GoPro, Inc.

Previous wording

•Results of Operations. Analysis of our financial results comparing the second quarter and first six months of 2025 to 2024.

Current wording

•Results of Operations. Analysis of our financial results comparing the third quarter and first nine months of 2025 to 2024.

Previous wording

In September 2024, we also began shipping our smallest and lightest version of a HERO camera which features a one-button design and touch display. The HERO camera can shoot videos at up to 4K at 30 FPS and in 4:3 aspect ratio for a wider, more immersive video, captures photos with 12-megapixel resolution, and has a slow-motion setting of up to 2.7K at 60 FPS. The HERO camera captures content with a wide field of view lens so that HyperSmooth image stabilization can be applied in the Quik app.

Current wording

Also in September 2025, we began shipping our compact lifestyle camera, LIT HERO, which can shoot videos in 4K at 60 FPS, capture photos with 12-megapixel resolution, has a slow-motion setting of up to 4K at 60 FPS, includes a built-in light, is waterproof up to 16 feet, and weighs 93 grams. The LIT HERO camera captures content with a wide field of view lens so that HyperSmooth image stabilization can be applied in the Quik app.

Previous 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, Superview and Horizon Leveling. 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. In March 2025, we shipped a limited edition HERO13 Black in a Polar White colorway, and in June 2025, we shipped another limited edition HERO13 Black in a Forest Green colorway, both of which included all of the features of our flagship camera. We also offer our Ultra

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 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, Superview and Horizon Leveling. 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. In March 2025, we shipped a limited edition HERO13 Black in a Polar White colorway, and in June 2025, we shipped another limited edition HERO13 Black in a Forest Green colorway, both of which included all of the features of our flagship camera. We also offer our Ultra Wide Lens Mod, Macro Lens Mod, Anamorphic 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 Anamorphic Lens Mod captures ultra wide-angle footage with reduced distortion and lets anyone tell their stores using the 21:9 aspect ratio used in feature films. The ND Filter 4-Pack allows the HERO13 Black to create motion blur. Additionally, we offer our HERO13 Black Creator Edition, which combines the HERO13 Black, Volta, Enduro Battery, Media Mod, and Light Mod to create professional-quality videos.

Previous 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.

Current wording

Our HERO13 Black, HERO13 Black Creator Edition, LIT HERO, HERO, HERO12 Black, HERO12 Black Creator Edition, MAX2, and MAX cameras are compatible with our ecosystem of mountable and wearable accessories.

Previous wording

We continue to monitor the current evolving macroeconomic landscape. Inflation, fluctuating interest rates, tariffs and recession concerns places increasing pressure on many areas of our business, including hardware and software product pricing, operating expenses, component pricing and consumer spending. In the past, the strength of the U.S. dollar relative to other foreign currencies largely impacted our revenue and gross margin. Revenue from the U.S. was 50.3% and 36.5% of revenue in six months ended June 30, 2025 and 2024, respectively. If the U.S. dollar strengthens relative to other foreign currencies in the future, our financial results will be negatively impacted. See Item 1A. Risk Factors for further discussion of the possible impact of evolving macroeconomic conditions on our business.

Current wording

We continue to monitor the current evolving macroeconomic landscape. Inflation, fluctuating interest rates, tariffs and recession concerns places increasing pressure on many areas of our business, including hardware and software product pricing, operating expenses, component pricing and consumer spending. In the past, the strength of the U.S. dollar relative to other foreign currencies largely impacted our revenue and gross margin. Revenue from the U.S. was 48.7% and 34.0% of revenue in nine months ended September 30, 2025 and 2024, respectively. If the U.S. dollar strengthens relative to other foreign currencies in the future, our financial results will be negatively impacted. See Item 1A. Risk Factors for further discussion of the possible impact of evolving macroeconomic conditions on our business.

Previous wording

(3)We define adjusted EBITDA as net income (loss) adjusted to exclude the impact of income tax expense (benefit), interest income, interest expense, depreciation and amortization, point of purchase (POP) display amortization, stock-based compensation, gain on insurance proceeds, (gain) loss on extinguishment of debt, restructuring and other costs, including right-of-use asset impairment charges (if applicable), and goodwill impairment charges.

Current wording

(3)We define adjusted EBITDA as net income (loss) adjusted to exclude the impact of income tax expense (benefit), interest income, interest expense, depreciation and amortization, point of purchase (POP) display amortization, stock-based compensation, (gain) loss on insurance proceeds, (gain) loss on extinguishment of debt, restructuring and other costs, including right-of-use asset impairment charges (if applicable), and goodwill impairment charges.

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 on insurance proceeds, (gain) loss on extinguishment of debt, gain on sale and/or license of intellectual property, goodwill impairment charges, 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 insurance proceeds, (gain) loss on extinguishment of debt, gain on sale and/or license of intellectual property, goodwill impairment charges, 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 2025 was $152.6 million, which represented an 18.0% decrease from the same period in 2024 of $186.2 million. The year-over-year decrease was primarily driven by lower camera and accessory unit sales, partially offset by less promotional activity in 2025 compared to the same period in 2024. Camera units shipped in the second quarter of 2025 decreased 29.2% year-over-year to 408 thousand, compared to 576 thousand in the same period in 2024, primarily due to consumer-related macroeconomic issues resulting in a softer global consumer market and an increasingly global competitive landscape. In the second quarter of 2025, our average selling price increased 15.7% year-over-year to $374. Average selling price is defined as total reported revenue divided by camera units shipped. Our second quarter of 2025 camera revenue mix from cameras with an MSRP equal to or greater than $400 was 75% compared to 76% for the same period in 2024. Retail revenue was $111.5 million in the second quarter of 2025 and represented 73.0% of total revenue, compared to 73.6% of total revenue for the same period in 2024. GoPro.com revenue, which includes subscription and service revenue, was $41.2 million in the second quarter of 2025 and represented 27.0% of total revenue, compared to 26.4% of total revenue for the same period in 2024. Our overall subscription attach rate from both sales on GoPro.com and from post-camera purchases at retail was 56% in the second quarter of 2025, up 24% from a 45% attach rate in the same period in 2024. Our aggregate retention rate for annual subscribers was 68% in the second quarters of 2025 and 2024. Our gross margin percentage for the second quarter of 2025 was 35.8%, compared to 30.5% in the same period in 2024. Net loss for the second quarter of 2025 was $16.4 million, compared to a net loss of $47.8 million for the same period in 2024. Adjusted EBITDA for the second quarter of 2025 was negative $5.7 million, compared to negative $33.4 million in the same period in 2024.

