GOPRO, INC., 10-Q filed on 4/29/2015
Quarterly Report
Document, Entity and Information
3 Months Ended
Mar. 31, 2015
Class of Stock [Line Items]
 
Entity Registrant Name
GoPro, Inc. 
Entity Central Index Key
0001500435 
Current Fiscal Year End Date
--12-31 
Entity Filer Category
Non-accelerated Filer 
Document Type
10-Q 
Document Period End Date
Mar. 31, 2015 
Document Fiscal Year Focus
2015 
Document Fiscal Period Focus
Q1 
Amendment Flag
false 
Common Class A [Member]
 
Class of Stock [Line Items]
 
Entity Common Stock, Shares Outstanding
89,404,158 
Common Class B [Member]
 
Class of Stock [Line Items]
 
Entity Common Stock, Shares Outstanding
44,613,243 
Condensed Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Current assets:
 
 
Cash and cash equivalents
$ 323,165 
$ 319,929 
Marketable securities
168,741 
102,327 
Accounts receivable, net
105,970 
183,992 
Inventory
164,044 
153,026 
Prepaid expenses and other current assets
60,334 
63,769 
Total current assets
822,254 
823,043 
Property and equipment, net
43,890 
41,556 
Intangible assets and goodwill
24,874 
17,032 
Other long-term assets
39,616 
36,060 
Total assets
930,634 
917,691 
Current liabilities:
 
 
Accounts payable
91,919 
126,240 
Accrued liabilities
103,350 
115,775 
Deferred revenue
12,327 
14,022 
Income taxes payable
2,940 
2,732 
Total current liabilities
210,536 
258,769 
Other long-term liabilities
18,378 
17,718 
Total liabilities
228,914 
276,487 
Commitments, contingencies and guarantees (see Note 9)
   
   
Stockholders’ equity:
 
 
Common stock and additional paid-in capital, $0.0001 par value, 500,000 Class A shares authorized, 89,404 and 52,091 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively; 150,000 Class B shares authorized, 44,613 and 77,023 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively
576,764 
533,000 
Retained earnings
124,956 
108,204 
Total stockholders’ equity
701,720 
641,204 
Total liabilities and stockholders’ equity
$ 930,634 
$ 917,691 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
Mar. 31, 2015
Dec. 31, 2014
Common stock, par value (in dollars per share)
$ 0.0001 
$ 0.0001 
Common Class A [Member]
 
 
Common stock, shares authorized
500,000,000 
500,000,000 
Common Stock, shares, issued
89,404,000 
52,091,000 
Common stock, shares, outstanding
89,404,000 
52,091,000 
Common Class B [Member]
 
 
Common stock, shares authorized
150,000,000 
150,000,000 
Common Stock, shares, issued
44,613,000 
77,023,000 
Common stock, shares, outstanding
44,613,000 
77,023,000 
Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Income Statement [Abstract]
 
 
Revenue
$ 363,109 
$ 235,716 
Cost of revenue
199,376 
139,202 
Gross profit
163,733 
96,514 
Operating expenses:
 
 
Research and development
49,437 
28,739 
Sales and marketing
56,369 
41,341 
General and administrative
35,659 
9,878 
Total operating expenses
141,465 
79,958 
Operating income
22,268 
16,556 
Other expense, net
(2,244)
(1,625)
Income before income taxes
20,024 
14,931 
Income tax expense
3,272 
3,882 
Net income
16,752 
11,049 
Less: net income allocable to participating securities
3,040 
Net income attributable to common stockholders—basic
16,752 
8,009 
Add: net income allocable to dilutive participating securities
443 
Net income attributable to common stockholders—diluted
$ 16,752 
$ 8,452 
Net income per share attributable to common stockholders - Basic (in dollars per share)
$ 0.13 
$ 0.10 
Net income per share attributable to common stockholders - Diluted (in dollars per share)
$ 0.11 
$ 0.08 
Weighted-average shares used to compute net income per share attributable to common stockholders - Basic (in shares)
132,278 
81,582 
Weighted-average shares used to compute net income per share attributable to common stockholders - Diluted (in shares)
148,573 
100,783 
Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Operating activities:
 
 
Net income
$ 16,752 
$ 11,049 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
5,369 
3,811 
Stock-based compensation
26,501 
4,037 
Foreign currency remeasurement and transaction losses
2,190 
Deferred taxes
(1,590)
(330)
Other
639 
247 
Changes in operating assets and liabilities:
 
 
Accounts receivable, net
77,684 
75,359 
Inventory
(11,017)
21,807 
Prepaids and other assets
1,451 
1,068 
Accounts payable and other liabilities
(50,017)
(97,042)
Deferred revenue
(1,695)
908 
Net cash provided by operating activities
66,267 
20,914 
Investing activities:
 
 
Purchases of property and equipment
(5,207)
(4,701)
Purchases of marketable securities
(79,368)
Sales and maturities of marketable securities
12,503 
Business acquisitions
(5,100)
(3,200)
Net cash used in investing activities
(77,172)
(7,901)
Financing activities:
 
