking Statements in this Quarterly Report on Form 10-Q. You should review the disclosure under the heading Risk Factors in this Quarterly Report on Form 10-Q for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements. Our MD&A is provided in addition to the accompanying condensed consolidated financial statements and accompanying notes to assist readers in understanding our results of operations, financial condition and cash flows.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2023 included in our 2023 Annual Report. This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading Special Note About Forward-Looking Statements in this Quarterly Report on Form 10-Q. You should review the disclosures under the heading Risk Factors in this Quarterly Report on Form 10-Q for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements. Our MD&A is provided in addition to the accompanying condensed consolidated financial statements and accompanying notes to assist readers in understanding our results of operations, financial condition and cash flows.

Previous wording

•Results of Operations. Analysis of our financial results comparing the second quarter and first six months of 2024 to 2023.

Current wording

•Results of Operations. Analysis of our financial results comparing the third quarter and first nine months of 2024 to 2023.

Previous wording

GoPro helps the world capture and share itself in immersive and exciting ways. We are committed to developing solutions that create an easy, seamless experience for consumers to capture, create and share engaging personal content. When consumers use our products and services, they often generate and share content that organically increases awareness for GoPro, driving a virtuous cycle and a self-reinforcing demand for our products. We believe revenue growth may be driven by the introduction of new products, accessories, lifestyle gear, and software and subscription offerings. We believe new camera features drive a replacement cycle among existing users and attract new users, expanding our total addressable market. Our investments in image stabilization, mobile and desktop app editing and sharing solutions, modular accessories, auto-upload capabilities, local language user-interfaces and voice recognition in more than 12 languages are designed to drive the expansion of our global market.

Current wording

GoPro helps the world capture and share itself in immersive and exciting ways. We are committed to developing solutions that create an easy, seamless experience for consumers to capture, create and share engaging personal content. When consumers use our products and services, they often generate and share content that organically increases awareness for GoPro, driving a virtuous cycle and a self-reinforcing demand for our products. We believe revenue growth may be driven by the introduction of new products, accessories, lifestyle gear, and software and subscription offerings. We believe new camera features drive a replacement cycle among existing users and attract new users, expanding our total addressable market. Our investments in image stabilization, mobile app editing and sharing solutions, modular accessories, auto-upload capabilities, local language user-interfaces and voice recognition in more than 11 languages with 6 accents are designed to drive the expansion of our global market.

Previous wording

In September 2023, we began shipping our HERO12 Black flagship camera that includes our GP2 processor, HyperSmooth 6.0 image stabilization, high dynamic range (HDR) photos and videos in 5.3K at 60 frames per second (FPS) and 4K at 60 FPS, and wireless audio support for Apple AirPods and other Bluetooth devices. HyperSmooth 6.0 image stabilization features improved AutoBoost, which analyzes up to 4x more data compared to HyperSmooth 5.0 while supporting 360-degree Horizon Lock. The HERO12 Black also includes 10-bit color video at up to 5.3K video at 60 FPS, 27-megapixel photo resolution, 8:7 aspect ratio video for a larger vertical field of view, and HyperView, which allows for a 16:9 field of view. The HERO12 Black also includes the Enduro Battery, which improves the camera performance in both cold and moderate temperatures, a front-facing and rear touch display, TimeWarp 3.0, a Timecode Sync feature, and a Night Effects Time Lapse feature. We also offer our Max Lens Mod 2.0 for HERO12 Black, which features an ultra wide-angle digital lens for 4K video at 60 FPS, Max HyperSmooth in all video modes, and Horizon Lock for all digital lenses. Additionally, we offer our HERO12 Black

Current wording

In September 2024, we began shipping our HERO13 Black flagship camera that includes our GP2 processor, HyperSmooth 6.0 image stabilization, hybrid-log gamma (HLG) high dynamic range (HDR) photos and videos in 5.3K at 60 frames per second (FPS) and 4K at 60 FPS, and a higher capacity battery resulting in longer runtimes and improved thermal performance. HyperSmooth 6.0 image stabilization features AutoBoost, which analyzes up to 4x more data compared to HyperSmooth 5.0 while supporting 360-degree Horizon Lock. The HERO13 Black also includes 10-bit color video at up to 5.3K video at 60 FPS, 27-megapixel photo resolution, 8:7 aspect ratio video for a larger vertical field of view, and HyperView, which allows for a 16:9 field of view. The HERO13 Black also includes a front-facing and rear touch display, TimeWarp 3.0, a Timecode Sync feature, and a Night Effects Time Lapse feature. We also offer our Ultra Wide Lens Mod, Macro Lens Mod and a ND Filter 4-Pack for HERO13 Black. The Ultra Wide Lens Mod allows for an ultra wide-angle digital lens for 4K video at 60 FPS, the Macro Lens Mod allows the HERO13 Black to focus on objects 4x closer than prior generation cameras and the ND Filter 4-Pack allows the HERO13 Black to create motion blur. Additionally, we offer our HERO13 Black Creator

Previous wording

Creator Edition, which combines the HERO12 Black, Volta, Enduro Battery, Media Mod, and Light Mod to create professional-quality videos.

Current wording

Edition, which combines the HERO13 Black, Volta, Enduro Battery, Media Mod, and Light Mod to create professional-quality videos.

Previous wording

Our HERO12 Black, HERO12 Black Creator Edition, HERO11 Black, HERO11 Black Mini, HERO11 Black Creator Edition, HERO10 Black, HERO10 Black Creator Edition, and MAX cameras are compatible with our ecosystem of mountable and wearable accessories.

Current wording

Our HERO13 Black, HERO13 Black Creator Edition, HERO, HERO12 Black, HERO12 Black Creator Edition, HERO11 Black, HERO11 Black Mini, HERO11 Black Creator Edition, and MAX cameras are compatible with our ecosystem of mountable and wearable accessories.

Previous wording

We offer our Premium subscription, which includes unlimited cloud storage of GoPro content supporting source video and photo quality, damaged camera replacement, cloud storage up to 25 gigabytes (GB) of non-GoPro content, the delivery of highlight videos automatically via our mobile app when GoPro camera footage is uploaded to the user’s GoPro cloud account using Auto Upload. Our Premium subscription also offers access to our Quik desktop app for macOS, launched in February 2024. Our Quik desktop app brings the speed and convenience of the Quik mobile app to desktop users, but with an expanded list of features and capabilities that take advantage of a desktop computer’s processing power and screen size. Our Premium subscription also provides access to a high-quality live streaming service on GoPro.com, as well as discounts on GoPro cameras, gear, mounts and accessories. In February 2024, we launched our Premium+ subscription which includes cloud storage up to 500 GB of non-GoPro content, HyperSmooth Pro and all of the same features included in the Premium subscription.