Current wording

Revenue for the third quarter of 2025 was $162.9 million, which represented a 37.1% decrease from the same period in 2024 of $258.9 million. The year-over-year decrease in revenue and camera units shipped was primarily due to the timing and mix of product launches in the third quarter of 2025 and 2024. Camera units shipped in the third quarter of 2025 decreased 47.9% year-over-year to 459 thousand, compared to 881 thousand in the same period in 2024. In the third quarter of 2025, our average selling price increased 20.6% year-over-year to $355. Average selling price is defined as total reported revenue divided by camera units shipped. Our third quarter of 2025 camera revenue mix from cameras with an MSRP equal to or greater than $400 was 72% compared to 74% for the same period in 2024. Retail revenue was $122.9 million in the third quarter of 2025 and represented 75.4% of total revenue, compared to 80.3% of total revenue for the same period in 2024. GoPro.com revenue, which includes subscription and service revenue, was $40.0 million in the third quarter of 2025 and represented 24.6% of total revenue, compared to 19.7% of total revenue for the same period in 2024. Third quarter overall subscription attach rate from both sales on GoPro.com and from post-camera purchases at retail improved sequentially from 54% to 57% and was up from 45% in the prior year quarter. Our aggregate retention rate for annual subscribers was 68% in the third quarter of 2025, compared to 67% in the same period in 2024. Our gross margin percentage for the third quarter of 2025 was 35.1%, compared to 35.5% in the same period in 2024. Net loss for the third quarter of 2025 was $21.3 million, compared to a net loss of $8.2 million for the same period in

Previous wording

Driving profitability through improved efficiency, lower costs, and better execution. We incurred operating losses in the first half of 2025 and for the full year 2024. 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 pursuing a hardware and software product roadmap we believe will drive innovation, differentiation, and growth. In the longer term, this includes increasingour total addressable market by introducing new, innovative hardware and software products, increasing unit sales volume of our new and 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 grow subscribers and increase subscriber retention that results in an increase in subscription and service revenue.

Current wording

Driving profitability through improved efficiency, lower costs, and better execution. We incurred operating losses in the first nine months of 2025 and for the full year 2024. 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 pursuing a hardware and software product roadmap we believe will drive innovation, differentiation, and growth. In the longer term, this includes increasingour total addressable market by introducing new, innovative hardware and software products, increasing unit sales volume of our new and 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 grow subscribers and increase subscriber retention that results in an increase in subscription and service revenue.

Previous wording

Gross margin of 34.1% in the first half of 2025 increased from 32.1% in the same period of 2024, or 200 bps, primarily driven by an increase in subscription and service revenue as a percentage of total revenue (170 bps), less sales promotional activity (130 bps), and a decrease of other operational costs (50 bps), partially offset by a $5.0 million one-time sale of inventory in the first quarter of 2025 (150 bps).

Current wording

Gross margin of 35.1% for the third quarter of 2025 decreased from 35.5% in the same period of 2024, or 40 bps, primarily driven by higher tariff costs (400 bps), partially offset by an increase in subscription and service revenue as a percentage of total revenue (240 bps) and a favorable product mix (120 bps).

Previous wording

Gross margin of 35.8% for the second quarter of 2025 increased from 30.5% in the same period of 2024, or 530 bps, primarily driven by less sales promotional activity (630 bps) and an increase in subscription and service revenue as a percentage of total revenue (80 bps), partially offset by increased tariff costs (180 bps).

Current wording

Gross margin of 34.4% in the first nine months of 2025 increased from 33.6% in the same period of 2024, or 80 bps, primarily driven by product mix and less sales promotional activity (290 bps) and an increase in subscription and service revenue as a percentage of total revenue (220 bps), partially offset by an increase in camera costs (250 bps) and higher tariff costs (180 bps).

Previous wording

The year-over-year decrease of $16.4 million, or 35.0%, in total research and development expense for the second quarter of 2025 compared to the same period of 2024 was primarily driven by a $6.3 million decrease in consulting and professional services primarily for development work on our next generation system-on-chip, a $5.5 million decrease in cash-based personnel-related costs, a $2.0 million decrease in restructuring costs, a $1.3 million decrease in stock-based compensation expense, and a $0.5 million decrease in research and development foreign tax credits.

Current wording

The year-over-year decrease of $9.7 million, or 21.9%, in total research and development expense for the third quarter of 2025 compared to the same period of 2024 was primarily driven by a $4.7 million decrease in cash-based personnel-related costs, a $3.5 million decrease in consulting and professional services, and a $1.1 million decrease in stock-based compensation expense.