 
Proceeds from issuance of common stock, net of repurchases
12,325 
522 
Taxes paid related to net share settlement of equity awards
(1,321)
Excess tax benefit from stock-based compensation
6,067 
69 
Payment of deferred public offering costs
(903)
(799)
Repayment of debt
(3,000)
Net cash provided by (used in) financing activities
16,168 
(3,208)
Effect of exchange rate changes on cash and cash equivalents
(2,027)
Net increase in cash and cash equivalents
3,236 
9,805 
Cash and cash equivalents at beginning of period
319,929 
101,410 
Cash and cash equivalents at end of period
$ 323,165 
$ 111,215 
Business overview
Business overview
Business overview
GoPro, Inc. (GoPro or the Company) produces mountable and wearable cameras and accessories, which the Company refers to as capture devices. Additionally, GoPro develops and provides desktop editing software and mobile applications for free to consumers. The Company’s capture devices are sold globally through retailers, wholesale distributors and on the Company’s website. The Company has wholly-owned subsidiaries in Hong Kong, Germany, the Netherlands, and the Cayman Islands. The Company’s corporate headquarters are located in San Mateo, California with additional operational support offices in Hong Kong, the Netherlands, and Shenzhen, China.
Basis of presentation and summary of significant accounting policies
Basis of presentation and summary of significant accounting policies
Basis of presentation and summary of significant accounting policies
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and in accordance with the interim period reporting requirements of Form 10-Q. The unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) that management believes are necessary for the fair presentation of the Company's financial condition, results of operations, and cash flows for the periods presented, but are not necessarily indicative of the results expected for the full fiscal year or any other future period. The condensed consolidated balance sheet at December 31, 2014 has been derived from the audited financial statements at that date, but does not include all of the disclosures required by GAAP.  This quarterly report should be read in conjunction with the Company's Annual Report on Form 10-K (Annual Report) for the year ended December 31, 2014. There have been no significant changes in the Company’s accounting policies from those disclosed in the footnotes to the audited financial statements contained in its Annual Report on Form 10-K for the year ended December 31, 2014.
Principles of consolidation
These consolidated financial statements include all the accounts of the Company and its wholly-owned subsidiaries. Unless otherwise specified, references to the Company are references to GoPro, Inc. and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the Company’s condensed consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions in several areas, including those related to: the collectability of accounts receivable, stock-based compensation, inventory valuation, warranty liabilities, revenue recognition and related estimates (including sales returns, web-based sale deliveries at period-end, implied post contract support, and marketing allowances), the valuation and useful lives of intangible assets and property and equipment, the valuation of deferred income tax assets, and uncertain tax positions. The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from management's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Comprehensive income
For all periods presented, comprehensive income equaled net income. Therefore, the condensed consolidated statements of comprehensive income have been omitted from the condensed consolidated financial statements.
Recent accounting pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers, which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount to which an entity expects to be entitled when products are transferred to customers. ASU 2014-09 becomes effective for the Company on January 1, 2017. Early application is not permitted. In April 2015, the FASB proposed a one-year deferral of the effective date of the new revenue standard. If approved, the new standard will become effective for the Company on January 1, 2018 and can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. The Company is currently evaluating the impact the adoption of ASU 2014-09 will have on the Company's consolidated financial statements.
Correction of error
During the preparation of the condensed consolidated financial statements for the period ended June 30, 2014, the Company determined that within the consolidated statement of cash flows previously disclosed for the quarter ended March 31, 2014, net cash provided by operating activities was understated by $3.2 million and net cash used for investing activities was understated by the same amount. The Company has properly presented its condensed consolidated statement of cash flows for the three months ended March 31, 2014 and determined that this revision is not material to prior periods.
Prior Period Reclassifications
Reclassifications of certain prior period amounts in the condensed consolidated financial statements have been made to conform to the current period presentation.
Balance sheet components
Balance sheet components
Balance sheet components
Inventory
Inventory consisted of the following:
(in thousands)
March 31,
2015
 
December 31,
2014
Components
$
3,301

 
$
4,324

Finished goods
160,743

 
148,702

Total inventory
$
164,044

 
$
153,026


Property and equipment, net
Property and equipment, net consisted of the following:
(in thousands)
Useful life
(in years)
 
March 31,
2015
 
December 31,
2014
Leasehold improvements
3–7
 
$
23,037

 
$
22,787

Computers, software, equipment and furniture
2–4
 
27,420

 
24,636

Tooling
1–4
 
17,639

 
16,159

Construction in progress
 
 
6,037

 
3,944

Tradeshow equipment and other
2-5
 
3,864

 
3,830

Gross property and equipment
 
 
77,997

 
71,356

Less: Accumulated depreciation and amortization
 
 
(34,107)

 
(29,800)

Property and equipment, net
 
 
$
43,890

 
$
41,556


Acquired intangible assets and goodwill
Intangible assets and goodwill increased from $17.0 million at December 31, 2014 to $24.9 million at March 31, 2015 due to the acquisition of a development-stage company in March 2015, which was accounted for as a business combination. The intangible assets acquired were recorded as in-process research and development. The acquisition did not have an impact on the Company’s condensed consolidated statements of operations. There were no impairments to intangible assets and goodwill during the three months ended March 31, 2015.
Fair value measurements
Fair value measurements
Fair value measurements
The Company’s assets that are measured at fair value on a recurring basis, by level, within the fair value hierarchy are summarized as follows:
 
 
March 31, 2015
 
December 31, 2014
(in thousands)
 
Level 1
 
Level 2
 
Total
 
Level 1
 
Level 2
 
Total
Cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
 
$
16,618

 
$

 
$
16,618

 
$
80,968

 
$

 
$
80,968

Corporate debt securities
 

 

 

 

 
2,000

 
2,000

Total cash equivalents
 
$
16,618

 
$

 
$
16,618

 
$
80,968

 
$
2,000

 
$
82,968

Marketable securities:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. treasury securities
 
$
2,498

 
$

 
$
2,498

 
$
1,994

 
$

 
$
1,994

U.S. agency securities
 

 
15,287

 
15,287

 

 
7,020

 
7,020

Commercial paper
 

 
3,697

 
3,697

 

 
2,497

 
2,497

Corporate debt securities
 

 
147,259

 
147,259

 

 
90,816

 
90,816

Total marketable securities
 
$
2,498

 
$
166,243

 
$
168,741

 
$
1,994

 
$
100,333

 
$
102,327


The Company classifies its cash equivalents and marketable securities as Level 1 or Level 2 within the fair value hierarchy. The fair value of Level 1 financial instruments, which are traded in active markets, is based on quoted market prices for identical instruments. The fair value of Level 2 financial instruments is obtained from an independent pricing service, which may use quoted market prices for identical or comparable instruments or model driven valuations using observable market data or inputs corroborated by observable market data. The Company's procedures include controls to ensure that appropriate fair values are recorded, including comparing the fair values obtained from the Company's pricing service against fair values obtained from other independent sources. At March 31, 2015 and December 31, 2014, the Company had no financial assets or liabilities that were classified as Level 3, which are valued based on inputs supported by little or no market activity.
During the three months ended March 31, 2015, the Company had no transfers of financial assets between levels. At March 31, 2015, $126.5 million of the Company's marketable securities had a contractual maturity of one year or less and $42.2 million had a contractual maturity of one to two years.
Stock-based compensation
Stock-based compensation
Stock-based compensation
Equity incentive plans
The Company has issued equity grants from its three stock-based employee compensation plans: the 2014 Equity Incentive Plan (2014 Plan), the 2010 Equity Incentive Plan (2010 Plan), and the Employee Stock Purchase Plan (ESPP).
The 2014 Plan serves as the successor to the 2010 Plan and provides for the granting of incentive and nonqualified stock options, restricted stock awards (RSAs), restricted stock units (RSUs), stock appreciation rights, stock bonus awards, and performance awards to employees, non-employee directors, and consultants. No shares have been issued under the 2010 Plan since June 2014. Options granted under the 2014 Plan generally expire within 10 years from the date of grant and generally vest over four years. Options with performance or market-based conditions are generally subject to a required service period along with the performance or market condition. RSUs granted under the 2014 Plan generally vest either annually or quarterly over three or four years based upon on continued service. The ESPP allows eligible employees to purchase shares of the Company's Class A common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning or the end of six-month offering periods. For additional information regarding the Company's equity incentive plans, please refer to the footnotes to the audited financial statements contained in its Annual Report on Form 10-K for the year ended December 31, 2014.
Stock option activity
A summary of the Company’s stock option activity and related information is as follows:
 