Current wording

We offer our Premium subscription, which includes unlimited cloud storage of GoPro content supporting source video and photo quality, damaged camera replacement, cloud storage up to 25 gigabytes (GB) of non-GoPro content, the delivery of highlight videos automatically via our mobile app when GoPro camera footage is uploaded to the user’s GoPro cloud account using Auto Upload. Our Premium subscription also provides access to a high-quality live streaming service on GoPro.com, as well as discounts on GoPro cameras, gear, mounts and accessories. In February 2024, we launched our Premium+ subscription which includes cloud storage up to 500 GB of non-GoPro content, HyperSmooth Pro and all of the same features included in the Premium subscription.

Previous wording

(4)We define non-GAAP net income (loss) as net income (loss) adjusted to exclude stock-based compensation, acquisition-related costs, restructuring and other costs, including right-of-use asset impairment charges (if applicable), (gain) loss on extinguishment of debt, and income tax adjustments. Acquisition-related costs include the amortization of acquired intangible assets and impairment charges (if applicable), as well as third-party transaction costs for legal and other professional services.

Current wording

(4)We define non-GAAP net income (loss) as net income (loss) adjusted to exclude stock-based compensation, acquisition-related costs, restructuring and other costs, including right-of-use asset impairment charges (if applicable), (gain) loss on extinguishment of debt, gain on sale and/or license of intellectual property, and income tax adjustments. Acquisition-related costs include the amortization of acquired intangible assets and impairment charges (if applicable), as well as third-party transaction costs for legal and other professional services.

Previous wording

Revenue for the second quarter of 2024 was $186.2 million, which represented a 22.7% decrease from the same period in 2023. The year-over-year decrease was primarily driven by an 18.2% decrease in units shipped in the quarter of 576 thousand, compared to 704 thousand in the same period in 2023 and an increase in second quarter sales incentives, partially offset by an 8.2% increase in our subscription and service revenue. The second quarter of 2024 sell-in was impacted by the delayed launch of our new entry-level camera from the second quarter of 2024 to the third quarter of 2024 and a reduction of channel inventory. Additionally, the continued consumer-related macroeconomic issues resulting in a softer consumer market in the Americas and Asia-Pacific regions, particularly in China, and an increasingly global competitive landscape, notably in China, negatively impacted the second quarter of 2024 sell-in and sell-through. Our second quarter of 2024 camera revenue mix from cameras with an MSRP equal to or greater than $400 was 76% compared to 75% for the same period in 2023. Our second quarter of 2024 average selling price decreased 5.6% year-over-year to $323, primarily due to a year-over-year increase in second quarter sales incentives of $10.5 million, partially offset by an increase in our subscription and service revenue. Average selling price is defined as total reported revenue divided by camera units shipped. Retail revenue was $137.1 million in the second quarter of 2024 and represented 73.6% of total revenue, compared to 68.6% of total revenue for the same period in 2023. GoPro.com revenue, which includes subscription and service revenue, was $49.1 million in the second quarter of 2024 and represented 26.4% of total revenue, compared to 31.4% of total revenue for the same period in 2023. Our overall subscription attach rate from both sales on GoPro.com and from post-camera purchases at retail was 45% in the second quarter of 2024. Our aggregate retention rate for annual subscribers was 68% in the second quarter of 2024, compared to 64% in the same period in 2023, a 7% improvement. Our gross margin percentage for the second quarter of 2024 was 30.5%, which was nearly flat year-over-year. Net loss for the second quarter of 2024 was $47.8 million compared to net loss of $17.2 million in the same period in 2023. Adjusted EBITDA for the second quarter of 2024 was negative $33.4 million, compared to negative $10.3 million for the same period in 2023. Cash was flat sequentially and we reduced inventory by 25.8% sequentially to make way for new product introductions expected in the third quarter of 2024.

Current wording

Revenue for the third quarter of 2024 was $258.9 million, which represented a 12.0% decrease from the same period in 2023. The year-over-year decrease was primarily driven by a 4.6% decrease in units shipped in the quarter of 881 thousand, compared to 923 thousand in the same period in 2023 and an increase in third quarter sales incentives, partially offset by a 10.6% increase in our subscription and service revenue. The continued consumer-related macroeconomic issues resulting in a softer consumer market in the Americas and Asia-Pacific regions, particularly in China, and an increasingly global competitive landscape, notably in China, negatively impacted the third quarter of 2024 sell-in and sell-through. Our third quarter of 2024 camera revenue mix from cameras with an MSRP equal to or greater than $400 was 74% compared to 75% for the same period in 2023. Our third quarter of 2024 average selling price decreased 7.8% year-over-year to $294, primarily due to a 38.2% increase in unit sales of entry level priced cameras, a reduction of $300 and above camera unit sales, as well as an increase in promotional activity, partially offset by an increase in our subscription and service revenue. Average selling price is defined as total reported revenue divided by camera units shipped. Retail revenue was $207.9 million in the third quarter of 2024 and represented 80.3% of total revenue, compared to 78.5% of total revenue for the same period in 2023. GoPro.com revenue, which includes subscription and service revenue, was $51.0 million in the third quarter of 2024 and represented 19.7% of total revenue, compared to 21.5% of total revenue for the same period in 2023. Our overall subscription attach rate from both sales on GoPro.com and from post-camera purchases at retail was 45% in the third quarter of 2024. Our aggregate retention rate for annual subscribers was 67% in the third quarter of 2024, compared to 65% in the same period in 2023, a 4% improvement. Our gross margin percentage for the third quarter of 2024 was 35.5%, an increase of 3.50% year-over year. Net loss for the third quarter of 2024 was $8.2 million compared to a net loss of $3.7 million in the same period in 2023. Adjusted EBITDA for the third quarter of 2024 was $5.4 million, compared to $7.2 million for the same period in 2023. Cash was down slightly sequentially, and inventory was slightly up year-over-year in preparation for the upcoming holiday season in the fourth quarter of 2024.