Previous wording

The year-over-year decrease of $31.5 million, or 34.4%, in total research and development expense in the first half of 2025 compared to the same period of 2024 was primarily driven by a $12.3 million decrease in consulting and professional services, a $12.2 million decrease in cash-based personnel-related costs, a $2.8 million decrease in stock-based compensation expense, a $2.3 million decrease in restructuring costs, and a $1.5 million decrease in allocated facilities, depreciation, and supporting overhead expenses.

Current wording

The year-over-year decrease of $41.2 million, or 30.3%, in total research and development expense in the first nine months of 2025 compared to the same period of 2024 was primarily driven by a $16.9 million decrease in cash-based personnel-related costs, a $15.8 million decrease in consulting and professional services primarily due to the substantial completion of our next generation system-on-chip in 2024, a $3.9 million decrease in stock-based compensation expense, a $3.1 million decrease in restructuring costs, and a $0.9 million decrease in allocated facilities, depreciation, and supporting overhead expenses.

Previous wording

The year-over-year decrease of $16.1 million, or 38.9%, in total sales and marketing expense for the second quarter of 2025 compared to the same period of 2024 was primarily driven by a $9.4 million decrease in advertising and marketing expenses, primarily attributable to online campaigns, activation events and sponsorships, a $2.2 million decrease in cash-based personnel-related costs, a $1.9 million decrease in consulting and professional services, a $0.9 million decrease in restructuring costs, and a $0.6 million decrease in stock-based compensation expense.

Current wording

The year-over-year decrease of $15.7 million, or 38.7%, in total sales and marketing expense for the third quarter of 2025 compared to the same period of 2024 was primarily driven by a $9.2 million decrease in advertising and marketing expenses, primarily attributable to online campaigns, activation events and sponsorships, a $2.4 million decrease in cash-based personnel-related costs, a $1.7 million decrease in consulting and professional services, a $0.7 million decrease in stock-based compensation expense, a $0.4 million decrease in restructuring costs, a $0.4 million decrease in travel related expenses, and a $0.3 million decrease in allocated facilities, depreciation, and supporting overhead expenses.

Previous wording

The year-over-year decrease of $28.0 million, or 36.6%, in total sales and marketing expense in the first half of 2025 compared to the same period of 2024 was primarily driven by a $15.5 million decrease in advertising and marketing expenses, primarily attributable to online campaigns, sponsorships and activation events, a $4.5 million decrease in cash-based personnel-related costs, a $3.6 million decrease in consulting and professional services, a $1.5 million decrease in stock-based compensation expense, a $1.0 million decrease in restructuring costs, and a $0.8 million decrease in allocated facilities, depreciation, and supporting overhead expenses.

Current wording

The year-over-year decrease of $43.7 million, or 37.3%, in total sales and marketing expense in the first nine months of 2025 compared to the same period of 2024 was primarily driven by a $24.7 million decrease in advertising and marketing expenses, primarily attributable to online campaigns, sponsorships and activation events, a $6.9 million decrease in cash-based personnel-related costs, a $5.3 million decrease in consulting and professional services, a $2.2 million decrease in stock-based compensation expense, a $1.4 million decrease in restructuring costs, a $1.1 million decrease in allocated facilities, depreciation, and supporting overhead expenses, and a $0.8 million decrease in travel related expenses.

Previous wording

The year-over-year increase of $0.2 million, or 0.7%, in total general and administrative expense for the first half of 2025 compared to the same period of 2024 was primarily driven by a $4.3 million increase in consulting and professional services, partially offset by a $2.7 million decrease in cash-based personnel-related costs and a $1.6 million decrease in stock-based compensation expense.

Current wording

The year-over-year decrease of $1.4 million, or 9.1%, in total general and administrative expense for the third quarter of 2025 compared to the same period of 2024 was primarily driven by a $1.0 million decrease in cash-based personnel-related costs and a $0.8 million decrease in stock-based compensation expense, partially offset by a $0.3 million increase in allocated facilities and supporting overhead expenses, and a $0.3 million increase in consulting and professional services.

Previous wording

The year-over-year decrease of $2.0 million, or 13.7%, in total general and administrative expense for the second quarter of 2025 compared to the same period of 2024 was primarily driven by a $1.3 million decrease in cash-based personnel-related costs and a $0.6 million decrease in stock-based compensation expense.

Current wording

The year-over-year decrease of $1.1 million, or 2.6%, in total general and administrative expense for the first nine months of 2025 compared to the same period of 2024 was primarily driven by a $3.6 million decrease in cash-based personnel-related costs, a $2.3 million decrease in stock-based compensation expense, and a $0.8 million decrease in acquisition-related costs, partially offset by a $4.6 million increase in consulting and professional services, a $0.8 million increase in restructuring costs, and a $0.2 million increase in allocated facilities and supporting overhead expenses.

Previous wording

Total other income (expense), net was expense of $1.0 million for the first half of 2025 compared to income of $0.6 million in the same period of 2024. The year-over-year change of $1.5 million was primarily due to overall lower cash and investment balances resulting in a $1.9 million decrease in interest income and a $0.8 million increase in cash interest expense, primarily driven by our $25.0 million draw from our 2021 Credit Agreement in February 2025 and subsequent $20.0 million repayment in June 2025, and an increase in fees related to factoring of receivables.

Current wording

Total other income (expense), net was expense of $4.6 million for the third quarter of 2025 compared to income of $1.9 million in the same period of 2024. The year-over-year change of $6.5 million was primarily due to a $2.6 million loss on the revaluation of the warrants issued in connection with the 2025 Credit Agreement as discussed in Note 5 Financing arrangements, a $1.9 million increase in cash interest expense primarily related to the 2025 Credit Agreement and draws on our 2021 Credit Agreement, and a $1.0 million gain on the sale of intellectual property in the prior year quarter.