 
Options outstanding
(shares in thousands)
 
Shares
 
Weighted-
average
exercise
price
 
Weighted-
average
grant
date fair
value
 
Total intrinsic
value of
exercises
(in thousands)
 
Aggregate
intrinsic value
(in thousands)
Outstanding at December 31, 2014:
 
25,134

 
$
6.62

 
 
 
 
 
$
1,425,339

Granted
 
420

 
45.56

 
$
22.47

 
 
 
 
Exercised
 
(4,143
)
 
1.44

 
 
 
$
203,784

 
 
Forfeited/Cancelled
 
(74
)
 
20.91

 
 
 
 
 
 
Outstanding at March 31, 2015:
 
21,337

 
$
8.34

 
 
 
 
 
$
756,135

 
 
 
 
 
 
 
 
 
 
 
Exercisable at March 31, 2015
 
14,678

 
$
2.68

 
 
 
 
 
$
597,831

Vested and expected to vest at March 31, 2015
 
20,966

 
$
8.08

 
 
 
 
 
$
748,068


At March 31, 2015, there was $66.3 million of unearned stock-based compensation expense related to unvested options, which is expected to be amortized over a weighted average period of 2.6 years.
Restricted stock awards
RSAs represent share awards of the Company’s common stock that are generally subject to repurchase at the original issuance price upon termination of services prior to vesting. These repurchase terms are considered to be a forfeiture provision and do not result in mark-to-market accounting each reporting period. At March 31, 2015, all RSAs were fully vested. A summary of the Company’s restricted stock awards is as follows:
(shares in thousands)
Shares
 
Weighted- average grant date fair value
 
Aggregate
intrinsic value
(in thousands)
Non-vested shares at December 31, 2014
17

 
$
6.30

 
$
1,017

Vested
(17
)
 
 
 
 
Non-vested shares at March 31, 2015

 
$

 
$


Restricted stock units
The cost of RSUs is determined using the fair value of the Company's common stock on the date of grant, and compensation is recognized on a straight-line basis over the requisite service period. The Company also has issued RSUs with both a market condition and service condition. The Company estimated the fair value of these market-based RSUs using a Monte Carlo valuation model on the date of grant. A summary of the Company’s RSU activity is as follows:
(shares in thousands)
Shares
 
Weighted- average grant date fair value
Non-vested shares at December 31, 2014
4,307

 
$
21.98

Granted
332

 
46.42

Vested
(817
)
 
15.80

Forfeited
(8
)
 
79.22

Non-vested shares at March 31, 2015
3,814

 
25.30


In June 2014, the Company granted a 4.5 million RSU award to the Chief Executive Officer (CEO RSUs), which included 1.5 million RSUs that vested immediately upon grant and 3.0 million RSUs that were subject to a market-based condition and a service condition. In January 2015, the market-based condition was achieved and the Company recorded stock-based compensation expense of $15.8 million during the three months ended March 31, 2015.  At March 31, 2015, $20.6 million of total unearned compensation costs related to the CEO RSUs is expected to be recognized over the remaining vesting period of 2.3 years.
At March 31, 2015, there was $70.3 million of unearned stock-based compensation related to RSUs (including the CEO RSUs), which is expected to be amortized over a weighted average period of 2.3 years.
Employee stock purchase plan
On February 13, 2015, the first purchase under the Company's ESPP was made and employees purchased an aggregate of 313,233 shares at a price of $20.40 per share. During the three months ended March 31, 2015, the Company recorded $1.1 million of stock-based compensation expense related to the ESPP. At March 31, 2015, there was $1.5 million of unearned stock-based compensation related to the Company’s ESPP, which is expected to be recognized over 0.4 years.
Stock-based compensation expense
The Company measures compensation expense for all stock-based payment awards, including stock options, RSUs, and purchases under the Company's ESPP, based on the estimated fair values on the date of the grant. The fair value of stock options granted and purchases under the Company's ESPP is estimated using the Black-Scholes option pricing model. There have been no significant changes in the Company’s valuation assumptions for measuring compensation expense from those disclosed in the footnotes to the audited financial statements contained in its Annual Report on Form 10-K for the year ended December 31, 2014.
The following tables set forth the detailed allocation of stock-based compensation expense:
 
Three months ended
(in thousands)
March 31,
2015
 
March 31,
2014
Stock-based compensation expense:
 
 
 
Cost of revenue
$
283

 
$
168

Research and development
3,535

 
1,401

Sales and marketing
3,066

 
1,414

General and administrative
19,617

 
1,054

Total stock-based compensation expense
26,501

 
4,037

Total tax benefit recognized
(9,304
)
 
(342
)
Decrease in net income
$
17,197

 
$
3,695

 
 
 
 
Stock-based compensation expense by type of award:
 
 
 
Stock options
$
5,957

 
$
2,894

RSUs
18,920

 
179

RSAs
566

 
964

ESPP
1,058

 