Previous wording

Driving profitability through improved efficiency, lower costs, and better execution. We incurred an operating loss in the first half of 2024, and for the full year 2023. Wecontinue to make strategic decisions to drive volume, growth, and profitability in our business. Restructuring actions in the first quarter of 2024 and prior restructuring actions, along with continued cost management have resulted in a more efficient global organization that has allowed for improved communication and alignment among our functional teams. We remain focused on increasingour total addressable market with new and innovative products, increasing unit sales volume of our existing products, increasing our subscriber base, and growing and cultivating the partnerships with our distributors and retailers to further expand our retail channel. In executing our strategy to rebuild our retail presence, our expectation is that sales from our retail channel will continue to increase relative to sales on GoPro.com. Wehave grown our subscribers and subscription and service revenue over the past several years and continue to make strategic decisions to enhance our subscription offerings, grow subscribers, increase retention, and increase subscription and service revenue.

Current wording

Driving profitability through improved efficiency, lower costs, and better execution. We incurred an operating loss in the first nine months of 2024, and for the full year 2023. Wecontinue to make strategic decisions to drive volume, growth, and profitability in our business. Restructuring actions in 2024 and prior restructuring actions, along with continued cost management have resulted in a more efficient global organization that has allowed for improved communication and alignment among our functional teams. We are changing our approach to operate in a leaner, more focused manner that we believe is sustainable and strategic for long-term success and improved financial performance. This includes reducing our operating expenses to the lowest level since before going public, while pursuing a product roadmap we believe will drive innovation, differentiation, and growth. And, in the longer term, increasingour total addressable market by introducing new and innovative products, increasing unit sales volume of our existing products, and increasing our subscriber base. Our expectation is that sales from our retail channel will continue to increase relative to sales on GoPro.com. While growth in subscribers and subscription and service revenue has slowed, we continue to make strategic decisions to enhance our subscription offerings to increase subscriber retention and increase subscription and service revenue.

Previous wording

If we are unable to generate adequate unit sales and revenue growth, successfully increase our total addressable market, successfully increase retail sales, grow subscribers and subscription and service revenue, effectively manage our expenses, and navigate the volatile macroeconomic environment (including fluctuating interest rates and currency exchange rates, and recession concerns), we may incur significant losses in the future and may not be able to return to profitability.

Current wording

If we are unable to generate adequate unit sales and revenue growth, successfully increase our total addressable market, successfully increase retail sales, successfully manage sales incentive levels, grow subscribers and subscription and service revenue, effectively manage our expenses, and navigate the volatile macroeconomic environment (including fluctuating interest rates and currency exchange rates, and recession concerns), we may incur significant losses in the future and may not be able to return to profitability.

Previous wording

Investing in research and development and enhancing our customer experience. Our performance is significantly dependent on the investments we make in research and development, including our ability to attract and retain highly skilled and experienced research and development personnel. We expect the timing of new product releases to continue to have a significant impact on our revenue and we must continually develop and introduce innovative new cameras, mobile and desktop applications, and other new offerings. We plan to further build upon our integrated mobile, desktop and cloud-based storytelling solutions, and subscription offerings. Our investments, including those for marketing and advertising, and those related to development efforts associated with our most recent acquisition, may not successfully drive increased revenue and our customers may not accept our new offerings. If we fail to innovate and enhance our brand, our products, our mobile and desktop app experience, or the value proposition of our subscription, our market position and revenue will be adversely affected. Further, we have and will continue to incur substantial research and development expenses and if our efforts are not successful, we may not recover the value of these investments and our business may be adversely affected.

Current wording

Investing in research and development and enhancing our customer experience. Our performance is significantly dependent on the investments we make in research and development, including our ability to attract and retain highly skilled and experienced research and development personnel. We expect the timing of new product releases to continue to have a significant impact on our revenue and we must continually develop and introduce innovative new cameras, software, and other new offerings. We plan to further build upon our integrated mobile and cloud-based storytelling solutions, as well as our subscription offerings. Our investments, including those for marketing and advertising, and those related to development efforts associated with our most recent acquisition, may not successfully drive increased revenue and our customers may not accept our new offerings. If we fail to innovate and enhance our brand, our products, our mobile app experience, or the value proposition of our subscription, our market position and revenue will be adversely affected. Further, we have and will continue to incur substantial research and development expenses and if our efforts are not successful, we may not recover the value of these investments and our business may be adversely affected.

Previous wording

Improving profitability. We believe that our continued focus on growing our total addressable market from our retail and GoPro.com channels, including subscription and service revenue, and broadening our range of products will support our ability to return to profitability on an annual basis due to timely and effective product launches, increases in unit volume, subscribers and related revenue, and continued operating expense control. We continue to believe that international markets represent a significant opportunity to achieve profitability. While the total market for digital cameras has seen an increase in competition, we believe that our consumers’ differentiated use of GoPro cameras, our mobile and desktop app and cloud solutions, our continued innovation of product features desired by our users, and our brand, all help support our competitiveness within the market for digital camera. However, we expect that the markets in which we conduct our business will remain highly competitive as we face new product introductions from competitors. Sales in international locations subject us to foreign currency exchange rate fluctuations and regional macroeconomic conditions that may cause us to adjust pricing which may make our products more or less attractive to the consumer. Continued fluctuations in foreign currency exchange rates and regional macroeconomic conditions could have a continued impact on our future operating results.

Current wording

Improving profitability. We believe that our continued focus on growing our total addressable market from our retail and GoPro.com channels, including subscription and service revenue, and broadening our range of products will support our ability to return to profitability on an annual basis due to timely and effective product launches, increases in unit volume, subscribers and related revenue, and continued operating expense control. We continue to believe that international markets represent a significant opportunity to achieve profitability. While the total market for digital cameras has seen an increase in competition, we believe that our consumers’ differentiated use of GoPro cameras, our mobile app and cloud solutions, our continued innovation of product features desired by our users, and our brand, all help support our competitiveness within the market for digital camera. However, we expect that the markets in which we conduct our business will remain highly competitive as we face new product introductions from competitors. Sales in international locations subject us to foreign currency exchange rate fluctuations and regional macroeconomic conditions that may cause us to adjust pricing which may make our products more or less attractive to the consumer. Continued fluctuations in foreign currency exchange rates and regional macroeconomic conditions could have a continued impact on our future operating results.

Previous wording

Our profitability also depends on the continued success of our subscription and service offerings. If we are not successful in maintaining our product sales, and subscription and service offerings, increasing our paid subscriber base, retail mobile app attach, retail desktop app attach, and improving subscriber retention, we may not be able to return to profitably and we may not recognize benefits from our investment in new areas.