Previous wording

Total other income (expense), net was expense of $1.1 million for the second quarter of 2025 compared to income of $21 thousand in the same period of 2024. The year-over-year change of approximately $1.1 million was primarily due to a $0.6 million increase in cash interest expense, primarily driven by an increase in fees related to factoring of receivables, interest related to our $25.0 million draw from our 2021 Credit Agreement in February 2025 and subsequent $20.0 million repayment in June 2025, and a $0.5 million decrease in interest income due to overall lower cash and investment balances.

Current wording

Total other income (expense), net was expense of $5.6 million for the first nine months of 2025 compared to income of $2.4 million in the same period of 2024. The year-over-year change of $8.0 million was primarily due to a $2.7 million increase in cash interest expense primarily related to the 2025 Credit Agreement and draws on our 2021 Credit Agreement, a $2.6 million loss on the revaluation of the warrants issued in connection with the 2025 Credit Agreement as discussed in Note 5 Financing arrangements, and a $2.1 million decrease in interest income primarily due to an overall lower cash and investments balance in the first nine months of 2025.

Previous wording

We recorded an income tax expense of $1.3 million for the three months ended June 30, 2025 on pre-tax net loss of $15.1 million. Our income tax expense for the three months ended June 30, 2025 primarily resulted from a tax expense of $1.7 million on pre-tax book income in certain tax jurisdictions and discrete items that included $0.4 million of nondeductible equity tax expense for employee stock-based compensation, partially offset by a net decrease in the valuation allowance of $0.4 million, a net income tax benefit on goodwill impairment of $0.3 million and foreign provision to income tax return adjustments of $0.2 million.

Current wording

We recorded an income tax expense of $0.8 million for the three months ended September 30, 2025 on pre-tax net loss of $20.5 million. Our income tax expense for the three months ended September 30, 2025 primarily resulted from a tax expense of $0.7 million on pre-tax book income in certain tax jurisdictions, discrete items that included $1.1 million of nondeductible equity tax expense for employee stock-based compensation, and tax expense of $0.1 million related to restructuring charges, partially offset by a net decrease in the valuation allowance of $1.3 million.

Previous wording

We recorded an income tax expense of $3.0 million for the six months ended June 30, 2025 on pre-tax net loss of $60.2 million. Our income tax expense for the six months ended June 30, 2025 primarily resulted from a tax expense of $3.3 million on pre-tax book income in certain tax jurisdictions and discrete items that included $2.6 million of nondeductible equity tax expense for employee stock-based compensation, partially offset by a net decrease in the valuation allowance of $2.0 million, an income tax benefit of $0.5 million related to restructuring charges, a net tax benefit on goodwill impairment of $0.3 million and foreign provision to income tax return adjustments of $0.2 million.

Current wording

We recorded an income tax expense of $3.7 million for the nine months ended September 30, 2025 on pre-tax net loss of $80.7 million. Our income tax expense for the nine months ended September 30, 2025 primarily resulted from a tax expense of $4.0 million on pre-tax book income in certain tax jurisdictions and discrete items that included $3.7 million of nondeductible equity tax expense for employee stock-based compensation, partially offset by a net decrease in the valuation allowance of $3.3 million, an income tax benefit of $0.4 million related to restructuring charges, a net tax benefit on goodwill impairment of $0.3 million and foreign provision to income tax return adjustments of $0.2 million.

Previous wording

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (OBBBA). The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. ASC 740, Income Taxes, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which new tax legislation is enacted. Consequently, as of the July 4, 2025 date of enactment, we will evaluate all deferred tax balances under the newly enacted tax law and identify any other changes required to our Condensed Consolidated Financial Statements as a result of the OBBBA, and the results of such evaluation will be reflected in our disclosures for the period ended September 30, 2025. However, since we have a full valuation allowance on our United States federal and state deferred tax assets, we do not expect the OBBBA to have a material tax impact on our Condensed Consolidated Financial Statements.

Current wording

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law which makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, U.S. research and experimental cost expensing, and the business interest expense limitation. ASC 740, Income Taxes, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which new tax legislation is enacted. We have evaluated the OBBBA enacted during the third quarter of 2025 and estimated its impact on the condensed consolidated financial statements to be immaterial.

Previous wording

Our primary source of cash is receipts from sales of our hardware products, and subscription and service. Other sources of cash are from proceeds from the issuance of convertible notes, employee participation in the employee stock purchase plan, the exercise of employee stock options, and facility subleases. Our primary uses of cash are for inventory procurement, payroll-related expenses, general operating expenses, including advertising, marketing, office rent, purchases of property and equipment, other costs of revenue, share repurchases, repurchases of convertible notes, acquisitions, interest, and taxes.

Current wording

Our primary source of cash is receipts from sales of our hardware products, and subscription and service. Other sources of cash are from proceeds from the issuance of convertible notes, borrowings under our credit facility and credit agreement, employee participation in the employee stock purchase plan, the exercise of employee stock options, and facility subleases. Our primary uses of cash are for inventory procurement, payroll-related expenses, general operating expenses, including advertising, marketing, office rent, purchases of property and equipment, other costs of revenue, share repurchases, repurchases of convertible notes, acquisitions, interest, and taxes.