Total stock-based compensation expense
$
26,501

 
$
4,037

Net income per share attributable to common stockholders
Net income per share attributable to common stockholders
Net income per share attributable to common stockholders
Basic and diluted net income per common share is presented in conformity with the two-class method required for participating securities. The Company considers shares issued upon the early exercise of options subject to repurchase and non-vested restricted shares to be participating securities, because holders of such shares have a non-forfeitable right to dividends. Additionally, prior to the date of the Company's initial public offering (IPO) in June 2014, the Company considered its redeemable convertible preferred stock to be participating securities due to their non-cumulative dividend rights. Immediately after the completion of the Company's IPO, all outstanding shares of redeemable convertible preferred stock converted to Class B common stock.
The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share. Each share of Class B common stock is convertible at any time at the option of the stockholder into one share of Class A common stock and has no expiration date. Each share of Class B common stock will convert automatically into one share of Class A common stock upon the date when the outstanding shares of Class B common stock represent less than 10% of the aggregate number of shares of common stock then outstanding. Class A common stock is not convertible into Class B common stock.
Basic net income per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted-average number of common shares outstanding during the period. All participating securities are excluded from basic weighted average common shares outstanding. Diluted net income per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted-average number of common shares outstanding, including all potentially dilutive common shares.
Undistributed earnings are allocated based on the contractual participation rights of common shares as if the earnings for the year have been distributed. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. The computation of the diluted net income per share of Class A common stock assumes the conversion of Class B common stock.
The following table presents the calculations of basic and diluted net income per share attributable to common stockholders:
 
Three months ended
(dollars in thousands, except per share data)
March 31,
2015
 
March 31,
2014
 
Class A
 
Class B
 
Common
Numerator:
 
 
 
 
 
Allocation of net income
$
8,926

 
$
7,826

 
$
11,049

Less: net income allocable to participating securities

 

 
(3,040
)
Net income attributable to common stockholders—basic
$
8,926

 
$
7,826

 
$
8,009

Add: net income allocable to dilutive participating securities

 

 
443

Reallocation of net income as a result of conversion of Class B to Class A shares
7,826

 

 

Reallocation of net income to Class B shares

 
968

 

Net income attributable to common stockholders—diluted
$
16,752

 
$
8,794

 
$
8,452

 
 
 
 
 
 
Denominator:
 
 
 
 
 
Weighted-average common shares—basic
70,483

 
61,795

 
81,582

Conversion of Class B to Class A common stock outstanding
61,795

 

 

Effect of potentially dilutive stock options, ESPP shares, and RSUs
16,295

 
16,202

 
19,201

Weighted-average common shares—diluted
148,573

 
77,997

 
100,783

 
 
 
 
 
 
Net income per share attributable to common stockholders:
 
 
 
 
 
Basic
$
0.13

 
$
0.13

 
$
0.10

Diluted
$
0.11

 
$
0.11

 
$
0.08


The following potentially dilutive shares of were not included in the calculation of diluted shares outstanding as the effect would have been anti-dilutive:
 
Three months ended
(in thousands)
March 31,
2015
 
March 31,
2014
Series A redeemable convertible preferred stock

 
30,523

Stock options, ESPP shares, and RSUs
1,984

 
3,634

Unvested stock awards and stock options
5

 
451

 
1,989

 
34,608

Income tax expense
Income tax expense
Income tax expense
The Company's tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual tax rate changes, the Company makes a cumulative adjustment in that quarter.
 
Three months ended
(dollars in thousands)
March 31,
2015
 
March 31,
2014
Income tax expense
$
3,272

 
$
3,882

Effective tax rate
16.3
%
 
26.0
%

The Company’s income tax expense was $3.3 million and $3.9 million for the three months ended March 31, 2015 and 2014, respectively. The Company’s provision for income taxes in each period has differed from the tax computed at the U.S. federal statutory income tax rate due to state taxes, the effect of non-U.S. operations, deductible and non-deductible stock-based compensation expense, non-deductible acquisition-related costs and adjustments to unrecognized tax benefits. The lower income tax expense for the three months ended March 31, 2015, compared to the same period in 2014, was primarily due to the effects of higher deductible stock-based compensation.
The Company is currently under examination by the U.S. Internal Revenue Service for tax years 2012 and 2013. The U.S. federal and U.S. state taxing authorities may choose to audit tax returns for tax years beyond the statute of limitation period due to significant tax attribute carryforwards from prior years, making adjustments only to carryforward attributes. The Company is also currently under examination by the California Franchise Tax Board for tax years 2011 and 2012. At this time, the Company is not able to estimate the potential impact that these examinations may have on income tax expense. If the examinations are resolved unfavorably, they may have a material negative impact on the Company's results of operations.
At March 31, 2015 and December 31, 2014, the Company’s total amount of gross unrecognized tax benefits was $16.9 million and $16.6 million, respectively. If recognized, $16.9 million of the unrecognized tax benefits (net of federal benefit) at March 31, 2015 would be recorded as a reduction of the income tax provision in future periods. Management believes events that could occur in the next 12 months and cause a material change in unrecognized tax benefits include, but are not limited to, the completion of examinations by the U.S. or foreign taxing authorities, and the expiration of statute of limitations on the Company's tax returns. The calculation of unrecognized tax benefits involves dealing with uncertainties in the application of complex global tax regulations. Management regularly assesses the Company's tax positions in light of legislative, bilateral tax treaty, regulatory and judicial developments in the countries in which it does business. It is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase within the next 12 months. However, the range of the reasonably possible change cannot be reliably estimated.
Related parties
Related parties
Related parties
The Company has agreements for certain contract manufacturing and engineering services with a vendor affiliated with one of the Company's investors. In the three months ended March 31, 2015 and 2014, the Company made payments of $0.5 million and $8.4 million, respectively, for services rendered.
The Company incurs costs for company-related chartered aircraft fees for the use of the CEO’s private plane. In the three months ended March 31, 2015 and 2014, the Company made payments of $0.4 million and zero, respectively.
In 2013, the Company entered into a three-year agreement with a company affiliated with the son of one of the members of the Company's Board of Directors to acquire certain naming rights to a sprint kart race track. As consideration for these naming rights, the Company would pay a total of $0.5 million in installments beginning in October 2013 over the naming rights period. In addition, the Company would also provide 100 GoPro capture devices at no cost each year over the term of the agreement. As of March 31, 2015, the Company has made cumulative payments related to this agreement of $0.3 million.
In the second quarter of 2013, the Company loaned one of its executive officers $150,000 pursuant to a demand payment loan that did not bear interest, which was fully repaid in March 2014.
Commitments, contingencies and guarantees
Commitments, contingencies and guarantees
Commitments, contingencies and guarantees
The following table summarizes the Company’s contractual commitments as of March 31, 2015:
(in thousands)
Total
 
1 year (remaining
9 months in 2015)
 
2-3 years (2016 and 2017)
 
4-5 years (2018 and 2019)
 
More than
5 years (beyond 2019)
Operating leases(1)
$
44,004

 
$
7,870

 
$
21,927

 
$
14,207

 
$

Sponsorship commitments(2)
11,314

 
4,912

 
6,402

 