Current wording

Our profitability also depends on the continued success of our subscription and service offerings. If we are not successful in maintaining our product sales, and subscription and service offerings, increasing our paid subscriber base, retail mobile app attach, and improving subscriber retention, we may not be able to return to profitably and we may not recognize benefits from our investment in new areas.

Previous wording

Seasonality. Historically, we have experienced the highest levels of total revenue in the fourth quarter of the year, coinciding with the holiday shopping season, particularly in the United States and Europe. While we have implemented operational changes aimed at reducing the impact of fourth quarter seasonality on full year performance, timely and effective product introductions, whether just prior to the holiday season or otherwise, and forecasting, are critical to our operations and financial performance.

Current wording

Seasonality. Historically, we have experienced the highest levels of total revenue in the fourth quarter of the year, coinciding with the holiday shopping season, particularly in the United States and Europe. However, in the current year, we do not expect this trend to continue due to macroeconomic conditions and competition globally. While we have implemented operational changes aimed at reducing the impact of fourth quarter seasonality on full year performance, timely and effective product introductions, whether just prior to the holiday season or otherwise, and forecasting, are critical to our operations and financial performance.

Previous wording

Revenue for the second quarter of 2024 was $186.2 million, which represented a 22.7% decrease from the same period in 2023. The year-over-year decrease was primarily driven by an 18.2% decrease in units shipped in the quarter of 576 thousand, compared to 704 thousand in the same period in 2023 and an increase in second quarter sales incentives, partially offset by an 8.2% increase in our subscription and service revenue. The second quarter of 2024 sell-in was impacted by the delayed launch of our new entry-level camera from the second quarter of 2024 to the third quarter of 2024 and a reduction of channel inventory. Additionally, the continued consumer-related macroeconomic issues resulting in a softer consumer market in the Americas and Asia-Pacific regions, particularly in China, and an increasingly global competitive landscape, notably in China, negatively impacted the second quarter of 2024 sell-in and sell-through. Our second quarter of 2024 camera revenue mix from cameras with an MSRP equal to or greater than $400 was 76% compared to 75% for the same period in 2023. Our second quarter of 2024 average selling price decreased 5.6% year-over-year to $323, primarily due to a year-over-year increase in second quarter sales incentives of $10.5 million, partially offset by an increase in our subscription and service revenue. Retail revenue was $137.1 million in the second quarter of 2024 and represented 73.6% of total revenue, compared to 68.6% of total revenue for the same period in 2023. GoPro.com revenue, which includes subscription and service revenue, was $49.1 million in the second quarter of 2024 and represented 26.4% of total revenue, compared to 31.4% of total revenue for the same period in 2023.

Current wording

Revenue for the third quarter of 2024 was $258.9 million, which represented a 12.0% decrease from the same period in 2023. The year-over-year decrease was primarily driven by a 4.6% decrease in units shipped in the quarter of 881 thousand, compared to 923 thousand in the same period in 2023 and an increase in third quarter sales incentives, partially offset by a 10.6% increase in our subscription and service revenue. The continued consumer-related macroeconomic issues resulting in a softer consumer market in the Americas and Asia-Pacific regions, particularly in China, and an increasingly global competitive landscape, notably in China, negatively impacted the third quarter of 2024 sell-in and sell-through. Our third quarter of 2024 camera revenue mix from cameras with an MSRP equal to or greater than $400 was 74% compared to 75% for the same period in 2023. Our third quarter of 2024 average selling price decreased 7.8% year-over-year to $294, primarily due to a 38.2% increase in unit sales of entry level priced cameras, a reduction of $300 and above camera unit sales, as well as an increase in promotional activity, partially offset by an increase in our subscription and service revenue. Retail revenue was $207.9 million in the third quarter of 2024 and represented 80.3% of total revenue, compared to 78.5% of total revenue for the same period in 2023. GoPro.com revenue, which includes subscription and service revenue, was $51.0 million in the third quarter of 2024 and represented 19.7% of total revenue, compared to 21.5% of total revenue for the same period in 2023.

Previous wording

Revenue for the first six months of 2024 was $341.7 million, or a 17.8% decrease from the same period in 2023. This was primarily driven by the impact of our May 2023 strategic pricing decision to reduce the MSRPs across our camera line up and a corresponding shift in camera revenue mix as we offered entry level cameras at a sub-$300 price point for the first time since 2019, and a 16.9% decrease in units shipped for the first six months of 2024 of 969 thousand, compared to 1.2 million in the same period in 2023, partially offset by a $27.7 million decrease in price protection charges. In the first six months of 2024, our average selling price decreased 1.1% year-over-year to $352 and our camera revenue mix from cameras with an MSRP equal to or greater than $400 was 74% compared to 81% for the same period in 2023. In the first six months of 2024, our subscription and service revenue increased 9.9% to $52.2 million, which is included in the GoPro.com channel. GoPro.com revenue represented 28.8% and 41.0% of total revenue for the first six months of 2024 and 2023, respectively, while retail revenue represented 71.2% and 59.0% of total revenue for the first six months of 2024 and 2023, respectively. The growth of the retail channel was partially due to adding more than 5,100 new retail doors since the second quarter of 2023.

Current wording

Revenue for the first nine months of 2024 was $600.6 million, or a 15.4% decrease from the same period in 2023. This was primarily driven by the impact of our May 2023 strategic pricing decision to reduce the MSRPs across our camera line up and a corresponding shift in camera revenue mix as we offered entry level cameras at a sub-$300 price point for the first time since 2019, and an 11.4% decrease in units shipped for the first nine months of 2024 of 1.9 million, compared to 2.1 million in the same period in 2023, partially offset by a $30.9 million decrease in price protection charges. In the first nine months of 2024, our average selling price decreased 4.5% year-over-year to $325 and our camera revenue mix from cameras with an MSRP equal to or greater than $400 was 74% compared to 78% for the same period in 2023. In the first nine months of 2024, our subscription and service revenue increased 10.1% to $79.7 million, which is included in the GoPro.com channel. GoPro.com revenue represented 24.8% and 32.9% of total revenue for the first nine months of 2024 and 2023, respectively, while retail revenue represented 75.2% and 67.1% of total revenue for the first nine months of 2024 and 2023, respectively. The growth of the retail channel was partially due to adding more than 6,300 new retail doors since the third quarter of 2023.