Previous wording

As of June 30, 2025, our cash, cash equivalents, and marketable securities totaled $58.6 million. Our cash, net of the outstanding principal balance of the 2025 Notes, as of June 30, 2025, was negative $40.2 million. The overall cash used in operating activities of $48.4 million for the six months ended June 30, 2025 was primarily attributable to a net loss of $63.1 million and net cash outflows from changes in our working capital of $19.1 million, partially offset by an $18.6 million goodwill impairment charge, andnet cash inflows from other non-cash expenses of $15.2 million. Working capital changes for the six months ended June 30, 2025 of $19.1 million were the result of a decrease in accounts payable and other liabilities of $55.9 million and a decrease in deferred revenue of $3.9 million, partially offset by a decrease in inventory of $36.2 million, a decrease in prepaid expenses and other assets of $1.7 million, and a decrease in accounts receivables of$2.7 million. As of June 30, 2025, $4.9 million of cash was held by our foreign subsidiaries.

Current wording

As of September 30, 2025, our cash, cash equivalents, and marketable securities totaled $58.4 million, and we had restricted cash of $94.3 million, which will be used to pay the 2025 Notes and related interest upon maturity in November 2025. The overall cash used in operating activities of $36.3 million for the nine months ended September 30, 2025 was primarily attributable to a net loss of $84.4 million, partially offset by net cash inflows from other non-cash expenses of $23.0 million, an $18.6 million goodwill impairment charge, andchanges in our working capital of $6.5 million. Working capital changes for the nine months ended September 30, 2025 of $6.5 million were the result of a decrease in inventory of $36.7 million, partially offset by a decrease in accounts payable and other liabilities of $22.3 million, a decrease in deferred revenue of $4.6 million, an increase in prepaid expenses and other assets of $2.1 million, and an increase in accounts receivables of $1.2 million. As of September 30, 2025, $2.3 million of cash was held by our foreign subsidiaries.

Previous wording

The 2021 Credit Agreement contains customary representations, warranties, and affirmative and negative covenants. We are required to maintain Liquidity (the sum of unused availability under the credit facility and our Qualified Cash) of at least $40.0 million from the date we entered into the 2025 Credit Agreement as discussed in Note 13 Subsequent events through October 30, 2025, $45.0 million from October 31, 2025 through November 14, 2025, $50.0 million from November 15, 2025 through November 30, 2025, and $55.0 million from December 1, 2025 through the maturity date (of which at least $40.0 million shall be attributable to Qualified Cash during all periods), or, if the borrowing base is then in effect, minimum unused availability under the credit facility of at least $10.0 million.

Current wording

The 2021 Credit Agreement contains customary representations, warranties, and affirmative and negative covenants. We are required to maintain Liquidity (the sum of unused availability under the credit facility and our Qualified Cash) of at least $40.0 million from the date we entered into the 2025 Credit Agreement as discussed in Note 5 Financing arrangements through October 30, 2025, $45.0 million from October 31, 2025 through November 14, 2025, $50.0 million from November 15, 2025 through November 30, 2025, and $55.0 million from December 1, 2025 through the maturity date (of which at least $40.0 million shall be attributable to Qualified Cash during all periods), or, if the borrowing base is then in effect, minimum unused availability under the credit facility of at least $10.0 million.

Previous wording

As of June 30, 2025, we are in compliance with all financial covenants contained in the 2021 Credit Agreement. There is an outstanding letter of credit under the 2021 Credit Agreement of $5.2 million for certain duty-related requirements which was not collateralized by any cash on hand. In the ordinary course of business, we drew $25.0 million from our 2021 Credit Agreement in February 2025 and repaid $20.0 million in June 2025. We had $39.8 million available to draw from our 2021 Credit Agreement as of June 30, 2025.

Current wording

As of September 30, 2025, we were in compliance with all financial covenants contained in the 2021 Credit Agreement. There is an outstanding letter of credit under the 2021 Credit Agreement of $5.2 million for certain duty-related requirements which was not collateralized by any cash on hand. We had fully drawn on our 2021 Credit Agreement as of September 30, 2025.

Previous wording

On August 4, 2025, we entered into a Credit Agreement (the 2025 Credit Agreement) with Farallon Capital Management, L.L.C., as administrative agent and collateral agent (the Agent), and Mateo Financing LLC (the Lender). The 2025 Credit Agreement provides for a second lien credit facility up to $50.0 million (the 2025 Term Loan). The 2025 Credit Agreement will mature, and any outstanding borrowings become due and payable on January 22, 2028.

Current wording

On August 4, 2025, we entered into a Credit Agreement with Farallon Capital Management, L.L.C., as administrative agent and collateral agent (the Agent), and Mateo Financing LLC (the Lender). In November 2025, we amended the Credit Agreement (collectively, the 2025 Credit Agreement). The 2025 Credit Agreement provides for a second lien credit facility up to $50.0 million (the 2025 Term Loan). The 2025 Credit Agreement will mature, and any outstanding borrowings become due and payable on January 22, 2028.

Previous wording

The 2025 Credit Agreement contains customary representations, warranties, and affirmative and negative covenants, including financial covenants. The negative covenants include restrictions on the incurrence of liens and indebtedness, certain investments, dividends, stock repurchases and other matters, all subject to certain exceptions. The financial covenants require (a) us to maintain liquidity (defined as unrestricted cash, cash equivalents and availability under the 2021 Credit Agreement) of at least $40.0 million, subject to a step-down to $30.0 million upon achievement of a total leverage ratio below 1.00:1.00; (b) us not to have EBITDA (as defined in the 2025 Credit Agreement) of (i) less than $10.0 million for the fiscal quarter ending December 31, 2025, (ii) less than $10.0 million for the period of four consecutive fiscal quarters ending March 31, 2026, (iii) less than $22.0 million for the period of four consecutive fiscal quarters ending June 30, 2026, (iv) less than $30.0 million for the period of four consecutive fiscal quarters ending September 30, 2026 or (v) less than $40.0 million for any period of four consecutive fiscal quarters ending on or after December 31, 2026; and (c) us not to permit an asset coverage ratio (defined as the ratio of (x) the sum of unrestricted cash, cash equivalents, and certain accounts and inventory, divided by (y) the sum of accounts payable and total debt) of less than (i) on or prior to December 31, 2025, 1.25:1.00 or (ii) thereafter, 1.15:1.00. Additionally, from August 4, 2025 through the maturity of the 2025 Notes, the 2025 Credit Agreement requires us to hold the full amount due upon the maturity of the 2025 Notes in a restricted account.