 

Other contractual commitments(3)
7,697

 
2,673

 
5,024

 

 

Capital equipment purchase commitments(4)
16,107

 
16,107

 

 

 

Total contractual cash obligations
$
79,122

 
$
31,562

 
$
33,353

 
$
14,207

 
$

(1)
The Company leases its facilities under long-term operating leases, which expire at various dates through 2019.
(2)
The Company sponsors sporting events, resorts and athletes as part of its marketing efforts. In many cases, the Company enters into multi-year agreements with event organizers, resorts and athletes.
(3)
The Company purchases software licenses and engages outside consultants to assist with upgrading or implementing its financial and IT systems, which require payments over multiple years.
(4)
The Company enters into contracts to acquire equipment for tooling and molds as part of its manufacturing operations. In addition, the Company incurs purchase commitments related to the manufacturing of its point-of-purchase (POP) displays by third parties.
Rent expense was $2.4 million and $1.3 million for the three months ended March 31, 2015 and 2014, respectively.
Legal proceedings
From time to time, the Company is involved in legal proceedings in the ordinary course of business. The Company believes that the outcome of any existing litigation, either individually or in the aggregate, will not have a material impact on the results of operations, financial condition or cash flows of the Company.
Indemnifications
In the normal course of business, the Company enters into agreements that contain a variety of representations and warranties and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made. As of March 31, 2015, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations.
Product warranty
The following table summarizes the warranty liability activity:
 
Three months ended
(in thousands)
March 31,
2015
 
March 31,
2014
Beginning balances
$
6,405

 
$
3,870

Charged to cost of revenue
6,044

 
271

Settlements of warranty claims
(3,480
)
 
(1,590
)
Ending balances
$
8,969

 
$
2,551


At March 31, 2015, $8.5 million of the warranty liability was recorded as an element of accrued liabilities and $0.4 million was recorded as an element of other long-term liabilities.
Concentrations of risk and segment information
Concentrations of risk and segment information
Concentrations of risk and segment information
Segment information
The Company operates as one operating segment as it only reports financial information on an aggregate and consolidated basis to its CEO, who is the Company’s chief operating decision maker.
Customer concentration
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of trade receivables. The Company believes that credit risk in its accounts receivable is mitigated by the Company’s credit evaluation process, relatively short collection terms and dispersion of its customer base. The Company generally does not require collateral and losses on trade receivables have historically been within management’s expectations.
The Company had the following customers who represented 10% or more of its net accounts receivable balance:
 
March 31,
2015
 
December 31,
2014
A (retailer)
16%
 
17%
B (distributor)
26%
 
14%
C (retailer)
10%
 
11%
D (retailer)
12%
 
*
E (distributor)
11%
 
*
* Less than 10% of total accounts receivable for the period indicated
In the three months ended March 31, 2015 and 2014, the Company sold accounts receivables, without recourse, of $35.3 million and $31.3 million, respectively, to a third-party banking institution. Factoring fees of $0.3 million for each of these periods were included in other expense, net.
Customers with revenue equal to or greater than 10% of total revenue were as follows:
 
Three months ended
 
March 31,
2015
 
March 31,
2014
A (retailer)
12%
 
13%
B (distributor)
*
 
10%
*
Less than 10% of total revenue for the period indicated
Supplier concentration
The Company relies on third parties for the supply and manufacture of its capture devices, some of which are sole-source suppliers.  The Company believes that outsourcing manufacturing enables greater scale and flexibility. As demand and product lines change, the Company periodically evaluates the need and advisability of adding manufacturers to support its operations.  In instances where a supply and manufacture agreement does not exist or suppliers fail to perform their obligations, the Company may be unable to find alternative suppliers or satisfactorily deliver its products to its customers on time, if at all.  The Company also relies on third parties with whom it outsources supply chain activities related to inventory warehousing, order fulfillment, distribution and other direct sales logistics
Geographic and other information
Revenue by geographic region, based on ship-to destinations, was as follows:
 
Three months ended
(in thousands)
March 31,
2015
 
March 31,
2014
Americas
$
180,093

 
$
125,166

Europe, Middle East and Africa (EMEA)
139,079

 
84,174

Asia and Pacific area countries (APAC)
43,937

 
26,376

 
$
363,109

 
$
235,716


Revenue in the United States, which is included in the Americas geographic region, was $155.3 million and $110.7 million for the three months ended March 31, 2015 and 2014, respectively. During the three months ended December 31, 2014, the Company reclassified four countries it had previously included in the APAC geographical region to now be included in the EMEA geographical region. This caused $4.1 million of revenue to be reclassified from the APAC region to the EMEA region for the three months ended March 31, 2014. The Company does not disclose revenue by product category as it does not track sales incentives and other revenue adjustments by product category to report such data.
As of March 31, 2015 and December 31, 2014, long-lived assets, which represent gross property and equipment, located outside the United States, primarily China, were $28.8 million and $25.4 million, respectively.
Basis of presentation and summary of significant accounting policies (Policies)
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and in accordance with the interim period reporting requirements of Form 10-Q. The unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) that management believes are necessary for the fair presentation of the Company's financial condition, results of operations, and cash flows for the periods presented, but are not necessarily indicative of the results expected for the full fiscal year or any other future period. The condensed consolidated balance sheet at December 31, 2014 has been derived from the audited financial statements at that date, but does not include all of the disclosures required by GAAP.  This quarterly report should be read in conjunction with the Company's Annual Report on Form 10-K (Annual Report) for the year ended December 31, 2014. There have been no significant changes in the Company’s accounting policies from those disclosed in the footnotes to the audited financial statements contained in its Annual Report on Form 10-K for the year ended December 31, 2014.
Principles of consolidation
These consolidated financial statements include all the accounts of the Company and its wholly-owned subsidiaries. Unless otherwise specified, references to the Company are references to GoPro, Inc. and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the Company’s condensed consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions in several areas, including those related to: the collectability of accounts receivable, stock-based compensation, inventory valuation, warranty liabilities, revenue recognition and related estimates (including sales returns, web-based sale deliveries at period-end, implied post contract support, and marketing allowances), the valuation and useful lives of intangible assets and property and equipment, the valuation of deferred income tax assets, and uncertain tax positions. The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from management's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Comprehensive income
For all periods presented, comprehensive income equaled net income. Therefore, the condensed consolidated statements of comprehensive income have been omitted from the condensed consolidated financial statements.
Recent accounting pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers, which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount to which an entity expects to be entitled when products are transferred to customers. ASU 2014-09 becomes effective for the Company on January 1, 2017. Early application is not permitted. In April 2015, the FASB proposed a one-year deferral of the effective date of the new revenue standard. If approved, the new standard will become effective for the Company on January 1, 2018 and can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. The Company is currently evaluating the impact the adoption of ASU 2014-09 will have on the Company's consolidated financial statements.
Correction of error
During the preparation of the condensed consolidated financial statements for the period ended June 30, 2014, the Company determined that within the consolidated statement of cash flows previously disclosed for the quarter ended March 31, 2014, net cash provided by operating activities was understated by $3.2 million and net cash used for investing activities was understated by the same amount. The Company has properly presented its condensed consolidated statement of cash flows for the three months ended March 31, 2014 and determined that this revision is not material to prior periods.
Prior Period Reclassifications
Reclassifications of certain prior period amounts in the condensed consolidated financial statements have been made to conform to the current period presentation.
Balance sheet components (Tables)
Inventory consisted of the following:
(in thousands)
March 31,
2015
 