Previous wording

Gross margin of 32.1% in the first half of 2024 increased from 30.9% in the same period of 2023, or 120 bps, primarily due to lower camera costs (200 bps), an increase in subscription and service revenue (190 bps), and lower operational costs (150 bps), partially offset by a decrease in camera pricing, net of price protection and other sales incentives (260 bps), and less accessory revenue (160 bps).

Current wording

Gross margin of 33.6% for the first nine months 2024 increased from 31.3% in the same period of 2023, or 230 bps, primarily due to lower camera costs (360 bps), lower operational costs (210 bps), and an increase in subscription and service revenue (160 bps), partially offset by a decrease in camera pricing, net of promotions (390 bps), and less accessory revenue (110 bps).

Previous wording

The year-over-year increase of $11.5 million, or 14.3%, in total research and development expense in the first half of 2024 compared to the same period of 2023 was primarily driven by a $4.8 million increase in consulting and professional services, a $4.3 million increase in cash-based personnel-related costs, a $2.6 million increase in restructuring costs, and a $0.6 million increase in acquisition-related costs, partially offset by a $1.4 million decrease in stock-based compensation expense.

Current wording

The year-over-year increase of $2.6 million, or 6.3%, in total research and development expense for the third quarter of 2024 compared to the same period of 2023 was primarily driven by a $5.0 million increase in consulting and professional services, a $0.8 million increase in restructuring costs, partially offset by a $1.4 million decrease in allocated facilities, depreciation, and supporting overhead expenses, a $1.1 million decrease in cash-based personnel-related costs, a $1.0 million decrease in stock-based compensation expense, and a $0.2 million decrease in travel related expenses.

Previous wording

The year-over-year increase of $5.0 million, or 12.0%, in total research and development expense for the second quarter of 2024 compared to the same period of 2023 was primarily driven by a $2.5 million increase in consulting and professional services, a $1.6 million increase in restructuring costs, a $1.2 million increase in cash-based personnel-related costs, and a $0.5 million increase in acquisition-related costs, partially offset by a $0.9 million decrease in stock-based compensation expense.

Current wording

The year-over-year increase of $14.1 million, or 11.6%, in total research and development expense for the first nine months of 2024 compared to the same period of 2023 was primarily driven by a $9.8 million increase in consulting and professional services, a $3.4 million increase in restructuring costs, and a $3.2 million increase in cash-based personnel-related costs, partially offset by a $2.4 million decrease in stock-based compensation expense.

Previous wording

The year-over-year decrease of $1.5 million, or 1.9%, in total sales and marketing expense in the first half of 2024 compared to the same period of 2023 was primarily driven by a $2.8 million decrease in credit card fees, partially offset by a $1.5 million increase in restructuring costs.

Current wording

The year-over-year decrease of $0.6 million, or 1.4%, in total sales and marketing expense for the third quarter of 2024 compared to the same period of 2023 was primarily driven by a $0.7 million decrease in consulting and professional services and a $0.5 million decrease in credit card fees, partially offset by a $0.4 million increase in restructuring costs, and a $0.3 million increase in advertising and marketing expenses primarily attributable to activation activities and sponsorships.

Previous wording

The year-over-year increase of $1.4 million, or 3.6%, in total sales and marketing expense for the second quarter of 2024 compared to the same period of 2023 was primarily driven by a $2.1 million increase in advertising and marketing expenses primarily attributable to sponsorships and point of purchase display depreciation expense, a $0.9 million increase in restructuring costs, and a $0.2 million increase in travel related expenses, partially offset by a $1.1 million decrease in credit card fees, and a $0.8 million decrease in stock-based compensation expense.

Current wording

The year-over-year decrease of $2.0 million, or 1.7%, in total sales and marketing expense for the first nine months 2024 compared to the same period of 2023 was primarily driven by a $3.3 million decrease in credit card fees and a $1.9 million decrease in allocated facilities, depreciation, and supporting overhead expenses, partially offset by a $1.9 million increase in restructuring costs, a $0.8 million increase in advertising and marketing expenses primarily attributable to sponsorships and point of purchase display depreciation expense, and a $0.5 million increase in travel related expenses.

Previous wording

The year-over-year decrease of $1.5 million, or 9.3%, in total general and administrative expense for the second quarter of 2024 compared to the same period of 2023 was primarily driven by a $1.4 million decrease in stock-based compensation expense and a $0.5 million decrease in cash-based personnel-related costs, partially offset by a $0.4 million increase in restructuring costs.

Current wording

The year-over-year decrease of $0.2 million, or 1.2%, in total general and administrative expense for the third quarter of 2024 compared to the same period of 2023 was primarily driven by a $1.6 million decrease in cash-based personnel-related costs, and a $0.9 million decrease in stock-based compensation expense, partially offset by a $2.5 million increase in consulting and professional services.

Previous wording

The year-over-year decrease of $2.9 million, or 8.9%, in total sales and marketing expense in the first half of 2024 compared to the same period of 2023 was primarily driven by a $2.0 million decrease in stock-based compensation expense, a $1.5 million decrease in consulting and professional services, a $0.6 million decrease in allocated facilities, depreciation, and supporting overhead expenses, and a $0.5 million decrease in bad debt expense, partially offset by a $1.0 million increase in restructuring costs and a $0.8 million increase in acquisition-related costs.

Current wording

The year-over-year decrease of $3.1 million, or 6.5%, in total general and administrative expense in the first nine months of 2024 compared to the same period of 2023 was primarily driven by a $2.9 million decrease in stock-based compensation expense, a $1.7 million decrease in cash-based personnel-related costs, a $0.9 million decrease in allocated facilities, depreciation, and supporting overhead expenses, and a $0.4 million decrease in bad debt expense, partially offset by a $1.2 million increase in restructuring costs, a $1.0 million increase in consulting and professional services, a $0.8 million increase in acquisition-related costs, and a $0.2 million increase in travel related expenses.

Previous wording

First quarter 2024 restructuring. On March 14, 2024, we approved a restructuring plan to reduce operating costs and drive stronger operating leverage by reducing our global workforce by approximately 4% and certain office space. Under the first quarter 2024 restructuring plan, we recorded restructuring charges of $2.3 million related to severance and $3.3 million related to a right-of-use asset impairment upon ceasing the use of certain office space. We expect approximately $2.2 million of office space charges through January 2027.