Current wording

The 2025 Credit Agreement contains customary representations, warranties, and affirmative and negative covenants, including financial covenants. The negative covenants include restrictions on the incurrence of liens and indebtedness, certain investments, dividends, stock repurchases and other matters, all subject to certain exceptions. The financial covenants require (a) us to maintain liquidity (defined as unrestricted cash, cash equivalents and availability under the 2021 Credit Agreement) of at least $40.0 million; (b) us not to have EBITDA (as defined in the 2025 Credit Agreement) of (i) less than $10.0 million for the fiscal quarter ending December 31, 2025, (ii) less than negative $12.5 million, subject to adjustment, for the period of four consecutive fiscal quarters ending March 31, 2026, (iii) less than zero, subject to adjustment, for the period of four consecutive fiscal quarters ending June 30, 2026, (iv) less than $25.0 million, subject to adjustment, for the period of four consecutive fiscal quarters ending September 30, 2026 or (v) less than $40.0 million for any period of four consecutive fiscal quarters ending on or after December 31, 2026; and (c) us not to permit an asset coverage ratio (defined as the ratio of (x) the sum of unrestricted cash, cash equivalents, and certain accounts and inventory, divided by (y) the sum of accounts payable and total debt) of less than (i) on or prior to December 31, 2025, 1.25:1.00 or (ii) thereafter, 1.15:1.00. The EBITDA thresholds for the period of four consecutive fiscal quarters ending in 2026 are subject to potential adjustments in the event of a reduction in tariff amounts in Malaysia or Thailand (or both) to a level that is 10% or lower, as described in further detail in the 2025 Credit Agreement. To the extent there are adjustments to the tariff rates of only one of the countries, the corresponding adjustments will be apportioned accordingly. Additionally, from August 4, 2025 through the maturity of the 2025 Notes, the 2025 Credit Agreement requires us to hold the full amount due upon the maturity of the 2025 Notes in a restricted account.

Previous wording

The 2025 Credit Agreement also includes customary events of default that include, among other things, non-payment of principal, interest or fees, inaccuracy of representations and warranties, violation of certain covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments, change of control and certain material ERISA events. An event of default would also occur in the event we fail to maintain the listing of our common stock on the Nasdaq stock market for a period of 30 consecutive days. The occurrence of an event of default could result in the acceleration of the obligation under the 2025 Credit Agreement and 2021 Credit Agreement.

Current wording

The 2025 Credit Agreement also includes customary events of default that include, among other things, non-payment of principal, interest or fees, inaccuracy of representations and warranties, violation of certain covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments, change of control and certain material ERISA events. An event of default would also occur in the event we fail to maintain the listing of our common stock on the Nasdaq stock market for a period of 30 consecutive days. The occurrence of an event of default could result in the acceleration of the obligations under the 2025 Credit Agreement and 2021 Credit Agreement.

Previous wording

As of August 4, 2025, there was $50.0 million outstanding under the 2025 Term Loan. As of August 4, 2025, we were in compliance with all of the financial covenants contained in the 2025 Credit Agreement.

Current wording

As of September 30, 2025, the outstanding principal under the 2025 Term Loan was $50.0 million, and we were in compliance with all of the financial covenants contained in the 2025 Credit Agreement.

Previous wording

In connection with the 2025 Credit Agreement, we issued an aggregate of 11,076,968 warrants to purchase shares of our common stock at an exercise price of $1.25. The warrants may be exercised at any time prior to 5:00 p.m. Eastern time, on August 1, 2035. Any warrants not exercised prior to such time will expire.

Current wording

On August 4, 2025, as amended on November 5, 2025, and in connection with the 2025 Credit Agreement, we issued an aggregate of 11,076,968 warrants to purchase shares of our common stock at an exercise price of $0.75. The warrants may be exercised at any time prior to 5:00 p.m. Eastern time, on August 1, 2035. Any warrants not exercised prior to such time will expire.

Previous wording

In November 2020, we issued $143.8 million aggregate principal amount of 2025 Notes in a private placement to purchasers for resale to qualified institutional buyers. In November 2023, we repurchased $50.0 million in aggregate principal amount of the 2025 Notes, reducing the amount owed on the 2025 Notes to $93.8 million. The 2025 Notes mature on November 15, 2025, unless earlier repurchased or converted into shares of Class A common stock subject to certain conditions. Prior to August 15, 2025, the 2025 Notes are convertible at the option of the holder, at an initial conversion rate of 107.1984 shares of Class A common stock per $1,000 principal amount of the 2025 Notes, which is equivalent to an initial conversion price of approximately $9.3285 per share of common stock, subject to adjustment. Conversion will be settled in cash, shares of our Class A common stock, or a combination thereof, at our election. We pay interest on the 2025 Notes semi-annually, which is due on May 15 and November 15 of each year.