December 31,
2014
Components
$
3,301

 
$
4,324

Finished goods
160,743

 
148,702

Total inventory
$
164,044

 
$
153,026

Property and equipment, net consisted of the following:
(in thousands)
Useful life
(in years)
 
March 31,
2015
 
December 31,
2014
Leasehold improvements
3–7
 
$
23,037

 
$
22,787

Computers, software, equipment and furniture
2–4
 
27,420

 
24,636

Tooling
1–4
 
17,639

 
16,159

Construction in progress
 
 
6,037

 
3,944

Tradeshow equipment and other
2-5
 
3,864

 
3,830

Gross property and equipment
 
 
77,997

 
71,356

Less: Accumulated depreciation and amortization
 
 
(34,107)

 
(29,800)

Property and equipment, net
 
 
$
43,890

 
$
41,556

Fair value measurements (Tables)
Fair Value, Assets Measured on Recurring Basis
The Company’s assets that are measured at fair value on a recurring basis, by level, within the fair value hierarchy are summarized as follows:
 
 
March 31, 2015
 
December 31, 2014
(in thousands)
 
Level 1
 
Level 2
 
Total
 
Level 1
 
Level 2
 
Total
Cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
 
$
16,618

 
$

 
$
16,618

 
$
80,968

 
$

 
$
80,968

Corporate debt securities
 

 

 

 

 
2,000

 
2,000

Total cash equivalents
 
$
16,618

 
$

 
$
16,618

 
$
80,968

 
$
2,000

 
$
82,968

Marketable securities:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. treasury securities
 
$
2,498

 
$

 
$
2,498

 
$
1,994

 
$

 
$
1,994

U.S. agency securities
 

 
15,287

 
15,287

 

 
7,020

 
7,020

Commercial paper
 

 
3,697

 
3,697

 

 
2,497

 
2,497

Corporate debt securities
 

 
147,259

 
147,259

 

 
90,816

 
90,816

Total marketable securities
 
$
2,498

 
$
166,243

 
$
168,741

 
$
1,994

 
$
100,333

 
$
102,327

Stock-based compensation (Tables)
A summary of the Company’s stock option activity and related information is as follows:
 
 
Options outstanding
(shares in thousands)
 
Shares
 
Weighted-
average
exercise
price
 
Weighted-
average
grant
date fair
value
 
Total intrinsic
value of
exercises
(in thousands)
 
Aggregate
intrinsic value
(in thousands)
Outstanding at December 31, 2014:
 
25,134

 
$
6.62

 
 
 
 
 
$
1,425,339

Granted
 
420

 
45.56

 
$
22.47

 
 
 
 
Exercised
 
(4,143
)
 
1.44

 
 
 
$
203,784

 
 
Forfeited/Cancelled
 
(74
)
 
20.91

 
 
 
 
 
 
Outstanding at March 31, 2015:
 
21,337

 
$
8.34

 
 
 
 
 
$
756,135

 
 
 
 
 
 
 
 
 
 
 
Exercisable at March 31, 2015
 
14,678

 
$
2.68

 
 
 
 
 
$
597,831

Vested and expected to vest at March 31, 2015
 
20,966

 
$
8.08

 
 
 
 
 
$
748,068

A summary of the Company’s RSU activity is as follows:
(shares in thousands)
Shares
 
Weighted- average grant date fair value
Non-vested shares at December 31, 2014
4,307

 
$
21.98

Granted
332

 
46.42

Vested
(817
)
 
15.80

Forfeited
(8
)
 
79.22

Non-vested shares at March 31, 2015
3,814

 
25.30

A summary of the Company’s restricted stock awards is as follows:
(shares in thousands)
Shares
 
Weighted- average grant date fair value
 
Aggregate
intrinsic value
(in thousands)
Non-vested shares at December 31, 2014
17

 
$
6.30

 
$
1,017

Vested
(17
)
 
 
 
 
Non-vested shares at March 31, 2015

 
$

 
$

The following tables set forth the detailed allocation of stock-based compensation expense:
 
Three months ended
(in thousands)
March 31,
2015
 
March 31,
2014
Stock-based compensation expense:
 
 
 
Cost of revenue
$
283

 
$
168

Research and development
3,535

 
1,401

Sales and marketing
3,066

 
1,414

General and administrative
19,617

 
1,054

Total stock-based compensation expense
26,501

 
4,037

Total tax benefit recognized
(9,304
)
 
(342
)
Decrease in net income
$
17,197

 
$
3,695

 
 
 
 
Stock-based compensation expense by type of award:
 
 
 
Stock options
$
5,957

 
$
2,894

RSUs
18,920

 
179

RSAs
566

 
964

ESPP
1,058

 

Total stock-based compensation expense
$
26,501

 
$
4,037

Net income per share attributable to common stockholders (Tables)
The following table presents the calculations of basic and diluted net income per share attributable to common stockholders:
 
Three months ended
(dollars in thousands, except per share data)
March 31,
2015
 
March 31,
2014
 
Class A
 
Class B
 
Common
Numerator:
 
 
 
 
 
Allocation of net income
$
8,926

 
$
7,826

 
$
11,049

Less: net income allocable to participating securities

 