Current wording

First quarter 2024 restructuring. In March 2024, we approved a restructuring plan to reduce operating costs and drive stronger operating leverage by reducing our global workforce by approximately 4% and certain office space. Under the first quarter 2024 restructuring plan, we recorded restructuring charges of $2.3 million related to severance and $3.3 million related to a right-of-use asset impairment upon ceasing the use of certain office space and $0.4 million related to office space charges. As of September 30, 2024, the remaining future lease related payments associated with certain office space vacated as a result of the first quarter 2024 restructuring plan are anticipated to be approximately $1.9 million and will be paid over the underlying remaining lease term.

Previous wording

Total other income, net was income of $21 thousand for the second quarter of 2024 compared to income of $1.3 million for the same period of 2023. The year-over-year change of $1.3 million was primarily due to an overall lower cash and investment balances resulting in a $1.8 million decrease in interest income, partially offset by a $0.3 million decrease in cash interest expense as we extinguished part of our 2025 Notes in the fourth quarter of 2023, and a $0.1 million decrease in net foreign exchange rate-based losses.

Current wording

Total other income, net was income of $1.9 million for the third quarter of 2024 compared to income of $0.8 million for the same period of 2023. The year-over-year change of $1.1 million was primarily due to a $1.1 million increase in net foreign exchange rate-based gains, a $1.0 million gain on the sale of intellectual property, and a

Previous wording

Total other income, net was income of $0.6 million in the first half of 2024 compared to income of $3.0 million for the same period of 2023. The year-over-year change of $2.4 million was primarily due to an overall lower cash and investment balances resulting in a $2.6 million decrease in interest income, and a $0.6 million increase in net foreign exchange rate-based losses, partially offset by a $0.8 million decrease in cash interest expense as we extinguished part of our 2025 Notes in the fourth quarter of 2023.

Current wording

Total other income, net was income of $2.4 million in the first nine months of 2024 compared to income of $3.8 million for the same period of 2023. The year-over-year change of $1.3 million was primarily due to overall lower cash and investment balances resulting in a $4.1 million decrease in interest income, partially offset by a $1.2 million decrease in cash interest expense as we extinguished part of our 2025 Notes in the fourth quarter of 2023, a $1.0 million gain on the sale of intellectual property, and a $0.5 million decrease in net foreign exchange rate-based losses.

Previous wording

We recorded an income tax expense of $1.3 million for the three months ended June 30, 2024, on pre-tax net loss of $46.5 million. Our income tax expense for the three months ended June 30, 2024 primarily resulted from a tax expense of $1.5 million on pre-tax book income in certain tax jurisdictions, and discrete items that included $0.5 million of nondeductible equity tax expense for employee stock-based compensation, and a net increase in the valuation allowance of $0.2 million, partially offset by an income tax benefit of $0.6 million related to restructuring charges, and an income tax benefit related to the foreign provision to income tax return adjustments of $0.3 million.

Current wording

We recorded an income tax expense of $2.1 million for the three months ended September 30, 2024, on pre-tax net loss of $6.1 million. Our income tax expense for the three months ended September 30, 2024 primarily resulted from a tax expense of $2.1 million on pre-tax book income in certain tax jurisdictions, and discrete items that included $1.9 million of nondeductible equity tax expense for employee stock-based compensation, partially offset by a net decrease in the valuation allowance of $1.6 million, an income tax benefit of $0.3 million related to restructuring charges, and an income tax benefit related to the foreign provision to income tax return adjustments of $0.1 million.

Previous wording

We recorded an income tax expense of $299.5 million for the six months ended June 30, 2024 on pre-tax net loss of $87.4 million. Our income tax expense for the six months ended June 30, 2024 primarily resulted from a tax expense on pre-tax book income in certain jurisdictions of $2.9 million, and discrete items that included $295.1 million of net tax expense from the valuation allowance on United States federal and state net deferred tax assets, and nondeductible equity tax expense for stock-based compensation of $3.0 million, partially offset by an income tax benefit of $1.1 million related to restructuring charges, and an income tax benefit related to the foreign provision to income tax return adjustments of $0.4 million.

Current wording

We recorded an income tax expense of $301.6 million for the nine months ended September 30, 2024 on pre-tax net loss of $93.5 million. Our income tax expense for the nine months ended September 30, 2024 primarily resulted from a tax expense on pre-tax book income in certain jurisdictions of $5.0 million, and discrete items that included $293.4 million of net tax expense from the recording of a valuation allowance on United States federal and state net deferred tax assets, and nondeductible equity tax expense for stock-based compensation of $4.9 million, partially offset by an income tax benefit of $1.3 million related to restructuring charges, and an income tax benefit related to the foreign provision to income tax return adjustments of $0.5 million.

Previous wording

Each quarter, we assess the realizability of our existing deferred tax assets under ASC Topic 740. We assess available positive and negative evidence to estimate whether sufficient future taxable income will be generated to realize our deferred tax assets. In the assessment for the period ended March 31, 2024, we concluded based on the introduction of negative evidence resulting from developments in the first quarter of 2024, such as increased and accelerated costs associated with our future product strategy and roadmap, an increased competitive environment, integration and product development costs related to the recent acquisition of Forcite Helmet Systems, restructuring costs and other negative factors, that it was more likely than not that our deferred tax assets related to United States federal and state deferred tax assets would not be realizable. Therefore, in the period ended March 31, 2024, after consideration of our deferred tax liabilities and recent developments, we provided a valuation allowance of $294.9 million on United States federal and state deferred tax assets. That determination was also based, in part, on our revised expectation that our projections of pre-tax losses in 2024 and future years will cause us to be in a cumulative GAAP loss for ASC Topic 740 purposes in 2024 and forward. In the assessment for the period ended June 30, 2024, we concluded that it remains more likely than not that we will not be able to realize our deferred tax assets. We will continue to monitor our future financial results, expected projections and the potential impact on our assessment regarding the recoverability of our deferred tax asset balances and in the event there is a need to release the valuation allowance, a tax benefit would be recorded. Our foreign deferred tax assets in each jurisdiction 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 our foreign deferred tax assets will be realized and thus, a valuation allowance is not required on our foreign deferred tax assets.