Current wording

In November 2020, we issued $143.8 million aggregate principal amount of 2025 Notes in a private placement to purchasers for resale to qualified institutional buyers. In November 2023, we repurchased $50.0 million in aggregate principal amount of the 2025 Notes, reducing the amount owed on the 2025 Notes to $93.8 million. The 2025 Notes mature on November 15, 2025, unless earlier repurchased or converted into shares of Class A common stock subject to certain conditions. We plan to repay the 2025 Notes in cash on or prior to maturity with restricted cash on hand as of September 30, 2025. Prior to August 15, 2025, the 2025 Notes were convertible at the option of the holder. We pay interest on the 2025 Notes semi-annually, which is due on May 15 and November 15 of each year.

Previous wording

The accompanying Condensed Consolidated Financial Statements have been prepared assuming we will continue as a going concern, which contemplates the continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. In the six months ended June 30, 2025, our performance continued to be impacted by consumer related-macroeconomic issues resulting in a softer global consumer market, an increasingly global competitive landscape and the delay of our next generation 360-camera. During the six months ended June 30, 2025, our revenue declined 16.0% from the same period of 2024 which resulted in operating losses of $59.2 million and operating cash outflows of $48.4 million. As of June 30, 2025, we had $58.6 million in cash and cash equivalents and an accumulated deficit of $744.7 million. The 2025 Notes with an outstanding principal of $93.8 million matures on November 15, 2025, unless earlier repurchased or converted at the option of the holder into shares of our Class A common stock under certain circumstances. In the ordinary course of business, we drew $25.0 million from our 2021 Credit Agreement in February 2025 and repaid $20.0 million in June 2025. We had $39.8 million available to draw as of June 30, 2025.

Current wording

The accompanying condensed consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates the continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. In the nine months ended September 30, 2025, our performance continued to be impacted by consumer related-macroeconomic issues resulting in a softer global consumer market, an increasingly global competitive landscape and the delay of our next generation 360-camera MAX2, which was introduced in September 2025. During the nine months ended September 30, 2025 and 2024, revenue was $449.9 million and $600.6 million, respectively, representing a 25.1% decline year-over-year. As a result, we incurred operating losses of $75.1 million and operating cash outflows of $36.3 million during the nine months ended September 30, 2025. As of September 30, 2025 and December 31, 2024, we had cash and cash equivalents of $58.4 million and $102.8 million, respectively, and an accumulated deficit of $766.0 million and $681.6 million, respectively. We also had $94.3 million of restricted cash as of September 30, 2025, which will be used to pay the 2025 Notes and related interest upon maturity in November 2025. We had fully drawn on our 2021 Credit Agreement as of September 30, 2025.

Previous wording

We have considered and assessed our ability to continue as a going concern for at least 12 months from the issuance of these Condensed Consolidated Financial Statements. Our assessment included the preparation of a cash flow forecast taking into account the restructuring actions already implemented in 2024 and the 2025 Credit Agreement, as discussed in Note 13 Subsequent events, which provided $50.0 million in August 2025. We considered additional actions within our control that we would implement, if necessary, to maintain liquidity and operations in the ordinary course of business including payment of the 2025 Notes upon maturity. The 2025 operational plan is structured to i) realize the savings in wages and benefits from the headcount reductions as part of our 2024 restructuring plans; ii) lower research and development costs from the completion of a next generation system-on-chip and rationalized product roadmap, and the reduction of sales and marketing expenses to a reduced level consistent with the business size; and iii) effectively manage working capital, specifically our intention to manage inventory levels to better align with our current run rates and seasonality of the business, and our intention to continue to effectively manage the collection of accounts receivables.

Current wording

We have considered and assessed our ability to continue as a going concern for at least 12 months from the issuance of these condensed consolidated financial statements. Our assessment included the preparation of a cash flow forecast taking into account the restructuring actions already implemented in 2024 and the 2025 Credit Agreement, as discussed in Note 5 Financing arrangements, which provided $50.0 million in August 2025. We considered additional actions within our control that we would implement, if necessary, to maintain liquidity and operations in the ordinary course of business including payment of the 2025 Notes upon maturity. The 2025 operational plan is structured to: (i) realize the savings in wages and benefits from the headcount reductions as part of our 2024 restructuring plans; (ii) lower research and development costs from the completion of a next generation system-on-chip and rationalized product roadmap, and the reduction of sales and marketing expenses to a reduced level consistent with the business size; and (iii) effectively manage working capital, specifically our intention to manage inventory levels to better align with our current run rates and seasonality of the business, and our intention to continue to effectively manage the collection of accounts receivables.

Previous wording

We estimate such actions will be sufficient to allow us to maintain liquidity and operations in the ordinary course, including payment of the 2025 Notes upon maturity on November 15, 2025, for at least 12 months from the issuance of these Condensed Consolidated Financial Statements. While we estimate such actions will be sufficient to allow us to maintain liquidity and operations in the ordinary course for at least 12 months from the issuance of these Condensed Consolidated Financial Statements, there can be no assurance we will generate sufficient future cash from operations. Factors that can impact our future cash generation include, but are not limited to, further inflation, rising interest rates, tariffs, ongoing recessionary conditions or continued competition. If we are not successful in maintaining demand for our products or if macroeconomic conditions further constrain consumer demand, we may continue to experience adverse impacts to revenue and profitability. Additional actions within our control to maintain liquidity and operations include further reducing discretionary spending in all areas of the business and further headcount restructuring actions. In addition, we may need additional financing to execute on our current or future business strategy, and additional financing may not be available or on terms favorable to us.