 
(3,040
)
Net income attributable to common stockholders—basic
$
8,926

 
$
7,826

 
$
8,009

Add: net income allocable to dilutive participating securities

 

 
443

Reallocation of net income as a result of conversion of Class B to Class A shares
7,826

 

 

Reallocation of net income to Class B shares

 
968

 

Net income attributable to common stockholders—diluted
$
16,752

 
$
8,794

 
$
8,452

 
 
 
 
 
 
Denominator:
 
 
 
 
 
Weighted-average common shares—basic
70,483

 
61,795

 
81,582

Conversion of Class B to Class A common stock outstanding
61,795

 

 

Effect of potentially dilutive stock options, ESPP shares, and RSUs
16,295

 
16,202

 
19,201

Weighted-average common shares—diluted
148,573

 
77,997

 
100,783

 
 
 
 
 
 
Net income per share attributable to common stockholders:
 
 
 
 
 
Basic
$
0.13

 
$
0.13

 
$
0.10

Diluted
$
0.11

 
$
0.11

 
$
0.08

The following potentially dilutive shares of were not included in the calculation of diluted shares outstanding as the effect would have been anti-dilutive:
 
Three months ended
(in thousands)
March 31,
2015
 
March 31,
2014
Series A redeemable convertible preferred stock

 
30,523

Stock options, ESPP shares, and RSUs
1,984

 
3,634

Unvested stock awards and stock options
5

 
451

 
1,989

 
34,608

Income tax expense (Tables)
Schedule of Components of Income Tax Expense (Benefit)
 
Three months ended
(dollars in thousands)
March 31,
2015
 
March 31,
2014
Income tax expense
$
3,272

 
$
3,882

Effective tax rate
16.3
%
 
26.0
%
Commitments, contingencies and guarantees (Tables)
The following table summarizes the Company’s contractual commitments as of March 31, 2015:
(in thousands)
Total
 
1 year (remaining
9 months in 2015)
 
2-3 years (2016 and 2017)
 
4-5 years (2018 and 2019)
 
More than
5 years (beyond 2019)
Operating leases(1)
$
44,004

 
$
7,870

 
$
21,927

 
$
14,207

 
$

Sponsorship commitments(2)
11,314

 
4,912

 
6,402

 

 

Other contractual commitments(3)
7,697

 
2,673

 
5,024

 

 

Capital equipment purchase commitments(4)
16,107

 
16,107

 

 

 

Total contractual cash obligations
$
79,122

 
$
31,562

 
$
33,353

 
$
14,207

 
$

(1)
The Company leases its facilities under long-term operating leases, which expire at various dates through 2019.
(2)
The Company sponsors sporting events, resorts and athletes as part of its marketing efforts. In many cases, the Company enters into multi-year agreements with event organizers, resorts and athletes.
(3)
The Company purchases software licenses and engages outside consultants to assist with upgrading or implementing its financial and IT systems, which require payments over multiple years.
(4)
The Company enters into contracts to acquire equipment for tooling and molds as part of its manufacturing operations. In addition, the Company incurs purchase commitments related to the manufacturing of its point-of-purchase (POP) displays by third parties.
The following table summarizes the warranty liability activity:
 
Three months ended
(in thousands)
March 31,
2015
 
March 31,
2014
Beginning balances
$
6,405

 
$
3,870

Charged to cost of revenue
6,044

 
271

Settlements of warranty claims
(3,480
)
 
(1,590
)
Ending balances
$
8,969

 
$
2,551

Concentrations of risk and segment information (Tables)
Revenue by geographic region, based on ship-to destinations, was as follows:
 
Three months ended
(in thousands)
March 31,
2015
 
March 31,
2014
Americas
$
180,093

 
$
125,166

Europe, Middle East and Africa (EMEA)
139,079

 
84,174

Asia and Pacific area countries (APAC)
43,937

 
26,376

 
$
363,109

 
$
235,716

The Company had the following customers who represented 10% or more of its net accounts receivable balance:
 
March 31,
2015
 
December 31,
2014
A (retailer)
16%
 
17%
B (distributor)
26%
 
14%
C (retailer)
10%
 
11%
D (retailer)
12%
 
*
E (distributor)
11%
 
*
* Less than 10% of total accounts receivable for the period indicated
Customers with revenue equal to or greater than 10% of total revenue were as follows:
 
Three months ended
 
March 31,
2015
 
March 31,
2014
A (retailer)
12%
 
13%
B (distributor)
*
 
10%
*
Less than 10% of total revenue for the period indicated
Basis of presentation and summary of significant accounting policies (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Understatement in net cash provided by operating activities
$ (66,267)
$ (20,914)
Understatement in net cash used for investing activities
77,172 
7,901 
Scenario, Adjustment [Member]
 
 
Understatement in net cash provided by operating activities
 
3,200 
Understatement in net cash used for investing activities
 
$ 3,200 
Balance sheet components - Inventory (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
 
Components
$ 3,301 
$ 4,324 
Finished goods
160,743 
148,702 
Total inventory
$ 164,044 
$ 153,026 
Balance sheet components - Property and Equipment, Net (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Dec. 31, 2014
Mar. 31, 2015
Leasehold Improvements [Member]
Dec. 31, 2014
Leasehold Improvements [Member]
Mar. 31, 2015
Computers, Software, Equipment and Furniture [Member]
Dec. 31, 2014
Computers, Software, Equipment and Furniture [Member]
Mar. 31, 2015
Tooling [Member]
Dec. 31, 2014
Tooling [Member]
Mar. 31, 2015
Construction in Progress [Member]
Dec. 31, 2014
Construction in Progress [Member]
Mar. 31, 2015
Tradeshow Equipment and Other [Member]
Dec. 31, 2014
Tradeshow Equipment and Other [Member]
Mar. 31, 2015
Minimum [Member]
Leasehold Improvements [Member]
Mar. 31, 2015
Minimum [Member]
Computers, Software, Equipment and Furniture [Member]
Mar. 31, 2015
Minimum [Member]
Tooling [Member]
Mar. 31, 2015
Minimum [Member]
Tradeshow Equipment and Other [Member]
Mar. 31, 2015
Maximum [Member]
Leasehold Improvements [Member]
Mar. 31, 2015
Maximum [Member]
Computers, Software, Equipment and Furniture [Member]
Mar. 31, 2015
Maximum [Member]
Tooling [Member]
Mar. 31, 2015
Maximum [Member]
Tradeshow Equipment and Other [Member]
Property, Plant and Equipment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Useful life (in years)
 