Current wording

Each quarter, we assess the realizability of our existing deferred tax assets under ASC Topic 740. We assess available positive and negative evidence to estimate whether sufficient future taxable income will be generated to realize our deferred tax assets. In the assessment for the period ended March 31, 2024, we concluded based on the introduction of negative evidence resulting from developments in the first quarter of 2024, such as increased and accelerated costs associated with our future product strategy and roadmap, an increased competitive environment, integration and product development costs related to the recent acquisition of Forcite Helmet Systems, restructuring costs and other negative factors, that it was more likely than not that our deferred tax assets related to United States federal and state deferred tax assets would not be realizable. Therefore, in the period ended March 31, 2024, after consideration of our deferred tax liabilities and recent developments, we provided a valuation allowance of $294.9 million on United States federal and state deferred tax assets. We intend to continue maintaining a full valuation allowance on our United States federal and state deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. That determination was also based, in part, on our revised expectation that our projections of pre-tax losses in 2024 and future years will cause us to be in a cumulative GAAP loss for ASC Topic 740 purposes in 2024 and forward. In the assessment for the period ended September 30, 2024, we concluded that it remains more likely than not that we will not be able to realize our deferred tax assets. We will continue to monitor our future financial results, expected projections and the potential impact on our assessment regarding the recoverability of our deferred tax asset balances and in the event there is a need to release the valuation allowance, a tax benefit would be recorded. Our foreign deferred tax assets in each jurisdiction 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 our foreign deferred tax assets will be realized and thus, a valuation allowance is not required on our foreign deferred tax assets.

Previous wording

In 2021, the Organization for Economic Co-operation and Development (OECD) established an inclusive framework on base erosion and profit shifting and agreed on a two-pillar solution (Pillar Two) to global taxation, focusing on global profit allocation and a 15% global minimum effective tax rate. On December 15, 2022, the EU member states agreed to implement the OECD’s global minimum tax rate of 15%. The OECD issued Pillar Two model rules and continues to release guidance on these rules. The inclusive framework calls for tax law changes by participating countries to take effect in 2024 and 2025. Various countries have enacted or have announced plans to enact new tax laws to implement the global minimum tax. We assessed the impact of Pillar Two and there is no material impact to our provision for income taxes for the three and six months ended June 30, 2024. We will continue to monitor future guidance issued and assess the potential impact to our condensed consolidated financial statements.

Current wording

In 2021, the Organization for Economic Co-operation and Development (OECD) established an inclusive framework on base erosion and profit shifting and agreed on a two-pillar solution (Pillar Two) to global taxation, focusing on global profit allocation and a 15% global minimum effective tax rate. On December 15, 2022, the EU member states agreed to implement the OECD’s global minimum tax rate of 15%. The OECD issued Pillar Two model rules and continues to release guidance on these rules. The inclusive framework calls for tax law changes by participating countries to take effect in 2024 and 2025. Various countries have enacted or have announced plans to enact new tax laws to implement the global minimum tax. We assessed the impact of Pillar Two and there is no material impact to our provision for income taxes for the three and nine months ended September 30, 2024. We will continue to monitor future guidance issued and assess the potential impact to our condensed consolidated financial statements.

Previous wording

As of June 30, 2024, our cash, cash equivalents, and marketable securities totaled $133.0 million. Our cash, net of the outstanding principal balance of the 2025 Notes, as of June 30, 2024, was $39.3 million. The overall cash used in operating activities of $97.8 million for the first six months of 2024 was primarily attributable to a net loss of $386.9 million and net cash outflows from changes in our working capital of $29.8 million, partially offset by a deferred tax asset expense of $296.7 million, and net cash inflows from other non-cash expenses of $22.2 million. Working capital changes for the six months ended June 30, 2024 of $29.8 million were the result of a decrease in accounts payable and other liabilities of $39.5 million, a decrease in deferred revenue of $2.8 million and an increase in prepaid expenses and other assets of $1.4 million, partially offset by a decrease in inventory of $8.9 million, and a decrease in accounts receivable of $4.9 million. As of June 30, 2024, $14.8 million of cash was held by our foreign subsidiaries.

Current wording

As of September 30, 2024, our cash, cash equivalents, and marketable securities totaled $130.2 million. Our cash, net of the outstanding principal balance of the 2025 Notes, as of September 30, 2024, was $36.4 million. The overall cash used in operating activities of $100.0 million for the nine months ended September 30, 2024 was primarily attributable to a net loss of $395.1 million and net cash outflows from changes in our working capital of $32.7 million, partially offset by a deferred tax asset expense of $296.8 million, and net cash inflows from other non-cash expenses of $31.0 million. Working capital changes for the nine months ended September 30, 2024 of $32.7 million were the result of an increase in inventory of $49.0 million, an increase in accounts receivable of $41.7 million, an increase in prepaid expenses and other assets of $4.7 million and a decrease in deferred revenue of $2.1 million, partially offset by an increase in accounts payable and other liabilities of $64.8 million. As of September 30, 2024, $15.5 million of cash was held by our foreign subsidiaries.

Previous wording

Based on our most current projections, we believe that our cash, cash equivalents, and amounts available under our credit facility, will be sufficient to address our working capital needs, capital expenditures, outstanding commitments, and other liquidity requirements for at least one year from the issuance of these financial statements.

Current wording

Based on our most current projections, we believe that our available cash and cash equivalents, and amounts available under our credit facility, will be sufficient to address our working capital needs, capital expenditures, outstanding commitments, and other liquidity requirements for at least one year from the issuance of these financial statements.

Previous wording

As of June 30, 2024, we had $133.0 million in cash and cash equivalents. Based on our current cash balance, our proactive cost reductions implemented to date, and working capital adjustments, we anticipate we will have sufficient funds to meet our strategic and working capital requirements, debt service requirements and lease payment obligations for at least twelve months from the issuance of these condensed consolidated financial statements. We also have $44.8 million available to draw from our 2021 Credit Agreement as of June 30, 2024 and as our 2025 Notes are due in November 2025, we have the ability to convert the balance due into stock. If we are unable to obtain adequate debt or equity financing when we require it or on terms acceptable to us, our ability to grow our business, repay debt and respond to business challenges could be significantly limited. Although management believes its current cash resources are sufficient to sustain operations for one year from issuance of these condensed consolidated financial statements, the success of our operations and the global economic outlook, among other factors, could impact our business and liquidity. We will continue to evaluate additional measures, including cost reduction initiatives, debt refinancing, and other similar arrangements. The current cash flow projections used in our evaluation do not include the impact of these additional measures.