Current wording

We estimate such actions will be sufficient to allow us to maintain liquidity and operations in the ordinary course, including payment of the 2025 Notes upon maturity on November 15, 2025, for at least 12 months from the issuance of these condensed consolidated financial statements. While we estimate such actions will be sufficient to allow us to maintain liquidity and operations in the ordinary course for at least 12 months from the issuance of these condensed consolidated financial statements, there can be no assurance we will generate sufficient future cash from operations. Factors that can impact our future cash generation include, but are not limited to, further inflation impacting consumer demand and cost of components, rising interest rates, tariffs, ongoing recessionary conditions or continued competition. If we are not successful in maintaining demand for our products or if macroeconomic conditions further constrain consumer demand, we may continue to experience adverse impacts to revenue and profitability. Additional actions within our control to maintain liquidity and operations include further reducing discretionary spending in all areas of the business and further headcount restructuring actions. In addition, we may need additional financing to execute on our current or future business strategy, and additional financing may not be available or on terms favorable to us.

Previous wording

Cash used in operating activities of $48.4 million for the six months ended June 30, 2025 was primarily attributable to a net loss of $63.1 million and net cash outflows from changes in our working capital of $19.1 million, partially offset by an $18.6 million goodwill impairment charge, andnet cash inflows from other non-cash expenses of $15.2 million. Working capital changes for the six months ended June 30, 2025 of $19.1 million were the result of a decrease in accounts payable and other liabilities of $55.9 million and a decrease in deferred revenue of $3.9 million, partially offset by a decrease in inventory of $36.2 million, a decrease in prepaid expenses and other assets of $1.7 million, and a decrease in accounts receivables of$2.7 million.

Current wording

Cash used in operating activities of $36.3 million for the nine months ended September 30, 2025 was primarily attributable to a net loss of $84.4 million, partially offset by net cash inflows from other non-cash expenses of $23.0 million, an $18.6 million goodwill impairment charge, andchanges in our working capital of $6.5 million. Working capital changes for the nine months ended September 30, 2025 of $6.5 million were the result of a decrease in inventory of $36.7 million, partially offset by a decrease in accounts payable and other liabilities of $22.3 million, a decrease in deferred revenue of $4.6 million, an increase in prepaid expenses and other assets of $2.1 million, and an increase in accounts receivables of $1.2 million.

Previous wording

Cash used in investing activities of $1.8 million for the six months ended June 30, 2025 was primarily attributable to net purchases of property and equipment of $1.8 million.

Current wording

Cash used in investing activities of $2.7 million for the nine months ended September 30, 2025 was primarily attributable to net purchases of property and equipment of $2.7 million.

Previous wording

Cash provided by financing activities of $4.8 million for the six months ended June 30, 2025 was primarily attributable to a $25.0 million draw on our 2021 Credit Agreement and $0.4 million of cash inflows from stock purchases made through our employee stock purchase plan, partially offset a $20.0 million repayment on our 2021 Credit Agreement, and $0.6 million in tax payments for net restricted stock unit (RSU) settlements.

Current wording

Cash provided by financing activities of $87.8 million for the nine months ended September 30, 2025 was primarily attributable to net proceeds of $113.2 million from our 2021 Credit Facility and 2025 Credit Agreement and $0.7 million of cash inflows from stock purchases made through our employee stock purchase plan, partially offset by repayments of $22.6 million on our 2021 Credit Facility, payment of debt issuance costs of $2.3 million related to our 2025 Credit Agreement, and $1.2 million in tax payments for net restricted stock unit settlements.

Previous wording

In the first quarter of 2025, our market capitalization declined 38% from December 31, 2024, in part due to recent tariff and geopolitical events, resulting in our market capitalization no longer exceeding the carrying value of our single reporting unit as of March 31, 2025. As a result, we performed a quantitative goodwill impairment analysis and estimated the fair value of our single reporting unit utilizing the income approach using a discounted future cash flow model and a market approach. The analysis required estimates which required significant judgment related to the estimation of future cash flow and discount rates. The analysis was dependent on internal forecasts, estimation of the long-term revenue growth rates, terminal growth rates, profitability measures and determination of the discount rate. As a result of the quantitative impairment test, we concluded that the carrying value of our single reporting unit exceeded its fair value, resulting in the recognition of a $18.6 million goodwill impairment charge in the first quarter of 2025.

Current wording

In the first quarter of 2025, our market capitalization declined 38% from December 31, 2024, in part due to tariff and geopolitical events, resulting in our market capitalization no longer exceeding the carrying value of our single reporting unit as of March 31, 2025. As a result, we performed a quantitative goodwill impairment analysis and estimated the fair value of our single reporting unit utilizing the income approach using a discounted future cash flow model and a market approach. The analysis required estimates which required significant judgment related to the estimation of future cash flow and discount rates. The analysis was dependent on internal forecasts, estimation of the long-term revenue growth rates, terminal growth rates, profitability measures and determination of the discount rate. As a result of the quantitative impairment test, we concluded that the carrying value of our single reporting unit exceeded its fair value, resulting in the recognition of an $18.6 million goodwill impairment charge in the first quarter of 2025.

Previous wording

In the second quarter of 2025, our market capitalization increased 15% from March 31, 2025, and as such, 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 as of June 30, 2025. Using the market capitalization approach, 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, 2025, the market capitalization exceeded the carrying value of our single reporting unit by 18%, which was not adjusted for an acquisition control premium which would further increase the percentage the fair value exceeded the carrying value.

Current wording

In the third quarter of 2025, our market capitalization increased 183% from June 30, 2025, and as such, 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 as of September 30, 2025. Using the market capitalization approach, 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, 2025, the market capitalization exceeded the carrying value of our single reporting unit by 76%, which was not adjusted for an acquisition control premium which would further increase the percentage the fair value exceeded the carrying value.