 
 
 
 
 
 
 
 
 
 
 
3 years 
2 years 
1 year 
2 years 
7 years 
4 years 
4 years 
5 years 
Gross property and equipment
$ 77,997 
$ 71,356 
$ 23,037 
$ 22,787 
$ 27,420 
$ 24,636 
$ 17,639 
$ 16,159 
$ 6,037 
$ 3,944 
$ 3,864 
$ 3,830 
 
 
 
 
 
 
 
 
Less: Accumulated depreciation and amortization
(34,107)
(29,800)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property and equipment, net
$ 43,890 
$ 41,556 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance sheet components - Acquired Intangible Assets and Goodwill (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
Intangible assets and goodwill
$ 24,874 
$ 17,032 
Fair value measurements (Details) (USD $)
Mar. 31, 2015
Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable securities
$ 168,741,000 
$ 102,327,000 
Marketable securities with contractual maturity of one year or less
126,500,000 
 
Marketable securities with contractual maturity of one to two years
42,200,000 
 
Fair Value, Measurements, Recurring [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
16,618,000 
82,968,000 
Marketable securities
168,741,000 
102,327,000 
Fair Value, Measurements, Recurring [Member] |
US Treasury Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable securities
2,498,000 
1,994,000 
Fair Value, Measurements, Recurring [Member] |
US Agency Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable securities
15,287,000 
7,020,000 
Fair Value, Measurements, Recurring [Member] |
Commercial Paper [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable securities
3,697,000 
2,497,000 
Fair Value, Measurements, Recurring [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable securities
147,259,000 
90,816,000 
Fair Value, Measurements, Recurring [Member] |
Money Market Funds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
16,618,000 
80,968,000 
Fair Value, Measurements, Recurring [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
2,000,000 
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
16,618,000 
80,968,000 
Marketable securities
2,498,000 
1,994,000 
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
US Treasury Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable securities
2,498,000 
1,994,000 
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
US Agency Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable securities
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
Commercial Paper [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable securities
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable securities
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
Money Market Funds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
16,618,000 
80,968,000 
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
2,000,000 
Marketable securities
166,243,000 
100,333,000 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
US Treasury Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable securities
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
US Agency Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable securities
15,287,000 
7,020,000 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
Commercial Paper [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable securities
3,697,000 
2,497,000 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Marketable securities
147,259,000 
90,816,000 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
Money Market Funds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Cash equivalents
$ 0 
$ 2,000,000 
Stock-based compensation - Narrative (Details) (USD $)
0 Months Ended 3 Months Ended 1 Months Ended 3 Months Ended 1 Months Ended 3 Months Ended 10 Months Ended 3 Months Ended
Feb. 13, 2015
Mar. 31, 2015
plan
Mar. 31, 2014
Mar. 31, 2015
ESPP [Member]
Mar. 31, 2014
ESPP [Member]
Mar. 31, 2015
Stock Options [Member]
Mar. 31, 2014
Stock Options [Member]
Mar. 31, 2015
RSUs [Member]
Mar. 31, 2014
RSUs [Member]
Jun. 30, 2014
RSUs [Member]
Chief Executive Officer (CEO) [Member]
Mar. 31, 2015
RSUs [Member]
Chief Executive Officer (CEO) [Member]
Jun. 30, 2014
RSUs [Member]
Chief Executive Officer (CEO) [Member]
Vested Immediately [Member]
Jun. 30, 2014
RSUs [Member]
Chief Executive Officer (CEO) [Member]
Subject to Market-based and Service Condition [Member]
Mar. 31, 2015
RSUs [Member]
Chief Executive Officer (CEO) [Member]
Subject to Market-based and Service Condition [Member]
Mar. 31, 2015
2010 Plan [Member]
Mar. 31, 2015
2010 Plan [Member]
Stock Options [Member]
Mar. 31, 2015
2014 Plan [Member]
RSUs [Member]
Vested Immediately [Member]
Mar. 31, 2015
2014 Plan [Member]
RSUs [Member]
Subject to Market-based and Service Condition [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of stock-based employee compensation plans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares issued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expiration period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10 years 
 
 
Vesting period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 years 
3 years 
4 years 
Purchase price of common stock as percentage of fair value of Company common stock (percent)
 
 
 
85.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unearned stock-based compensation costs
 
 
 
$ 1,500,000 
 
$ 66,300,000 
 
$ 70,300,000 
 
 
$ 20,600,000 
 
 
 
 
 
 
 
Unearned stock-based compensation, expected recognition period
 
 
 
4 months 13 days 
 
2 years 7 months 6 days 
 
2 years 3 months 18 days 
 
 
2 years 3 months 
 
 
 
 
 
 
 
Shares granted
 
 
 
 
 
 
 
332,000 
 
4,500,000 
 
1,500,000 
3,000,000 
 
 
 
 
 
Stock-based compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
 
15,800,000 
 
 
 
 
Aggregate shares purchased by employees
313,233 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchase price of shares purchased (in dollars per share)
$ 20.40 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation
 
$ 26,501,000 
$ 4,037,000 
$ 1,058,000 
$ 0 
$ 5,957,000 
$ 2,894,000 
$ 18,920,000 
$ 179,000 
 
 
 
 
 
 
 
 
 
Stock-based compensation - Stock Option Activity (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Dec. 31, 2014
Shares
 
 
Outstanding at beginning of period (shares)
25,134 
 
Granted (shares)
420 
 
Exercised (shares)
(4,143)
 
Forfeited/Cancelled (shares)
(74)
 
Outstanding at end of period (shares)
21,337 
 
Weighted- average exercise price
 
 
Outstanding at beginning of period (in dollars per share)
$ 6.62 
 
Granted (in dollars per share)
$ 45.56 
 
Exercised (in dollars per share)
$ 1.44 
 
Forfeited/Cancelled (in dollars per share)
$ 20.91 
 
Outstanding at end of period (in dollars per share)
$ 8.34 
 
Granted, Weighted average fair value at grant date (in dollars per share)
$ 22.47 
 
Exercised, Total intrinsic value of exercises
$ 203,784 
 
Aggregate intrinsic value
756,135 
1,425,339 
Exercisable (shares)
14,678 
 
Exercisable - Weighted average exercise price (in dollars per share)
$ 2.68 
 
Exercisable - Aggregate intrinsic value
597,831