Current wording

As of September 30, 2024, we had $130.2 million in cash and cash equivalents. Based on our current cash balance, our proactive cost reductions implemented to date, and working capital adjustments, we anticipate we will have sufficient funds to meet our strategic and working capital requirements, debt service requirements and lease payment obligations for at least twelve months from the issuance of these condensed consolidated financial statements. We also have $44.8 million available to draw from our 2021 Credit Agreement as of September 30, 2024 and as our 2025 Notes are due in November 2025, we have the ability to convert the balance due into stock. If we are unable to obtain adequate debt or equity financing when we require it or on terms acceptable to us, our ability to grow our business, repay debt and respond to business challenges could be significantly limited. Although we believe our current cash resources are sufficient to sustain operations for one year from issuance of these condensed consolidated financial statements, the success of our operations and the global economic outlook, among other factors, could impact our business and liquidity. We will continue to evaluate additional measures, including cost reduction initiatives, debt refinancing, and other similar arrangements. In addition, in October 2024, we initiated a cost reduction effort that will reduce headcount by approximately 26% compared to our headcount ending Q2 2024, reduce marketing expenses in the second half of 2024 as well as 2025, and reduce other general expenses. We considered whether there were conditions or events that raise substantial doubt about our ability to continue as a going concern and evaluate the funds necessary to maintain operations. Based on our current cash flow projections, we concluded that our cash, cash equivalents and marketable securities are sufficient to continue operating activities for at least twelve months following the issuance date of these condensed consolidated financial statements.

Previous wording

Cash used in operating activities of $97.8 million for the six months ended June 30, 2024 was primarily attributable to a net loss of $386.9 million and net cash outflows from changes in our working capital of $29.8 million, partially offset by a deferred tax asset expense of $296.7 million, and net cash inflows from other non-cash expenses of $22.2 million. Working capital changes for the six months ended June 30, 2024 of $29.8 million were the result of a decrease in accounts payable and other liabilities of $39.5 million, a decrease in deferred revenue of $2.8 million, and an increase in prepaid expenses and other assets of $1.4 million, partially offset by a decrease in inventory of $8.9 million, and a decrease in accounts receivable of $4.9 million.

Current wording

Cash used in operating activities of $100.0 million for the nine months ended September 30, 2024 was primarily attributable to a net loss of $395.1 million and net cash outflows from changes in our working capital of $32.7 million, partially offset by a deferred tax asset expense of $296.8 million, and net cash inflows from other non-cash expenses of $31.0 million. Working capital changes for the nine months ended September 30, 2024 of $32.7 million were the result of an increase in inventory of $49.0 million, an increase in accounts receivable of $41.7 million, an increase in prepaid expenses and other assets of $4.7 million and a decrease in deferred revenue of $2.1 million, partially offset by an increase in accounts payable and other liabilities of $64.8 million.

Previous wording

Cash provided by investing activities of $10.0 million for the six months ended June 30, 2024 was primarily attributable to maturities of marketable securities of $24.0 million, partially offset by $12.3 million of net cash used to acquire Forcite Helmet Systems, and net purchases of property and equipment of $1.7 million.

Current wording

Cash provided by investing activities of $8.1 million for the nine months ended September 30, 2024 was primarily attributable to maturities of marketable securities of $24.0 million, partially offset by $12.3 million of net cash used to acquire Forcite Helmet Systems, and net purchases of property and equipment of $3.6 million.

Previous wording

Cash used in financing activities of $0.8 million for the six months ended June 30, 2024 was primarily attributable to $2.2 million in tax payments for net restricted stock unit (RSU) settlements, partially offset by $1.4 million of cash inflows from stock purchases made through our employee stock purchase plan.

Current wording

Cash used in financing activities of $0.7 million for the nine months ended September 30, 2024 was primarily attributable to $2.8 million in tax payments for net restricted stock unit (RSU) settlements, partially offset by $2.2 million of cash inflows from stock purchases made through our employee stock purchase plan.

Previous wording

Although our market capitalization further declined in the second quarter of 2024, we do not believe that it is more likely than not that the fair value of our single reporting unit is less than the carrying value. Using the market capitalization approach, which we would expect to be similar to the discounted cash flow method, the fair value of our single reporting unit is estimated based on the trading price of our stock at the test date, which is further adjusted by an acquisition control premium representing the synergies a market participant would obtain when obtaining control of the business. As of June 30, 2024, the market capitalization exceeded the carrying value of our single reporting unit by 15%, which was not adjusted for an acquisition control premium which would further increase the percentage the fair value exceeded the carrying value.

Current wording

Although our market capitalization further declined in the third quarter of 2024, we do not believe that it is more likely than not that the fair value of our single reporting unit is less than the carrying value. Using the market capitalization approach, which we would expect to be similar to the discounted cash flow method, the fair value of our single reporting unit is estimated based on the trading price of our stock at the test date, which is further adjusted by an acquisition control premium representing the synergies a market participant would obtain when obtaining control of the business. As of September 30, 2024, the market capitalization exceeded the carrying value of our single reporting unit by 13%, which was not adjusted for an acquisition control premium which would further increase the percentage the fair value exceeded the carrying value.

Previous wording

The estimated fair value of our single reporting unit is sensitive to the volatility in our stock price. For example, a 5% decrease in our June 30, 2024 stock price would result in our market capitalization exceeding the carrying value of our single reporting unit by 10%, which is not adjusted for an acquisition control premium. If our market capitalization continues to decline or future performance falls below our current expectations, assumptions, or estimates, including assumptions related to current macroeconomic uncertainties, this may trigger a future material non-cash goodwill impairment charge, which could have a material adverse effect on our business, financial condition, and results of operations in the reporting period in which a charge would be necessary. We will continue to monitor developments, including updates to our forecasts and market capitalization. An update of our assessment and related estimates may be required in the future.

Current wording

The estimated fair value of our single reporting unit is sensitive to the volatility in our stock price. For example, a 5% decrease in our September 30, 2024 stock price would result in our market capitalization exceeding the carrying value of our single reporting unit by 8%, which is not adjusted for an acquisition control premium. If our market capitalization continues to decline or future performance falls below our current expectations, assumptions, or estimates, including assumptions related to current macroeconomic uncertainties, this may trigger a future material non-cash goodwill impairment charge, which could have a material adverse effect on our business, financial condition, and results of operations in the reporting period in which a charge would be necessary. We will continue to monitor developments, including updates to our forecasts and market capitalization. An update of our assessment and related estimates may be required in the future.

Previous wording

The following table presents a reconciliation of net loss to non-GAAP net loss:

Current wording

The following table presents a reconciliation of net loss to non-GAAP net income (loss):